Dubai has had the largest rise in annual property values globally, with an increase of 21.7 percent, according to London-based property consultants Knight Frank.
Dubai’s annual growth figure was closely followed by Hong Kong and Taiwan, at 19.1 percent and 15.4 percent respectively.
“Confidence is high, and people expect things to continue getting better,” said Khawar Khan, Middle East Research Manager in Knight Frank’s Dubai office.
Khan added that most of Dubai’s house price increases are offsetting the “pretty significant” correction that property values underwent in the financial crisis of 2008 to 2009.
However, the rapid rise in values experienced in Dubai may be too sudden, according to a report released earlier this year, which stated that the market shows “increasing signs of overheating” as sales and rental prices rise “too quickly.”
Khan played down fears of the marketing overheating, noting that Dubai’s house prices are “still about 30 to 40 percent off the previous peak, so there’s certainly room for house prices to continue growing.”
While house prices will continue to rise, the market will begin to slow as it reaches previous pre-recession levels, according to Khan, although he believes that higher investor confidence and more government regulation is likely to push further growth.
“Given that there’s still scope for house prices to grow, it’s still a buyers’ market and we suspect that that will probably continue to be the case for months,” added Khan.
Khan notes that in addition to traditional investors in Dubai such as Iranians, Indians and Pakistanis, Europeans are beginning to return to Dubai, attracted by uncertainty back home, brighter job prospects and the allure of a tax-free salary.
“It will be occupiers that will continue to push demand forward,” he said, noting that Dubai’s new buoyant property market is now more sustained by end users rather than the heavily speculation-fuelled pre-recession market.
Knight Frank’s global house price index rose by 2.4 percent in the second quarter of 2013 and by 6. 1 percent over a 12-month period.