Residential property prices are still falling in Dubai, and were down an average of 1.23% in May, according to the latest real estate index to be published.
The Reidin Index shows that apartment prices dropped 2.88% in May compared with April while villa prices were down 0.63%. It is a new real estate index launched in partnership with the emirate’s property regulator RERA.
It also shows that sales in Dubai are flat. Sale in the 101 to 150 square meter sector increased by 0.93% in May compared with April while all other property size categories decreased in sales.
The latest figures show that the decline in the property market in Dubai is slowing but not yet at an end. Some analysts had predicted it would pick up in 2010 but there are few signs of that happening yet.
The number of repossessions and defaults are increasing. This week Tamweel became the latest to take court action against non payers. It won the right to repossess five homes after their owners left the country.
Hamid Chinoy, group chief corporate services officer at Tamweel, said the company has several other cases in the courts and plans to file more. Around 3% of its mortgages are in default.
Barclays was recently the first to win a foreclosure case in court under a 2008 mortgage law. This set a precedent for lenders holding about $16 billion of Dubai home loans to take action when borrowers default.
Under the law, foreclosed properties financed by conventional mortgages must be sold by the lender in a public auction. However, for Islamic mortgages it is possible public auctions won’t be necessary.
Legal firm Al Tamimi has already obtained 10 to 12 successful judgments for the enforcement of Islamic finance documents, known as Ijara. None of the judgments has been carried out yet.