Bloomberg / BusinessWeek
Dubai home prices declined 6 percent in the third quarter while the United Arab Emirates’ biggest construction firm, Arabtec Holding PJSC, reported 96 percent drop in profit and Deyaar Development PJSC suffered a loss.
The Dubai House Price Index dropped 6 percent in the third quarter compared with the previous one, reaching its lowest level since the second quarter of 2009 on a summer slowdown and as banks continued to restrict lending, Colliers International, a brokerage, property and asset management company said today.
The deepest global financial crisis since the 1930s led Dubai property prices to drop by more than 50 percent from the 2008 peak and forced builders to cancel half of their projects in the emirate. Property prices in Dubai will continue to drop due to an oversupply of housing units and offices over the next 20 months, said Mohamed Alabbar, chairman of Emaar Properties PJSC, the U.A.E.’s largest developer.
Deyaar, a property developer partly owned by Dubai Islamic Bank PJSC, tumbled 7.8 percent today after reporting a third- quarter loss of 145 million dirhams. Arabtec dropped the most since May 25 after it reported a profit plunge.
“After a period of stable prices we are beginning to witness a shallow but lengthening slide in overall average prices,” said Ian Albert, regional director at Colliers. Prices had been hovering around the same values since the third quarter of 2009, he said in the report.
The average price per square foot of residential real estate fell to 951 dirhams ($258.90) in the third quarter from 1,015 dirhams in the second quarter. The number of transactions also declined 4 percent, according to the report.
Townhouses suffered the biggest price decline, falling 8 percent in the third quarter, Colliers said. Apartment prices slid 7 percent, while those of villas dropped by 5 percent.
Colliers estimate that 33,000 new housing units will be added to Dubai’s market by the end of this year, down from an earlier estimate of 41,000 units.
“We are witnessing a slow but protracted decline in asset values,” Albert wrote. “This reflects the reality on the ground as occupancy rates fall to 80 percent and the market is unable to absorb the additional supply without a growth in the population or a slowdown in the release of stock.”