The bank suggests prices, which by its reckoning are still rising at 18.8 per cent per annum, will peak in the first half of next year. However, while Dubai will feel the heat, Abu Dhabi may move ahead on the back of recently liberalised investment rules.
A Prime Group report cited by Standard Chartered estimates that around 52,000 new Dubai residential units will be completed next year, with a further 63,000 set for release in 2008. Given ‘a reasonable assumption’ of 7 per cent population growth for the emirate, this suggests supply will exceed demand by around 6,000 units in 2007 and 33,000 units in 2008. The result is likely to be that property prices and rents will slip for the next two years.
‘We have argued before that residential property prices are likely to come down around 20 to 30 per cent in the next two to three years and we believe that we are getting close to the peak in residential property prices’, said Steve Brice, regional head of research for the bank for the Middle East.
‘While demand is likely to remain strong in the coming years, as Dubai continues to focus on diversifying its economy away from oil, the key is supply’.
The Bank said prices jumped by an ‘extraordinary’ 12.9 per cent in October after a 1 per cent fall between July and September. This ‘may have come from a realisation that estimates for the release of properties reported for the second half of the year are unlikely to be attained. Indeed, one developer at one point suggested it would be releasing 60,000 units onto the market in the second half of 2006 and Prime Group now estimates the full year market figure will only be 40,000. There may also be a seasonal effect at play here’.
well i have a different opinion on it, check the post on uaec blog
DUBAI — The volume of property sales in Dubai is poised to rise as more global investors, shifting their focus away from markets hit by credit crunch, seek to enter the Gulf markets, a leading global property investment expert said.
Dubai, which registered the greatest improvement in real estate transparency globally over the past two years, is projected to record a 55.2 per cent surge in property deals to hit Dh717 billion in 2008 from Dh462 billion in 2007, said Blair Hagkull, managing-director of Jones Lang LaSalle (JLL), MENA, a leading real estate investment and advisory firm.
“With credit crisis hitting real estate markets in the US and Europe, many investors are eyeing Gulf markets, particularly Dubai,” said Hagkull. He was speaking to reporters at the launch of a new study — the Real Estate Transparency Report 2008 for the MENA region — which ranked Dubai as the region’s top most transparent market.
Hagkull said Dubai’s position as the most transparent of the MENA markets placed it ahead of other emerging economies such as those of the BRIC Markets (Brazil, Russia, India and China).
“Better than China, India and most of Russia, Dubai’s transparency index score exceeds the other BRIC markets,” he told reporters. JLL is an investment adviser with a track-record of working on projects worth $200 billion in MENA.
Transparent markets as those that are open and easier to do business with the components of transparency encompassing transaction processes, the regulatory and legal environment, market fundamentals and performance measurements.
Dubai property prices, which have surged 79 percent since the start of 2007, are likely to fall 10 percent by 2010 as supply of real estate units outpaces demand in the Gulf emirate,