Dubai Real estate projects 'cut by half'

[LahoreEstate]

DUBAI: Over half the residential and commercial property projects due for completion in Dubai between this and next year have been put on hold or cancelled, Jones Lang LaSalle said yesterday.

The emirate's real estate sector has been hit hard by the financial crisis as developers halt or cancel projects, property prices fall and jobs are slashed.

Delays and cancellations to Dubai's projects "reflects the lack of available funding and projections of declining population along with continuing job cuts," the real estate service company said in a report.

Dubai's property sector is suffering from a slump in prices after a six-year building boom spurred by the emirate's move to allow foreign investors to buy properties as economic growth boomed during an oil price rally.

Prices have fallen by an average of 25 per cent since their peak in September and some $263 billion worth of projects throughout the UAE have been delayed or cancelled, Morgan Stanley said in a report earlier.

Vacancies in the emirate's office market have doubled to around 16pc over the past six months, the highest rate recorded, Jones Lang LaSalle said, adding that the hospitality market is suffering its lowest occupancy rate in five years with an average of 79pc.

The report said it expects activity in the residential sector to slow further in the first half of this year adding the government needs to take "more radical measures" to support the market, including a removal of the link between employment and residency status and a clarification of the law providing for residency for expat buyers of residential units.

"Nervous investor sentiment coupled with lower rental rates will encourage residents to lease rather than buy as investors continue to adopt the "wait-and-see" approach," it said.

Office rents in Dubai are likely to decline in most locations over the first half of this year while the outlook for the hotel market for the year was expected to be "less optimistic than previously expected" due to a fall in visitors.

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