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Stabilization is a big word in Dubai these days. Property investors aren’t looking for fireworks, just some sign of predictability after prices soared for three years, only to drop by more than 40 percent in 2009.
With that in mind, the latest Colliers International Dubai House Index seems like good news for the industry. Property prices in the fourth quarter rose a miserly 1 percent and the number of transactions dropped 15 percent from the previous quarter, however the slight uptick in prices represented the second quarter in a row in positive territory.
“We have now seen for the last two quarters the index remain fairly stable,” Colliers regional director Ian Albert told the National. “I don’t think we are going to see this huge fall or vast changes we have seen over the last two years.”
Prices are down 46 percent from the high in the third quarter of 2008, according to the index. But there are signs that the market is gripping reality.
“We anticipate price fluctuations will become less pronounced as the market matures, providing early indications that Dubai house price values are getting closer to underlying values,” Albert said.
Nevertheless, there were still red flags in the report. For example, while villas prices jumped 7 percent in the last quarter, apartment prices actually decreased 4 percent. And apartments represented 48 percent of transactions. Plus, the report doesn’t take into account the impact of the latest round of news, including Dubai World’s financial problems.
There is also widespread concern that supply is going to outweight demand for at least the next year.
“"We now seem to have reached the point where the market is trying to find its natural equilibrium,” Albert said in a press release. “While we have tracked marginal variations in the performance and prices of property types, it remains to be seen how the market will react to further news of Dubai World's debt restructure as well as the banks' end-year results."
The full report can be found here.
