A recovery in the Dubai real estate market might not happen until late 2011 as a result of subdued investor sentiment, according to a new report by EFG Hermes.
Analysts at the Egypt-based investment bank, in a report published on Wednesday, said it had expected recent clarifications from the UAE government on home ownership to improve investor sentiment.
The new federal law passed earlier this month said foreigners buying a home in the UAE valued at more than 1 million dirhams would be eligible for a six-month renewable residency visa.
A statement issued by the Ministry of the Interior said the move underlined the government’s commitment to serving the interests of all people who view the country as "an oasis of stability and peace".
But EFG Hermes analysts called the rules "self-destructive rather than helpful". As a result, they have predicted that a market recovery in Dubai could happen as late as late-2011, rather than its earlier prediction of the second half of 2010.
Analysts also said property prices in Dubai were continuing to slide and were now down 35 percent since the start of 2009.
The latest study on the emirate's real estate market added that prices were 40 percent off their peaks of 2008 while transaction values and volumes were also subdued during April.
Latest figures revealed that the total value of transactions amounted to AED31.8 billion during the first quarter of 2009, compared to AED73.4 billion in the fourth quarter of 2008 and AED110 billion in Q3 - when the property market was at its peak.
This represents a 72 percent drop off in market activity from the highs of the previous year, EFG Hermes added.
And analysts forecast that the slump in Dubai house prices would continue until they fell up to 60 percent from their 2008 highs.
(C) Arabian Business
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