Dubai house prices to fall 60% by end 2009

Real estate values in Dubai could plummet by 60 percent by the end of 2009, according to UAE investment bank Shuaa Capital.

Property prices in the emirate have already dived by 40 percent and rents could fall by 20 percent over the next two years.

The factors affecthis are negative population growth, expected delivery of 35,000 units in 2009, declining occupancy rates, lack of mortgage funding, high job insecurity, and cancellation of visa guarantees for home buyers.

Declining occupancy rates to around 80 percent would cause rents to ease.

Global economic unrest has burst Dubai’s six-year long property bubble as well as hitting the wider real estate market in the UAE.

Cherry said Abu Dhabi would not be immune from the real estate slump, predicting prices have so far plunged 15 percent and could slide a further 5 per cent.

Prices would start to stablise in the final quarter of 2009 or early 2010.

UBS-swiss investment bank predicted Dubai’s population could fall five percent this year on job losses, with the overall UAE population easing 1 to 1.3 percent.

Dubai has a population of about 1.4 million.

UBS forecast there could be an 8 percent dip in Dubai’s population this year, mainly on the fall-out from the construction and real estate sectors.

Also last week, property services firm Colliers International reported an 8 percent dip in Dubai property prices in the final quarter last year.

Separate data published last week from fellow real estate consultant Asteco said rental growth slowed last year in Abu Dhabi and Dubai, after massive rises in the last few years.

It said rents for apartments and villas grew at 4 percent and 8 percent in 2008.