Serious concern about UAE Property Market

[Investoman_uae]

Guys, you probably heard of this topic a zillion times, but one more wont harm.

I am beginning to feel seriously concerned about the UAE property market and wanted to know if others share the same feeling.

Firstly, I am an investment consultant and I have experience from UK and currently working in a british real estate company in UAE. What I understand over my time here, is that the UAE market is very short term. And this is the concern.

People are buying like crazy, and then selling in the same week at higher premiums, good for them, but is there much analysis put in this? What about the end user? Who is going to live in these properties.

Some projects havent even started and the units are bought and sold with papers, nothing more. This is extremely fake and thats worrying.

Alot of developers appeared out of nowhere, I dare you guys to name the developers you bought from and give me some history about them. Who are these developers, whats their reputation, how do we know they are goin to deliver a decent product.

Many of you here are complaining about the procedures, these are negative signs of unprofessionalism from the side of the developers and ignorance from the side of investors.

Also, this morning I hear that Tameer has put its project Al Salam City where alot of investors threw their money.... so this project is semi cancelled.... so they saying people will get their money back (without premium)... and the project as a whole was a failure because of power shortage and no water etc.

This is the biggest problem and we've only seen the tip of ice berg. Is there enough power to make these projects feasable? Me thinks not.

I am sure the investors make money short term, but are we goin to see more of these failed projects?

What will happen in 2009, 2010, 2011... when these millions of projects will be completed, (if completed).... who is goin to fill these apartments and villas? You and I? Me thinks not. Are you prepared to buy a 1 bed which will then be about 2.7 million lets say.... how the hell will you rent it out? Can you let it for 200,000? even 180,000 per annum.... for a one bed? I'll go live in friggin palace in Monaco for that rent.

So my concern is, ... who is goin to fill these thousands and thousands of units.

People buyin for 2500/sqft NOW, before the construction even started..... can you guarantee you will be able to sell it in the near future? or even buyer2.... will he be able to resell and make profit? ... and will the end user pay somethin with 100% premium to live in it?

And to finally seal it off.... developers (even the big names) have no clear procedure on how to buy, sell, register (in connection with RERA, Lands department etc).

This is madness. Are you all thinking to buy and sell while you still can and not bothered about what happens in 3 years time? Cos alot of buildings will lie empty I tell you that.

Inv.

 

[Investoman_uae]

Al Salam City put on hold

Bad news for those who bought in Al Salam City.... sorry guys. Hang in there!

Inv.

 

[mpat]

Guys, you probably heard of this topic a zillion times, but one more wont harm.

I am beginning to feel seriously concerned about the UAE property market and wanted to know if others share the same feeling.

Firstly, I am an investment consultant and I have experience from UK and currently working in a british real estate company in UAE. What I understand over my time here, is that the UAE market is very short term. And this is the concern.

People are buying like crazy, and then selling in the same week at higher premiums, good for them, but is there much analysis put in this? What about the end user? Who is going to live in these properties.

Some projects havent even started and the units are bought and sold with papers, nothing more. This is extremely fake and thats worrying.

Alot of developers appeared out of nowhere, I dare you guys to name the developers you bought from and give me some history about them. Who are these developers, whats their reputation, how do we know they are goin to deliver a decent product.

Many of you here are complaining about the procedures, these are negative signs of unprofessionalism from the side of the developers and ignorance from the side of investors.

Also, this morning I hear that Tameer has put its project Al Salam City where alot of investors threw their money.... so this project is semi cancelled.... so they saying people will get their money back (without premium)... and the project as a whole was a failure because of power shortage and no water etc.

This is the biggest problem and we've only seen the tip of ice berg. Is there enough power to make these projects feasable? Me thinks not.

I am sure the investors make money short term, but are we goin to see more of these failed projects?

What will happen in 2009, 2010, 2011... when these millions of projects will be completed, (if completed).... who is goin to fill these apartments and villas? You and I? Me thinks not. Are you prepared to buy a 1 bed which will then be about 2.7 million lets say.... how the hell will you rent it out? Can you let it for 200,000? even 180,000 per annum.... for a one bed? I'll go live in friggin palace in Monaco for that rent.

So my concern is, ... who is goin to fill these thousands and thousands of units.

People buyin for 2500/sqft NOW, before the construction even started..... can you guarantee you will be able to sell it in the near future? or even buyer2.... will he be able to resell and make profit? ... and will the end user pay somethin with 100% premium to live in it?

And to finally seal it off.... developers (even the big names) have no clear procedure on how to buy, sell, register (in connection with RERA, Lands department etc).

This is madness. Are you all thinking to buy and sell while you still can and not bothered about what happens in 3 years time? Cos alot of buildings will lie empty I tell you that.

Inv.

I agree with most of your comments,and its becoming more and more alarming for those ppl investing in Ajman , UAQ , RAK, etc . Dubai will somehow manage crisis of power and water , but from where they will bring ppl to fill in ? and that s the time rents will start crashing.Ultimately that is the major cause of inflation,so may be govt is thinking in that direction also.
supply more and demand less to bring down rents.

 

[mermaid123]

there is a serious power problem in RAK as well....wonder if the RAk projects are going to end the same way.....

 

[mpat]

also ajman projects

 

[MMSM]

. Are you prepared to buy a 1 bed which will then be about 2.7 million lets say..
Inv.

Where? who's selling? me thinks me wants!

 

[mermaid123]

Where? who's selling? me thinks me wants!

u serious??????
there's a property exhibition the next 3 days in Grand Hyatt Dubai - Property Shopper.
u can go have a look around there...might get something nice...

 

[investorppty]

I totally agree with the comments made by Investoman_uae. I am not a pro at Real Estate and only recently gotinterested due to all the hype in UAE ReaL Estate. As well as seeing some of my friends, who only have a brain the size of a 'pea', and made lots of money. I have personally always been wary of UAE as the figures being mentioned have been astronomical and in some cases the Internet is not always helpful as too much information and you always have the doubt with some weird user giving false information etc.

 

[investorppty]

I have been advised to invest into a project called Al Badrah by Nakheel. Please view link Nakheel unveils Badrah district at Waterfront

Have been informed that the launch will have thousands of people queuing all night.

I am interested to purchase and thereafter Flip this investment in a short period of time at 25%-30% Premium.

Nakheel will be launching Al Badrah this forthcoming Sunday (phase 1)

Approx prices:
Studio-493sqft-685,000AED
1br-655 sqft-980,000AED
2br-907sqft 1,220,000AED
3br-1286sqft-1,820,000AED
2br townhouse -1179sqft-1,900,000AED
3br townhouse -1638sqft-2,285,000AED

Plse can someone gve me advice on above...

 

[Vicks]

Guys, you probably heard of this topic a zillion times, but one more wont harm.

I am beginning to feel seriously concerned about the UAE property market and wanted to know if others share the same feeling.

Firstly, I am an investment consultant and I have experience from UK and currently working in a british real estate company in UAE. What I understand over my time here, is that the UAE market is very short term. And this is the concern.

People are buying like crazy, and then selling in the same week at higher premiums, good for them, but is there much analysis put in this? What about the end user? Who is going to live in these properties.

Some projects havent even started and the units are bought and sold with papers, nothing more. This is extremely fake and thats worrying.

Alot of developers appeared out of nowhere, I dare you guys to name the developers you bought from and give me some history about them. Who are these developers, whats their reputation, how do we know they are goin to deliver a decent product.

Many of you here are complaining about the procedures, these are negative signs of unprofessionalism from the side of the developers and ignorance from the side of investors.

Also, this morning I hear that Tameer has put its project Al Salam City where alot of investors threw their money.... so this project is semi cancelled.... so they saying people will get their money back (without premium)... and the project as a whole was a failure because of power shortage and no water etc.

This is the biggest problem and we've only seen the tip of ice berg. Is there enough power to make these projects feasable? Me thinks not.

I am sure the investors make money short term, but are we goin to see more of these failed projects?

What will happen in 2009, 2010, 2011... when these millions of projects will be completed, (if completed).... who is goin to fill these apartments and villas? You and I? Me thinks not. Are you prepared to buy a 1 bed which will then be about 2.7 million lets say.... how the hell will you rent it out? Can you let it for 200,000? even 180,000 per annum.... for a one bed? I'll go live in friggin palace in Monaco for that rent.

So my concern is, ... who is goin to fill these thousands and thousands of units.

People buyin for 2500/sqft NOW, before the construction even started..... can you guarantee you will be able to sell it in the near future? or even buyer2.... will he be able to resell and make profit? ... and will the end user pay somethin with 100% premium to live in it?

And to finally seal it off.... developers (even the big names) have no clear procedure on how to buy, sell, register (in connection with RERA, Lands department etc).

This is madness. Are you all thinking to buy and sell while you still can and not bothered about what happens in 3 years time? Cos alot of buildings will lie empty I tell you that.

Inv.

I agree as well. It totally madness, as one quoted in another thread.

Its a train moving full speed ahead, everybody jumping in for the ride, then jump off at the next stop, taking their profits until the last passenger gets on the ride and unknown to him the next stop is the crash.

Again, its happening all over the world, prices are dropping and eventually we will see a correction in Dubai, albeit it being the world number 1 Financial City, prices will have to drop, there will be empty properties, as you state 'who is going to fill them'?, then this will be the time to invest, wisely.
Hopefully by then, the unknown developers would have fallen off the Trains as well and the developers with strong balance books will be able to continue. This wouold in turn nring in a process of legalislation. In times like these Developers will be looking and replying to our emails and telephone calls, asking ask to buy. We can then choose to ignore them or whatever you like. Its already starting with DAMAC.

On the other hand, visitors to Dubai is to increase from, i think, 10 Million a year to 60 Million a year in 5 to 10 Years, Olympic games in 2020?, Grand Prix, Dubailand , that will compete with Florida's Disney land, World Class beaches, world class hotels, eventually an excellant transport system, Motocity - World biggest Go kart Track - so in the long run, with location , location and Location in mind, your apartment could hold in value but the times of flipping will stop due to high prices. They ARE very high. I am looking long term in Dubai, with Location in mind i will pay the price , with the rents to cover. It all Mathematics but what is happening in Dubai defies all mathematical equations apart from the fact the + and the MONEY sign !

So enjoy the ride, make the money while you can but if you are coming on the the last stop accept your losses.

 

[fws]

Your statistics are out - 10 million to 60 million. It doesn't help a rational argument if you make things up.

Likewise you can't expect a permanent 10% rental return. Basic economics means that as prices rise, rental yields fall. You don't expect to get a 10% yield on future prices.

 

[Vicks]

Your statistics are out - 10 million to 60 million. It doesn't help a rational argument if you make things up.

Likewise you can't expect a permanent 10% rental return. Basic economics means that as prices rise, rental yields fall. You don't expect to get a 10% yield on future prices.

Apologies for the making up but i wasn't. I thought these were the figures on top of my head as i read it somewhere but can't remember where ! Apologies for that.

And you are right about the 10% yield, hence the future fall in prices? Supply outstripping demand?

 

[Wannaberich]

With regards to who will fill up these properties.In the short term,from now - 2010/11,
I think there will be a steady flow of people moving to Dubai,maybe not enough to fill the units so there will be a price correction.
Then from 2015
onwards,once the metro and many of the amazing projects are finished and many almost finished,Dubai will be an amazing place and people will flock there.This will push the prices back up.
So basically if u buy now then take it as a long term investment.

 

[Investoman_uae]

With regards to who will fill up these properties.In the short term,from now - 2010/11,
I think there will be a steady flow of people moving to Dubai,maybe not enough to fill the units so there will be a price correction.
Then from 2015
onwards,once the metro and many of the amazing projects are finished and many almost finished,Dubai will be an amazing place and people will flock there.This will push the prices back up.
So basically if u buy now then take it as a long term investment.

Its not about people who will fill them in. Its about people who will afford (the price or rent) to fill them in.

Since people are flippin left right centre, the end product will end up with an unbelievable price. For example, many 1 bed apartments in Abu Dhabi were launched at 2M. What will their value be in 2010 when finished? or 2009.... 4 Million? 3.5M?? ....And the rent? Ok lets forget the rent because we said the end user will be someone who will live in it..... will this person be able to buy it for that amount? How many people can afford over priced properties due to the flipping and investment greed goin on!!!...

So you buy and sell while you can.... but when I said who will fill them in... I didnt mean that there will be a lack of number.... but a lack of people who can afford the price and the rent.

Inv.

 

[Sixgun]

Dubai is a city, which will either continue to grow, or will fail.
Sounds simplistic, but with this city, I think its pretty black and white,
either the "toast of the town" or ...toast
If it fails, the property values are done, if it grows, (and they are trying their best, and the rest of the world believe it so far) the population will grow, and properties will level out to comparable cities.
if you're already paying more than a comparable city, well..don't.
The main question, what will be comparable?

 

[mpat]

sayedat
Ajman will have to spend billions in power generation and infrastructure.they are blindly following dubai which is a very dangerous sign. Even today there are hundreads of buidings ready in Ajman industrial area which is more closer to dubai on the emirates road without power and water.Also, there are only 2 roads (main) leading from dubai to ajman and one is always blocked since its passing from inside sharjah,second is emirates road which is blocked during peak hours.becos neither shrajah nor ajman is doing anything on widening that road whereas dubai part is widened to 6 lanes from 3 lanes previousely.
In short,Ajman is in more danger than dubai.

 

[Wannaberich]

Its not about people who will fill them in. Its about people who will afford (the price or rent) to fill them in.
Inv.

If people can afford to rent in London and New York to name a couple of cities then Dubai should be no different.

 

[Investoman_uae]

sayedat
Ajman will have to spend billions in power generation and infrastructure.they are blindly following dubai which is a very dangerous sign. Even today there are hundreads of buidings ready in Ajman industrial area which is more closer to dubai on the emirates road without power and water.Also, there are only 2 roads (main) leading from dubai to ajman and one is always blocked since its passing from inside sharjah,second is emirates road which is blocked during peak hours.becos neither shrajah nor ajman is doing anything on widening that road whereas dubai part is widened to 6 lanes from 3 lanes previousely.
In short,Ajman is in more danger than dubai.

The power has been promised and i believe will be delivered to all Emirates Rd projects.... because The Government of Ajman is the master developer there So when power arrives you can bet it will arrive to those projects first.

Secondly, Ajman's market is more stable than the other markets...whereby prices rise on a gradual level... these concerns of power and infrastructure has had its positive effect on the market.... it removed speculation....so prices rise slowly as investors are more wary.... I find this to be a good thing actually.

I dont want Ajman to turn into Al Reem Island where prices rise like crazy and people buy and sell properties like bread.

Also, once finance becomes available in Ajman, you will see a serious rise in prices because that will encourage more investors to enter this market.

My main concern with Ajman is those projects will put alot of pressure on Emirates Rd... especially around National Paints Roundabout.... we need to see Emirates Rd widened all the way to Ajman and beyond.

The fact that Ajman opened its doors for freehold development is already a great sign. And the developers there (although not well known) but atleast they respond to your calls and treat their investors seriously and with respect. This is something important, customer care is very important to investors these days. Cos you go and buy with a big developer, then you get treated like crap, your calls ignored etc.... wats the point? That will affect developments in the long run.

In my opinion, if they cant take their clients seriously, then they will not take their projects seriously, end of story.

Inv.

 

[georgihh]

Well we will see
Nakheel are ready to flood the market with 25000 flats in the middle of the summer
The name of the project is discovery gardens.
It’s obvious that to fill the above development will take more than a year
People will be dispread to rent out the units and will drop prices.
And if the rents go down the property value will follow.
I really don’t know what nakheel are aiming by delivering such a huge project at once, but if they do - a lots of people will suffer

 

[muqarabin]

Investoman_uae, I will beg to differ to most of your comments. Simply because the property market in Dubai has not fully matured. Most properties are being bought by a large proportion of cash. People like you and me putting down 30% - 50% or in ordered cases putting down the whole 100% in stages in parallel with construction and thru to completion. The success (or longevity) of the property market will be aided by availability of mortgages for the young Dubai indegenes who at some point will also want to get on the property ladder. It will mimick what happened in the UK, where many young adults just thought it a waste of money to be renting and with the availability of Mortgages many went to buying route. Also the UAE region as a whole will continue to have expats working in the region and they will continue to be able to afford renting, so as long as the government provides the necessary infrastructure Water, Power, Transportation, then I am sorry I dont see the problem you see.