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Dubai world’s second worst performing property market
Dubai is the second performing property market in the world after Latvia, says London-based Knight Frank. Ouch.
May 26, 2009 9:42 by Dana El Baltaji
Thanks to the financial crisis, prices in Dubai’s property market have slumped by 32 percent between March 2008 and March 2009, according to a report published on Tuesday by London-based property broker Knight Frank.
The emirate “is in a mess,” says Nick Barnes, head of international research at Knight Frank. “A lot will depend on developers and how long they can hold on before getting into fire-sale territory.”
Analysts predict, however, that Dubai’s prices will continue to fall in 2009. A recent report by Swiss finance house UBS said it expects a 57 percent to 70 percent drop in prices from the market’s peak, from AED1,850 per square foot to AED500-AED800 per square foot.
Dubai’s market slump is second to Latvia’s, which saw a 36 percent drop in prices, and is followed by Singapore’s at 23.8 percent. The United States and Britain are in fourth and fifth place having suffered declines of 16.9 percent and 16.5 respectively.
Nick Barnes, head of international research at Knight Frank, says the price slump is likely to continue “for some while.”
“The inescapable trend is that the worst and most widespread economic recession since the 1930s continues to batter housing markets across the globe,” said Barnes.
“Rising unemployment and concern among those still in jobs, added to constrained credit conditions, means that buyer demand for housing remains suppressed and confidence is low in most markets which is inevitably having a negative impact on house prices.”
At the other end of the spectrum, Israel’s property market posted the highest increase globally, 10.9 percent, followed by the Czech Republic at 9.9 percent.
According to the report, the world’s best performing markets during the global economic crisis are small and have “fewer structural imbalances.”