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Has the UAE property market bottomed out?
HSBC says maybe. According to the bank, property prices in Dubai rose in April and May, indicating a possible comeback for the nation’s real estate sector.
June 2, 2009 3:28 by Dana El Baltaji
Property prices in Dubai and Abu Dhabi rose by 4 percent in April and 5 percent in May, according to a survey conducted by HSBC. The news comes after almost ten months of falling property prices and an increase in property disputes.
Since September 2008, the UAE has suffered a significant decline in consumer confidence; a report published by London-based Knight Frank in May said Dubai’s property prices fell by 32 percent from March 2008 to March 2009, making Dubai the world’s second worst performing property market after Latvia.
The market, however, may be on the mend, said David Lepper, head of UAE equity research at HSBC: “Market data from April and May show a range of positive indicators: agreed property sale prices are rising, volumes are holding up well, and banks have loosened their lending criteria.”
The increase is predominantly in the sale of apartments, which increased a total of 9 percent in May alone. The sale of apartments accounted for 85 percent of all transactions the bank recorded.
Villa prices, on the other hand, fell by 11 percent in May.
According to the bank, apartment and villa prices have fallen by 23 percent and 65 percent respectively compared to the market’s peak in September 2008.
The increase in apartment prices, however, is not an indicator that the real estate market has recovered: “We will not be able to discern a sustainable trend until later in 2009,” said the bank. “And while we note these positive developments, the market as a whole is coming off a very low base, given the sharp declines since the market peak. Credit growth remains subdued, and the UAE economy still has challenges to deal with.”
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