Even Dubai, the seemingly invincible ‘nothing can stop me now’ emirate is feeling the effects of the credit crunch, with property prices in some of Dubai’s most prestigious developments falling by as much as 50 per cent…
Prices in the Downtown Burj Dubai area have fallen by as much as half, according to Dubai based estate agents. Because prices in the area had previously risen so high and so fast, when the slowdown happened, it affected that area, one of the most exclusive in Dubai, far more than others.
Whilst prices in the area were around £652 per square foot, they are now sitting at around £482. Downtown Burj Dubai, a mixed use urban development that includes the recently opened Dubai Mall, has some of the most expensive properties in the Emirate. The Burj Dubai Tower, due for completion next year, will put the area further onto the map.
This fall in property values has been pinned on the global crisis and current investors who have liquidated their assets in Dubai in order to get some ready cash.
Whilst short term investors are running scared and selling their properties for far lower prices, long term investors are sitting still holding onto their properties, confident that prices will rise once more.
When the Dubai market does begin to pick up again, properties in the most exclusive areas, including Downtown Burj Dubai, should improve before the rest.
Arabian Business has reported that Palm Jebel Ali’s island prices have depreciated by 40 per cent in the last two months.
To make matters worse, local Dubai mortgage providers have reduced home financing loan-to-value (LTV) to about 70 per cent down from 90 per cent last month.
Five and six bedroom villas on the island used to be valued at around £3 million. In the last couple of months however these prices depreciated to £1.5 million instead – a huge loss for current property owners.
According to HSBC Holdings, overall property prices in Dubai fell by four per cent between September and October, with the price of villas tumbling 19 per cent due to slowing demand and tighter lending conditions.
The report is the first official statistical evidence of a correction in the UAE housing market after years of rapid growth.
Lloyds TSB has stopped offering home loans to people wanting to buy apartments in the UAE due to the escalating credit crunch.
The bank, Britain’s third largest mortgage lender, said it had also dropped its loan to value ratio on villas in the UAE to 50 per cent, meaning buyers can only borrow half the value of the property.
Many other banks and mortgage lenders have reduced their loan-to-value ratios from 90 percent to 60 per cent over the last couple of months.
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-ENDS-
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