More sharp falls ahead for UAE house prices
Prices in Abu Dhabi to fall another 20 pct.
October 27, 2010 3:04 by Reuters
Dubai house prices will sink another 11 percent before troughing in 2012 despite already having crashed 58 percent from their 2008 peak, as oversupply delays any hopes of a recovery, a Reuters poll found.
Dubai’s property market, which boasts the world’s tallest building and man-made islands in the shape of palms, was hit hard by the financial downturn, although debt concerns have eased after state-owned conglomerate Dubai World’s $25 billion debt deal last month.
Prices in Dubai and Abu Dhabi are set to fall six and eight percent respectively just in the next two months, and will not stabilise until 2012, according to banks, investment firms and research institutions polled by Reuters over the past week.
Abu Dhabi, the United Arab Emirates’ capital and home to most of its oil, fared better during the crisis but now faces a property oversupply. Prices have already fallen 45 percent and will will sink another 20 percent, the poll said.
“As properties are completed and delivered in Abu Dhabi, rents and prices will decline,” said Ambereen Jiwani, senior analyst at Securities and Investment Company.
House prices in the capital are set to decline 9 percent in 2011, the poll showed.
“Dubai’s prices will decline steadily until mortgage lending picks up and job security increases,” Jiwani added.
Six respondents in the poll said house prices in Dubai will reach a trough in the first half of 2011. Two said they had already hit bottom, while two said they will reach their low in the second half of 2011, and three in the first half of 2012. “According to market sources, a total of 26,000 units are expected to hit the market in 2010, followed by 25,000 units in 2011,” said Abeer Gouda, Assistant Vice President at Global Investment House.
“With the new supply of residential units coming on stream, we do not expect a market recovery before 2011.”
The chance of a residential property market recovery in Dubai before the first half of next year was 10 percent, according to median forecasts of the 13 respondents.
RENTAL DECLINE CONTINUES
Residential rents in Dubai are seen falling nine percent for the rest of 2010 and 10 percent in 2011 before rising 5 percent in 2012, according to the poll.
Rents in Abu Dhabi are set to fall 10 percent in 2010 and 2011 but hold steady in 2012.
“New deliveries in 2010 from projects such as Marina Square, Sun & Sky Tower, and Al Bandar will further push down rents and prices,” said Gouda.
Abu Dhabi’s property market is set for another year of consolidation in 2011 and the supply of new high-end homes will do little to address a shortage in mid-income housing, Gurjit Singh, chief operating officer at Sorouh Real Estate told the Reuters Middle East Investment Summit in Dubai earlier in October.
Gurjit said he expected 8,000 higher-end homes to hit the market by end-2011.
(Reporting by Praveen Menon; Editing by Jason Benham and Catherine Evans)