DUBAI: Dubai real estate prices could fall as much as 60 per cent this year from their peaks in July last year, while Abu Dhabi may slide as much as 20pc, Shuaa Capital said yesterday.
Real estate prices have fallen by around 40pc in Dubai and by around 15pc in Abu Dhabi from their peaks last year, the Dubai-based investment bank vice-president for research Roy Cherry said, adding that rents in Dubai are likely to fall some 20pc in the next two years.
"Dubai is seeing a negative growth in demand for real estate," Cherry said.
"At the same time it is seeing an increased output. We think the net result of that is lower occupancy rates, going down to the 80pc level which will mean a correction in the rents."
Dubai's population was likely to fall 5pc this year on job losses, while the population of the UAE would ease one to 1.3pc, Shuaa said.
Rental rates for apartments and villas have been levelling off throughout last year, with an average growth rate of 4pc and 8p respectively, property services firm Asteco said.
Rents are expected to continue rising in Abu Dhabi, albeit at a slower pace, due to strong demand exceeding limited supply, Cherry said.
Around 30,000 units are expected to be delivered in Abu Dhabi this and next year compared with 80,000 units, he said.
Meanwhile, stock markets in the UAE, which fell as much as 72pc last year, are likely to rise 21pc this year as confidence begins to recover in the second half of the year, Shuaa said.
"Negative economic and corporate news flow will present a headwind for stocks throughout this year, setting a grim mood, especially during the first half of the year," Shuaa said.
"But a sluggish economic recovery towards the second half of the year will allow the UAE markets to record gains of around 21pc this year."
Dubai's main index slumped 72pc last year, the worst performer in the Gulf region. Abu Dhabi's benchmark fell 47.5pc last year.
Shuaa said UAE markets were likely to exhibit lower correlation with global markets this year as most foreign investors had already exited.