Bottom out? Not for a while yet
Experts were predicting that Dubai’s property market would level off around the end of this year, but with new supply coming online the bottom looks a long way off.
December 16, 2010 2:18 by Samuel Potter
But maybe they should wait a little longer before making the move. According to Downs at Landmark, Dubailand will get cheaper still. “Consider Dubai’s total supply pipeline over the next four to five years, approximately one-fourth of the total supply pipeline is in Dubailand. We estimate a further 20 to 25 per cent decline in Dubailand average rents over the next three to four years,” says Downs.
So, what can we say for sure? That rental and real estate prices in Dubai will continue to fall for months yet, as the long overdue correction continues. But as we have seen, even the experts can’t agree how fast or how far the price will drop.
The end result has made property valuation a guessing game, according to the National. Richard Paul of Cluttons (a busy boy, it seems) told the paper it was now “very, very difficult” to place an exact price on a property. This means the real estate industry is often using educated guesses to value properties. But they value on what a buyer will pay, while a vendor has a longer term appraisal. The result is a disconnect between industry and vendor.
“You have to bear in mind, are the prices achievable?” David Quinn, the head of UAE operations for Cushman & Wakefield says. “There is definitely denial. The shock factor is greater.”
As the National observes, the old formulas simply do not work. But for the vast majority – the renters – the price drops are certainly working.
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