The Gulf emirate's once-booming property sector has suffered sharply as a result of the global financial crisis, as prices fall, developers slow or cancel projects and jobs are cut.
'A period of minimal negative growth over the next 3-6 months could see some stability achieved and the market bottom called before year-end,' said Matt Green, associate director, Research & Consultancy at the real estate services firm.
Rents in Dubai are seen declining by 40 per cent for the whole of this year, and a further 10 per cent in 2010, before recovering in 2011, a Reuters poll showed in June.
Expats leaving Dubai, coupled with an increase in property supply, has led to a sharp drop in apartment prices.
Newer residential areas have been the worst affected with rents for one-bedroom apartments falling as much as 40 per cent year-on-year to 60,000 dirhams (S$23,608), the report said.
Office supply will increase substantially over the next six months with many projects in the latter stages of completion, it said.
Several projects expected to enter the market in the first half of the year are being pushed back further, while slowdown in business activity has led to a slump in demand for office space.
In neighbouring Abu Dhabi, weak demand and low levels of sales activity are expected to shape the market in the second half of the year, the report said.
The property sector of the United Arab Emirates' capital, home to most of the country's oil, has been more resilient than Dubai to the global economic downturn.
Sales prices declines are likely to level off as more investors choose to hold property due to low prices while rents are expected to fall further as more supply enters the market.
'Distressed sales are starting to clear with more investors choosing to hold on to units.'
Prime office rents in Abu Dhabi have fallen as much as 40 per cent to as low as 3,000 dirhams per square metre over the last three quarters, the report said.
'Despite comparatively sound macro fundamentals, slowdown in rents is inevitable as demand weakened markedly. The outlook remains uncertain.' -- Reuters
Source: Business Times, 1 Aug 2009