DUBAI (Reuters) - Dubai’s housing market will witness further delays in its recovery path and plummet another 10 percent, as it faces a slowdown amid renewed global financial woes and European sovereign debt crisis, a Reuters poll showed on Monday.
Home prices and rents in the Gulf emirate has already plunged nearly 60 percent from its peak before the global financial crisis.
Residential property prices in Dubai will fall 70 percent from a peak in the third quarter of 2008, according to the median estimate of ten banks, investment firms and research institutions.
“Although we have witnessed better volumes and slight increase in prices at few property transactions, the overall sector is still facing oversupply and lack of volumes/investor interest, which acts as a headwind against price increase,” said Harshit Oza of Beltone Financial.
All but one of the 10 respondents said the renewed global economic concerns and euro zone crisis will further delay recovery of Dubai’s property market.
The lack of confidence on Dubai real estate continues to weigh. Respondents in the poll saw no chance of a recovery this year. They gave just a 37 percent of property market recovery in 2012 and a 70 percent chance in 2013.
Prices in Dubai will plummet by another 10 percent, an average of eight respondents showed.
The findings matched those of a Reuters poll in April which showed that existing supply and additional new units would push Dubai’s house prices down by 10 percent.
Global markets were rattled in 2009 when Dubai announced a $25 billion debt restructuring of conglomerate Dubai World DBWLD.UL. A real estate collapse followed, putting an end to an historic building spree in Dubai.
Dubai’s property market is oversupplied by about 25 percent, a median of eight respondents showed with two saying the emirate has nearly half too much supply.
Two respondent said house prices in Dubai have already reached a bottom. Seven said they expected prices to reach a trough in 2012, while others said 2013.
In percentage terms, the Dubai housing market crash is set to be more than double the size of the fall in the U.S.
A Reuters poll in September found that U.S. home prices -- as measured by Standard & Poor‘s/Case-Shiller 20-City Composite Home Price Index -- will fall 3.8 percent for the year, before stabilizing and gaining 0.8 percent in 2012.
Oversupply in Dubai has forced developers to cancel and delay projects worth $170 billion up to August, a Citigroup report showed.
The United Arab Emirates, the second largest Arab economy, is likely to grow at 3.8 percent next year, a Reuters polled showed last month.
Analysts now estimate the overall debt burden of Dubai and its state-owned companies at around $111 billion, or 137 percent of last year’s GDP, the poll showed. This is slightly less than the June poll’s estimate of $113 billion.
Abu Dhabi, the capital of the United Arab Emirates and home to most of the country’s oil had fared better during the downturn but is now facing challenges as a huge supply of high-end homes are expected to enter the market.
As many as 11,000 units will flood the Abu Dhabi market in the next quarter, a report by property consultants Jones Lang laSalle said this month.
Prices in Abu Dhabi are expected to fall another 14 percent from here, or 60 percent from their peak, the median estimate showed.
“Abu Dhabi and Dubai are not out of the woods yet,” said Patrick Rahal, manager for asset management at The First Investor bank in Doha.
“The market will continue to adjust on the short term as local banks are still averse to real estate lending and deliveries continue to increase supply. The supply-demand mismatch is still in place.”
Rental prices in Dubai will fall 8 percent in 2011 and 5 percent next year, the median forecast showed. Abu Dhabi rentals are expected to drop 14 percent this year and 10 percent in 2012.
Reporting by Praveen Menon; Editing by Mike Nesbit