Property Select

• Home
• Property Search
• News
• About Us
• Contact

FORTY PERCENT INCREASE IN PROPERTY PRICES IN DUBAI

Friday, 15 Aug 2008

According to Al Mal Capital investment bank, the price of Dubai property showed a forty percent increase last month, as compared to July 2007. By contrast, rental returns decreased in July, falling to 6.8% from the 7.8% return seen from Dubai property rentals in 2007, according to Robert Mckinnon, the managing director of Al Mal Capital, who stated this in a letter to investors.

Higher prices are driving the rental returns decrease, as the median rental amount has seen an approximate rise of 23% over 2007’s levels. A slight decrease was also seen in commercial Dubai property, which fell from 12.4% in June to 11.9% in July.

The price of residential property reflected the decline, and only increased by 0.7% over June’s levels. The office market, however, continued to increase, showing a 3.7% growth. Since 2002, when foreigners were allowed to buy property in some areas, the price of Dubai property has soared, and demand has far exceeded supply.

In the Al Mal Capital bank’s report it is stated that some areas of the investment boom will lessen if the US dollar strengthens further, however. While a major portion of the investors who are buying Dubai accommodation come from countries that do not use the US dollar, such as Europe, Great Britain, Russia and Asia, the strengthening dollar will undermine their ability to purchase property and curtail further investment.

The report goes on to state, “It is, however, important to note that taking this more speculative type of investor out of the market could be better for the longer-term real estate picture. We expect that any moderation in prices would ease the transition from an investor-driven market to an end-user market. In our opinion, this would lead to a market driven less by liquidity levels and more by the already strong supply and demand fundamentals.”