New report suggests increase in Dubai's freehold property rate
A report published by Reidin-GCP has found that the average of price of purchasing land in the freehold areas of Dubai has increased by 13 percent in the past six months.
The report added that while the rate of land transactions have been increasing in since 2016, it has only started to appreciate this year.
The report also found that returns on land transactional activity has, in fact, outperformed that of residential units by more than 50 percent for the past 14 years.
A trend, that the report suggests will continue to gain momentum until the Expo 2020.
The price of land in freehold areas such as Jebel Ali, the Palm Island, The World, Dubai Marina, Emirates Hills and Al Barsha is also set to increase as the city moves closer to hosting the Expo.
The news of the increase in rates of freehold property comes just days after several reports have suggested a decline in Dubai’s property market.
According to an Asteco report, rents have dropped by 2 percent quarter-on-quarter.
“Market conditions have served to strengthen the negotiating position of many residential and commercial tenants. Many existing tenants have taken this opportunity to renegotiate their lease terms [on expiry of contracts], or when faced with intransigent landlords, opted to relocate in search of more attractive terms,” said John Stevens, Managing Director, Asteco.
Villa rentals have also seen a decline in price in the second quarter, with Arabian Ranches dropping by 13 percent and the Springs by 16 percent.
Similarly, a recent report published by Propertyfinder.ae found that rental values have dropped in both Dubai and Abu Dhabi.
According to the report, Downtown Dubai experienced the greatest decline at 6.7 percent.
Speaking on the drop, Propertyfinder’s chief commercial officer, Lukman Hajje said: “The report confirms what most have suspected; prices continue to ease, both in sales and rentals across most communities in the UAE. There are a number of elements at play [including] high levels of construction in the lead up to 2020.”
Keeping Dubai’s current property market in mind, Reidin has advised all prospective investors to either buy plots of freehold land or invest in listed developers with ample land.
“We opine as land prices continue to rise, the balance sheet of these companies will expand affecting their stock price. Investors wanting to capitalise on land prices would do well by currently using proxy means through the capital markets of real estate companies that have a large land bank,” the report read.