Safe as villas; How well insulated is DXB?
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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?
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.
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My thought logic resembles yours mensaboy, Reading it in black and white makes me understand it even better. The facts are there. All I need now is a crystal ball, well any ball that can tell me what the future holds. Now that would be wishful thinking, wouldn't it?. Needless to say I think you hit the nail on the head. I just hope the hit wouldn't be as hard or harsh as it sounds. let's see what unfolds...... Time to scratch your balls!!
Out to be some pleasure in that.
Out to be some pleasure in that.
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Interesting stuff. I think that one way or another we are as not 'insulated' as we are led to believe.
Kingpost makes the valid point that it is not all about property but that is one of the barometers that will indicate change the quickest.
One or two of the banks are already in 'difficulty' with consolidation likely as seen in the US/UK. NBD have already combined with Emirates Bank and rumors of trouble in more than one UAE bank will force others to consolidate.
Less banks, less choice... sound familiar?
As far as the property market is concerned it will feel the changes soon as increased regulation combines with tighter credit. As regards the former, rent valuations will be imposed by the municipality as early as next year and the latter lower LTVs on 'higher risk' developments will make it more expensive to buy.
Villas should do better as apartments due to supply but commercial property? Who's coming to set up business where Dhm/square meter as gone up 10 fold and relocating staff is so expensive?
Add to this capital gains taxes to control the rampant speculation then change is inevitable.
Time will tell but insulated? No way.
Kingpost makes the valid point that it is not all about property but that is one of the barometers that will indicate change the quickest.
One or two of the banks are already in 'difficulty' with consolidation likely as seen in the US/UK. NBD have already combined with Emirates Bank and rumors of trouble in more than one UAE bank will force others to consolidate.
Less banks, less choice... sound familiar?
As far as the property market is concerned it will feel the changes soon as increased regulation combines with tighter credit. As regards the former, rent valuations will be imposed by the municipality as early as next year and the latter lower LTVs on 'higher risk' developments will make it more expensive to buy.
Villas should do better as apartments due to supply but commercial property? Who's coming to set up business where Dhm/square meter as gone up 10 fold and relocating staff is so expensive?
Add to this capital gains taxes to control the rampant speculation then change is inevitable.
Time will tell but insulated? No way.
I reckon that the only thing insulating the ME was the US economy and the high price of oil. If world demand reduces and oil prices fall, where do you think it will leave the ME? What other reason is there to buy overpriced property in DXB? Let's face it, if there wasn't any oil/gas in the ME , why would anybody go there? IMHO, I think commodity and oil prices will reduce to a sensible level ( where is anybodies' guess), and there will be a serious correction in property prices around the world generally.
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Folks always remember the one fundamental economic priciple you learnt in high school. All economic growth patterns are cyclical in nature. This has been proved time and time again in different economies in different countries and with different assets. Just look at:
1) Dot Com
2) Global Real estate - particularly US, UK & Europe
3) Oil Prices
4) Gold prices (yes their high now but look more carefully - pre 1980's)
5) Bonds, equities you name it ....
Prices only go so far until investors realise the Emperor really isn't wearing any clothes and then the bubble bursts. People thought oil would go to 200USD per barrel... it only peaked in line with the peak in other major global economies. Now that growth in USA, India and China is looking curtailed so demand has dropped along with the price. Funny how many soverign wealth funds are actually insuring against the price of oil dropping below 70USD per barrel. Now why would they do that do you think?
The point is that the Dubai economy will tighten in time as inflation becomes rampant and the Dubai commercial banks realise that they too have been rather cavalier in their lending policy. Property prices will correct this is inevitable and i'll state my profit share (like we'll get any this year, NOT) on this. Its just a question of time. Maybe its time to realise some of those gains in property we've made.....
Dubai may have some insulation but rest assured the correction will come. Maybe not an all out slump but certainly a slowing of growth. As some of the other points have made above this is aleady starting to show.
Thought for the day:
Greed through excessive risk has killed the banking system in the USA. Hedge funds, short selling they've all contributed to it. If we learn to be less gready and use our heads we'll all be worth more.
Right that's enough b*ll***s for one day,LOL
1) Dot Com
2) Global Real estate - particularly US, UK & Europe
3) Oil Prices
4) Gold prices (yes their high now but look more carefully - pre 1980's)
5) Bonds, equities you name it ....
Prices only go so far until investors realise the Emperor really isn't wearing any clothes and then the bubble bursts. People thought oil would go to 200USD per barrel... it only peaked in line with the peak in other major global economies. Now that growth in USA, India and China is looking curtailed so demand has dropped along with the price. Funny how many soverign wealth funds are actually insuring against the price of oil dropping below 70USD per barrel. Now why would they do that do you think?
The point is that the Dubai economy will tighten in time as inflation becomes rampant and the Dubai commercial banks realise that they too have been rather cavalier in their lending policy. Property prices will correct this is inevitable and i'll state my profit share (like we'll get any this year, NOT) on this. Its just a question of time. Maybe its time to realise some of those gains in property we've made.....
Dubai may have some insulation but rest assured the correction will come. Maybe not an all out slump but certainly a slowing of growth. As some of the other points have made above this is aleady starting to show.
Thought for the day:
Greed through excessive risk has killed the banking system in the USA. Hedge funds, short selling they've all contributed to it. If we learn to be less gready and use our heads we'll all be worth more.
Right that's enough b*ll***s for one day,LOL
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Which is what everyone has been hoping for I think - rises of 70% in the past 9 months are totally unsustainable so and reduction to more normal rates can only be good for the future.
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Hy mensa boy et all ---
i really don't know what You guys are taking to come up with these ridicolous figures like 70 % profit in 9 mont h-
the harsh fact is, that over-priced properties are already DECLINING significantly since some time - just villas are doing slightly better!
in the Marina & especially in the JBR-Area, prices went already down over 25% from its highs, as NOBODY wants to live in this crappy & dirty ghetto - with just one overprices Spinneys, but several russian hookers in every building anymore; with cheap-built highrises popping up like mushrooms everywhere, closinging the last green spots (if any!) there- just to stay half empty for years after completion (2 years after plan) thereafter & no green garden nowhere left for the kids to play ..
most Appartments in the Marina are just impossible to be sold unless massively discounted, as the nice water-Channel is now obstructed by another line of cheaply built stadardized high-rises - more dirt, noise & pollution right in everybodys neighbourhood! plus massive building quality issues for example in the JBR:
massive cracks in the basement & walls & consecutively several broken water pipes & sewage hoses - a total nightmare & owners desperate to get out of their ownership - wiping out their gains by doing that!
That's jsut why emirates put their new pilots in this new concrete ghetto like "Lake towers" as nobody else wants to live there - just like the 60% unsold nightmare-ish Burj Dubai - an isolated &ghostly place !
Villas in Springs & Greens & Arabian R.or Green Comunitiy doing however much better in the downward trend now, but are already losing as well from its highs, as building and quality issues require now - after merely 4 years time - massive renovation costs (new heating, new c a/c etc. pp, cracks, detached terasses, cracks in the pools etc.); not to forget the skyrocketing municipality costs - up betwenn 80 and 150% in the last two years in most areas!
So - anybody still considering to buy must be outright naive - to put it mildly - Realize it & face it - the boom & party in the sandpit is over
- worse to come - Not for me - i'm gonna go back to europe asap - i just had enough from these greedy clowns here! You bet!
i really don't know what You guys are taking to come up with these ridicolous figures like 70 % profit in 9 mont h-
the harsh fact is, that over-priced properties are already DECLINING significantly since some time - just villas are doing slightly better!
in the Marina & especially in the JBR-Area, prices went already down over 25% from its highs, as NOBODY wants to live in this crappy & dirty ghetto - with just one overprices Spinneys, but several russian hookers in every building anymore; with cheap-built highrises popping up like mushrooms everywhere, closinging the last green spots (if any!) there- just to stay half empty for years after completion (2 years after plan) thereafter & no green garden nowhere left for the kids to play ..
most Appartments in the Marina are just impossible to be sold unless massively discounted, as the nice water-Channel is now obstructed by another line of cheaply built stadardized high-rises - more dirt, noise & pollution right in everybodys neighbourhood! plus massive building quality issues for example in the JBR:
massive cracks in the basement & walls & consecutively several broken water pipes & sewage hoses - a total nightmare & owners desperate to get out of their ownership - wiping out their gains by doing that!
That's jsut why emirates put their new pilots in this new concrete ghetto like "Lake towers" as nobody else wants to live there - just like the 60% unsold nightmare-ish Burj Dubai - an isolated &ghostly place !
Villas in Springs & Greens & Arabian R.or Green Comunitiy doing however much better in the downward trend now, but are already losing as well from its highs, as building and quality issues require now - after merely 4 years time - massive renovation costs (new heating, new c a/c etc. pp, cracks, detached terasses, cracks in the pools etc.); not to forget the skyrocketing municipality costs - up betwenn 80 and 150% in the last two years in most areas!
So - anybody still considering to buy must be outright naive - to put it mildly - Realize it & face it - the boom & party in the sandpit is over
- worse to come - Not for me - i'm gonna go back to europe asap - i just had enough from these greedy clowns here! You bet!
Last edited by Cyberbird; 3rd Oct 2008 at 17:39.
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Cyber I totally agree, the figures mentioned are examples of the the over inflated figures spouted by those with vested interests trying to sell bits of the pyramid they've been selling for the past few years.
The reality is, as you say, very different.
But it is pyramid selling none the less and the market is turning and areas such as JBR are feeling it with more to come.
The reality is, as you say, very different.
But it is pyramid selling none the less and the market is turning and areas such as JBR are feeling it with more to come.
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in the Marina & especially in the JBR-Area, prices went already down over 25% from its highs, as NOBODY wants to live in this crappy & dirty ghetto
Sounds familiar.......
the appartment prices are obviously already on the downturn, as my colleagues confirm, who can't sell their investments at the Dubai Marina with profit anymore 23rd July 2006
Oh and please name and shame your 'colleagues' who couldn't sell anything in the past 2 years at a profit - I need a laugh
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Those who sold in the Springs, Arabian Ranches & Green Community made some good gain - reduced however by the massive inflation of the weak Dirham;
however those who bouht on the trunk of the plam -where the opposite metro-line erased the projects water-channel & those who bougt in the JBR -made definitively losses - after subtracting their financing & agent costs!
Like it or not - these are the facts - and , NO, it doensn't matter for me, as my property is in Europe - as i don't wanna own anythin' here, as the climate & mentality is horribl, and i want to be able to take my belongings on the next flight back into a civilised country-
but hey, prsto, that's just MY thoughts - and these have apparently not changed over the past years, as you might have found out smartly
and -as you see - others are sharing my poínt of view -which has not to be yours - that's fine with me
however those who bouht on the trunk of the plam -where the opposite metro-line erased the projects water-channel & those who bougt in the JBR -made definitively losses - after subtracting their financing & agent costs!
Like it or not - these are the facts - and , NO, it doensn't matter for me, as my property is in Europe - as i don't wanna own anythin' here, as the climate & mentality is horribl, and i want to be able to take my belongings on the next flight back into a civilised country-
but hey, prsto, that's just MY thoughts - and these have apparently not changed over the past years, as you might have found out smartly
and -as you see - others are sharing my poínt of view -which has not to be yours - that's fine with me
So - anybody still considering to buy must be outright naive - to put it mildly - Realize it & face it - the boom & party in the sandpit is over 
- worse to come - Not for me - i'm gonna go back to europe asap - i just had enough from these greedy clowns here! You bet!
- worse to come - Not for me - i'm gonna go back to europe asap - i just had enough from these greedy clowns here! You bet!
That pretty well sums it up. Pity that greed will forever remain the motivating force for a majority of mankind.
Incidentally, being only a simple pilot and not an economist, could one of the "experts" tell me who is holding on to all the money that is still surely floating around in the world? Who is going to be snapping up all those foreclosed properties at bargain basement prices to be sold back to the peasant masses (aka "hoi polloi") at yet again inflated sub-prime rates sometime in the future? According to some of the banking whizkids, there is still lots of liquidity in the market. Armageddon is not round the corner, at least not yet.
To paraphrase a famous quote which I have always felt has much to offer in the Aviation world- "Man has oft more need to be reminded than informed". We are forever reinventing the wheel, be it in flying or anything else!
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The 'facts' are that property prices have risen every year since the the law was changed allowing foreigners to buy.
This year demand and prices have risen - even in the Marina.
Prices and demand in DXB are bound to be affected by the present financial crisis but if you think that by going back to Europe is going to escape from it then you are as barmy as your mates who couldn't make any money in the last 2 years.
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What liquidity???? There is none. The small manufactures and companies in NA are already complaining of the lack of available funds/loans. The banks won't lend to each other!!!!!!! If they do it is at much higher rates and they are ALL gun shy about potential risk.
The money that was 'floating' around was built on risk and whan that risk finally materiallized the money disappeared - hence the current crisis/problems.
Anyone who thinks that Dubai will simply side step this is in la la land. The only questioon will be to what extent. Less foreigners will be investing money here--because there is none and those that have will not likley risk it in the bubble that has grown here. They're gun shy now.
As for the guys who have made money in the last several years = you should be happy for them!!!! However, have they made the money??? ie have they SOLD yet?? You have not made money (or lost it) until you sell. Till then it is all speculation.
The smart ones rarely buy at the low or sell at the high but make some money in between. Trying to guess the exact low or high is a mugs game.
The game has changed in Dubai. The risk now in holdig property is high. If you are holding onto it today or buying you may still see increases. The trick will be to sell while you can and while you can crystallize that profit.
The money that was 'floating' around was built on risk and whan that risk finally materiallized the money disappeared - hence the current crisis/problems.
Anyone who thinks that Dubai will simply side step this is in la la land. The only questioon will be to what extent. Less foreigners will be investing money here--because there is none and those that have will not likley risk it in the bubble that has grown here. They're gun shy now.
As for the guys who have made money in the last several years = you should be happy for them!!!! However, have they made the money??? ie have they SOLD yet?? You have not made money (or lost it) until you sell. Till then it is all speculation.
The smart ones rarely buy at the low or sell at the high but make some money in between. Trying to guess the exact low or high is a mugs game.
The game has changed in Dubai. The risk now in holdig property is high. If you are holding onto it today or buying you may still see increases. The trick will be to sell while you can and while you can crystallize that profit.
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Mensaboy - I hope you're not telling us that obama's going to be a better bet
Cyberbird - you're talking total rubbish... (except about JBR - a ghastly place)
Trader - I've made a nice profit on property here, but to be honest money is not what drives me!! It just happened.. And it's 'fewer foreigners', not 'LESS foreigners'. You're not level 6 are you
Cyberbird - you're talking total rubbish... (except about JBR - a ghastly place)
Trader - I've made a nice profit on property here, but to be honest money is not what drives me!! It just happened.. And it's 'fewer foreigners', not 'LESS foreigners'. You're not level 6 are you
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Your predictions are of course super accurate which is why you've just sold your properties here and are actually writing this from the comfort of the sun lounger on the for' deck of your yacht in the Bahamas.
Pass the Pina Coladas please.
Pass the Pina Coladas please.
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No Land 3,
You asked how many mortgages we are talking about, I could only come up with this from Wikipedia ''During 2007, nearly 1.3 million U.S. housing properties were subject to foreclosure activity, up 79% from 2006.''
The forcast rate for 2008 is higher still. I believe this stat indicates a minimum of 3 missed mortgage payments.
White Knight, you asked if I thought Obama was a better bet than McCain.
Abso-frickin-lutely !! It concerns and scaries me quite frankly, that you think otherwise. When we have a significant proportion of individuals who vote for the likes of Bush (twice) and McCain (hopefully not once), then disasters like the Iraq War and this financial crisis........... are to be expected.
I am open to debate about most issues, but not the disastrous Presidency of GWB.
If the bubble bursts in Dubai, it will be due in part to the financial crisis or at least accelerated by it. (there are other factors). The financial crisis is due to bad government. Bad government is due to people electing bad leaders. People electing bad leaders is due to ignorance and a lack of education, which is in large part due to bad leaders. This cycle is next to impossible to break! It has reached the point in the USA when either they completely altar the way government operates, or their fall from economic, political and military dominance will accelerate. Based on my observations, I think the latter is more likely, but I am ever hopeful that it won't. In any other democratic country on the planet, that government would be kicked out on their arses, to send a very clear signal. Stop the insanity.
My personal defence against these likely events, was to get out of the markets,with respect to any investments tied to the US, limit my exposure to the USD and sit back. It the carnage continues, then I have made a wise choice. If things miraculously change for the better, then I have lost a couple of years of investing time. Even now though, I am much further ahead than if I had done nothing.
I am hoping that miracles do happen. I do not wish ill-will upon anyone, even those who started this cycle. But when I see a $700Billion bill being passed, that has attached to it, 100's of millions of dollars being thrown away to Puerto Rican rum exporters, children's wooden arrow suppliers etc, I have my doubts.
You asked how many mortgages we are talking about, I could only come up with this from Wikipedia ''During 2007, nearly 1.3 million U.S. housing properties were subject to foreclosure activity, up 79% from 2006.''
The forcast rate for 2008 is higher still. I believe this stat indicates a minimum of 3 missed mortgage payments.
White Knight, you asked if I thought Obama was a better bet than McCain.
Abso-frickin-lutely !! It concerns and scaries me quite frankly, that you think otherwise. When we have a significant proportion of individuals who vote for the likes of Bush (twice) and McCain (hopefully not once), then disasters like the Iraq War and this financial crisis........... are to be expected.
I am open to debate about most issues, but not the disastrous Presidency of GWB.
If the bubble bursts in Dubai, it will be due in part to the financial crisis or at least accelerated by it. (there are other factors). The financial crisis is due to bad government. Bad government is due to people electing bad leaders. People electing bad leaders is due to ignorance and a lack of education, which is in large part due to bad leaders. This cycle is next to impossible to break! It has reached the point in the USA when either they completely altar the way government operates, or their fall from economic, political and military dominance will accelerate. Based on my observations, I think the latter is more likely, but I am ever hopeful that it won't. In any other democratic country on the planet, that government would be kicked out on their arses, to send a very clear signal. Stop the insanity.
My personal defence against these likely events, was to get out of the markets,with respect to any investments tied to the US, limit my exposure to the USD and sit back. It the carnage continues, then I have made a wise choice. If things miraculously change for the better, then I have lost a couple of years of investing time. Even now though, I am much further ahead than if I had done nothing.
I am hoping that miracles do happen. I do not wish ill-will upon anyone, even those who started this cycle. But when I see a $700Billion bill being passed, that has attached to it, 100's of millions of dollars being thrown away to Puerto Rican rum exporters, children's wooden arrow suppliers etc, I have my doubts.