The total value of real estate deals in Dubai plunged 65 percent in 2010 as new supply squeezed market prices, a new report has said.
The number of deals fell by more than half during the period as lending in the emirate remained pinched, the latest data from Jones Lang LaSalle showed.
In the third quarter, less than 600 property transactions were completed, down from more than 1,200 in the same period in 2009.
Dubai’s already glutted real estate market will see a further 25,500 units come online in 2011, analysts said, with no major project cancellations expected over the next year.
“Dubai’s residential market will continue to experience a situation of oversupply and prices are not expected to recover before 2012,” analysts said.
Apartments will make up 79 percent of Dubai’s residential stock by the end of 2011.
“Lending will remain a key factor in market recovery. The residential market will likely see improved lending in 2011 as more banks are injecting liquidity into the mortgage market.”
The data showed sellers continue to struggle with new economic realities, with the gap between asking and achieved prices widening.
Average selling prices in the three months to December 31 were 15 percent lower than asking prices, compared to 10 percent in the same period a year earlier.
On the rental front, landlords across Dubai had mixed fortunes in the fourth quarter, with apartments in cheaper developments showing a significant decline in lease price.
International City saw lease rates fall to less than AED50,000 per annum for a two-bedroom apartment. In contrast, rents in Burj Khalifa’s Downturn stayed relatively stable, with two-bedroom flats attracting an average annual rent of around AED125,000.
Rents across Dubai saw an average decline of eight percent in the fourth quarter, compared to the same period a year earlier, the report said.
Villas fared better, with rents starting to stabilise as the rate of new supple entering the market slowed, the report said.
“Rents for middle to high-end villas such as those on Palm Jumeirah have remained relatively stable while rents in The Springs have declined substantially,” analysts said.
Rents fell an average of 11 percent in the fourth quarter, compared to the same period a year earlier.