Safe as villas; How well insulated is DXB?
They say when the US sneezes, the rest of the world catches a cold... only this time it appears to be pneumonia.
The 'experts' on Wall Street and various government heads were heard to say only a matter of months ago that 'their economies was robust enough to withstand the current economic situation' before billions of dollars had to be injected in to keep it alive with major banks having to be nationalised, others going bust.
Similarly the UAE has stated their 'insulation' against the global slowdown but only last week 50 billion Dhms was pumped into the economy to provide liquidity... deja vu?
Projects in DXB and AAH are reported to be under review possibly delayed, hotels have seen a 5% reduction in bookings so far this year with businesses such as banks laying off staff and closing offices...
In Dubai considerable internal investment is needed to improve power, water and sewage facilities as it struggle to cope with current developments let alone future ones. Where will this money come from? VAT and other taxes, capital gains amongst them, are on the way increasing the burden on the expat population and making the place less attractive to all but those seeking to dry-clean their money.
What next? Many are still tempted by inflated promises of 25-60% property investment returns (one ad for 60% probably flashing overhead this thread now) when the rest of the world are seeing trillions of $s wiped from property values... With several loans from several banks they over extend and pay over inflated prices for substandard properties in the hope of a quick turn around... but how much higher can the pyramid go? As people look to covert their assets into cash and supply increases with decreasing demand prices will have to drop.
So my question is how insulated are we really from the effects of the 'outside world'? Can we really expect the boom of the last 6 years to continue in which case an average two bed apartment would be + 5 million Dirhams, a 3 bed villa 8m? Or is a crash imminent?
It was only a few months ago that the so called financial experts (an oxymoron if ever there was one) seemed totally oblivious to the looming crisis... now it is all they can talk about.
It's all about 'sentiment' apparently but fear is a far stronger sentiment than greed and as the fear spreads could DXB and the UAE be in for the mother of all corrections?
Last edited by Marooned; 2nd Oct 2008 at 09:09.