Dubai Bubble Bursts

[georgihh]

Dubai Bubble Bursts - It’s official, but how far will it fall?
After months of press releases and government promises that there will be no such thing as a bubble in Dubai, the big boys of Dubai are finally saying, “Beam me up Scotty, I think I’m in trouble.”

Dubai Bubble Bursts - It’s official, but how far will it fall?

 

[TommyC]

Dubai Bubble Bursts - It’s official, but how far will it fall?
After months of press releases and government promises that there will be no such thing as a bubble in Dubai, the big boys of Dubai are finally saying, “Beam me up Scotty, I think I’m in trouble.”

Dubai Bubble Bursts - It’s official, but how far will it fall?

Thanks for the link, very interesting reading! Developers are running, who will stop them?

 

[georgihh]

Thanks for the link, very interesting reading! Developers are running, who will stop them?

What worries me most is that the stock exchange is sinking every day.
People know something and I don’t know what this is.
We know about the bubble, but something else is on the way

 

[Wannaberich]

I'm amazed how shortsighted some people are.
Yes Dubai prices will take a big drop,probably,like the rest of the world.
However,when things recover,there will be another surge in prices which will shoot back up.
In the meantime property owners can enjoy earning from very high rents.
No panic.

 

[georgihh]

I'm amazed how shortsighted some people are.
Yes Dubai prices will take a big drop,probably,like the rest of the world.
However,when things recover,there will be another surge in prices which will shoot back up.
In the meantime property owners can enjoy earning from very high rents.
No panic.

Most of the people in this Forum are in trouble and they have lost a descent amount of money.
If you are not in trouble and renting some places enjoy it as it lasts and try to understand that people have lost money big time.

 

[revolutionary]

Most of the people in this Forum are in trouble and they have lost a descent amount of money.
If you are not in trouble and renting some places enjoy it as it lasts and try to understand that people have lost money big time.

Everyone has been talking about a correction and so the only surprise was that it happened so quickly. I am not at all surprised at how quickly it happened since so many were aware and the more experienced had probably prepared their strategy of moving quickly to get out and dropping your prices earlier than others is one good tactic.

The people who have been caught out are probably those that just saw positives and at the time of buying had not considered what would happen if prices went down as well as up.

I bought for good reasons - to be an end-user. The price made sense even if the market went down as I had worked on the amount of taxes I would save, the alternative costs of accommodation, the value of the certainty and permanence of ownership to myself personally.

Immediately after buying an off-plan apartment I was also interested in getting an office. However the ideal location for my business would have been in the Maritime City. When I looked at the prices being quoted there I quickly realised that they were beyond the level that anyone trying to make a profit in yacht fit-out could possibly sensibly justify.

I welcome this correction as it should bring prices to a sensible level that end-users can make sensible judgements on rather than justifying an excessive investment on the grounds that ' the only way is up' which is clearly now not the case.

I have little sympathy for those speculators struggling now. A lot more sympathy for those end-user buyers who finally decided to dive in at the exorbitant prices simply because the rents are so crippling.

 

[AbraCadabra]

Everyone has been talking about a correction and so the only surprise was that it happened so quickly. I am not at all surprised at how quickly it happened since so many were aware and the more experienced had probably prepared their strategy of moving quickly to get out and dropping your prices earlier than others is one good tactic.

The people who have been caught out are probably those that just saw positives and at the time of buying had not considered what would happen if prices went down as well as up.

I bought for good reasons - to be an end-user. The price made sense even if the market went down as I had worked on the amount of taxes I would save, the alternative costs of accommodation, the value of the certainty and permanence of ownership to myself personally.

Immediately after buying an off-plan apartment I was also interested in getting an office. However the ideal location for my business would have been in the Maritime City. When I looked at the prices being quoted there I quickly realised that they were beyond the level that anyone trying to make a profit in yacht fit-out could possibly sensibly justify.

I welcome this correction as it should bring prices to a sensible level that end-users can make sensible judgements on rather than justifying an excessive investment on the grounds that ' the only way is up' which is clearly now not the case.

I have little sympathy for those speculators struggling now. A lot more sympathy for those end-user buyers who finally decided to dive in at the exorbitant prices simply because the rents are so crippling.

Second that sentiment. A lot of the people asking for government help now are the same ones who were crowing about making money hand over fist over the past few years. Property flipping comes with inherent risks and if the "flippers" lose out now so be it.

 

[TommyC]

Second that sentiment. A lot of the people asking for government help now are the same ones who were crowing about making money hand over fist over the past few years. Property flipping comes with inherent risks and if the "flippers" lose out now so be it.

So what if end-users that can't get mortgage (like me) is stuck and the developer is only having the simple objective of cancelling investors? What do you suggest should be done, you call it "flippers". If the developers themselves had sound calculations in their projects which is NOT speculative at all from the beginning, then it would be a bit more clear what's going on.....but unfortunately this is not the case. Developers have been promoting (and depending on quick investments/transfer fees/profits) this as well as the government, so I find it a rather easy way out to just say "flippers" and that's it.

For the record I've been struggling to get a mortgage for the last couple of months after being promised 90% on sign up, at the time though, they didn't have an agreement with the bank and when they got one, LTV was already down to 75% and stockmarkets even lower (the assets I had). Now the mortgage lenders have stopped all lending to my developer "awaiting engineering approval" (but you never know what that means, are they going bankrupt?)

 

[revolutionary]

So what if end-users that can't get mortgage (like me) is stuck and the developer is only having the simple objective of cancelling investors? What do you suggest should be done, you call it "flippers". If the developers themselves had sound calculations in their projects which is NOT speculative at all from the beginning, then it would be a bit more clear what's going on.....but unfortunately this is not the case. Developers have been promoting (and depending on quick investments/transfer fees/profits) this as well as the government, so I find it a rather easy way out to just say "flippers" and that's it.

For the record I've been struggling to get a mortgage for the last couple of months after being promised 90% on sign up, at the time though, they didn't have an agreement with the bank and when they got one, LTV was already down to 75% and stockmarkets even lower (the assets I had). Now the mortgage lenders have stopped all lending to my developer "awaiting engineering approval" (but you never know what that means, are they going bankrupt?)

I hope you got the 90% mortgage offer in writing? If so I think sticking to that as a mantra when the developer comes asking for more money and quoting breach of contract, you just fire that one back as the developer being in breach and they will get their money as soon as they organise that mortgage they promised.

I'm not at all happy about the way the banks are behaving right now - looks awfully like saving their own sorry asses and bonuses rather being good responsible corporate bodies. That is why I have just invested heavily in them!! The banks will be turning this problem to their advantage and soon be making abnormal profits out of everyone elses suffering.

 

[AbraCadabra]

So what if end-users that can't get mortgage (like me) is stuck and the developer is only having the simple objective of cancelling investors? What do you suggest should be done, you call it "flippers". If the developers themselves had sound calculations in their projects which is NOT speculative at all from the beginning, then it would be a bit more clear what's going on.....but unfortunately this is not the case. Developers have been promoting (and depending on quick investments/transfer fees/profits) this as well as the government, so I find it a rather easy way out to just say "flippers" and that's it.

For the record I've been struggling to get a mortgage for the last couple of months after being promised 90% on sign up, at the time though, they didn't have an agreement with the bank and when they got one, LTV was already down to 75% and stockmarkets even lower (the assets I had). Now the mortgage lenders have stopped all lending to my developer "awaiting engineering approval" (but you never know what that means, are they going bankrupt?)

When I agreed with revolutionary, that included his expression of sympathy for those in end-user buyers who were just caught in the crises. I really do sympathize and trust me even if you do have a mortgage it's no fun seeing the value of your property depreciate so drastically so quickly (my situation).

My disgust is purely reserved for the speculators who have been buying/selling without a thought about financing and with no intention of holding on to the property beyond the first payment. They raked it in when the going was good and now that they have been caught in the crash there are all sorts of demands for govenment intervention etc. Hard to sympathize with that lot.

 

[TommyC]

I hope you got the 90% mortgage offer in writing? If so I think sticking to that as a mantra when the developer comes asking for more money and quoting breach of contract, you just fire that one back as the developer being in breach and they will get their money as soon as they organise that mortgage they promised.

I'm not at all happy about the way the banks are behaving right now - looks awfully like saving their own sorry asses and bonuses rather being good responsible corporate bodies. That is why I have just invested heavily in them!! The banks will be turning this problem to their advantage and soon be making abnormal profits out of everyone elses suffering.

Does anyone ever get anything in writing except demands for more cash? Just today I could see the big billboards along SZ that said "90% financing from Amlak guaranteed". That's the way it is, and probably what they say to the unsuspecting buyers until they hand in their applications just to know that: "Sorry, we don't do any financing whatsoever" and the developers reply: "Oh, you can't pay, thanks for the money! Bye bye now!". Another twist to this would be that developers should take the hit now, and be more selective of who they are selling to, demanding pre-approvals and so on and do their own investigations to assure they don't have a buyer who will default since they will have to repay a certain amount, as the original (still valid!?) Law 13 stated. Maybe they should only be allowed to sell to big time investors to secure money instead of the small time investors which they currently can handle any way they like.

Never forget that the "flipping" and quick cash have been promoted by EVERYONE; buyers who made their easy money, developers that started developments left and right and cashed big time, banks happily letting everyone know how much money they were making (3-digit % increases in profit) by lending to everyone, and Dubai as a country who got the Buzz they were looking for. So please, don't use the word "flipper" as a mean to simply point out one of all the involved in this story as sole responsible for the current situation.

 

[memo123]

THEY HAVE BEEN SAYING THAT THE BEST IS YET TO COME AND NOW I TOTALLY BELIEVE IT
The last I was in Dubai for cityscape the Dubai stock index feel 41% in 3 days , yet I was stunned by the people who were buying under the table in Cityscape , thing did not add up.
I thought many are hitting margin calls, and being forced to get out .
but then it has been over two months only last week in 3 trading sessions Dubai stock exchange fell 21% then again I thought that people trying to create liquidity to meet mortgage payments. but then the Dow , ftsi, smi , NASDAQ, all are up since Friday huge recovery and still Dubai opens limit low!
people are attributing this to collapsing oil prices, but still that does not make sense ,,after all not one penny from the oil when it was at $147 went into my pocket so i wish it goes back to $7, so we don't have imported inflation anymore . So what is the reason behind this crash ?
and why the panic sell every morning ?
are we missing something ? I used to consider myself smart , when i went to city scape I refused to put one penny after seeing the collapse in the stock market , but i was already involved to my waist , now i believe i am drowning , if the developer really have no intention to build he will delay the project, push the investor to the edge so they would stop paying , and he gets to keep the 30 % of the total value of the building without putting one brick .
I think one bottle of Prozac +1 bottle of lithium are still not enough to stop my cells from jumping. And from seeing the interview with moh'd alabbar , he said every developer is alone and it is up to him whether to continue or not , at this rate . contractors will flee the city , thousands have been laid off their Jobs , rents will collapse , Dubai will get empty . SO as they are saying the best is yet to come

 

[memo123]

Wait until your tenants leave and you cant rent or sell

With the number of people loosing their Jobs on daily basis , you will be lucky if in 3 months you will have tenants for your apartments or houses. enjoy it while it lasts .
lucky you , you probably got in at the right time , but how about us that just got in at the wrong time ? who will refund us our life savings , and kid's college money ?
best regards

Most of the people in this Forum are in trouble and they have lost a descent amount of money.
If you are not in trouble and renting some places enjoy it as it lasts and try to understand that people have lost money big time.

 

[aviduser]

I am watching this from across the Gulf in Qatar. And it doesn't look pretty. The crash in Dubai has been so quick and burnt so many people that I doubt the market will ever recover.

Dubai was attracting people to the City with promises of high returns on their investments, property had become an asset class, there was absolutely no fundamentals behind the high prices except speculation. The high rents were riven by greed.

Another poster on this forum made the excellent point that there was no "low end" property being built or even offered to market. This meant there would never be a property ladder in the country.

A new arrival in Dubai could never hope to buy a cheap property and work their way up the property ladder as all but the top rungs had been removed. This means you have to be pretty tall or very wealthy to reach the top.

Dubai never attracted the numbers of people to justify the property boom, and the Emeraties were never going to buy to live in an apartment when their Government gives them a plot of land for free to build a villa.

Now the true scale of the deception is being seen in Dubai the decline and fall be be rapid, I don't sit and gloat about this. I brought and luckily sold here in Qatar, why did I sell ? because I realised that the steady stream of propaganda I had been fed by the papers and the banks simply did not add up to the reality on the ground here. I could not see how demand was ever going to meet supply. And that's in Qatar. I could see the same lack of fundamentals in Dubai.

The Government, the papers and the developers were all in collusion to convince everyone that Dubai was booming, and in a way it was, Tourists brought the story and visited in increasing numbers and bankers and investors moved in to take care of the liquidity in the market.

Then reality set in, the credit crunch has hastened the fall but reality would have set in sooner rather than later. Earlier this year hotels were already reporting low occupancy rates, The brochure stories of Dubai as a shopping and luxury paradise were being replaced by returning visitors with stories of horrendous traffic, no taxis, overpriced shops and hotels, few beaches and a City severely lacking any charm or character.

Next to cotton on were early adopters realising that Dubai was too hot and too far for a holiday home and not the best place to retire to.

And the crunch hit and mearly exasperated the decline.

It didn't have to be this way. The Government could have slowed hotel construction, they could have built infrastructure first not thought of it afterwards, they could have slowed or forbidden construction of more and more towers. They didn't and they more than anyone are to blame for this fiasco, for that is what it is a fiasco.

This many people cannot get their fingers burnt for it to recover, Spain as someone else mentioned now looks better and better every day.

If you are not already out, forget it. I am trying to think of another example where this has happened before, and I can't. Even Spain has a local population who eventually might want to move house.

Dubai will go down as a glorious failure

 

[manman]

Not the end of this world for people in Dubai

Everyone can see the market going down and people are losing jobs but this does not mean end of this world for people in Dubai and that Dubai will be wiped off from the map of this world and you wont find a single person on this Island.

There is lot of scare mongering and negativity in the market and that’s causing more problems than what it actually is

People will still live there and work

People who came to Dubai in last 5 years have only seen the Real Estate side of Dubai and that’s why they think this way

There are thousand and thousand of businesses established in Dubai and people working in Dubai for more than 25 years.

Its one of the top re-export zone for many countries like Iran, Israel, and many others. Services centre for Middle east and South Asia. Most of the bank head offices are in Dubai and will continue to stay. Its a hub for in-country smuggling and money laundering.

In addition to that lots of parks and tourism stuff will be ready in the coming years. Another airport will need staff , all these theme parks will need staff.

And I also heard there will be 200,000 people from China will come to Dubai for work every year.

I expect market going down 25 to 30% on average and rents coming down to still high normal levels of 6 - 7 but not that you wont find a single person in Dubai.

Many good things are coming to Dubai in future.

Also until there is un-stability in countries like Pakistan, Iran, Israel and other places Dubai still is important for businessmen and other people

I think 6 months and things will settle down. Some flippers will loose money and some will find ways out and things will start picking up again.

I think this is the right time to buy. Don’t wait that the market will come down and then u will buy because you never know where it stops rather buy and then wait --- as long as u are not a flipper and can wait for a year or two and u will succeed

 

[helen4you]

Great time to buy now!

Prices have gone down and remember it's not just in Dubai. Its WORLDWIDE!!

However, that is how it is. You make a decision, to buy or to rent, to invest or not to invest. We are all grown up right?

Now, the truth is, it is acutally a great time to buy! Prices are going down and there are some great deals on the market now.

If you have money and want to invest, this is probably a once in a lifetime opportunity to buy cheap.

The only way is down and then its up up up! It's a cycle of boom and bust. Same same everywhere friend.

If you want to invest, I have some fantastic deals on the market now. Water homes for 3m net. Signature villas on Palm Jebel Ali for 45% net.

Get in there, not everyone is in distress and needs to sell. These bargains are not all over the place - if you come across one - grab it whilst you can because some astute investor will - no doubt about it.

helenforyouatgmaildotcom

 

[Wannaberich]

I am watching this from across the Gulf in Qatar. And it doesn't look pretty. The crash in Dubai has been so quick and burnt so many people that I doubt the market will ever recover.

Dubai was attracting people to the City with promises of high returns on their investments, property had become an asset class, there was absolutely no fundamentals behind the high prices except speculation. The high rents were riven by greed.

Another poster on this forum made the excellent point that there was no "low end" property being built or even offered to market. This meant there would never be a property ladder in the country.

A new arrival in Dubai could never hope to buy a cheap property and work their way up the property ladder as all but the top rungs had been removed. This means you have to be pretty tall or very wealthy to reach the top.

Dubai never attracted the numbers of people to justify the property boom, and the Emeraties were never going to buy to live in an apartment when their Government gives them a plot of land for free to build a villa.

Now the true scale of the deception is being seen in Dubai the decline and fall be be rapid, I don't sit and gloat about this. I brought and luckily sold here in Qatar, why did I sell ? because I realised that the steady stream of propaganda I had been fed by the papers and the banks simply did not add up to the reality on the ground here. I could not see how demand was ever going to meet supply. And that's in Qatar. I could see the same lack of fundamentals in Dubai.

The Government, the papers and the developers were all in collusion to convince everyone that Dubai was booming, and in a way it was, Tourists brought the story and visited in increasing numbers and bankers and investors moved in to take care of the liquidity in the market.

Then reality set in, the credit crunch has hastened the fall but reality would have set in sooner rather than later. Earlier this year hotels were already reporting low occupancy rates, The brochure stories of Dubai as a shopping and luxury paradise were being replaced by returning visitors with stories of horrendous traffic, no taxis, overpriced shops and hotels, few beaches and a City severely lacking any charm or character.

Next to cotton on were early adopters realising that Dubai was too hot and too far for a holiday home and not the best place to retire to.

And the crunch hit and mearly exasperated the decline.

It didn't have to be this way. The Government could have slowed hotel construction, they could have built infrastructure first not thought of it afterwards, they could have slowed or forbidden construction of more and more towers. They didn't and they more than anyone are to blame for this fiasco, for that is what it is a fiasco.

This many people cannot get their fingers burnt for it to recover, Spain as someone else mentioned now looks better and better every day.

If you are not already out, forget it. I am trying to think of another example where this has happened before, and I can't. Even Spain has a local population who eventually might want to move house.

Dubai will go down as a glorious failure

What a load of crap.I always find the doom and gloom merchants like you have only bad things to say about Dubai and nothing good.Surely you have one thing thing to say about the place?
What crash?wheres the crash?prices down around 10% so far.Is that a crash?
On the other hand those who are pro Dubai like me recognise the good and the bad.Dubai has problems that need to be addresed.
No-one should ignore that.
As for having no 'low-end' properties.Look at Silicon Oasis,International City,Discovery Gardens for example.Still cheaper than most major cities.
Dont forget wages are tax free making these places more affordable.

Dubai is young and the developments new.So many businesses are coming to Dubai.Office occupancy is almost at a max.When Business Bay is complete this will house many more thousands of businesses and workers.All needing somewhere to live.
Tourists can enjoy the sun in the winter.The fantastic shopping malls will take those women away from their 3 days in New York and send them to Dubai.
Sports City and all the golf courses will attract their husbands while the wifes shop.
As more and more hotels get built prices will drop.Occupancy was low like u said but only in the hot summer months and at the start of the worlds recession.Get real.
Dubai is becoming a financial hub which will attract even more banks etc.The freezones aswell will attract many businessmen.
The 'horrendous traffic' will continue until the fantastic metro is up and running.
As an investment prices in Dubai will continue to rise due to the shortgage made worse by the slowdown on new launches.
People will afford to rent and buy like they afford to in most other expensive cities.
In the meantime you can save money through cheap cheap petrol prices and no central heating bills.You dont even have to wrap yourself up in that much clothing and expensive coats to keep warm.
Its all good so relax.

 

[monsi]

What a load of crap.I always find the doom and gloom merchants like you have only bad things to say about Dubai and nothing good.Surely you have one thing thing to say about the place?
What crash?wheres the crash?prices down around 10% so far.Is that a crash?
On the other hand those who are pro Dubai like me recognise the good and the bad.Dubai has problems that need to be addresed.
No-one should ignore that.
As for having no 'low-end' properties.Look at Silicon Oasis,International City,Discovery Gardens for example.Still cheaper than most major cities.
Dont forget wages are tax free making these places more affordable.

Dubai is young and the developments new.So many businesses are coming to Dubai.Office occupancy is almost at a max.When Business Bay is complete this will house many more thousands of businesses and workers.All needing somewhere to live.
Tourists can enjoy the sun in the winter.The fantastic shopping malls will take those women away from their 3 days in New York and send them to Dubai.
Sports City and all the golf courses will attract their husbands while the wifes shop.
As more and more hotels get built prices will drop.Occupancy was low like u said but only in the hot summer months and at the start of the worlds recession.Get real.
Dubai is becoming a financial hub which will attract even more banks etc.The freezones aswell will attract many businessmen.
The 'horrendous traffic' will continue until the fantastic metro is up and running.
As an investment prices in Dubai will continue to rise due to the shortgage made worse by the slowdown on new launches.
People will afford to rent and buy like they afford to in most other expensive cities.
In the meantime you can save money through cheap cheap petrol prices and no central heating bills.You dont even have to wrap yourself up in that much clothing and expensive coats to keep warm.
Its all good so relax.

Hear hear!

For goodness sake guys stop scare mongering - Dubai has a bright future and it is so much worse in other countries.

 

[georgihh]

Dubai is wonderful and very pleasant to live every body knows this.

But the topic is about the bubble.

I am asking about the bubble because every one of you wants to make money out of his property.


1 All of us know that the market will pick up again and prices will go up but when?

2 How far are we away from the bottom?

3 When will hit the bottom?

My prediction

1. 2012
2. 20%
3. mid next year

 

[Wannaberich]

Dubai is wonderful and very pleasant to live every body knows this.

But the topic is about the bubble.

I am asking about the bubble because every one of you wants to make money out of his property.


1 All of us know that the market will pick up again and prices will go up but when?

2 How far are we away from the bottom?

3 When will hit the bottom?

My prediction

1. 2012
2. 20%
3. mid next year

1.Late 2009/early 2010
2.15/20%
3.March 2009