Dubai property prices rocket, with rents up 17 per cent in 2012

The cost of buying a villa in Dubai rose by the highest rate in four years, with further increases expected over the coming months.

DUBAI, UNITED ARAB EMIRATES, Feb 22: View of the villas in the Springs and Meadows in Dubai. (Pawan Singh / The National) For Stock.

The cost of buying and renting accommodation in Dubai rocketed last year, with villa sale prices up 23 per cent and further increases expected during the coming months.

According to Asteco, the cost of buying a villa in Dubai rose by the highest rate in four years, as the property market began to recover from the global financial crisis.

Apartment prices rose by 14 per cent, said the property services firm, while rental costs increased by an average of 17 per cent.

Asteco said that the price and volume increases were highest during the second half of the year, with sales prices for apartments and villas rising by 9 per cent during the final three months of the year alone.

Villa price increases were highest in the Springs district, where values rose 38 per cent to Dh9,700 (US$2,640) per square metre, followed by Jumeirah Islands - where prices increased 28 per cent to Dh12,400 per square metre - and the Arabian Ranches, where prices rose 27 per cent to Dh10,250 per square metre.

Prices for apartments rose the most at Palm Jumeirah, where values jumped 27 per cent to Dh15,100 per square metre. This was followed by The Greens, where apartment values increased 23 per cent to Dh10,250 per square metre and Downtown Dubai, which recorded an 18 per cent increase, rising to Dh14,000 per square metre.

John Stevens, the managing director at Asteco, a property management company, predicted that the sales market was set for further growth this year."The recent clarification by the UAE Central Bank that it will not impose any immediate loan-to-value caps on UAE banks, suggests that existing LTV [loan-tovalue] ratios are likely to remain unchanged, in which case Asteco forecasts that the sales market will enjoy continued growth in 2013," he said.

Residential rents also increased significantly in the final quarter of last year. According to Asteco, prices in all researched areas apart from International City increased by an average of 7 per cent for apartments and 5 per cent for villas between October and December.

The highest growth rates year-on-year for villas were recorded in the Springs, where rent on a three-bedroom villa now costs Dh140,000 a year, a 27 per cent increase on 2011. Rents for villas in Arabian Ranches rose 25 per cent to Dh155,000 a year for a three-bedroom house. The most expensive area remains The Palm Jumeirah, where the annual rent on a three-bedroom villa stands at Dh325,000.

Apartment rents increased the most in Discovery Gardens, with a 23 per cent increase to Dh45,000 a year for a one-bedroom flat.

There were similar increases on rented apartments in Downtown Dubai, with a one-bedroom flat now costing Dh80,000 a year. Meanwhile rents for flats in International City rose by just 6 per cent, putting a one-bedroom flat at Dh24,000 a year.

"If demand continues, we expect to see a shift in the market from being predominantly tenant-led to one controlled by landlords, especially in quality, well-managed and established developments," said Mr Stevens.

Office rents in Dubai improved little last year.