Dubai sees world's biggest real estate reverse - study

Knight Frank research shows home prices fell 32% after 48% rise in previous year.

Dubai suffered the biggest reversal among global housing markets in the wake of the global economic crisis, a new report reveals.

The research by London-based property broker Knight Frank said house prices in Dubai fell 32 percent in the 12 months ended March 31, compared to a rise of 48 percent the previous year.

“A lot will depend on developers and how long they can hold on before getting into fire-sale territory,” said Nick Barnes, head of international residential research at Knight Frank in comments reported by newswire Bloomberg on Tuesday.

Within a year, Dubai went from being the fastest rising of 46 markets monitored in the Knight Frank global house- price index to the second-biggest decliner after Latvia, the report said.

In the first quarter of 2009, house prices in Latvia dropped 36 percent, while Singapore was the third-worst performing market with a slide of almost 24 percent.

They were followed by the US and the UK, where prices declined about 17 percent.

The biggest increase in property values tracked by Knight Frank was for Israel, where homes appreciated by almost 11 percent. The Czech Republic and Jersey came second and third respectively, the broker said.

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Posted by: MD

Cut the coat according the cloth is what my mother used to tell as a child. And that is what people seem to have forgotten after coming to Dubai. Most speculators in the real estate market were driven purely by greed and the intention of making a quick buck without really having the money. However, what is also inexcusable is that developers are allowed to get away with keeping the buyers' money without delivering on time and in many cases not even starting construction. Even they should be penalised heavily for this just like the buyers. That would serve as an effective deterrent to all those solely motivated by greed.

Posted by: Property Guru

I have never seen such a brilliant comment from anyone Johnny. I am with you, trust me - anyone who arranged 100% money for property either via own funds or mortgage is not complaining today. The reason, even if they wanted to buy more the ability to get and SERVE more mortagae can't be developed overnight. Since the purchase was restriced, so were to exposure and the fall.

Posted by: Carmi

I have to say that Omar has put across some interesting and true facts. So many people get caught up the fabulous lifestyle that there is here in Dubai and know that they are living beyond their means. It does all boil down to honestly knowing that and accept the consequences that come along with it. Yes that's right nobody put a gun to your head and told you, you have to buy what you couldn't afford. Greed always makes you think .. oh yes I can buy it now ....on credit ..... and pay for it later on. The only problem is that one keeps saying this over and over again but when the times comes to pay up you realize you're in such a big hole you don't know how to climb out of. But having said this you still know that what is happening now with the real estate and property market was only a matter of time. We all adhere to the term SUPPLY AND DEMAND but it seems to be to be all SUPPLY SUPPLY SUPPLY

Posted by: AH

Dear Amit, I agree with you fully about the reckless behaviour of the big developers and the greedy, 'fly-by-night', behaviour of some estate agents (there are some very solid agents out there so don't be put off by the bad ones). Obviously I don't know your friend, however, I question that he was being 'greedy'. Did he know the world financial markets were about to crash? Of course he didn't. His objective was to relaise the highest and best price for his property. Would any sane person sell their property (or shares or any other item) for a value less than the market value at the 'then present' time? Of course not. Your friend wasn't 'greedy' he was a player/participant in the capitalist market...the free market...the market economy which is now global. If he sold his property to the first offerer at the said 2.6m he would have missed the offer from the 4m offerer. The fact that his property is now not even saleable for 1.8m is irrelevant (although sad for him). He participated in an open marked economy which is impacted upon by external forces. This doesn't make him a greedy man, by definition. In religious terms he may have acted in a greed orientated manner but that is not for us to decide. Real greed is where other people suffer as a consequence of your actions. If you are trying to better the situation of you and your family by honest means and external influences weigh against you then I, personally (theology aside), don't believe that type of action constitutes greed. There are a great many of us non-greedy in the UAE and we should not lose our voice to the neysayers and perpetual negative doomsayers/dayers (depending upon your country of origin). We live here (in our own homes) and their constant degrading tripe degrades our being and I am sick of it. There is no intelligence in looking at the past and claiming you knew it was going to happen. Many of us are in serious negative equity and trying to work our way out of it. Constant twiddle from would be 'negative equity companions' is something we have seen far too much.

Posted by: steven

Live within your means is what it's all about. Only buy what you can afford For those that have been good with their finances, they should be able to benefit in the future from others reckless borrowing and spending, if what has happened previously doesn't bring the economy further to its knees. If you save up a deposit for the next 1 - 2 years you should be able to purchase a property to live in at fair market value, not this over inflated market, and that is what it should all be about.

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