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PRICE OF PROPERTY IN DUBAI FALLS BY HALF

Monday, 24 Nov 2008

The emirate with the ‘can do’ attitude, Dubai, is suffering the pinch of the global financial crisis, and the price of many of Dubai’s largest and most prominent developments have dropped by up to 50%. According to estate agents, in Downtown Burj Dubai property prices have crashed to half their original value, due to the fact that property in this prestigious area rose so quickly and to such heights previously. Before the slowdown, prices in the Burj Dubai were about £652 per sq ft, but now they have dropped to about £482.

The multi-purpose urban development, which encompasses the newly launched Dubai Mall, boasts many of the priciest properties in Dubai. The yet to be completed Burj Dubai Tower, due to open in 2009, is set to boost the region’s already daunting reputation. The current worldwide financial situation is being blamed for the collapse of Dubai property prices, and many investors have sold their properties to free up cash.

Although speculative investors are bowing to the pressure of the tightening financial constraints and selling off their Dubai properties for bargain basement prices, long-term owners are holding onto their assets in the hopes that the prices will increase in the not too distant future. When that time comes, properties in the trendiest and most expensive areas, such as Downtown Burj Dubai, are predicted to rise first.

To exacerbate the situation, Dubai banks and loan companies have cut back on home funding loan-to-value to around 70% from 90% just last month. HSBC Holdings reports that on average, the price of accommodation in Dubai has dropped by 4% between the months of September and October, while villa prices have collapsed 19% because of the lessening of demand and restricted loan conditions. This is the first hard evidence of the worsening situation in the UAE property market, and Lloyds TSB is no longer offering loans on apartments there.