It is something not unexpected and these 'corrections' are most welcome. However, I would still not purchase anything now with the current uncertanties.
Around $263 billion worth of real estate projects have been delayed or cancelled as the UAE’s property sector is dealt a “worse than expected” blow by the global financial crisis, Morgan Stanley said yesterday.
HSBC research reported recently, had said that property suspensions and calculations had reached $75 billion just in Dubai, but a Morgan Stanley spokesperson said HSBC had not considered three further large projects in its assessment. The investment bank cited the figure from Middle East business information web site Zawya in a research note on the UAE property sector. Some of the project cancellations that have been officially announced are Sunland Group’s $654 million Atrium project and the $790 million Trump Tower project by Nakheel on Palm Jumeirah.
· The UAE Ministry of Economy has announced the results of the household expenditure and income survey. Business 24/7
· Construction cost per square foot has fallen by an average 30 per cent in the UAE compared to the last quarter of 2008, even as prices of building materials continue to drop further. Business 24/7
· More than one family are allowed to share the same villa as long as it has been granted a licence to do so by the Dubai Municipality, an official has said. Khaleej Times
· Nakheel not to cut prices for Jumeirah Park, Furjan projects. Business 24/7
· Omniyat Properties, a Dubai-based developer with Dh13.5bn (US$49bn) worth of projects launched, announced on Monday a new property management arm to help the company diversify its income and distinguish itself from its competitors. The National
· Damac Properties has announced that enabling works have been completed on site at its Executive Bay development at Business Bay in Dubai. Business 24/7
As the sector is hit by job losses and project delays, prices are falling, Morgan Stanley said. Real estate prices in UAE capital Abu Dhabi are down by an average of 20 per cent since a peak last summer as the UAE’s property sector is hit particularly hard by the global economic situation, the bank said.
Residential property prices in Dubai have also fallen, by 25 per cent since peaking last September, with high-end real estate units taking the biggest hit, the bank said.
Since September, Dubai apartment prices have fallen 25 per cent and villa prices are off 26 per cent, “belying the argument of some developers about the price resilience of villas and low-rise building segments,” the bank added.
“Anecdotal evidence suggests sharp falls in transaction volumes in the fourth quarter due to deteriorating economic conditions, the disappearance of speculative buying and the lack of financing,” Morgan Stanley said.
Prices of high-end Dubai properties - including those at the Burj Dubai development that includes the world’s tallest tower, as well as the man-made Palm Jumeirah - are down 35 per cent since their peak.
Because of this Emaar Properties is likely to be the “worst affected” among Dubai developers by the change in selling prices.
“We believe that Emaar runs a high risk of sales returns and defaults among its recent launches,” the bank said. “The company’s high-end developments, the Burj area and The Old Town, have taken the biggest hit since the peak.”
Analysts surveyed by Reuters in December said they expected Emaar’s fourth-quarter profit to fall 7.5 per cent. The stock has fallen about 17 per cent this year.
Meanwhile, rents in Dubai, were also down, falling seven per cent in December from a peak last summer, while the cost of renting villas had declined ten per cent, the bank added.