Colliers International Q4 2009 house price index for Dubai rises close to 1%

The Index, compiled using actual mortgage transaction data from a consortium of financial institutions, indicates a leveling of property values in Q4 following the 7% increase of the previous quarter. Over the 12 months of 2009 the Index also reported a total annual variance of just 1.7 basis points, further underlining a stabilisation trend.

"We anticipate price fluctuations will become less pronounced as the market matures, providing early indications that Dubai house price values are getting closer to underlying values,"

said Ian Albert, Regional Director, Colliers International.

In year-on-year terms, overall house price values declined 42% between Q4 2008 and Q4 2009, placing Dubai property prices at the same levels as Q2 2007. When compared to previous quarters the precipitous freefall of overall annual prices also appears to show signs of abating.

The volume of market transactions declined 15% during Q4 compared to Q3, which Colliers attributes more to the anticipated seasonal slowdown than the well publicised Dubai debt issues.

"Anecdotally we have learnt that the announcement of the Dubai World debt restructuring has influenced purchaser sentiment, but in the context of seasonal adjustment it is difficult to assess to what extent at this stage," said Albert.

It was an active fourth quarter for the Dubai property sector in 2009 as news broke of the Dubai World debt restructuring and forthcoming opening of the world's tallest tower. However, in terms of their impact on residential transactions and prices Colliers says the Q1 2010 Index will provide a better indicator.

"We now seem to have reached the point where the market is trying to find its natural equilibrium. While we have tracked marginal variations in the performance and prices of property types, it remains to be seen how the market will react to further news of Dubai World's debt restructure as well as the banks' end-year results," added Albert.

Colliers says the marginal fluctuations in the performance of villa, townhouse and apartment sectors were to be expected as the market continues to cope with a number of influencing factors. The availability of finance for a specific sector, development or developer stimulated demand for properties contained within the confines of these parameters and resulted in minor price variations. While the ongoing issue of supply within the three main property segments also impacted the monthly and quarterly results.

Key report findings:
• Increase in the overall index of 0.89% between Q3 2009 and Q4 2009
• YOY decline of 42% between Q4 2008 and Q4 2009
• Blended average rate for residential property in Q4 2009 is up from Dhs1,016/ft2 (Dhs10,936/m2) to Dhs1,022 per ft2 (Dhs11,000/m2)
• Apartment prices decreased by 4% in Q4 2009 compared to Q3 2009
• Villa prices increased by 7% in Q4 2009 compared to Q3 2009
• Townhouse prices increased by 10% in Q4 2009 compared to Q3 2009
• The number of transactions declined by 15% in Q4 2009 compared to Q3 2009
• Victory Heights development has been added to the Index, increasing the number of developments covered by the Index to 15.