ArabianBusiness.com - Middle East Business News
Thursday, 12 December 2019
30-50% fall seen in apartment prices - survey
Friday, 03 April 2009


Apartment prices in the UAE are predicted to fall by at least 30 percent during 2009, according to the results of an exclusive Arabian Business survey.

More than 1,000 householders in the UAE took part in our poll during March to find out the true picture of the real estate market in the emirates.

When asked how much they expected freehold prices for apartments to rise or fall this year, 60 percent of respondents told us they expected a decline of between 30-50 percent.

Story continues below
advertisement

Of those, 26 percent saw a fall of 50 percent, 15 percent predicted a drop of 40 percent and another 19 percent expected a fall of at least 30 percent.

Another 21 percent saw 2009 price falls of between 10-20 percdent while nine percent predicted that prices would remain flat.

By contrast, only seven percent of people who took part in our Property Survey said they expected any kind of rise during 2009.

The response comes a few weeks after UAE investment bank Shuaa Capital said real estate values in Dubai could plummet by 60 percent by the end of 2009.

Declining occupancy rates to around 80 percent would also cause rents to ease, Shuaa added.

In a separate report, Jones Lang LaSalle said Dubai property prices and rental rates were likely to start recovering in 2011, following a period of stabilisation in 2010.

The company saw 2009 as a year of correction for Dubai’s property market amid the global economic downturn, with the emirate likely to be harder hit than other markets in the region due to its greater integration in the global economy.


 
Comments (13)

Immobiliari
Posted by Bahrain Taxi on 6 April 2009 at 11:59 UAE time

In what sense can property possibly be "consumed" in the sense that a car or a hamburger can be consumed?

Again, the line between consumption and investment is blurred, with perhaps the unconscious assumption that only speculators are real "investors" and the people who buy and live in the homes are mere "consumers".

This imprecision over the fundamental concepts underpinning the property market might go some way in explaining how and why the Dubai market overheated and imploded in the way it did.

True, there will be "bottom feeding" investors who will gain from buying up properties when prices reach their nadir, but anyone who thinks there will ever be a return to the "old days" of 2002-8 are living in cloud-cookoo land. Dubai prepertywill simply never be attractive in the way it once was, because the things that once made Dubai attractive in that way are now historical.

Further, the comment about the "consumption" of preoperty also reveals something of the short-termist attitude that has done so much harm to the Dubai market.

Immobile assets (Real Estate is "Immobiliari" in Italian) are different from other kinds of investments precisely because they are fixed in a particulr geographical locations and cannot be moved.

Such investments, therefore, are much more sentistive to local issues realted to long-term sustainability, environmental concerns, political and social stability, regional stability, and long-term economic growth.

There sustainability issues seem to have been totally ignored in Dubai as investors started to forget the ways in which "immobiliari" are different to other investments, eventually coming to the point at which they bizarrely regarded property as as a mere consumer item.

I fear the region will be paying the price for this negligence and short-sightedness for some time to come.
Re- Investment Class
Posted by M Shaharyar Umar, Dubai, UAE on 5 April 2009 at 14:23 UAE time

It seems that Real Estate People who have still managed to save their jobs are busy writing Press Releases enticing people to buy without providing any meaningful research.
The example of Nano and BMW holds valid as it highlights the actual affordability. Actual consumption is very important as real investors will only invest if the property is actually consumed and not speculated. Henceforth extrapolating prices based on consumption and affordabilty factors holds more weightage rather than speculation. The era of speculation is over at least as of now.Dubai will witness stable growth and other industries will be contributing factors rather than real estate as of now.
Dubai /world's price correction
Posted by Kumar, Dubai, UAE on 5 April 2009 at 13:12 UAE time

Even after some many losses its really shocking to see people and governments still not changing their attitudes to this Real Estate Laundring its a Gambling game and once addicted u are bound to loose more and more until you find yourself in the streets begging. Stop this fools game once and for all. Remenber every thing has a fixed value in life do not overestimate that and do not underestimate either. Just treat them for what they are worth. Or else again and again the world will have to learn it the hard way. Long live the common sense and the sense of human ethics.
Investment class
Posted by Nuts on 5 April 2009 at 09:20 UAE time

Property is an investment class and if a report says the prices will fall by 30 + % it is one more bit of data that goes into the investors variables for taking the investment decision. Unless the person is all money and no brains, I don't think one report will influence their investing decision either way i.e. positive or negative.

There is nothing to get emotional. Let's face it if a person is an investor, he needs to first ascertain his / her own risk appetite, identify asset classes where he / she wants to invest, and how much to invest, given the risk appetite. Real estate is an illiquid asset class, it has a long gestation period, compared to say equities, commodities, currency or money markets. Further, the initial capital outlay is significant. Investors further, need to identify the asset class that they are comfortable with and develop their skill sets to make their investments work in the chosen investment class/es.

In the stock market, it is said that if a person invests based on tips, he has already lost out as the minute the "tip" comes out the real investor has already made the money on it.

The problem, with the real estate market here in Dubai, has been several people played the real estate market on tips and have burnt their savings. All is not lost, every asset class or market is subject to change and after a trough there will be another peak. The only problem is people again trying to predict the peak or further trough on sentiment (polls) instead of cold statistical analysis.

For yasin investment in Nano and BMW are two different asset classes and comparing them is like comparing apples with oranges. Further, buying a Nano or a BMW constitutes consumption and not investment and this is driven by personal sensibilities. So taking one step further, how can you rely on the comments of someone who cannot distinguish between consumption and investment other than to discount the same as an emotional outburst of a failed investor.
Nano Mentality
Posted by Bahrain Taxi on 4 April 2009 at 10:55 UAE time

Re Yasin's comment, what on earth is this supposed to mean:

"Majority of people taking part in the polls and givining comments would give 99% yes to buying a nano car by tata and similarly 99% no for bmw 7 series."

Talk about "commodity fetishism"! Is this supposed to be some sort of dis of subcontinental people, like saying their views on property speculation are irrelevant because they never had the money to speculate? (Unlike those who wise investors who spend God knows how much on 7 Series BMWs only to take a 30% depreciation hit in the car's first year.)

Despite the automobile being 120 year-old technology, no Arab country manufactures any automobiles at all, not even Nanos. Perhaps if it did wealth generation in the Arab world would not depend on unsustainable property speculation.

The real reality check comes here:

"Somehow i see the prices now have settled on the original prices when the properties were bought 4-5years before when the property boom started. . ."

Right on, some investment, Yasin; a nano return after five years!

PS, for the record I'm British and I drive a Range Rover, but one built in 1984 because it cost nothing to buy, is cheap to run, has classic style, is an anti-status symbol, and is better off-road than modern 4X4s!
It will not be like this forever.
Posted by Shehryar Iqbal, Dubai, UAE on 4 April 2009 at 10:03 UAE time

The fact is that this is not going to be like this forever, the people who keep on commenting and taking pleasure out of these prices, instead should wake up and start investing.These are the same people who missed the boat and now the boat is in front of them but they lack liquidity. So because of there own attitude they miss out or are too afraid to invest. Remember you can never go wrong with bricks and walls. Yes these are testing times but if our fundamentals to invest are strong in the first place e.g to keep the property and rent it out (not to flip it ) you will see a steady growth in your passive income.I recommend to all my fellow readers to read the book ''Rich Dad , Poor Dad'' by Mr. Robert T. Kiyosaki and please dont be short sighted it will only hurt you.Happy investing and long live Dubai and the brilliant portfolio that Dubai has created to choose from .......what can be a better time then this to own one !!!!!!
and after?
Posted by Sanne, dubai, uae on 4 April 2009 at 08:22 UAE time

So prices are dropping, everyone who checks rental prices once in a blue moon will have seen that. But now the question, what will happen in a few years? Let's say you can now finally rent that nice 2-bedroom appartment because the rent is finally reasonable. Who says that in 2 years time your landlord will not do the same as what happened a year ago, raise your rent with 25% or more. Will the rent cap that was installed still be applicable then??
DUBAI'S PRICE CORRECTION
Posted by yusuf husein, london, UK on 4 April 2009 at 00:55 UAE time

When buying off plan in Dubai , my UK investors saw pre 1000psq ft prices jump to 1600psq ft which was too fast. Remember that Jan 2005 prices in JLT were around 750p sq ft.
The problem started as follows: Some developers started to increase their p sq ft prices to over 1600 when digging hadn't even started. They created a perception of sutainable increasing prices "forever". It didnt make sense . These same developers then said "see, how much capital appreciation" you made ! Well done they added.
Teh 2007 adn 2008 rises were ( I calcualte ) based on a monthly appreciaton of 1.5% for resedential units.
Whats needed now to avoid such blunders and a repeat of the same mistake is for a New Regulation of Investors. A bit like teh money laundring checks that UK solicitors have to do. UAE investors in property should have different lending "harder"rules applied to them . First time investors / end users shuld have "softer lending rules for them. This is a discussion that needs to happen. In part two I will go into more detail.
Positive collapse.
Posted by Paul King, Dubai, UAE on 3 April 2009 at 22:30 UAE time

More good news about this positive collapse of the property prices in Dubai. Expect rallies in the world stock markets but ultimately this is the start of a world depression that has brought to an end the madness of the world we lived in Pre-2008. My bet is that prices will fall much further yet and evidence of this is that banks are still only prepared to gamble 60-70% of the current reductions. With large amounts of stock nearing completion at the "Dubai Property Factory", expect further discounting & price reductions a plenty!
Meaningless
Posted by T, Manama, Bahrain on 3 April 2009 at 20:06 UAE time

This is an online poll, to which many people have responded. However, most of these people's responses are are a "guess". The results are meaningless, yet Arabian Business chose to post this article as if it is based fundamental data.
Fall in apartment prices
Posted by M Shaharyar Umar, Dubai, UAE on 3 April 2009 at 16:06 UAE time

Mr. Yasin seems to have clearly indicated that 99% of the respondent may say yes to buying nano and 1% may say yes to BMW 7 series. ArabianBusiness Poll seems to completely agree with this figure and interpreting it correctly I believe. When 99% of the total population cannot afford to buy and only 1% can afford to buy the prices are bound to fall.Unless the purchasing power of people increases dramatically there is going to be a downfall till more percentage of total population can afford to buy.
yupeeeeeeee :)
Posted by Talib, UAE, UAE on 3 April 2009 at 13:35 UAE time

I am not here to verify the authencity of the report, however reports like this brings a smile to my face, Developers, middlemen, freelancers, who were in someway responsible for inflating the market will have to face reality, Greed and Avarice will give way to emergence of sanctity in market. The loot in recent times has been phenomenol, Reports like this will clout the sentiments of investors who will tread cautiously in their future investments......signs of corrections emerging.......
Comments and polls by readers
Posted by yasin bawaney, dubai, uae on 3 April 2009 at 12:38 UAE time

I see many people participating in polls and giving comments which are so immatured and sound like actully they have never bought an any property or played in dubai property boom.Due to polls from theese people the data collected is totally wrong.Somehow i see the prices now have settled on the original prices when the properties were bought 4-5years before when the property boom started.Majority of people taking part in the polls and givining comments would give 99% yes to buying a nano car by tata and similarly 99% no for bmw 7 series.
All posts are sent to the administrator for review and are published only after approval. ArabianBusiness.com reserves the right to remove any comment at any time for any reason.Please keep your responses appropriate and on topic.
Arabian Business would like to point out that only comments relevant to the story will be published. Any containing personal insults or inappropriate language will not be approved.
Name *
Remember me on this computer
Email *
(Your email address will not be published)
City
Country
Subject *
Comment *


Please click post only once - your comment will not be published immediately.
Arabian Business Property
eg. Azure, Dubai Marina, Dubai OR Betterhomes OR Emaar

READER COMMENTS

Reader Comments (24 hrs)

No comments.

Read all user comments >

Architect Powerlist 2010

Meet The Boss