UAE Property Market Still Struggling

Prices for UAE property came down again in the last quarter at an average of 4 per cent, with villas performing the strongest, according to Colliers International House Price Index, suggesting a trend for the remainder of the year. "We anticipate a further slowdown and we have an ongoing concern of the new supply entering the market, which will further impede recovery," said Ian Albert, regional director, Colliers International. Another 33,000 units expected to come online by year end are the main reason to be less optimistic about the market despite stabilising since the steep high and subsequent drop of 2008 and 2009. However, some of the supply could be further delayed into 2011, but current occupancy figures suggest that there is enough on the market as it is.

"There are already more than 340,000 residential properties in Dubai with an average occupancy rate of 87 per cent, with further declines anticipated. The market simply cannot absorb the additional supply unless the population grows and/or the release of stock is slowed down," Albert said. House prices are back to the earlier parts of 2007 yet, according to the Colliers Index, house price values overall still enjoyed a 7 per cent increase when comparing the second quarter of last year with the current one. The index is based on statistics of lenders transactional prices and sets the blended average house price for the second quarter at about Dh1,014 per square foot.