27 April 2009
Dubai “most expensive” property in emerging world
Dubai remains the most expensive emerging property market in the world despite the market slowdown and falling prices caused by the global credit crunch, according to Reidin, a consultancy.
In Reidin’s latest report, the city ranked first among 59 cities in 34 emerging markets, with the highest average residential property prices.
Dubai’s average rate as of February was about US$7,000 (Dh25,690) a square metre, the company said.
It was followed by Singapore, with an average sales price of $6,600 a sq metre, with Moscow at $6,000, Hong Kong $5,400, Beijing $4,500 and Tel Aviv $4,200.
But prices in Dubai continue to decline. Reidin based its analysis on data gathered from advertised prices and brokers.
Colliers International, a property consultancy, said residential sale prices in Dubai had dropped by 41 per cent in the first quarter of this year, compared with the fourth quarter of last year. Colliers International’s index is based on data provided by mortgage lenders, on real transactions and on selected developments.
According to the Colliers House Price Index report, prices have seen a year-on-year decline for the first time since records began.
Dubai residences in the first quarter of this year were on average 34 per cent cheaper than in the first quarter of last year.
The average price in the first quarter of this year was Dh1,122 per sq foot for apartments, Dh961 per sq ft for villas and Dh855 per sq ft for townhouses.
Colliers said the lack of available finance, job insecurity among expatriates and the lack of transparency about project delays and postponements were reasons for the decline.
Another factor is the change in the profile of buyers.
The report said the first quarter had seen the arrival of professional investors who were more focused on returns than speculative price rises. “The investors who are in the market now are a new breed of entity that we have not seen previously,” said John Davis, the chief executive of Colliers International.
“We have been through the speculation stage to the end-user stage. The end-users now have dropped out of the market due to the lack of finance available from the banks.”
According to the report, rental yields have become one of the dominant markers setting price, while it was a secondary concern during the boom.
“What we are seeing with the March prices is that banks, in terms of mortgage finance, have come back into the market,” Mr Davis said. “Availability of finance has become a little bit easier.”
On a monthly basis, the report showed that although January had seen the largest decline, down 26 per cent from the previous month, and February saw a fall of 20 per cent, residential prices last month were stable.
But Mr Davis said it was still too soon to determine a trend.
“The next quarter could throw up a mixed bag of results because we have got the school holidays coming up, Ramadan, Eid,” he said.
“We will start to see some meaningful results again, or trend, when we have a look at the fourth quarter of this year.”