DUBAI - Dubai home prices rose 7 percent in the third quarter, their first increase since the property downturn began in 2008, but it is still too early to tell whether a recovery has started, a study showed on Tuesday.House prices in the emirate are still down about half their value compared to a year ago, real estate consultancy Colliers International said, warning that 34,000 residential units springing up in the city in 2010 and 2011 will likely deflate prices.
“The early indications from Q3 are yes, we have reached a bottom, but I think at the same time it takes more than one quarter to establish a trend,” Ian Albert, regional director at Colliers, told Maktoob Business.
Albert said the decrease in prices next year will not be uniform across the market, with areas such as the Springs, Meadows, Dubai Marina, downtown Dubai, Burj Dubai and Arabian Ranches offering “oases of performance” in a city whose real estate sector has been battered by the financial crisis.
However, there is expected to be no respite for newly developing areas in Dubai, such as Jumeirah Lake Towers and Dubai Silicon Oasis.
Colliers’ housing price index showed that the number of transactions rose 64 percent during the quarter compared with the second quarter of 2009. It showed that while housing prices increased 7 percent between July and September, compared to the second quarter, they are still down 47 percent compared to the third quarter of last year.
The UK-based real estate consultancy added that by the end of the third quarter, property prices in Dubai had returned to the same level recorded in the second quarter of 2007.
Albert said new units expected to come to the market next year will suppress pries “thought I don’t think there is a figure I can give you”.
The increase in prices in the third quarter came due to better financing and improved expat job security, Colliers’ study said.
Prices rose to an average of 1,016 dirhams ($277) per square foot in the third quarter from 949 dirhams in the second quarter, Colliers’ index showed.
Villa prices rose 9 percent, townhouses gained 7 percent and apartment prices climbed 6 percent in the third quarter compared to the second quarter.