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New report warns of Dubai property bubble risk
| Published: | 31 Jul at 6 PM |
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Dubai’s latest residential review noted that rents rose by 20 per cent over the last 12 months and warned of another property bubble.
The revelations in the latest Dubai property review are causing concern over yet another property bubble in the region. Apartment rents soared year-on-year by 21 per cent, dragging the average overall rent increase to 20 per cent.
Those renting villas fared better with just a 10 per cent increase, but the impact of rent rises on Dubai’s cost of living is worrying for expats working in the city as it restricts their choice of districts. The sharpest rises took place in Sports City, Business Bay, The Greens, International City and Motor City, and was at its strongest from April through to early July this year.
Fashionable areas close to Dubai's commercial heart are seeing rental inflation of up to 50 per cent, driving many expats to search for less convenient but cheaper accommodation. However, rents are rising in formerly more affordable districts, hurting cost-conscious expats on short-stay contracts as well as long-stay workers relocating to save money.
As a result, sales of apartments and villas are enjoying an upswing, and growth in the property market is on a rising trend of 5 per cent quarter on quarter in spite of government attempts to tighten the flow of mortgage funds. The government is also concerned about property speculation in general.
Real estate professionals consider that the supply of new-build property is not at present commensurate with demand, thus pushing up prices in popular districts. Agents believe that the balance between supply and demand should be monitored carefully in order to prevent speculation resulting in a property bubble.
The revelations in the latest Dubai property review are causing concern over yet another property bubble in the region. Apartment rents soared year-on-year by 21 per cent, dragging the average overall rent increase to 20 per cent.
Those renting villas fared better with just a 10 per cent increase, but the impact of rent rises on Dubai’s cost of living is worrying for expats working in the city as it restricts their choice of districts. The sharpest rises took place in Sports City, Business Bay, The Greens, International City and Motor City, and was at its strongest from April through to early July this year.
Fashionable areas close to Dubai's commercial heart are seeing rental inflation of up to 50 per cent, driving many expats to search for less convenient but cheaper accommodation. However, rents are rising in formerly more affordable districts, hurting cost-conscious expats on short-stay contracts as well as long-stay workers relocating to save money.
As a result, sales of apartments and villas are enjoying an upswing, and growth in the property market is on a rising trend of 5 per cent quarter on quarter in spite of government attempts to tighten the flow of mortgage funds. The government is also concerned about property speculation in general.
Real estate professionals consider that the supply of new-build property is not at present commensurate with demand, thus pushing up prices in popular districts. Agents believe that the balance between supply and demand should be monitored carefully in order to prevent speculation resulting in a property bubble.
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