Good news for home owners in Dubai - the correction of the emirate’s real estate market will come sooner and be steeper than anticipated as demand falls amid the global financial crisis.
Egyptian investment bank EFG-Hermes said it still anticipated a 20 percent correction in Dubai real estate prices by 2011, but that the fall would come sooner than previously thought.
"While EFG's forecast is still for a 20 percent decline, this has now become very front-end loaded and with risks significantly skewed to the downside," analyst Raj Madha said in a research note on UAE banks.
The financial crisis has hit demand for real estate in Dubai from foreign investors, which make up the large proportion of buyers, while tightening liquidity has made home financing much more difficult.
HSBC said in a report last month that property prices in Dubai fell for the first time on record between September and October, declining four percent.
Added to this, Madha said a glut of new properties expected to come onto the market could be harder for the market to absorb if immigration fell as companies cut jobs amid the crisis.
“We are currently seeing significant distress in the property sector, resulting in several major developers cutting headcount," he said.