Although Dubai real estate has seen an increase in month-over-month values, the head of research at Deutsche Bank warns that this can be misleading. He expects the decline to continue with real estate prices falling 15-20% by the end of the year. For more see the following article from Property Wire.
Residential property prices and rents in Dubai rose slightly in June bringing much relief to the embattled real estate sector.
According to an analysis by Deutsche Bank the average price for apartments and villas increased 6.5% month-on-month in June to AED1,285 per square foot, while rents rose 1.1% over the same period following a 10% fall.
Nabil Ahmed, head of research at Deutsche Bank in Dubai said that one month’s figures should be viewed with caution and the real estate market has not yet bottomed out but he is confident that the worst is over.
‘Although monthly data should be viewed with caution given the limited number of transactions, recent numbers tend to confirm the stabilization in the market we saw in May. This might not be the bottom yet but the worst increasingly looks behind us,’ he said.
Deutsche said it still expects property prices to bottom out at the end of the year after falling a further 15 to 20%. ‘We continue to see risks of further weakness on the combination of expatriates’ exodus during the summer and new supply flowing into the market in the second half of 2009,’ its report said.
The analysts believe that a stabilization in prices is mainly driven by easing pressure from distress sales and potential sellers now being unwilling to drop prices any further.
The main concern is that the level of transactions is very low. However figures from the Dubai Land Department show a slight increase. From June 16 to June 23 alone, there were 1,018 sales, mortgages and leasing transactions in Dubai, compared with 439 in the week before.
Vincent Easton, the sales director at the property brokerage Engel and Voelkers, said people were taking advantage of available options now that prices had declined to more affordable levels.
‘There are a lot of positive signs out there. It’s started to reach a fairly reasonable level,’ he said.
This article has been republished from PropertyWire. You can also view this article at PropertyWire, an international real estate news website.