Dubai Property Prices (Aug 2010 Update) - Still going down

-Dubai property prices fell 4% during the second quarter of 2010, compared with the first three months of the year, the first quarter-on-quarter contraction in 12 months, U.K.-based real-estate consultancy Colliers International said Sunday.
Despite the second quarter slide, Colliers said its quarterly price index showed a 7% increase in overall house price values compared with the second quarter of 2009.
The average price of property slipped to 1,014 U.A.E. dirhams ($276) per square foot in the second quarter of 2010, compared with AED1,061 in the first quarter, Colliers said in an emailed statement.
The real-estate consultancy warned that forthcoming housing supply and declining rental incomes are likely to put downward pressure on Dubai house prices moving forward.
"We anticipate a further slowdown and we have an ongoing concern of the new supply entering the market, which will further impede recovery," said Ian Albert, regional director at Colliers International.
Dubai's property market has been hit hard by the global financial crisis and prices have slumped close to 50% since their peak in 2008 while many of the emirate's most ambitious projects are on hold.
Colliers said it expects around 33,000 units to be released onto the Dubai market by the end of 2010, down from its earlier estimate of 41,000 following project delays or rescheduling. However, given Dubai's history so far, a large number of these units may not be delivered on time and may cross over into 2011, it added.
"There are already more than 340,000 residential properties in Dubai with an average occupancy rate of 87%, with further declines anticipated. The market simply cannot absorb the additional supply unless the population grows and/or the release of stock is slowed down," said Collier's Albert.
Compounding the situation are dwindling rents in the emirate with Dubai's overbuilt residential market contributing to more than a 50% decline in average rental rates since 2008, discouraging ownership and further dampening demand, said Colliers.