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Is Dubai ready to bounce back? - 15 September 2009

It is rare that news of prices dropping in a particular country is greeted with optimism, but that is the case in Dubai at the moment, as the latest figures from Knight Frank on global property prices are released. The figures in the Global House Price Index show that property prices in Dubai fell by 7.5 per cent in the second quarter of 2009, the second largest fall in the list.

The basis for the current optimism in the Dubai property market is based in the fact that the rate of price fall is slowing dramatically. Looking across the whole of the past year, the Index shows that property prices in the Emirate fell by 47 per cent in the space of 12 months, and that the drop in the previous three months was a large as 41 per cent. In that respect, the drop of just 7.5 per cent in the second quarter of 2009 has prompted some commentators to call the bottom of market soon, and predict that prices could start to recover in the next 12 months.

Dubai has certainly had a rapid fall from the heights of the overseas property investment boom to the present situation, where the vast majority of projects which have not been completed or sold out are now on hold until things pick up. Just last week, the Times reported that the huge project of man-made islands, The World, is sitting unoccupied and incomplete just off the coast of Dubai.

The project, which was to be one of the crowning achievements of the financial and engineering achievements of Dubai is now empty and patrolled by security guards, the paper said. One local agent is quoted as saying that only one of the islands is currently maintained, that which is owned by Dubai’s ruler, Sheikh Mohammed Bin Rashid Al Maktoum.

For those projects which have been built and are still for sale, agents are turning to more innovative and attractive offers to try to tempt buyers to part with their cash. Developer Emaar, which is selling properties in the world’s tallest tower, Burj Dubai, is offering to waive maintenance fees for all new buyers in a bid to kickstart lacklustre sales.

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