Poor outlook for Dubai house prices in 2011
Posted on 03 January 2011 with 3 comments from readers
Supply fundamentals are stacked against Dubai house prices in 2011. Visit propertyfinder.ae and you will find a 3-bed JBR apartment with full sea view at AED1.45 million for a quick sale. That is a return to the original selling price.
You might conclude it is time to snap up a bargain. But consider the upcoming supply in and around Dubai Marina of which the Jumeirah Beach Residence is the flagship. At night the empty apartments are visible as black shadows, and the neighboring Jumeirah Lake Towers has whole towers shrouded in black.
New Dubai
Then look to the north of the marina and a whole mini-city of super high-rise apartment blocks is coming up for completion. This will include a 107-storey tower, the highest in the world, shortly to be topped by the Pentominium Tower whose construction has started. Within two to three years New Dubai will be awash with brand, spanking new apartments.
Perhaps that will be the time to pick up a bargain. Prices will surely not bottom out until the over supply is at a maximum and that is not now, as the ArabianMoney newsletter discusses at length this month (click here to sign-up) in its regular update on the UAE property scene.
Whether the situation for villas is much better is debatable. Almost one-in-three of the once popular Jumeirah Island villas is now listed for sale on propertyfinder.ae, perhaps a reflection of the well publicised problems of its master developer Nakheel and the failure to open its club house some four years after the handover of the villas.
Falling prices
At the market peak there was not a villa under AED10 million in this location, now the lowest priced is AED4.5 million. Is that the bottom? Well probably not if Nakheel carries out its most recent promise to restart work on the neighboring Jumeirah Park villa community.
There is a risk here for Dubai as a city. Rising global interest rates this year are already threatening further damage to many world property markets. In Dubai this risk is compounded by over supply, and a downward price spiral could develop if the global economy has another bad turn.
3 Comments posted by readers:
Quickest way to see a recovery in local real estate prices is to drop residency fees,visa fees, and allow expats to get permanent residency for those that invest in property for $1 million USD or higher like they do in Hong-Kong. If people could live or reside where they owned property without having to pay an arm and a leg to live there many people may consider raising a family and moving to Dubai. The laws and regulations along with the cost of living are what affect Real Estate sales in Dubai. If nothing changes I think Real Estate prices will tank further just like stock prices did when the stock market tanked.
Andy’s point is definitely relevant. There are many rich people living in unpleasant places within 4 hours or so flying distance. They would love a bolt-hole to which they could escape if the proverbial should hit the fan.
However, the Elephant in the Room, which the Dubai Government has studiously avoided seeing, is the rampant defrauding of investors during the boom. Their money was stolen but no one went to jail.
Without Rule of Law, investments will be limited and opportunistic.
The plastic party is over!
Dubai was built on a dream with assumtions of excesses to be present in the world in the future. The global economy is hit hard & the capitalist system built on forever consumption of a finite world is disintegrating.
So, my friends, the “thought” of a bottom in Dubai is this: ZERO
Do not be fooled into thinking a particular level is bottom… it looks like the global economy is NOT likely to recover for at least a generation if AT ALL!…
so dont waste your money on price speculation any more!!
Buy FOOD & WATER instead… if u know what i mean!!
Good luck