Dubai home prices to fall another 5% next year, commercial property prices to drop 10% - economist
Dubai’s economy may grow between 1.5 percent and 2 percent in 2011, mainly driven by expansion in the services, trade and tourism industries, Shady Shaher, a Standard Chartered economist, said in Dubai on Sunday.
The UAE, a federation of seven emirates including Dubai, will grow four percent next year while Abu Dhabi will rise 5 percent, the bank said in a report issued as Shaher made his remarks. The UAE economy probably grew 3 percent in 2010, it said.
“With global trade looking unlikely to sustain the sharp rebound seen in 2010, re-exports and the logistics sector, of critical importance to Dubai, will be only moderately positive for growth,” Shaher wrote in the report. Trade accounts for 40 percent of Dubai’s economy, and along with tourism helped drive Dubai’s “recovery despite the challenges of a suppressed housing market and debt overhang,” according to the report.
The emirate has an estimated $18bn in sovereign and quasi-sovereign debt maturing in 2011, Shaher said. Some of Dubai’s state-controlled companies are struggling to refinance debt after credit markets froze amid the global economic crisis and a property boom ended.
Dubai World, one of the emirate’s three main state-owned holding companies, reached an agreement with all its creditors to alter the terms on $24.9 billion of debt, a person familiar with knowledge of the matter said in October.
Dubai home prices, which dropped by almost 60 percent since the market’s peak in mid-2008, will fall another five percent next year while commercial property prices will drop 10 percent, senior Standard Chartered economist Philippe Dauba-Pantanacce said.
It “will take a year and half to two years for prices to stabilise and start a recovery,” he wrote.