Dubai Land Department figures reflect a 37 percent increase in property transactions when compared to 2009 at the height of the financial crisis, suggesting signs of recovery in the city’s battered housing market. But analysts remain concerned that the estimated 33,000 new homes scheduled to hit Dubai’s market by end-2012 could cause fresh declines in rental and sale prices. Dubai’s housing market will plummet another 10% before it stabilises, a Reuters poll showed earlier this month, adding that the market is oversupplied by about 25%.
The situation in Abu Dhabi, the capital of the United Arab Emirates, is no better with as many as 11,000 homes expected to flood the property market in the next quarter. House prices in Abu Dhabi are expected to fall another 14%, taking them to 60% below their peak.
There’s a lot of uncertainty in the market still. Despite stabilising prices, there is still reluctance to get back into the market, certainly on the investor side. Although villa properties continue to outperform apartments, lease rates fell 10% year on year with smaller houses worst hit by the declines. Emaar Properties the UAE’s largest developer by market value has said revenue from apartment sales plunged 86% in the third quarter, amid weak property demand in Dubai.
Speaking in London last week, Emaar Properties chairman Mohamed Alabbar said that Dubai’s real estate will remain a “challenging” environment for two or three years but house prices are beginning to recover. He also said he saw “optimism in the city” and confidence among consumers and the government, resulting in growth in key sectors of Dubai’s economy.
Moody’s, one of the most reputed rating agencies, has recently predicted the future of Dubai real estate according to which, oversupply is still suppressing Dubai property market despite various steps taken by the Dubai government.
Analysts have warned that Dubai risks developing a two-tiered property market with villas and apartments in poorly maintained developments proving difficult to rent out or sell.
While the outlook for the United Arab Emirates property sector remains gloomy, the emirates have been seen as a safe haven during turmoil that has gripped the Arab world and toppled leaders in Tunisia, Egypt and Libya.
