norsk

I would agree with this tactic, but...

the million dollar question is how the market develops over the next let's say 6 months. If expat owners put their properties on the market in increasing numbers (fear of crash/correction combined with the willingness to take a 10-15% hit on price due to exceptional currency exchange rate) there will be a definite market imbalance and prices could potentially drop off a cliff (again).

It could happen very quickly and there will be very few buyers putting money on the table until the perceived bottom has been reached...

I'm so glad I don't own property here, although if there is another pop I will be there ready and waiting with my money

scrubbedexpat141

That's the thing isn't it, in theory, what I suggested is a top notch idea.

When I was studying economics at college (read; when I wasn't playing basketball, chasing girls, drinking and was really bored so I actually went) it was always wonderful in theory and is probably the most hindsight based subject I ever studied.

Yes, you can predict trends and things but in a place like this I think it's akin to coin flipping. Irishbeehelmet could cash out now and see prices go back up and be missing out on huge returns. He could wait and see his returns get eaten up by the price bottoming out. He could hold and see solid 12% for the next 4 years. It's all a ****ing gamble and it really, really confuses me because such strong arguments can be put any which way - based on evidence AND opinion.

"Hindsight Ltd is the easiest company to run" says my mrs' Dad. Regularly. Still expecting the same laughs.

norsk

Economic theories typically rely on a functional and regulated market, but in Dubai there are a lot of external factors that make the markets do strange things. Once in a while however it is brought into line and what should happen does happen. 2008 was one of those times...

Your mrs' dad sounds like a real hoot. How old do you reckon you have to be before you start repeatedly telling the same story as if it was the first time?

scrubbedexpat141

I agree, this place is a bit out on it's own and a bit wild, unpredictable and crazy. But that's why people have made silly money. Still, risk/reward eh.

Oh he's basically an accountant. He's nice and has some interesting stuff to say about the market he's in but the 'hindsight ltd' thing literally drives me crazy. I promise you it's once a day.

I reckon any age, I repeat stuff now that I've told people before. It's only if you start making it better / bigger that you can get in trouble.

Meow

Irishbeekeeper, if you are happy with the return you have made so far and don't want to hang on to it for the very long term, why not sell now and bank the profit?

This is an immature market and thus has many more extreme highs and lows than a mature European market. If values drop it could be quick and you may not get a buyer at the current value and could end up hanging on to it for years.

If its's purely an investment don't be sentimental or hope this increases continue. A mistake that many investors make is not to take profits when then can. Sure it might go up further, but it could also fall and you have to decide which is the least worst option in your particular situation.

Irishbeekeeper

Well tbh I dont think the prices are going to go up by much anymore. They pretty much have leveled out. The rise in rents has also stopped now. What I am trying to say is that I feel this has gone up as much as it could and is now plateauing, only way now is down. When it happens? now thats the million (4 Billion) dollar question isnt it?

Anyone know if Dubai made the IMF payment that it was supposed to make this year? or it hasnt happened yet?

I reckon around early 60s! Same for my dad!

I honestly would sell today if I got an offer, ive had it up for sale for 2 weeks now and not a nibble. So starting to see signs of prices going down maybe?

Millhouse

There's no IMF loan mate (thank God, otherwise we would have to pay tax and have no cheap petrol). They only borrowed from commercial banks and they can go f- themselves.

Millhouse

The sales market is very slow. Prices have already come down 10% or so but its not been widely reported. If it's an apartment, get out before 2016 or be prepared to hold it for a while.

If you are getting 12% rental return (is this gross?) then I'd probably hold on to it.

Irishbeekeeper

niiiiiiiice! how much did the borrow btw? I read 4 Billion from AD and another 4 Billion from the banks?

Yep, an apartment. Why 2016? what happens then?
Well, it is 14% gross actually but I had forgotten the 'since we built it we will charge you for doing absolutely nothing' service charge from Nakheel, so the return actually comes down to 11% net.

Millhouse

Then borrow as much as you possibly can at 5% against it and cash out that way.

2016 is when the 2013/2014 mini-boom apartments will all be delivered and the glut of oversupply will hit the market again.

This market will be like HK - a fast cycles of boom and busts. It'll never mature.

scrubbedexpat141

Just before I got my first apartment in 2011 it was bought in the August for 959,000 dizzers. They now sell for 2mill+. I wish I'd had the bollocks to tell Daddy to buy it. I wish even more I had the money to buy it.

Especially seeing as I rented it for 62500 the first year and they're on Dubizzle for 115-120 now.

Meow

Hindsight is a wonderful thing...

Millhouse

Rental yield hasn't really changed. (i.e. 62k on 900k... 120 on 2m).

As rents fall due to oversupply and low oil prices, so will the capital values.

scrubbedexpat141

But 120k on 900k is pretty nice going. Even if just for 2-3 years. It would (minus say 20k on costs - I don't know how much) do 2-300k damage to the mortgage.

Still, all irrelevant because I didn't buy it and I don't get that much.

Tockalosh

My mate has this one as part of his portfolio of projects he is managing so we know this one is real