Dubai’s real estate market increasingly faces the chance of a sharp correction as signs of overheating emerge, Saudi Arabian bank Samba said in a report released on Sunday.“Signs of overheating are emerging, fuelled by expansionary monetary conditions and high oil prices,” Samba Financial Group said in the report.
“This is raising the risk that a significant imbalance may develop over the next two years as scheduled new supply comes on to the market, increasing the prospect of a – possibly sharp – market correction.”
Shares in Dubai property firms have plunged in recent trading sessions, with the biggest listed firm, Emaar, falling on Sunday by around 8 percent to hit a 3-1/2 year low.
Investors have fled the Dubai property sector in recent weeks in the wake of corruption investigations and confusion over visa rules for expatriate homebuyers.
Samba said it expected the sector to enter a cyclical weak phase in 2009-2010.
“Soaring property price increases over the last five years, have attracted increasing supply which will eventually exceed demand,” the bank said. (Reuters)
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