Key developers in Dubai pull out of Cityscape

Far be it for me to suggest that the amount of lawsuits being leveled at the major property developers in Dubai is the reason for this, but Nakheel, Emaar and Limitless have all pulled out of this years Cityscape Dubai.

One does wonder what the point of running cityscape this year will be, and the fact that these developers are not participating really does point to a disaster in the making in Dubai. With the ex pat exodus during the summer, manyt are interested to see just how many are left and the Muslim fundamentalists are already saying it is time for even more laws to curb the foreigner’s excesses.

With about every third hotel in Dubai being a thinly disguised brothel, I suspect that all that will happen is the “excesses,” are driven further underground. The latsest report from EFG Hermes does not sound promising either.

With relatively low buyers’ confidence in Dubai, together with our view that demand will continue to focus on the rental market as supply is absorbed, we do not anticipate any strong recovery in Dubai selling prices before H2 2010 at the earliest,” EFG said in a quarterly report on the UAE’s property sector.

The report said that prices in Dubai had, on average, declined 50 per cent from their peak last year. It added that current transactions were focused on completed projects and prime locations.

End-user demand in Abu Dhabi, however, is expected to rise as mortgage financing is more readily available and there is still a shortage in supply compared to demand, the investment bank said.

EFG said rents in Dubai had fallen “significantly”, and more than in Abu Dhabi. EFG also noted that a number of property owners in Dubai may be holding back from selling or renting, as they wait for better prices.

“Over the next six to 12 months, we believe we could see a further, possibly smaller, tranche of distressed transaction activity.

“This may negatively impact pricing and rental trends further, and so prolong any anticipated recovery for the market,” the bank said.

Separately, Dubai-based research firm Proleads said yesterday that the UAE’s construction sector had been hardest hit in the Gulf by the downturn.

So, it seems as though the authorities are finally accepting there is a problem. There is a lot of repossessed property in Dubai right now and the amount of investment property for sale in Dubai is threatening to flood the markets and bring prices even lower.