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A large majority of developers polled at Cityscape saw house prices in Dubai falling further. (Getty Images)Real estate company Colliers said on Wednesday that 25 percent of residential units in Dubai were lying empty as the impact of the global downturn continued to hit the emirate's property sector.
The findings, published in a new report, also showed that nearly three quarters of developers (71 percent) surveyed at the Cityscape Dubai show said they believed house prices still had not reached the bottom.
The poll of 28 developers, undertaken by Colliers, also revealed that only 18 percent had suspended sales in projects until the market showed signs of recovery.
The new report showed that office capacity in Dubai was expected to double in the next year, putting pressure on prices.
Colliers said that the current vacancy rate for both residential and office accommodation in the emirate was 25 percent. It said that residential rents were down by 49 percent in the third quarter of 2009, compared to Q3 2008.
Average asking prices in Dubai residential sales also fell 12 percent from the first quarter to the third quarter.
"It's going to be a long and slow recovery," JP Grobbelaar, director of research, said without predicting when the recovery would start. He added that while there had been no mass buying of distressed properties, Colliers did still see opportunities for investors in Dubai.
On rents, Grobbelaar added: "If I were a landlord I would rent my property to the first person who could pay the rent because rents are going to decline."
The report said there will be around 340,000 units in Dubai by the end of the year and Colliers saw another 34,300 being completed in Dubai over the next two years. It said that prices would only start to recover once demand exceeded supply.
Colliers said it saw office capacity increasing from three million to six million sq m by 2011, saying projections were based on confirmed projects only. It added that the office market had been the worst hit by the global economic slowdown.
Average Dubai office prices were down 58 percent in the third quarter, Colliers said, compared to the same period last year, while office rents fell 44 percent in the same period.
Retail rents, the report added, had fallen 18 percent in the past year based on new and renewed rents in the emirate.
In a Reuters poll compiled last week, analysts at banks, investment firms and research institutions said Dubai house prices appeared poised to fall another 10 percent in 2009.
Residential property prices in the former boomtown have yet to reach a bottom and have a 20 percent chance of picking up before 2011, according to the median forecast of nine analysts.
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