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Little chance of property recovery in Dubai this year

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  • Little chance of property recovery in Dubai this year

    A recovery in the property market in Dubai is unlikely this year with some analysts predicting further steep falls in real estate prices.

    The latest analysis from UBS Bank predicts that house prices in Dubai could plunge by up to 70% from their peak levels in 2008.

    Analysts said that the real estate sector in Dubai will face a substantial glut next year while demand will continue to be weak as many of the expatriates who drove the property boom in recent years are losing their jobs and are returning home.

    'In our view, we are still in relatively early stages of the property downcycle in UAE, and we believe risk-reward profits are not yet compelling for investors to consider market re-entry, hence, continued price declines are expected,' said UBS.

    UBS expects the average house price in Dubai drop to about Dh500 per square foot this year, compared to its peak of Dh1,850 in the fourth quarter of 2008. Prices have already fallen by 25% cent to about Dh1,400 per square foot.

    It also predicts a further decline in Dubai's expatriate population which will fall by 8% this year and 2% in 2010. 'We would not be surprised to find Dubai residential vacancy rates reach between 25% and 30% by the end of 2010,' it said in its report.

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    Jenny

  • #2
    Whether we call it a recession or not, one thing is sure, we are going through a severe economic crisis, which will be discussed (once over) in the Economics syllabus and debates, in coming years. In this global crisis, where the likes of United Estates or European economies are feeling the heat, United Arab Emirates economy continues to head into positive direction. All the economic indicators and reports are also confirming to the fact that there will be no slowdown in near future. Let's have a look at this thriving economy and the contributing factors.
    Oil & Gas reserves:
    UAE has almost 10 percent of world's oil (proven reserves), while the gas reserves amount to 4 percent of global reserves. According to Middle East government portal, these reserves can last well over 150 years. Recently when soaring oil prices took a toll on all and sundry, this part of the world remained mostly unscathed. Among the seven states, Abu Dhabi is the biggest producer, producing more than 80 percent of the total UAE oil and gas production. There's hardly any chance that oil consumption and demand will go down in future, so the black gold will continue to fuel economic growth.
    Construction & Real Estate:
    Dubai has done remarkably well as far as real estate market is concerned. Grand projects like "The Palm", "Burj ul Arab" or "The World" managed to draw investors from all over the world. Abu Dhabi and other states are also working in this sector. The demand will be much stronger than the supply even after the completion of ongoing projects. Real estate investors are now much more interested in UAE properties, after the credit crunch in US market, considering it a safer option than others.
    High-Class Tourism Industry:
    Biggest shopping mall, tallest building of the world, indoor ski resort, white beaches, deserts, man-made islands, some of the most luxurious hotels in the world, crime free environment, rich cultural heritage, international sports event, to sum up, UAE has got tourists attractions in abundance. Tourism industry contributes significantly in over all GDP and it will continue to do so in the coming years. Many development projects are in progress; world-class airports, bridges and other infrastructure programs are about to complete.
    It's not that UAE is somehow immune to whatever happens globally, but with ample oil reserves, strong real estate market, foreign investments and an exuberant tourism industry, UAE is better equipped to put up with such situations.

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    • #3
      i understood that Dubai didnt actually have oil itself, the place was propped up by the Prince who had grand plans that he wanted to see come to fruition. ?
      A huge generaliation I realise, but then the same could be said for making such sweepiing statements of the UAE. Just as the US & Europe is made up of a series of very individual & different markets within the respective unions, the oil rich countries also have their own individualities - take Iraq & Iran for instance- Both of which the US is trying to take !

      The question from a property perspective is does the Prince & co have the wherewithall to continue his plans & therefore bring about a more rapid recovery than might be acheived by relying on world economic recovery ?
      Last edited by Keithw; 29-06-2010, 08:54 PM.
      Food.Gems.ILS

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