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Dubai rents to fall as much as 40% in high-end areas
Dubai rents reached “unrealistic” levels and are expected to fall as much as 40 percent in high- end areas this year after the global financial crisis slowed a property boom in the Gulf business hub, the head of Dubai’s Real Estate Regulatory Authority said.
The market is seeing “a healthy and beneficial correction,” Marwan Bin Ghalita said in a phone interview today. “Life in Dubai was affordable at one point, but with inflation and economic boom, prices reached unrealistic levels.”
Property prices in Dubai, home to the world’s tallest building, most expensive hotel suite and largest manmade islands, have fallen 25 percent in Dubai from September’s peak as banks cut back on mortgage loans and speculators left the market, Morgan Stanley said a month ago. Prices soared after foreigners were given the right to own real estate in limited areas in 2002 and demand outstripped supply as the population grew.
Rental rates “started to ease in Dubai in December, where we expect average rents to have fallen by 7 percent” since the summer, Morgan Stanley said. Dubai rents for apartments and villas dropped by as much as a third in the last eight weeks as homeowners flooded the market with properties amid falling demand, Arabian Business reported Feb. 3, citing real estate agents.
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“Now with rents coming down Dubai will start again to attract people,” said Matthew Green, head of United Arab Emirates research at CB Richard Ellis. “People moved here because it’s tax free and has an amazing life style. Once they had to spend so much on rent and couldn’t afford to save, it became a less attractive proposition.”
Rental rates may fall between 10 percent and 40 percent depending on the area, while prices in some parts of the city such as Deira may increase, Bin Ghalita said. “We don’t want a fast bounce back after the correction ends. We want to reorganize the market to allow for healthy and sustainable growth based on long-term investment not speculation.”
A quarter of current property projects in Dubai will be completed on time, while the rest may be put on hold, rescheduled or merged with other developments, Bin Ghalita said.
Emaar Properties PJSC, the U.A.E.’s biggest real-estate developer, halted new projects as it restricts supply of new homes amid falling prices. Deyaar Development PJSC put a quarter of its projects in Dubai on hold, it said earlier this month.
The market is seeing “a healthy and beneficial correction,” Marwan Bin Ghalita said in a phone interview today. “Life in Dubai was affordable at one point, but with inflation and economic boom, prices reached unrealistic levels.”Property prices in Dubai, home to the world’s tallest building, most expensive hotel suite and largest manmade islands, have fallen 25 percent in Dubai from September’s peak as banks cut back on mortgage loans and speculators left the market, Morgan Stanley said a month ago. Prices soared after foreigners were given the right to own real estate in limited areas in 2002 and demand outstripped supply as the population grew.
Rental rates “started to ease in Dubai in December, where we expect average rents to have fallen by 7 percent” since the summer, Morgan Stanley said. Dubai rents for apartments and villas dropped by as much as a third in the last eight weeks as homeowners flooded the market with properties amid falling demand, Arabian Business reported Feb. 3, citing real estate agents.
Life Style
“Now with rents coming down Dubai will start again to attract people,” said Matthew Green, head of United Arab Emirates research at CB Richard Ellis. “People moved here because it’s tax free and has an amazing life style. Once they had to spend so much on rent and couldn’t afford to save, it became a less attractive proposition.”
Rental rates may fall between 10 percent and 40 percent depending on the area, while prices in some parts of the city such as Deira may increase, Bin Ghalita said. “We don’t want a fast bounce back after the correction ends. We want to reorganize the market to allow for healthy and sustainable growth based on long-term investment not speculation.”
A quarter of current property projects in Dubai will be completed on time, while the rest may be put on hold, rescheduled or merged with other developments, Bin Ghalita said.
Emaar Properties PJSC, the U.A.E.’s biggest real-estate developer, halted new projects as it restricts supply of new homes amid falling prices. Deyaar Development PJSC put a quarter of its projects in Dubai on hold, it said earlier this month.
Source: Bloomberg
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