Dubai’s embattled real estate market is showing signs of stability amid a global stall in the growth of house prices, real estate consultancy Knight Frank said.
The Gulf’s worst-performing property market in the last three years has seen house prices rise 2.1 percent since October, with a modest 0.6 percent increase in the first quarter.
By comparison, global house prices rose just 1.8 percent in the year to March, the lowest annual rate of growth recorded since the last quarter of 2009, the consultancy said.
Half of the 50 countries in the Knight Frank Global House Price Index were flat or saw negative growth in the first quarter, compared with just 18 nations a year earlier.
“The Middle East provides an improving picture,” said Liam Bailey, head of residential research at Knight Frank. “Dubai has seen price growth regain positive territory in the last six months and the consensus is that the market is stabilising following the volatility observed in 2008-2010.”
The index echoes the findings of consultancy Cushman & Wakefields, which said last week that real estate in the Middle East had seen a 15 percent rise in investments from overseas buyers.
The company said prime rents across all sectors in the UAE were beginning to stabilise following months of declines, with the region re-emerging as a real estate investment destination amid widespread political unrest in the Arab world.
Dubai, the worst-hit property market in the Gulf, saw house prices more than halve in late-2008 as the financial crash wiped out project funding and brought a halt to its real estate boom.
Real estate sales have plummeted since the days of Dubai’s property bubble, when speculators frequently bought yet-to-be- built homes and sold them at a profit before a single brick was laid, but the emirate continues to struggle with the legacy of oversupply in an already glutted market.
Jones Lang LaSalle estimates that 54,000 homes will come onto the market in Dubai from 2011 to 2015. That’s about 15 percent to 20 percent of the existing supply, according to Jesse Downs, director for Middle East and North Africa at the property broker.
Global analysts remain divided on the state of the trade and tourism hub’s real estate market, with many suggesting house prices have further to fall.
Earlier this month, Deutsche Bank said Dubai property prices continued to slide and that political instability in the Middle East had failed to give the market an expected boost.
“Despite talks of renewed interest in real estate following regional unrest, there is no visible sign of an improvement,” analysts wrote.
“Even if we believe the worst of the downtrend is now behind, new supply, lack of homebuyers’ appetite and anemic transaction activity point to further weakness.”
Tarik El Mejjad a London-based analyst for Nomura International, said last week that, while there was a gradual increase in UAE mortgage lending, the market is far short of a real recovery.
Dubai said it had cancelled 217 property projects as of May 31 after completing a review of the industry in the past two years, in a bond prospectus filed on the London Stock Exchange earlier this month.
The total value of property sale transactions plunged to AED119.5bn at the end of last year from AED152.9bn a year earlier, it said.For all the latest business news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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