House prices in Dubai are likely to drop nearly 28 percent this year, due to sudden drop in demand. This puts a halt to the six-year property boom that the emirate had been witnessing, reveals the survey report by Reuters.
The residential prices in Dubai will see a decline of 15 percent next year reveal the median forecast of seven analysts at Banks Research Institutions and Investment Firms.
Six of the analysts are of the opinion that prices in Dubai have already touched its peak, in early June, even before the launch of $1.5bn Atlantis hotel on the Palm-shaped Island visible from space.
The prices could drop 27.5 percent thereafter, including a 17.5 percent drop from their current levels, as per the survey conducted between 23rd November and 3rd December.
Senior Financial Analyst at Global Investment House, Bikash Rout, said that there are hardly any takers at the moment. The pressure would be further more on properties that are under construction (off-plan properties) as speculators are desperate to sell the properties during global credit crunch, while the buyers grapple for mortgage loans.
The prices of housing in Dubai have surged since 2002, when the emirate kept its doors open for foreign investors by offering freehold ownership in certain areas, including the Palm Jumeirah.
According to Colliers International, the prices surged 80 percent during third quarter of the year, compared to same period the previous year. But considering quarter-on-quarter, the growth in prices have declined sharply from 43 percent in the first quarter to just 5 percent in the third.
According to Fabio Scacciavillani, the Director of Microeconomics and Statistics, Dubai International Financial Center, there will be an oversupply of residential units during the first half of 2009.
With the worsening of global financial crunch, tumbling of oil prices, and credit markets frozen, the economic boom in the Gulf have come to a total halt. Analysts are now expecting an overall increase of 15 percent in housing prices in Dubai for 2008.
Developers, most of whom, are partly or fully owned by the state are now scaling back on projects and cutting jobs due to the global financial crisis.
Most analysts said that prices of houses were overvalued and would take more than a year to attain stability, when buyers would re-enter market to take advantage of bargains.
The problem would get further aggravated, as the market has been focusing more on high-end units, which is far beyond what majority of the population can afford, said Roy Cherry, Vice President- Real Estate and Construction, Shuaa Capital.
But analysts still state that market for existing units is still healthy due to scarcity of residential units. Dubai Real Estate is oversold at the moment due to lack of liquidity, but, once the credit markets ease out, it will function smoothly again, said Chris Flinos, Head of MENA region-Real estate investment and banking, Merrill Lynch. Posted on 10/12/2008
Read more news
> Ebony, Ivory towers construction in progress
> Housing prices to plunge another 20 percent in 2009
> Dubai retail sector may see tough times ahead
> Dubai Housing Prices witness huge decline in first quarter
> Jumeirah Village projects well on-track
> Dubai rents plunge 23 percent
> Omniyat Properties rents out parking lots
> Leading Dubai property developers records decline in profits
> Apartment prices in UAE may drop by 30 percent
> Dubai Property Market may recover in 2 years
|
Hotels
Restaurants
Property
Jobs
Sports
Entertainment
Business
Directory
