Sale prices on Dubai’s Palm Jumeirah have fallen to their lowest level in over three years, with a three bedroom apartment on the prestigious Shoreline changing hands for just AED1.55million ($422,000).
Arabian Business understands the property is one of a number of new distress sales that have come onto the market in the past six weeks – effectively pushing down the lowest selling price to just AED704 ($191) per square foot. This compares to a peak of over AED2300 ($626) in 2007.
Since the start of the property crash in late 2008, prices have now fallen by nearly 70 percent in some parts of the Palm, though across the development the average drop is believed to be closer to 40 percent.
In May this year the Arabian Business Think Tank forecast that prices on the Palm Jumeirah will plummet another 20 percent in the next year. It predicted that average prices for an apartment on Nakheel's man-made island will fall to just AED1,022 per square foot by May 2011.
Meanwhile the latest data from real estate consultancy Colliers said that house prices across Dubai fell by four percent in the second quarter, according to the latest data from real estate consultancy Colliers.
The agency last week said that this was the first quarter-on-quarter contraction to be reported by its index in twelve months, adding that “forthcoming housing supply and declining rental incomes are likely to put downward pressure on house prices moving forward”.
Colliers had previously reported that its index had risen by two percent in the first quarter in comparison to the final quarter of last year.
The consultancy is predicting that around 33,000 new units will be released onto the market by the end of the year, less than its original estimate of 41,000 due to project delays or rescheduling.
“There are already more than 340,000 residential properties in Dubai with an average occupancy rate of 87 percent, with further declines anticipated,” said Colliers International’s regional director, Ian Albert.
“The market simply cannot absorb the additional supply unless the population grows and/or the release of stock is slowed down.”
Albert also warned that a dramatic drop in rents made home ownership a less attractive option for investors in terms of income generation, another factor that was weakening demand.
The report also indicated that rigid mortgage approval processes from cautious banks meant that access to finance for some buyers remains limited.
Colliers’ index is compiled using actual mortgage transaction data from a consortium of financial institutions. The data also shows a seven percent increase in overall house price values year-on-year, and the total number of property transactions rose by fifteen percent quarter-on-quarter.
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