'Apartment prices will fall by an average of 20%, with individual declines ranging between 10% and 50% depending on the development,' says a report by Landmark Advisory.
'Villa prices are likely to remain relatively stable with an average drop of up to 10%, with lower quality units bearing the brunt of the decline,' the report continued.
This reflects the feeling that, increasingly, there has been a power shift from developers and agents to buyers and end users, as prospective investors become far choosier about their properties.
Asking price differences
Differences in asking prices between areas, unit types and quality are being noticed as sellers struggle to attract interest.
A Commercial Review report by Better Homes concurs: 'Within a matter of months we have seen the Dubai real estate market shift from what was a 'seller's market' to what now is clearly a 'buyer's market'. The advantage in negotiations now rests with the buyers, with those willing to play their cards and name a price,' says David Macadam, Director, Commercial at Better Homes.
'The Dubai real estate market began to show signs of slowing in Q3 of 2008...Q4 saw these signs intensify and a correction across all segments of the real estate market began and is continuing to occur,' the Better Homes report states.
'What is unclear early in 2009 is whether or not the projected oversupply of commercial and residential real estate that was forecasted in Dubai in the coming years is a concern.'
The Landmark Advisory report comes to a similar conclusion: 'As new supply encounters slowing demand the market will reward developers who deliver quality and punish those who do not.'
Lowered rental returns
In line with the increased availability of housing, and properties from those investors unable to sell placing their units on the leasing market, rental rates, and therefore returns, are likely to continue dropping as the year progresses.
The current estimates place the estimated decrease in rental at an average of 25% for both apartments and villas, although analysts are awaiting the next update due to the city's Real Estate Regulatory Authority's rental price index, against which contracts are to be measured.
A report by Global Investment House found 25% to be near the ceiling of possible decline in rental returns: 'We expect to see further price corrections [in 2009] for freehold properties in the range of 15% to 30%, and rents to decline by 15% to 25% due to the lack of demand in line with the economic slowdown, which has forced many firms to downsize or halt their expansion plans which will likely result in a decline in the number of expatriates in Dubai.'
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