Colliers International, the global real estate consultancy, today launched its Q2 2008 International House Price Index for Dubai.
The annual overall growth between Q2 2007 and Q2 2008 was 76% representing a growth from 117 to 206 points on the underlying index. The quarterly overall growth rate slowed from 42% in Q1 2008 to 16% in Q2 2008 representing an increase from 178 to 206 points on the underlying index.
This average price increase was significantly high when compared to other major international cities over the same period. The index shows that prices increased across all market sectors covered which include apartments, villas and townhouses. The report also notes that demand for residential property mortgages, an indicator of the demand for property, was very strong and increased significantly from the previous quarter. This increase in demand caused prices to rise as supply remained short.
Ian Albert, Colliers Regional Director said: 'While our research shows that overall growth has slowed from 42% in the first quarter of 2008 to 16% in the second quarter of 2008, it is worth noting that overall price growth still occurred across all residential sectors. If you consider the performance of other global cities over the same period, Dubai offered attractive returns comparative to these markets. Looking forward to future quarters we expect a return to fundamentals as the demand-supply dynamic moves towards equilibrium.'
The HPI report also highlights factors that Colliers believes have contributed to the increase in prices during this period. They include: projects at or near handover appear to enjoy a spike in prices; increasing construction costs; rising inflation; increasing residential property rents; erosion of the U.A.E currency value relative to other world currencies; continued real GDP growth attracting more workers to the city; competitive interest rates and increased availability of mortgages; increasing residential rental rates making ownership more appealing and cost-effective for residents.
