Macroeconomic indicators - Dubai property market shows signs of recovery
Khaleej Times reported that Dubai’s property market is showing signs of recovery with property prices rebounding by 9% since hitting bottom in April but low occupancy levels could pull down sales and rent prices before the end of 2009.
rokerage HC Securities said that the property market in the emirate appears to be headed for a turnaround, thanks to improving sentiment and credit returning to the market. It said that mortgage values and volumes have steadily recovered to pre crisis levels, reaching 24% and 14% in October, respectively, compared to 7% and 6% in April. Mortgages in freehold areas increased to AED 340 million in October from a low of AED 190 million in April.
HC Securities said that liquidity returning to the system appears to be the driver of renewed interest. Mortgage providers have more recently raised their loan-to-value ratios, relaxed their credit norms and have lowered their rates in line with a downward trending in Emirates inter bank offered rate. However that, property prices in Dubai, which already declined by 30% from peak to trough, could see a bigger decline of 40% to 60% and no recovery prior to 2010 or 2010. This is due it said, to the fleeing of expatriates, as well as stock additions coming on stream.
Rents on the other hand, declined by 38% since January but the pace of decline is slowing, with only a two per cent drop in September and October, as weakened demand in Dubai is being offset by a major spillover of people from other emirates like Abu Dhabi, Sharjah and Ajman.
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