Dubai is one of the worst performing real estate markets in the world but the rate of price decline is slowing, according to a new global property report.
The emirate’s troubled property market, which has seen prices fall by up to 64% in some locations, was the ninth worst performing market in the world last year, according to the Global House Price Index from Knight Frank.
However, the results of a survey of the 50 biggest property markets in the world also show the rate of decline in Dubai has began to slow.
Ireland was named in the report as the worst performing real estate market, with house prices declining 12.9% in the twelve months to June 2011. Dubai recorded a decline of 4.7%.
An analysis of prices for the first six months of the year showed prices have moved slightly into the black and grew 0.1% between January and June 2011. According to Knight Frank, Dubai prices have declined 49.7% overall since the peak in the third quarter of 2008.
Top of the league was Hong Kong, with 26.5% annual growth, followed by India at 21.3%, Taiwan at 12.7% and Estonia at 10.6%. ‘Asia continues to be the top performing continent in terms of house price inflation, a position it has held for seven consecutive quarters,’ said Liam Bailey, head of residential research at Knight Frank.
Last month, a survey of local analysts by Arabian Business found house prices in Dubai are expected to fall a further 15% by the end of the year.
The Gulf’s worst performing real estate market over the last three years has seen rents and prices more than halve from their 2008-peak, but residential costs have further to go, analysts said.
‘Average sales rates are likely to be down around 10 to 15% but this will vary by individual property,’ said Matthew Green, head of research at consultancy CB Richard Ellis.
Oversupply continues to be a key driver behind falling rents and prices, analysts said. Colliers calculated that around 13,000 units are due to come online by the end of 2011, followed by a further 27,000 properties in 2012.
Dubai said that in June alone, it had cancelled 217 property projects as of May 31, following a review of more than 450 projects. The emirate said it expected a further 237 developments to be completed in due course.