Dubai is hot property. Dubai is so hot that once again Dubai house prices is the fastest rising in the world.
A 28.5% price growth, year on year, ending September 30, 2013, makes Dubai the No. 1 race horse in the world property market. See Knight Frank’s Global House Price Index.
The Index shows Dubai house prices surging 11.8 per cent in the past 6 months and 4.5 per cent in the last 3 months. Analysts are anticipating that Dubai and the UAE’s property prices will continue rising in the near future, tying this to the new growth prospects of the Emirate winning the rights to host World Expo 2020.
Last year, same quarter, Dubai managed a mere 2 percent price rise, and ranked 23rd in the Global House Price Index, but jumped a whopping 21.7 per cent year-on-year, as investors returned in droves to their favourite property market, in this region and around the world.
In Q3 2009, average Dubai house prices was down a massive 47 per cent, landing at the bottom of the Global Price Index Chart amongst the 42 countries charted. Dubai at that time was really down in the dumps, with massive financial loss and huge economic insolvency. This year Dubai’s housing rebound is impressive to say the least.
What lessons can we learned from the Dubai economic roller coaster? My personal observations are:
1. Rapid growth can cause a country’s economic performance to derail, and in dire cases to default on payment, like the sudden 2008 global financial crisis.
2. The pace of economic growth therefore should be measured and handled responsibly. Rapid, unchecked economic expansion can cause hiccups and insolvencies.
3. Strong economies are usually more resilient. These are the last to go under and the first to recover.
4. The same principles can be applied to property investments. Invest soundly in strong economies, vibrant cities, centres of growth, and regions that are politically stable. Sound principles of investment should be your number 1 guide.
Global banking giants, Goldman Sachs and Standard Chartered have confirmed that Dubai is not experiencing a property bubble and that Dubai’s recent property price rises are backed by fundamentals, and talks of a property bubble are prematured. Improved fundamentals, increased housing regulations, subdued mortgage growth and low off-plan sales make this price rally substantially different from the 2008 scenerio.
In a report, Global Head of Residential Research, Liam Bailey, stipulated that Dubai will see a jump of 10 to 15 per cent in prices in 2014.
Authorship: Zen Tan