Reuters Poll Suggests Dubai Prices Have Further to Go
29 July 2011
The majority of people surveyed in a new Reuters poll believe the property market in Dubai has no chance of recovering this year, a 25% chance of recovery next year, and a 50% chance of recovery for 2013.
The residential property market in Dubai is still substantially oversupplied, and in spite of increasing numbers of transactions and an improvement in the economy, this is likely to drag prices down by a further 10% which will mean that prices have dropped by nearly 60% since 2008.
If this prediction is true it would mean that percentage property in Dubai has fallen by is double the percentage in the US, as property prices here are currently around a third less than their peak values.
Apparently there will be another 18,000 new homes on the market in Dubai by the end of the year, and although its neighbour Abu Dhabi has fared somewhat better during the downturn it is also beginning to suffer from a huge oversupply of luxury homes which are due to come on the market very shortly.
It's expected that this will exert downward pressure on prices in Abu Dhabi, with predictions of another 15% decrease which would mean they will have dropped 55% from their peak.
The problem in Abu Dhabi is slightly different when compared to Dubai, as there is actually an under supply of homes when compared to the number of households. The problem is that the majority of households cannot afford the current prices of these luxury homes
A recent announcement by the UAE's federal government to extend three year residency visas to foreign buyers may help lure investors back into the market, but they do have to spend a minimum of AED1 million.