Mixed Signals Continue to Baffle Recovery Hopes for Property Sector

Mixed signals continue to baffle recovery hopes for Dubai’s once bouyant property sector as analysts remain divided with their predictions of a time-frame for the eagerly awaited turnaround and its overall impact. While some property market experts see recent trends in prices and rents as signalling the end of the downturn, quite a few believe the worst is yet to come for the sector that has seen prices plummeting overall by as much as 50 per cent so far from their peak in August 2008. “I don’t think prices have bottomed out but certainly prices are seeking stability currently,” said Bobby Sarkar, Vice-President of Equity Research at Al Mal Capital. “Given the expected demand stagnation and potential expat departure in the summer months, we could see prices fall another 15-25 per cent going forward and in the process we could see price volatility, albeit on a reduced rate than the steep declines seen previously on finished properties throughout the remainder of 2009,” Sarkar said.

But Deutsche Bank sounded upbeat in its recent forecast, saying that “Dubai property prices and rents recovered slightly in June, signalling that the worst for the sector may be over.” “The average house price for apartments and villas rose 6.5 per cent month-on-month in June to Dh1,285 per square foot, while rents rose 1.1 per cent over the same period following a 10 per cent fall,” said Nabil Ahmed, head of research at Deutsche Bank. “Although monthly data should be viewed with caution given the limited number of transactions, recent numbers tend to confirm the stabilisation in the market we saw in May,” Nabil Ahmed said with reference to the bank’s proprietary price index, which covers 13 locations in Dubai.