Dubai house prices 'may never return to 2008 peaks'

Dubai real estate prices may never return to previous levels if the city is to compete with global hubs such as New York, London and Singapore, Standard Chartered said on Tuesday.

In a 2008 survey of the world’s most expensive office markets by CB Richard Ellis, Dubai ranked seventh worldwide, putting it ahead of the City of London, Paris, Singapore, and New York, the bank noted in a report on the GCC economy.

“This does not accurately reflect these cities’ comparative advantages, demographic pressures, and physical constraints relative to Dubai’s,” said analyst Philippe Dauba-Pantanacce.

“Thus, Dubai’s real-estate market needed to become better-aligned with its intrinsic value.”

Signs of stabilisation in the emirate’s property market are encouraging but further falls cannot be ruled out and should even be “welcomed”, he added.

“After a fall of 30 to 40 percent…the first signs of stabilisation in Dubai’s real estate sector have appeared, taking observers by surprise since further declines were expected,” he said.

“Some caution is warranted, as there are still question marks surrounding population flows in the coming months.”

On a positive note, the report pointed out that the amount of distressed stock on the market has gradually diminished, and that mortgage lenders have begun to ease their requirements.

Official figures showing a net inflow of people into the country during the worst months of the crisis were "reassuring", it said.

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