Dubai house prices appear poised to fall another 10 percent in 2009 as financial woes linger, a Reuters poll showed, in stark contrast to more mature markets in Britain and the United States which are showing signs of life.

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 at banks, investment firms and research institutions.

The two respondents who said they thought there was more than a 50 percent chance of prices picking up before then expected a rise in the third and fourth quarters of 2010.

Prices in the emirate, which boasts the world's tallest building and man-made islands in the shape of palm fronds, are seen falling 50 percent in 2009 from their peaks late last year, and likely a total of 60 percent by 2010, which would amount to a 20 percent fall from current levels, if realised.

"The real estate market remains subdued as oversupply concerns and lackluster demand continue to characterize the marketplace," said Matthew Green, head of research and consultancy at property services firm CB Richard Ellis in Dubai.
Dubai is expected to be oversupplied by 32,000 new homes by end 2010, according to recent Deutsche Bank figures.

"Sales and lease rate declines are starting to abate but further nominal declines could be realized before year end," Green said.

Two out of nine respondents said they expected Dubai property prices to hit a bottom in the fourth quarter of 2009, four predicted the first half of 2010 and two in the second half. One expected prices to reach a bottom in 2011 or later.

"We have been consistent with our view that the market will bottom out substantially in the fourth quarter of 2009, but there will be some tail off into the new year," said Chet Riley, an analyst at Nomura Investment Bank.

Property prices in the emirate have fallen sharply since late last year, when the global financial crisis and a drop in oil prices ended an economic boom in the Gulf region.   

Prices suffered the biggest 12-month fall among global property markets, but declines are easing as global markets recover, real estate brokerage Knight Frank said in September.   

The UAE's construction sector has been hardest hit by the downturn, with more than 500 projects on hold or cancelled, and Dubai has been the most severely affected emirate, Dubai-based research firm Proleads said in September.   

The Reuters poll found that residential rents in Dubai are seen falling by 45 percent for full year 2009 and a further 10 percent in 2010.

Three out of seven respondents expected rents to fall as much as 50 percent in 2009 and one by 30 percent in 2010.   

"Relative to more established markets rents have normalised but may come under some pressure again in 2010 after the 'mini rally' we are currently seeing," said Nomura's Riley.   

House prices in neighbouring Abu Dhabi, the UAE capital and home to most of the country's oil, are expected to fall 33 percent during full year 2009 and are expected to decline 3 percent in 2010, the Reuters poll showed.

One analyst expected prices in the capital to fall as much as 40 percent in 2009.
 Both figures have declined from the last poll, published in June, when analysts forecast a fall of 25 percent in 2009 and prices to remain flat in 2010. - Reuters