Dubai home prices may fall 70 percent

Bloomberg

"We are still in relatively early stages of the property down-cycle in United Arab Emirates," Saud Masud, a Dubai-based analyst at the Swiss bank, wrote in a report to clients dated Tuesday. "We believe risk-reward profiles are not yet compelling for investors to consider market re-entry, hence continued price declines are expected."

Economic growth in Dubai, the second-biggest of seven states that make up the UAE, slumped after the worst financial crisis since the 1930s hurt its property, financial services and tourism industries. The economy may contract 2 percent to 4 percent this year, Standard & Poor’s Ratings Services said in a report last month.

UBS downgraded Emaar Properties, the UAE’s biggest developer, and Union Properties to "sell" from "neutral" as first-quarter results "will be disappointing."House prices in Dubai have slumped at least 25 percent since their peak, and apartments have tumbled 39 percent, UBS said. Dubai’s majority expatriate population may drop 8 percent this year and a further 2 percent in 2010 as residents lose their jobs and leave within 30 days in accordance with the emirate’s visa laws, the Swiss bank said.