A significant amount of new property supply due to enter the Dubai real estate market is making analysts from Deutsche Bank cautious about a recovery.

Property prices in the United Arab Emirates will fall another -15-20% and won’t bottom out until the end of the year and what concerns analysts from Deutsche Bank is the number of expatriate workers that have left the UAE and the amount of new units that are due to come onto the market.

Deutsche Bank estimates that Dubai prices have lost -50% of their value since peaking in August last year, while the Abu Dhabi market has come down 30% from previous highs.

The bank also said that the outlook is cautious despite signs of stabilisation because of the limited number of transactions and a continued decline in rents.

UBS’s outlook is even gloomier. Property prices in Dubai will have fallen another -40% by the end of 2010 when one in three homes will be vacant, it said in a report. Although there may be some pent up demand there is also a significant amount of new supply set to enter the market this year and there are doubts as to where the new demand is going to come from.

Analysts currently estimate a vacancy rate in Dubai of 10-20%. Adding 30,000 new units to the market by the end of 2010 would translate into another 10% of vacancies. The UBS report also mentioned a declining expatriate population. It expects a decrease of -8% this year and -2% next year