Is the Dubai property market falling apart or finding a level?

[revolutionary]

I'm not sure the Dubai bashing in the British media was about wishing Dubai to fail rather the opposite. A lot of people want Dubai to succeed but the lack of respect for contracts, no practical recourse to law, some poor quality finishing and general late delivery of properties are not going to help build a good solid reputation which will be necessary for attracting future waves of investors. Word of mouth of investors who have been burned will probably be more powerful than the occasional press report and there are a lot of people who have been left desperately disappointed, to a large extent because they believed in the miracle.

I can understand why RERA has not been able to really tackle the issues since they opened up just as the crisis hit and almost immediately went into survival mode. However there were major developers who took advantage of this and played the 'don't enforce the law or we go under and leave a mess' card despite having huge cash reserves.

 

[Darius]

I see most of you are professionals working in real estate. And all you operate hundreds of numbers proving your beliefs. But they are only beliefs. I'm admiring Dubai for many years, but came there for first time only a year ago. I hope I have distance view to all that happens.

Dubai was an idea, miracle or let's say fairy-tale of childhood. That dream was based on few stones. Let's say: really free and empty market, very good conditions for business with extremely low prices of everything, strong back of oil money. Are those conditions today? I think no one. All investors or common people feel themselves woken. So telling same story again is bad idea. People will look for new tale, for new miracle somewhere else.

Of course Dubai is build and better or worse it is functioning. But coming years looks quite hard. I see only one chance if government or somebody in very high level will find new motto or dream. But they need to make hard solutions for themselves. Usually it is changing stodgy people to new more clever and more potential. Is it possible? I'm not sure...

Best regards to all
Darius

 

[Darius]

I'm replying to my own post.

Maybe we can exchange ideas about future of Dubai? What can or must happen to start new wave of interest?

I'm architect working in much smaller but identically falling market. And we found that now we must to invent new models of life. Nobody wants to build and buy same thing like 2 years ago. And only after inventing inspiring things we can work on place and form of those things. Maybe direction is same in both places?

all the best
Darius

 

[financier888]

I'm replying to my own post.

Maybe we can exchange ideas about future of Dubai? What can or must happen to start new wave of interest?

I'm architect working in much smaller but identically falling market. And we found that now we must to invent new models of life. Nobody wants to build and buy same thing like 2 years ago. And only after inventing inspiring things we can work on place and form of those things. Maybe direction is same in both places?

all the best
Darius

H Darius , not sure what other market you are working in but before starting to consider new approaches and models for building - we need to address the facts that there is an oversupply in the market and do to the fact that many of the existing buyers / investors do not have Dubai as their primary residence - this begs the question - 'who will the new buyers be?' - It's incumbent on the rulers to re-engineer Dubai and change the underlying business model - and this needs to start with the visas

 

[Wannaberich]

'who will the new buyers be?' - It's incumbent on the rulers to re-engineer Dubai and change the underlying business model - and this needs to start with the visas

Totally agree.

 

[Darius]

Hi financier888,

I'm working in Lithuania. Here Real Estate market falls about 80-90%. After years of foreign money flow people go to opposite extremeness. So we also have oversupply. Quantities are much less but proportions almost same. So when we work with developers we try to find something absolutely different from seen before. It's not about architecture. It is about new business idea, new purpose, new customers. Sometimes we find solutions, sometimes not. I think it is very same to Dubai, that's why I found this forum.

If you ask about one building or complex, I think owner must to change something in structure - clients, purpose, something else. Idea must be enough fresh to escape from mass of depressed developers. If we speak about all Dubai, authorities must to do same - to find new sources of grow. After finding good idea, they will see what things must be done following. Maybe visas maybe not. For example if they will decide to focus on Arabian customers

 

[financier888]

Hi financier888,

I'm working in Lithuania. Here Real Estate market falls about 80-90%. After years of foreign money flow people go to opposite extremeness. So we also have oversupply. Quantities are much less but proportions almost same. So when we work with developers we try to find something absolutely different from seen before. It's not about architecture. It is about new business idea, new purpose, new customers. Sometimes we find solutions, sometimes not. I think it is very same to Dubai, that's why I found this forum.

If you ask about one building or complex, I think owner must to change something in structure - clients, purpose, something else. Idea must be enough fresh to escape from mass of depressed developers. If we speak about all Dubai, authorities must to do same - to find new sources of grow. After finding good idea, they will see what things must be done following. Maybe visas maybe not. For example if they will decide to focus on Arabian customers

Many people were attracted to Dubai for the business opportunities. During the peak it was some like mining towns that popped-up during the gold rush and became ghost towns after the mines were spent.

After the global collapse whereupon many people and institutions heavily invested in the stock / equity markets lost more than 50% - the demand for real estate primarily fueled by speculation died virtually overnight. Having worked in Dubai on the development side, the VISA issue is a critical area as many purchasers that constituted your end-users found the visa very attractive.

The largest market in Dubai came from: India, Pakistan, Iran, Russia and the UK - (largely Indian & Pakistani UK citizens.) The high cost of living in Dubai, which includes: rents, food staples, schools and transport remain a challenge, albeit rents have come down.

Trying to find buyers investors in the GCC is surely an option to consider and no doubt some of them will take advantage of 'fire sales' but when a market goes into a 'free-fall' it takes time - most often years before the confidence comes back and if the overall consensus is - 'it hasn't reached bottom yet' - investors sit on the sidelines. Also - considering most of the investors are outside of the Dubai - their local economies come into play.

The other big attraction to buyers / investors was the rental income and now, one has to re-examine this quite carefully as rents have dropped and there is a huge inventory on the market. I suspect, that going into 3Q 2010 - we'll see prices soften further.

Last but not least, much investor sentiment has 'soured' due to the enumerable amount of investors that have gotten burnt by errant developers and question the Rule of Law - as laws were indeed put in place to protect them but are hardly enforced leaving little recourse, This is no small matter.

So, in my opinion, based on the dynamics of the Dubai market, there are many challenges indeed - unique to this market. Dubai is a great city, with many benefits but it need a serious overhaul and I'm not referring to it's infrastructure - which is superb - the overall engineering of the underlying business model for sustained growth, a shift in the govt mindset - (among the rank & file) and a more attractive business - 'user friendly' model to encourage businesses to relocate there is imperative.

Alas, this takes time and I am sure the best minds are working on it
thanks and good luck

 

[Darius]

Alas, this takes time and I am sure the best minds are working on it

I agree to all facts but don't agree to belief. Yes it is grate city, but just waiting for recovery can be blasting. 10 years is enough to rise new star. Let's say Qatar, Mumbai, Karachi. Or let's be more crazy: Dakar, Maldives, Baku, Kabul. As down place is as big potential it has...

Best regards
Darius

 

[samsaf]

10 years is enough to rise new

A rising star has already started... Abu Dhabi!

 

[stumbled]

OK ....I am back after another session of hibernation. You were warned then and you are still warned, DUBAI IS FINISHED!!! EVERYONE AGREE??

Dubai Asks For Debt 'Standstill' For Its Conglomerate Dubai World | Business | Sky News

 

[Brendan R]

well, to follow on the subject of this thread, it looks like the Dubai property market will be finding a new level on the back of today's news.

From an emerging market to what people wanted to believe a developped market back to an emerging market. Good luck:toilet:

 

[dalvir bains]

GAME OVER DUBAI!! :ciao:


£40bn wiped from the value of British firms as Dubai company warns it can’t pay its debts | The Sun |Features

 

[Zero Avenue]

Palaces Built on Sand

Richard Hunter, head of UK equities, Hargreaves Lansdown, 30/11/2009 14:52

The initial fallout from the announcement from Dubai that state-owned Dubai World wanted a debt "repayment standstill" of six months was a stark reminder that last year's global events have not fully washed through.
Investors were left high and dry by the news, which was made without revealing any core information and was also ahead of the region's Eid al-Adha holiday, with markets shut since close of play on Wednesday, and the US Thanksgiving holiday, where the market was closed on Thursday.
This meant markets initially couldn't react to the news. The UK market took a 3% hit on Thursday (although it recovered some poise on Friday),while the US dropped 1.5% as soon as it opened on Friday. Meanwhile markets in the United Arab Emirates tumbled 6 to 7% on Monday.
European banks were the hardest hit, being those most exposed to the region, on fears that further capital writedowns would inevitably follow.
Open an online trading account
Rich states but risky loans
The real powerhouse and capital of the UAE is Abu Dhabi. There is little doubt that Abu Dhabi has the resources to repay debts on behalf of its neighbour.
The question is whether it is willing to do so, having seen the reckless expansion the region has undergone over recent years now coming home to roost. The question now becomes political (and to some extent, given the region's strong religious society, moral) as to whether Dubai should be seen to reap what it has sown.
Nonetheless, it did make some soothing noises in order to restore some order to what was becoming an embarrassing situation for the region, with the central bank setting up a liquidity facility.
The official line was reportedly that it would "look at Dubai's commitments and approach them on a case-by-case basis". However it added that this "does not mean that Abu Dhabi will underwrite all of their debts".
How big is the problem?
The exposure of international banks to Dubai World is estimated to be over £7 billion. This is a lot of money but pales when compared with some of the numbers the markets had to digest during the financial crisis.
As can be seen by the more recent reaction of the markets to the news, it is increasingly hoped that the losses are containable, particularly with regard to any wider implications for the global economy.
Bigger questions
Even so, it is another reminder of the fact that markets hate uncertainty. "It's not what you know, it's what you don't know," has long been the attitude of investors.
Bad news can be factored in to prices and therefore dealt with, whereas surprises such as the Dubai announcement are unwelcome at the best of times.
The manner in which the news was broken was certainly not ideal and left markets rattled and unhappy that they had little opportunity fully to analyse the implications.
Taking a breather
There has also been an increasing view that after the 50% plus rise in the UK market since March, traders are looking for an excuse to take a pause, which this could have provided.
By the same token, it provided a timely reminder that investment jitters remain, potentially for the rest of the year, as investors have now locked in the profits made during 2009, with little intention of opening new positions before the New Year.
It is also another example of the very real market implications of geopolitical tensions, which is why the situation in Iran may well move nearer centre stage over the next few months.
Lastly, it is a reminder for those who have kept faith in developed economies that - despite the recent difficulties - you are less likely to be surprised if you invest in what you know.

 

[Zero Avenue]

A Round of Applause

Well said, I agree with you on many counts - including how hospitable the Emiratis are - however I do feel that the "government" of Dubai relied too much on the West in its financial and economic decisions, in regards to its mass building projects.

As a young educated blackman I have grown up with racism and despise the use of ethnic identity when referring to an individual or a collective group of people. To quote someone below " the arabs believe they are better than anyone". I despise the attrocities that have been committed by some people in Dubai and some of those people have been Emiratis. What you need to remember is the very people heading this frontier are all expats, British, American, German, Australian, South African, Lebanese, Syrian, Japanese, Korean, Chinese etc.. and this is just to mention a few. Most of this people created the problems Dubai is facing today, and some stood by and watched in silence and did nothing until it was too late. The Majority of people in Dubai speak English, have you ever wondered why that is?

Yes I agree that having towers unoccupied does not make business sense, however Dubai is working very hard to diversify it's economic drivers away from Oil dependancy and the real estate market. The tourism sector is very solid in Dubai with the hotel across the way from my lovely apartment running at a 100% occupancy rate 365 days a year. Booking well in advance is your only hope of securing a room and when a cancellation is made there is a waiting list for any cancellations longer than any bad list you could put on paper as to what is wrong with Dubai. My answer to you is this, the speculators who caused this mess have all but disappeared and hopefully not to be seen again. What we have been left with is a good base to rebuild a stronger real estate market with professional qualified individuals heading up the push for better times again. Call me optimistic, dilusional or stupid you're entitled to your opinion. However I am doing a lot more than most out there! I am not getting involved in this witch hunter of Dubai and taking a different stance in support of the efforts being made by this hospitable and simple people.

I have established long standing relations with several Emiratis who have gone out of their way to make me feel welcome. They share the concerns as we all do regarding the current situation of this beautiful city. They also have something most people do not see. They are proud, proud of the achievements of Dubai in such a short space of time. Proud of the government for implementing laws that have made Dubai a multi cultural community just as diverse as London but a hundred times safer. Do I feel safe in Dubai? Yes I do and I can safely say the thought of being mugged while walking down the street late at night has never ever crossed my mind in the past 4 years. I have witnessed individuals come to Dubai penniless and become millionaires within months. I have also winessed some of them lose it all, due to greed and their financial blue print not being altered to handle such money.

So if you're looking lay blame on anyone do not blame Dubai.. be more specific blame GREED! Blame the people that came to Dubai with only one aim, to get rich. To take advantage of the opportunities available to everyone. These people conducted business in such a manner that is immoral and unethical as they were here for a short space of time! Due to this fact they were not interested in establishing long standing business relationships. Blame some of the Emiratis who got involved in this practice or stood by and did nothing to stop it. I can only speak of my own experience, it doesn't make it wrong and it doesn't make it right! It is my experience.

 

[Brendan R]

Abu Dhabi are suckers when it comes to making sound investment decisions, I wouldn't be surprised if they bailed out Dubai in one way or another.

Before they do, they have another obligation of $7.5bn to satisfy, following a savvy investment they made 2 years ago, check below :laugh:

* BUSINESS
* DECEMBER 3, 2009, 12:28 P.M. ET

Abu Dhabi's Citigroup Investment Turns Costly

By MARSHALL ECKBLAD

NEW YORK—Abu Dhabi Investment Authority is set to pay its first bill of misery to Citigroup Inc.

Because of an investment deal struck two years ago, early in the financial crisis, the United Arab Emirates' sovereign fund will soon start purchasing $7.5 billion in Citigroup shares at $31.83 apiece, even though the New York bank's stock closed at $4.10.

The value of Abu Dhabi's investment will ultimately be shaped by the price of Citigroup's stock come March. But it seems very likely that "one of the world's...most sophisticated equity investors," as Citi crowed of Abu Dhabi when it inked the complex deal, will soon overpay for the stock of a bank that has fallen into the arms of the U.S. government.

The news is the latest setback for the United Arab Emirates. Last week, Dubai World, a government-owned company, sought a standstill on debt payments, a move that shocked world markets.

The terms of the Citigroup deal looked lucrative for Abu Dhabi back in November 2007, when it raced to Citi's rescue as the New York bank crumbled under soaring investment losses tied to the depressed U.S. mortgage and housing markets. Abu Dhabi wrote a check for $7.5 billion in exchange for an 11% annual dividend.

The bad news for Abu Dhabi is it only demanded such dividend payments for a little more than two years—until March 15, 2010. Afterwards, Abu Dhabi would in essence exchange its original investment in four installments for Citigroup common stock, which was then worth nearly $31.

To pull off that exchange, Citigroup on Wednesday announced a coming public bond offer that will pay a much smaller yield of slightly more than 6%. The proceeds will go to Abu Dhabi, which is required to use the cash in March for its expensive purchase of Citigroup stock.

Abu Dhabi, by agreeing ahead of time to exchange cash for stock at a price of $31.83, figured to make money under the assumption that Citigroup's shares would rise modestly over more than 27 months. "This investment reflects our confidence in Citi's potential to build shareholder value," Sheikh Ahmed Bin Zayed Al Nahyan, Abu Dhabi's managing director, said at the time.

But now it is Citi, not Abu Dhabi, that is seeing prospects for a winning deal. If Citi's stock price holds steady through March, the beleaguered New York bank will basically be able to raise new capital by selling stock at more than seven times its market price. The deal will also boost Citi's Tier 1 common equity and tangible common equity by $1.875 billion, according to Wednesday's statement.

As harsh as the deal's terms now seem for Abu Dhabi, they perhaps could have been worse. In early 2008, after Citigroup raised $12.5 billion, it reduced Abu Dhabi's conversion price to $31.83.

If the current deal holds, as expected, it will mark a rare win for Citigroup, which has been mauled by the financial crisis. The bank turned to the Treasury twice for infusions of capital, which ultimately left the U.S. government owning 34% of the bank. For a time in March, its stock traded below $1 a share.

http://online.wsj.com/article/SB100...MIDDLTopStories

 

[Essex Jay]

I Agree

As a young educated blackman I have grown up with racism and despise the use of ethnic identity when referring to an individual or a collective group of people. To quote someone below " the arabs believe they are better than anyone". I despise the attrocities that have been committed by some people in Dubai and some of those people have been Emiratis. What you need to remember is the very people heading this frontier are all expats, British, American, German, Australian, South African, Lebanese, Syrian, Japanese, Korean, Chinese etc.. and this is just to mention a few. Most of this people created the problems Dubai is facing today, and some stood by and watched in silence and did nothing until it was too late. The Majority of people in Dubai speak English, have you ever wondered why that is?

Yes I agree that having towers unoccupied does not make business sense, however Dubai is working very hard to diversify it's economic drivers away from Oil dependancy and the real estate market. The tourism sector is very solid in Dubai with the hotel across the way from my lovely apartment running at a 100% occupancy rate 365 days a year. Booking well in advance is your only hope of securing a room and when a cancellation is made there is a waiting list for any cancellations longer than any bad list you could put on paper as to what is wrong with Dubai. My answer to you is this, the speculators who caused this mess have all but disappeared and hopefully not to be seen again. What we have been left with is a good base to rebuild a stronger real estate market with professional qualified individuals heading up the push for better times again. Call me optimistic, dilusional or stupid you're entitled to your opinion. However I am doing a lot more than most out there! I am not getting involved in this witch hunter of Dubai and taking a different stance in support of the efforts being made by this hospitable and simple people.

I have established long standing relations with several Emiratis who have gone out of their way to make me feel welcome. They share the concerns as we all do regarding the current situation of this beautiful city. They also have something most people do not see. They are proud, proud of the achievements of Dubai in such a short space of time. Proud of the government for implementing laws that have made Dubai a multi cultural community just as diverse as London but a hundred times safer. Do I feel safe in Dubai? Yes I do and I can safely say the thought of being mugged while walking down the street late at night has never ever crossed my mind in the past 4 years. I have witnessed individuals come to Dubai penniless and become millionaires within months. I have also winessed some of them lose it all, due to greed and their financial blue print not being altered to handle such money.

So if you're looking lay blame on anyone do not blame Dubai.. be more specific blame GREED! Blame the people that came to Dubai with only one aim, to get rich. To take advantage of the opportunities available to everyone. These people conducted business in such a manner that is immoral and unethical as they were here for a short space of time! Due to this fact they were not interested in establishing long standing business relationships. Blame some of the Emiratis who got involved in this practice or stood by and did nothing to stop it. I can only speak of my own experience, it doesn't make it wrong and it doesn't make it right! It is my experience.

I agree. I went to Dubai in Feb 2008 to complete on a property I sold.
This was the first time I had been, and was quite surprised at how nice Dubai was and how safe I felt.

On this basis I invested in 2 other projects 1. Eagle Heights and 2. The Cube.

I was looking for some advice from yourself if possible or from anyone else that maybe able to help.

The Eagle heights project hasn't got off the ground and I can't get in contact with the developers. I've emailed RERa numerous times with no responce.
The money is supposed to be in an Escrow account - I've again emailed the Dubai Islamic Bank and again, I haven't had any responce.

I paid a lawyer to do an investigation on my behalf to see the best way forward.
All they could advise was to go through the courts at an estimated expence of 230,000 dhr - equivalent to £39,000. With no guarantee of getting any money back.

I thought an Escrow account was there to protect the buyer if circumstances like this occur. But it appears that unless you have got tens of thousands of pounds to gamble on getting your money back. There's nothing you can do about it.

I would be very grateful if anyone knows of anything that I can do to try and recoup some of my money back.

 

[Brendan R]

I agree. I went to Dubai in Feb 2008 to complete on a property I sold.
This was the first time I had been, and was quite surprised at how nice Dubai was and how safe I felt.

On this basis I invested in 2 other projects 1. Eagle Heights and 2. The Cube.

I was looking for some advice from yourself if possible or from anyone else that maybe able to help.

The Eagle heights project hasn't got off the ground and I can't get in contact with the developers. I've emailed RERa numerous times with no responce.
The money is supposed to be in an Escrow account - I've again emailed the Dubai Islamic Bank and again, I haven't had any responce.

I paid a lawyer to do an investigation on my behalf to see the best way forward.
All they could advise was to go through the courts at an estimated expence of 230,000 dhr - equivalent to £39,000. With no guarantee of getting any money back.

I thought an Escrow account was there to protect the buyer if circumstances like this occur. But it appears that unless you have got tens of thousands of pounds to gamble on getting your money back. There's nothing you can do about it.

I would be very grateful if anyone knows of anything that I can do to try and recoup some of my money back.

unfortunately it seems that Dubai has for only intent to suck in as much money as it can from the exterior, be it from real estate investors and now from lawyers.
By having lawyers ask for ridiculous sums with no guarantee of success, they make sure that they control the law.
Dubai is a con. People either stay trapped or they will end up naked fighting the dictatorship. :heeeelllllooooo:

 

[paul66]

Some good news for Dubai and the UAE

Some good news for Dubai and the UAE

Some of the travel agents I know personally in the UK have seen a huge increase in holiday and flight enquiries to Dubai recently.

They say it is because of all the negative Dubai coverage in the media, and is resulting in many middle class people (who would have never even thought of going to Dubai as it was perceived as a 'Rich mans paradise') to booking holidays there.

This is great news. We should thank The Times, Daily Telegraph and all the racist British media who thought they had the last laugh but actually is going to help fast-track tourism to the country instead. Well done you c*nts - much appreciated. :stupid:

Paul

 

[georgihh]

Some good news for Dubai and the UAE

Some of the travel agents I know personally in the UK have seen a huge increase in holiday and flight enquiries to Dubai recently.

They say it is because of all the negative Dubai coverage in the media, and is resulting in many middle class people (who would have never even thought of going to Dubai as it was perceived as a 'Rich mans paradise') to booking holidays there.

This is great news. We should thank The Times, Daily Telegraph and all the racist British media who thought they had the last laugh but actually is going to help fast-track tourism to the country instead. Well done you c*nts - much appreciated. :stupid:

Paul

Dubai doesn’t need 1000 tourists with few pennies in their pockets. Dubai needs investments from rich investors and until they(government) don’t change the low of the citizenship nobody will invest a single cent in this place for years to come. 80 billion $ are thrown in the sea I wander how many are thrown in the desert and when they will announce further losses.

 

[kully sanghera]

:flute:
Europe shares rise as Dubai concerns ease- Global Markets-Markets-The Economic Times