Dubai property prices to slide further, insiders warn

Villa prices across Dubai have fallen by as much as 45% in just four months

Property prices in Dubai will hit rock bottom in the third quarter of this year, according to a top real estate consultant.

The remark was made by Iseeb Rehman, managing director of independent property consultant Sherwoods, at a meeting of the Dubai Property Society on Monday.

“I think you will see prices leveling off around the third quarter of 2009,” he said. “That is when you will see the bottom of it. There will then be a period when prices start to hold up for at least 12 months before we start to see them move upwards again.”

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Jones Lang Laselle, managing director Blair Hagkull, agreed. “2009 is a period of transition,” he said.

“In a year we will start to see some improvement in specific sectors. Ultimately, by 2011 we will be back on track.”

But property consultancy Cluttons resident partner Ronald Hinchey warned that it may take much longer before property prices return to 2008 levels.

“When you see this situation start to develop you start to look at other models and other emerging markets,” he said.

“The Hong Kong market was quite similar to Dubai. It went up steeply for seven or eight years. When it corrected in 1997, it corrected by 40%-60%.

“Here we are 11 years later and prices in Hong Kong still haven’t quite got back to where they were.”

Construction activity across Dubai has slowed considerably over the past four months, partly as a result of the fall in real estate demand and the difficulty buyers are experiencing in obtaining mortgages.

Villa prices in some areas of Dubai have fallen by as much as 45% in just four months, according to property broker AAA.

“I have a villa on Palm Jumeirah that I bought for 2.8 million dirhams in 2003,” Danube Group chairman Rizwan Sajan told Construction Week last month.

“It went to 15 million dirham by 2008, but that’s not the correct picture, because that 15 million has come down to 6 million,” he said.