Monday, November 03, 2008

Property prices in Dubai surge 17 percent: Report

Property prices in the UAE saw an increase in September, with Dubai registering 17 percent increase, and Abu Dhabi registering 11 percent increased, compared to an average increase of just 2 to 3 percent during the summer months.

According to a recent report released by HSBC Bank about the UAE real estate market, the price growth is gathering pace after a brief moderation during the summer months. Although the prices are following an upward trend, rental rates in Dubai seems to be stabilizing.

The report by the bank indicates that market is likely to remain tight until 2010.

According to estimates, about 90 percent of upcoming supply in Dubai will be controlled by Emaar, Nakheel and Dubai Holdings. The demand is affected by several factors. For instance, increase in prices is decreasing affordability, which gets further augmented by the mounting pressure on mortgage rates and dropping loan to values. Recent stock market declines too have not helped improve this situation, which indicates that the region is not immune to global trends, be it property, debt or equity.

According to HSBC, in such a scenario, the off-plan market will be the first to get affected, due to high level of speculation. On the other hands, ready units will be supported by demand and any weakness would seem less pronounced.

Although the prices in UAE are getting less affordable, Dubai offers a bigger range of units targeting most income levels, unlike the Capital city.

Softening in the property market is not just healthy, but is necessary, for the sustainability of the economic story, says the bank report.

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