Property prices in the United Arab Emirates will fall another 15 to 20% and won't bottom out until the end of the year, according to analysts from a major bank.
What concerns analysts from Deutsche Bank is the number of expatriate workers that have left the UAE and the amount of new units that are due to come onto the market.
Deutsche estimates that Dubai prices have lost 50% of their value since peaking in August last year, while the Abu Dhabi market has come down 30% from previous highs.
'We expect UAE property prices to decline another 15 to 20% from current levels and only expect a bottom by year end,' a team of analysts wrote in a research note.
They also said that the outlook is cautious despite signs of stabilisation because of the limited number of transactions and a continued decline in rents.
UBS is even gloomier. Property prices in Dubai will have fallen another 40% by the end of 2010 when one in three homes will be vacant, it said in a report.
'From our vantage point we think we're still relatively early in the cycle. We believe the fundamentals are weakening as we speak,' said Saud Masud, a UBS analyst.
Although there may be some pent up demand there is also a significant amount of new supply set to enter the market this year and there are doubts as to where the new demand is going to come from.
'I think what we have to ask ourselves is: what is the fundamental, underlying demand? Is there any net new demand that will stabilise the market?' he added.
Analysts currently estimate a vacancy rate in Dubai of 10 to 20%. Adding 30,000 new units to the market by the end of 2010 would translate into another 10% of vacancies.
The UBS report also mentioned a declining expatriate population. It expects a decrease of 8% this year and 2% next year.
