Dubai villa prices 'may have hit bottom' - Landmark

Sunday, 4 October 2009 1:29 PM

PRICE PREDICTION: Landmark Advisory said on Sunday that villa prices in Dubai may have hit the bottom.

The price of villas in Dubai rose eight percent during the third quarter of 2009 and are expected to remain stable in the short-term, Landmark Advisory said in a new report published on Sunday.

Villas accounted for 60 percent of residential sales, and the report added that with projected villa supply and current sales inventories "relatively stable", the floor for villa prices in the emirate may have been reached.

"If investor confidence and inventories are stabilising, then we may have possibly reached a price floor for villas,” said Jesse Downs, director of Research & Advisory Services.

The latest report also found that apartment prices fell three percent in Q3, in comparison to falling 17 percent during the previous quarter.

“Apartment inventories remain stable, with the majority of sellers holding prices, and because many distressed sales that were available over the past 3-6 months are no longer available,” added Downs.

“In Dubai, apartment demand gravitates toward more affordable units, but financing appears to be an issue, with financed apartment sales declining to 14 percent in Q3 2009,” she added.

Leasing rates for villas in Dubai increased six percent in the third quarter, in line with sales trends, according to Landmark.

“This is due to considerable demand during the summer months, primarily from relocation within the UAE, but also from a limited amount of new demand from expatriates moving from abroad,” said Downs.

But unlike the villa segment, Dubai apartment rents dropped 17 percent during Q3, she added.

Dubai’s office market continued to suffer from weak demand, which brought office prices down another 10 percent in Q3, the report added.

Abu Dhabi’s residential market saw average listed sale prices increased, but most real transactional prices did not, the report said.

It showed that market-wide average listed prices for apartments and villas increased 8.5 percent and 7.2 percent, respectively.

Abu Dhabi’s leasing market showed a similar trend, with asked rents appearing to stabilise, while agreed rents kept falling.

Join the Discussion

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

Read All 30 Comments

Posted by: Mr Big Brain Thursday, 8 October 2009 12:48 PM[UAE] - UAE

All good stuff..! Just a quick one on what price a villa should be - say a build cost of 400 s/ q ft & land at 200 / sq ft = 600 ; sq ft x say a 3M Springs villa at 2,455 sq ft = 1,473,000 x 30% Developer Profit (low!!) = 1,914,900.00. Obviously build costs & land prices fluctuate and have decreased - but gives an idea anyway. Obviously in a rising market the price should rise from this point, & in a falling one, levitate back down towards it. But to state prices should fall to 2000 levels is a bit difficult as there never has been a 2000 level - not for free hold property anyway. Maybe i'm wrong, but i don't think prices should fall lower than the actual cost for the developer to release the projects to the public. Maybe their margins will just become a little bit more realistic as they now dont have to support thousands of overpaid & incompetent staff anymore & can leave delivery of the projects to professional companies. And I always find it interesting people slagging off the Springs. Ive seen a hell of a lot worse construction than the Springs, Jumeriah Park is a case in point as the level of workmanship and Supervision is abysmal (hope no-one has bought one). And have you ever looked at the Master Plan of the Springs? By far the most land given over to Parks, Communal Facilities, and Lakes - trust me, no othjer development in Dubai will ever cede so much open space & land again - just not cost effective. Again i will have to refer to Jumeirah Park (or maybe Jumeirah No Park is more appropriate) - no community facilities whatsoever (sorry, there were a few planned & then put in the dustbin when the money ran out). And finally, im sure your all relieved, is the new Jebel Ali project Al Furjan by Nakheel? If so, please forget about Nakheel confirmed launch dates and please get a grip on reality - these homes will be built with serious delays, and will be built in a half finished estate with no facilities and sky high maintenance charges. It is a fact that Nakheel maintenance charges will be at least double those of Emaar. So where would you rather live - in a fairly well managed development where you are treated with a little respect (Emaar) or a Nakheel development - Ladies and Gentlemen, the decision is yours..!

Reply to this comment.

Posted by: girish.narayanan Wednesday, 7 October 2009 6:04 PM[UAE] - UAE

its no where near the lower deck, still it's unaffordable.

Reply to this comment.

Posted by: Banana Rules Tuesday, 6 October 2009 10:24 AM[UAE]

Thank you SR for taking the time to expalin to Research about his/her ranting. Dont you just hate it when people get all agressive without having to evaluate and fully understand things? Anyway... just a few points to add on to SR's comments.... Why on earth would sale prices be going up if rents are going down?? and if Landmark says in a fancy report that prices did go up for villas it does not necessary have to be true because we all know that those big agencies only HOPE to benefit from spreading such rumors. This brings me to Kumar's comments about their guessing game when they say "May have hit the bottom!" which only indicates that they themselves are not sure. If the banks dont start lending again with international standards, and if RERA doesnt step up to its real responsibilities like any other decent regulatory authority around the world, and if developers dont change their totally unrealistic and unfair contracts that they issued to owners, and if Dubai government doesnt step in to fix this whole mess they created to get back investors trust, if and only if, then we are waiting for a whole new bottom. A bottom where all the property owners who bought at high prices will either be in jail or wud have fled the country and most of the property will be owned by the banks and finance houses that financed it who will in turn need to sell it at a REAL auction to get their money back. Only then we can talk about a bottom or a recovery for this speculative egocentric market

Reply to this comment.

Posted by: Jon H Tuesday, 6 October 2009 10:10 AM[UAE] - UAE

Villa prices should fall further until it reach year 2000 levels, when this happens, I may think that prices may have reached bottom. Demand is weak, availability is high, what happened to the first rule of economy?? offer and demand??

Reply to this comment.

Posted by: Alan Monday, 5 October 2009 4:26 PM[UAE] - UAE

Here goes the merry go round again. Last September not one estate agent in Dubai had any clue on a price fall in Dubai and they were in complete denial right up to the end of 2008/early 2009, well after the rest of the world had a property crash some 8-10 months beforehand. NO ESTATE AGENT ever gets anything right, they never do, their only aim is to continuously talk a property market up & their commission with it. I have been an end user of homes for over 30 years and I have heard all this speculative 'forecasting' many times before - the property 'market' is nothing more than a casino table anywhere in the world. Bring back projects like Dubailand & also entice manufacturing industry thus delivering a sustainable economy, only then will Dubai will enjoy a long lasting STEADY growth - bye bye speculators, lick your wounds and go away......your best days are well and truly OVER!!

Reply to this comment.