Middle East developers losing millions as large number of real estate investors fall behind with pay

[Nicholas Wallwork]

Major developers in the Middle East are admitting that a large number of their property investors are struggling with payments because of the global economic downturn.

Because of property price falls of up to 40% many investors in off-plan projects are facing negative equity with the real estate now worth less than the debt owed on the property. Some want to extend or re-schedule payments while others want out of their investment.

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[financier888]

the new deal

Property developers would be wise to go back to their investors, reduce the sales prices and reschedule the payments to keep the money coming in. This requires a shift in mind set from 'living in the past' to 'looking toward the future' - Simply by looking in the property / freehold section and seeing how far the prices have been reduced says it all... Put yourself in the place of the buyer - 'why continue to throw good money after bad?' - Why struggle to make payments at a sales price in excess of AED 1,300 + - when the market - for PRIME locations - already built are hovering from AED 700 - (JLT) to 1,000 - 1,200 (Marina & Burj area!) -

There is sill plenty of room for margins considering the cost of building materials has dropped significantly - best to come-up with some creative packages to keep your investors / buyers and stay solvent... trying to 'hold-out' till the bitter end - well, better get a shovel and start digging your own grave!

a word to the wise..