Oversupply of residential property in Dubai is expected to peak in 2012, has 25 vacancies, and 28% according to the latest Landmark Advisory.
At the same time lead to distress sales to accelerate the falling prices, according to the Dubai and Abu Dhabi Real Estate reports for the third quarter of 2010 for consultation. "With prices falling faster than rents, thus enhancing yields upward," said Jesse Downs, director of research and advisory services to relevant advice.
This is a positive picture of the market for higher returns to attract investors aware of weak fundamentals and the perceived risk. Currently, funding is still limited, which means that investors will continue to dictate market development, "he explained. The report states that sales volumes fell in the second quarter than the first. Prices have fallen by 5% villas and apartments dropped by 5.8% due to limited buyers and tighter credit restrictions.
In neighboring Abu Dhabi quality problems could lead to a rapid restructuring of the market that offer better news is delivered, the report also. Downs expects only 20% of high-end properties in the pipeline to meet the standard, which will have an impact on housing prices in mid-stretch. "However, we expect this trend will only be temporary, with a weakening of the results and is not recovering Once the high end developments are delivered, he added.
In Dubai and Abu Dhabi rental costs fell in all areas of villas in Dubai to 4.4% and apartments down 5.8% during the quarter. Abu Dhabi rents have fallen by 11%, down sharply from 3% in the first quarter of the year. "These are clients by offering the following supplies on the island such Khalidiyah Palace, Al Aryam Tour, Tour d’Argent and Wave. Static prices and rents down have resulted in new performance compression, currently at 5.1% and we expect that dividends will continue to compress in the short term, "said Downs.
The figures confirm those published by consultants Colliers International earlier this month which showed house prices fell 4% in the second quarter of this year compared to a 2% increase in the first three months of 2010. Consulting predicts that about 33,000 new units will be placed on the market at the end of the year is lower than the initial estimate of 41,000 because of project delays or rescheduling. "There are already more than 340,000 homes in Dubai with an average occupancy of 87%, with an expected further decline," said Regional Director of Colliers International, Ian Albert.
"The market simply can not absorb the additional supply, unless the population increases, and / or dismissal of the action is slower," he added. Albert has also warned that the dramatic decline in rents home ownership a less attractive option for investors in terms of revenue generation, another factor that weakened demand.
Dubai Real Estate Market 