Palm real estate agent sees 50% price fall

A real estate agent dealing in top-end properties on Palm Jumeirah in Dubai said on Monday he has seen prices fall by more than 50 percent since Sept 2008.

Four-bedroom garden homes on the Palm are now selling as low as AED6.5 million ($1.8m), down from AED14 million ($3.8m) in Sept, according to sales agents PowerHouse Properties.

Ian Hainey, Palm sales specialist for the company, said: “We’ve seen a steady stream of bargain hunters in the market shopping for these prestigious addresses, with many motivated primarily by price.

"Many end-users who previously could not afford to live on Palm Jumeirah are also now turning their attention to the bargains currently on offer.

“Palm signature villa prices have also fallen, with even the most popular styles that were selling for over AED30 million six months ago now appearing on the market for under AED15 million."

He said there had been a noticeable increase in Palm Jumeirah buying activity during January as buyers sought to take advantage of lower prices.

"Sales are still being made on the island, with an upsurge in those buying to rent, taking advantage of the bargain prices while still capitalising upon the high rental yields. Garden homes are renting at over AED400,000 and furnished signature villas still commanding rents up to AED1 million.”

Dubai-based mortgage advisor Jack Czechowski from propertyfinancelink.com added: “There has been a marked reduction in people seeking to buy properties on the Palm Jumeirah, and therefore obtain finance, but this is true in developments throughout Dubai.

“Those who are still looking to buy are finding it very challenging to obtain finance at the moment. Banks have tightened their policies, reduced lending ratios and increased interest rates. Most lenders have reduced their maximum borrowing ratios from 90 per cent to less than 80 per cent.

“Interest rates have increased from approximately 6.5 per cent to 8.5 per cent and banks will generally no longer lend to non-residents or people employed in the real estate sector. Unfortunately this is preventing many potential buyers from being able to purchase.

“It is difficult to make an accurate prediction on the immediate future, as Dubai has never faced this problem, but it is quite possible banks will review their policies early in the year.”

The Palm Jumeirah was built as the flagship part of Dubai’s ambitious Universe development, which planned to extend Dubai’s coastline to around 625 miles, around 15 times its natural size.

Last month, a report showed property prices in Dubai dropped eight percent in the fourth quarter of 2008, the first quarterly decline since foreign ownership became legal in 2002.

Sales volume also dropped by 45 percent in the last quarter, providing fresh evidence of the global credit crunch hitting the emirate.

When work started on the Palm in 2001, the villas were quickly snapped up at prices from AED2.8 million each, with celebrity buyers including David Beckham and Michael Schumacher.

As 2008 drew to a close, the decision to halt work on Palm Jumeirah’s AED2.9 billion Trump International Tower is one of the more notable effects of the economic downturn.