Residential property prices in Dubai will fall by up to a third by the end of the year as new housing is ready, according to analysts. "Prices will drop an additional 33 per cent to about Dh600 (US$163) a square foot," said Saud Masud, an analyst in Dubai for the Zurich-based bank UBS, in an interview with Bloomberg. Other analysts are more conservative but also predict a decrease. "By the year end, you can expect 10 to 15 per cent fall from the current level," said Sajeer Babu, an analyst at the National Bank of Abu Dhabi.
"You rarely find any buyer today even though there are more transactions than in the first quarter." According to the property consultant Jones Lang LaSalle MENA, about 22,400 units are expected to be handed over this year. People "feel the market is coming back and they are trying to hold off for a bit", Mr Masud said. "But that is not going to last because when more inventory hits the market and someone's apartment sits vacant for six to nine months, they are going to cave in and that's when we'll see the re-pricing of assets."
In its latest report, Colliers International said selling prices in Dubai had declined between 40 and 42 per cent over the past two quarters, based on transactions. "It is reasonable to assume that as new stock continually comes online that the downwards trend in the market will continue throughout 2009 and is unlikely to stabilise before" the second quarter of next year," Colliers said. The market is currently in a "numb phase" and optimism was based on "few transactions", Mr Masud said. Prices will reach a bottom in about 12 months to 18 months.
Next year "is going to be tough, and I would be shocked if we started talking about a recovery in 2010", he said. @Email:ngillet@thenational.ae