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Property prices expected to fall further in Dubai as buyers adopt a wait and see approach

Although prices have been stabilising in recent months they are still around 50% below peak and many potential buyers are hoping for further falls before making a commitment, it would appear.
According to the latest report from Landmark Advisory prices for apartments, villas and commercial property have remained level despite an increase in the supply of units. 'While the number of newly handed over units has increased, the actual inventory, or quantity of units available for sale and lease has decreased during the past year, due to investor sentiment. Most are taking a wait and see approach, especially in the sales market,’ said Jesse Downs, director of research and advisory services.
Those that are buying are pickier and putting more emphasis on location and quality, she added. ‘While product quality is relatively homogenous in many master developments, areas such as Dubai Marina and JLT have a more diverse selection, which makes sale prices prone to greater volatility in the current value-driven market,’ she explained.
The latest analysis from the Kuwait Financial Centre (Markaz) says that an upturn in the property sector is unlikely until more people move to Dubai and population growth is not expected until next year.
It says prices, transactions and rentals have all fallen and will continue to do so in 2010. It singles out rentals as being particularly volatile with the supply of homes continuing to outstrip demand in the short term.
The report also expects property lending to remain flat this year as Dubai banks react to the negotiated settlement of the Dubai World debt standstill.
Things are not much better in others parts of the Gulf. House prices in Riyadh, Jeddah and Al Khobar/Damman in Saudi Arabia fell about 20% in 2009, according to a new report from consultants CB Richard Ellis.
The research company’s latest Saudi Arabian MarketView report predicts that the new mortgage law proposed for the kingdom, which is expected to be introduced later this year, would ‘quickly galvanise the latent mortgage industry into action, stimulating a surge in house buying particularly in the middle income sector’.