Dubai Prices May Slow by 10%

Property prices in Dubai are likely to fall 10 per cent by 2010 as supply outpaces demand, but they are expected to rise in Abu Dhabi’s undersupplied market, Morgan Stanley said in its latest report on Tuesday.

“For 2009, we expect prices to start coming under pressure as oversupply becomes evident [in Dubai]. We forecast a 10 per cent decline between 2008 and 2010 in our base case,” said the report.

A sharp correction in Dubai’s real estate sector could have a ripple effect on neighbouring countries in the Middle East, with shares of 12 regional property firms dropping an average of 35 per cent, said Morgan Stanley in a report.