Real estate prices are in freefall. Billions of dollars worth of projects have been cancelled or put on hold and expats are leaving in droves as they lose their jobs. Once a playground for the rich and super-rich, the seaside emirate — home to palm tree shaped islands, mega malls and luxury sky-rise hotels — has lost its lustre. And bargain-basement assets are not yet cheap enough to tempt buyers back.
European investors, who once clamoured to Dubai, reckon they can land better deals closer to home or elsewhere in the Gulf. Some analysts are predicting that the more stable markets in Abu Dhabi, Doha and Saudi Arabia to recover faster than Dubai.
“Dubai is not one for us. I prefer long-term established locations with underlying intrinsic attractions or clear, sustainable competitive advantages,” Bill Hughes, managing director, Legal & General Property, told Reuters.
True, Dubai offers guaranteed sunshine for almost 365 days of the year, tax-free salaries and arguably the most westernised lifestyle in the Gulf but the boom-bust characteristics of its real estate sector will likely deter many investors from taking the plunge.
From start-2007 to mid-2008, prices rallied almost 80 percent, Morgan Stanley estimates showed. But a UBS report last month said Dubai house prices could fall up to 70 percent from their fourth-quarter 2008 peak. A Reuters poll in March showed prices were likely to fall more than 40 percent in 2009 and 2010 before recovering in 2011.