Dubai property forecast asked
Every so often we see a few posts which offer a different angle and approach to the norm, this is one of those posts which brings together a mass of information, views and reviews. The original poster has asked forum members to forecast the price per square foot in 2010 for property in Dubai Sports City, Jumeirah Village and another 4 locations in and around the same area. The post has received some very interesting comments and views which show how opinions are so very different between different people – similar to an ‘is the glass half full or half empty’ scenario.
While there have been many comments and forecasts as to what the price of property will be in the areas mentioned, some have gone further and actually given a break down of their reasons and analysis. The basis of the cost structure in the market has also been covered in great detail with many highlighting the fact that developers are starting to factor in rises for construction costs and passing these on to buyers.
There is a very healthy mix of positive and negative views and predictions, and while the truth may be somewhere in between, they are very much food for thought. The thread has also highlighted what investors believe to be the better of the regions mentioned and why they feel this way, with others taking the contrary view and looking at specific markets which are due a ‘catch up’ period. It is advisable to read the majority of the posts to get a balanced opinion, but there is certainly enough information and comment to keep readers busy for some time.
Summary
If we all had a crystal ball wouldn’t life be so much easier?
As we touched on above this thread has provoked a large response from those in the forum with many more than willing to come forward with their predictions for property prices in 2010 and their reasons. Even though it is near impossible to predict what prices will be 1 year’s time let alone 2 years, there are some very sound and interesting comments.
However, perhaps the more striking characteristics of this thread is the changing views of those who may have posted upon creation back in April and have reposted some weeks or months later, and those who have joined the thread late. Opinions are changing as the worldwide and local economies change and this is being reflected in the not only the price predictions but comments for the future direction of the markets.
There seems to be a growing consensus that short to medium term there is good growth left in these markets but as the supply / demand ratio starts to level off prices may well start to slow. The region is a boom time at the moment with new ventures being announced on a regular basis and many investors heading for what some are seeing as safe havens at the moment.
In summary there is some very useful information, views and comments on this thread and it seems to have caught the imagination of the masses. While there is no consensus on prices for 2010 this is not unexpected as this is what makes a market.
you dont own property you only own the life style so live to your means then theres everything for everyone in life i no loads of rich poeple living false lives to impress but so sad possestions are only for the week and when the real life comes there existence will be no more make of it wat you will
It really is an impossible situation, how does one predict the market trends that will govern property value next year? The variables are nearly endless, as in fact the scope for interpretation of any results derived from this.
Perhaps it is better to consider investments over a longer term, the cycle of boom and bust is as inevitable as the tide, and to put a slightly different spin on things, what goes down must come up. Viewing as such, investing in property right now ensures a solid foundation for wealth generation in the future. Who knows, property prices may have sunk even further by 2010, but maybe by 2011 the global economic downturn may have receded into past memory, ensuring that while you may have been able to buy cheaper at one point, you will almost certainly be able to sell for a higher value than what you paid for the property in the first place. The trick is to buy at the lowest value, but who can possibly say when that might be? It could be now, it could be next February.
Bargaining power shifts from seller to buyer in Dubai
The bargaining power has shifted from the seller to the buyer in Dubai with the market witnessing downward pressure on prices and lease rates, says a new report.
"This shift becomes very beneficial to purchasers of commercial property when negotiating the price, payment terms and sales agreement, and is equally beneficial to tenants who can negotiate lease rates down, reduce fees, request better renewal terms and lower rent increases in their agreements. For the first time in many years, real estate in Dubai has become a 'buyer's market'," Better Homes said in its fourth quarter report on commercial real estate.
Speculators have vanished from the market and this has put emphasis on finding the right property, with the right amenities, in the right location, for the right price, the report said.
Likewise, popular commercial areas in Dubai are also starting to feel downward pressure with asking annual lease rates in Dubai Media City, for example, dropping as low as Dh240 per square foot, levels last seen in September 2006.
As nearly all speculators have left the real estate market, the investment focus will shift from "flipping" properties, to making more informed, long-term investments in yield products.
"This shift will expose poorly designed commercial space for what it is, and will benefit product that was developed with end users in mind," the report said.
As Dubai's market continues its maturation process, some very appealing yield based investments in commercial space may present themselves while prices and lease rates continue to fall.
Industrial space
Demand in industrial space has remained relatively high for quality products that are finished or about to be completed. Labour camps have only been slightly affected by the current economic conditions, but generally a supply shortage still exists, especially for quality products.
With the Dubai Police Human Rights General Department planning to intensify inspections of labour accommodations this year, quality accommodation will be in higher demand.
According to Better Homes, Jafza warehouse space is renting at between Dh45 and Dh65 per square foot and Dubai Investment Park between Dh35 and Dh50 per square foot. Besides, average rent per room in Dubai for new or nearly new labour camp accommodations is between Dh5,000 and Dh5,500 with there being outliers for very poor quality and very high quality.
New labour accommodation is about to hit the market in the first quarter as many developers are soon taking delivery of high quality accommodation. Pressure is also causing many businesses currently located in Al Quoz to lower occupancy costs and relocate to new high quality warehouse facilities in Dubai Investment Park and Dubai Industrial City with plenty of parking, power and accessibility at significantly lower costs.
Retail space
The supply of retail space in Dubai is expected to increase by about 50 per cent to more than three million square metres of gross leasable area (GLA) within the next two years, but this may not be sustainable, especially in today's economic climate, according to the report.
The potential oversupply of shopping mall retail space, coupled with the current economic climate, will place significant downward pressure on the leasing rates at malls. It is also probable that some of the older malls that do not achieve the footfall of the newer ones will have to refocus their target market.
Convenience retail will be prevalent in new developments to cater to the needs of the end users who will ultimately be purchasing in these developments.
Following are a few points of interest with regard to retail in Dubai.
The retail sector in Dubai has seen exponential growth of total gross leasable area over the past few years. Dubai has focused on "destination shopping malls" to create demand generators for tourists and has successfully done so.
However, with the ailing financial system and poor global economy, these destination shopping malls will be hard pressed to continue to see the revenues achieved in the past few years, Better Homes said.
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When will the market recovers seems to be the question everyones lips.To be honest its impossible to say. We can only hope it is sooner rather than later. When unemployment starts to drop and the banks start lending again to people with smaller deposits thats when things will start to be more positive.