Saturday, July 11, 2009

Real estate sales in Dubai drops by half in 2009

Property sales in Dubai dropped by more than 40 percent during first half of this year, compared to that registered during the same period last year, reports, the firm that tracks property with the data available from Dubai Land Department.

A total of 1724 sales transactions were registered during the first half of the year, marking a 42.6 percent decline over the same period last year, reports

Although, the prices have begun stabilizing in Dubai during the past two months, according to analysts and property brokers, the Deutsche Bank reports that residential prices increased by 6.5 percent, touching Dh.1285 per square foot in 13 locations around Dubai last month, compared to May.

The steep decline in property transactions suggests another slow quarter for developers, with many working to create new business strategies and change the plan of their projects to survive the changed economic environment, analysts said.

The decline in prices is more than 50 percent in few areas, which has taken its toll on the value of transactions. The data shows that the total value fell by 39.9 percent, touching Dh.2.02billion.

An Analyst at Nomura Securities, Chet Riley, has revealed that earnings across UAE real estate board are likely to remain weak for the second quarter.

There are signs of stability in the underlying market, but the second half of the year will witness the 'crunch' when several developments are due. If developers face delay, they are not likely to see sales revenues, and this may lead to further downgrades, he said.

Currently, analysts are closely monitoring Emaar Properties and Union Properties, as they have reduced their contact with investors and are passing through crucial phases. Emaar has announced merger talks, with three real estate companies under Dubai Holding. Union Properties, on the other hand, have recently undergone a management overhaul, and is facing difficulty in filling the funding void.

An Analyst at Deutsche Bank said that the price increases are the result of easing pressures from distress sales and the potential sellers who are remaining are now unwilling to sell at current rates.

The analyst predicted further fall in prices to the tune of 15 to 20 percent by the end of the year.

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