Prices of properties in Dubai was said to have stabilised in the last quarter of 2009 after a year of declines.
Property prices in the emirate rose quickly in 2008 as speculators bought and sold apartments in rapid succession, sending prices up by 43 per cent in the first three months. Those gains have since been erased. Overall house price values declined 42 per cent between the fourth quarter 2008 and the fourth quarter of 2009.
The average rate for residential property in the final quarter last year rose to Dh1,022 (US$278) per square foot compared with Dh1,016 in the third quarter.
The number of transactions declined 15 per cent in the last quarter compared with the previous three months, but the broker declined to disclose how many properties were bought and sold over the period.
While Dubai property prices rose 1 per cent in the last three months on the previous quarter, the increase masked a significant difference in the performance of apartments and houses. While house prices gained 10 per cent over the period, those for apartments fell 4 per cent.
The rapid drop in prices resulted in many investors falling into negative equity and forced some to flee the country to escape their debts.
While international banks estimate that bad home loans could run to billions of dollars in Dubai, lenders have held back from repossessing homes in default because of untested foreclosure processes. That may be starting to change after Barclays said last week it had won several of the first repossession cases to make their way through the Dubai courts. The legal significance of these rulings remains unclear because the country’s courts do not rely on precedents.
The Dubai World conglomerate announced in November that it was seeking a six-month freeze on debt repayments. It has since been in talks with about 90 creditors to restructure as much as $22 billion.
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