Dubai property prices rose in the third quarter for the first time since the emirate’s property market crashed late last year, but are still almost 50% lower than a year earlier, U.K.-based real estate consultancy Colliers International said Tuesday. Prices increased 7% between July and September from the second quarter — the first price jump since the market fell from its peak in the third quarter of 2008, Colliers said in its quarterly price index, which collates mortgage transactions on properties open to foreign ownership since the start of 2007.
Annual prices, however, remain 47% lower, and are currently at the same level as those recorded in the second quarter of 2007. The number of market transactions rose 64% during the third quarter of 2009 on a quarterly basis. “The third quarter results indicate a ‘bounce’ in the market but we will have to wait for the fourth quarter results before we can say whether an underlying growth profile exists, indicating a potential recovery,” said Ian Albert, Colliers International regional director in Dubai.
The average price of property rose to 1,016 United Arab Emirates dirhams ($278) per square foot in the quarter, compared with 949 dirhams a quarter earlier. Apartment prices rose 6%, while villa prices increased 9% and townhouses gained 7%. Colliers said the rise in prices was mainly due to an increased availability of mortgage financing and a perceived increase in job security among expatriate workers. The consultancy firm said the volume of new units coming on to the market next year may suppress average prices in 2010, but added that “certain tier one developments will offer investors oases of performance, predicated upon a return to fundamentals outlook.”
Property prices in Dubai were rising sharply as recently as the first half of 2008. Prices rose 42% in the first quarter of 2008, 16% in the second quarter and 5% in the third quarter, according to previous Colliers reports. However, in the third quarter of 2008, as the impact of the global crisis drew in on the emirate, prices fell sharply and are yet to recover. Prices between the fourth quarter of 2008 and the first quarter of 2009 tumbled 42%, according to Colliers, but the rate of decline slowed to 9% between the first quarter and second quarter of this year. “We’ll have to wait until the fourth quarter to see how strong this underlying growth is,” Mr. Albert told Zawya Dow Jones. “By then we’ll know if a trend is developing.
