Some Short Term Opinions on Dubai’s Real Estate Sector

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  • Author David Martin
  • Published March 26, 2010
  • Word count 497

According to the results of a recent poll by Reuters, Dubai real estate prices are expected to fall a further 10 percent in 2010. It is estimated that the emirate's debt crisis will delay the recovery in the property sector up to 2012.

The majority opinion of 12 analysts at banks, investment firms and research institutions was that residential property prices in Dubai have only a 13 percent chance of picking up before 2011.

Some respondents said that prices had already reached a bottom, while others said they expected a trough to be reached in the first half of 2010. Still others expected a trough in the second half of 2010 and a few in the first half of 2011. It is no secret that the recent woes of Dubai World have further sapped the prospects of a recovery in real estate.

In addition to this, conditions in the UAE property market are expected to remain weak in 2010 due to unfavorable demographics, property oversupply and risks associated with cancelled or delayed projects. What is also being anticipated is the continuation of rising vacancy ratios in the wake of Dubai’s oversupply of homes. However, the asset quality and location will determine the effect in individual circumstances. Dubai is expected to be oversupplied by over 30,000 new homes by the end of 2010, according to some estimates.

Since 2008-2009, Dubai has not only been hit by the global financial crisis but also the Dubai World debt repayment saga. At the height of the financial crisis, billions of dollars worth of projects were put on hold or cancelled. Thousands of expatriate and migrant workers lost their jobs and were forced to leave the emirate. By some estimates, more than 500 projects have been suspended or cancelled in the United Arab Emirates, with Dubai being the most severely affected.

In the long run, the financial crisis and credit crunch will result in a decrease in liquidity and financing that will limit the supply of properties in the market. In fact property prices are expected to fall another 10 to 15 percent before there is any major recovery in prices.

It is generally anticipated that rents in Dubai will fall between 10 to 15 percent in 2010 and remain flat in the first half of 2011, with rents and prices possibly rising in the second half of 2011. At present demand for Dubai Apartments and Dubai flats for rent are considerably on the lower side compared to Dubai Marina Apartments. You can contact Just Rental Dubai for some of the best rental rates.

Meanwhile house prices in Abu Dhabi remained largely unchanged this year, with the majority of analysts expecting prices and rents to climb further. Prices are expected to increase due to the current mismatch in demand and supply but will stabilize as the delivery of some of the projects is completed.

Rents in Abu Dhabi are seen falling by 15 percent in 2010 and by 5 percent in 2011, in order to meet a rising demand due to limited supply of housing facing a population increase from the influx of migrant workers.

David Martin is a respected, well read columnist in Dubai and considered an expert on the economy and issues. Expatriates like to quote him on everything from renting Dubai apartments to selecting the best rent in Dubai.

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