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Dubai real estate brokers confirm property price falls of up to 70%

Freehold property prices in Dubai have plunged by as much as 70% since March of last year, real estate agents say but expect them to bottom out in another six months.

The disclosures indicate that those involved at grass roots level have seen prices fall severely and although there are variations, the steep decline appears universal.

'We have seen prices plummet across Dubai's property sector by 50 to 70% to the level of 2005. We expect the plunge to continue for the next six to eight months to bring prices down to their original level five years ago,' said Mohammed Khan, Managing Director of New World Capital, a Dubai-based real estate brokerage.

Dubai's property prices, propelled by a swelling expatriate population, speculative investments and rising construction costs, surged by 25% in the first half of 2008 over the first half of 2007.

But because of the global downturn a drastic decline set in during the last quarter of 2008 and first quarter of this year, especially for higher priced property. The price decline has been less severe for lower cost developments but still considerable.

Khan and other property brokers said that the current outlook for the property market was starker than the latest study by investment bank EFG-Hermes, which said on Saturday that the Dubai market had entered a period of correction after a sustained period of buoyant activity. The bank forecast overall price declines of 50 to 60% from peak prices in 2008.

A drop in residential as well as commercial rents is also evident, brokers said. The slide has been more pronounced in areas of New Dubai, where rents have fallen by up to 40%. A. Najeeb, Sales Manager of MS International Property, said apartment rents in the more established area of Al Ghusais were also declining fast.

More drastic has been the decline in commercial property rents, almost 60% across Dubai. 'We are expecting further rent drop by May or June when a lot of expatriate families will be going back,' Najeeb added.

Hafiz Sohail Ijaza, Property Consultant at Wood Bridge Real Estate, expects the property market will remain balanced in terms of supply and demand through 2009. 'We don't see a recovery for the off-plan property sector till 2010,' he said.

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