Property prices start falling in Dubai and Abu Dhabi
Property sales in Dubai and Abu Dhabi have stalled and resale prices have dropped for the first time due to the global financial crisis, according to real estate professionals.
Off-plan sales have been the hardest hit as speculators struggle to meet instalment plans due to difficulties finding finance. But they are finding it hard to sell on their properties because potential buyers are also finding it more difficult to secure loans.
'It has been going on for a week now. I have seen prices going down about 10% everywhere, even in Dubai Marina and Downtown Burj Dubai,' said Khaled Elqassim, the sales manager at Dubai-based property broker AAA.
'Pretty much all the secondary market is trading at less than it was before the financial crisis,' said Karen Lay, the marketing manager at LLJ Properties in Abu Dhabi.
The situation is hardest for speculators who secured finance only for one or two instalments, sometimes through personal loans, hoping to sell at a profit. They are now dropping their asking prices.
'If they can't afford the next payment and can't sell the property they invested in, they might find themselves in trouble,' said Walter Hart, the managing director of Humberts International.
Many property professionals had expected prices to rise substantially after Cityscape Dubai, the world's largest real estate investment and development event, at the beginning of the month, but instead many agents' telephones have gone unusually quiet.
'Nobody is interested in off-plan any more. Our phones are quiet most of the time. We haven't felt the Cityscape effect,' added Mr Elqassim.
Usually agents sell around 12 units a month but some are barely managing to sell 10 or 12 at present. Developers offering new properties directly to investors have not yet reduced their prices but some believe it is bound to happen soon as prices on re-sales fall.
Prices in Dubai are falling in many different areas including Downtown Burj Dubai, plus some projects in Dubailand and Al Furjan. In Abu Dhabi prices are going down Building Material City and the Al Reef development.
But overall Dubai is still regarded as an attractive place. 'People who are coming here for new opportunities all need to live somewhere,' said Vincent Easton, the head of sales at Sherwoods.
Andrew Covill, the head of sales at Abu Dhabi-based LLJ Properties, said some people are not really informed of the situation and think they need to sell. 'Now is not a time to sell, it's a time to invest for the future. There are fantastic deals out there. There is more choice for the buyers,' he explained.