Dubai housing: famine or feast
Are high housing prices so last year?
"There is a sizeable increase in the number of property owners in an urgent state to sell," Robert Macnair, sales director of Dubai-based Elysian Real Estate, told Reuters on Thursday.Reuters analysis:
Global Property Guide cut its long-term investment rating on Dubai residential property on Wednesday from neutral to negative due to the drop in gross rental yields from last year.
"Gross yields are now an average of 5.5 percent, significantly down from an average of 7.5 percent a year ago ... At these levels, Dubai is less attractive than it was previously as an investment property," it said in a research note.
Global Property Guide said Dubai has "an enormous" amount of new supply and expects prices to fall over the next 2-3 years.
To compound matters, Dubai Islamic mortgage lender Amlak AMLK.DU said on Wednesday it suspended new loans.
"It's gotten pretty ugly out there," analysts at Nomura Investment Banking wrote in a note this week, describing Dubai's property market as "a full-scale frenzy in which speculation went largely unchecked until it was very late."
The result may be a new business model for the emirate, one based less on debt and speculation.
Dubai's response is now being hammered out by a committee of business and government leaders charged with steering the emirate through the crisis and perhaps throwing its high-debt business model out the window.
"Lenders blinded by rising oil prices and borrowers spellbound by easy returns have helped build a mountain of private sector debt in parts of the region that has generated an illusion of excess and abundance," Nomura said.