Over the 16 weeks leading up to August 26, Dubai saw a bullish market driven by property. On Sunday August 12, Nakheel announced that demand was expected to remain high for properties on the island. The Dubai developer made the statement as it announced the sale of a 305,704sqft plot for Dh1,302 ($520) per square foot to an unidentified local investor.
Nakheel went on to state that the value of residential plots ion the Palm - particularly on Frond N - had increased by 30 per cent in the past year. 'We have seen a very healthy demand in the first half of 2012, and this looks set to continue for the year,' Nakheel said, quoting a spokesman.
To date, Nakheel has sold over 80 of the 105 plots on the Palm, which have a total sales value of over Dh657 million. Earlier this year, a single 5, 574sqm plot was sold by Nakheel for Dh87 million.
In the same statement, Nakheel's spokesman explained that the company believed that 'land and properties on Palm Jumeirah are in big demand thanks to its unique design, location and ever-increasing range of amenities.'
Figures releases by the Dubai government showed that Indian citizens were the main buyers of luxury apartments and commercial space in the Burj Khalifa during the first half of 2012, spending $222 million, while Iranians came in second, spending $128 million.
Dubai has reovered from the collapse of a property bubble in 2008 that cut home prices by more than 60% from their peak. However, Dubai now functions as a safe haven for regional investors as London does in Europe, according to Graham Stock, strategist at frontier fund manager Insparo in London, who added that 'we see Dubai real estate performing well over the medium term,' and that 'safe-haven' investment was drinving up real estate prices. In turn, this is buoying up Dubai's stock market.
Farouk Soussa, Middle East economist at Citgroup in Dubai, commented on August 9 that 'perceptions are that the real estate market has bottomed out. If you are looking for a more long-term investment, the market in Dubai seems reasonable. A lot of people in the Middle East and Russia, Pakistan, the Asian sub-continent are looking for a safe haven.'
This 'safe haven effect' could be driving Dubai's current property expansion - in 201, real estate contributed approximately 13% of Dubai's GDP, almost as high a contribution as manufacturing.
In July of this year, Nakheel announced its half-year financial results, declaring a net profit of Dh767 million, an increase of 36.5% over the Dh562 million it made in the same period last year. The company has also recently completed a restructuring exercise.
During Sunday, August 26, however, Dubai's index slipped 0.9%, which Amer Khan, fund manager at Shuaa Asset Management, ascribed to Eid interfering with normal trading patterns. 'We're not back to post-Eid trading levels yet,' Mr. Khan told Reuters. 'Some of the names in Dubai were stretched from a technical point of view and were looking to correct... it's better that names like Emaar correct on low volumes rather than when people are back.'
The negative 14-day divergence at the recent high suggests that the market may flag temporarily, but will resume its upswing shortly, according to analysts.
In the real estate letting and purchase market at the apartment level, there has been a rally of over 5% in the second quarter compared with 6 months ago, according to Frank Knight estate agents.
Most Popular Slideshows
- Top Ten Most Peaceful Countries in the World in 2013 [SLIDESHOW]
- Kim Kardashian Baby Girl: Suggested Ways Kanye West’s New Born Can Earn Money to Keep Up with the Kardashians [PHOTOS]
- 'Game of Thrones'-like Film, 'The Queen of the Tearling,' Casts Emma Watson as Lead Star and Exec Producer [PHOTOS]
- Asus Transformer Infinity Pad, Sony Vaio Duo, Toshiba Satellite, A Look at Intel's Haswell 4th Generation Ultrabooks and Notebooks [Photos]