Residential and commercial property market hit by oversupply: report
(DUBAI) Dubai house prices are not seen recovering before 2011 at the earliest while oversupply in commercial property will boost vacancy rates to more than 50 per cent next year Jones Lang LaSalle said on Sunday. A total of 26,000 homes are expected to be completed in 2010 and 25,000 in 2011, bringing total residential stock to 320,000 homes by the end of 2011, up from 287,000 at the end of the second quarter, the property consultancy said in a report.
'Despite the recent stabilisation in pricing levels, Dubai's residential market will experience a situation of oversupply and prices are not expected to recover before 2011 at the earliest,' the report said.
'Finance is a key factor in market recovery. The residential market has shown signs of improved lending in 2010 as more banks are injecting liquidity into the mortgage market.' Dubai's once booming property sector collapsed in the wake of the global financial crisis, leaving developers and customers with huge debts and several major projects unfinished.
Average apartment rents fell 10 per cent in the second quarter from the same period a year ago, and were down 4 per cent from the first quarter this year. Average villa rents fell 23 per cent in the second quarter from the second quarter of 2009 and were down 11 per cent from the first quarter this year. Greatest declines were in the luxury and high-end for both categories, the report said.
Apartment prices remained stable while villa prices rose marginally over the quarter.
While Dubai's office market is expected to experience a supply overhang, there is still a shortage of good quality supply, the report said.
2010 represents the peak in new supply with 20 million square feet of supply expected, but only 25 per cent of that is currently complete and further delays are expected. -- Reuters
Source: Business Times, 29 Jun 2010