Dubai market continues to soar as values in the rest of the world tank

Property prices in Dubai are continuing to defy global trends by rising monthly, a survey by The National has revealed. In 16 major investment zones, the price of villas skyrocketed 76 per cent in the year to last month. Offices were close behind, rising 74 per cent during the same period, while apartments increased 63 per cent, the survey found. According to analysts, property prices should rise further in the coming months, although at a slower pace.

"We are expecting a maximum 35 per cent increase next year, even if you may find a higher increase in some areas," said Sajeer Babu, a property analyst at the National Bank of Abu Dhabi. Vincent Easton, the head of sales at Sherwoods property agency, agreed that any increases would be smaller. "Increases by over 70 per cent over a year, that is not sustainable," he said. "There is currently a strong demand for villas because there are not many coming into the market. You are entering in a supply and demand situation."

Billy Rautenbach, the head of sales at Better Homes, said: "Dubai Marina, for instance, has such little stock on the villas that they are not changing hands. People are not trading them but living there. They are not coming out to the market." The data, provided by six property agents, consultants and a bank, also showed that once a project had been delivered, prices still increased each month, but at a slower pace; the cost of villas at Arabian Ranches, for instance, rose three per cent, while villas and apartments at Dubai Marina increased two per cent.

Office prices have increased faster than apartments over the past year, with record highs in Downtown Burj Dubai and Tecom. "There is an interest in terms of 'coming-close-to-completion' offices because there is also an acute shortage of ready available commercial office space," Mr Easton said. "Dubai's strategic location and strong economic performance has meant many multinational corporations are establishing regional headquarters here," said Aurore Maupou, the director of Dubai property sales at Hamptons International.

On a month-by-month basis, the study showed that prices increased an average of eight per cent for villas and apartments and seven per cent for offices. An increase in the cost of construction has been partly credited for the increase in prices. "Construction costs are going up and most of the contractors are charging this additional cost to the developers, who will pass it on to the customers," Mr Easton said. Other increases are related to affordability, as is the case with International City.