Steep price falls in UAE expected
Residential property prices in Dubai are set to fall another 10% before they stabilise, while prices in Abu Dhabi will drop another 20%, according to a new poll.
Dubai, famous for the world’s tallest building and man made islands in the shape of palms, is also famous for its spectacular drop in property prices and the fall is not yet over.
It will see prices plunge a total 65% from their late 2008 peak, according to the median estimate of 12 banks, investment and research firms polled by Reuters.
They will fall by 5% in 2011 and another 1% in 2012, medians showed, with only a 40% median chance they start rising again by 2013.
The same analysts calculated prices in Abu Dhabi would fall 55% before they start to recover, and expect them to drop 11% this year and another 7% in 2012.
‘Nearly 20,000 to 25,000 units are expected to be delivered in Dubai this year, which should pressure prices in older areas further,’ said Ambereen Jiwani, research analyst at Securities and Investment Company.
Social unrest in neighbouring countries will have a positive impact on the United Arab Emirates’ market, all respondents said, as the country is seen as a safe haven for investors in the region.
‘Regional unrest highlighted again Dubai’s status as a safe harbour. We expect foreign money in some of these countries to be withdrawn and reinvested in Dubai. The real estate sector could benefit from this,’ said Nabil Ahmed, real estate research analyst for Deutsche Bank.
Dubai’s real estate market is 28% oversupplied, which is putting pressure on the prices, a median of eight respondents showed.
‘Both Abu Dhabi and Dubai are facing an aggressive deleveraging process as well as a too-ambitious number of deliveries. This will lead to a demand supply imbalance even if the current socio-political unrest in MENA may have a favourable impact on demographics,’ said Patrick Rahal, manager for asset management at The First Investor bank in Doha.
Abu Dhabi, capital of the United Arab Emirates and home to most of the country’s oil, fared better during the downturn but house prices have still fallen 55% since the end of 2008.
Residential rents in Dubai are seen falling 10% in 2011, and 2% in 2012, according to the median forecasts in the poll. While rents in Abu Dhabi are expected to fall 13% more in 2011 and another 10% in 2012.
I agree that in some areas the price will still come down due to oversupply. I have a real estate company in dubai and we only concentrate on high end properties on good locations. These prices are picking up now
It will not come back for many years, when the royals need to defraud the poor they are in a bad position, we , who have lost all our life savings are now eating beans and rice daily But the royals nakheel for one is lost for about 25 year or maybe 50 years. sad the theives. Will you print this?
You will not see a come back to dubai for 50 years, .