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The company cited data from the Dubai Land Department which showed that the number of sales during the fourth quarter of 2011 reached 2,605 compared to 1,589 in the third quarter, representing an increase of 64% quarter on quarter. "This trend is definitely continuing and is evident to brokers on the completion of transfers," Cluttons said.
However, there is a general consensus that the large influx of new supply slated to hit the market will serve as a major roadblock to the sector's recovery in the short term. At present, there are approximately 336,000 residential units in Dubai, with around 23,000 additional units set to enter the market in 2012, according to Jones Lang Lasalle.
Cluttons said the Dubai market was "still plagued by oversupply" but was seeing "selective stabilisation", with growing demand for homes in some parts of the city.
"In some premium locations with only a fixed number of properties on the market, Cluttons is already seeing prices increase as a result of a strong interest in potential buyers," the real estate firm said.
Investors focus on premium property
Tom Bunker, Investment Sales Consultant at Better Homes, said 'a lot' of the activity he is seeing is in property that her refers to as the 'good stuff', by which he means villas and apartments that are well managed, in good locations, and built by reputable developers.
He says there is high demand for the 'good stuff', with investors now buying up to 20 units at a time. "I can see the good stuff appreciating quite steadily over the next year or so because more and more investors are coming into town and they are looking for exactly that type of property, and it's going to start disappearing because there is a limited amount of it," he said.
Bunker says there is a big difference between the property that is set be handed over and the 'good stuff' with regard to build quality and location. "I don't really care about what else is coming online down the road, because I don't see anything that compares to the good stuff right now," he said. "It's more of the regular stuff, and it shouldn't have too much influence on the appreciation of the good stuff."
"And the people who are holding the mediocre or poor properties, well all bets are off on that because it is going to be a while before we see any real activity in that product," Bunker added.
While agreeing that the influx of new supply will have no impact on the price of upper-tier property, Vineet Kumar, Head of Business Development at Asteco Property Management, goes a step further by contending that the concerns about oversupply in the Dubai market might be overstated.
"I think that concerns are over blown because as we know inventory is handed over in stages and not all at once and of course some projects have been delayed, making it even more difficult to estimate exactly when certain building will come to market," Kumar said.
"In addition there is a secondary and in some cases a very time consuming process of preparing a building for its residents. Health and safety issues, lifts, swimming pools, parking, utility connections, ID cards and even duplicate keys need to be organised before allowing owners to take possession of their properties."
"Evaluating both of these points, it is almost impossible to estimate accurately when, on a Dubai-wide basis, supply will be coming to the market," he added.
While acknowledging that the effect that the new projects will have on the market cannot be ignored, Kumar said eventually it is the market that will decide what values they achieve. "And as the market matures, location and quality will be always be in demand," he said.
Jeff Florian, Senior Reporter
