Increase in supply blamed for rising vacancy rates in Middle East

Dubai house prices, which have halved since mid-2008, may drop another 15 to 20%, according to Credit Suisse Group.

The banking group blamed an increase in supply for the fall and predicts that the oversupply gap will peak in 2011.

It also predicted that neighbouring emirate Abu Dhabi would experience price pressure, with office vacancy rates expected to rise by up to 10% next year.

However, house prices in Dubai rose on average by 2% in the first quarter of 2010 compared to the same period last year, according to the latest house price index released by Colliers International in May.