Thursday, April 30, 2009

Dubai House Price Index shows 41 percent decline during Q1 2009

The Dubai House Price Index for first quarter of 2009 released by the leading global real estate consultancy, Colliers International, has indicated a drop of 41 percent during the first three months of this year.

The index has been compiled using mortgage transaction data from financial institutions accounting to 60 percent of the mortgage market in Dubai. It demonstrates a 34 percent decline year-on-year between first quarter of 2008 and first quarter of 2009.

The property prices in the emirate had returned to the levels equivalent to that during Q2 2007, the report pointed out. When compared to other markets in the Gulf, the global crisis has had a huge impact on Dubai, mainly due to high level of integration with global economy as a regional hub, and the wide speculation in property assets before the market's peak during third quarter of 2008.

Speaking about the Q1 2009 report, the Chief Executive Officer of Colliers International, John Davis, said that the negative sentiment is a major factor contributing to decline in the index and availability of finance too has a major impact on the market. The end-users are more concerned about job security, and hence are hesitant to enter the market, despite the finances being open for them.

Looking at the brighter side of things, the index remains unaltered as in March 2009. But, it is too early to predict whether the halt in decline of the index can be sustained during the quieter summer months, Davis said.

The House Price Index takes into account the price trends achieved for completed properties, as against the properties that are still under construction. The results obtained by including the Burj Dubai development in the results, the index indicates that completed properties fell 31 percent, while the properties under construction fell 56 percent. Keeping aside the Burj Dubai, the completed projects fell 32 percent, while those under construction fell 51 percent.
Mortgage lending is beginning to revive in the emirate, with several financial institutions re-entering the market, Davis pointed out.

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