Serious concern about UAE Property Market

[Investoman_uae]

Ok, now then!....

What do you guys think will happen when completion dates come up i.e 2009,2010, 2011, 2012.

These years, the market will supply all those 1000s of units, and we kno that right now, the buyers are flip flop investors.

So the market will spill those 1000s of apartments, villas, offices etc.... and then what? they will be over priced as a completed product,.....who will fill them? Who will pay rent on them?... rent prices will come down due to over supply?

Who says that demand is over taking supply? Will 1000s of people enter Dubai to live in it when all those units hit the market?

Also, people will come here to live and also to work.... will there be job opportunities for those 1000s? Cos all i see is residential projects (lets say most of them).... where will these ppl work? Why would they want to live here if they cant work here.

Will their wages support mortgage payments to pay for those over priced units?

Just more questions to continue this thead... keep it alive people. We gota keep thinking and learning!!

Inv.

 

[Roshan]

Ok, now then!....

What do you guys think will happen when completion dates come up i.e 2009,2010, 2011, 2012.

These years, the market will supply all those 1000s of units, and we kno that right now, the buyers are flip flop investors.

So the market will spill those 1000s of apartments, villas, offices etc.... and then what? they will be over priced as a completed product,.....who will fill them? Who will pay rent on them?... rent prices will come down due to over supply?

Who says that demand is over taking supply? Will 1000s of people enter Dubai to live in it when all those units hit the market?

Also, people will come here to live and also to work.... will there be job opportunities for those 1000s? Cos all i see is residential projects (lets say most of them).... where will these ppl work? Why would they want to live here if they cant work here.

Will their wages support mortgage payments to pay for those over priced units?

Just more questions to continue this thead... keep it alive people. We gota keep thinking and learning!!

Inv.

As of now, demand is more than supply. Who can forecast what's going to happen in the future.

Real estate is a 2 edged knife, it could be good to you, it could be bad as well. Dubai could be building too much. Nobody knows.

If supply should exceed demand, then obviously there is bound to be correction and people who did not buy sensibly will be in distress.

From what I see there there is bound to be a correction.

Regards

Roshan

 

[georgihh]

Ok, now then!....

What do you guys think will happen when completion dates come up i.e 2009,2010, 2011, 2012.

These years, the market will supply all those 1000s of units, and we kno that right now, the buyers are flip flop investors.

So the market will spill those 1000s of apartments, villas, offices etc.... and then what? they will be over priced as a completed product,.....who will fill them? Who will pay rent on them?... rent prices will come down due to over supply?

Who says that demand is over taking supply? Will 1000s of people enter Dubai to live in it when all those units hit the market?

Also, people will come here to live and also to work.... will there be job opportunities for those 1000s? Cos all i see is residential projects (lets say most of them).... where will these ppl work? Why would they want to live here if they cant work here.

Will their wages support mortgage payments to pay for those over priced units?

Just more questions to continue this thead... keep it alive people. We gota keep thinking and learning!!

Inv.

More and more people will buy in Dubai.
Dubai is a prime destination for India, Pakistan, Iran and partly Russia.
Even millions of flats are released in Dubai the above mention countries will absorb them.
The time for the quick return is gone but the steady income is on the way and the UAE government has so many hidden cards that the market will not collapse for unforeseen future
I have been in Dubai for 7 years now and any time I pack up and ready to go a big cheque comes to me.
People all over the world have tripled their money from the property market for the last 4 years.
So Dubai is nothing special they give you just a little bit “more” to make you happy.
Finally any one of you could of made much more money in your own countries from the property market but Dubai is special and do the brain washing very well

 

[NAZ_2_NAZ]

More and more people will buy in Dubai.
Dubai is a prime destination for India, Pakistan, Iran and partly Russia.
Even millions of flats are released in Dubai the above mention countries will absorb them.
The time for the quick return is gone but the steady income is on the way and the UAE government has so many hidden cards that the market will not collapse for unforeseen future
I have been in Dubai for 7 years now and any time I pack up and ready to go a big cheque comes to me.
People all over the world have tripled their money from the property market for the last 4 years.
So Dubai is nothing special they give you just a little bit “more” to make you happy.
Finally any one of you could of made much more money in your own countries from the property market but Dubai is special and do the brain washing very well

I Agree. We still have 1-2 years of good growth, notcrazy growth. There will no doubt be a slight correction, but i dont think it will be major, it will just stabilise. The location globally, the oil, the tax makes Dubai very unique. All the major financial institutions are setting up office here, it will be the financial hub of the Midde East maybe the World. People keep mentioning empty properties, have they checked to see if these properties have been handed over. Just because a building is up, but does not have many lights on does not mean that it has been handed over!! Utilities are a card the govt uses to stagnate completion so that not too many things come on the market at one time. As far as i have seen things get rented quickly at a good price.

There is definately a good market for middle income earners. Ras Al Khaimah is prooving very very popular option.

BUY TO FLIP, BUY TO HOLD YOU WONT LOOSE,

 

[Fal Pat]

With anything rising very quickly, there is always an apprehension for it to fall too equally fast. Yes we would like to believe that Dubai has unique dynamics than other places so it is more likely to sustain the property prices and also rise further. But logical sense says that a correction is inevitable. WHEN? That is the most important question. How do we tackle this kind of situation? I have concluded that the only strategy that can work is be selective. Not all the projects that are being launched will fetch good returns. The popular developers will generally have more demand than the other lesser known ones. Also once the properties are completed, people will be actually able to see what they are buying and at that time, the poorly built developments will be outrightly rejected by end users.

 

[lesplaces]

Value drivers

It really comes down t value.

Here are some good examples:

- Shorline apartments on the palm with a 10 meter walk to the sea from your lift 1600 -2500 AED per square foot - GREAT VALUE

Trump tower 100 meters from the shoreline apartments
18,000 AED per square foot - YOU WOULD HAVE TO BE MAD

Anything inland over 2500 AED per square foot - DANGEROUSLY HIGH
Anything close to sea over 3,500 AED per square foot - DANGEROUSLY HIGH

This is my rule of thumb - it may not be scientific but the basics are check out the price per square foot and compare to what is selling (not what is advertsed).
I would be keen to see how other people see value per square foot.

 

[Roshan]

It really comes down t value.

Here are some good examples:

- Shorline apartments on the palm with a 10 meter walk to the sea from your lift 1600 -2500 AED per square foot - GREAT VALUE

Trump tower 100 meters from the shoreline apartments
18,000 AED per square foot - YOU WOULD HAVE TO BE MAD

Anything inland over 2500 AED per square foot - DANGEROUSLY HIGH

Anything close to sea over 3,500 AED per square foot - DANGEROUSLY HIGH

A risk worth taking if you are loaded with money, which I am not. Waterfront properties are again where th rich tread and a total different ball game.

This is my rule of thumb - it may not be scientific but the basics are check out the price per square foot and compare to what is selling (not what is advertsed).
I would be keen to see how other people see value per square foot.

Shoreline apartments are great apartments. Imagine when the full Palm comes in, the value would judst shoot up. I always maintain that the investments should be made where the rich like to stay. The Rich would not mind parting with a couple of millions just to have his toy.

Trump I would not call mad. Trump is Trump, again you are catering to celebrities who would not mind paying.

Inland over 2500 AED per square foot - DANGEROUSLY HIGH

Anything close to sea over 3,500 AED per square foot - DANGEROUSLY HIGH. A risk worth taking if you are loaded with money, which I am not. Waterfront properties are again where the rich tread and a total different ball game.

Regards

Roshan

 

[lesplaces]

Valid comments but still don't understand why the Waterfront development can justofy 50-100% premium per square foot compared to shoreline apartments on Plam.

Will they be better spec ?
Is location better ?
Is it just because shorelines are coming up from such a low start point in which case no justification ?
Are the just speculating on future prices - in which case why not just buy a shoreline and pocket the rent for the same period ?

Don't understand ????

 

[savais]

Question for you guys. We all know a correction is likely, we just don't know when. But, my question is what is the WORST case scenario in terms of price per sq ft in the following places:
Sports City
City of Arabia
Greens
Springs
Arabian Ranches
Internaitonal City
Jumeirah Village

 

[Roshan]

Valid comments but still don't understand why the Waterfront development can justofy 50-100% premium per square foot compared to shoreline apartments on Plam.

Will they be better spec ?
Is location better ?
Is it just because shorelines are coming up from such a low start point in which case no justification ?
Are the just speculating on future prices - in which case why not just buy a shoreline and pocket the rent for the same period ?

Don't understand ????

Shorline apartments are not exactly the best of developments. There were serious concerns about finish. There is no guarantee that the ones with 50 to 100% are better construction. However the views might be better

Regarding Trump. It's for sure that it will have lots & lots of class. It's a different ball game altogether. He caters to a different class and he has the history to back him.

Regards

Roshan

 

[Roshan]

Question for you guys. We all know a correction is likely, we just don't know when. But, my question is what is the WORST case scenario in terms of price per sq ft in the following places:
Sports City
City of Arabia
Greens
Springs
Arabian Ranches
Internaitonal City
Jumeirah Village

Nobody can predict that. Dubai has adopted the "build and they will come approach ". If the people come in and the supply and demand equation holds, then we could see a small correction. If the equation does not hold obviously ther could be a deeper correction.

Regards

Roshan

 

[savais]

I know it is one of those questions which you need a crystal ball for. I guess I just want people's opinions on whether the price per sq ft of a place anywhere in Dubai could go less than 800 for example.

 

[Roshan]

I know it is one of those questions which you need a crystal ball for. I guess I just want people's opinions on whether the price per sq ft of a place anywhere in Dubai could go less than 800 for example.

Certainly not. I feel Dubai would never below Dhs 800 psf. My guess is Dhs 1,000 to 1,200 would be an acceptable price in the future in the event of a correction.

I bought my investments at Dhs 700 to 850 and I know for sure I cannot go wrong whatever happens. I confidently say that even if the market corrects by 50% I will make money in terms of rent.

Regards

Roshan

 

[NAZ_2_NAZ]

Agreed. These corrections people keep on talking about i believe will just be a slow down in the increase of the market prices as of todays prices. If the short term speculators are allowed to continue to further create this false demand in the market for another year by flipping again and again, then yes it is only time before we see a major correction of 20-30%. As the flippers margins are constantly reducing now. or the time it takes to sell is getting longer, i think flipping will slow down harshly soon. So this should not happen any way.

Even flippers need clients to sell onto, usually people who have experience in investment and thus knowledge of the market, they have had to be savvy to create the funds to purchase these deals at 5-10% + premium, so they can go on and make money on it. The quick return days, double your money in a queue are very numbered.

 

[Roshan]

Agreed. These corrections people keep on talking about i believe will just be a slow down in the increase of the market prices as of todays prices. If the short term speculators are allowed to continue to further create this false demand in the market for another year by flipping again and again, then yes it is only time before we see a major correction of 20-30%. As the flippers margins are constantly reducing now. or the time it takes to sell is getting longer, i think flipping will slow down harshly soon. So this should not happen any way.

Even flippers need clients to sell onto, usually people who have experience in investment and thus knowledge of the market, they have had to be savvy to create the funds to purchase these deals at 5-10% + premium, so they can go on and make money on it. The quick return days, double your money in a queue are very numbered.

I call that a "WOW " words of wisdom.

What you are saying is absolutely right. Flippers are finding it hard to operate as the market matures. I do agree there are pockets where flipping still exists, for eg : Badrah and that was only because the price was reasonable. That too, in time to come will stop.

Once the flippers are out. The artifical pricing will not last and the developer would be forced to bring his price down - OR - offer incentives like free children education for 10 years

I would be preparing myself for ready properties, buy and rent and be happy for the rest of my life.

Regards

Roshan

 

[NAZ_2_NAZ]

I call that a "WOW " words of wisdom.

What you are saying is absolutely right. Flippers are finding it hard to operate as the market matures. I do agree there are pockets where flipping still exists, for eg : Badrah and that was only because the price was reasonable. That too, in time to come will stop.

Once the flippers are out. The artifical pricing will not last and the developer would be forced to bring his price down - OR - offer incentives like free children education for 10 years

I would be preparing myself for ready properties, buy and rent and be happy for the rest of my life.

Regards

Roshan

Thanks for the compliment mate.

Dubai has still got a lot of money to be made, its just how you go about doing it. I think trying to not follow the crowd is always a good option. Yeah, i agree buy finished properties get excellent rent in one payment no headache, it is a good option.

 

[harbkalsi]

Certainly not. I feel Dubai would never below Dhs 800 psf. My guess is Dhs 1,000 to 1,200 would be an acceptable price in the future in the event of a correction.

I bought my investments at Dhs 700 to 850 and I know for sure I cannot go wrong whatever happens. I confidently say that even if the market corrects by 50% I will make money in terms of rent.

Regards

Roshan

I have an optimistic view on this. Although I agree that AED 1000 to 1200 is a realistic price, I feel that Dubai will continue to appreciate in the long run. The government is delivering everything that it promised and this coupled with very strong marketing, and the fact that many new attractions like Dubailand are still to be developed, demand will continue to grow, though not at the rate that we have seen in last 4 years. There may be some price correction but I don't ever see the prices going south beyond the 50% mark. If it does, my cash is ready !

Assuming that there is 20% - 30% capital growth/appreciation p.a what sort of percentage rental return (on market value as opposed to purchase price) should one expect on residential units between now and next 24 months in desert areas like DSC, JV ?