E-mail Article
Printer Friendly
Share Article
Dubai house prices slump 8% - Colliers
House prices in Dubai fell eight percent in the fourth quarter of 2008, easing for the first time in the year, due to tighter liquidity and negative sentiment, property consultants Colliers International said on Tuesday.
Year-on-year prices for the fourth quarter rose 59 percent, while transaction volume fell 45 percent compared to the third quarter of 2008, Colliers said in a quarterly price index for the emirate.
Prices rose 42 percent in the first quarter of 2008, 16 percent in the second quarter and 5 percent in the third quarter according to previous Colliers International reports.
The index shows that the overall average price level is now similar to that recorded at the beginning of Q2 2008. Colliers says the index will help investors benchmark investment values over a period of time.
Ian Albert, Colliers International's regional director, said: “There is no escaping the fact that for the first time since the HPI was launched, overall average residential prices in Dubai have fallen.
"Investors accustomed to continual price rises will have to recognise this, as the global financial crisis impacts the region.
"Tighter liquidity, more selective lending and growing negative sentiment are all bringing about these changes. However, an overall average price fall of eight per cent for the fourth quarter is not as bad as everyone had feared.
"What established investors now need to consider is at what stage they entered the Dubai market because this will broadly determine whether the value of their investment has grown, declined or remained static."
Negative sentiment from the global financial crisis led to a fall in demand for property and was reinforced by postponements of developments and job redundancies, the report said.
Year on year, apartments were the worst performers in Q4, dipping 11 percent with villas falling 3 percent. Town house values rose 1 percent.
Uncompleted properties fell by 10.4 percent when the Burj Dubai development was included in the index.
Likewise, completed properties in Dubai dived 5 percent when the Burj development was included in the index.
"What we saw in Q2 and Q3 last year was very high levels of speculation in the Burj project, so much so that even before the credit crisis started to take effect, some banks were withdrawing finance availability," said Albert.
"Property prices rose at exponential rates in Q2 and Q3, and the greater the speculation, the more likely they are to fall at a precipitous rate."
The increase in the value of the UAE dirham because of the appreciation of the US dollar means that property in Dubai has become more expensive to other markets, causing investors to look at opportunities in other countries, further reducing demand in the local market, the report said.
Rents are expected to ease early in the year but will stabilise quickly with demand in the rental sector picking up as tough market conditions slow transactions and investors step back and assess market conditions, Albert said.
Albert said he expected there would be fewer developers in Dubai by the end of the year as they consolidate to strengthen their balance sheets and diversify portfolios, while the emirate would see further projects delayed or postponed.
Key findings:
Quarterly overall average price decline of 8 percent
Year-on-year overall average price growth of 59 percent between Q4 2007 and Q4 2008
45 percent drop in transaction volume in Q4 2008 compared to Q3 2008
Apartments overall average price fall of 11 percent in Q4 2008 from Q3 2008
Townhouses overall average price rise of 1 percent in Q4 2008 from Q3 2008
Villas overall average price fall of 3 percent in Q4 2008 from Q3 2008
Completed properties fell by an average 5 percent when the Burj Dubai Development was included in the index
Uncompleted properties fell by an average 10.4 percent when the Burj Dubai development was included in the index
Completed properties fell an average 1.6 percent when Burj Dubai Development was excluded from the index
Uncompleted properties rose by an average 5.7 percent when Burj Dubai Development was excluded from the index
Quick Links(Residental)
Filter by address:
Comments 1-10 of 10
Posted by Ignorant Me on 17 January 2009 at 18:41 UAE time
I am confused but having said that I am in a perpetual state of confusion ever since I landed in Dubai.
Just as soon I start of grasp the 'can do' I am told it has been reversed to 'no can do' only to be followed by a 'probably can silently do'. So do excuse me.
My confusion now lies in the fact that a fair amount of projects have been shelved (so nothing new on the market), empty apartments are quickly filling up as people have no confidence or money to buy. Quite a few of the new projects do not have electricity connections, etc. etc.
So come 2010, with the continuous influx of people into the UAE, why should the rents/selling prices drop? I would reckon they will drop no further, steady and then slowly start climbing.
Another factor is Dubai has no more beach property - so why would owners of the only property directly on the beach i.e. JBR - think their prices will drop?
Perhaps Collier's should spend a little more research time before issueing hard to believe or, worse, outdated reports.
Posted by Saleh, Abu Dhabi, UAE on 14 January 2009 at 14:10 UAE time
Let us be realistic. The increase in prices has mostly been driven by speculation; this had created a bubble and there is no way that the 'stellar growth' can be sustained sooner or later prices have to obey the economics of supply and demand and head southward. when will it hit the bottom? It is anyone's guess but I suspect we we still have a long way to go; taking into consideration the global recession and capital flight from GCC countries, we should brace ourselves for the hard landing which is still to come by 2010.
Posted by Property Guru, Dubai, UAE on 14 January 2009 at 10:11 UAE time
The best way to decribe Dubai real estate market managment is - Oh God forgive them, they don't know what they are doing.
The issues are very simple to address, but someone somewhere just don't want to acknowledge them. It is like s suspense movie where you keep guessing :-
Residence visa or not? Rent cap or not? Can I stay in my property or not once it has been rented out? Is there any service charges limit on developer or not? Can a property owner audit the service charges accounts or not? Is there any penalty on developer for delaying beyond agreed delay period in contract or not? Who will handle rental disputes - RERA or rent committee? Why service charges have no regultion but rentals have a 5% gap? What does an owner do if Emaar or Nakheel simply double the service charges but lanlord has to keep the rent same for 2 years?
Anyone listening? NO. Oh god again forgive them.
Posted by UK, Dubai, UAE on 14 January 2009 at 09:58 UAE time
In DEC 2008, Colliers "predicted" in AB that "house prices in Dubai set to fall..."when in realty they had already dropped significantly. When many readers raised this issue, the author of the report had to openly admit that the report was prepared months earlier and published in DEC when the atual situation had changed considerably. Now we have this new "finding"from Colliers which again seems to be far from reality. It is time for Colliers to provide another explanation. And as far AB, they should seriously consider if such priority be accorded to Colliers reports in future.
Posted by ALEX.A, DUBAI, UAE on 14 January 2009 at 07:37 UAE time
The government was told that the residency rules are being abused. People are obtaining residency for their whole family buy simply buying a studio and then rent out the studio and do not even live in it. Well, instead of coming up with a wise solution to curb the abuse, they simply said no more residence visa!!! This is not only a misrepresentation (as the companies promising the residency were mainly government owned companies like EMAAR), but it simply put a major lid on investor confidence. How can someone spending 10,000,000 DH in this country not be allowed to live in their own house??!! This is absurd. Would anyone in the world buy any property anywhere in the world that does not allow them to live in it? Absolutely not. The first thing the government MUST do is put the confidence back in investor's mind and that starts by giving them the facility to live in their own place. That is not even enough. They should come up with a long term plan that even allows people to become citizens. They can do the same thing in Canada and obtain residency right away and obtain citizenship in 3 years at much lower prices!
This is from a stupid investor that has bought over 15 properties!! I know, it is my own fault.
Posted by kumar, Dubai, U.A.E on 14 January 2009 at 01:10 UAE time
Colliers ! well come to Dubai.
Hope you people will come to know the real rates of the market & study the prices & give the correct information to your investors as they have too much to loose or gain on your trust.
good luck to your investors & customers.
Posted by nhea jmani, dxb, uae on 13 January 2009 at 20:36 UAE time
IN WHICH WORLD IS COLLIERS LIVING - 8% - ANY WAY ZERO
HAS NO VALUE
Posted by Muhammed Azeem, Abu Dhabi, UAE on 13 January 2009 at 18:34 UAE time
It should be accepted as a reality that, any country, any race, any religion, any society is a combination of beggars to Kings. We can never create a city with an ARTIFICIAL super rich, handsome/beautiful, driving limos/sports car kind of people. The people come here make money and save money in different brackets.
So a modern cosmopolitan city should be planned in such a way to accommodate all income group people.
Posted by Property Guru, Dubai, UAE on 13 January 2009 at 15:07 UAE time
What makes these consultants worthy of publishing comments in all the prominent publications? they have no clue of what is happening. The prices have fallen from 25-40% across the board. It's seven years now since the market opened yet the government can't tell clearly that a residence visa will be given or not? or at least a firm statement of rules and procedures. Even this is a matter of speculation in Dubai, the whole market was anyway under specultion mode.
The developers are charging service charges without any limits on them but rentals are governed by rent caps. Who can affort to buy and maintain an apartment after paying AED 30 per sq ft as annual charges. It is as good as paying rent for your own apartment. Such funny thing can happen only here.
Posted by Aadil, Johannesburg, South Africa on 13 January 2009 at 14:18 UAE time
Even after the decreases, prices are still way too high.
Entry level should be AED500 per sq ft. Average price should be AED1100 per sq ft.
Developers need to stop ripping people off.