Residential property prices in Dubai are stabilising but there is still no immediate prospects of a real estate recovery in the Gulf emirate because of a predicted over supply in 2010, according to reports.
The latest research report from Deutsche Bank indicates that property prices fell by 4% in the last six months but future over supply could prevent a near term recovery.
Overall property prices and rents were flat on the month, indicating that the market is stabilizing, but prices are still down by 52% from their peak, the bank said.
The bank though says that around 30,000 new housing units due next year could keep the market flat. ‘While signs of life are multiplying in the real estate market, we believe the main risk remains new supply, which could prevent any meaningful recovery in the near term,’ said analysts Nabil Ahmed and Athmane Benzerroug.
Positive signs include prices easing by 0.9% on the month while rents gained 2.4% in October, the report says and it also estimates that transaction levels have risen by 50 to 60% from their lows in the first half of the year.
In another report it is clear that the much hyped prediction that property near the new Dubai Metro stations would benefit from price increases has failed to materialise. There has been no substantive increase in sales prices or rents for residential property near stations, according to Landmark Advisory.
This is despite claims that they have. Most notably Essa Abdul Rahman Al Dossari, chief executive of the RTA’s Public Transport Agency, said this week that land prices around the city’s metro station had risen by three to five times.
‘There have been a few cases where the sale prices have increased marginally, but this was largely due to speculative demand from investors, said Jesse Downs, director of research and advisory at Landmark.
‘The Metro is not fully functioning yet as only a limited number of stations are open. Therefore, I do not anticipate that the Metro will impact sale prices or rents in the next six months to a year,’ Downs added.