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Discuss this article (20 Comments)UBS sees Dubai property prices falling 40%
by This email address is being protected from spam bots, you need Javascript enabled to view it on Thursday, 11 June 2009
HOMES VIEW: UBS said on Thursday that Dubai house prices were still to fall 40 percent. (Getty Images)
Property prices in Dubai will have fallen another 40 percent by the end of 2010 when one in three homes will be vacant, UBS said on Thursday.
“From our vantage point we think we’re still relatively early in the cycle,” analyst Saud Masud told Arabian Business in an interview about recent reports that Dubai real estate prices are showing signs of stabilising. "We believe the fundamentals are weakening as we speak.”
That was most likely due to pent up demand coming into the market and consumer confidence recovering from the initial shock following a steep decline in prices, Masud said.
“This is a very natural reaction. No market drops from peak to trough in a straight line.”
But as a significant amount of new supply looks set to enter the market this year, there are doubts as to where the new demand is going to come from.
“I think what we have to ask ourselves is: what is the fundamental, underlying demand? Is there any net new demand that will stabilise the market?” Masud said.
Analysts currently estimate a vacancy rate in Dubai of 10 to 20 percent.
Adding 30,000 new units to the market by the end of 2010 would translate into another 10 percent of vacancies, Masud said.
Colliers said in April it believes 64,800 new homes will be ready by the end of 2011, down from an earlier estimate of 140,000 units.
“The net impact from population exits I’m putting to around 5 to 10 percent of the total market impact.”
That adds up to around one third of Dubai properties being vacant by the end of next year, he said.
Masud reiterated UBS’s April prediction that Dubai residential property will bottom out at around AED500-800 per square foot, which would be around 40 percent below current levels.
UBS said in March that Dubai’s expatriate population will decrease by 8 percent this year and by 2 percent next year.
Deutsche Bank said on Thursday that property prices in the UAE will fall another 15-20 percent before bottoming out at the end of this year.
READERS' COMMENTS
Disclaimer: The views expressed here by our readers are not necessarily shared by ArabianBusiness.com or its employees.
If you can get out....
Posted by mr muscle, Dubai, UAE on Tuesday 23 June 2009 at 07:09 UAE time
do so now. This market needs to find it's bottom and that can only be found when the buyers outnumber the sellers. Thos of you who are "in" can sit tight and watch your money evaporate or get out and buy back later giving yourself a chance to speculate once more. There's no doubt about this market, it's still going down, the only question is how far. Personnally, I'm looking for property in Dubai but not at todays prices, nor last years or the year before. I agree with this report and will be waiting to after the summer to see how the hotels have fared in the season. If we don't get the visitor numbers from Europe that were promised, then the game's up and I'm back to Hong Kong or Singapore instead, where the markets are more reliable. There is risk here and that's where money can be made but not in a falling property market.....I'd be real interested to know how many of you posters here are active buyers?
Posted by mr muscle, Dubai, UAE on Tuesday 23 June 2009 at 07:09 UAE time
do so now. This market needs to find it's bottom and that can only be found when the buyers outnumber the sellers. Thos of you who are "in" can sit tight and watch your money evaporate or get out and buy back later giving yourself a chance to speculate once more. There's no doubt about this market, it's still going down, the only question is how far. Personnally, I'm looking for property in Dubai but not at todays prices, nor last years or the year before. I agree with this report and will be waiting to after the summer to see how the hotels have fared in the season. If we don't get the visitor numbers from Europe that were promised, then the game's up and I'm back to Hong Kong or Singapore instead, where the markets are more reliable. There is risk here and that's where money can be made but not in a falling property market.....I'd be real interested to know how many of you posters here are active buyers?
Good or Bad news ?
Posted by Ars, Dubai on Monday 22 June 2009 at 19:11 UAE time
More risk more money
Posted by Ars, Dubai on Monday 22 June 2009 at 19:11 UAE time
More risk more money
Utter nonsense
Posted by Sachin Bharti Gupta on Wednesday 17 June 2009 at 17:55 UAE time
I am disinclined to believe UBS assertions on the Dubai real estate prices. UBS have proven to the world that they are poor managers of the field that they supposedly specialise in (thats money management). For the sake of whatever little reputation they have left, they should stop passing judgements and issuing reports on sectors that they know nothing about. One of their investment strategists overheard two bearish investors speak about doom and gloom and decided to publish a report, thinking there is a 50% chance of the report coming true. If it does come true, wonderful, UBS would be praised. If otherwise, they would top it up with another report citing how Dubai handled the crisis well and avoided the real estate disaster!!! It's all mumbo jumbo!!! Ignore UBS. As far as real estate is concerned, I am not overly bullish on any immediate turn around, but at the same time I understand that Dubai is a very sentiment driven market. As soon as some investor friendly laws are passed and the rera framework is improved, we shall see the property market coming back up strongly. And this time the growth could be slow but when it happens, it would definitely be sustainable. Because Dubai would have stood the test of unfavourable times. Cheers!
Posted by Sachin Bharti Gupta on Wednesday 17 June 2009 at 17:55 UAE time
I am disinclined to believe UBS assertions on the Dubai real estate prices. UBS have proven to the world that they are poor managers of the field that they supposedly specialise in (thats money management). For the sake of whatever little reputation they have left, they should stop passing judgements and issuing reports on sectors that they know nothing about. One of their investment strategists overheard two bearish investors speak about doom and gloom and decided to publish a report, thinking there is a 50% chance of the report coming true. If it does come true, wonderful, UBS would be praised. If otherwise, they would top it up with another report citing how Dubai handled the crisis well and avoided the real estate disaster!!! It's all mumbo jumbo!!! Ignore UBS. As far as real estate is concerned, I am not overly bullish on any immediate turn around, but at the same time I understand that Dubai is a very sentiment driven market. As soon as some investor friendly laws are passed and the rera framework is improved, we shall see the property market coming back up strongly. And this time the growth could be slow but when it happens, it would definitely be sustainable. Because Dubai would have stood the test of unfavourable times. Cheers!
Kettle Calling Pot Black
Posted by KDA on Sunday 14 June 2009 at 12:46 UAE time
I wonder when UBS will do a report on its own future. These were the same people who were talking and hyping up everything in the "Golden Days", and right now they are one of the most shredded and bleeding banks out there.
Fact is dont rely on any of these so called experts, most of them are just talking rubbish and guessing. The play it by ear and just string people along. If they were so smart they wouldnt have gotten themselves into the position that they are in in their main markets.
Why do we even give these peoples comments any worth or value after we have seen what these "geniuses" have done to the world economy??!!!?!?!!?!?!
Posted by KDA on Sunday 14 June 2009 at 12:46 UAE time
I wonder when UBS will do a report on its own future. These were the same people who were talking and hyping up everything in the "Golden Days", and right now they are one of the most shredded and bleeding banks out there.
Fact is dont rely on any of these so called experts, most of them are just talking rubbish and guessing. The play it by ear and just string people along. If they were so smart they wouldnt have gotten themselves into the position that they are in in their main markets.
Why do we even give these peoples comments any worth or value after we have seen what these "geniuses" have done to the world economy??!!!?!?!!?!?!
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