Dubai house prices, which fell the most during the global recession, will undergo another "meaningful" slump in about three months because of increased supply and restrictions on mortgages, UBS said.
Prices will drop an additional 33 per cent to about US$163 (Bt5,500) a square foot, said Saud Masud, an analyst in Dubai for the Zurich-based bank.
They sank 47 per cent in the second quarter from a year earlier, Knight Frank said in September-10 report.
Dubai landlords have created " temporary respite" in the market by keeping apartments empty rather than adding to a glut of homes available for rent, Landmark Advisorry said last month.
Starting in the second half of 2008, the skeikhdom went from being the best performer out of 46 markets monitored in the Knight Frank global house-price index to the worst.
A construction boom had created thousands of homes just as demand began to evaporate.
People "feel the market is coming back and they are trying to hold off for a bit", Masud said.
"But that is not going to last because when more inventory hits the market and someones apartment sits vacant for six to nine months, they are going to cave in, and that's when we'll see the re-pricing of assets."
Jones Lang La Salle had said on August 16 that there were "signs of stabilistion" in Dubai's property market, with the decline in home prices having slowed i n the second quarter from the previous three months.
However, the number of transactions fell 58 per cent during the quarter from a year earlier, it said.
The market is currently in a numbphase, and optimism is based on few transactions, Masud said. Prices will reach a bottom in about 12 months to 18 months.
Next year "is going to be tough, and I would be shocked if we started talking about a recovery in 2010", Masud said.
"Issues of excess inventory, litigation, financing and payment delays are still unresolved and clogging up the pipeline."
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