Dubai property prices drop 4 per cent
Property prices in Dubai declined four per cent during the second quarter of 2010, compared with the first quarter in the first quarter-on-quarter contraction in 12 months, Colliers International said today.
However, the global real estate consultancy said the house price index (HPI) showed a year-on-year increase of seven per cent. The average house price fell to Dh1,014 per square foot in the second quarter compared to Dh1,061 per square foot in the first quarter.
Apartment prices also decreased by five per cent in the second quarter compared to the first quarter. During the same period, villa prices decreased by three per cent and townhouse prices fell by eight per cent, it added.
In May, Colliers said property prices in Dubai's residential property market rose four per cent between the fourth quarter of 2009 and the first quarter of 2010, but the demand-supply mismatch was likely to put downward pressure on prices.
The consultancy reiterated that forthcoming housing supply and declining rental incomes were likely to put downward pressure on house prices moving forward.
"We anticipate a further slowdown and we have an ongoing concern of the new supply entering the market, which will further impede recovery," said Ian Albert, regional director at Colliers International.
Dubai's property market has been hit hard by the global financial crisis and prices have slumped close to 50 per cent since their peak in 2008 while many of the emirate's most ambitious projects are on hold.
Colliers now expects around 33,000 units to be released onto the market by year-end, down from its previous estimate of 41,000 following project delays or rescheduling. However, given Dubai's history so far, a large number of these units may not be delivered on time and may cross over into 2011.
"There are already more than 340,000 residential properties in Dubai with an average occupancy rate of 87 per cent, with further declines anticipated. The market simply cannot absorb the additional supply unless the population grows and/or the release of stock is slowed down," said Albert.
The house price index, compiled using actual mortgage transaction data from a consortium of financial institutions, showed transactions increased by 15 per cent in the second quarter compared to the first quarter.
In May, JP Grobbelaar, Director, Research and Advisory, Colliers International, said despite property prices in Dubai having dropped significantly since 2008 the real estate market was "fundamentally healthy" and driven by the "right forces”.
"Property prices may have dropped considerably, but, at least, the forces that are driving the market now are the 'right' forces. Investors who are determining the demand are end users… they are not buying something to flip tomorrow and that is healthy," he said.
The consultancy reiterated that forthcoming housing supply and declining rental incomes were likely to put downward pressure on house prices moving forward.
"We anticipate a further slowdown and we have an ongoing concern of the new supply entering the market, which will further impede recovery," said Ian Albert, regional director at Colliers International.
Dubai's property market has been hit hard by the global financial crisis and prices have slumped close to 50 per cent since their peak in 2008 while many of the emirate's most ambitious projects are on hold.
Colliers now expects around 33,000 units to be released onto the market by year-end, down from its previous estimate of 41,000 following project delays or rescheduling. However, given Dubai's history so far, a large number of these units may not be delivered on time and may cross over into 2011.
"There are already more than 340,000 residential properties in Dubai with an average occupancy rate of 87 per cent, with further declines anticipated. The market simply cannot absorb the additional supply unless the population grows and/or the release of stock is slowed down," said Albert.
The house price index, compiled using actual mortgage transaction data from a consortium of financial institutions, showed transactions increased by 15 per cent in the second quarter compared to the first quarter.
In May, JP Grobbelaar, Director, Research and Advisory, Colliers International, said despite property prices in Dubai having dropped significantly since 2008 the real estate market was "fundamentally healthy" and driven by the "right forces”.
"Property prices may have dropped considerably, but, at least, the forces that are driving the market now are the 'right' forces. Investors who are determining the demand are end users… they are not buying something to flip tomorrow and that is healthy," he said.
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