Dubai is expected to experience oversupply in the property market next year, with prices expected to fall by 10 per cent by 2010, according to Morgan Stanley.
"The regional property market is in the early to mid stage of a 'super cycle'. Dubai stands out as the most advanced market, with a possible price correction between 2008 and 2010," the New York-based investment bank said in research released yesterday.
However, it believes Abu Dhabi will see a price increase of 25 per cent by 2010, but will remain undersupplied till 2012.
"Demand is being driven by rising populations with Dubai, Abu Dhabi and Qatar each growing by 0.5 million over the next five years. We expect price increases of 25 per cent for Abu Dhabi in 2008-10 and 15 per cent in Qatar."
In coverage initiated on 12 Middle East and North Africa property stocks, Morgan Stanley said these companies were trading at an average 62 per cent discount to the estimated 2009 net asset value.
Its four top picks were UAE's Emaar Properties and Aldar Properties, Qatar Real Estate Investment Company (Alaqaria) and Egyptian Palm Hills, which offer an average 80 per cent upside to their price targets.