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October 29, 2014
Recent government measures to curb speculative buying have helped introduce sustainability into the high-performing Dubai property market.
Summary:
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Government regulations have help introduce sustainability to the Dubai property market
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Capital growth in Dubai has been much higher than anywhere else in the world
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Property investors have also seen double-digit rental rises over the past two years
Following the introduction of new lending and buying criteria in Dubai, the pace of growth has become more sustainable.
Masood Ahmed, Head of the International Monetary Fund’s Middle East and Central Asia Department, has told reporters that growth in the Dubai property market has become more sustainable since the emirate’s authorities took steps to limit speculative buying.
“I think all of these [regulations] are little grits of sand in the machine that have helped to slow down that pace, which is good, so we are certainly a little less concerned about that,” said the official.
The pace of growth seen by property investors with assets in Dubai has been unlike that anywhere else in the world. Last month Knight Frank’s Global House Price index revealed that over the 12 months leading to the end of 2014 Q2, property in Dubai had increased in value by 24%. Not only was this the largest growth in the world, it was almost 10 percentage points higher than second placed Nairobi.
The appeal of Dubai as an emerging commercial hub and attractive place to live has led to a significant rise in the population and subsequently, rental returns in Dubai have also increased at an astonishing rate.
Since 2012, 10 consecutive quarters of rate rises saw the average rent in Dubai increase by approximately 41%.
Mr Ahmed added: “If you look at the last few months, I would say that the pace of that property market price increase has moderated quite a lot,” explaining the credit for the sustainability should go to the government.