Dubai Housing Prices May Stay Flat: Report

Source : The Business Times, October 7, 2008

Colliers expects slowdown in price rise till 2010 after 5 years of steep gains

(DUBAI) Home prices in Dubai, the second-biggest of the seven sheikhdoms that make up the United Arab Emirates, are likely to remain flat until 2010 after five years of steep gains, Colliers CRE plc said.

About 140,000 new homes will be completed in Dubai by the end of 2010, adding to the existing stock of about 300,000 units, Colliers said in a report released in Dubai on Sunday.

Home prices average US$5,420 per square metre, or US$504 per square foot, in Dubai, compared with US$6,500 a square metre in neighbouring Abu Dhabi, the report said.

'We've not seen a drop-off in demand, but there has been a slowdown in value appreciation,' Ian Albert, Colliers regional director, told reporters in Dubai.

'As we sit here today there is insufficient supply in property across the Middle East and North Africa, in residential, office, leisure and retail.'

Dubai is aiming to become a regional financial centre and is spending billions of dollars on finance and tourism projects to diversify its economy.

Property values in the UAE, the second-biggest Arab economy, have quadrupled over the last five years, investment bank Al Mal Capital PSC said in a report on March 9. Dubai's residential property prices rose 40 per cent from a year earlier, slowing from an annual 41 per cent in May, Al Mal said on Aug 14.

Emaar Properties PJSC, the Middle East's biggest publicly traded real estate company, lost the most since 2000 on concerns that the US bank bailout won't be enough to stop the global credit crisis reaching Dubai.

It fell as much as 13.4 per cent to 6.67 dirhams, the biggest one-day drop since March 2000, according to data compiled by Bloomberg.

The biggest threat facing the Dubai property market is liquidity, Mr Albert said. The departure of speculators from the market may also lead to prices falling, he said.

'We are concerned about developer bias toward the high end residential segment, when demand for housing from the middle income segment is most acute,' Colliers said in the report, titled 'MENA Real Estate Overview'. -- Bloomberg