Dubai’s surging residential property market is starting to cool, new research says. Financial Times
However, project delays are likely to push a long-awaited price correction back until 2009.
The supply of new flats and villas has been delayed by materials and labour shortages, creating a shortfall in the required 50,000 housing units a year for the flow of migrant workers.
EFG-Hermes, a regional investment bank, forecasts that prices will peak in the second half of 2008 and decline by 15% to 20% by 2011 as the supply/demand balance flips.
However, commercial rents, for now, are showing no signs of a slowdown, rising 40% this year.
Offices in Dubai are among the most expensive in the world. But with supply doubling from current levels by the end of the decade, rents should begin to ease, said Nicholas Maclean, the Dubai-based managing director of CB Richard Ellis. ‘This is good, because Dubai is now losing its competitive advantage.’