Villa prices in Dubai up 23% so far this year

Citing REIDIN Residential Sale Indices, the report said the overall residential market is picking up, with average prices increasing by 14% in the first nine months of the year, largely due to an increase in villa prices.

Prices for villas have risen 23% compared to same period last year, and are now 14% higher than in early 2008. By comparison, apartment prices rose just 4% and remain 18% less than their peak in Q3-2008.

Looking at rents, JLL said the villa rent index has increased 7% compared to the first nine months of last year and has now reached its highest level since the index started in 2009. While the apartment rental index has increased by 5% this year, it remains 30% lower than its peak level in January 2009.

"While the Dubai market is certainly starting to recover, this improvement remains largely focussed on a limited number of high quality assets / locations, and has yet to trickle down to the overall market where rents and values have remained largely unchanged during 2012," said Craig Plumb, Head of Research for Jones Lang LaSalle in MENA. "The overall market still faces challenges of high new supply and limited demand for secondary assets, that is providing tenants and occupiers with significant choices."

Data from the report showed that the total residential stock stood at around 349,000 units at the end of the third quarter of 2012, with around 2,000 residential units, mostly apartments, being added to the market.

The major completion in Q3 was Princess Tower in Dubai Marina, the world's tallest residential building. Other delivered projects include Latifa Tower on SZR, Orra Marina Tower in Dubai Marina, in addition to new completions in Dubai Silicon Oasis, Jumeirah Park and Jumeirah Heights.

The first nine months of 2012 saw the completion of 6,000 residential units. While a further 17,000 units had previously been expected to come to the market before the end of the year, it is likely that much of this supply will be delayed until 2013. Among the most awaited deliveries for Q4 2012 is Elite tower in Dubai Marina, this will be the world's third tallest residential tower after Princess Tower and 23 Marina.

Around 50,000 additional residential units are expected to be delivered by 2014. With demand picking up and liquidity returning to the market, a number of previously stalled projects are now resuming, such as the Mudon project in Dubailand, the report noted.

Most of the future residential stock will be located outside central Dubai, with the main completions anticipated to be from 2012 to 2014 in Jumeirah Village (approximately 6,300 units); Dubailand (6,200 units); Dubai Sports City (6,000 units); Dubai Silicon Oasis (4,200 units) and Al Furjan (4,000 units).