Panic selling by Dubai property speculators is driving prices down, eroding confidence and making banks reluctant to lend, the CEO of MAG Group Properties said on Sunday.
A mass sell-off by speculators, whose frenzied buying and selling of off plan properties before the global crisis contributed to Dubai’s housing crash, is ‘undercutting the fair market price’ according to Mohammed Nimer, the boss of developer MAG Group Properties, which has a portfolio worth AED3bn.
“Speculators were originally responsible for driving property prices to unrealistic levels. Now, although they are on the receiving end of the slump in prices, they are still blighting the real estate landscape by panic selling and undercutting the fair market price,’ he said in a statement on Sunday.
While this was good news for buyers, it was creating confusion as to when the market would bottom out, spooking investors and banks, he said.
“It’s a vicious cycle. Forget the benefit of lower construction prices, we have to wait until these distressed sales are pushed out of the system. Only then we will witness some stability and a return to fundamentals instead of sentiment based on fear and uncertainty,” he said.
But he remained upbeat on the UAE’s long term prospects.
“Although property prices fell dramatically in the last quarter of 2008 and the first quarter of 2009, the rate of decline has now slowed considerably, indicating that the market could be approaching the bottom,” he added.
Real estate consultant Colliers International said house prices in Dubai fell 41 percent in the first quarter of this year.
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