Dubai Housing Slump Nears Bottom: Jones Lang LaSalle

Source : The Business Times, August 18, 2009

(DUBAI) A downturn in Dubai's residential properties market appeared to be nearing a bottom in the second quarter as the rate of price declines eased and transaction volumes stabilised, a Jones Lang LaSalle researcher said.

Dubai's once-booming property sector has been hit hard by the global financial crisis, but the pick-up in more mature markets such as the US and Britain, is starting to boost investor confidence.

'The stabilisation is showing that the market is reaching the bottom and sales activity is starting to come back in,' Craig Plumb, head of research at Jones Lang LaSalle Middle East and North America told Reuters on Sunday.

'Prices are reaching a level where people think they are willing to buy,' said Mr Plumb, adding that sales activity was expected to increase in the next six months. Average asking sale prices fell by about 24 per cent in the second quarter from the first quarter, but the rate of decline slowed, he said in a report published on Sunday. This signalled the gap between asking price and selling price was narrowing, he added.

The decline in average housing prices has slowed down to 6 per cent in the second quarter compared to the previous three months, according to the report. Transaction volumes declines by 13 per cent compared to the first quarter and 58 per cent from their level in the second quarter of 2008. The gap between achieved and asked prices narrowed to 7 per cent in the second quarter of 2009, after achieved prices were 20 per cent lower than asking prices since the second quarter of 2008, it said.

The decline rate in rental prices also slowed, Jones Lang LaSalle said.

The average rent for two bedroom apartments fell by 15 per cent in the second quarter, compared with a 22 per cent decline in the first quarter of this year.

Additionally, new residential supply will continue to enter the market as 22,400 units are expected to be handed over this year, despite the cancellation or delay of more than US$24 billion worth of housing projects, it said. -- Reuters