Prices in Dubai reaching bottom
The property market in Dubai has undergone a substantial drop in the last few months offering excellent investment possibilities, according to the latest research.
Residential rents fell 23% in the first quarter, with Discovery Gardens posting the biggest drop, while prime office rents declined 18%, according to the analysis from CB Richard Ellis.
Both off plan and finished properties witnessed a sharp drop in sale prices over the last quarter as the number of transactions fell by 60% from the corresponding period last year.
The fall in rents was particularly steep in Nakheel's Discovery Gardens development, where the average rent for studios and one bedroom apartments fell by 28%.
The exit of speculators from the market would see further interest from real time investors/end users and investment funds entering the market during the rest of the year with the focus on properties which are ready to occupy or expected to enter the market over the next 12 months.
'In some of the developments prices have already bottomed out, providing excellent investment opportunities for investors,' said analyst Matt Green.
Many projects currently due to be completed this year are likely to be further delayed and pushed back into next year, the commercial property consultant said. Developers of off plan properties have revised payment plans and in a few cases their prices in order to retain a steady flow of funds for their developments.
In the commercial sector prime office rents in Dubai fell by around 18% on the quarter. Secondary locations with Grade A office buildings, mainly in the freehold locations of Jumeirah Lakes Towers and TECOM, are experiencing a sharp decline in lease and occupancy rates, the research indicates.
The drop in demand for commercial and rental space, following the decline in an expatriate workforce, will have a significant impact on the lease and occupancy rates in all areas of Dubai throughout 2009, it predicts.
A new rental index for Dubai to be published this week is expected to a 30% fall in rents since March for Palm Jumeirah villas and other residential hotspots in Dubai such as apartments in Jumeirah Beach Residence and townhouses in the Springs will show rental falls of 8%.