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Colliers International, the global real estate consultancy, today released the Dubai House Price Index for Q1 2009, which indicates a decline in the overall index of 41% for the first three months of 2009. The index, compiled using mortgage transaction data from financial institutions accounting for 60% of the mortgage market in Dubai, also demonstrates a 34% year-on-year decline between Q1 2008 and Q1 2009. At the end of Q1 2009 property prices in the Emirate had returned to approximately the same level as those recorded in Q2 2007.


In comparison with other markets in the Gulf region, the global crisis has impacted heavily on Dubai because of its high level of integration with the global economy as a regional hub and the extensive speculation in real estate assets prior to the market's peak in the third quarter of 2008.

The decline in the value of the index can be attributed to the convergence of a number of interrelated and overlapping factors including the availability of finance, expatriate job security concerns and transparency about delays and postponements. Colliers' analysis also highlights a key change in the market as professional investors, focused on the yield generated by a property, became the primary purchaser type as end-users and speculators fell away from the market.

Commenting on the Q1 2009 report John Davis, Chief Executive Officer, Colliers International, said: “Negative sentiment is the key factor driving the decline in the Index and the availability of finance continues to impact the market. End-users are concerned about job security and therefore unwilling to enter the market, even if finance is available to them, while the price/yield gap is tempting professional investors to wait for further declines.”

Davis added: “On a more positive note, the Index remained unchanged in March 2009. However, we would caution that it is too early to say whether the halt in the decline of the Index can be sustained, especially over the traditionally quieter summer months. We expect the last quarter of 2009 to be a barometerfor signalling future trends in the market.”

The House Price Index also analyses the trends for prices achieved for completed properties as opposed to properties still under construction. When the Burj Dubai development was included in the results, the Index indicates that completed properties fell 31% and properties under construction fell 56%. Excluding the Burj Dubai development, completed properties fell 32% and properties under construction declined 51%.

Key findings:

- Decline in the overall index of 41% between Q4 2008 and Q1 2009
- Year-on-year decline of 34% between Q1 2008 and Q1 2009
- Blended average rate for residential property in Q1 2009 down from AED 1,770/ft² (AED 19,053/m²) in Q4 2008 to AED 1,037/ft² (AED 11,162/m²)
- Apartment prices decreased by 42% in Q1 2009 compared to Q4 2008
- Villa prices decreased by 40% in Q1 2009 compared to Q4 2008
- Townhouse prices decreased by 42% in Q1 2009 compared to Q4 2008
- Currently the index is at approximately the same level as Q2 2007
- Decline in the index value can be attributed to the convergence of a number of interrelated and overlapping factors including: availability of finance; expatriate job security concerns; transparency, or lack thereof, about delays and postponements; professional investor as primary purchaser type as end-users and speculators fall away from the market
- Including the Burj Dubai development, completed properties declined 31% and uncompleted properties declined 56%
- Excluding the Burj Dubai development, completed properties declined 32% and uncompleted properties declined 51%

Source: Colliers