Press Release 01\/08\/2010
\nAverage house prices in Dubai have fallen slightly, according to the Colliers International Dubai House Price Index for the second quarter of 2010, published today. The index recorded a 4 percent decline in house prices since the first quarter of this year, the first quarter-on-quarter contraction in twelve months.<\/p>\n
The index dropped 5 basis points from 119 in Q1 to 114 in Q2, with the median price of homes reaching AED 1,014 per square foot (AED 10,915 per square meter) in Q2, down from AED 1,061 per square foot (AED 11,420 per square meter) in Q1.<\/p>\n
Despite the decline in the second quarter of the year, the index still shows a 7 percent increase in overall house price values year-on-year compared to the second quarter of 2009. However, Colliers International warns that the upcoming increase in housing supply, coupled with lower rental income, could put pressure on house prices, pushing them down further in the coming period.<\/p>\n
Ian Albert, regional director of Colliers International, said a 4 percent decline in the second quarter of this year is \u201ca relatively modest change compared to the extreme volatility of the index between 2008 and 2009, when it showed a 50 percent increase in house prices before falling back to 2007 levels,\u201c Albert said: \u201dIn the past 12 months we have seen the index move within 1.8 percent of its average index value of 115 points, indicating a degree of stability over the past year, however, we expect a further slowdown, as ongoing concerns about putting more homes on the real estate market will prevent further recovery.\".<\/p>\n
Colliers International, the global real estate consultancy, expects around 33,000 residential units to come onto the market by the end of 2010, down from its previous estimate of 41,000 units, following delays and rescheduling of a number of projects in Dubai. Given Dubai's track record so far, a significant number of these units may be delayed until 2011.<\/p>\n
There are more than 340,000 residential properties in Dubai, with an occupancy rate of 87 percent, and he expects this rate to decrease. \u201cThe market cannot absorb the additional numbers of real estate units unless the population increases or slows down the entry of these new real estate units into the market,\u201d he said.<\/p>\n
The situation is exacerbated by falling rents in the emirate. Dubai's saturated residential market contributes to the more than 50 percent drop in average rental prices since 2008, which discourages ownership.<\/p>\n
\u201cWhile this is good news for tenants, the potential drop in income for residential rental properties negatively impacts market value, making them less attractive to investors, which will be another factor to monitor in the coming quarters,\u201d Albert said.<\/p>\n
The index, compiled using actual mortgage transaction data from a range of financial institutions, showed a 15 percent increase in the number of transactions in the second quarter of 2010 compared to the first quarter of the same year. Colliers International says that despite this increase, the market is still experiencing sluggish demand, which, as in the previous quarter, is mostly end-user-oriented and geared towards existing residential projects with completed infrastructure and amenities.<\/p>\n
\u201cBanks are still cautious and selective in real estate financing, often providing mortgages to completed projects and borrowers who go through rigorous approval processes,\u201d Albert said.<\/p>","protected":false},"excerpt":{"rendered":"
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