DUBAI, (Reuters) – House prices in Dubai’s battered property market are likely to stabilise by the fourth quarter, reflecting improving sentiment in global property markets, Colliers International said on Monday.
Prices in the Gulf emirate, which boasts man-made islands in the shape of palm trees, fell 9 percent in the second quarter from the previous one as the pace of decline slowed, the property consultants said in a report.
In contrast, prices in the once-booming real estate sector plunged 41 percent from the fourth quarter to the first quarter.
“We would hope that by the fourth quarter, we would have arrested the decline and are looking at stabilization,” Ian Albert, Colliers’ regional director told Reuters.
“I don’t think you can disconnect Dubai from the global community. Any positive news from around the world will have a positive impact on Dubai.”
Anglo-French property investor Hammerson on Monday cited stabilising UK real estate prices for slowing a decline in its net asset value for the first half of 2009.
Home prices in the U.S. rose in May for the first time in three years, while prices in Britain increased for a third month running in July, the latest signs suggesting both housing markets are stabilising.
In Dubai, any pick-up in prices in 2010 would depend on easier access to mortgages and loans and the delivery time frame for new supply to the market. Dubai is expected to be oversupplied by 32,000 new homes in 2010, according to Deutsche Bank figures.
Expatriate job security fears and concerns about project delays are also hampering the market’s recovery, Colliers said in its report.
Market transactions in the second quarter of this year rose 50 percent over the first quarter due to increased financing options for buyers, mainly for completed or nearly completed properties, it said.
Prices will fall a further 20 percent in the second half of the year, a Reuters poll showed in June.
Year-on-year, prices fell 48 percent in the second quarter, putting property prices back at the same levels as the second quarter of 2007. Prices are off 50 percent from their peak in the third quarter of last year.
NORTHERN EMIRATES RENTS
Year-on-year residential rents in the United Arab Emirates’ northern emirates fell by an average 20 percent in the first half of the year, and are expected to fall further as new supply enters the market, CB Richard Ellis said in a report this week.
Rents are now close to prices levels in the first half of 2007, the real estate services firm said, adding rents in the emirate of Ajman fell as much as 35 percent.
Property prices were significantly cheaper in Ras al-Khaimah than in Dubai and Abu Dhabi it said.
Many residents in the northern emirates are relocating back to Dubai or looking to upscale in their current locations as rents ease across the country.
“Declining lease rates in Dubai will result in further relocation of tenants from the northern emirates, predominantly from Sharjah and Ajman,” the report said.
Rents for residential and commercial properties in Dubai will fall for the rest of 2009 but declines will be marginal compared with the first half of the year, it said on Thursday.
Seven emirates make up the United Arab Emirates federation.