Dubai's real estate market will see another 18,000 homes by the end of the year, adding to the emirate's oversupply woes and pushing prices further down, a report from property consultancy Jones Lang LaSalle said.

Some 2,000 homes were completed in Dubai in the second quarter and another 18,000 will be ready for occupancy by the fourth quarter, it said in a report, adding that total current residential stock will rise to around 322,000 homes.

Office supply in Dubai is expected to grow by more than 30 per cent over the next 3 years, it said.

With liquidity slowly flowing back into the construction industry a few developers, including Nakheel, have recommenced work on projects, thereby raising fears of adding further supply to the market.

"The residential sector is approaching the cycle trough and select pockets of stability are emerging, but, on average, sale prices and rents will continue to decline," Jesse Downs, head of management consulting at Jones Lang LaSalle said.

Rents for apartments fell 3 percent in the second quarter year-on-year and average sale prices decreased by 1 per cent, the report said.

Rents in more established areas like the Burj Khalifa Downtown and Palm Jumierah have stabilised, while prices in other less popular areas continue its decline.

Dubai house prices, already nearly 60 per cent off their peak, are set to drop another 10 percent before stabilising, Reuters poll showed. – Reuters