Residential house prices fall up to 32%

The cost of housing in Abu Dhabi and Dubai fell steeply in the first quarter of this year.

DUBAI // Residential property prices in Dubai fell up to 32 percent in the first quarter from the previous quarter while prices in Abu Dhabi declined by as much as 30 per cent, Landmark Advisory said in a report on Monday. The average sale price for apartments in Dubai fell 23 per cent to Dh1,146 (US$312) per square foot, while prices for villas fell 32 per cent to Dh1,076 dirhams per square foot, it said.

Prices are at levels seen in the fourth quarter of 2007 with year-on-year declines of 4 per cent for apartments and 9 per cent for villas, according to the report. Rental rates have dropped by 9 to 41 per cent since the fourth quarter. On the supply side, Landmark expects around 24,000 new homes to be built this year, which, adding to vacancies caused by emigration, will lead to a 30,000-52,000 surplus. In Abu Dhabi, sales prices fell by up to 20 per cent for apartments in the first quarter and 30 per cent for villas compared with the previous quarter.

Apartment rents remained stable but average villa rents declined by up to 20 per cent. "The faltering demand for villas in Abu Dhabi is likely due to intense competition from Al Ain and Dubai, where housing costs are plunging. For many expats, low rents and lifestyle preferences justify to work in Abu Dhabi but live in Dubai," the report said. Under a conservative 2 per cent population growth scenario for 2009 and 2010, Abu Dhabi's property market will still be undersupplied by 27,900 units while at an unlikely 6 per cent, the housing shortage would reach 45,000 units, the firm said.

Landmark Advisory is part of property brokerage and consult Landmark Properties, which has offices in the United Arab Emirates and London. *Reuters