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Property developers are bracing themselves for another tough quarter after weak figures for the first part of the year.
Property developers are bracing themselves for another tough quarter after weak figures for the first part of the year.

Dubai property sales fall by almost half

The sharp decline in property transactions in the emirate indicates another slow quarter for developers.

Property sales in Dubai fell in the first half of this year by more than 40 per cent compared with the same period last year. There were 1,724 sales in the first half of the year, a 42.6 per cent drop over the same six months last year, according to REIDIN.com, which tracks property with data from the Dubai Land Department. Prices have started stabilising in Dubai over the past two months, according to analysts and property brokers. Deutsche Bank reported that home prices rose about 6.5 per cent to Dh1,285 (US$350) a square foot in 13 locations around Dubai last month, compared with May. The figures come as property developers prepare to release their earnings reports for the second quarter. The sharp decline in property transactions suggests another slow quarter for developers, many of which are working to create new business plans and change the make-up of their projects to survive in the changed economic environment, analysts said. The decline in prices, more than 50 per cent in some areas, took its toll on the value of transactions. The total value fell by 39.9 per cent to Dh2.02 billion, the data show. "Earnings across the UAE real estate board are likely to be weak for the second quarter," said Chet Riley, an analyst at Nomura Securities. "We are seeing some signs of stability in the underlying market, but the 'crunch' comes in the second half of the year, when a number of developments are due. Any development delays, which we are starting to see, will not allow developers to recognise sales revenues and may lead to further analyst earnings downgrades." Analysts are closely watching Emaar Properties and Union Properties because both companies have reduced contact with investors and are at crucial periods, according to Bobby Sarkar, an analyst at Al Mal Capital. Emaar has announced it is in merger talks with three property companies controlled by Dubai Holding. Union Properties has recently undergone a management shake-up and is having difficulty filling a funding gap. "Year over year, the numbers are going to be pretty dismal," Mr Sarkar said. "Some companies are going to start doing better as they hand over projects and see income from hospitality and retail." Nabil Ahmed, an analyst at Deutsche Bank, said the price rises were the result of "easing pressures from distress sales and potential remaining sellers now being unwilling to sell at current prices". However, he predicted there could still be price falls of another 15 to 20 per cent by the end of the year. bhope@thenational.ae

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