House prices in former boomtown Dubai tumbled in the second quarter as the market in the Gulf emirate continues to reel from the global economic downturn, a UAE-based consultancy firm said.
However, it also said prices are likely to stabilise by the end of the year.
Colliers International's Dubai House Price Index slumped 48 per cent in the three months ended in June from the same period in 2008 on concerns over financing, expatriate job security and lack of transparency on project delays.
But the rate of decline had eased to nine per cent in the second quarter compared with a 42 per cent plunge in the first quarter, according to Colliers.
The average price rate for residential property fell to 949 dirhams ($259) per square foot or 10,215 dirhams ($2,783) per square metre in the second quarter from 1,037 dirhams ($283) per square foot or 11,162 dirhams ($3,041) per square metre in the first quarter.
The firm gave no directly comparable figures for the second quarter of 2008.
"What we are seeing really is a rapid deceleration, indicating that we are reaching a bottom," Ian Albert, regional director at Colliers, told AFP.
"In the coming months, the market will be searching for further evidence of stabilisation as we draw nearer to the bottom of the market prices."
"Going forward, we will reach stablisation in the fourth quarter," he added.
Colliers said that real estate prices, which by the end of the second quarter were down by half from their peak in the third quarter of last year, have bounced back to levels last seen in the second quarter of 2007.
The index is compiled using mortgage data from financial institutions representing 60 per cent of the mortgage market in Dubai, and analyses price trends for both completed properties and those still under construction.
Dubai, part of the seven-member United Arab Emirates, has embarked on massive construction projects in recent years, including man-made palm-shaped islands and the world's tallest tower. But the onset of the global economic crisis triggered many project delays and cancellations, thousands of job losses and tightening of credit, bringing the property market to a screeching halt.
More than 80 per cent of the 6.4-million-strong population of the UAE is expatriate, and many expats entered the property market when it was opened to foreign ownership in 2002. Albert attributed the slowdown in the real estate market to Dubai being closely integrated in the global economy, which suffered a huge blow, and to "very high speculation."
"But as the markets improve in the US and Europe, this will have a positive impact on the business community here and that will reflect on real estate prices," he said.
"The stabilisation or recovery will depend on how the world recovers."