zamboooka

Exactly my point, totally agree. Furthermore, I feel that in oil rich places such as UAE, purchasing power of individuals is much higher than other places. People dont have much problem here with liquidity. Most home owners that I know, have no mortages or anything to do with banks and bought the property on cash - no loans. Which really isnt the way back home in the states. So, in that respect, i feel that UAE is better off than other countries where its custom to buy houses through banks etc...

zamboooka

mmm coolies... I still dont know where that came from though.. but anyway

return of the dbxdude

Im being unfair on the place. . .

i was suggesting that small minded Brits - the type that sing 2 world wars and one world cup - wear napkins on there head and don’t apply suntan lotion, should go back to Wigan.

The most embarrassing about being british apart from the above, is that they are always, have always and will always be doomsayers. They are only happy when people fail. . . which is why I made my first post – when I suggest they shouldn’t be so happy that people were loosing money – just because they never had the stones or smarts to take a chance…

Wigan is shit place in the north.... but a surprisingly good night out. Expect to see girls vomiting on the street at 3am.

Autonomy

OK - enough. I will ban you again if you don't quit it. The whole debate had merit for a while, but it's turgid one up manship now.

It's a relevant and serious topic - every one wants to discuss it then fine, but these threads are now pointless.

Get back on topic and discuss reasonably or forget it.

Norm_uk

But surely who one has slept with falls under the "property" category in the middle east?

N.

benzonar

Wigan is an excellent place and renowned for it's lovely pies.


Now back on topic. Dubai is a prime example of extremistan as far as the economy goes. That means it is far more prone to black swan type events, and is almost impossible to make any accurate predictions which way it will go. You will have plenty of people claiming that they know, but the truth is they don't.

Yes, the economy could suddenly recover in the next couple of months and those buying property now would see their gamble come off. On the other hand it could get a lot worse and not fully recover for the next 5 years. Someone could suddenly discover an alternative energy source next week that completely removes the need for oil, if so then a lot of countries in this area would be screwed. Yes AD has a SWF, but I suspect that it has been heavily dented by recent events and they will be lucky if there investments are even worth half what they were 4 months ago.

The point I'm making is that those who claim they know which way it is going to go based on past events are full of shit. It's the same as those who claim that they saw this coming. They didn't, at least not for the reasons they claimed.

Everyone thought oversupply was going to be the reason, but it has been lack of credit. But then those that claimed it wouldn't crash due to high demand, well we have seen that high demand has meant diddly squat in this case. There is no guarantee that this demand will return once the credit taps are turned back on. I think a lot of people will be a bit more circumspect in where and what they buy. Let's face it a lot of property here is badly built, and badly managed, it is rediculously hot for 6 months of the year, and the city lacks any semblance of soul that it may have once had. Where is the real incentive for living here.

Don't get me wrong, Disneyland is a good place for a day out but I wouldn't want to live there. I'd much rather live in Wigan, have a meat and potato pie once a week at the footie, and maybe visit somewhere on holiday once in a while. After a bit you do find the lifestyle in the UAE to be inextricably dull, especially when all anyone talks about is property and money.

W10

It is partially down to Dubai. Even if there weren't global credit problems - in order to survive, the Dubai property market needs to become largely an end user one...there will eventually come a point (maybe in 15 years) when people will need to live in these things.....

There has also been:

Poor regulation of the property market allowing rampant speculation and causing huge unchecked price rises, almost nothing done to encourage end users. Everything done to encourage the 'hype' caused by flippers.

Too much development, not enough forward thinking, too much expenditure on marketing, perks for CEOs, massive internal corruption.

Local banks are not interbank lending to each other or lending for mortgages.

Zero credit regulation

Blatant and bare faced lying by company CEOs (no transparency), leading to rumour and speculation continued

A badly regulated exchange largely driven by insider trading

admon

It's true that the Dubai Property Collapse has happened at this time at least in part to the liquidity crisis globally.
But in all fairness, property has been exceedingly slow this year, as high prices have drove away those looking to flip.

Dubai property was already approaching the cliff edge, the liquidity problem just made it get there quicker.

CeeBee

The way i see it all.....if you're good at your job you shouldn't have anything to worry about in UAE construction. It is however a great opportunity for companies to get rid of the 'dead wood' (as I like to call it).

Whatever people are calling this...recession, collapse, bullsh*t..(you decide) it aint gonna last forever. So in xx months down the line when things pick back up and all of a sudden Dubai and ABD are back on with mega projects then companies are going to want to hit the ground running without having to mess about with another recruitment drive. I understand that contractors basically get offered jobs dependant on how quickly they can get on site. Might as well keep somebody that you know is good ticking over in a job rather than let them go and have to replace them down the line.

It sounds harsh....but its true.

IndieG

Absolutely - you've hit several nails on the head...

IndieG

Cash buyers in the market - yeah right! And this report confirms what several have been saying for the last couple of months......and what W10 has summarised above....


Property buyers struggle to make payments
Nathalie Gillet

* Last Updated: November 27. 2008 11:57PM UAE / November 27. 2008 7:57PM GMT

Some developers have reported up to 40 per cent of buyers falling behind on their payments. Pawan Singh / The National

Property developers are seeing more defaults by home buyers and property investors, who are caught between declining prices and a shortage of lending by banks, Dubai’s property regulator said today.

Marwan bin Ghalita, the chief executive of the Real Estate Regulatory Authority (Rera), said some developers had reported up to 40 per cent of buyers falling behind on their payments where units were sold off-plan by developers before they are completed or in some cases where construction has yet to even begin.

Most cannot sell the units they have purchased because buyers are scarce. But they cannot continue to make payments because banks are tightening lending amid the global credit crisis or will not pay because they are concerned the project may never be built. Some are simply walking away and leaving their downpayments. Defaults are particularly high among speculators who bought properties without financing, aiming of re-selling and pocket a quick profit.

The federal government is now moving aggressively to try to reinvigorate mortgage lending, while many developers are adjusting installment plans to accomodate some delay in payments before default. But Mr Ghalita said defaults could climb to the 40 per cent level in the off-plan, secondary market for property “if banks do not provide finance and developers do not change payment plans by the end of the year since payments are due,” Mr Ghalita said.

Precise figures on defaults and overdue payments are not available. But Mr Ghalita said he saw evidence of rising default levels in his department’s monitoring of what is known as the “trust account,” which is controlled by Rera and takes in payments from buyers until a project is completed.

“In projects where the percentage of speculators is high, there are cancellations,” he said in an interview in his Dubai office. “But in projects with end-users, cancellations are less than 10 per cent,” he said.

According to Rera statistics, there are 922 residential and commercial property developments in Dubai, of which 479, accounting for 46,000 units, are under construction.

Industry officials and analysts said rising default rates may push prices lower in the short-term, That could help refocus the market on end-users rather than speculators over the long term, but could put stress on many developers as their cash-flow from investors dries up even as loans are tough to obtain.

“We would obviously see more downward pressure on real estate prices,” said Robert McKinnon, the managing director of Al Mal Capital, “The closer people get to defaulting, the more they panic. Developers themselves will have to take a lot of these assets, that they recognise as sold back, on their books. You are going to see a hit to their earnings also.”

Developers say the government is tracking default levels closely and could make finance available to companies with viable developments if necessary. But prices may continue to adjust until new buyers enter the market in significant numbers. “I believe eventually that the issue is actually more about affordability,” Mr McKinnon said. “Real estate prices are going to come down to a point where consumers or end-users find it attractive for them to buy.”

Buyers tend to fall behind on payments for several reasons. Some cannot afford to keep up payments because they do not have the cash and cannot borrow. Others decide to stop paying out of a lack of confidence in the developer, or because they fear the value of the asset has already dropped below what they agreed to pay for it.

The Government has begun to address the shortage of credit from banks by merging the two largest home loan companies into a state-run bank, and launching a new government-backed mortgage company.

Mr Ghalita said the government has also moved to bolster confidence in projects by barring developers from cancelling sales contracts if construction had not started. The government has also moved to discourage speculators from withdrawing from purchase agreements with a new rule that buyers must forfeit 30 per cent of the property’s value if they default. Buyers had previously forefeited just 30 per cent of what they had already paid, according to lawyers.

Some investors argue the rule provides an incentive to developers to cancel projects and walk away with the money. Mr Ghalita said government will prevent that by requiring approval from the Land Department before any project can be cancelled. “The Land Department is not allowing cancellation without evaluating the whole project. If we cannot reach an agreement, they will have to go to the court to force the cancellation, which will take a long time,” he said.

Mr Ghalita said the authority was acting as a mediator and was negotiating with developers who have run into financing problems. In the meantime, he said the rise in missed payments underscores the urgency of government efforts to get the flow of mortgage lending going again.

“I think finance is important for off-plan market continuity,” he said. “The market will change by itself. Developers will be smart enough to start a project, get the finance, then think of selling or keeping it for rent. This will happen 100 per cent. They will not depend on off-plan sales anymore. For sure.”

IndieG

The purchasing power is sky high thanks to stupid banks lending 70 multiples of salary and giving personal loans up to AED 2 million and more.

Probably 99.9% of the emiratis are neck-deep in debt. Little wonder then, that the MOD warned banks that they would stop transferring salaries and EOSB if banks didn't reduce salary multiples when granting loans in the case of their employees (so MoD have get lower loan amounts - but then they have 15 credit cards to make up).

And about cash buyers - see above post.

IndieG

Can you believe the muppets wanted to hire a COO cum Head of Compliance in Aug - offering a ridiculously high salary!

zamboooka

jeeezzz... my bad.. take a breather!! strict one. this'un is!!
Either way, i, along with most people i know bought ours .. all cash - have no pressure from any side.. so guess kudos to us..

Blue Cat

so Nakeel have announced their redundancies this morning, no surprise as Hello Kitty had mentioned it before. I feel so sorry for those who are sitting a month before Christmas, jobless. There for the grace of God go I.