The Jones Lang Lasalle report states that despite the fact that certain more positive factors have started to be felt 'there is little doubt that we remain in the downturn stage of the cycle,' and that markets are likely to experience a further downward correction in prices over the next six to twelve months.

'Theres a lot of negative media attention, both from a regional and an international basis being paid to Dubai in particular,' Ian Ohan, Jones Lang Lasalle's head of Investment Transactions for the Mena region told Sole Dubai Info.

'Investor confidence globally is obviously very dramatically affected currently. Going forward we obviously have some work to do to repair that confidence. There are a number of government initiatives taking place today that are coming to the forefront that we think will go some way to repairing investor confidence.

'But effectively in 2009 we'll see a continued state of capitulation in the market, it's in 2010 that we'll see results from these initiatives, and perhaps an easing of negative media attention that we're getting at the moment.'

Competitive opportunities Although sentiment is down, there are competitively priced opportunities available in the market, as many investors edge away from acting while awaiting the market to hit bottom.

In February, sales transactions in the emirate doubled compared to the previous month, going up to $520m - although this only represented approximately 400 deals. Until the end of the year, however, further falls in both rental and purchase prices are predicted to continue prior to the sector moving into a recovery stage.

The recovery will be fuelled by the return to the market of liquidity and the availability of capital for real estate investments. One of the initiatives underway, the issuance of bonds by the Dubai authorities, will begin to bear fruit in the coming months as over $5bn is expected to find its way to government-affiliated real estate companies.

'Liquidity is a broad term, we effectively see that 2009 is going to show a continued state of challenge and reducing rates in the market, 2010 we see some traction formed with a bit of stability, and 2011 we see as a period of recovery'. 'Liquidity from the bank side we see starting to come back in mid- to late 2010.
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This mirrors the view of Abid Junaid, Executive Director of ETA Star properties. 'The banks currently have an exposure to the real estate sector, and they do not want to increase that just yet,' he told Sole Dubai Info. 'But with more liquidity being available to them they will come back and begin lending to the housing sector.'

Fall in supply The Dubai property sector has already seen a 50% fall in projected new supply levels, both commercial and residential, for developments that were due to come online between 2009 and 2012, which should help to cushion the fall in prices over the longer term.
The projects that have remained mostly unaffected have been those targeted at the end user market rather than luxury speculative models. 'In terms of mega projects I think that it'll be some time before we see a return to the ambitions of 2008, things are going to be more prudent for the next few years, perhaps with a slant on sustainable income developments'.

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