Dubai land values have surged by 1,000%
The value of property units in the Dubai real estate market are maintaining an upward trajectory, according to the Government of Dubai Land Department, a fact that has become a hot topic for conversation among market experts trying to trace the causes of the trend.
Some have attributed the skyrocketing property prices to speculation, while others believe that several interlinked factors appear to be involved, including the investor-friendly legal infrastructure in Dubai, and the emirate's surplus liquidity and economic competitiveness, all of which are expected to contribute, along with many other factors, to sustaining the real estate boom for another decade.
Commenting on the issue, Mr. Ali Fakhruddin, Director of Fakhruddin Properties, one of the UAE's leading real estate developers, said:
'According to recent statistics, over 860,000 residential units have either already been handed over or will be handed over to their owners in the coming two years. However, this will not halt the increasing sales or rental values of property units, as the booming market remains open for investors and expatriates. Property market analysts anticipate further growth in land value in Dubai, following the 1,000% growth seen since the beginning of the boom and further growth anticipated.'
Fakhruddin, whose company is developing projects in Dubai and Ajman, added, 'Dubai's leading position as a regional business hub has significantly contributed to rising levels of speculation in the property market. Nowadays, $1m is not enough to purchase a flat in a prime location such as Dubai Marina, where the average price for an apartment is double that, at around Dhs2,000 per square foot, and subject to further increases. And an apartment at the Palm would set you back around Dhs3,000 per square foot, while you will pay approximately Dhs1,000 per square foot at International City, Dhs2,000 per square foot at the Dubai Marina, and Dhs7,500 per square foot for residential units at the Burj Dubai - a price that is expected to increase threefold by the handover of the project.'
The total value of land transactions in Dubai has been increase constantly since 2006, reaching Dhs111.41bn by the end of 2007, a 70% increase as compared to the figures from 2006. The total value of sales and mortgages grew by 142% and 40%, respectively, from 2006 to 2007.
The first quarter of 2008 saw the total value of land transactions in Dubai peaking at Dhs65bn, a 441% increase as compared to the corresponding period in 2006and 2007, while the total value of mortgages fell to half-levels as a result of the need for liquidity to be injected into different investment channels.
