Dubai Property Prices Halved
Nov - 24 | 
14 comments. | 
Dubai Property, Overseas Property News
Even Dubai, the seemingly invincible ‘nothing can stop me now’ emirate is feeling the effects of the credit crunch, with property prices in some of Dubai’s most prestigious developments falling by as much as 50 per cent…
Prices in the Downtown Burj Dubai area have fallen by as much as half, according to Dubai based estate agents. Because prices in the area had previously risen so high and so fast, when the slowdown happened, it affected that area, one of the most exclusive in Dubai, far more than others.
Whilst prices in the area were around £652 per square foot, they are now sitting at around £482. Downtown Burj Dubai, a mixed use urban development that includes the recently opened Dubai Mall, has some of the most expensive properties in the Emirate. The Burj Dubai Tower, due for completion next year, will put the area further onto the map.
This fall in property values has been pinned on the global crisis and current investors who have liquidated their assets in Dubai in order to get some ready cash.
Whilst short term investors are running scared and selling their properties for far lower prices, long term investors are sitting still holding onto their properties, confident that prices will rise once more.
When the Dubai market does begin to pick up again, properties in the most exclusive areas, including Downtown Burj Dubai, should improve before the rest.
Arabian Business has reported that Palm Jebel Ali’s island prices have depreciated by 40 per cent in the last two months.
To make matters worse, local Dubai mortgage providers have reduced home financing loan-to-value (LTV) to about 70 per cent down from 90 per cent last month.
Five and six bedroom villas on the island used to be valued at around £3 million. In the last couple of months however these prices depreciated to £1.5 million instead – a huge loss for current property owners.
According to HSBC Holdings, overall property prices in Dubai fell by four per cent between September and October, with the price of villas tumbling 19 per cent due to slowing demand and tighter lending conditions.
The report is the first official statistical evidence of a correction in the UAE housing market after years of rapid growth.
Lloyds TSB has stopped offering home loans to people wanting to buy apartments in the UAE due to the escalating credit crunch.
The bank, Britain’s third largest mortgage lender, said it had also dropped its loan to value ratio on villas in the UAE to 50 per cent, meaning buyers can only borrow half the value of the property.
Many other banks and mortgage lenders have reduced their loan-to-value ratios from 90 percent to 60 per cent over the last couple of months.
News submitted by Jon Moore, The Move Channel
A situation long overdue considering some of the comments made in the press by several Arabian developers that have really been quite laughable. The recession itself will have a substantial knock on effect for some time to come, just as the several stock market crashes in years gone by. The reality is that just because it is not understood, or acknowledged, it doesn’t mean it will “go away”
Research first. If prices have been going up and up and up, is it really time to invest? where is the top in your given market? Can you afford to “average down” by buying more?
Not long ago I saw a segment on tv about the spending on development in this part of the world, which suggested that developers were give blank cheques to create whatever they could imagine. I think it’s safe to suggest those times may have come to an end.
This is excellent news, I can still not believe how anyone thought purchasing a small 2 bedroom “townhouse” for over $1,000,000 could be considered an investment if it is located in the middle of nowhere in the sand ?
Most of these properties were bought by speculators with the majority of developments less than 50% occupied yes “sold out”.
We are seeing investors keen to buy resale properties ready to move into or rent out – the demand for rental properties is particularly strong and rental prices have not dropped in line with sales prices so yields have improved significantly.
It is a bubble and scams which have burst.Sellers advertising 24% yield , well if there was 24% yield the sellers would buy the properties themselves and invest in them, the fact is the sellers /developers are making money marketing these properties ……..with a difficult get out clause and freehold rights ,in many cases unclear
It is just a matter of time that the rental yield will fall significantly as more property holders unable to sell there property are going rental and buying time till the market stabalizes , the supply demand situation is also changing much rapidly prices will come down to avg of 200$ per sqft which is what most of the properties real value is.
There is a lot more down to the propertie market
Let me tell you a real story here. A couple shifted from New York to Dubai and it took them 2 years of savings to buy their dream property, an apartment in Dubai and just 8 months post buying their apartment house the price of the property has fallen 30%. Means they have lost 30% on their property in just 8 months. That is cruel.
i PERSONALLY THINK ITS THE MIDDLE CLASS OF PEOPLE WHO CAME IN TO THE BOOM TO MAKE A QUICK BUCK ARE THE ONES WHO HAVE DIED ….DUBAI WILL GROW AND ITS THE ONLY PLACE IN THE WORLD TO OFFER YOU SO MUCH FOR SO LESS…CAN YOU BUY A VILLA IN INDIA FOR SUCH FUNDS NEVER…YOU WOULD REQUIRE THREE TIMES THE MONEY…BOTTOM LINE THE MARKET HAS BEEN SLOWED DOWN DUE TO MANY OF THE WORKING CLASS PEOPLE WHO PUT IN THEIR MONEY TO MAKE A FAST AND EASY BUCK THESE ARE THE PPL WHO HAVE SUFFERED MOST . PPL WHO ARE THE REAL INVESTORS CAN HOLD ONE DONT PANIC DUBAI IS GOING NO WHERE NITHER IS YOUR MONEY INVESTED WAIT AND WATCH THIS MARKET CRUNCH WILL BE OVER BY FEB OF 2009 AND DUBAI WILL RAISE AGAIN .MAYBE NOT TO WHAT IS WAS IN AUG-SEP OF 2008 BUT YOU WILL MAKE LOADS OF MONEY …THIS WILL CORRECT THE SYSTEM AND THE SMALL TIME INVESTORS WHO CAME IN TO THE BOOM TO MAKE QUICK MONEY AND JUST HYPED UP THE MARKET ARE OUT BACK TO DOING WHATS BEST WORKING IN THEIR JOBS…IF IT WAS THAT EASY AS IT LOOKED WHY WORK JUST SIT AT HOME AND SELL HOUSES
THE SYSTEM HAD TO BE CORRECTED AND THIS IS BETTER WHITH THE NEW RULES OF ONLY AGENTS WITH PERMISSION TO SELL HOUSES THATS WHAT WAS NEEDED…PPL SHOULD LEARN MONEY EARNED IS MONEY IN THE BANK….WAIT GUYS DUBAI WILL RAISE BACK TO WHAT YOU SAW…DILIP SITLANI
Homes in Dubai were overpriced. One million dirhams is about 190,000 pounds sterling. What can u buy in Dubai and what can u buy in the UK with this amount? In dubai u can get 2 bedroom apt in a middle class area. In the Uk u can get yourself a 3 bed semi detached or maybe detached property in a reasonable decent area. (Not London ofcourse). Another thing, it is established that 80% of the so called buyers were speculators. So how will all the new units about 80,000 in 2009 be absorbed? Furthermore, the ‘SOLD OUT’ properties were basically bought by real estate companies as stock, so they may have been sold out by the developer but they were not really sold out to end users. It was all part of the hype to create the illusion that propety was hard to come by… This amounted to coercion and pressure on investors to buy before it was too late . hand over ur money and don’t ask questions mentality. The real estate agents would come out on radio and other media and keep repeating the phrase demand will out strip supply. SOme of these are so called respectable agents. Based on what? Based on some far fetched calculations of a large number of people moving here. So basically u were asked to commit huge sums of money on what was effectively a bet that so many people might move here. At the end the devlopers made money. Now they are losing hopefully. I do hope they go bankrupt to teach them a lesson. The market was devoid of any ethics. It was simply a casino. I think the prices will fall to below their original prices , because that is what the market is dictating. Even then u will have a huge over supply and many empty buildings. The figure don’t add up. Mr. Dilip I hope u are right. But I think February 2020 might be a more accurate time frame.
Even after the major corrections the property prices in dubai are much higher than Newyork, London and Paris and I wonder what is the charm for the investors to invest in the middle of the desert country where 8 months of the year the temprature is around 50 degrees with 90% humidity. It is like living in steam room.
Well all the demands were created by the speculators and developers without the real demand. Large number of people coming in the construction industry of Dubai created demand for the rental properties, which will go down substantially due to thousands exiting every month due to layoff’s. More supply of offices and apartments in hundreds of towers being completed each month will further result in over suply and both prices and rent will fall like pack of cards.
Take my words, the prices will fall by minimum 50% from where they are today by end 2009 and rents going down by 50% by end 2010. The speculators can not fool the real investors by their sham transactions of purchase and sale.
My suggestion is to get out of this market as fast as you can as this is lasvegas of properties and you are bound to loose in the long run.
Zahid Hussain
I would speak of Dubai only.I agree with Zahid and Bugle. This bubble had to burst. I remember my time when we were buying a 3-bed villa in Dubai in April,May 2008. I well remember our hard time. When thrice the owners of the villas went back from their promises with which our deal had been finalised. But due to greed they broke their deals and we were given our checks back and thus they wasted our lots of time whereas the prices were rising like anything and much above our affordability range.
That price rise was absolutely unjustified. Due to 90% finance and interest based jobs, made people buy them blindly. If the prices fall by 50% now, I think that will be the real value of these properties.
I have also been to Dubai and it is an amazing place, with so much construction going on the place it’s a bit of a building site. Once completed it will surely be an impressive place. I.ve heard, even foreigners can now own property freeholds in certain areas, Right ??
Regards,
Josh@ dubairentalindex.com
This has hit investors severely because as prices fall, so does the demand for rental properties and with that goes the rental yields which will ultimately affect the ROI and the United Arab Emirates doesn’t look like it will rebound any time soon.
ONLY FEW WORDS TO WRITE FOR ALL RESPONSIBLE IN U.A.E
SHAME ON YOU AND FOR YOUR COMMING GENERATIONS
WHAT WE ALL CALL YOU ‘SHEIKH’
SHAME ON YOU