Villa Market - Bottom reached?

[monsi]

Here is a question for debate.

I realise the current theme on this forum is mostly about crashes and corrections, but my acquaintances and I have been experiencing an interesting phenomenon over the last week.

We are people who know each other because we have all bought properties in Dubai. Some of us are thinking of selling to reinvest.

Those of us who own villas, whether complete or almost complete, have suddenly started receiving calls with offers.

Most of the offers are not worth considering, so none accepted so far.

What we've been calling the 'scavengers' are out looking for villas - as cheaply as possible. (We've heard of one Russian buyer who is looking to buy 10 Villas on one of the Palms.)

So my question.

Has the villa market bottomed out?

To elaborate, do these people know something? Are they trying to hoover up as many villas as quickly as they can while people are still panic-stricken by the rumour mill?

 

[Sportsman]

The foundation of this market is the rent yields for ready properties, specifically villas. Have you tried to rent a 4 bed villa? It's very costly which is one of the only silver linings in this market.

As long as Dubai doesn't start to lose jobs, villas should hold up well, IMO

Cheers

 

[Roshan]

Here is a question for debate.

I realise the current theme on this forum is mostly about crashes and corrections, but my acquaintances and I have been experiencing an interesting phenomenon over the last week.

We are people who know each other because we have all bought properties in Dubai. Some of us are thinking of selling to reinvest.

Those of us who own villas, whether complete or almost complete, have suddenly started receiving calls with offers.

Most of the offers are not worth considering, so none accepted so far.

What we've been calling the 'scavengers' are out looking for villas - as cheaply as possible. (We've heard of one Russian buyer who is looking to buy 10 Villas on one of the Palms.)

So my question.

Has the villa market bottomed out?

To elaborate, do these people know something? Are they trying to hoover up as many villas as quickly as they can while people are still panic-stricken by the rumour mill?

Developers sensing that villas will move better than other developments will start launching villas.

Eventually villas will come down to sensible levels and that will be a good for everybody.

Regards

Roshan

 

[kamadenu]

Developers sensing that villas will move better than other developments will start launching villas.

Eventually villas will come down to sensible levels and that will be a good for everybody.

Regards

Roshan

I dont think developers are going to launch anything soon till they sort out their current projects, so my feeling is that any completed properties will definitely have value for some time to come

 

[georgihh]

I dont think developers are going to launch anything soon till they sort out their current projects, so my feeling is that any completed properties will definitely have value for some time to come

Yes agree
Further more the government will start buying properties back particularly villas until the prices stabilize and start going up again.
I think we hit the bottom, the government will step in with full power and the demand will come back to the market in couple of months.

 

[monsi]

Well that may explain the agents who are calling trying to cut the price by large percentages as they have ready buyers trying to buy in bulk?

 

[georgihh]

Monsi

What have you got and how much are they offering you?
Pure curiosity I am not an agent

 

[monsi]

The people we know have bought in the Palm, the Ranches and the Villa project.

We have a Mallorca in the Villa project, Phase One, ready March 09. We reserved it 2005.

We were considering selling it, but the panic in the market has had the opposite effect on us and we think we should keep it and rent it out until sanity and calm returns.

In the last week we have had offers from 1m below our asking price to 30% below our asking price.

The 30% one was an agent, who called an agent, who called our agent because someone was bulk buying and wanted to see how many bargains he could bag.

We were considering the 1m below, but the logistics of the deal were not suitable as we have to travel to Dubai and we weren't as desperate as they would have liked us to be.

Our asking price was not excessive, but we know our Villa is in a very good location within the development (Ponderosa, backing on to water) so, if not now, later it will be appealing to the right end user.

One mortgage broker we recently spoke to told us that the Dubai banks have more or less met their home lending quota for the year, but there is an expectation that deals will be available in the New Year.

As soon as lending becomes more available, complete or near complete property prices will go up as, for many, it is a more pragmatic option than renting.

 

[AbraCadabra]

For not yet delivered properties the demand these days seem to be only for those that are nearing completion AND from reputed developers and even then the demand is very weak due to the lack of credit availability. The only people who are still buying are those paying the still exteremely high rents for villas. The question on everyones mind now is if the rent rates will start coming down now and personally I think it's inevitable if the current situation holds.

 

[monsi]

For not yet delivered properties the demand these days seem to be only for those that are nearing completion AND from reputed developers and even then the demand is very weak due to the lack of credit availability. The only people who are still buying are those paying the still exteremely high rents for villas. The question on everyones mind now is if the rent rates will start coming down now and personally I think it's inevitable if the current situation holds.

That makes sense and ties in with what we've been told.

The bulk buyers may know more than we do about credit availability?

If what the broker said is correct and mortgage availability improves in the new year, any (complete/near complete) villa bought from someone frightened into parting with it now - at a knock down price - is going to deliver a nice return as soon as people are able to borrow.

When discussing the rental of our property, we were told that rental yields will remain healthy as long as demand outstrips supply of vacant complete villas.

What's fascinating is how dramatically the selling agents have changed their tune?

They seem to be exploiting the panic.

When our little group exchange notes the same picture emerges.

Our previously 'bullish' agents are trying to get us to sell at any price, by describing nightmare scenarios and implying that we would be stupid not to sell to the person who has just offered.

I suppose when times get hard, from their perspective, any sale is better than no sale.

One agent even muttered something about karma - mildly insulting when most of us did not buy speculatively.

 

[memo123]

You said it ,scavangers

I wouldnt sell under current conditions and every one is looking for ready buildings and homes especially houses, becuase the off-plan market is dead and people want to buy somthing they can touch . DONT SELL UNLESS YOU GET YOUR PRICE.
I heared on CNBC Arabia that houses that were worth 15 mio in the palm are now going for 10 mio , but who is selling . I would believe it only when I see it

regards

Here is a question for debate.

I realise the current theme on this forum is mostly about crashes and corrections, but my acquaintances and I have been experiencing an interesting phenomenon over the last week.

We are people who know each other because we have all bought properties in Dubai. Some of us are thinking of selling to reinvest.

Those of us who own villas, whether complete or almost complete, have suddenly started receiving calls with offers.

Most of the offers are not worth considering, so none accepted so far.

What we've been calling the 'scavengers' are out looking for villas - as cheaply as possible. (We've heard of one Russian buyer who is looking to buy 10 Villas on one of the Palms.)

So my question.

Has the villa market bottomed out?

To elaborate, do these people know something? Are they trying to hoover up as many villas as quickly as they can while people are still panic-stricken by the rumour mill?

 

[Wannaberich]

Anyone with a villa shouldnt panic and sell.Dubai has a big shortage of villas.The current situation with prices dropping will reverse itself as soon as the worlds ecomomies come out of their recessions.Once people feel confident again,and once the banks start lending money again,prices will come straight back up and more.
This is especially the case with villas because there is such a shortgage.
Also,the fact theat many projects have been put on hold will create an even bigger shortgage of properties.Long term those who hang on to their completed villas/appartments
will benefit.
In the meantime you can enjoy the amazing rents which actually are still going up and will continue to go up.Figure it out,if people arent buying because they cant get a loan or they are waiting for prices to drop before they buy then obviously they have to rent.

 

[UAEProp]

I Think the banks will only start lending now after the Amlak-Tamweel merger. Before that everyone will continue to wait and watch. So any lending and any upward price movement that MAY happen will only occur after the middle of next year, when the merger is complete and the dust settles.

 

[monsi]

Convinced something is going on

Thank you guys.

There is definitely something going on.

Received 3 phone calls today and an earlier pm enquiry courtesy of this thread.

It's funny all of them with the same general theme. Examples of their powers if persuasion include

• market is falling and we are heading for more price reductions
• no one is lending so no one can afford to buy
• I should be grateful any one is considering our villa
• they have been offered the very same villa for anything from 7m to 9m. This is less than half the current off-plan price - a bargain for something that will very soon be able to return a very healthy rental yield - why not just buy it, why approach us?
• soon I will have to pay people to buy it

If this is the case then why are we suddenly getting so many enquiries? Why push so hard on the assumption that we are desperate to sell?

Our Villa is in Phase 1 of the Villa project, Dubailand (6 beds + 2 maid's rooms) and is expected to complete Q1 next year. All of us who bought in Phase 1 have paid 70% of the price, in our case cash.

As no more payments are required until completion, it is highly unlikely that any of these Villas will be available as a distress sale.

They also seem a bit disgruntled when we say we will keep it and rent it out rather than sell for a ludicrous price.

These people know something and are trying to brow beat people into parting with their properties for silly prices while there is panic in the market. Judging from their urgency they may think things will change sooner rather than later.

I have been told the only reason Amlak stopped lending was they had reached their quota for the financial year and that they will start again in the new year.

Also, to protect the Dubai property market there will be a number of measure introduced in the coming couple of months, including: -

• local banks will be pressured into reducing their interest rates and start lending again
• some developments will be slowed down or put on hold to reduce supply

It'll be interesting to see what happens next.

 

[PropGuy]

Banks need to start lends because as far as I know there is no liquidity problem for banks in Gulf so far.

Anyway I heard US$ is expected to lose 50% of its value in next 8 months, because all big for-ex investors I know are planning to cash out on US$ very soon.

Thank you guys.

There is definitely something going on.

Received 3 phone calls today and an earlier pm enquiry courtesy of this thread.

It's funny all of them with the same general theme. Examples of their powers if persuasion include

• market is falling and we are heading for more price reductions
• no one is lending so no one can afford to buy
• I should be grateful any one is considering our villa
• they have been offered the very same villa for anything from 7m to 9m. This is less than half the current off-plan price - a bargain for something that will very soon be able to return a very healthy rental yield - why not just buy it, why approach us?
• soon I will have to pay people to buy it

If this is the case then why are we suddenly getting so many enquiries? Why push so hard on the assumption that we are desperate to sell?

Our Villa is in Phase 1 of the Villa project, Dubailand (6 beds + 2 maid's rooms) and is expected to complete Q1 next year. All of us who bought in Phase 1 have paid 70% of the price, in our case cash.

As no more payments are required until completion, it is highly unlikely that any of these Villas will be available as a distress sale.

They also seem a bit disgruntled when we say we will keep it and rent it out rather than sell for a ludicrous price.

These people know something and are trying to brow beat people into parting with their properties for silly prices while there is panic in the market. Judging from their urgency they may think things will change sooner rather than later.

I have been told the only reason Amlak stopped lending was they had reached their quota for the financial year and that they will start again in the new year.

Also, to protect the Dubai property market there will be a number of measure introduced in the coming couple of months, including: -

• local banks will be pressured into reducing their interest rates and start lending again
• some developments will be slowed down or put on hold to reduce supply

It'll be interesting to see what happens next.

 

[georgihh]

Banks need to start lends because as far as I know there is no liquidity problem for banks in Gulf so far.

Anyway I heard US$ is expected to lose 50% of its value in next 8 months, because all big for-ex investors I know are planning to cash out on US$ very soon.

Yes looks like the $ is running out of steam but 50% is too much 10-20% is more reasonable

 

[PropGuy]

Yes looks like the $ is running out of steam but 50% is too much 10-20% is more reasonable

50% is minimum expected by the forex investors I know. All are seeing huge inflation in next 8months. Most have taken off 5 to 10% of their liquid US$ investment. Waiting for furture market signs to move 60% to 75% liquid US$ investments into other investments. Banks at the moment are hoarding US$, but when they see value of US$ falling they will be pushing it out too from their accounts. Overall this is good, it will unblock the US$ supply in the market.