Dubai among world’s worst performing property markets

Dubai real estate was the 9 worst performing market in the world last year, according to  a new report by Knight Frank. However, the results of a survey of the 50 biggest property markets in the world also show the rate of decline in Dubai has began to slow.

Ireland was named in the report as the worst performing real estate market, with house prices declining 12.9 percent in the twelve months to June 2011. Dubai showed a decline of 4.7 percent.

The Global House Price Index report found prices fell 6.1 percent in 2010-11, showing the rate of decline has begun to slow.

An analysis of prices for the first six months of the year showed prices have moved slightly into the black and grew 0.1 percent between January and June 2011. According to Knight Frank, Dubai prices have declined 49.7 percent overall since the peak in the third quarter of 2008.

Top of the league was Hong Kong, with 26.5 percent annual growth, followed by India (21.3 percent), Taiwan (12.7 percent) and Estonia (10.6 percent). “Asia continues to be the top-performing continent in terms of house price inflation – a position it has held for seven consecutive quarters,” said Liam Bailey, head of residential research at Knight Frank.

Last month, a survey of local analysts by Arabian Business found house prices in Dubai’s battered real estate market will slide a further 15 percent by the end of the year.

The Gulf’s worst-performing real estate market over the last three years has seen rents and prices more than halve from their 2008-peak, but residential costs have further to go, analysts said.

“Average sales rates are likely to be down around ten to fifteen percent, but this will vary by individual property,” said Matthew Green, head of research at consultancy CB Richard Ellis.

Oversupply continues to be a key driver behind falling rents and prices, analysts said. Colliers calculated that around 13,000 units are due to come online by the year-end, followed by a further 27,000 properties in 2012.

Dubai said in June it had cancelled 217 property projects as of May 31, following a review of more than 450 projects. The emirate said it expected a further 237 developments to be completed in due course.

Click here to see the best performing real estate markets in 2010-11