Dubai best performing realty in the Middle East

New research by Knight Frank revealed 25 to 35 per cent of purchases are mortgage financed in Dubai. — AFP

Dubai has got the status of the best performing luxury real estate market in the Middle East, property consultancy Knight Frank revealed on Wednesday in its latest research.

Dubai’s 6.3 per cent annual price growth of luxury homes is also slightly better than the global average recorded during the first half of the year by the latest Prime Global Cities Index by Knight Frank.

Dubai was ranked the 13th best performing real estate market tracked by the property consultancy. The mortgage cap and doubling of transfer fees at the end of 2013 in the Emirate influenced buyer activity more than forecast.

New research by Knight Frank revealed 25 to 35 per cent of purchases are mortgage financed in the Emirate, more than previously thought. However, with new supply at the prime level looking limited over the next 18 months the consultancy firm expects prices in Dubai to strengthen in the remainder of 2014.

Globally, prime residential prices across the index’s 32 cities rose by 6.2 per cent on average in the year to June 2014. Of the 32 prime residential markets tracked by the index, 27 recorded positive annual price growth in the year to June 2014, up from 21 a year earlier.

However, the index’s annual increase in the year to June is above the long-run average of 4.6 per cent recorded since Lehman’s collapse in the third quarter of 2008, underlining the extent to which prime property has become a favoured asset class globally.

Jakarta and Dublin stand out due to their stellar performances, ending the year to June 27.3 per cent and 23.5 per cent higher respectively in the index. However, in both cases the rate of growth has slowed in the second quarter.

“In Dublin’s case, the rate of growth slowed from 5.6 per cent in the first quarter to 2.1 per cent in the second. However, given Ireland’s improving economic landscape and the expiry of Ireland’s capital gains tax incentive at the end of 2014, we expect prime prices will continue their upward trajectory in the second half of the year,” Knight Frank said in a statement.

The consultancy noted last quarter the improving performance of luxury homes in North America. This trend has continued in the second quarter with New York, Los Angeles, Miami and San Francisco all recording double-digit annual growth in the 12 months to June, placing them all in the top 10 rankings.

With the gradual withdrawal of stimulus measures in the US and the UK, the prospect of rising interest rates and the continual enforcement of cooling measures across much of Asia, it would be logical to assume the index’s performance would be weakening.

— abdulbasit@khaleejtimes.com