Dubai Downturn Over Says Emirates Business

The latest press release, I ,mean editorial, I mean advertorial from Emirates Business is pretty clear that Dubai’s property bubble has finished deflating and we are back to boom times. Hold on to your hats!

“Most industry participants and analysts yesterday agreed with an HSBC research report that said the gloom and doom in Dubai’s real estate sector has ended, with property prices bottoming and initial signs of confidence returning.

“Distressed stock is gradually clearing, with further signs of consolidation as volumes continue to pick up. Also, more recently, mortgage providers have moved to ease their requirements, raising loan-to-value (LTV) and relaxing credit norms, which we view as a further sign of some normalcy returning to the market,” HSBC said.

According to the bank, the May transaction survey suggests that the market is starting to bottom out, with agreed prices up four per cent and five per cent month-on-month in April and May, respectively.

Relax - The boom is back on in Dubai

Apartment prices (which account for 85 per cent of transactions) are up nine per cent in May, villa prices continue to come under pressure, down 11 per cent month-on-month. Villa agreed prices have now fallen 49 per cent since a September 2008 peak, compared to only 16 per cent for apartments, HSBC said.”

This is strangely at odds with the fact that not one single property sold at Dubai’s first property auction; the amount of discounted property in my inbox has gone through the roof; and a minuscule increase in median property prices does not a summer make. Speaking of summer, Arabian money rightly points out that the summer exodus is about to begin and the reason the stock market rose was largely down to an increase in oil prices.

And the HSBC reports also states: “1). With the summer approaching volumes are likely to soften leading to short-term price volatility. 2). The school year coming to an end in June, and more supply coming on the market could lead to renewed (real estate) price weakness. 3). A further downturn in the global economic environment is likely to have an adverse effect on the market.”