After a prolonged downturn in the United Arab Emirates (UAE) housing market, the government hopes for a positive turnaround by the end of 2011. Home values continued to fall throughout 2010, well over a year after the bubble burst. See the following article from Global Property Guide for more on this.
The UAE’s housing market is still taking a beating, over a year after the bubble burst. The residential property price index dropped 6% q-o-q to Q3 2010 from the previous quarter, and was down 6% on a year earlier, according to Colliers International Middle East.
Sentiment has been hit by soil erosion, caused by delayed construction at “The World” project. Without maintenance, the islands made up of reclaimed land are slowly being eaten by the sea.
Nevertheless the UAE’s Economics Minister Sultan Al Mansouri expects “positive movements” by the end of the year.
“It won’t be a graph like before (sic), but we will see growth which is gradual and more realistic,” Al Mansouri said in an interview published in Arabian Business. The end of the house price crash will come by the end of 2011 or early 2012, he forecasts.
Perhaps. But during Q3 2010:
• House prices fell 6.3% during the quarter to AED10,236 per sq. m. (USD2,786 per sq. m.) (6% down on the year).
• Apartment prices were down 7% during the quarter to AED11,281per sq. m. (USD3,071 per sq. m.) (9% down on the year).
• Villa price prices fell 4.7% during the quarter to AED 9,332 (USD2,540) per sq. m. in Q3 2010 (1% down on the year).
• Townhouses fell 9% during the quarter to AED7,793 (USD2,121) per sq. m. (11% down on the year).
Total real estate transaction values in Dubai plunged 65% in 2010, according to Jones Lang La Salle. And while demand fell, oversupply kept on rising. In Q3 2010, less than 600 transactions were completed, significantly down from 1,200 during the same period in 2009.
• The completion of 36,000 housing units in Dubai in 2010 squeezed prices down.
• The anticipated completion of 25,500 units in 2011 is expected worsen the glut, according to La Salle.
LaSalle expect house prices to decline by 10% in 2011, and around 5% in 2012, contrary to the government’s hopes. House prices have already fallen by around 60% from their Q4 2008 peak.
This article was republished with permission by Global Property Guide.
