Dubai Property Prices to Increase as Much as 35% in 2008
Dubai housing prices are expected to increase by as much as 35% in 2008, before slowing to a more manageable 8-10% in 2009, according to several banks and research firms. So far this year, prices have increased by an average of 40% in both residential and commercial markets according to one company.
The Al Mal Capital Dubai real estate price index indicates that, through July of 2008, year over year prices for property in the Emirate had appreciated by a whopping 39.9% and in the commercial segment by 40.5%. While the performance of the market so far this year has been excellent, Al Mal expects it to ease off a bit by the end of the year, with one reason being the rise in the US dollar. This could take some foreign speculators, who are driving up costs hoping for a quick turnaround, out of the market. While it will slow the growth, it will also be a good event for the long term health of the Dubai real estate market.
While Al Mal is fairly bullish on the Dubai market, Morgan Stanley had a more pessimistic report. The investment bank recently released a report that said the Dubai property market would drop 10% by 2010 as supply outpaced demand. However, this view is not shared by many other analysts and some view the Dubai market as a solid investment for several years.
According to Morgan Stanley's price index, Dubai property prices rose 25% in the first half of 2008, and are up 79% since the beginning of 2007. "Prices have been driven by a combination of genuine demand, speculation and, most recently, escalating construction costs," said the report. It continued: "For 2009, we expect prices to start coming under pressure as oversupply becomes evident. We forecast a 10-percent decline between 2008 and 2010 in our base case."
|
