theduke

Everywhere I look at the moment I am reading how things are getting better and the end is near(of the downturn), but to be honest it doesn't feel like it.

I very nearly moved over to Dubia in January 09 and was lucky enough to change my mind after my current company offered me a promotion and 25% wage increase, which was nice.

However, I have decided that one day I would like to go and work on one these huge iconic buildings and as I am British and the Americans have never invaded or epressed us I have a low chance in getting a visa to work there and the only other place I can work on anything of the size and stature that I have in mind is Middle East.

So the big question is when will the upturn begin, I know some of you will be all doom and gloom and I do want to hear your thoughts, but would also like to hear from the 1/2 full guys. Then that will give us a pretty even balance.

admon

Really is a case of how long is a piece of string.

Local media will always talk up the economy here, so it can sometimes be difficult to see the wood for the trees.

But the fact is that there are still many people either losing their jobs or being downgraded on salary on a daily basis.

Construction in my view will take years to recover, maybe a decade or more. The real estate market was built on speculation - only in the next year or two will it fully unravel and we will see what is left in terms of true demand.
The fact that rents have halved in some areas in the last 6 months, shows how big the bubble was, I feel there is still a long way to go in the next year or so before the market reaches bottom.

On a positive note, Abu Dhabi still have cash to spend and a lot of infrastructure and government building work will still take place. Abu Dhabi seems to have much more of a long term sustainable plan and unlike Dubai, has the cash to attain it.

admon

and as if on cue, a timely reminder of 'exuberant' attempts to talk up the market:
http://www.gulfnews.com/business/Rea.../10321437.html

Ethos83

It's possible the Dubai property market will never fully recover, that is, reach the same price levels of late 2008. It's not an impossible concept when you consider that property prices in Japan and Taiwan, both well-developed economies, are still below their 1991 peak values.

This place is still massively overbuilt that I'm surprised the bust hasn't been worse. Or perhaps it is actually a great deal worse than I imagine, for it's the government that carefully controls the press for any negative news.

shiva

I suspect that dubai is well and truely broken and that we may never know the full extent of it.

There has been very little talk and press on defaults on mortgages and or loans. We get the occasional story of developers extending payment plans for months but no figures on how many or how much default has already occured, add on the fact that a great deal of those with extended payment plans are probably not in any position to make any more payments regardless of what extension they get and we could be looking at defaults totalling billions.

I personally know several individuals who are desperately trying to raise cash to make the above payments and are failing badly. 1 of these owns 16 properties bought on a flippers dream and now cant pay for more than half the mortgages, 1 flipper built up to a mega villa, paid the deposit on the 25 million dhs price and now cant make the 1st payment (his plan was to flip before it was due), he has had an extension but i know for a fact he is now planning on bailing as the idea of a 5 odd million dhs debt ( its now on the market for 20 million dhs) in Dubai fills him with dread, he'd rather be bankrupt in the Uk than here!

these are just two examles and i am certain they are but a couple of the thousands of similar stories. God alone ( and perhaps indie girl) knows the extent to which banks here will be left with huge holes in the books

Combine the above with the fact that most of the large developers owe enormous sums of money to their contractors and have openly told them that they will not recieve full payment and you start to get the picture.

Just driving around you can see many many more to Let signs than have been seen in years, a visible indicator of more property on the rental market and less people chasing these properties

Several government entities have restructured and I have it on good authority that this is in preperation for dumping several of the non performing elements, this will leave an awful lot of people and big companies seriously out of pocket, lead to more redundancys and be a pr disaster, further damaging an already buggered dubai.

Outside of property and construction dubai's other main income is from tourism. An industry which every analyst in the business is predicting will suffer hugely this year and for a few years to come. One just needs to look at the malls to realsie that there are very very few tourists here this year.

The property market here is dead and as stated in the above posts may never recover to the previous highs, the local population is dropping as people leave due to redundancy, debt, etc. Tourism is already down and likely to get worse. The goverment is official in deap shit financially and the global PR battle looks as if it has been lost.

In short Dubai is a very very long way from a recovery and in fact may never recover fully, whilst Abu Dhabi has and will continue to help it will come at the cost of Dubai's ascendency.
Abu Dhabi will once again become the main city in the UAE and Dubai will revert to its poorer and less popular cousin

mrskpd

Here are a few things I have observed in the last few weeks

Rental prices, for the past few months, have been steadily dropping. We have been looking around for several months just to know our options when our lease is up. Most properties have been sitting vacant for quite some time (I'm only talking about the Old Town area where we live).
However, in the past week, we have noticed that prices seem to have started going up again! And at least 5 or 6 of the apartments that we have had our eye on have been leased, sometimes before we could view them. And no new comparable apartments have come onto the market.

We have also been keeping an eye on second hand cars, waiting for a great opportunity. Several weeks ago most cars were still available weeks after being listed. Last week, we saw two we liked advertised (at prices that were good but not really bargains). We made appointments on Wednesday to see both on Friday, however on Thursday we got a call from both owners saying the cars were sold.

Also, the Dubai Mall is getting busier and busier. More and more shops are opening. Last weekend, the bridge between the Mall and the Souk al Baher was at 6pm what you could only describe as jam packed. There were so many people waiting to watch the fountain that we couldn't actually get across the bridge and had to go around the other way. Out the front of the Mall there were 7 tourist bus' lined up, waiting for the tourists to come back after the fountain.

So I don't know whether these indicate that the light is shining again yet, but maybe they are signs that we are no longer on the downward slope

TGFKASE

But did people actually BUY anything at the mall, or simply view it as a toursit attraction.....

Hello.Kitty

good post there, Shiva.

I'd also add that the tourism targetted by Dubai is high-end and expensive. They don't want Dubai to be a cheap package-holiday destination and so prices will remain high. Therefore (no-brainer) tourism will only recover when the middle-to-wealthy bods feel that their own jobs/income are secure in their home countries. To this day I don't know why some governments base their economies on something as fickle as tourism.

Also, I do wonder about the longer-term effects of Dubai's over-expansion. There are construction sites/plots that have been put on hold dotted around all over the place, and whilst Dubai was booming, people could forgive the odd eye-sore... now, well, would you like to spend a rather expenny 2 week holiday next to a dusty pit or indeed rent a flat next to some abandoned hoarding?

mrskpd

I think just the fact that the tourists are there in the hordes that they are is a positive sign.

I don't really keep tabs of what people are buying, but I have noticed that lots of the restaurants (also the food court) are often completely packed. Last weekend we tried 4 different restaurants around the fountain area before we found one that didn't have a waiting list

Ethos83

I wouldn't take one week's observation as gospel. A friend's seriously apartment hunting and she did notice that rents started to trickle up slightly at the end of May, but now she says she's seeing another rent drop happen. She viewed a large one bedroom in JLT asking 65,000, and a two bedroom in Al Barsha for 70,000, both (which she claims) are 10-15% cheaper than they were a month ago.

Ethos83

Are they tourists?

Even in boom years tourism dropped off this time of the year because of the weather.

mrskpd

I doubt that locals would be transported in on 24 seat coaches and would stand around gaping with long lense cameras, so pretty safe to assume they are tourists. When you live there it is prety easy to tell a tourist from a resident

And if it is true that even in boom years tourism dropped at this time of the year, my point was that tourists seem to be picking up in our area, not dropping off, so hopefully that is a good sign

Robbies

There are a few reports from HSBC, Standard Chartered and a few others (granted, many of the others are real estate agents / developers so pinch of salt advised...) which are positive at the moment.

HSBC, who around Aug/Sept 08 suggested we would see a 10% price correction in real estate during 2009 (before things plumeted here) are now reporting that the number of sales transactions and the actual sales prices (not asking prices) are increasing. I think 4% in April and 5% in May were the price increases quoted.

This is in relation to real estate only, and there are many other areas to consider.

Oil/Oil service companies - $70 oil will be helping there. Financial markets are improving. GBP:USD position improving, and as we get closer to 6.5+ AED to the GBP, then tourism will improve again as goods appear cheaper to tourists.

I think the main brunt of the current negative related to construction. Other areas seem to be levelling off at the moment and some starting to pick up.

At the moment, it all depends on who you are listening to - for every positive there is a negative. In all honesty, it may be too early to tell.

Nic1

But they aren't high end tourists - if you scan the UK papers there are loads of offers for Dubai - you can fly EK and get the hotel basically for free. A friend of ours works at one of the top end hotels and they hate the 'deals' as the tourists don't use the in house facilities as they are so expensive and bring in their own water, crisps, etc. to snack on instead of using the mini bar or the pool bar.

N

Ethos83

So that explains why my friend's hotel, which has 95% occupancy rate (so she claims) is still laying off staff.