UAE Rising Real Estate Prices

Dubai’s reputation as top property spot within the Arab emirates is safe for the time being, according to the results of a new survey carried out by AME Info. The AME Info Buying Property in the UAE survey looked at property buying trends and market expectations from across the region, asking respondents their views on where, why and when to buy and rent in this noted and exciting property hotspot.

While Dubai is undeniably popular thanks to its glamorous reputation, the emirate’s massive marketing hype as it continues to break world records is, for some potential investors, beginning to work against it. Prices in Dubai have been rocketing for some time and show no sign of slowing down, leading many buyers to look for bargains in emirates that have been off the bling radar – up until now. Most purchasers appeared to be biding their time, waiting to see how events in this exceptional and unusual market will pan out as the year comes to an end. Nonetheless, a huge 59.5% are planning to make the leap from rental into buying in the near future, with many prepared to choose off-plan properties, due to the lower costs and limited availability in heavily populated areas.

Buying real estate in Sharjah, Ajman and Abu Dhabi were popular alternatives to the über-popular choice of Dubai, with investors only too aware of the massive added extras available to them by buying just that bit further away from Dubai’s hype. The Abu Dhabi property market has suffered in recent times from seriously lagging behind Dubai in terms of numbers of completed projects and properties but it now seems that it is catching up, and fast, with the result that 22.5% of respondents named it their property-buying destination of choice within the emirates as a whole. Sharjah and Ajman received 14.6% and 11.4% of the vote respectively, while Dubai demonstrated its strong hold with 81.5% of respondents planning on buying there, despite 70% feeling that the emirate is heavily overpriced. The heavily publicized and promoted destination of Ras Al Khaimah scored low as a destination.

The high prices in and around Dubai proved to be a double edged sword for many potential buyers, on the one hand keeping them away from the market altogether (12% fear a property crash), on the other encouraging some to get into the market as soon as possible, in order to take advantage of ever-increasing capital investments and rental yields. A large proportion expressed disillusionment with the current rental yields, deemed by many to be excessively high – and escalating. Many respondents felt that they might as well purchase a property and meet monthly mortgage repayments with money currently spent on high rent.

Clearly an investor’s market right now, property owners in the emirates often own more than one property, the more fortunate owners having entered the market prior to the rapid price increases of recent times. Buying trends were seen to be cleanly split, with over 35% of owners purchasing family homes of three bedrooms or more, and over 42% buying apartments with two bedrooms. Over a quarter of respondents stated that they would also add a one bedroom property to their portfolio. However, following some concerns over whether or not standards of finishing and construction overall justified the exceptionally high prices in the region, a broad spread of respondents suggested that the true investment grade property within the emirates is commercial, not residential, property.

Nonetheless, the booming situation in Dubai is undoubtedly having an increasing effect on surrounding emirates, all keen to grab a slice of the UAE property pie.