By Joanne Bladd
Data shows a 15% gap between asking and selling price, as homeowners struggle with economic realities
The total value of real estate deals in Dubai plunged 65 percent in 2010 as new supply squeezed market prices, a new report has said.
The number of deals fell by more than half during the period as lending in the emirate remained pinched, the latest data from Jones Lang LaSalle showed.
In the third quarter, less than 600 property transactions were completed, down from more than 1,200 in the same period in 2009.
Dubai’s already glutted real estate market will see a further 25,500 units come online in 2011, analysts said, with no major project cancellations expected over the next year.
“Dubai’s residential market will continue to experience a situation of oversupply and prices are not expected to recover before 2012,” analysts said.
Apartments will make up 79 percent of Dubai’s residential stock by the end of 2011.
“Lending will remain a key factor in market recovery. The residential market will likely see improved lending in 2011 as more banks are injecting liquidity into the mortgage market.”
The data showed sellers continue to struggle with new economic realities, with the gap between asking and achieved prices widening.
Average selling prices in the three months to December 31 were 15 percent lower than asking prices, compared to 10 percent in the same period a year earlier.
On the rental front, landlords across Dubai had mixed fortunes in the fourth quarter, with apartments in cheaper developments showing a significant decline in lease price.
International City saw lease rates fall to less than AED50,000 per annum for a two-bedroom apartment. In contrast, rents in Burj Khalifa’s Downturn stayed relatively stable, with two-bedroom flats attracting an average annual rent of around AED125,000.
Rents across Dubai saw an average decline of eight percent in the fourth quarter, compared to the same period a year earlier, the report said.
Villas fared better, with rents starting to stabilise as the rate of new supple entering the market slowed, the report said.
“Rents for middle to high-end villas such as those on Palm Jumeirah have remained relatively stable while rents in The Springs have declined substantially,” analysts said.
Rents fell an average of 11 percent in the fourth quarter, compared to the same period a year earlier.
Thought Dubai was fine now?
Dubai will remain as the finest city in the middle east. Give it time and it will pickup again. So it is only a matter of time.
the comparison is with 2009 - how abt with 2007-08? how far down are we?
Dubai is on its way to recovery, very soon..!!! Well before 2012.
The very planning will bear the fruits. The over supply of units is a long term business planning to emerge as the choicest city to live in.
Great work Dubai..!! More to come..!!
Dubai is the ECONOMIC hub for SAARC region, Middle East, North Africa, East Africa, China and Russia.
DUBAI offer the platform to people with imagination to become billionires in next 10 years
Imagination is the currency and need of the day in Dubai......
I am headed for Dubai. Do not under estimate the vision of the Head of State and his imaginative power.
Saif i have been reading your comments for a while now and every one is how Dubai is back in business and just about to recover.
We will be at the bottom of the hole we are in until RERA tells us all what projects are cancelled and people get their money back from the developers.
as for the continued over supply with even more to come this year that will not get sorted out until more people come to this region to live and that will not happen until the banks are tighter regulated and the company sponsorship rules change.
dont get me wrong i love the UAE and have no intention of leaving anytime soon but i am realistic in the fact that we do not have all the facts as to the problems Dubai has with its debt so people will not invest here.
You said the same thing last year for 2010. Didn't happen. Simply because your statements aren't backed by valid reason. There are too many negatives that Dubai's property market is combating as opposed to any positives you might be able to think of & list out. Let me know if you'd like to get a little educated vis-a-vis those.
Basic economics is supply and demand. If you have too much of an item you either cannot sell it or you have to reduce the price. Over supply of anything means bad planning and certainly not long term business planning. Unless the long term business plan is not to sell an item?
Dubai has lost no charm regardless of property prices going up or down. The slump came due to finance establishments backing off from their expected support in the real estate industry , indeed due obvious reasons.
But the Opportunities that are available for the investors now, when the property prices are low and affordable, is indeed again the obvious reason for the finance establishments to reinstate their support.
For when that happens as a distinct strategic offer, the people will see the opportunity and accept the mortgage terms on offer and invest again, which will bring about a healthy return of the boom in the property market again.
As Dubai exudes the same charm in the region as it always did!!
It's a long way ahead. I think it would take minimum 8-10 years for the property market to recover to the price level of 2008. It may not reach the level we saw at its peak.