Serious concern about UAE Property Market

[investorppty]

Much better if cash available, buy ready properties and gain instant ROI of 9% which of course excludes the appreciation.

Buying off plan is a big head ache at times. The projects tend to get delayed. I have 2 projects which are delayed by over a year

Regards

Roshan

Roshan....Are you aware of any deals available now buy ready properties and gain instant ROI of 9% which of course excludes the appreciation?....plse let me know

 

[memo123]

The big question here as the thread indicates
are we in a bubble and if so when do u think it is going to burst?
many claim we are and yet you see them buy even at 4600/sq ft and 5000 even much more depending on location.
many say building wise yes we are and all the building , i the say not me , are empty and there is no tenants
yet i go to so many blogs and you see demands for 10-and 15 units at one time
so who should we believe , bubble or no biubble?
regards

 

[New_Investor]

The big question here as the thread indicates
are we in a bubble and if so when do u think it is going to burst?
many claim we are and yet you see them buy even at 4600/sq ft and 5000 even much more depending on location.
many say building wise yes we are and all the building , i the say not me , are empty and there is no tenants
yet i go to so many blogs and you see demands for 10-and 15 units at one time
so who should we believe , bubble or no biubble?
regards

This is really interesting, can u define what's a Bubble first? and do u think it can apply to Dubai, where the global capital is moving towards it now? and if so, do u think that investing in other markets really worth it too..

lot's to answer though.

in my point of view we might face a correction, but it will not be more than 10% , however a bubble might happen but not currently, since there's no other market is attracting the investment, and don't forget that inflation is a very strong and consistent driver for property appreciation!!!

Mark my words, Dubai property market will appreciate by 40% at least within the next 6 month time, and not investing now if u have the money is like throwing money to the toilet.

after all this is my personal opinion and i might be wrong.

 

[Roshan]

Roshan....Are you aware of any deals available now buy ready properties and gain instant ROI of 9% which of course excludes the appreciation?....plse let me know

JLT, Marina will have deals going. Will you be paying cash or leveraging. What is your budget.

Roshan

 

[memo123]

Thank you for you remarks

This is really interesting, can u define what's a Bubble first? and do u think it can apply to Dubai, where the global capital is moving towards it now? and if so, do u think that investing in other markets really worth it too..

lot's to answer though.

in my point of view we might face a correction, but it will not be more than 10% , however a bubble might happen but not currently, since there's no other market is attracting the investment, and don't forget that inflation is a very strong and consistent driver for property appreciation!!!

Mark my words, Dubai property market will appreciate by 40% at least within the next 6 month time, and not investing now if u have the money is like throwing money to the toilet.

after all this is my personal opinion and i might be wrong.

I tend to agree with you in the sense that i will gain nothing by putting money in the bank , but might make some money in properties . Yet, again the Resale market in Dubai , has proved to be a very difficult process , especially for people not living in the UAE , I am not talking for my self only but also for my friends here where i live .
The whole process of resale looks very difficult and even some agents don't know how to do it unless they are big companies in London that charge more than local Dubai agents , and that inflates the price and make it difficult to sell .
even when you say we should invest now , when do we go out , I read so many articles saying that by the year 2010 Dubai will reach equilibrium , and supply will surpass demand , and market will calm down if not correct .
from what i have seen so far in my very short experience in Dubai properties most of the people that are doing the buying are all speculators, SO where are the end users ? I spoke to a person in Dubai yesterday that made me feel like I would be crazy if I don't get out soonest of this market , i almost had a heart attack from fear . He was talking like dooms day is coming soon and claims he has 25 years of experience in this market .
So who do we believe ? the optimistic or the pessimistic?

 

[New_Investor]

I tend to agree with you in the sense that i will gain nothing by putting money in the bank , but might make some money in properties . Yet, again the Resale market in Dubai , has proved to be a very difficult process , especially for people not living in the UAE , I am not talking for my self only but also for my friends here where i live .
The whole process of resale looks very difficult and even some agents don't know how to do it unless they are big companies in London that charge more than local Dubai agents , and that inflates the price and make it difficult to sell .
even when you say we should invest now , when do we go out , I read so many articles saying that by the year 2010 Dubai will reach equilibrium , and supply will surpass demand , and market will calm down if not correct .
from what i have seen so far in my very short experience in Dubai properties most of the people that are doing the buying are all speculators, SO where are the end users ? I spoke to a person in Dubai yesterday that made me feel like I would be crazy if I don't get out soonest of this market , i almost had a heart attack from fear . He was talking like dooms day is coming soon and claims he has 25 years of experience in this market .
So who do we believe ? the optimistic or the pessimistic?

Believe in your common sense, u'll always face several opinions and frankly speaking no one actually can confirm any thing, what will happen will happen, we just hope that whenever a crash happens that we can lick our wounds and not to die, this can only happen buy the famous investment quote "don't put all your eggs in one basket" the key is diversification, make a portfolio of low - medium and high risk investment to be in the safe side for the rainy day!

Good Luck.

 

[memo123]

Hello
again
My definition of bubble is when the property changes hand 6-7 times and increase in the price yet , there is not one brick of that building is built yet , towers and floors changes hands yet there no floors or towers. the "expected" property changes hands over and over with a continued added premium . there has to be a looser at the end , In any market if one is making money that means another is loosing exactly the same amount of money . also from what I have seen there are very few laws if any , in Dubai that protect the investor especially foreign ones , read any contract and u will see how the developer protect himself even if he is 2 years late on delivery. he would have nothing on the ground yet he wants his installments right on time! and impose penalties , so why is the developer not penalized for late deliveries
we have seen three properties that were canceled and yet the was no mention of Dubai government with this regards, they should have been more active in this issue and should have taken action against these developers that took investors money to at least 2 years than canceled the projects. So in order to reinstate investors confidence the government should have A proactive roll in the property market and not leave the develops act as they wish .

 

[New_Investor]

Hello
again
My definition of bubble is when the property changes hand 6-7 times and increase in the price yet , there is not one brick of that building is built yet , towers and floors changes hands yet there no floors or towers. the "expected" property changes hands over and over with a continued added premium . there has to be a looser at the end , In any market if one is making money that means another is loosing exactly the same amount of money . also from what I have seen there are very few laws if any , in Dubai that protect the investor especially foreign ones , read any contract and u will see how the developer protect himself even if he is 2 years late on delivery. he would have nothing on the ground yet he wants his installments right on time! and impose penalties , so why is the developer not penalized for late deliveries
we have seen three properties that were canceled and yet the was no mention of Dubai government with this regards, they should have been more active in this issue and should have taken action against these developers that took investors money to at least 2 years than canceled the projects. So in order to reinstate investors confidence the government should have A proactive roll in the property market and not leave the develops act as they wish .

I totally agree that RERA and government have a lot to do to impose more clear laws for the property market, however it's still an emerging market and i think it's just a matter of time until they do so, especially in the completion date compliance in order to increase confidence in the developers, for example in Egypt there's a low that both parties, buyer and developer have to maintain execution dates to the full, ie. buyer will pay fees if he's late for installment and developer will pay Huge fees to buyer and government as well in case of delay for more than 6 month of the contract completion date, if the problem persist the developer risck loosing their license!

 

[Design Architect]

My point of view...

Dear all,

I went to Dubai Marina the other day with my wife - in order to check out progress on some buildings and to decide which one we are going to go - for investing...

All I can say - is that waaaaaaaaay to much apartments are empty. Really - somewhere around 80%. So that's kinda worrying...But Marina is marina - and it will be for the next 10 - 20 years. And prices hardly go up above 2000 mark even for finished apartments....

On the other hand - People are selling off plan apartments in Jebel Ali, DSO, Sports City and the rest for prices that are touching 2500!!
And developers are saying that it will touch 3000...3500...4000...reason for this is that people are not thinking - just buying - and trying to copy success of others.
I think that clearly bubble will burst - when another investor see that prices for buying off plan property in the middle of dessert is same as buying finished product in NY and the rest of the world (main cities)...

We are not far from that..maybe 1-2 years...
my 2 cents

 

[uae properties]

I agree, the signs are all there as u mentioned.
First came the mass deportation of unregisterd labourers, thus ending the small developers, so that the larger ones survive, thus delaying the delivery of the units and avoiding the inevitable = a surplus of properties and devaluation of properties.
Second, the entrance of institutional speculators who have raised property prices to dizzying heights.
Finally, now properties are selling in the secondary market cheaper than the primary market.
To backup as to what I am asaying, just look at the property section in the newspaper and they count for 3 volumes of adverts for sale!
The property market has reached its peak and with global credit crunch ( and mind u 95% percent of uae propert owners are non-end users) will start selling their properties to cover the losses.
Regionally the drums of war is beating and there was a recent article that there will be no automatic residecny visas for propert purchasers.
Enough said, liquidate b4 it is too late.

 

[uae properties]

uae property bubble

I agree, the signs are all there as u mentioned.
First came the mass deportation of unregisterd labourers, thus ending the small developers, so that the larger ones survive, thus delaying the delivery of the units and avoiding the inevitable = a surplus of properties and devaluation of properties.
Second, the entrance of institutional speculators who have raised property prices to dizzying heights.
Finally, now properties are selling in the secondary market cheaper than the primary market.
To backup as to what I am asaying, just look at the property section in the newspaper and they count for 3 volumes of adverts for sale!
The property market has reached its peak and with global credit crunch ( and mind u 95% percent of uae propert owners are non-end users) will start selling their properties to cover the losses.
Regionally the drums of war is beating and there was a recent article that there will be no automatic residecny visas for propert purchasers.
Enough said, liquidate b4 it is too late.

 

[Investoman_uae]

Guys I want to discuss something else now. Maybe you can share your views on it.

Its an issue that is bothering investors and is also a serious concern in this buyant market.

When there is a constant supply of projects to the market... erm, how will investors sell their properties? It would take considerably longer to market it.

For example, investor bought and wants to flip, puts it in market for a while. .. why would someone buy his property when there are projects hittin the market on a weekly basis. Why think of the resale market when u can buy direct from developer. . . in some cases in the same tower.

Whats your views guy? its a concern in the UAE market that we havnt discussed it alot.

Buying is easy,... selling is not that easy.

Inv.

 

[Design Architect]

My thoughts

The reason why people are buying from "secondhand" market is because they can't buy it directly from developer.

As I can see - on this market there are some "big" players. Big players with big money and contacts. As soon as some good developer lunches promising project - they buy off full floors and buildings - just to resale them a week or month later. Money earned is measured in millions, and it gives them a head start for next thing.

Most of us - fortunate ones and informed ones - are buying that second hand - just to try and sit on it for a while - and sell it for 10-20% premium...after them usually come ordinary people, who are trying to copy everybody’s else's success.
These ones will lose everything - is something go wrong. Not the well informed ones, and the BIG players....

Unfortunately - UAE market have 6-7 layers of people after BIG players and well informed ones. Every one of these layers don't know anything about financing, and they are deep in dept already. But all want to sell at 10-20% premium and that will lead to bubble burst. People won't be able to pay monthly installments for property they bought - and bank won't be able to sell it either...end of story...

Problem is - as long as all of 6-7 layers are buying - demand is bigger then supply. It's not real demand - it's artificial...

It needs just couple of cases - where people are not able to payout the whole thing - and chain reaction is going to follow.

Disclaimer: all things above is written by novice property investor - without any property bought whatsoever. This is just his way of looking at things in this country - and if it gives some info, than it's good otherwise just skip it

 

[Design Architect]

Things

Things are starting to get a bit ridicilous. I just browsed through some expat ads, and apartments are renting for 15-20 000 a month! International City 8000...

Obviously - with prices for bought apartments and monthly instalment - this is what we get to. Basically - off plan projects planned for couple of years will hit 50 000 a month (with prices of 3000-4000dhs/sqft). Let's see.

People who are thinking of coming here to live - are going to think twice I tell you that. Familly with kids and decent job - will definately skip this place in a year or two, because thay wouldn't afford it!

Looks like the only peole who are comin here are property buyers...

 

[Investoman_uae]

People who are thinking of coming here to live - are going to think twice I tell you that. Familly with kids and decent job - will definately skip this place in a year or two, because thay wouldn't afford it!

Looks like the only peole who are comin here are property buyers...

The market will push them to consider other destinations within the UAE... such as Ajman, Sharjah, Abu Dhabi (slightly cheaper than Dubai not alot). Um Al Quwain is abit far.

If I was a developer right now, I would hit the middle to low class audience and develop (lower quality accommodation than Dubai standards) but it will definately fit the budgets of the biggest section of the population.

Thats where the money is right now.

Inv.

 

[Design Architect]

Funny Enough

Funny enough - I agree with you, and fact that middle to low class apartments are good in this moment...

Funny is - that if speculators would see this as a potentially good investment (although it would be cheaper then rest) which it would be - resale process would start - and prices would soar to new heights

There is enough empty apartments in Dubai - but resale is going so fast - that none of them is ever available! And - why would they be - as the owner is making more money if he holds them for just 6 months...

Hmmm - definately this crazy thing will go on for 1 or 2 more years, but after that - it will be interesting

 

[Investoman_uae]

Funny enough - I agree with you, and fact that middle to low class apartments are good in this moment...

Funny is - that if speculators would see this as a potentially good investment (although it would be cheaper then rest) which it would be - resale process would start - and prices would soar to new heights

There is enough empty apartments in Dubai - but resale is going so fast - that none of them is ever available! And - why would they be - as the owner is making more money if he holds them for just 6 months...

Hmmm - definately this crazy thing will go on for 1 or 2 more years, but after that - it will be interesting

No, what I would do is have a rule. . .. for sale to end-users ONLY. Cool ha? None of those money hungry investors will be able to take advantage of MY development.

Watch out for the next best Developer in the market.

Inv.

 

[lesplaces]

I agree with these views and have real proof. I bought Metro Tower in COA from developer for roughly 900 per square foot before it was sold out a year ago. Can't even sell it now for price I bought it for even though developer is marketing resales at 40% premium (who are they kidding).

Lucklily I bought on initial release of palm at crazy price and made 4 * growth in 4 years.

Reality is tjat no investor that buys at list price on release should plan on resale prior to completion - it is unlikley to be there for the reasons expressed in this thread. My advice:

- Buy good developments if you can afford to make the payments until completion.
- Estimate minimum 4 years to completion and do the maths and see if it still worth doing for a 25% - 50% premium in 4 years.

If anyone fancies holding Metro for another 3 years for last years price - let me know.

 

[tony ben]

Guys I want to discuss something else now. Maybe you can share your views on it.

Its an issue that is bothering investors and is also a serious concern in this buyant market.

When there is a constant supply of projects to the market... erm, how will investors sell their properties? It would take considerably longer to market it.

For example, investor bought and wants to flip, puts it in market for a while. .. why would someone buy his property when there are projects hittin the market on a weekly basis. Why think of the resale market when u can buy direct from developer. . . in some cases in the same tower.

Whats your views guy? its a concern in the UAE market that we havnt discussed it alot.

Buying is easy,... selling is not that easy.

Inv.

Is the party nearly over? it is in Spain, Dubai has the oil boom from Abu Dhabi next door helping it. Are prices coming down yet in Dubai?

 

[lesplaces]

Prices

Can't see any evidence of them going down.

Depends on the development. - As I said off plan and nowhere near cmplete is less likley to go up now unless it is the best development in Dubai.

Established resales where development is complete like Palm are shhoting up at 5% a month.