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Sun 4 Oct 2009 01:29 PM

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Dubai villa prices 'may have hit bottom' - Landmark

UPDATE 1: Property advisory firm says villa prices rose 8% in Q3, apartments down 3%.

Dubai villa prices 'may have hit bottom' - Landmark
PRICE PREDICTION: Landmark Advisory said on Sunday that villa prices in Dubai may have hit the bottom.

The price of villas in Dubai rose eight percent during the third quarter of 2009 and are expected to remain stable in the short-term, Landmark Advisory said in a new report published on Sunday.

Villas accounted for 60 percent of residential sales, and the report added that with projected villa supply and current sales inventories "relatively stable", the floor for villa prices in the emirate may have been reached.

"If investor confidence and inventories are stabilising, then we may have possibly reached a price floor for villas,” said Jesse Downs, director of Research & Advisory Services.

The latest report also found that apartment prices fell three percent in Q3, in comparison to falling 17 percent during the previous quarter.

“Apartment inventories remain stable, with the majority of sellers holding prices, and because many distressed sales that were available over the past 3-6 months are no longer available,” added Downs.

“In Dubai, apartment demand gravitates toward more affordable units, but financing appears to be an issue, with financed apartment sales declining to 14 percent in Q3 2009,” she added.

Leasing rates for villas in Dubai increased six percent in the third quarter, in line with sales trends, according to Landmark.

“This is due to considerable demand during the summer months, primarily from relocation within the UAE, but also from a limited amount of new demand from expatriates moving from abroad,” said Downs.

But unlike the villa segment, Dubai apartment rents dropped 17 percent during Q3, she added.

Dubai’s office market continued to suffer from weak demand, which brought office prices down another 10 percent in Q3, the report added.

Abu Dhabi’s residential market saw average listed sale prices increased, but most real transactional prices did not, the report said.

It showed that market-wide average listed prices for apartments and villas increased 8.5 percent and 7.2 percent, respectively.

Abu Dhabi’s leasing market showed a similar trend, with asked rents appearing to stabilise, while agreed rents kept falling.

John 10 years ago

Landmark makes itself look stupid every time it issues one of these press releases, which is printed with a byline and no checking about what is really happening. Once again, like a stuck record, there is not a single fact in this press release.

munter 10 years ago

Miserable cretin tenants are screwing us over on rents whilst sale prices (our equity!) are in freefall. It's not fair! How much longer can we survive this double whammy - not much longer. Just don't tell the banks how far underwater we all are...

Simon 10 years ago

Landmark are not really on the ball with their 'market knowledge'... There is a brandnew townhouse villa development coming up in jebel ali in excess of 300units. Priced below 1mil for a 3bed 2,600sqft+ and 1.5 for a 4bed 3,000sqft+... This is real pricing and thats where the springs and meadows need to be headed. When this new development hits the market...with showhouse and delivery within the next 12mths from launch...prices will correct in the villa market further. Also Landmark really do need to understnd that although there is a perception that villa prices have stabilised...there are some very good financial reasons why...the owners are in negative equity so can not possibly sell below certain prices because they can't afford to repay their mortgage deficits! So, in reality, there is a FALSE price floor in this market for villas. You can still see cash owners liquidating below market/advertised prices...its the mortgaged owners who can't sell. Believe me...if their weren't such high mortgage liabilities out there, prices would fall further

Research 10 years ago

You are so right! I know this one house that sold for a really good price. So obviously every other price has to fall to that level too. Real estate is like so easy; I don't understand why people make it so complicated, with their "trends" and "averages." Even this Jesse person "hedging her bets..." Why would anybody bet on shrubbery? We should all start brokerage company and teach these guys a thing or two actual estate. Who's with me!?

Simon 10 years ago

One villa price won't change the market price as your sarcastic comment alludes to...but 300 will...with more to follow...and thats my point. When a critical mass is priced well below the curent market rate a new psycological level of value will enter the frame and will effect prices in the Springs and Meadows...comparatively similar developments. It is that simple and has been proven time and time again...you appear to be one of those that just says stuff without actually knowing why you've said it. There is a lot further for prices to fall in Dubai because currently there are no fundamentals underpinning the Real Estate market here. You don't have to be a genious to figure that one out. Owning a brokerage as I do...i get to see the 'real' state of the market, how brokers are trading, how they treat their clients/investors, what they are selling, what clients are buying, how brokers are still cheating their clients on commissions, how properties are falsely priced, how some investors never get to hear about every genuine offer because the broker can't earn enough commission at certain offer levels, how large numbers of mortgaged clients are in massive negative equity, how the banks over here are massively exposed to defaults not only from developers but also residential mortgagees etc, etc, etc...I see it all. When you get to see the 'real' market in operation...you get an inside view that 'paints a picture' and gives a future direction to where the market could and can be headed...which gives me the ability to contradict and in some cases attack the authors who report on the Real Estate market on this website...

Kris 10 years ago

I don't know about all villa developments in Dubai but I have been an investor in a villa in the green community west & that has shown a great price increase over the past 6 months. As an example, a 4 bed bungalow went for as low as 2m in March 09 from a high of 5.8m in July 08. A couple of my friends bought at 2.1m & sold at 2.4m in a matter of 3 months ( in July) and now those same bungalows are at 2.9m or 3m! Like I said, I don't know of any other developments but GC West has risen in price (for completed units that is).There are many out there who had cash & invested at the right time & have made in excess of 35% within 6 months. It took guts to invest but these people have been rewarded handsomely.....I feel villas are still worth the risk as there isn't much in the pipeline as compared to apartments.

Mr Big Brain 10 years ago

Simon, everything you've told us about your fantastic insight into the UAE property market is common knowledge to all. You seem to be fairly impressed by it though, so that's nice. & I hope your villas project near Jebel Ali doesn't have any Nakheel flags flying nearby it - but i am sure you really know that delivery within 12 months actually means maybe the showhouse will be half finished by then.... Anyway i'll let you get back to the doom mongering, im sure it makes you happy..

Anthony 10 years ago

Simon, care to name this development in Jebel ALi? As an agent you will not need me to tell you, that the price of a property is determined by numerous factors. So to claim, that because 300 villas are selling at x price, other developments need to come down to that level is pretty special logic. I know I can get a dirt cheap flat in KArama but I still pay a hell of a lot more for my apartment in the Marina. Unless two developments are identical (any property in Jebel Ali is of course going to cost much less than Emirates Living) comparing them is a futile excercise. In any case you say they are not ready for another 12 months, so whose to say that when they are complete their price might well rise or indeed fall? Using one small unfinished development as a bellweather for all villa prices in Dubai is nonsencial.

Jebel Ali Baba 10 years ago

Simon is totally right with is statements. The reason some villa prices went up is the simple fact of high demand on low priced villas like the Springs or Jumeirah Gardens. High priced villas will be still see decrease of prices for a while. Also Simons arument of higher supply is right as many "soon-to-be-finished" projects were artificially delayed to bring up demand but will go on the market end of this year/beginning next year. Generally real estate prices in Dubai are and will not be indexed and unified anymore. Sharp negotiations and bargaining will diversify the prices the same way as location, build quality, age and condition is already. No one pays the same price per sqm like in Arabian Ranches when he is buying in Emirates Hills, prices in Jumeirah Lakes are different than in Al Barsha... But all in all landlords and sellers can only get, what tenants and buyers are able and willing to pay, regardless what the ask for.

Simon 10 years ago

I don't usually take the bait...but hey... 12mth build...due to the construction techniques and fabrication/materials used...yes...can and should be done. Its technology used in Europe tried and tested. Delivery in 12mths?...yes, hard to believe but has been achieved in Europe in less time. Dubai time line? unheard of here...lets see. I will accept any sceptical view on the timeline. As you'll note I said a development similar to Spings and Meadows...so comparatively speaking its very well priced. Its not a development I'm involved in or have any vested interest or any interest at all but I have seen the plans and understand how its gong to be executed. The development will have an effect on prices...springs and meadows being the obvious casualties. Jebel Ali...not Karama. How you can compare Jebel Ali to an area such as Karama from what I wrote is interesting...You must read what is written then you'll see that as an area, comparatively, it sits well between Dubai and Abu Dhabi. Batutta Mall is the nearest Ammenities at this time...10mins away max. catchment area for working families is excellent...and affordable. There are other facors but I won't bore you with those as they are pretty obvious. Anthony, look at the bigger picture and not in isolation...there is more to what I wrote if you think deeper...the comparison is a fair one and not futile. Big Brain...Doom mongering? didn't see it. If you can't look facts in the face, positive or negative and deal with them then you must be one of those that just ramps up the market for no reason...other than for your own self interest and personal gain..now that is sad. Take the negatives and deal with it. Life goes on, deals get done but even surely with your 'big brain' you can see there are no real fundamentals underpinning the Dubai property market(?) By pointing it out doesn't mean i'm a doom mongerer. But do me a favour....point out the factors that ARE supporting the Dubai property market...spell it out for everyone...that would be interesting...very interesting to see. O' big brain...i put the stuff in about my knowledge of the market so anyone reading would know that what I wrote was from a frame of reference and not just hear say or repeating gossip. If you think i'm impressed by it then thats sad. Anyone who thinks its impressive to rip off investors and clients is one sad individual. Anyways...