26,465 apartments, 1,179 villas sold in Dubai in 2011

Posted on 02 January 2012 with 1 comment from readers

The Dubai Land Department has reported a 20 per cent increase in the value of transactions it recorded in 2011 over 2010, with 26,465 apartments and 1,179 villas sold in the year.

Mortgage activity was up 12 per cent but still a very low for a city of two million inhabitants. There were just 3,315 mortgages granted worth a total of $18.8 billion.

Re-mortgages

A lot of this was re-mortgaging. Out of $11.7 billion in apartment sales only a quarter required mortgages worth $4 billion, while a half of villa transactions involved mortgages worth a total of $550 million.

However, for anybody who thinks the Dubai real estate market is still locked in a state of shock from the real estate crash of just over three years ago this information might come as a surprise.

It also puts the current oversupply into perspective. Dubizzle.com lists 24,154 residential properties for sale in Dubai – less than a year’s supply at current levels of demand.

The Dubai real estate sector is clearly very much alive and kicking and still mainly a cash business. The potential for borrowed money to push prices higher at some stage in the future is very much there.

In the meantime those who scoff at the notion of an active property market in Dubai should read these statistics and realize that they are talking nonsense. The Dubai freehold property revolution that began almost a decade ago with a nod from the ruler has left a legacy of a modern real estate infrastructure that is filling up.

How long will it be before the price rises seen in certain sections of the villa market in 2011 begin to occur in the most popular apartment developments?

Oversupply?

That might be a long shot because there is still plenty of new supply coming into the market. But the demand for it certainly seems to be there at the moment.

Those expatriates from multinationals and wealthy individuals fleeing the Arab Spring for a new life in Dubai are also buying property in one of the few cities in the Gulf where foreigners can own real estate.

Real estate and construction activity in Dubai is still well below the boom times but this is a recovering sector.