Property prices in Dubai are definitely not high, or low by any means. It is based on individual’s perception and choice of location. The reality is that property price in Dubai is higher than cities ranked between 26 and 93, but much lower than those ranked between 1 and 25 says Rizwan Sajan.
A good number of people think that property prices in Dubai are too high. I keep hearing this quite often. Although terms ‘high’ or ‘low’ are relative, however, this is far from true.
Property prices in Dubai are definitely not cheap – or low – by any means. However, one has to look at the city’s relative status as a global hub, a business and financial centre, in line with a like-for-like comparison. In terms of connectivity, not other city is better connected to the rest of the world than Dubai.
So, price comparison should be made amongst such cities that match the status of Dubai, such as London, New York, Tokyo, Hong Kong and Singapore. If one looks at property prices in these cities, Dubai comes at the bottom of the list.
Global Property Guide prepared a list of the world’s most expensive cities based on the price of properties per square metres in which Dubai ranks 25th among 93 cities.
It might surprise many people that house prices in Dubai per square metres are less than half of what they are in Mumbai, India, according to the Global Property Guide. Property prices in Dubai are also much lower than in Hong Kong, Singapore, London, New York, Helsinki and Dublin.
Talk of property prices being ‘very high’ or ‘low’ is based on individual perceptions and not on reality. The reality is that property price in Dubai is higher than those cities ranked between 26 and 93, but much lower than those ranked between 1 and 25.
While talking about property prices, one tends to forget the most important thing – location – that determines the price of the asset per square metre. So, price of an apartment at the International City is drastically lower compared to that at the Burj District or Dubai Marina.
Even across both sides of Sheikh Zayed Road, prices of apartments differ between Dubai Marina and Jumeirah Lake Estates due to one area’s close proximity to water and the marina.
Besides, price or value of a property also varies due to the demand and supply situation. An apartment that is priced at Dh1 million during recession, might had a price of Dh1.5 million during the height of the property boom. It’s the same apartment – but two different prices separated by the market dynamics.
So, property value and prices are quite relative terms. What is ‘cheap’, could be ‘expensive’ and what is perceived to be a ‘good buy’ could turn to be a ‘bad investment’ – depending on the timing of the investment. One has to make the purchase at the right time.
When it comes to investment in property, hitting the bull’s eye is not enough. One has to also look at the timing of hitting the bull’s eye – it has to be the right time. Otherwise, the right investment could turn into a ‘worse nightmare’!
Coming back to the current status of property prices in Dubai, there is no denying that the prices are on the decline since last year, simply due to the fact that there are a less number of buyers in the market.
After the unsustainable growth surge of the last two years, Dubai’s housing market is now slowing sharply, and the same is true in Abu Dhabi. During the year to April 2015, Dubai’s all-residential property price index (RPPI) fell by 2.8 per cent, the first month of y-o-y decline since March 2012 and in sharp contrast with the spectacular 37.5 per cent surge during the same period last year, based on latest figures released by Reidin.com. When adjusted for inflation, Dubai house prices actually dropped 6.8 per cent over the same period, a report said.
Dubai’s property market has been one of the world’s most volatile. Dubai saw one of the world’s worst housing crashes with house prices plunging 53% from Q3 2008 to Q3 2011. The housing market started to recover in Q2 2012 with double-digit house price increases since then.
The current pricing provides a good opportunity for buyers – both end-users and investors. Needless to say, if the prices continue to slide then the level of opportunity will increase.
So, if anyone wants to know whether this is the right time to buy, one could wait to see if prices decline further – till the lowest point. The best time to buy property or equity is when the prices hit the rock bottom – just as they hit the lowest point before recovering.
One’s greed might encourage one to wait for the last minute – although one seldom knows when prices hit the bottom of the curve. If you are not greedy, then the right time to buy or invest in property is ‘now’.
Those who have investable savings, start looking at the property landscape for apartments of villas to match their budget for investment. With oil and gold trading at low prices, the global economy is also facing challenges.
So, a very interesting time has come about for investors, especially those looking at the real estate market. Dubai leads the region’s developed cities for attracting investment. The time to act is now!