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Dubai house price index climbs 7%
Source: BI-ME , Author: BI-ME staff
Posted: Tue November 3, 2009 12:14 pm
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UAE. Colliers International, the global real estate consultancy, today released its Dubai House Price Index for third quarter 2009, which indicates a 7% increase in the overall value of residential properties between July and September 2009. 

The Index, compiled using mortgage transaction data from financial institutions, also demonstrates a 47% year-on-year decline between third quarter 2008 and third quarter 2009.

The report shows that at the end of third quarter 2009 property prices in Dubai had returned to approximately the same level as those recorded in second quarter 2007.

The volume of market transactions increased by 64% during third quarter 2009 compared to the previous quarter.

Colliers analysis of the results indicates that the increase in the value of the Index is due to a number of interrelated factors.

The increased availability of finance and a softening of Loan-to-Value ratios eased the liquidity concerns of purchasers. Supporting this demand is a perception of improved expatriate job security, excluding the real estate sector.

In addition, the ability for purchasers to monitor the actual progress of developments has allowed for greater transparency regarding progress and afforded them greater certainty when it comes to making the purchasing decision.

Ian Albert, Regional Director, Colliers International, said: This latest HPI has now recorded the first price increase since the market fell.

We believe that figures in the HPI third quarter 2009 have clearly demonstrated a crystallisation of the property market in Dubai between oases of performance, or tier one developments, and tier two and other developments.

Commenting on future expectations Albert added: The third quarter results indicate a bounce in the market but we will have to wait for the fourth quarter results before we can say whether an underlying growth profile exists, indicating a potential recovery.

Looking ahead to 2010, Colliers predicts that the volume of new units expected to come onto the market will suppress average prices. However, Colliers stresses that price suppression will not be uniform across developments.

Certain tier one developments will offer investors �oases of performance, predicated upon a return to fundamentals outlook.
 
 
Well planned mature developments in good locations, supported by facilities and community infrastructure will receive relatively higher demand.

This demand ensures a lower risk profile for banks, which ensures the availability of finance to support demand further, said Albert.

The dynamic between consumer demand and the banks risk profile for lending will be fundamental to driving the price direction of each development in the coming months.
 

Key findings:

  • Increase in the overall index of 7% between second quarter 2009 and third quarter 2009
  • YOY decline of 47% between third quarter 2008 and third quarter 2009
  • Blended average rate for residential property in third quarter 2009 up from AED949/ft2 (AED 10,215/m2) in second quarter 2009 to AED1,016/ft2 (AED10,936/m2)
  • Apartment prices increased by 6% in third quarter 2009 compared to second quarter 2009
  • Villa prices increased by 9% in third quarter 2009 compared to second quarter 2009
  • Townhouse prices increased by 7% in third quarter 2009 compared to second quarter 2009 The number of transactions increased 64% in third quarter 2009 compared to second quarter 2009
     


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