17 August 2009
DUBAI – Dubai residential property prices fell by 24 per cent in the second quarter compared to the first three months of the year.
However, the number of sales and rental transactions has remained steady over the two quarters, signalling a renewed confidence in the emirate’s battered real estate market, property consultancy Jones Lang LaSalle said on Sunday.
Property prices are falling more slowly, and the gap between the prices that owners are asking and buyers are offering has narrowed, LaSalle said in a statement.
A separate report by the Harbor real estate brokerage said that its sales transactions doubled in number in the second quarter compared to the first, underscoring the idea that Dubai’s over-built market might have hit bottom.
“The narrowing gap between asking prices and achieved prices is an indication that the market is beginning to stabilise, albeit at significantly lower levels of pricing than those seen earlier in the year,” said Craig Plumb, Head of Research at Jones Lang LaSalle MENA.
The Dubai property sector collapsed in the aftermath of the global credit crunch. LaSalle expects that 22,400 new residential units will be handed over this year, even though developers have cancelled or put on hold more than $24 billion worth of residential projects.
The downturn in Dubai’s once-booming construction industry has created a backlog of legal claims totalling almost £3 billion, The Times newspaper of London reported on Sunday. More than 180 claims have been filed this year, mostly by international contractors. British firms are estimated to be owed at least £400 million on contracts in the UAE, the newspaper said, citing an article in Building magazine, a British trade publication.
According to LaSalle, the volume of sales and rental deals were stable between the first and second quarters of this year. By contrast, transactions decreased in number by 58 per in the second quarter from the same period a year ago.
“The stabilisation of transactional volumes is an important indicator, which reflects improved confidence among investors,” Plumb said.
Meanwhile, the Harbor brokrage confirmed that activity in the second quarter improved significantly over the previous three months, as more properties have become affordable for more people. Harbor noted that sales transactions, especially in the latter part of the second quarter, increased when compared with rental transactions, with middle to middle-lower income earners taking advantage of the new levels of affordability to buy.
“We look at factors that are likely to drive the recovery and the influence of the global economic recovery as it impacts the local scene here in Dubai,” said Mohanad Alwadiya, the Managing Director of Harbor Real Estate Brokerage.
“Harbor’s results for the second quarter were promising. Not only did we see a 55 per cent increase in the number of viewings but we also saw sales transaction double.”