Dubai's population could fall 8 per cent this year as a global downturn hits its once-booming real estate sector, curbing housing demand and revenues of major developers, UBS said in a research note.
A slowdown in the real estate sector, which employs half of Dubai's workforce, may dent the inflow of expatriates, leading to an oversupply in the property market and see revenues of major Dubai developers such as Emaar Properties fall between 5 and 10 per cent, the note said.
"A slowdown in the housing market in addition to challenging macro-conditions may lead to fewer foreign workers moving to the region for job opportunities and fewer investors engaging in local investments including real estate assets," analyst Saud Masud said in the note.
"This would likely lower net demand growth for property and may actually create incremental headwinds should there be net population outflows," he wrote.
Dubai's construction and real estate workforce could fall by 20 per cent and 10 per cent in 2009 and 2010 respectively, the note said, leading to an overall population decline of 8 per cent and 2 per cent in those same years.
Excess supply in the property market was seen reaching 27 per cent - or 87,000 units - by the end of 2010, Masud wrote.
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It’s a big difference now, investors are quickly reducing prices,” adds Imran Aslam, agent at Dubai-based property broker AAA. “They are also finding they have too many properties, so they want to sell. At the moment, there are no stable prices in the market.”
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