Serious concern about UAE Property Market

[muqarabin]

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

DoBuy, I agree with your view and I was just thinking I forgot to add this to my post. If we look at Dubai as the London of UAE??? Is Dubai poperty currently and densely populated as london???? I would think not. People continue to complain about property prices (rent & buying) in london and yet they are still buy or renting there.....I dont see why this would be different in Dubai.

 

[Investoman_uae]

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.

Muqarabin, firstly your last sentence makes an assumption, as long as water, power, transportation etc are provided? Thats exactly the problem. Most of these projects are launched without guarantee of water, elec supply, drainage etc. So most of those plots are not serviced.

Can you believe that a friend who works in a power generation company (providing generators) said they sold huge generators to some developers and one of the towers on Shiekh Zayed Rd has been running on generators for 3 years.

Another source tells me that some buildings around DIFC and World Trade Centre have a very large number of generators built in under them.

Secondly, you missed my point. The main point I made was to do with the end product. When the final installment comes or the guy who has to live in the property has to pay the final full price (over price).

How many will be able to pay for the thousands and thousands of units being developed now. I made the example of someone buyin a one bed for 2M (off plan)... who will be the end user and are there many of these kinda end users.

Even with availability of finance,... you gota have a damn good job 20,000+ per month to be able to afford approx a 2million dirhams property. How many of those are there?

Also the rental market wont exist.... someone who ends up with a 3 Million Dirhams 1 bed flat... (OP = 2Million).... how much will he rent it for? 240,000 p/a for an 8% return?

People can buy and sell in the early stages of construction... but once construction is near completion, problems will pop up. Wat will be the marketin period of the end product as well?

The vast majority of these projects are luxury projects ...the middle class and lower class will struggle to get near it.....thats like 80% of UAE;s population.

Inv.

 

[georgihh]

At the moment Dubai is booming the business is on high a lots of jobs
But soon or later this will change.
The cycle in Dubai ups and downs reapers every 10 years.
Next time down will be 2011-2012
The petrol prices will fall down the property market will be flooded with new developments.
And at that time if the government doesn’t splash the cash to protect the market we don’t know how much will be one bedroom.
But we still have 2-3 years to enjoy.
That’s why nobody thinks for the future every body thinks now( specially in Dubai).
Will be one more prize hike most probably later this year and after that will be long long downturn and as result I will buy one bedroom in Dubai Marina for 1000 DHS per sqft

 

[Wannaberich]

Falling rental prices doesnt have to mean falling property prices.1 million aed for a 1 bed appartment isnt expensive.
With falling interest rates plus new mortgage deals being offered in Dubai more people will be able to buy.They will buy instead of renting so no need for owners to drop prices.
As a result however,rental prices may drop.

 

[maximusprime]

I keep hearing Dubai compared to London or New York. Have any of you ever been to new york? Dubai has a long way to go before it even compares to these places. It has appeal but I have to agree that eventually reality will have to catch up and it will boil down to what the real sensible working folks will be willing to pay for when they do flock here by the millions like they are supposed to. As someone said earlier, you would have to have a DAMN good job to afford these places and really, I cant see much reason to move here aside from a damn good job with damn good tax free pay. New York or London on the other hand are interesting well developed cities with highly efficient infrastructures and a strong sense of identity and mature culture which make them very desirable places to live.

 

[Wannaberich]

New York or London on the other hand are interesting well developed cities with highly efficient infrastructures and a strong sense of identity and mature culture which make them very desirable places to live.

Not to mention crime,gun culture,ever increasing amount of immigrants,crap weather,high taxes,yeah all is real good.

 

[Investoman_uae]

I keep hearing Dubai compared to London or New York. Have any of you ever been to new york? Dubai has a long way to go before it even compares to these places. It has appeal but I have to agree that eventually reality will have to catch up and it will boil down to what the real sensible working folks will be willing to pay for when they do flock here by the millions like they are supposed to. As someone said earlier, you would have to have a DAMN good job to afford these places and really, I cant see much reason to move here aside from a damn good job with damn good tax free pay. New York or London on the other hand are interesting well developed cities with highly efficient infrastructures and a strong sense of identity and mature culture which make them very desirable places to live.

Sorry but life in New York and London has become extremely expensive. Aparently 2 Million british people left the UK last year to live abroad. The conditions back home have become unbearable.

Whereas, in Dubai, you get paid twice your wage in New York or London and its tax free and its a nice place to live in in terms of projects etc... it is maturing, dont forget it is a very young country... 36 years old to be exact... so the way it has advanced and caught up with major world cities.... it is THE desireable place to live.

You cant enjoy it all though, if you are not well paid. Alot of people struggle in Dubai, so I am only talking about those who are well paid. They can atleast enjoy the money they are making. In UK you cant. The government steals a quarter of your wage and calls it tax, you pay about 400 dirhams to fill your car with petrol,...etc... oh and dont get me started on the weather. Its winter all year around.

Inv.

 

[Wannaberich]

The government steals a quarter of your wage and calls it tax

Inv.

I'd say its at least a third with all the hidden taxes.Theres also the huge increase in heating and food bills.

 

[Investoman_uae]

I'd say its at least a third with all the hidden taxes.Theres also the huge increase in heating and food bills.

Thats wat am talking about... I only mentioned income tax... never mind the other one thousand different taxes.

So in conclusion, UK is becoming increasingly difficult to live in, this is why many are considering other destinations, Dubai being one of them.

Inv.

 

[syedaat]

Yeah it must be getting even tougher in UK. Glad I left there 6 years ago, although I had a good number there too. But have never looked back. I am now looking to sell my house there too and invest els where with a better return. I have bought a far larger Vills here to live to avoid paying rent, which was Great move.

So when r u guys moving to Dubai!

 

[Investoman_uae]

Yeah it must be getting even tougher in UK. Glad I left there 6 years ago, although I had a good number there too. But have never looked back. I am now looking to sell my house there too and invest els where with a better return. I have bought a far larger Vills here to live to avoid paying rent, which was Great move.

So when r u guys moving to Dubai!

Am already in UAE, been living and workin here since a year and half.

Am selling my property too in UK, but because of the messed up market, its taken ages, been on market for 4 months. I am in a hurry to get rid of it and invest elsewhere also.

Inv.

 

[maximusprime]

Not to mention crime,gun culture,ever increasing amount of immigrants,crap weather,high taxes,yeah all is real good.

Dont get me wrong, I agree that these places have their problems, Maybe there arent as many guns but there is plenty of crime here too, its just not allowed in the papers, the weather is crap for about 4 months out of the year here too in the summer. you got me on the taxes part. I just dont think that just because NY and London have high prices means that we can assume Dubai will be able to sustain the same. They arevery different places.

 

[Investoman_uae]

Lets talk about cost of construction. Anyone here a Quantity Surveyor? Or Project Manager?

I just need to hear their views about whats goin on with contractors in this market.

Alot of contractors are very worried, I was just talking to a client of mine and also a bank manager about how there is an element of fear.

When a contractor agrees with a developer a price per square foot, now what they do, is they always put a clause in the contract to say that if the prices rise above 25% (example) they will share this loss with the developer.

The contractor cannot pay the rise in construction prices off his pockets alone during the term of construction.

Developers like Damac are facing a huge problem with this issue. They are not making much profit, cos the cost keep getting closer to the selling price, especially when they promised to provide such flashin futuristic towers. Its gona cost them alot, and I am not sure if they can deliver what they promised they will deliver.

If they cant, then they will delay it until they can afford it or get finance help from the banks.

Just wanted to share this concern in the market right now.

Inv.

 

[afd]

don't agree with that, i believe dubai gov would't let that happen.

 

[Wannaberich]

don't agree with that, i believe dubai gov would't let that happen.

Dubai gov can't do anything about it unless they are prepared to bail out Nakheel financially.

 

[Vicks]

Dubai gov can't do anything about it unless they are prepared to bail out Nakheel financially.

Is Nakheel in trouble?

I heard about the Badrah spectacle by Nakheel! Nightmare for people who came from far places.

 

[afd]

if the gov done nothing i believe sheikh mohammed will do somthing!

 

[Wannaberich]

if the gov done nothing i believe sheikh mohammed will do somthing!

He can't bail out developers everytime they are in trouble.Its nothing to do with him.These developers have made tons of money so I for one have no sympathy.

 

[georgihh]

At the moment there is a huge demand for properties and not enough due to:

1. Not enough complete buildings
2. Very few of the completed are registered with Dubai land department (its very difficult to resale).
A lots of cash is poring into the country from overseas and there is not enough properties witch act in accordance with point 1 and 2.
If points 1 and 2 are completed for all the buildings the prices will double yes double in two months.

That’s the way Dubai government is trying to cool the economy but for how long.
The new price index for different areas will help keeping the price reasonably stable for some time.

Expect further restriction in buying and reselling properties in Dubai as this is the only means to fight with the inflation

 

[Wannaberich]

At the moment there is a huge demand for properties and not enough due to:

1. Not enough complete buildings

How do you know that?No-one seems to have figures for how many people are moving to Dubai.There are alot of properties empty looking for tenants.