Colliers International Q3 2009 House Price Index for Dubai rises 7%

Transaction volumes increase 64% compared to Q2 2009

Colliers International, the global real estate consultancy, today released its Dubai House Price Index for Q3 2009, which indicates a 7% increase in the overall value of residential properties between July and September 2009.The Index, compiled using mortgage transaction data from financial institutions, also demonstrates a 47% year-on-year decline between Q3 2008 and Q3 2009.  The report shows that at the end of Q3 2009 property prices in Dubai had returned to approximately the same level as those recorded in Q2 2007. The volume of market transactions increased by 64% during Q3 2009 compared to the previous quarter.

Colliers’ analysis of the results indicates that the increase in the value of the Index is due to a number of interrelated factors. The increased availability of finance and a softening of Loan-to-Value ratios eased the liquidity concerns of purchasers. Supporting this demand is a perception of improved expatriate job security, excluding the real estate sector. In addition, the ability for purchasers to monitor the actual progress of developments has allowed for greater transparency regarding progress and afforded them greater certainty when it comes to making the purchasing decision.

Ian Albert, Regional Director, Colliers International, said: “This latest HPI has now recorded the first price increase since the market fell. We believe that figures in the HPI Q3 2009 have clearly demonstrated a crystallisation of the property market in Dubai between “oases of performance”, or tier one developments, and tier two and other developments.”

Commenting on future expectations Albert added: “The Q3 results indicate a ‘bounce’ in the market but we will have to wait for the Q4 results before we can say whether an underlying growth profile exists, indicating a potential recovery.”

Looking ahead to 2010, Colliers predicts that the volume of new units expected to come onto the market will suppress average prices. However, Colliers stresses that price suppression will not be uniform across developments.  Certain tier one developments will offer investors “oases of performance”, predicated upon a return to fundamentals outlook.

“Well planned mature developments in good locations, supported by facilities and community infrastructure will receive relatively higher demand. This demand ensures a lower risk profile for banks, which ensures the availability of finance to support demand further,” said Albert. “The dynamic between consumer demand and the banks’ risk profile for lending will be fundamental to driving the price direction of each development in the coming months.”

Key findings:

• Increase in the overall index of 7% between Q2 2009 and Q3 2009
• YOY decline of 47% between Q3 2008 and Q3 2009
• Blended average rate for residential property in Q3 2009 up from AED 949/ft² (AED 10,215/m²) in Q2 2009 to AED 1,016/ft² (AED 10,936/m²)
• Apartment prices increased by 6% in Q3 2009 compared to Q2 2009
• Villa prices increased by 9% in Q3 2009 compared to Q2 2009
• Townhouse prices increased by 7% in Q3 2009 compared to Q2 2009
• The number of transactions increased 64% in Q3 2009 compared to Q2 2009

To download a copy of the Dubai House Price Index please go to www.colliers-me.com .About the Index
The Colliers International House Price Index (HPI) was established in January 2008 by Colliers International U.A.E and six leading banks/financial institutions in the emirate of Dubai to provide statistics specifically designed to reflect the average growth/decline in the rate of house prices across certain foreign ownership areas in Dubai, United Arab Emirates.  The data that forms the basis of the indices presented in this HPI has been provided by all the member financial institutions and relates to properties which have been mortgaged through these member institutions.  The member banks/financial institutions associated with Colliers International House Price Index are as follows:  HSBC Bank Middle East Limited, Barclays Bank PLC, Amlak Finance PJSC, Dubai Islamic Bank PJSC, Emirates NBD and Abu Dhabi Commercial Bank (ADCB)

We have used the weighted average method to construct the Overall Index.  Based on its coverage of 14 developments in Dubai, weighting has been apportioned on the basis of unit type (apartment, villa or townhouse).

Apartments, villas and townhouses have been weighted at 55%, 34% and 11% respectively in order to provide an accurate representation of market trends.

About Colliers International UAE
Colliers International established an office in the UAE in November 1996. The Company was formed under a joint venture with The National Investor, which is a wholly owned UAE investment bank and corporate financial advisory company.

As part of the Colliers Global network, its Middle East offices offer a full range of real estate consultancy services in all major market sectors covering offices, retail, residential, and hotel properties.

Colliers prides itself on its ability to offer a truly in-depth professional service gained from many years of active involvement in the Middle East real estate sector.