Even those experts who did not believe in the Moody’s predication to kick start recovery in 2016, and had a strong faith that the recovery would initiate in 2012 are also confused since UAE real estate is showing mixed performance. According to a new report, prices of the properties in the UAE have still not touched the bottom level and there is still margin of decline in them.

It is predicted that the selling prices of the residential properties in Dubai will continue to decline till the mid-2012, which would be the time when prices will hit the bottom level in real. Even after that, the recovery cannot be expected because the inorganic supply of the properties expected to add to the market in 2012, will not allow the prices to appreciate quickly.

The prices are expected to remain stagnant after mid-2012 for some months and the year 2013 would finally be the year, when there would be something to cheer about Dubai real estate. This would be the year when the actual improvement in the prices of properties would be recorded which would be backed by original demand of properties.

The Dubai rental market performed much better in 2011 clearly indicating 11% increase in rents in the fourth quarter. Even the 90% of the new supply of the apartments, marked 3% increase in rents in contrast to the earlier times, when apartment rentals were showing constant declines. The rental market is showing good recovery because landlords are offering better rates and flexible terms and conditions to lure tenants towards their properties.

The housing market is unfortunately not ready for the improvement before 2013. This is because oversupply and the tight mortgage lending criteria is still hampering buyers decision to invest in them. The lack of demand and constant supply added to the market in 2011 brought down the prices of the properties in Downtown, Burj Dubai, and Dubai Marina in the fourth quarter to almost 11%. This trend of decline in prices is likely to continue till mid 2012.

The prediction states that increase in number of realty transactions is expected in 2012 because the low rents and the status of Dubai as a safe heaven will attract foreigners and locals to increase the demand of rental as well as buying properties in Dubai. Despite that, 38000 new units are expected to add in 2012 to the market, which will not allow the kick-start to recovery before 2013.