The global financial crisis and the corresponding housing market crash sent shock waves throughout the world that are still being felt today. The United Arab Emirates (UAE) known for its luxury hotels, villas and lifestyle, fared better than most. After a drop in prices and sales, 2011 was a strong year for residential real estate in both sales and rentals. While commercial real estate continued to drop in 2011 and 2012 there are signs that residential real estate, especially luxury homes, will stay steady or grow through the rest of 2012 and into 2013, especially in Dubai.
After dropping more than 60 percent from their 2008 highs, Knight Frank Global Cities Index reports that Dubai houses and markets rose again in the second Quarter of 2012 nearly two percent and 1.8% across UAE. In the last six months prices have increased 5.6% and total sales of houses and real estate have increased 15 percent in the second quarter. Luxury homes certainly were a contributing factor in this, with villa sales increasing 21% compared to last year, compared to just 1% for apartments according to Jones Lang LaSalle a property consulting company. This increase in residential luxury real estate coincides with an increase in foreign investment, increased travel possibly due to the Arab Spring, and resurgence in the luxury consumer goods market.
The jump in prices has returned developer confidence and real estate construction has returned to Dubai’s surrounding areas and the emirate as a whole. The already established luxury communities as well as surrounding areas plan to see an increase in real estate construction and sales. The Palm Jumeirah, the manmade island, along with Emaar’s Downtown is likely areas of growth in luxury real estate as many high income individuals look to build safe havens during the Arab Spring. Over 350,000 new residential real estate properties are expected to be built in the emirate, and while this will depress the prices, the increase in immigration and foreign investment should offset that and the increased demand should keep prices rising.
The global real estate market is finally readjusting itself after a massive drop off in 2008 during the global financial meltdown, Dubai, with its deserved reputation for exorbitant luxury and high incomes is uniquely equipped to recover and perhaps even grow during this transition phase of the global economy. The residential real estate market already has, having started its recovery in 2011 and consistently improving every quarter. Above all, rich people tend to stay rich, rich people tend to want new things and The United Arab Emirates if full of high worth individuals who are visiting and living there, so long as those three statements still ring true the real estate market in Dubai should be fairly strong.
Kathleen Hubert is a blogger who writes on a variety of different sites. Check out more of her work at modularhomes.org