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Dubai property prices stabilise after steep falls

22 April 2010

Dubai suffered some of the steepest property price declines in the world in the final three months of last year but values have since begun to stabilise in the emirate, according to a housing index released yesterday.

The UK-based estate agency Knight Frank’s Global House Price Index showed prices in Dubai declining by 42.1 per cent compared with the same quarter last year, with only Latvia seeing a bigger drop at 49.8 per cent. In the third quarter, Dubai registered a 47 per cent fall, the biggest drop in the world for that period, according to the index.

Liam Bailey, the head of residential research at Knight Frank, said global housing markets were still “somewhat shaky” with almost half experiencing price falls for the fourth quarter last year.

But Hong Kong and mainland China saw increases of 27.6 per cent and 25.1 per cent, respectively, after major government stimulus packages injected billions into the economies. “The Australian economy has also benefited from China’s rapid recovery from the global recession, and the country’s house prices increased by 13.6 per cent, with particularly strong growth of 5.2 per cent in the final quarter of the year,” Mr Bailey said.

“At the other end of the scale, Ukraine and the Baltic states – Estonia, Latvia and Lithuania, as well as Ireland and Dubai, continue to be hit hard by the fallout from the credit crunch and prices corrected sharply last year. “… the positive news for these locations is that prices do seem to have stabilised, with most reporting minimal falls or even slight growth in the final three months of the year.”

On average, prices around the world fell by 3.8 per cent for the period. Other top performers included Israel and Norway, according to the index. The US, one of the largest housing markets, declined by 0.6 per cent in the last quarter but saw a rise of almost 3 per cent for the whole year. Mr Bailey said this year “could mark the beginning of the recovery for those countries where prices were still falling last year”, but that “we should not take anything for granted yet”.

Dubai’s property market bubble began deflating in late 2008, after years of credit-fuelled speculation.

But analysts said yesterday prices had begun to level out. Emaar Properties, the largest developer in the Middle East, reported profits up by 221 per cent for the first quarter to Dh760 million (US$206.9 million), compared with same period last year. “I think we are starting to see stabilisation in the Dubai market now,” said Chet Riley, an analyst at Nomura Securities. “We’ve got a pretty clear idea of the new stock coming in and prices have factored that in.”

Source: www.thenational.ae