DUBAI - One in four homes is vacant in Dubai and a quarter of office space lays empty due to oversupply and additional supply coming onto the market will continue to put pressure on prices, Colliers International said on Wednesday.The property services firm said in a report the emirate will have 340,000 residential units by the end of the year, with and another 34,300 expected to come online in the next two years.
Meanwhile, leasable commercial space is expected to double to six million square metres by 2011, Colliers said.
“The survey indicates a market beset with falling demand and oversupply evidenced through increasing vacancy levels and falling take up rates,” it said.
“The gap between demand and supply is expected to amplify due to a significant increase in forthcoming supply.”
The city, which led the regional construction boom for years, is grappling with massive oversupply at a time of reduced demand and a lack of home financing.
Developers launched thousands of projects during the boom years, but are now struggling to find buyers after prices plummeted more than 50 percent in the wake of the global financial crisis.
Analysts have forecast prices could fall as much as 33 percent further before the market bottoms out.
More than 70 percent of developers surveyed by Colliers during last week’s Cityscape real estate exhibition believe the market has still not found a bottom and expect prices to fall further due to the supply overhang.
Only 25 percent said they thought prices had stabilised and that the market had hit the bottom.
Only 23 percent of the developers believe that the Dubai real estate market will start recovering in 2009, whilst 75 percent expect a recovery starting in 2010, Colliers said.
Colliers said 18 percent of developers said they have suspended sales until the market has “recovered sufficiently”. Eighty percent of those developers are based in Dubai.
It said rents, which have fallen close to 50 percent over the past 12 months, are also likely to fall further as demand drops and supply increases.