Dubai house prices fell 12 per cent last year and will continue to drop this year - but the rate of decline is slowing, says Jones Lang LaSalle, a property company, in a report published yesterday.
"We expect 2011 to be similar to 2010," with declines of 10 per cent to 15 per cent, said Craig Plumb, the head of research for Jones Lang LaSalles's Dubai office.
In 2009, Dubai prices in many areas fell 25 per cent over the year before.
Any pickup in the number of transactions will be offset by a continued oversupply of housing in the city, the company said. Twenty-five thousand new units are expected to come online in Dubai this year, compared with 7,800 last year, said the report.
About 79 per cent of that residential supply will be apartments on the market by the end of the year, said Jones Lang LaSalle.
"Even if some of these projects are delayed, there will be a significant level of new supply entering the market," Mr Plumb said.
The company's findings are corroborated by new data, also released yesterday, by CB Richard Ellis (CBRE).
"Notable hand-overs from new developments in Dubai Sports City, Al Barari and Jumeirah Village will further aggravate the oversupply situation during the course of 2011," CBRE reported.
Rental rates dropped 17 per cent last year compared with 2009, largely due to the abundance of units available, CBRE reported. Rents for one-bedroom apartments fell 19 per cent in the year compared with 2009, while those for villas dropped 13 per cent, the company said.
"With a number of other major villa projects under construction, it is likely that this segment of the market could see expanding vacancy levels over the next 12 months, particularly in new freehold locations," CBRE reported.
Jones Lang LaSalle said it did not expect sale prices to improve before next year.
The number of sales transactions dropped 53 per cent last year compared with 2009, it reported, and the value of those deals dropped 65 per cent.
But the company said it expected the number of transactions to pick up this year.
"The key to transaction levels is going to be liquidity and the availability of mortgages," Mr Plumb said. He declined to say when he expected prices to level out.
"Clearly we're getting closer to the bottom, but in our view we are not at the bottom," he said.
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