Dubai property prices up 4pc, but market at 'tipping point': HSBC
Monday, 15 December 2008
DUBAI, Dec 14: Dubai property prices rebounded in November but may be approaching a "tipping point" as the number of homes advertised for sale surged, according to the latest research by HSBC Holdings, according to Internet.
The bank said this week in its survey of real estate prices in the United Arab Emirates that advertised prices for properties in the emirate gained 4.0 per cent due to a shift by investors to smaller units.
At the same time the lender cautioned that prices in Dubai may be reaching a turning point amid growing concerns over job security, stock market losses and a shortage of liquidity in the emirate.
Real estate has been a key driver in Dubai's boom, accounting for 30 per cent of the Emirate's economy since it allowed foreigners rights to buy property for the first time six years ago.
The number of properties advertised for sale in Dubai in November surged by 36 per cent as "anecdotal evidence suggests that transaction volumes have dried up," the bank said.
The report highlights that adverts for properties in the area surrounding Burj Dubai, the world's tallest building, almost doubled to 670 listings between September and November.
Access to finance may be hampering sales as lenders either pull mortgage finance for buyers in Dubai, or require bigger deposits. HSBC said in the report that the average down-payment more than doubled to US$220,000 in November, up from $98,000 in September.
"I think bank financing has pretty much dried up these days," said Fadi Moussalli, a regional director at Jones Lang LaSalle. "Large-style investments are not happening. Banks for the moment have no appetite for lending money to help investors fund transactions."
Last month, HSBC said prices in Dubai, the first Emirate to allow foreign ownership, fell 4.0 per cent between September and October.
In recent weeks, real-estate agents have reported softening prices and a lack of buyers, especially property speculators that helped drive steep price increases in recent years. Developers are shedding jobs and local lending has also tightened significantly.
One real estate agent contacted by BI-ME said that some areas of Dubai such as International City and Jumeirah Beach Residence, two of the city's largest projects, are seeing high vacancy rates of up to 50 per cent as of this month.
"The government is looking at measures to support the market such as the reintroduction of two-year rental contracts, and the abolition of the rent cap, but nothing is certain," the agent said.
Speaking on condition of anonymity another agent said that rents had been edging down by up to 20 per cent in some areas, although the Dubai letting market is currently much stronger than sales, where investor confidence and access to mortgage finance were more of a factor.
The bank said this week in its survey of real estate prices in the United Arab Emirates that advertised prices for properties in the emirate gained 4.0 per cent due to a shift by investors to smaller units.
At the same time the lender cautioned that prices in Dubai may be reaching a turning point amid growing concerns over job security, stock market losses and a shortage of liquidity in the emirate.
Real estate has been a key driver in Dubai's boom, accounting for 30 per cent of the Emirate's economy since it allowed foreigners rights to buy property for the first time six years ago.
The number of properties advertised for sale in Dubai in November surged by 36 per cent as "anecdotal evidence suggests that transaction volumes have dried up," the bank said.
The report highlights that adverts for properties in the area surrounding Burj Dubai, the world's tallest building, almost doubled to 670 listings between September and November.
Access to finance may be hampering sales as lenders either pull mortgage finance for buyers in Dubai, or require bigger deposits. HSBC said in the report that the average down-payment more than doubled to US$220,000 in November, up from $98,000 in September.
"I think bank financing has pretty much dried up these days," said Fadi Moussalli, a regional director at Jones Lang LaSalle. "Large-style investments are not happening. Banks for the moment have no appetite for lending money to help investors fund transactions."
Last month, HSBC said prices in Dubai, the first Emirate to allow foreign ownership, fell 4.0 per cent between September and October.
In recent weeks, real-estate agents have reported softening prices and a lack of buyers, especially property speculators that helped drive steep price increases in recent years. Developers are shedding jobs and local lending has also tightened significantly.
One real estate agent contacted by BI-ME said that some areas of Dubai such as International City and Jumeirah Beach Residence, two of the city's largest projects, are seeing high vacancy rates of up to 50 per cent as of this month.
"The government is looking at measures to support the market such as the reintroduction of two-year rental contracts, and the abolition of the rent cap, but nothing is certain," the agent said.
Speaking on condition of anonymity another agent said that rents had been edging down by up to 20 per cent in some areas, although the Dubai letting market is currently much stronger than sales, where investor confidence and access to mortgage finance were more of a factor.