40% decrease of Dubai property in Q1 2009 - Colliers International

Colliers International, the global real estate consultancy, has released the Dubai House Price Index (HPI) for Q1 2009, which indicates a decline in the overall index of 41% for the first 3 months of 2009. The index, compiled using mortgage transaction data from financial institutions accounting for 60% of the mortgage market in Dubai, also demonstrates a 34% year-on-year decline between Q1 2008 and Q1 2009. At the end of Q1 2009, property prices in Dubai had returned to approximately the same level as those recorded in Q2 2007.

John Davis, CEO, Colliers International, said, "Negative sentiment is the key factor driving the decline in the Index and the availability of finance continues to impact the market. End-users are concerned about job security and therefore unwilling to enter the market, even if finance is available to them, while the price/yield gap is tempting professional investors to wait for further declines. On a more positive note, the Index remained unchanged in March 2009. However, we would caution that it is too early to say whether the halt in the decline of the Index can be sustained, especially over the traditionally quieter summer months."

Colliers' analysis also highlights a key change in Dubai real estate market as professional investors, focused on the yield generated by a property, became the primary purchaser type as end-users and speculators fell away from the market. The HPI also analyses the trends for prices achieved for completed properties as opposed to properties still under construction.