Oversupply in Dubai’s once-booming property sector will continue to send prices lower in the short term, Jones Lang LaSalle said on Sunday.
“The oversupply situation is likely to get worse before it gets better in some sectors and this will continue to place downward pressure on prices and rental levels in the short term,” the real estate service company said in a report.
The Gulf emirate’s real estate market has been hit hard by the global financial crisis, with billions of dollars worth of projects either on hold or cancelled. House prices are off around 50 percent since the crisis began late last year.
Vacancies in the office market are currently around 25 percent and the average occupancy rate in the hotel market has fallen to around 65 percent, Jones Lang LaSalle said.
Dubai is expected to be oversupplied by 32,000 new homes in 2010, according to recent Deutsche Bank figures.
Abu Dhabi, Dubai, Cairo and Casablanca are best positioned to attract more long-term regional and global investment into their real estate markets over the next two to three years, Jones Lang LaSalle said.
The real estate firm said the four locations were chosen partly for competitiveness and market conditions.