Little chance of property recovery in Dubai this year
|Saturday, 25 April 2009|
A recovery in the property market in Dubai is unlikely this year with some analysts predicting further steep falls in real estate prices.
The latest analysis from UBS Bank predicts that house prices in Dubai could plunge by up to 70% from their peak levels in 2008.
Analysts said that the real estate sector in Dubai will face a substantial glut next year while demand will continue to be weak as many of the expatriates who drove the property boom in recent years are losing their jobs and are returning home.
'In our view, we are still in relatively early stages of the property downcycle in UAE, and we believe risk-reward profits are not yet compelling for investors to consider market re-entry, hence, continued price declines are expected,' said UBS.
UBS expects the average house price in Dubai drop to about Dh500 per square foot this year, compared to its peak of Dh1,850 in the fourth quarter of 2008. Prices have already fallen by 25% cent to about Dh1,400 per square foot.
It also predicts a further decline in Dubai's expatriate population which will fall by 8% this year and 2% in 2010. 'We would not be surprised to find Dubai residential vacancy rates reach between 25% and 30% by the end of 2010,' it said in its report.
UBS has also downgraded Emaar Properties, Union Properties and Aldar Properties, saying the UAE's property market fundamentals have weakened in the first quarter of 2009.
It cited existing investors defaulting on payments, insignificant incremental financing for both infrastructure projects and mortgage issuance and an increase in project cancellations
Dubai residential property prices have fallen by up to 42% over the last six months and have further to fall further to fall, according to the latest report Colliers International.
Ian Albert, Colliers' regional director said that speculators had largely quit the Gulf market and debt financing was unavailable, leaving only professional investors who only want nearly complete or income generating property investments.
This story relates to: [SEE ALL]
BOOKMARK THIS PAGE (What is this?)
Search for Properties:
It’s the UK’s strongest asset class, but are all student accommodation properties good investments? This is the comprehensive list of what to watch out for when buying student property.