Dubai property prices may fall 20% - Emaar chief

PRICE SLUMP: Emaar's chairman sees Dubai real estate prices falling by 20 percent in 2009. (Getty Images)

Property prices in Dubai could fall about 20 percent on average, the chairman of the emirate's largest developer, Emaar Properties , said in remarks published on Monday without giving a timeframe.

Mohamed Alabbar also said Emaar's financial position was strong but the firm had no intention to buy back shares, but it might consider delaying some projects if market conditions indicated a need to postpone putting new units for sale.

Asked about views that real estate prices could fall as much as 60 percent, Mohamed Alabbar told Al Khaleej newspaper: "In my opinion a decline of 60 percent is illogical. There will be a variation in the percentage of decline based on the location and level of units."

"Prices in some areas will fall 10 percent in others the decline would reach 30 percent, on average I expect the decline to reach 20 percent even if there were some units being sold cheaper because their owners are in dire need for cash."

Alabbar said earlier this month that demand for real estate in Dubai is likely to outweigh supply this year despite the fallout of the global financial crisis.

Alabbar also heads a crisis committee set up by the Dubai government to respond to the global financial crisis, which brought to an end an economic boom in the Gulf Arab region.

Property prices in the emirate fell 23 percent in the last quarter of 2008, HSBC said last week.

Alabbar said Emaar has laid off 100 employees after the financial crisis but was not facing any financial problems.

"I believe we are finished now with the layoffs and this might be the same for other companies," he said.

"We do not have financial problems, the financial policy that we have followed over the past years in preserving liquidity despite the pressure we faced at general assemblies from shareholder calling for higher dividend helped the company enjoy a good financial position now.

"As for our projects we are studying them in the light of the current situation. If there were (projects) planned for 2009 and should be postponed we might postpone them to 2010 based on studying market conditions and what can be sold."

He did not specify any projects but said the flagship Burj Dubai development was due for completion within a year.

Asked if Emaar intends to buyback shares, Alabbar said: "It is more important for the firm to retain liquidity."

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READERS' COMMENTS

"In my opinion a decline of 60 percent is illogical."
Posted by joe simms, new york, usa on Tuesday 27 January 2009 at 18:26 UAE time


Since when is a market logical? The market has the ability to remain illogical for much longer than one can remain solvent. (paraphrasing Lord Keynes) Logic loses money in this environment

Come dowm
Posted by as on Tuesday 27 January 2009 at 16:50 UAE time


Iam sure this will go down more and more, just waiting for that

Perhaps It's Still too Costly Even at 60% Off?
Posted by Louie Tedesco, Dubai, UAE on Tuesday 27 January 2009 at 14:19 UAE time


Many astute comments from the readership, in particular the views and opinions that the end of the downward price spiral in the real estate market has yet to be reached. More importantly, none of us has an idea as to how low the price of depressed real estate here can sink. When the people who build your villas, townhouses, apartments and "Pentominiums" (?) are paid such humble salaries -assuming that they even get paid regularly- and are using the most cheaply sourced materials, the value of such housing can never be compared to quality structures built by competent construction workers who earn a living wage under working conditions which are much safer.

People have no problem paying the price for a property that was built by skilled people that were paid fair wages from developers who base their profit margin on fair market value. Here, buyers of property that was built by menial labourers who earn $200 monthly are gouged by developers claiming comparisons to London, Paris, Tokyo, New York, etcetera. If you visit or stay in a 17th century, or earlier, European sandstone building or a 1930's Manhattan skyscraper you may notice substantial qualitative differences to what is being built here. And 17th century / 1930 build-quality has improved since then. Unless you're buying a wood frame house, it'll last you a lifetime and the next three generations of your family too - even in poor ambient weather environments. Will your Palm or Arabian Ranches villa do that? I think not.

Current real estate prices here still remain much above the original offering price of developers during the launch of the various projects. The real beneficiaries are those who bought early on and still own the property. Even in a depressed market, they still likely will have doubled their initial early investment - good for them! Instead, I was fortunate to find vintage objets de art on auction and my investment grew ten-fold. There's also money which can be made outside of real estate…and I do own property, but not here.

Emaar Marina
Posted by Ed on Tuesday 27 January 2009 at 13:14 UAE time


My girlfriend sold her place at the New Marina complete in June 2008. It was a single bedroom place with peeping ocian views. What would that actually be worth at the moment.

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