The Dubai real estate market posted a strong third quarter performance driven by demand that is keeping credit accessible, and confidence that is replacing risk-aversion. While prices remain considerably below last year’s level, expectations of a market turnaround are increasing. Industry optimism, however, is offset by concerns that new inventory hitting the market will drive prices back down. See the following article from Property Wire for more on this.
The first glimmers of hope for the real estate market in Dubai are coming through as two new reports claim that prices are rising.
But there is still concern that new units coming on stream next year could result in a loss of any recent price gains.
Dubai real estate prices rose 7% in the third quarter of this year from the previous quarter due to increased availability of mortgage financing and a perceived increase in job security among expat workers, according to the latest Dubai House Price Index from Colliers.
And a new report from HC Securities & Investment shows that prices bottomed out in April and have since risen by 9%.
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An encouraging sign is that the Colliers report shows that transactions increased by 64% in the third quarter but analysts said that the real test will be what happens in the final three months of the year.
‘The results indicate a bounce in the market but it is too early to say if an underlying growth profile exists that would indicate a potential recovery,’ said Colliers regional director Ian Albert.
Prices are still 47% lower than in the same period a year ago, the report shows and it predicts that the volume of new units expected to come onto the market in 2010 will dampen prices.
However Albert added; ‘Well planned mature developments in good locations, supported by facilities and community infrastructure will receive relatively higher demand.
This demand ensures a lower risk profile for banks, which ensures the availability of finance to support demand further.
But the HC Securities and Investment reports claims that estimates for the amount of real estate that will enter the market in the next two years are overstated and overall the peak-to-trough decline was smaller than many analysts were expecting.
Its analysts believes around 60,000 units will hit the market by the end of 2011, compared to other estimates that range between 90,000 and 140,000.
The report cites improving sentiment and risk appetite, a negative real interest environment and attractive rental yields as the factors behind the rebound.
This article has been republished from Property Wire. You can also view this article at Property Wire, an international real estate news site.