Until H2 2010, no Dubai house price recovery
Wednesday, a new report was released, which informed that it is hard for Dubai house prices to recover strongly before the second half of 2010.
In the 2009 review of the UAE real estate and construction sectors, Egyptian investment bank EFG Hermes said that Dubai is experiencing concentration of demand on the rental market, amid plunging buyer confidence. In Dubai, values have fallen 50 percent since their peak last autumn.
The report added, "Completed properties or homes that are considered to be in a prime location currently make up the bulk of transactional activity."
The optimism in the emirate has waned due to the global credit crisis, which has also hit the investor demand. A notable drop has been noticed in prices, especially those for off-plan property.
EFG specified that though the market could come under pressure from diminishing rents in Dubai - leading to a supply-demand driven correction, as residents and businesses opt for cheaper accommodation in Dubai -, the property in Abu Dhabi is "fundamentally strong."
The changing market dynamics could lead to the scaling back of some long term projects belonging to Aldar and Sorouh, the number one and two developers in Abu Dhabi.
The bank warned, "Aldar, developer of the F1 circuit on the Yas Marina Island in Abu Dhabi, could find debt repayment difficult in the short to medium term. Arabtec, the UAE's largest construction company, was EFG's top pick with the stock up 35 percent in the year to date."
It is predicted that Sorouh will require further investment for projects due for delivery beyond 2011.
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