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Dubai home prices rise 5% in third quarter |
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12/4/2008 11:01:19 AM |
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Value of residential properties in Dubai jumped by five per cent in the third quarter 2008 compared to the second quarter, according to Colliers International.
The average price for completed residential properties rose to Dh1,913 per square foot in the third quarter from Dh1,784 in the second quarter, a seven per cent rise.
According to the Colliers' House Price Index for third quarter, these price increases have been driven due to price increases in The Springs, Jumeirah Beach Residence, Arabian Ranches and The Palm Jumeirah.
Average rates per square foot under construction property declined slightly by 0.4 per cent to reach Dh1,901 in third quarter compared to Dh1,908 in the second quarter.
Property prices in Dubai continued to increase in the third quarter. The index rose 10 points to reach 216 basis points, a five per cent increase from second quarter of 2008. The growth rate for this quarter was slower than the previous quarter, however the index growth in the third quarter was higher when compared to third quarter of 2007 when it increased only by two per cent.
The Colliers International House Price Index was established in January 2008 by Colliers International UAE and five banks and financial institutions in Dubai – HSBC Bank, Middle East Limited, Barclays Bank, Amlak Finance, Dubai Islamic Bank, and EmiratesNBD.
Colliers International has used the weighted average method to construct the overall Index, based on 14 developments in Dubai. Weighting has been apportioned on the basis of unit type such as apartment, villa or townhouse. Apartments, villas and townhouses have been weighted at 55 per cent, 34 per cent and 11 per cent, respectively, in order to provide an accurate representation of market trends.
In the second quarter of 2008, prices of residential property under construction were higher than completed properties, driven by strong speculative activities in the off-plan sector. However in the third quarter, the average per square foot rate for completed properties and those under construction were almost at the same level.
Demand for completed properties has driven prices upwards and made the rates for completed properties modestly higher by 0.6 per cent than under construction properties. "In order to establish the true nature of property transactions within Dubai, we felt it was necessary to separate the transactions relative to properties which are completed from those under construction," said the report.
To provide further clarification, the report said, they have separated these transactions again by removing the Downtown Burj Dubai development from the index as it was felt that this high performance area had a skewing effect on the index results as a whole.
Excluding Downtown Burj Dubai development from the index, the average rate per square foot for completed properties increased nine per cent from Dh1,679 in the second quarter to reach Dh1,838 in the third quarter.
The average rate per square foot for properties under construction increased six per cent to reach Dh1,483 in the third quarter.
Excluding this development from the index led to a reduction in the average rates per square foot for both completed and uncompleted properties. This was particularly evident in prices of properties under construction, where it dropped radically from Dh1,901 to Dh1,483. The spike in average rates per square foot caused by the Downtown Burj Dubai development is clearly significant and it should be noted that the performance of this development substantially skews the entire index, said the report. |
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Source: Business24-7.ae |
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