Dubai house prices to fall 60% from peaks - Shuaa

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REALTY CHECK: Real estate prices in Dubai have fallen around 40% from 2008 peaks. (Getty Images)

Real estate values in Dubai could plummet by 60 percent by the end of 2009, according to UAE investment bank Shuaa Capital.

Property prices in the emirate have already dived by 40 percent and rents could fall by 20 percent over the next two years, Shuaa analyst Roy Cherry told Arabian Business on Sunday.

"Prices in Dubai could lose 50-60 percent by the end 2009 from their peak last summer.

"With negative population growth, expected delivery of 35,000 units in 2009, declining occupancy rates, lack of mortgage funding, high job insecurity, and cancellation of visa guarantees for home buyers, it is going to be tough for the market to show resilience at least in the first half of 2009," he said.

Declining occupancy rates to around 80 percent would cause rents to ease, he added.

Global economic unrest has burst Dubai’s six-year long property bubble as well as hitting the wider real estate market in the UAE.

Cherry said Abu Dhabi would not be immune from the real estate slump, predicting prices have so far plunged 15 percent and could slide a further 5 per cent.

Prices would start to stablise in the final quarter of 2009 or early 2010, Cherry said.

Echoing a report by Swiss investment bank UBS last week, Cherry predicted Dubai’s population could fall five percent this year on job losses, with the overall UAE population easing 1 to 1.3 percent.

Dubai has a population of about 1.4 million.

UBS forecast there could be an 8 percent dip in Dubai’s population this year, mainly on the fall-out from the construction and real estate sectors.

Also last week, property services firm Colliers International reported an 8 percent dip in Dubai property prices in the final quarter last year.

Separate data published last week from fellow real estate consultant Asteco said rental growth slowed last year in Abu Dhabi and Dubai, after massive rises in the last few years.

It said rents for apartments and villas grew at 4 percent and 8 percent in 2008.

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READERS' COMMENTS

Go back to normal
Posted by Jebel Ali Baba, Dubai, UAE on Tuesday 20 January 2009 at 06:23 UAE time


A decline of over 50% will bring real estate properties in Dubai and in the UAE back to normal. Considering the unregulated ownership situation, visa regulation, build quality and total life span of properties even 50% of the current prices are high compared to the rest of the world. The UAE want to attract investors so they have to make it attractive to invest in real properties. There is no more money to wash to justify antyhing else.

This is healthy for Dubai Economy
Posted by Lebanese in Dubai, Dubai, UAE on Monday 19 January 2009 at 21:32 UAE time


I think that the drop in prices for the properties in Dubai is very healthy for its economy. What was going on in Dubai was abnormal growth which will always heart its body.
What attracted companies to Dubai before 2003, was that it had a good geaographical location, infrastructure and cost competitive. But with the current rents, it will never be feasible for tens of thousands of companies to rent offices, appartments for staff, and pay huge salaries to be able to operate in Dubai and fill all these commercial and appartment blocks
Unfortunately, real estate became a market for amateur investors, which are the same investors who turned the stock market into PURE gambling.
Not only investors ruined the property market, but also developers that the only feasibility study which they made before even building a tower is that they are following a TREND (selling full towers in very short time for people that will never use)

God bless this city, which will be hurt in the curing process (3 to 4 yrs) but will bounce back as a normal and healthy city that will make use of its Branded reputation and will compete with the biggest cities in the world

Dubai Property
Posted by Aly-Khan Satchu, Nairobi, Kenya on Monday 19 January 2009 at 14:22 UAE time

Hindsight will show that Dubai has the highest beta of world markets. In fact, Dubai property was casino capitalism and its worst.

10 trades before completion says it all.

The poem that resonates in my mind is Ozymandias.

Aly-Khan Satchu
www.rich.co.ke

Decline in prices
Posted by Chris J, Dubai, UAE on Monday 19 January 2009 at 10:32 UAE time

These are the same people who said only a few short months ago, that the prices in Dubai would continue to increase until 2010 before a correction (read decline). Who was it that said that economists predicted 27 of the last 3 recessions that we have had.

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