Stabilisation emerging as Dubai property market falls to 2006 levels

Elaine Jones, CEO of Asteco Property Management, said that the group had seen signs of stabilisation in the rental market in the city. 'After Cityscape last year, people froze while they waited to see what would happen. No deals were going through and everyone was staying on the sidelines.

'Our rental business this year has been superb, but the rent fluctuation has been enormous. I would say that we are now back to 2006 levels, which is fine for most landlords, except maybe for those who bought at the height of the boom.

'The problem is with landlords who bought at the peak, saw that rents were high for a small window and expected these yields to continue to help them pay off the financing. So there have been some casualties.'

Despite this, Dubai needs to assess how it will create demand drivers to absorb the number of units coming onto the market, in addition to the ones that have already been handed over.

'There is no point in hiding the fact that there is excess capacity,' said Dr Hani Shammah, CEO of Abu Dhabi-based Bloom Properties. 'The question is how will Dubai create demand drivers to absorb that capacity? Now it's about diversifying the economy, which they have been successful at.'

In terms of access to financing, Shammah said that banks had begun to lend to prospective buyers, although not as freely as before the financial crisis: 'Now they are being much more careful, and examining an individual's circumstances and credit worthiness.'

Marios Maratheftis, Standard Chartered Bank's regional head of research, struck a positive note when speaking on a macro-economic level. 'I was much more nervous this time last year than I am now. We've had the shock, we had massive job losses in the first six months, and there are still some but the rate is diminishing,' he told delegates. 'In 2010 if there is a surprise it will be a positive one.'

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