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Dubai House Prices Fell 8pc in Q4

DUBAI — A new report shows home prices in fast-growing Dubai tumbled 8 per cent in the last three months from the previous quarter, the strongest evidence yet that the city-state’s property boom has run out of steam.

Colliers International, the real estate consultancy that issued the report on Tuesday, said the decline is the first it has seen in its two years of tracking prices. The firm’s regional director described the drop as likely the first the boomtown has witnessed since it began allowing foreigners to buy property in 2002. That decision is credited with helping turn this one-time sleepy desert village into a metropolis packed with new skyscrapers and fancy seaside mansions.

Colliers blamed the slide on tightening liquidity and investor sentiment that has grown increasingly negative in recent months.

The firm expects prices will continue to decline at least through the first three months of this year.

“Nobody is expecting a recovery in the first quarter. Everybody is expecting a decline,” Regional Director Ian Albert said in an interview.

It’s not all bad, at least for current homeowners: Average prices remain 59 per cent higher year-over-year. Still, Colliers said its price index has already slipped to levels not seen since about April 2008.

The drop in prices is not a complete surprise. Real estate agents have been sharing stories since autumn of panicked property owners looking to sell. Many banks have tightened lending standards because of fear of defaults and a lack of cash.

Meanwhile, a number of property developers and construction companies, among the emirate’s biggest employers, have laid off thousands of workers in recent months.

Reliable official real estate values are hard to come by, however.

Property buyers first feared the good days might be over in November when HSBC PLC reported the value of homes on the secondary market dipped month-to-month. Colliers’ numbers — compiled with the help of five banks active in the market — appear to be the first quarterly figures available.

Albert said the latest data suggest Dubai is moving beyond its reputation as a speculators’ market where buyers would snatch up high-end property with little money down and then flip it in a matter of days.

“The market here is changing. The speculative market has fallen away,” he said.”It’s the first time Dubai’s entered a mature property cycle ... Now you’ve got to take a longer term view.”