Dubai house prices to slide up to 15% by year-end

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House prices in Dubai have more than halved from their peak in mid-2008

House prices in Dubai have more than halved from their peak in mid-2008

House prices in Dubai’s battered real estate market will slide a further 15 percent by the end of 2011 as fresh supply floods an already glutted market, analysts said in an Arabian Business poll.

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.

Lower-tier properties are likely to be worst hit by an estimated 10 to 15 percent fall in rents, said Ian Albert, regional director Middle East at Colliers International.

“[The lower tier] has been most impacted by the fall in rents as a significant amount is owned by investors as opposed to owner-occupiers.”

His view was echoed by Michael Michael, Director of Landmark Properties, who said prime properties would fare better amid an oversupply of lower-tier real estate.

“Markets such as Discovery Gardens and International City have witnessed the largest decline, while prime locations such as Downtown Dubai have witnessed the least,” he said.

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.

“Original estimates put considerably more [new properties] in 2011,” Albert said. “However, there are delays in some of the phased deliveries of the following projects, pushing them out until 2012 delivery; Jumeirah Golf Estates, Jumeirah Park and Jumeirah Village South.”

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”.

The UAE federal government in June said it would offer three-year residency visas to owners of properties worth AED1m or more, replacing visas that require renewal every six months.

The move was seen as an attempt to lure investors back into its struggling real estate sector, but analysts were divided on whether foreign buyers would respond.

“The crux of this issue is whether or not buyers will actually pay a premium just for the visa. This is unlikely because buyers are value conscious, especially now,” Jesse Downs, director at Jones Lang LaSalle MENA, said earlier this month.

Though the consensus was that house prices across Dubai had further to fall, some analysts suggested pockets of prime property would buck the trend and post small price rises.

“By the end of the year, house prices in the prime projects - Palm, Marina, Downtown Dubai - will continue to increase at small levels and will be higher than those prices of 2010,” said Priyesh Patel from Aston Pearl Real Estate.

“Prices compared to 2010 are definitely on the increase; not huge, but three to five percent.”

A report by Landmark Advisory this week found prices of villas in high-end locations had risen 2.8 percent in the last quarter, though apartment sales had continued to decline.

On Monday, Dahi Khalfan Tamim, Dubai’s chief of police and head of the country’s budget committee, urged Dubai to slow down the pace of its real estate development.

“Dubai shouldn’t expand its real-estate sector as it did in the past,” Khalfan said. ‘‘We should slow activity, and there should be a ceiling.’’

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Disclaimer:The view expressed here by our readers are not necessarily shared by Arabian Business, its employees, sponsors or its advertisers.

Please post responsibly. Commenter Rules

Posted by: Johnny

Once the UAE give the expats Green Card, the market will def go up.

Posted by: Paul King

Now that Omar has spoken on the subject, our fears and doubts are greatly reduced. Our anxieties relieved and our nerves are settled... You gotta hand it to him though....he consistently provides 100% nonsense!
I'll stay right here thank you very much...just trying to assist folk to avoid the "trap doors" that many have fallen through.

Posted by: Omar

My wife just delivered last week and while taking her to hospital in Bur Dubai at 4:40 AM on a week-day in the middle of Aug. +50c in mid Ramadan, cars were almost bumper to bumper. I bought in Lakes 4 months ago and i am receiving calls and texts late at night offering 10% more!!!Dubai airport is all set to become the world's busiest airport and for those who say that they are transit, even transit passgs spend money to see Burj Khalifa or the Palm or x,y,z of Dubai. In AB, we see an interesting article on Chinese investors coming to Dubai!(beyond the US-European crisis) and the oil is still in triple digits!So Dubai is here to stay!!Whoever doesn't like Dubai can leave so we enjoy the Dubai dazzling assets in a more peace of mind!! +Dubai Oympics 2024 is a 99% reality with 2nd to none infrastructure. Go around Sports city and see work going on 24/7!!!so real estate prices will get triple 2008!!All flights from and to Dubai are full!!

Posted by: P.A.S.S.

I recently came off a return flight from Birmingham. If more than 10 people walked with my family to arrivals, I would be surprised. All others went on to the transfer desk. Go Emirates - they are great, but people are not staying in Dubai, even overnight.

Posted by: John D

Sorry to burst your bubble but oil prices haven't been in the triple digits for a few months now. With another recession looming and a slow down in China, they are likely to fall even more.
But, if your house has increased in value and people are lining up ready to buy it and everything is rosy for you, more power to you!!
We are leaving so you can enjoy the 'dazzling assets' with complete peace of mind.

Posted by: sonnydubai

I presume you work in real estate? This is the most entertaining post I have read for a long time. You should try your hand at writing fictional novels.........

Posted by: Mark

You are getting late night texts offering to buy your house? How are they finding you?? And are your hundreds of neighbors with identical houses getting late night texts also? Or just you? Interesting. Dubai flights are full because it's a hub. Nothing more, nothing less. That doesn't equate to investment, even if someone does get out of the airport to look at the Burj Khalifa. Sorry but no bearing on the real estate market at all. And to think that Dubai has an infrastructure second to none? Certainly that would that mean efficient means of transportation and adequate roadways - correct? So how is it that the roads were bumper to bumper in Bur Dubai at 4AM???

Posted by: Jack J

Anyone who claims that this is the start of another Dubai real estate bull run obviously doesn't look at what's happening outside of the UAE's borders. The global economy is still in a complete mess!
If you're rich enough that you can afford to take a high risk with your money that's fine; however if you're relying on a mortgage or your life savings to make a real estate investment in the current economic environment you're taking a huge risk!
Very little has been done to fix the problems created in the run up to the 2008 crash; central banks have propped up the stock markets with their money printing and in doing so have created global inflation which is not going to disappear anytime soon. Many banks continue to hide their bad debts and toxic assets.
Unfortunately no one country is immune from a global crisis, as we found out in 2008, don't expect it to be any different this time round.

Posted by: Paul Reid

Start of a bull run 100%.

The market is a few months out of date as always and when you see real data of what has occurred over the next six months, you will be too late.

I am what you would call a pessimist but if you are specifically talking about finished property in communities like PJ, Marina etc- you could not be buying at a more opportune time (tho maybe 2-3 months ago may have been closer to the turning point).

If you are unaware of what lies around the corner best you keep schtum and watch.

Momentum will drag for a while as measures kick in, but you we have already witnessed the change in the curve. No doubt.

Posted by: Jake

looking at the figures posted by the land department, I can't agree to what is being claimed. Not only are the majority of purchases in areas that are only available to Locals and GCC Nationals, but there is no real incentive to invest here.

From a legal aspect, nothing has changed. Service charges are bound to increase further, rents may stabilize at the moment but there is still quite a lot of supply in the pipeline.

Anyway, the way I see it, the world is up for some more turmoil in the next 18 month, as none of the actual issues have been resolved since 2008. Contrary, things only got worse.

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