Over 200 real estate projects in Dubai have been cancelled in the last two years as the emirate’s real estate sector slumped as a result of the global economic downturn, official figures show.
According to data from Dubai’s Real Estate Regulatory Authority a total of 217 property projects were cancelled as of the end of May out of 450 projects that were reviewed.
The figures give an idea of the extent of the slump which has seen property prices fall by up to 60% in some locations. RERA added that it expects 237 out of the total reviewed to eventually go ahead.
It also revealed that the total value of property sale transactions plunged to AED119.5 billion at the end of last year from AED152.9 billion a year earlier.
Residential property prices in Dubai, the worst performing market in the Middle East for the past three years, haven’t yet benefited from political turmoil in other parts of the region as some analysts predicted.
Residential property prices fell another 1.2% in May from the previous month and rents have fallen by 1%, according to the latest price report from Deutsche Bank. It also found that apartment prices dropped 1.3% percent and villas were down 1%.
The emirate is trying to revive its property market and make it more mature and transparent. One case of the property crash was the huge amount of speculation that was going on and after the economic downturn lenders became reluctant to lend. Now they are being encouraged to offer more finance to developers and buyers.
Dubai’s Land Department is set to introduce tighter rules for real estate surveyors in a bid to clamp down on inflated property valuations. The plan is to force unqualified surveyors from the market in a move aimed at ensuring real estate valuations accurately match the worth of the property.
‘We working on legislation to allow us to regulate valuers and register them. The date of release is yet to be confirmed, but we provided the draft legislation two years ago and we are nearly there,’ an official said.
Many buyers who bought property in the pre-2008 boom years have now found their valuations were grossly inflated, leaving them facing huge mortgages or the risk of foreclosure.
‘During the boom times, many banks and institutions were lending vast amounts of money to developers and speculators alike off the back of one or two page valuation reports produced by non-professionally qualified valuers, who often gave opinions of worth as opposed to market value,’ said Samuel Morris, real estate manager for the Middle East at Deloitte.