Monday, January 24, 2011

Prices of Dubai housing units unlikely to recover before 2012

The residential market in Dubai will continue to witness an oversupply situation with prices unlikely to recover before 2012, says a report by Jones Lang LaSalle (JLL), the leading global real estate consultants.

The global real estate consultants, in their fourth quarter report, said that despite the recent stabilization in Dubai's higher-end residential sector, lending will continue to be a major factor in market recovery.
Improved lending may be seen in 2011 within residential sector, with banks injecting more liquidity into mortgage market, the JLL report said.

A total of 7800 units were completed last year, with total residential stock touching 309,301 towards the year-end. Another 25,500 units are likely to be completed in 2011. The apartments will constitute 79 percent of total residential stock by end of 2011.

Work on some major residential projects have once again begun, and are due for completion during first half of 2012. Although some delays in construction are likely, no major cancellations are likely to happen for projects targeted for completion this year. Moreover, Nakheel’s projects in Dubai Waterfront, Jumeirah Park, Jumeirah Village and Jumeirah Heights are due to begin in 2011.

According to the RERA (Real Estate Regulatory Agency) CEO, Marwan bin Ghalita, more than 202 projects have been cancelled last year.

The JLL report points out that the rents for apartments fell 8percent year-on-year, while villas dropped 11 percent year-on-year. The total value of residential transactions dropped 65percent in 2010, in comparison to that of 2009.

As for the office sector, the current oversupply situation is likely to continue with vacancy rates expected to grow through the year, putting downward pressure on rents.

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