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A couple of things seem certain to happen this year: Property prices will fall further, the Northern Emirates in particular will suffer, and Kipp will write more property related stories.
January 20, 2011 3:17 by Samuel Potter
Coincidentally, that’s the approximate decline that Northern Emirate rents are set to see this year, according to CB Richard Ellis. Khaleej Times reports that analysts at the property consultancy have predicted a further 10 – 15 percent fall in rents there over the next 12 months. “The sheer volume of residential stock in the development pipeline across the Northern Emirates poses a major problem for the market that will ultimately lead to further rental declines,” it said in a study.
“Our forecast for the next 12 months is for a further 10-15 per cent drop in residential rental rates. The biggest declines are expected in Ajman and Umm Al Quwain due to their proximity to Dubai and Sharjah which both have huge volumes of available supply at declining rental rates,” said Mathew Green, head of research, and Mohammed Faheem, senior research analysts.
So far so familiar – Kipp is sure it has been writing this story every month for a year at least. So is this Groundhog Day? Can we expect Bill Murray to whizz by us in a truck driven by a small rodent? Maybe not. Because while there may be a continued decline across the mid and low ends of the market, there may be a surge in demand for high-end properties, according to Landmark. It says it has identified a significant price bifurcation based on quality.
Yeah, we didn’t know what it meant either. Apparently, bifurcate means to cause or divide into two branches or parts. That means that while the general trend for prices and rents is downwards, high quality units have stabilized. We couldn’t say that a year ago, so things aren’t completely repeating themselves.
Unfortunately, though, Landmark quickly reverts to the same language as everyone else: “There is a high degree of oversupply already prevalent in the Dubai Market, and with a considerable amount of fresh supply due to come online shortly, this will only have an adverse affect, putting downward pressure on sale prices,” says Jesse Downs, director of research and advisory services, Landmark Advisory. “Although we have not seen as steep a decline in sales prices as we have with lease prices, there have still been significant reductions and, what is more, this has happened ubiquitously throughout Dubai.” Tell us something we don’t know.
So what have we learned today? Well, real estate is still on its knees, and Kipp really likes Groundhog Day. Two very important facts, one much more fun than the other.
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