Dubai Real Estate to Become Buyer’s Market in Early 2012

A new report published by The Dubai Chamber of Commerce and Industry claims that the city’s real estate sector is to ‘bottom out’ in the first quarter of next year, with property prices reaching their lowest point since the recession began. Dubai real estate prices have dropped off dramatically since the start of 2009 and the study found this decline is likely to continue due to oversupply, but dipping prices are expected to bring buyers flocking to the UAE.

“A robust rebound is expected at a slow pace as it may still take 2011 and the first quarter of 2012 for the sector prices to bottom out”, the study said.

According to Jones Lang LeSalle, a British Commercial Property consultancy, around 36,000 residential properties were completed in 2010 while only 25,545 are expected to be completed in 2011, suggesting that the new supply of residential properties in the city is due to slow down by around 30 per cent compared to 2010.

Dubai’s house price index which catalogues prices and rents for apartments and villas, registered a one per cent increase in the final quarter of 2010 compared to the third quarter, but on an annual basis the index recorded a decline of six per cent in value when compared against Q4 2009.

This makes it an ideal time for investors and expats to consider buying property in the UAE and many banks, such as HSBC.ae who provide credit cards, are offering mortgage products to suit a range of different buyers as well as specialist home loan products for Islamic investors.

Dubai enjoyed a property price boom during the economy’s halcyon days prior to the economic downturn and Chamber officials admitted that the property market was “unlikely to return to pre-crisis sales growth rates in the foreseeable future”, making the Dubai property market more accessible to new buyers and investors.

The recovery and future growth in Dubai’s property market will be dependent on the completion of a “world class infrastructure and business friendly environment”, the report said.

In the rental market, The Dubai Chamber said waning occupancy rates have resulted in landlords becoming willing to absorb service charges normally paid by tenants, or offer rent-free periods as an incentive to new tenants. The report found that other landlords are offering rates of 10-12 per cent below standard market levels to secure tenants willing to pay their rent a full year in advance.