Property Prices in Dubai Set to Fall Further

According to a recent report by Colliers International, property prices in Dubai will fall even further over the next 18 months and will not start to increase for the foreseeable future. 71% of developers polled stated that property prices had not yet bottomed out.

Prices have already fallen by at least 50% and another 20% reduction is likely, with no sign of recovery until such times as demand increased significantly. According to JP Grobelaar, CP at Colliers, in an interview with Gulf news, "With the oversupply [situation] now and its continuation, prices will only level out once demand starts to exceed supply,. While it is difficult to project how much further residential prices could potentially fall, a further 20 per cent isn't unrealistic."

There will be 340,000 residential units available in Dubai by the end of the year with a further 34,300 units due to be released by 2011. This will take supply in excess of 374,300 to 415,000 units. With the population still dropping and the speculators leaving teh market, how long it might take to clear this inventory is hard to predict.

Certainly a lot of foreign investors got their fingers burned this time around, but at some point there are going to be some bargains to be had. Most of the developers - those still in business anyway - are shifting focus to more affordable housing in Dubai, where there has long been issues of under supply. All the time there was a pool of available credit, the luxury housing market seemed a more attractive proposition. With this much over-supply, that will change for some time. .