Dubai Property - Price Report from Collier International

Prices for UAE property came down again in the last quarter at an average of 4 per cent, with villas performing the strongest, according to Colliers International House Price Index, suggesting a trend for the remainder of the year.

"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, Colliers International.
Another 33,000 units expected to come online by year end are the main reason to be less optimistic about the market despite stabilising since the steep high and subsequent drop of 2008 and 2009. However, some of the supply could be further delayed into 2011, but current occupancy figures suggest that there is enough on the market as it is.
"There are already more than 340,000 residential properties in Dubai with an average occupancy rate of 87 per cent, 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," Albert said.
House prices are back to the earlier parts of 2007 yet, according to the Colliers Index, house price values overall still enjoyed a 7 per cent increase when comparing the second quarter of last year with the current one. The index is based on statistics of lenders transactional prices and sets the blended average house price for the second quarter at about Dh1,014 per square foot.
Villas are tops
Villas fared better than apartments, comparing this quarter to the first of this year. The former decreased by only 3 per cent, whilst the latter's prices fell 5 per cent. Interestingly, townhouses took the biggest hit of an 8 per cent price reduction.
"The reason why townhouses have taken a larger hit than villas is simply because as the market corrected, many families upgraded to villas as more became available and affordable," said Tom Bunker, Investment Sales Consultant, Better Homes.
Reason he says, villas are typically larger and in most cases have a half decent back yard, sometimes absent in townhouses. "Many of the townhouse communities are a little more out of the way," he added.
Villas also trumped on the number of transactions with 49 per cent of the total, followed by apartments with 34 per cent and the 17 per cent remaining going to townhouses. Interestingly, buyers seem to spot value, the number of transactions has been 15 per cent higher this second quarter than in 2009's.
Hot spots
Popular villa communities are in the Emirates Living District thanks to the quick and easy access to Shaikh Zayed Road and beyond, said Bunker. The favourite within is The Lakes, reckons Kim Robinson, residential sales and leasing manager, Cluttons.
"The Lakes is an upgrade to The Springs. Prices dropped so much that families who are looking for space, better feel and facilities can now afford The Lakes independent villas. We recently sold one upgraded to a five-bed for Dh3.6 million net," she detailed. Others in vogue are the Montgomery Maisonettes, luxury townhouse type.
The average occupancy rate in Dubai's existing 340,000 residential properties is 87 per cent and is expected to decline, according to Colliers. With rents at half of what they were in 2008 the lack of return on investment is further subduing buyer's appetite, Albert said.
Top five by price

• 1 The Palm Jumeirah — Villas
• 2 Downtown Dubai
• 3 The Palm Jumeirah — Apartments
• 4 Dubai Marina
• 5 The Lakes — Villas
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Top 5 developments by number of transactions

• 1 Arabian Ranches
• 2 The Springs
• 3 Victory Heights
• 4 Downtown Dubai
• 5 Green Community

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.

Dubai Prime Property Values Approach Floor, BofA Says

By Camilla Hall

May 17 (Bloomberg) -- Property prices in centrally located areas in Dubai may be reaching a “floor” after values dropped by 45 percent, Bank of America Merrill Lynch said.

“We see an emerging floor for prime assets, particularly in the retail sector, which has the smallest supply pipeline,” Dubai-based analysts including Karthik Sankaran and Abdelrali El Jattari wrote in a note to investors today. Growth in retail, trade and tourism should resume, helping the real-estate industry, the analysts said.

Dubai property projects stalled after the global credit crisis pushed up the cost of financing, prices plummeted and buyers defaulted on payments. The market’s collapse followed a construction boom that created thousands of homes just as demand began to evaporate. Average residential prices across the emirate may fall a further 15 percent this year, according to the bank.

Abu Dhabi-based Aldar Properties PJSC is the Bank of Americai Merrill Lynch’s “preferred developer” because “substantial negativity is priced in.” The analysts reinstated coverage of Emaar Properties PJSC, which opened the largest skyscraper this year in Dubai, giving the company a “neutral rating” and a 12-month share price target of 4.4 dirhams. Emaar closed at 3.75 dirhams yesterday and Aldar at 3.77 dirhams.

Migration within the United Arab Emirates will support established residential locations, though that isn’t a “panacea,” the analysts said. Dubai would have 44,000 vacancies this year “even if all qualifying expats from Abu Dhabi and Sharjah relocated to Dubai tomorrow.”

The completion of a “significant” number of new homes in Dubai later this year will put pressure on prices after they rose 2 percent in the first quarter, Colliers International said in a May 9 report.

Nakheel PJSC, the Dubai World-owned property company seeking to restructure $10.5 billion of debt, restarted work on projects that have been put on hold, Al Bayan reported today, citing people it did not identify.

Dubai Houses Prices - May Update

May 9 (Bloomberg) -- The completion of a “significant” number of new homes in Dubai later year will further pressure prices that rose 2 percent in the first quarter, Colliers International said.

Colliers, a global real-estate-services firm, estimates that 41,000 residential units will enter the market by the end of 2010, mostly in the low- to mid-income segments. House prices in the first quarter were on par with 2007 levels, rising on average to 1,061 dirhams ($289) a square foot from 1,037 dirhams a year earlier, Colliers said in an e-mailed report today.

“There will be significant oversupply in the market by the end of the year, so it is anticipated the index will experience fluctuations in value going forward,” Colliers’ regional Director Ian Albert said in the report. “Demand is not expected to match the growth in supply, creating downward pressure on property prices,” according to the document.

Dubai’s property prices have slumped more than 50 percent since their peak in mid-2008 as the financial crisis forced companies to dismiss workers. The market’s collapse followed a construction boom that created thousands of homes just as demand began to evaporate.

Apartment prices in the emirate gained 6 percent in the first quarter compared with the previous three months and villa prices rose 2 percent while the cost of townhouses was down 4 percent, Colliers’ house-price index showed.

Banks ‘Selective’

“Numerous” banks and mortgage providers increased the loan-to-value ratio to between 75 percent and 90 percent in the first quarter, according to Colliers. Some also lowered interest rates on mortgages to between 6.5 percent and 8.5 percent.

“Banks remain selective in offering finance, providing it against specific projects, mainly completed or near completion, and only to borrowers who can meet the strict lending criteria adopted by most banks,” Colliers said in the report.

The change of demand from speculative investors to end- users places more importance on the “liveability” aspect and there will be better demand and greater stability for projects that offer a “community lifestyle,” according to the report.