Dubai house prices to remain flat until 2010

APPRECIATION SLOWDOWN: Colliers said Dubai house prices will remain flat until 2010. (Getty Images)

House prices in Dubai are expected to remain flat until 2010 following five years of sharp gains, a Colliers International report predicted on Sunday.

Around 140,000 new homes in Dubai are expected to be completed by 2010, adding to an existing stock of around 300,000 units the report said.

Approximately 40 percent are expected to cater to the high income segments.

“We have not seen a drop off in demand [but] we have seen a slow down in value appreciation,” Ian Albert, regional director for Colliers International told reporters.

He added there is "insufficient supply" across all four sectors of real estate; hospitality, residential, office and retail across the whole of the Middle East and North Africa.

The report also predicted a return to fundamentals as investors become increasingly “cautious” as regional real estate markets mature.

The number of speculative buyers is also set to decrease as they look to markets in the US and Europe to snap up bargains as a result of the global credit crunch.

A slowdown in capital value property, decreased liquidity and a move towards a supply and demand equilibrium are already indicating the shift, Albert said.

“[There is a] gradual slowdown in capital value property. Whereas you saw year on year increases of 50-60 percent, now we are moving more towards 5-10 percent.”

He added a decrease in liquidity is also likely to slow down speculative buyers.

“Regional institutional investors will probably be focusing their attention on the US and the UK where they can snap up real estate assets for a good price. In that ways the markets will be increasingly deprived of the liquidity,” he added.

An overwhelming focus on high end developments and an increased scope for copycat developers are the region’s biggest risks in real estate, the report said.

“In the current climate market segmentation and product differentiation will be key,” Albert said.

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