Saturday, June 13, 2009

UAE property prices may decline prior to level-out

Property prices in the UAE may decline by 20 percent and level-out by the end of the year, says a Deutsche Bank report.

The predictions are based on the evidence generated during the past two months that prices in few areas of Dubai and Abu Dhabi have increased. The prices will once again drop, as several expat workers are likely to leave the country during summer, when several new properties hit the market.

Nabil Ahmed and Athmane Benzerrough, an analyst, when speaking about the report, said "We remain cautious, given, the limited number of transactions and the constant declining trend in rents. We expect UAE property prices to drop by another 15 to 20 percent from current levels, and expect a bottom by year-end."

The global financial crisis has so far cut an estimated 50 percent off Dubai property prices, since their peak in August last year, while prices in Abu Dhabi have dropped by 30 percent.

Growing defaults from the end of homeowners are one of the prime concerns facing developers over the past couple of months. But, there are signs of stabilizations with brokers and bankers stating that prices in few developments in Dubai and Abu Dhabi are on their way to recovery, after the nine-month fall.

In Abu Dhabi, prices for properties nearing completion, such as Al Reem and Raha Beach increased by 10 percent last month, while villas in Al Reef saw a price increase of 5 to 7 percent.

HSBC, in its recent report, also said that prices in Dubai increased 4 percent in April, and another 5 percent last month. The prices of flats, which account for majority of property transaction, are believed to have increased by 9 percent last month, but villas fell by 11 percent.

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