Dubai Property Prices: Gloomy Article No 472
Oct 26th 2008, 12:21 pm
#1
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Dubai Property Prices: Gloomy Article No 472
Dubai Property Agents Fear Crash As Home Sales Slump
DUBAI -- A six-year real estate boom in Dubai that spurred a $475 billion building frenzy has ended, according to agents who say sales are collapsing amid fears that the global economic downturn will hit the sheikdom.
"Last month was a real disaster and worse is coming I guess," Mehdi Zoghbi, an agent at Middle East Real Estate Consultants, told Zawya Dow Jones Sunday.
Zoghbi says that desperate sellers are now offering off-plan properties on
the secondary market for a zero premium, effectively accepting a loss on their
investment in order to offload quickly.
Dubai, the first Gulf sheikdom to allow foreigners rights to buy homes, may also be the first to see a crash in property prices as uncertainty over the
region's prospects and the global credit crunch have undermined investors'
confidence.
"Our commissions have fallen by up to 70% recently," said Khaled Daji, an
agent at Al Jabal Real Estate. "The most hit are the projects under development and those luxurious high end. We plan to survive for another six months to see how this crisis unfolds."
Daji says that Dubai's real estate watchdog needs to do more to stop the
practice of "flipping" property and the payment of "key money" to reserve real
estate.
But the city's biggest developers like Emaar Properties PJSC (EMAAR.AI) and Nakheel are adamant that sales remain robust. Mohammed Alabbar, Emaar's chairman and one of the architects of Dubai's real estate boom, said in the company's third-quarter statement that "we are very confident of our company's fundamentals and future growth."
That hasn't stopped investors dropping the company's shares. Emaar's stock has fallen 62% since the beginning of the year, that's more than the 48% fall in the Dubai Financial Market's main index over the same period, according to Zawya.com data.
Earlier this month, Colliers International said the growth of property prices
in Dubai slowed to 16% in the second quarter of 2008 from 42% in the first
quarter. Morgan Stanley warned in August that property hotspot Dubai could see a 10% fall in prices by 2010.
A collapse in real estate prices will add to pressure on Dubai's economy,
which doesn't benefit from the vast oil income enjoyed by neighboring Abu Dhabi. Property and construction are estimated to account for about 30% of the emirate's economy.
And the buoyant economic conditions across the region that have underpinned Dubai's real estate boom, which according to Middle East Economic Digest will consume $475 billion in capital spending, are now under assault.
Oil, which underpins the region's economy, looks likely to fall further as
demand across the globe weakens. Crude traded in New York closed down at $64.15 a barrel Friday.
Not Panicking
Tighter lending is also making life hard for many real estate agents, with
buyers unable to secure loans for property without larger deposits.
HSBC Holdings PLC (HBC), the largest international bank offering home loans for Dubai property, tightened its requirements last month asking borrowers to front up to 50% of the purchasing price for some homes.
The bank will now only lend up to 70% of the total value of the property in
the best cases, down from 85% last month.
The tougher terms are "to ensure that customers receive loans that they can afford to repay at a time of considerable uncertainty around the world," the bank said in a statement to Zawya Dow Jones.
"The financial crisis is putting people off buying," said Lisa Penderis
Dubai-based real-estate agent. "End users are particularly impacted because banks are only lending up to 75% so people need to find a lot of cash for a deposit."
Tony Stafford, a British commercial manager working in Dubai has like many of the 100,000 U.K. nationals living in the United Arab Emirates bought property in the sheikdom as an investment. He owns two apartments worth about 3 million U.A.E. dirhams ($817,000).
"It's not a great time to be selling as banks aren't lending," Stafford told
Zawya Dow Jones in a phone interview. "But I'm not going to reduce the price of the apartments because I'm confident things will pick up again before Christmas. I'm not panicking. I'm just waiting for the right buyer."
Stafford, who remains bullish, says he will buy another property in Dubai and is now in a stronger position to negotiate on the price. His optimism is shared by Dubai's ruler Sheikh Mohammed bin Rashid Al Maktoum who announced earlier this month plans for the AED350 billion redevelopment of the city's Satwa district.
But whether buyers still exist in the current depressed economic mood is no longer guaranteed.
DUBAI -- A six-year real estate boom in Dubai that spurred a $475 billion building frenzy has ended, according to agents who say sales are collapsing amid fears that the global economic downturn will hit the sheikdom.
"Last month was a real disaster and worse is coming I guess," Mehdi Zoghbi, an agent at Middle East Real Estate Consultants, told Zawya Dow Jones Sunday.
Zoghbi says that desperate sellers are now offering off-plan properties on
the secondary market for a zero premium, effectively accepting a loss on their
investment in order to offload quickly.
Dubai, the first Gulf sheikdom to allow foreigners rights to buy homes, may also be the first to see a crash in property prices as uncertainty over the
region's prospects and the global credit crunch have undermined investors'
confidence.
"Our commissions have fallen by up to 70% recently," said Khaled Daji, an
agent at Al Jabal Real Estate. "The most hit are the projects under development and those luxurious high end. We plan to survive for another six months to see how this crisis unfolds."
Daji says that Dubai's real estate watchdog needs to do more to stop the
practice of "flipping" property and the payment of "key money" to reserve real
estate.
But the city's biggest developers like Emaar Properties PJSC (EMAAR.AI) and Nakheel are adamant that sales remain robust. Mohammed Alabbar, Emaar's chairman and one of the architects of Dubai's real estate boom, said in the company's third-quarter statement that "we are very confident of our company's fundamentals and future growth."
That hasn't stopped investors dropping the company's shares. Emaar's stock has fallen 62% since the beginning of the year, that's more than the 48% fall in the Dubai Financial Market's main index over the same period, according to Zawya.com data.
Earlier this month, Colliers International said the growth of property prices
in Dubai slowed to 16% in the second quarter of 2008 from 42% in the first
quarter. Morgan Stanley warned in August that property hotspot Dubai could see a 10% fall in prices by 2010.
A collapse in real estate prices will add to pressure on Dubai's economy,
which doesn't benefit from the vast oil income enjoyed by neighboring Abu Dhabi. Property and construction are estimated to account for about 30% of the emirate's economy.
And the buoyant economic conditions across the region that have underpinned Dubai's real estate boom, which according to Middle East Economic Digest will consume $475 billion in capital spending, are now under assault.
Oil, which underpins the region's economy, looks likely to fall further as
demand across the globe weakens. Crude traded in New York closed down at $64.15 a barrel Friday.
Not Panicking
Tighter lending is also making life hard for many real estate agents, with
buyers unable to secure loans for property without larger deposits.
HSBC Holdings PLC (HBC), the largest international bank offering home loans for Dubai property, tightened its requirements last month asking borrowers to front up to 50% of the purchasing price for some homes.
The bank will now only lend up to 70% of the total value of the property in
the best cases, down from 85% last month.
The tougher terms are "to ensure that customers receive loans that they can afford to repay at a time of considerable uncertainty around the world," the bank said in a statement to Zawya Dow Jones.
"The financial crisis is putting people off buying," said Lisa Penderis
Dubai-based real-estate agent. "End users are particularly impacted because banks are only lending up to 75% so people need to find a lot of cash for a deposit."
Tony Stafford, a British commercial manager working in Dubai has like many of the 100,000 U.K. nationals living in the United Arab Emirates bought property in the sheikdom as an investment. He owns two apartments worth about 3 million U.A.E. dirhams ($817,000).
"It's not a great time to be selling as banks aren't lending," Stafford told
Zawya Dow Jones in a phone interview. "But I'm not going to reduce the price of the apartments because I'm confident things will pick up again before Christmas. I'm not panicking. I'm just waiting for the right buyer."
Stafford, who remains bullish, says he will buy another property in Dubai and is now in a stronger position to negotiate on the price. His optimism is shared by Dubai's ruler Sheikh Mohammed bin Rashid Al Maktoum who announced earlier this month plans for the AED350 billion redevelopment of the city's Satwa district.
But whether buyers still exist in the current depressed economic mood is no longer guaranteed.
Oct 26th 2008, 12:47 pm
#2
Truth is the safest lie.
Joined: Jul 2008
Location: @ the beach.
Posts: 7,243
Re: Dubai Property Prices: Gloomy Article No 472
Will make for interesting talks between expats and landlords in the near future."This property crash is immense isn't it? Struggling to meet mortrgage re-payments? You are! Well let me twist the knife a bit more..."
Oct 26th 2008, 1:03 pm
#3
Lost in BE Cyberspace
Thread Starter
Joined: Jul 2007
Posts: 13,553
Re: Dubai Property Prices: Gloomy Article No 472
And now read the article in the 'Different Crisis' thread..........
