Palm Jumeirah prices to fall 20% - Think Tank

Business leaders say property prices will keep falling over next 12 months.

Business leaders are predicting that prices on the Palm Jumeirah will plummet another 20 percent in the next year.

A special gathering of the Arabian Business Think Tank (ABTT) – comprising nine senior business figures – has forecast that average prices for an apartment on Nakheel's man-made island will fall to just AED1,022 per square foot by May 2011.

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The ABTT estimated that current average prices in the area are AED1,200 per square foot – compared to a peak of AED3,000 per square foot in summer 2008.

ABTT members cited concerns of oversupply in the market, and continued unwillingness by banks to approve new mortgages.

The ABTT comprises Kanoo Group deputy chairman Mishal Kanoo; OMG Mena Region CEO Elie Khouri; Fairmont regional vice president Philip Barnes; Gulf Research Centre chief economist Eckart Woertz; Arabtec CFO Ziad Makhzoumi; Colliers International Regional CEO John Davis, Asda’a Burson-Marsteller Sunil John; Crescent Investments CEO Badr Jafr and ITP Executive managing director Karam Awad.

At a lunch last week hosted by ITP chairman Andrew Neil, the ABTT also set out predictions on the value of regional stock markets, gold prices and the strength of the euro.

Landmark Advisory said last month that increased supply of residential units in some of Dubai's most popular areas forced further rent declines in April.

The property company's April 2010 Dubai Lease Guide said the likes of Palm Jumeirah and Dubai Marina, which have performed better than other parts of the emirate during the past six months, have seen recent drops of up to six percent.

Landmark Advisory said average rents for a two-bed apartment on Palm Jumeirah had fallen from AED120,000 to AED115,000 a year, a drop of four percent.

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Posted by: Ali

I think Don's last 2 lines of comment are the golden words for the future of Dubai real estate. "The constant surplus of newer development getting delivered will drive the older properties down even if they are on Palm Jumeirah."

Posted by: Don

I have been looking to purchase an apartment at the palm of a unit a stone throw away from the sea. The latest offer was for AED772 p/sfqt (a large unit). Working in the property industry I see many signs that by year end it will lower to around AED635 p/sqft. This is the same news I get from those in the industry, which would represent a further reduction of 18%. Long term we should target for AED600 as reasonable value for the quality that is offered in Dubai. Many people will hold onto their units as Dubai is still for many a holiday home destination, but for those letting go, this is what they need to get ready for. The constant surplus of newer development getting delivered will drive the older properties down even if they are on Palm Jumeirah.

Posted by: A A

I think the comments are open to a lot of debate and questioning. Anyhow, back to the Palm Jumeirah. Most of the owners of appartments and villas on the palm are either end users or long term investors. The only properties in Dubai that seem to retain their value are either on the Palm on Burj Dubai. There may be a few desperate sales here and there, but there is no sign of any panic as many people are commenting. I've been doing a lot of research and hunting around on the Palm and i've formed my conclusion based on this. As far as the experts are concerned, it was the experts who sent prices sky rocketing on the Palm with sales on the Trump Tower, etc among the highest in Dubai and villa prices on both the palms to Infiniti. I personally think that the Palm will retain its value simply because of its unique location and its value proposition as a holiday resort in the Middle East. If you beg to differ, i would welcome your views and comments.

Posted by: Paul King

Palm Jumeirah always was and always will be an unsustainable project. I liken it to living on the side of a volcano. Decades of calmness might pass and all will seem rosy in the garden. But then.....BANG! Whatever the values are now or next year, ultimately the Palm properties are a consumerable!

Posted by: ik

Jobs & Population growth in Dubai will define the future of real estate, alongwith the revival of Tamweel & Amlak. Dubai had the highest population growth in the world in 2007/8 but 2009 saw ZERO population growth so a city with the highest population growth rate in the world down to zero growth within a year speaks volumes. Only when this imbalance is corrected will normaly return to the real estate market (a stable market henceforth & not an unsustainable volatile market)

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