The total value of apartment and villa sales in Dubai in October went up by more than 50% compared with September, according to the emirate’s Land Department.
While some may take the news with a pinch of salt, officials say it is a sign that the property market is stabilising. However, prices are still way off their peak values of a year ago.
The figures show that the value of apartment sales increased 34% compared with September and villa deals rose by nearly 70% although the Land Department did not give price data.
According though to Hamad Buamin, director general of the Dubai Chamber of Commerce and Industry, it represents a sales boost and is the start of an upturn in the emirate’s battered real estate sector.
He said the rise ‘was due essentially to the fact that demand has risen owing to increased expectations about job security, and ease of access to finance’.
Many analysts have, however, pointed out in recent weeks unless there is a sudden influx of people into Dubai there is going to be a large oversupply of property in the next couple of years due to new units coming onto the market.
In neighbouring Abu Dhabi, the authorities have announced that they are limiting construction in the short term to avoid a property glut although the long term expectation is a need for many more units. The Emirate’s Plan 2030, announced in 2007, predicts that the population will increase to as much as 5 million by 2030 from an estimated 1.6 million in 2008.
Not everyone though thinks it is a good idea. Limiting supply will increase the cost of housing and could be seen as an additional tax on companies, according to Jesse Downs, director of research and advisory services at Dubai-based Landmark Advisory. ‘It could potentially curb job growth, which has a residual effect on the real estate market,’ downs explained.
A spokesman for Abu Dhabi’s Urban planning council said it would not mean with holding units or regulating prices. ‘It will be focused on planning and projects that don’t fit won’t be given permission,’ he declared.