An exodus of unemployed expats at the end of the school year could add additional inventory to the struggling Dubai housing market. This could worsen what one analyst is calling one of the riskiest housing markets in the post war era. For more on this see the following article from Property Wire.
Over supply and population decline makes Dubai one of the riskiest property markets for investors, it is claimed.
As thousands of recently unemployed expats prepare to leave the emirate when the school terms ends next week the reality of the impact of the global recession will be felt, according to Saud Masud, an analyst at Swiss investment UBS.
‘In my view Dubai’s property risk profile appears to be one of the highest in the post war era and while one may debate the potential support factor from Abu Dhabi the fundamental oversupply and population dynamics risks are very much there,’ he said.
He described the scale of Dubai’s real estate collapse as being on a par with Hong Kong’s housing crash at the start of the decade and boom and bust cycles in other markets such as Singapore and Ireland.
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In Hong Kong the Asian financial crisis triggered a 70% collapse in real estate prices between 1997 and 2003.
‘While Singapore, Hong Kong, Ireland are considered property market comparables, Dubai is very unique due to its demographics, supply pipeline and relevance in the Middle East,’ he added.
He has already predicted that residential property prices in Dubai could plunge up to 70% from their peak in the fourth quarter of last year.
He also said that investors would return to the Dubai market in the second half of 2009 when prices would be at their most attractive. But now that prediction is looking rocky.
Meanwhile tenants and owners in Dubai’s Discovery Gardens have threatened legal action against developer Nakheel unless service charge fees are reduced further.
The Dubai based master developer announced on Monday it was lowering the service charge by AED5 per square foot and it would be backdated to January 1, 2009.
Despite this reduction residents say they are still paying far more than tenants in similar developments across the Emirate.
‘We’re not going to accept and we won’t pay unless it’s under AED13. Nakheel is hoping this will go away but it’s not going to happen,’ said Michael Aldendorff, who is leading a petition signed by 68 residents.
This article has been reposted from Property Wire. View the article on Property Wire’s international real estate news website here.