Dubai's Palm Jumeirah sees prices fall over 40 pc as crunch moves in

[Cyberbird]

Dubai's Palm Jumeirah sees prices fall as crunch moves in
Property prices on the Palm Jumeirah, the island in Dubai that has been dubbed the ‘eighth wonder of the world’, have plummeted by as much as over 40pc since September amid fears that the global credit crisis is stalling the emirate’s economy -

Nakheel said earlier this week it has witnessed a slowdown in the rate of real estate sales. Last month the developer announced it had scaled back dredging work on its massive Palm Deira project, the largest of three palm archipelagos that is planned to house more than 1 million people.

Meanwhile buyers are struggling to get mortgage loans in the region. Dubai Islamic mortgage lender Amlak told Reuters today it had suspended new mortgage loans as Dubai’s real estate sector shows further signs of stress.

Dubai-based Elysian Real Estate this week sent out a text message to up to 40,000 mobile phones advertising distressed property sales, offering a luxury six bedroom, six bathroom villa in Dubailand, a multi-billion-dollar luxury theme park well 30 pc beyond the prices 3 month ago - as buyers just stay away.

The Palm is the flagship part of Dubai’s ambitious ‘Universe’ development. The Universe will extend Dubai’s coastline to around 625 miles (calculated by measuring the coastal circumferences of the various manmade archipelagos), around 15 times its natural 43 miles.

By Louise Armitstead /www.telegraph.co.uk/finance/
Last Updated: 10:27AM GMT 21 Nov 2008

So - there ist is - the bubble is bursting ...
and - btw - the 4,7 Million Springs Villa Type 4E is still advertised at the Choitram - as just nobody wants to waste his money on a declining property market now - Thoughts ?? :sad:

[buba]

got chatting to a japanese man whose here with the dubai metro project, in short, he said when japan's economy gave in it was like 'a car travelling at 60 miles an hour hitting a brick wall'..in regards to dubai, in his words, 'that car is like travelling at 100 miles'

guess it all depends if big brother down the road is willing to shed a few billion dirhams in loose change

[Trader]

There is a silver lining...just think what would happen if, like in any other major city and outlying area, you could actually AFFORD to buy a house!!!!???? If housing prices rationalize and allow someone to buy, as an example, a 4 bedroom home in the Ranches for between 1.5 and 2 million dhms you would see a large increase in people buying to live as opposed to speculation.

That is good for the market - just bad for the speculators and, to be quite blunt, I couldn't give a toss about the speculators.

[ShinjukuHustler]

Agree, no one cares about the speculators, they've inflated the bubble, it's only fair they feel full force of the blast when it bursts. There's no value for money in DXB and let's not forget AUH/SHJ/RAK either. The sun shines here, big deal but the quality of construction is apalling and as for the the workmanship on things like the interiors and fittings, well it's non existant. Pay peanuts and you know the rest...

[Panama Jack]

Would have to agree. When I see TV advertisements like Al Zohra, I am puzzeled. Unless you have so much money that you really don't know what to do with it anymore, why would somebody buy his luxury home in this part of the world, rather than the Mediterranean, the Caribbean or a number of other parts of the world. :confused:

[Jet II]

The average price of a four-bedroom garden home on The Palm Jumeirah during the first quarter of 2008 was Dh2,200 per sq ft. During the second quarter the price shot up to Dh2,700 and in the third quarter it climbed to Dh3,000. Now the price has fallen to Dh2,700.

Hardly the bottom falling out of the market though.

Now what has collapsed are off-plan prices - The average sale price on JA Waterfront in September was Dh3,150 per sq ft. In October the price fell to Dh2,000 – a 36 per cent decline in a month. And this month the figure has fallen a further five per cent to Dh1,900.

Why anyone would pay more for off-plan property than completed was always a mystery to me.

The sun shines here, big deal but the quality of construction is apalling and as for the the workmanship on things like the interiors and fittings, well it's non existant.

LOL - you have obviously never bought a new house in the UK if you think Dubai's are badly built ;)

[Jet II]

why would somebody buy his luxury home in this part of the world, rather than the Mediterranean, the Caribbean or a number of other parts of the world. :confused:

Perhaps because they live and work in Dubai?:E

[fractional]

... and as reported by Gulfnews: Atlantis slashes room rates as visitors stay away (http://www.gulfnews.com/business/Hotel_and_Tourism/10261866.html)

[Jet II]

I wouldn't trust anything you read in the GN ;)

Try and book one of these 'bargains' - a room for $44!

I think somebody's been pulling someone's leg :E

[Gulfstreamaviator]

The rate for next few days was 4400 aeds. ++. not quite 40us$.

or can I not read their web site rates.

GlF

[EGGW]

Best i got was 1800 dhs for 1 night, my guess is a LOT of Gulfnews employees will be staying in Atlantis in the next week or two.

They did mention if i had a Emirates Platinum card a few times :confused:

EGGW

[pzu]

Atlantis has full page ads in at least two Sunday Papers in UK - Mail on S & S Times) today 23 November

Deal is £899 pp, double occupancy De Luxe Rooms inc breakfast, 3 nights + 4th Free
Between 23 Nov '08 & 31 May '09 with blackout dates10 Dec - 9 Jan, 13 - 23 Feb & 20 Mar - 18 April

Includes flights (Y presumably) and airport transfers

Book by 18 Dec (includes various kids deals as well)

PZU - Out of Africa (Retired)

Stand by for the CHAV invasion

[noflare]

Is that Russian CHAVs or UK CHAVs:}
cant see the UK CHAVs having the dosh!

[Cyberbird]

... Ahhh - here we go: Hte Palm Jebel-Ali Investments are doing a "formation nose-dive" with their Jumeirah sibling - as found in ArabianBusiness.com - Middle East Business, Financial & Industry News, Events & Information (http://www.arabianbusiness.com)

"House prices on the Palm Jebel Ali, second largest of Nakheel’s palm-shaped islands, have fallen by as much as 40 percent in the last two months as the global financial crisis sees foreign investors move to liquidate assets in Dubai, according to three Dubai-based real estate agents.

“I never expected [prices on the Palm Jebel Ali] would have come back so quickly and by so much,” said Jeroen Van Der Geer, partner at AA Properties in Dubai. “We are back to a level of one and a half to two years ago.”

The global financial crisis has hit demand from foreign investors, which make up a large percentage of property buyers in Dubai, while tightening liquidity has made home financing more difficult, agents said.

Local mortgage providers have slashed home financing from 90 percent to as little as 60 percent in recent weeks.

The price of five and six bedroom signature villas, the most expensive properties on Palm Jebel Ali, have dropped from around 16 million dirhams ($4.35 million) to 9 million dirhams since the beginning of September, according to figures from AA Properties.

But that still represents a premium of between 70 percent to 80 percent on the original launch prices.

A four-bed garden home has fallen from around 7.4 million dirhams to 4.1 million dirhams, according to the figures, with the premium dropping from around 160 percent to 45 percent.

The figures show a three-bed water home, the cheaper of the Palm Jebel Ali properties, is now selling for around 3.8 million dirhams, when at the beginning of September it was selling for 6.2 million dirhams, with the premium falling from about 210 percent to 90 percent.

Jodie Smith, managing director of Elysian Real Estate, said garden homes were currently selling at around 4.5 million dirhams, compared to 8.6 million at the beginning of September, while water homes had come down to around 4 million dirhams from 6.5 million dirhams.

David Rowland, sales consultant at Dubai’s Smith & Ken Real Estate, said he had seen premiums on signature villas drop from 200-210 percent in July/August to 75-80 percent currently.

Rowland said he had also seen garden homes selling at a 35-40 percent premium, compared to 130-160 percent in July/August.

He described the drop as “quite alarming”.:sad:

By Claire Ferris-Lay and Dylan ArabianBusiness.com - Middle East Business, Financial & Industry News, Events & Information (http://www.arabianbusiness.com/)

[myknobblyknees]

even at these price drops there are still 90%++ premiums to the original prices......
still further to drop then.:uhoh:

[percyprune]

Sonia Verma in Dubai

:sad::sad::sad:


div#related-article-links p a, div#related-article-links p a:visited {color:#06c;}For a few hours, the glitz and the glamour, the red carpet and, above all, the astonishing fireworks disguised the reality that is dawning over Dubai – but only for those few hours. Not even the £13.5 million extravaganza that launched the £1 billion Atlantis Resort could hide the fact that Dubai’s property boom, which has fuelled double-digit growth for five years, is showing signs of turning to bust.
“It’s been ten times worse than expected. The liquidity is absolutely frozen. There’s no money. It’s just gone. If the Government doesn’t act really quickly, we’ll slip into an Indonesian-style bust,” said one of Dubai’s leading bankers, who did not want to be named. He was echoing a growing consensus in the region. “These last six weeks have changed the face of the Earth,” he said.
Dubai’s property boom was fuelled largely by investors who bought properties off-plan. Most had no intention of ever living in the buildings, intending, instead, to sell them on and collect a tidy profit. Most also used borrowed money to finance their payments, according to analysts, intending to use a cut of their profits to pay back their loans.
But in recent weeks credit has virtually evaporated, with international and local banks tightening credit. International investors have grown nervous as local economists have downgraded Dubai’s economic outlook. And demand for properties has fallen into a slump, with job losses and the cancellations of new developments adding up.
Related Links


Reality bites for Dubai property market boom (http://business.timesonline.co.uk/tol/business/industry_sectors/construction_and_property/article4842323.ece)
Gulf feels the crunch as UAE pumps in $13.6bn (http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article4804729.ece)
A land of golden sands and golden opportunities (http://business.timesonline.co.uk/tol/business/movers_and_shakers/article5218886.ece)



A striking example of Dubai’s old and new realities was apparent last Thursday. As celebrity guests were whisked away by private helicopters from the Atlantis resort, residents on The Palm Jumeirah, the artificial island that is home to the hotel, were left to digest bad news. The value of their properties has fallen as much as 40 per cent since September, according to estate agents, as buyers struggle to secure mortgages. When the development, built by the state-owned Nakheel, went on to the market seven years ago, its luxury villas were snapped up by the likes David Beckham and Michael Schumacher for up to £5 million. Today Nakheel estimates that British buyers own nearly a quarter of the villas on the Palm.
Last week Amlak, the country’s largest lender, said that it would suspend new loans completely because of a lack of funds, a move unprecedented in this market. Yesterday the Government merged Amlak and Tamweel, the country’s other top lender, into the federally owned Real Estate Bank in an effort to loosen lending by pooling resources.
“People have really begun to fear a crash in the market,” Chris Dommett, chief executive of John Charcol Dubai, a mortgage advisory firm, said. “Banks aren’t suspending loans because of a lack of demand, they’re doing it because they don’t have any liquidity. Transactions have just stopped and everybody is holding their breath, waiting to see what will happen.”
According to new data from HSBC, property prices fell last month by 4 per cent in Dubai and 5 per cent in neigh-bouring Abu Dhabi. The credit squeeze is having a devastating effect on existing buyers, who no longer are able to meet payments on their existing investment properties. “Anybody who’s bought into this market to flip property and make a quick profit – they’re all getting crucified,” another banker said, adding that several of his clients were trying to “wriggle out” of their contracts with developers for properties that they had bought off-plan.
Brokers are reporting a sharp increase in panic-selling. Last week the Dubai-based Elysian Real Estate sent a text message to up to 40,000 mobile phones advertising distressed property sales. The text offered a luxury six-bedroom, six-bathroom villa in Dubailand, a multibillion-dollar luxury theme park on the outskirts of the city-state, at an advertised cost of about £3.86 million – about half its original price. Robert Macnair, Elysian’s sales director, told The Times: “We have had a sharp increase in clients who are looking to sell because the market has done what it’s done. There is a new urgency to these sales.
“The market has slowed dramatically. On a number of occasions, these investors or speculators actually can’t afford to make the next payment.”
Developers are also feeling the pressure. Damac, one of Dubai’s leading developers, cut 200 jobs last week. Nakheel has also said that it will scale back construction plans for its next man-made island, the Palm Deira.
Dubai is considering stronger measures to restore lending, but analysts say the market lacks the maturity to embrace them. Banks, for example, have been unwilling so far to tap into billions of dollars of emergency funding made available by the Government in recent months as the international economy heads for global recession.
Economists say that the Government needs to take a tougher stance. If credit does loosen, some predict a quick rebound.
Simon Williams, HSBC’s Middle East economist, said: “Real estate markets anywhere in the world are volatile . . . but they tend to work themselves out as the real economy tends to perform well, as it does in the Gulf.
“I still see very low vacancy rates across the UAE and rents are high. Those two key variables suggest that the property market will endure.”

[bear11]

I love the BS about "prices have dropped X percent". One simple point - if the properties aren't selling, how do you know what the "market" is? To have a market, there must be buying as well as selling. The prices you see now are not what people will buy at, they're priced at what owners think they will need to offer in order to sell. And we see attempted soothing comments from the vested interests such as estate agents and banks, while at the same time they reach for their helmet....

[Marooned]

Agreed Bear.

You read the various quotes in the papers playing down the effects of the economic Tsunami and they're from those who are in the property sector on which they have gorged for several years. Now the famine's here they're either in denial or cutting their losses.

It has ground to a halt and regardless of the current price per square meter the square root of FA is being sold.

[Panama Jack]

WELCOME TO DO-BUYLAND! :)

http://www.tropicalparty.co.uk/acatalog/50839-limbo-kit.jpg

[Cyberbird]

...a there you - go - the Burj Dubai prices are falling as well now by 25-30 up to 50 pc %:eek:
Burj Dubai property prices fall by Nathalie Gillet -http://www.thenational.ae

Property prices within the Burj Dubai tower have declined by up to 50 per cent, say brokers. Paulo Vecina / The National
Residential prices for Emaar Properties’s signature Downtown Burj Dubai development have fallen by at least 22 per cent, with reductions of up to 50 per cent within the Burj Dubai tower itself, according to property brokers.

Some high-end developments in Abu Dhabi are also recording significant price declines in the secondary market, where properties change hands after being sold by the developer.

The price corrections underscore how the credit crunch and prospects of a global recession are affecting the property market, particularly high-end developments.
According to statistics from the international estate agents Hamptons, which is owned by Emaar, prices in the Downtown Burj Dubai area rose 88 per cent in the year to September. Other brokers said some prices more than doubled.

“This is indicative of the whole marketplace,” said Vincent Easton, the head of sales at Sherwoods property agency in Dubai. “Downtown [Burj Dubai] had quite a sharp spike in pricing. Anything that has a sharp spike is open to a correction if the market slows. Really, ultimately we will see the correct level.”

Sherwoods, which closely monitors transactions at the development, said it had observed an average decline of 25 per cent, including the Burj Dubai tower. Prices in the tower – scheduled to become the tallest in the world – increased the most, and have subsequently fallen sharply. Prices outside the tower fell from an average of Dh3,500 (US$952) per square foot to Dh2,700, Sherwoods said. “When you exclude Burj Dubai from the area, you get a more realistic idea of the decline in the development,” said a market research officer at Sherwoods. Flats on 8 Boulevard Walk, for instance, dropped from Dh3,300 per sq ft to Dh2,500 per sq ft in three weeks – a 24 per cent decrease.

Sujeeva De Silva, another Dubai-based property consultant, said prices in the Old Town quarter of the development had fallen 30 per cent in the past month, along with nearly 20 per cent at the South Ridges and Residences areas.

[FlyingCroc]

A few weeks ago we discussed this and some blokes bragged about how much money they made, 300% etc. And now, those who bought the property now are not laughing are they. Greed is the root of evil here. :yuk:

[casio man]

Why single out the UAE and the Gulf? Aren't these evils everywhere?

I would think that Wall Street USA would have first dibs for Greed...

[shazar]

BBC has a good report in Arabic.
http://news.bbc.co.uk/hi/arabic/sci_tech/newsid_7739000/7739718.stm (http://news.bbc.co.uk/hi/arabic/sci_tech/newsid_7739000/7739718.stm)
Another link in English here
http://news.bbc.co.uk/2/hi/middle_east/7693614.stm (http://news.bbc.co.uk/2/hi/middle_east/7693614.stm)

[captplaystation]

Sounds more like an estate agents ( fingers crossed & hope for the best :eek:) sound bite ,rather than in depth analysis, at least in the English version.
It's never too early to panic, or indeed to call your solicitor (as the old ads used to say.)

[Ketek400]

"Safe as houses" Property is useable. Owning property in the long run, is always the way to go. Might be down now, but it has just been unrealistic the way property has been performing in the Gulf. It is now coming back to real world figures. Pay for what you get. If you payed too much, then you are in trouble. If not, you will always be smiling.

Good luck! Dubai is not the only place in trouble. It will take a while.

[kingpost]

Contacted

Be careful not to stick your neck out too far. So what if the values go down, the rental will go up because of the supply shortage, no one is lending so developments will slow - simple economics 101.

You must be one of those that wished he'd got in the market prior to June 2008 and now gloats that you've got nothing - the property owners wil still have a great rental yield as a pension support.

[Wizofoz]

[QUOTE] the rental will go up because of the supply shortage, [QUOTE]

No, it won't.

Most properties were being bought to rent anyway, so there are no fewer rentals on the market.

Because of the number of redundencies, particularly amongst middle management types who make up the bulk of the villa rental market, and the number of people that just won't be coming, what there WILL be a shortage of is rental CUSTOMERS.

You can expect a collapse of rental returns as well.

[Jet II]

You can expect a collapse of rental returns as well.


May well happen but no sign of it yet.

Apartments in the marina are still giving 10% yield so there is still a lot of 'give' in the market and there will still be a decent return.

[BITE System]

Depends when you purchased your property. Yields can be as high as 20% to even 23%

[ferris]

What depreciation are you applying to get a yield like that?

[Jet II]

Depends when you purchased your property. Yields can be as high as 20% to even 23%

I'm talking about prices that are applicable today.

In fact I was talking to an investor here and he bought 3 properties last week to rent and his yield is almost 15%

What depreciation are you applying to get a yield like that?

Not factoring in any capital depreciation or appreciation - nobody can see into the future which is why I apply sale prices from today.

[FlyingCroc]

is not the truth from yesterday. And so good luck if you bought rental property. All the prices were and are overinflated. For heavens sake, with the prices for apartments here in the Gulf you could buy also in New York, Miami, Paris or the French Riviera. And with a lot better quality and security in the future. Don't buy if you can't live in it yourself. And watch what they are going to do with the $40 a barrel oil price here in the Gulf. :E

[Jet II]

And watch what they are going to do with the $40 a barrel oil price here in the Gulf. :E

Oil, over the long term, is only going one way.

Once the world economy starts growing again then the same fundamentals are going to kick in that pushed oil up earlier this year - hoping that oil stays below $50 is just a that - a forlorn hope. ;)

[Wizofoz]

Jet,

It wasn't fundementals that pushed oil prices up, it was speculative money flowing out of the US housing market.

It was the fundementals that brought it back down!

[Jet II]

Wiz - do you really think that the market price in a growing world economy is less than $50 a barrel?

The IEA estimate that production will need to increase by six times the current Saudi output to meet expected demand in 2030.

[Cyberbird]

...i surely think, everybody who still thinks investment in real estate/ property is smart - should better think again - and read this ...

Economic slowdown puts an end to glitzy property parties in Dubai :eek:
Sunday, 30 November 2008 Middle East property news | Middle Eastern real estate news (http://www.propertywire.com/news/middle-east)

Glitzy property parties in Dubai come to an endGlitz and glamour are being erased from the real estate sector in Dubai as developers cut back on their entertainment budgets.

The recent extravagant opening party for Atlantis is likely to be the last of the big events for some time according to officials as the global downturn means money is tight.

Almost half of the emirate's real estate launch parties have been delayed or cancelled as a result of the cooling property market, according to corporate event organisers.

'Corporate entertainment, team building and entertaining, they are being put on hold,' said Biju Jayaraaj, CEO of Dubai-based events firm Artaaj.

Dubai's booming real estate sector has become synonymous with extravagant launch parties. In October Hollywood power couple Catherine Zeta-Jones and Michael Douglas attended the press conference to launch Nakheel Tower while Enrique Iglesias performed for guests as the launch of residential development Dream Harbour in August.

But the most expensive opening event to date was the $20 million opening party for Atlantis on the Palm Jumeirah which included a private concert by global superstar Kylie Minogue.

There is also a feeling that with property prices falling up to 40% and more and buyers struggling to get mortgages and meet loan payments then a show of extravagance sends out the wrong impression. Also marketing and advertising budgets are being slashed.

That means that the property downturn is now having an effect on the events industry. Jayaraaj said that the company is now looking to refocus its strategy away from real estate.

Simone Sebastian, events producer at Dubai-based firm 9714, said four of their large real estate events had been put on hold indefinitely in light of the slowdown

so . there You are - lots of negative press of the Dubai Real Estate Market -

one of the biggest INDEPENDENT newspaper /which is actually in German/ biggest economy in europe: The Sueddeutsche Zeitung states this weekend/ if You can read it - i barely could, as i worked there on a contract for some Years .. / states ((unlike the propagada Government sensored Gulf-News & @% alike ...) the harsh truth of dark clouds hanging over dubai, which has 80 Billion loans to pay compared to a annual (!) GDP of merely 40 Billions, which are dwindling as i write this .....

DUBAI in BURNOUT-Crisis - Collaps not unlikely! :eek:

and pretty much the same tenor in all other INDEPENDENT papers ..

like: http://www.easybourse.com/bourse-actualite/hsbc-holdings

Job losses hasten property decline in Dubai

Wednesday, 03 December 2008

Dubai job cuts hastens downward spiral:
Job cuts in the Middle East could hasten the downward spiral of property prices but a sharp drop in prices could actually make the crisis medium-lived, analysts claim.

The price correction in Dubai's real estate market will come sooner and be steeper than anticipated as demand falls amid the global financial crisis, according to Egyptian investment bank EFG-Hermes.

It is still predicting a 30% correction in Dubai real estate prices by 2011, but that the fall would come sooner than previously thought.

'While EFG's forecast is still for a 30% decline, this has now become very front-end loaded and with risks significantly skewed to the downside,' said analyst Raj Madha.

The global financial crisis has hit demand for real estate in Dubai from foreign investors, which make up the large proportion of buyers, while tightening liquidity has made home financing much more difficult.

Added to this, Madha said, is a glut of new properties expected to come onto the market that could be harder for the market to absorb if immigration falls as companies cut jobs amid the crisis.

'We are currently seeing significant distress in the property sector, resulting in several major developers cutting headcount. As for financial services, we expect that with the local index declining over 60%, there will be less revenue to go around, and therefore less revenue to justify the current staffing requirement,' he predicted.

New properties coming onto the market could see rents decline, meaning Dubai would be better placed to market itself to industries that have increasingly been priced out of the market, he added.


Well, than it will be good times for buyers soon: with price-levels will be some 40 % lower in Bout half a year - which is MY personal guess, as i know by an owner @ JBR,that they actually have to pay the security people to go up & switch on the light in the ttally empty towers, which are still NOT sold, as they should look less ghostly @ night then !?! Fake as whole Dubai i guess - I fell really sorry for that city; it had its chance, and obviously totally missed it !
:ugh:

[FlyingCroc]

Usually you see in the Gulf News two pages of colo:eek:rful property advertising, yesterday there was none.

[bigmountain]

Having read all the submissions for and against the property market in Dubai.
May I add my two bits.
There will always be a section of the population that will consider the Gulf as an area of uncertain calm and will try and justify their decsion not invest in a "volatile " area as the middle east. You can't blame them . They perhaps have a risk tolerance level that just does not allow them the "luxury" . I myself initially was aghast at the flurry of or shall I say "mad rush" to purchase the first free hold villas on the bases of photocopies of off plan properties at Emaar. People were lining up in the early hours of the morning to be the lucky few to put down a deposit. There were detractors then and there will be detractors now. People call this a fly by night operation. The"wise" advised to put money in more mature markets like Europe and the Us......... Now 2008 and what do we have. The Stock Market , the property market , business , airlines GM GE , you name it ,have all headed South.. Had one invested in any of the Markets in Europe America , all I can say is that you would have done much better had you had your money in the property market in Dubai and UAE.

As in any market,the higher the risk the higher the reward. Surely no one can argue against the returns they have made and continue to make in Dubai and the UAE. Yes Dubai and UAE are part of the Global Economy and they will have to be prepared to weather the Storm. However the Storm that the UAE is experiencing is passing right over the Major Economies of North America and Europe , while UAE is only experiencing the strong winds and currents that are by-products of the mismanagement by the so called "czars of the global economy".

I will not digress too much on the failure of the Global economy . I shall leave that to the Economist and the like to ponder over such issues. However back to the matter at hand ; the property market.

Yes there is currently a "lull" and so there should be one. Some may call it a "lull "before the "Storm" .Ordinary people , investors , speculators and just watchers on the side lines all have an opinion. Is the Glass Half Full or Half Empty?

The facts are that
1) There is a housing shortage for every type of dwelling . Be it International City or an apartment on Shk Zayed Road or for a Villa for Emirates Staff.
2) Every so often you will see a report published in the press that the market will correct in 2008 .Only to be revised by another " research paper that we will see a downward trend in 2009 and only recently again another report from a private Capital investment house stating that we can expect to see prices moderating in 2011. Meanwhile prices of Villas on Palm and the Emirates Hills have shot up astronomically. Prices in Victory Heights and Arabian Ranches have shot up 30%-40% in 8 months. The Marina and Jumeriah LAKE TOWERS all are offering off plan investors 100% returns . Thats approx 30% yr on yr. Yes they have all moderated lower .You cannot find villa to rent out in Meadows or Springs . Major population is being uprooted in Satwa and I suppose shortly Karama. Where will they move. "International City" I would assume. Had you invested in a studio 2 1/2 yrs ago You would have paid close to 230,000 Dirhams ( in easy installments) including a premiums. Today you can command rentals in the 45000/- range and prices for Resales vary from AED 450,0000/- to 500000/- Not bad yields even if you bought today.
For those of you waiting for the market to fall, I would recommend that they don't wait too long and put their money elsewhere; perhaps in Europe and US now as their risk profile doesn’t match the investment style in UAE. Notwithstanding the "flip artiste" may I suggest that there are opportunities for some of our fellow investors who only wished they had a second chance. Well “chance”, it has presented itself . Prices have moderated and offer opportunities to End buyers to “ dip their toe”( studio . One bed) or “get their feet wet” (ready Villas, Meadows Arabian ranches ,Springs ,Green community or Palm Jebel Ali Garden Villas -2011) Now you can take your time . Estate Brokers will follow up on your calls , you will have a choice of options and can have time to sleep over it . So whenever you do decide , it should be a calm and considered decsion. But rememeber this is till the end of the Year. Dubai is not going to sit still. It will come p with some innovatiiove idea to kick start the economy.

For the shrewd and savvy investor who is willing to ride out the peaks and toughs of an investment cycle, the UAE has a lot of potential. Its still a growing economy . For those who cannot match the investment required in Dubai and AbuDhabi need only to look at Ras al Khaimah and Ajman. These are relatively new areas, but offer the advantage in allowing potential investors to track the Developers track record in Dubai and so hedge their bets somewhat with reliable builders with a history. Lost an opportunity on the Palm Jumeriah. Why not try Marjan Island in Ras al Khaimah. or Boris Beckers "turtle shaped " Sports comlplex" and Resort all tied into one. Various options with easy installments plans between 6 and 15 yrs are offered.

For someone who can't be bothered in investing in property , there are a few Investment vehicles offered .Eg EPI 20% Property Concepts Dubai 30% and Arcadia 22% A littlle bit of research and a chat will allow a person to decide which way to go.

One must remember the UAE property market has provided really astounding returns on the back of really poorly performing stock markets all around the world. This is because the market is fairly new as compared to more mature markets of the world such as Europe and North America. In the long term one can expect a consistent growth that will provide a hedge against inflation. The speculators, meanwhile have probably taken all the money out of the property market and working on investing in the Stock markets that are looking very promising .........Maybe not just yet!.

Summary enter into the market if you can pay your mortgage with the expected rental returns. This has been true for off plan investments and to some extent on some resale properties. e.g International city studio 500,000 -Annual Rental 55,000 Discovery Garden 600,000-70000/- Rental 75000/-(annually)
If the sums don't add up then don't get into it. Still feeling itchy then take your cash and have a talk with one of the property investment syndicates/ property investor groups . Still not happy put it in HSBC and get 5% . Last checked Gordon Brown is Guaranteeing your money. Still not happy put it under your mattress.

Dubai and UAE are still growing economies that have somewhat slowed down ; just like any other economy .Nevertheless their growth rate is still an enviabe pace as compared to other economies that are into recession.
I believe the Glass to be Half Full
Cheers
BM

[FlyingCroc]

However, why are almost all the properties empty? And yes there is a 50% depreciation on the property. And a lot of people lost stocks in the Gulf. And we have 40$ a barrel for the oil which will not help the economy in the Gulf. And who wants to spend a f@$%& 55'000 DHS rent a month in this dustbowl? This is a crime, not even in Manhattan or Paris you would pay that much for a top luxury apartment, this is fleecing and will be punished with jail in most countries :yuk:
And yes 5% interest at HSBC with a 20% inflation rate, go figure. I guess a lot of guys are in a hurry now to exchange now before the $ plunges into the nirvana.

[fo4ever]

Bloomberg.com: Exclusive (http://www.bloomberg.com/apps/news?pid=20601109&sid=a2jrSPqYhVzY&refer=home)

[White Knight]

Flying Croc - you're spouting garbage (as usual)... Most properties in the Marina, JLT, Greens, Lakes, Meadows, Int'l City, Discovery Gardens (I'll stop here but could go on) are occupied.. The exception is JBR 'cos it's a ghetto..

50% depreciation on property??? Mine have appreciated as have most...

$45 a barrel - still good money for the Gulf states....

55,000 dhms a month rent in the dustbowl - many pay it. I'm sure that if they really didn't want to pay that they'd have gotten a job elsewhere..

$ plunging - last I looked it was going up and up, especially against sterling and euro....

[sexdriven]

Got to agree with White Knight.

Fundamentals in the UAE still strong for the long term.

Low oil price is going to be short lived. In fact the longer the price of oil stays below $50,the higher the price is going to spike inthe future. Oil below $50 is not in anyone's interest in the long term.

The housing market is definately correcting and there are not a lot of sales at present. But this is because people are just sitting back and assessing at present as there is fear in the market.Also there are lots of speculators who need to unwind their positions.However, the rental market is still strong which bodes well for the future of the real estate market in the long term.

Contrary to what many economists believe, the US dollar still has a lot of life in it. The recent financial crisis has just proven that fact. The US dollar has strengthened significantly which just shows that most investors still see it the reserve currency. Sure, there are structural problems with US economy but Europe has just as many problems.In fact the US economy might even progress out of the recession quicker than Europe.

Bottom line is that we do have problems in the UAE economy but we will see them through.At the end of the day Emirates is still one of the the best jobs in the industry and no, Dubai will not go bankcrupt.

If you feel otherwise ,than I suggest you immediately start looking elsewhere for a job instead of wasting time on pprune.

[fourgolds]

Well , have been helping a friend find a property to rent here for the last month. I have been out to Discovery gardens and others and they are no where near fully occupied. In addition the rentals have dropped Dhs 10000 a year in just two weeks. You can say what you like , there is a a bursting bubble.

I think we will see the pendulum swing the other way , as greedy landlords will struggle to find tennants who renew at last years rentals. The tennants wil actually be in a position to bargain for a lower rent. As they will have choices. Serves them right. Greed Greed Greed.

As for trying to sell in this market , good luck. This market was never established on sound principles and was driven by greed.

[FlyingCroc]

And what a joke last year with the oil price so high. It was all engineered by the same crooks that keep it now low to destroy the economy in the Gulf. And no, the economy will not improve in the US anytime soon and the dollar will most likely plunge next year. I will however take advantage of the good exchange rate now. And good for you White Knight if your property has increased in value, and believe me I wish everyone a good fortune with their investment. However, 55000 DHS a month is a crime even if people are willing to pay for it.

[Bin Landwirt]

quote: Low oil price is going to be short lived. In fact the longer the price of oil stays below $50,the higher the price is going to spike inthe future. Oil below $50 is not in anyone's interest in the long term. The US dollar has strengthened significantly which just shows that most investors still see it the reserve currency./end of quote


Sorry, but utter bullocks. The banks were in kneedeep sh*t long before Main Street got the news. The financial 'elite' pushed the oil price up beyond recognition. Read the long term analysis reports of the US Energy Dept. Current oil price should be around 40 dollars a barrel, given current demand and global growth (China and India at the forefront of oil demand), by 2030, at current growth levels (before the crisis) it should reach 110 dollars a barrel, exluding the fear factor and speculators.

Russian oligarchs were quick to shout out summer 2008, a new oil price threshold could reach 200-250 dollars within a year, as crude hit 147. An ailing US economy demanded an ever weaker dollar, therefor the oil price had to be pushed higher. In such a climate, it was easy for the big oil companies to rake in mega profits, while argueing the crux of the problem was driven by global demand, all the while they failed to invest significantly in non-oil related future technologies. Finally, when the handle broke, banks and oil companies decided it was time to let go. Promptly the oil price dropped, but the damage was done already. That's the problem with a non-regulated, free-wheeling market capitalism. Greed knows no ethic. Wallstreet sure looks after itself, securing hundreds of millions in fees through the bailout package. The taxpayer pays for something he will never fully understand, other than that he's getting ripped off once again. The oil industry will continue to make hefty profits, while the Hill is making sure the dollar stays strong.

OPEC's secretary's statement in summer 2008 was accurate: the artificially deflated US dollar and oil speculators of the global financial elite are responsible for the high oil price, rather than global demand. In fact, 60 dollars a barrel was stated as a desirable threshold price, to ensure good profits. Sure, before the wars in the Middle East, 40 dollars was deemed desirable, with a ten dollar fear margin factored in already. Even then, there was ample room for manouvring.

To bail out the banks, who have gotten us into that mess in the first place and who's CEOs show no remorse, quite the contrary, is a joke.

To bail out the ailing car industry, who has failed to show real intent for change, i.e. investing in future technologies, restructuring its top-of-the-pyramid-driven fat jo-jo management is an unforgivable mistake.

We're in the Great Depression Game, yet again. It's orchestrated by the global financial elite. As was then in the 30s. We're ruled by decree of our own greed. Whether on a small or a large scale. We've only got ourselves to blame. Is the end of free market capitalism looming at the horizon? I don't think so. We've already transferred a great deal of man-made goods and materialistic wealth into cyberspace's digital betting universum. This will have dire consequences. Just as ignoring the warning signs of the rapidly dwindling arctic and antarctic ice shields. While the ice that matters so much to this planet is disappearing, we've just seen the tip of the iceberg we've created. The global financial crisis has just begun. Bailout packages will not provide a long term solution, but rather delay the inevitable.

[Wizofoz]

Well, oil STILL below $40 and Gulf News saying rents have slipped 15% (If Pravda is saying that, what's the real figure?)

Was told 60 cars were abandoned at DXB in the last month by retrenched expats just getting on a plane and leaving a mountain of debt behind.

It's going to be an interesting year!!

[BYMONEK]

Croc

keep your scales on! The 55,000dhs is per YEAR , not per month. It was for apartments in International ****y.

A reliable source has it on good authority that the banks here will be lending 90% again on certain villas from March onwards. Apartments 60%. Now that the prices have tumbled, I guess that makes sense.

[Silverspoonaviator]

So in future Pan Ams negative profit situation logic will be used in all Gulf report.

My own view is that if the press are not allowed to report bad news, the "investors" and "residients" will make up the news.

Bad news travels 100 times faster than good news.

But there is no such word as "logical" in the mindset of the sandy world.

Take care, ssa