Dubai saw less than 1,700 real estate deals in the first ten months of the year, government data shows, a 70 percent decline on sales made at the housing market’s peak in mid-2008.
Some 1,603 deals were signed off in the ten months to October, down from 5,363 during the same period in 2008, data from Dubai Land Department showed.
But the figures reflect a 37 percent increase in property transactions when compared to 2009 at the height of the financial crisis, suggesting fledgling signs of recovery in the city’s battered housing market.
The average number of monthly real estate sales is 160, up from 117 in 2009 but still a dramatic way from the average 536 property transactions seen a month in 2008, as off-plan properties were flipped multiple times by speculators.
“It reminds me of how truly extraordinary the market was from 2005-8, and how regular it seems to be today,” said Ryan Mahoney, CEO of Better Homes, the largest real estate firm in Dubai.
“We are operating in a market that has less than a quarter of the annual transactional value that it had in previous years and yet we are busy… and we even excited by the small spurts of growth we see from month to month.”
Charles Neil, CEO of Landmark Properties, said the rise in sales was attributable to an increase in bank lending and the increasing number of Chinese and Indian investors entering the market.
“There has been an increase in liquidity in the market,” he said. “Banks are being more active in providing mortgages and interest rates on mortgages have come down from level of around eight to about six percent.”
Property prices in Dubai soared after the city opened its real estate sector to foreign investors in 2002, granting them freehold ownership rights at many developments.
From start-2007 to mid-2008, prices rallied almost 80 percent, Morgan Stanley estimates showed, with billions of dollars worth of new projects launched by local developers.
But home prices in Dubai, the Gulf property market that had the biggest reversal because of the financial crisis, fell more than 60 percent in the wake of the global credit crunch.
House prices in Dubai showed signs of recovery in the third quarter, with slight rises in prime projects such as Palm Jumeirah and Arabian Ranches, Jones Lang LaSalle said in September.
But analysts remain concerned that the estimated 33,000 new homes scheduled to hit Dubai’s market by end-2012 could cause fresh declines in rental and sale prices. Renewed global financial woes and the European sovereign debt crisis are also likely to cause more pain, with Moody's last month predicting any price recovery to be delayed to 2016.
Andrew Goodwin, Dubai director of real estate consultancy DTZ, said transactions remained subdued as landlords fail to match their asking prices to new economic realities.
“We receive significant interest from investors looking at the Dubai market but in many cases there is a discrepancy between the purchasers and sellers valuations which keeps volumes low,” he said. “Those sales that do go through are where the purchaser has a long-term confidence in the Dubai market.”