Housing shortage driving up prices

PROJECT DELAYS: EFG-Hermes said a shortage of housing is supporting rising property prices in Dubai. (Getty Images)

Property prices in Dubai have risen as much as 10 percent more than expected this year due to the continued lack of housing supply in the market, EFG-Hermes said on Sunday.

The Egyptian investment bank said in a report residential property prices have jumped 14.4 percent so far in 2008, compared to an expected rise of 5-10 percent for the entire year, according to newswire Bloomberg.

The bank said delays in building homes were supporting high prices, the result of a shortage of contractors and construction materials, as well as rising costs.

The supply of new property "came short of our expectations for a fourth year", Sana Kapadia, an EFG-Hermes, said in the report.

"The supply of new units remains a key determinant of the timing of a potential correction."

EFG-Hermes had previously forecast around 64,000 housing units would be delivered this year, but said in the report this is unlikely to be met.

It said supply is expected to peak in the first half of 2009, with 70,000 units scheduled to come online.

On the severity of a future correction in the property market, EFG-Hermes said the diversion of money to Abu Dhabi, the global economic slowdown and soaring house prices are all factors that could lead to a steeper correction.

The results of a survey published on Sunday by UAE daily The National found house prices have risen every month for the past year, with villa prices up 76 percent in the 12 months ending August, office prices rocketing 74 percent, and apartment prices 63 percent.

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READERS' COMMENTS

Price is not high enough... MAYBE!!!
Posted by JOHN on Saturday 27 September 2008 at 17:11 UAE time


TAKE MY ADVICE: PACK AND GO. ITS GONNA BE EVEN WORSE. WHY? BECAUSE NOBODY WANTS TO LISTEN TO YOU. YOU DON'T LIKE IT YOU CAN GO. ITS NOT ONLY THE HOUSING, ITS SALIK, RTA, MUNICIPALITY, ETISALAT, DU, DEWA, WEAK $ V/s €, HIKE IN PRICE OF OIL, VISA FEES, EDUCATION, CLOTHING, FOOD, MEDICATION, ETC.... YOU DON'T LIKE IT??? NOBODY CARES.

shortage?
Posted by nom on Monday 22 September 2008 at 11:57 UAE time


is arabian business blind! unbelievable! your surveys are way off the chart! what a away to ruin the day.

Rental Prices
Posted by fed up on Monday 22 September 2008 at 10:23 UAE time


The increase in rents and my landlords wish to evict me so his son can live in my present villa (even though there is an empty one in the same small compound) yes he needs my specific villa to move his son into... has come as a blessing in disguise, rents have gone up around an extra 100k in this area, so now I am priced out of the market I will finally leave the country and break the tie after 11 years here, the difficult desicion has been made for me... I now look forward to looking for pastures new and an exciting new challenge, I suggest more people look at this and consider a new strategy and let Dubai take its well earned fall from grace and market correction, the one thing I will be happy about is I moved on before the inevitable bursting bubble..

Affordable housing!
Posted by SR, Dubai on Monday 22 September 2008 at 09:49 UAE time


Yes, there is a shortage of AFFORDABLE housing.

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