Dubai real estate prices plunge 50pc

KARACHI - The property prices in Dubai have further fallen by 50 percent due to lack of interest of investors and global crisis. The average residential prices have dropped by nearly 40 percent over the past six months, sources related to the real estate business told The Nation.
Property markets have suffered all around the world. Global financial crisis has forced many companies to cut their work-force, abandon projects, leave their posh offices and move to small offices to cut the expenditures. This situation has left thousands of square meters of office space and millions of residential properties around the world standing empty.
Dubai is a major victim of the current global economic meltdown. Overall trade and industry is facing tough time but the property market has been the worst affected there. Construction companies in the UAE have put most of the projects on hold and the property experts fear departure of masses from there that would be disastrous for the real estate business in UAE, especially Dubai, once the hot-favourite place of the investors.
The resale market is showing a huge decline in asking prices. Studio apartment value in well-known International City and Discovery Gardens have slumped to AED290,000 per unit and AED360,000 per unit, respectively which is well below the peak time prices. People are asking to each other that how far the prices can fall further? There must be some floor put on the falling prices as the cost of the construction of these properties was big, a Dubai based real estate broker, Khurram Raza told The Nation.
On the other hand, rental rates in Dubai have dropped between 20 to 40 percent. The annual rental income from a studio apartment in International City is slightly lower than AED35,000. The position of other renowned projects is not different.
The impact of the global crisis continues to be a lack of liquidity and stricter lending criteria when compared to last year, said a property consultancy firms director adding that in a relatively short span of time, we have witnessed the switch from speculators to end-users and occupiers and now to professional investors as the main type of purchaser in these markets due to the unavailability of debt financing.
It is anticipated that the property market in Dubai will face hard time for another quarter or so as the investors have lost the confidence and it may take some time to rebuild their confidence. It is important to mention here that more than half of the investors in the UAE property market are foreigners and they are called the backbone of the real estate market there.
Pakistani investors in the UAE property market have suffered losses of tens of millions of US dollars. One major reason behind the major loss is the huge number of Pakistani skilled workers living in the UAE. Moreover, a group of Pakistan investors recently sought assistance from the Pakistan High Commission over the property issue.