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The property apocalypse draws closer...

The property apocalypse draws closer...

Old Apr 29th 2007, 1:25 pm
  #61  
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Default Re: The property apocalypse draws closer...

Originally Posted by jvr20
oh - i hoped you were going to say you were single!

lol, have some karma .........
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Old Apr 29th 2007, 1:53 pm
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Default Re: The property apocalypse draws closer...

Originally Posted by GarethR
Hermes believe that even with the expected rate of population expansion, it will take 10 years for demand to catch up with supply, since 70% of the incoming population will not be in the market for high-end accommodation. What leads you to think they are wrong?
They are experts expressing an opinion and I'm an amateur doing the same. If it was that easy predicting what will happen all the experts would be busy making millions on the property market rather than writing reports. The Titanic was built by experts and Noah's Ark was built by amateurs. Go figure.

I agree with what you say about high end apartments being a large sector of the market but there is a world of difference between a penthouse at (say) La Reve (I think that is correct?) and some of the so called luxury apartments you can see at the Marina.
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Old Apr 29th 2007, 2:26 pm
  #63  
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Default Re: The property apocalypse draws closer...

Originally Posted by Border Reiver
They are experts expressing an opinion and I'm an amateur doing the same
But the experts are expressing their opinion based on a great deal of objective research taking all the relevant factors into consideration. You're expressing yours based on a general hope that, as a property owner, you're not about to get shafted. Like expat brat, you're trying to be bullish because you're far too close to the subject to be objective about it, and I imagine that at the back of your mind you're worried.

If it was that easy predicting what will happen all the experts would be busy making millions on the property market rather than writing reports
The people who make millions on the property market - just like the people who make millions on the stock market - are the ones who read the reports compiled by the experts and make their decisions accordingly. But you knew that really, didn't you?

As W10 pointed out, when the UAE stock market crashed it was the individual investors who got shafted, because they'd ignored the warnings given by the analysts (or more likely, not bothered to research what the analysts were saying in the first place, but would probably have ignored it anyway because the official word from the UAE money men was "Everything's fine, no crash coming here!"). The sensible people, and/or the people with proper fund managers, took heed of the warnings and moved their money accordingly.

The Titanic was built by experts and Noah's Ark was built by amateurs. Go figure
That's one of the most meaningless attempts at constructing an argument I've ever seen! Full marks for sheer cheek though

I agree with what you say about high end apartments being a large sector of the market but there is a world of difference between a penthouse at (say) La Reve (I think that is correct?) and some of the so called luxury apartments you can see at the Marina
That's completely irrelevant. The overwhelming majority of accommodation under construction at the moment falls into the "luxury" bracket, whether it's a Marina apartment or a penthouse. Even by the Dubai government's own figures (which you'd kind of expect to paint the rosiest possible picture) there just aren't going to be enough new expats earning the kind of money needed to rent or buy them.
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Old Apr 29th 2007, 5:36 pm
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Default Re: The property apocalypse draws closer...

Originally Posted by GarethR
Like expat brat, you're trying to be bullish because you're far too close to the subject to be objective about it, and I imagine that at the back of your mind you're worried.

Not at all. I do think that when the likes of JBR come onto the market, there will be excess supply and prices/rents for apartments will fall in the short term. However, in the long run, and by that I mean 5+ years down the line, prices will show an upward trend.
For villas, however I think it is a different story and demand exceeds supply by a huge margin.

As for these so-called 'experts'.. well weren't they the same ones that predicted doom and gloom for the UK property market since the late 90s? And what has happened since?

And I remember the original professional predictions that the completion of the Springs, Meadows, Ranches etc will ease pressure on Jumeirah rentals.. could they have been any further from the truth!!

While I do admit I do have a desire to see the Dubai property market grow even stronger due to my stake in it, I can also see how your views are quite clouded. I would be bitter as well if my rent doubled and I was effectively paying off my landlord's mortgage and funding several luxury cruises a year for him, the family and the maid!

As for the stock market vs real estate...you cant quite flip shares the same way you can flip houses.
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Old Apr 29th 2007, 6:26 pm
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Default Re: The property apocalypse draws closer...

One major development (sorry, I cannot provide any names) already sold fully to real estate agents who want to now pull out but are stuck (and who are incidentally continuing to promote it heavily!) has been abandoned and repossessed by the master developer. No finance for the development has been tied up yet. Before you ask - yes, this is first hand information....

Just be very careful with whom you deal - I would never buy off-plan nor would I advise paying the highly inflated prices (unless the sums are in your favour) for ready property.

PS - Expat brat:
My rents have not doubled, we use 34% of our rent allowance, and I certainly do not wish or hope for a crash - far from it!

Last edited by IndieG; Apr 29th 2007 at 6:30 pm.
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Old Apr 29th 2007, 6:50 pm
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Default Re: The property apocalypse draws closer...

Originally Posted by expat.brat
Not at all. I do think that when the likes of JBR come onto the market, there will be excess supply and prices/rents for apartments will fall in the short term. However, in the long run, and by that I mean 5+ years down the line, prices will show an upward trend.
For villas, however I think it is a different story and demand exceeds supply by a huge margin.

As for these so-called 'experts'.. well weren't they the same ones that predicted doom and gloom for the UK property market since the late 90s? And what has happened since?
I don't think many people have been predicting a crash in the UK housing market for several years now. The smart money for the past 8 or 9 years has been on a slowdown, followed by stagnation, followed by a slight fall, followed by moderate growth. It wasn't a boom and bust cycle, there was steady employment, secure jobs, decent pay rises, economy was growing steadily and in a controlled fashion...perfect scenario for a reasonably inflated market.

Dubai is a classic boom and bust economy, which is being propped up by the super-rich.

I think it will take more than JBR to bring prices down, but sometime in the next 18 months they will fall. Not as much as people think because there are still people with vested interests and enormous sums of cash who will keep apartments empty to maintain inflated prices. (much like they are doing now with the DFM, govt institutions accounted for probably 25% of the Air Arabia share sales because they knew an undersold IPO would be disasterous for the reputation of the market). I still say 30% will be the benchmark though.
 
Old Apr 29th 2007, 6:51 pm
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Default Re: The property apocalypse draws closer...

Originally Posted by Border Reiver
They are experts expressing an opinion and I'm an amateur doing the same. If it was that easy predicting what will happen all the experts would be busy making millions on the property market rather than writing reports.

I agree with what you say about high end apartments being a large sector of the market but there is a world of difference between a penthouse at (say) La Reve (I think that is correct?) and some of the so called luxury apartments you can see at the Marina.
If they had the capital...but by and large yes. Most high end property analysts do make a lot of money from emerging markets. Much like good stockbrokers make money from hedging and knowing when to get out.

Isn't a 2 bed flat in Marina still (supposedly) selling for Dh2m...I'd say that was aimed at the luxury end of the market...

PS - for what its worth, I've been told Cape Town is where it's at in property terms. Still affordable, beautiful location, good healthcare, proper ownesrship rights, good retirement area. You can pick up a waterfront 2 bed for US250k...
 
Old Apr 29th 2007, 7:04 pm
  #68  
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Default Re: The property apocalypse draws closer...

Originally Posted by expat.brat
However, in the long run, and by that I mean 5+ years down the line, prices will show an upward trend
Why do you think that? What figures for population growth are you working from?

As for these so-called 'experts'.. well weren't they the same ones that predicted doom and gloom for the UK property market since the late 90s? And what has happened since?
What has happened since is that UK property values have been pushed up and up by the availability of cheap money and the extensive use of self-certification mortgages, which allowed people to lie about their incomes. The result has been that the amount of personal debt in the UK has rocketed, and a sizeable chunk of property owners are maxed out in respect of their monthly mortgage payments. They didn't think about the future, they assumed that interest rates would never rise, and they don't have any breathing space to absorb rate increases.

Even the Bank of England has admitted that it made a mistake in engineering the cheap-money-driven property boom, and there *will* be a reckoning. Interest rates are still artificially low in the UK; the "normal" rate should be about 8-9%... which would crucify the property market. The BoE can stave it off for now, but not indefinitely.

I would be bitter as well if my rent doubled and I was effectively paying off my landlord's mortgage and funding several luxury cruises a year for him, the family and the maid!
It's not so much that I'm bitter; we still have more disposable income here than we did in the UK, and we're in a Springs 3-bed. No, it's more that I detest hubris, and Dubai is built on it. Well, hubris and sand.

As for the stock market vs real estate...you cant quite flip shares the same way you can flip houses.
You can't flip houses here any more! And of course you can flip shares; what do you think investment houses and fund managers do every working day?

But of course, you're missing the point. Canny investors (read : professional investors) took heed of the expert warnings that the stock market growth was unsustainable (and bloody hell, there were enough of them), and they got their money out in time. All it took them was a phone call. Private investors preferred to listen to the official blandishments that everything in the garden was rosy, and of course they paid a heavy price; I know several people (all private investors who thought they were onto a sure thing) who lost a lot of money when the market crashed, simply because they either didn't want to hear the warnings, or dismissed them as jealous scaremongering.

Last edited by Eeyore; Apr 29th 2007 at 7:07 pm.
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Old Apr 29th 2007, 7:08 pm
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Default Re: The property apocalypse draws closer...

Originally Posted by IndieGirl
One major development (sorry, I cannot provide any names) already sold fully to real estate agents who want to now pull out but are stuck (and who are incidentally continuing to promote it heavily!) has been abandoned and repossessed by the master developer. No finance for the development has been tied up yet. Before you ask - yes, this is first hand information....

Just be very careful with whom you deal - I would never buy off-plan nor would I advise paying the highly inflated prices (unless the sums are in your favour) for ready property.

PS - Expat brat:
My rents have not doubled, we use 34% of our rent allowance, and I certainly do not wish or hope for a crash - far from it!
At current prices (and given the impending release of several thousand apartments) I would not buy, but my view might change a year or two down the line.
At the end of the day, if you are looking to stay in the UAE for a good number of years and get a company housing allowance, it makes sense to look into buying property since your company is practically helping you to subsidise the mortgage.
One thing is for certain, the days of buying property on Monday and selling it 30% higher on Wednesday are well and truly over. But there are still some gains to be made if you invest very wisely and carefully.
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Old Apr 29th 2007, 7:11 pm
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Default Re: The property apocalypse draws closer...

Originally Posted by GarethR

What has happened since is that UK property values have been pushed up and up by the availability of cheap money and the extensive use of self-certification mortgages, which allowed people to lie about their incomes. The result has been that the amount of personal debt in the UK has rocketed, and a sizeable chunk of property owners are maxed out in respect of their monthly mortgage payments. They didn't think about the future, they assumed that interest rates would never rise, and they don't have any breathing space to absorb rate increases.

Even the Bank of England has admitted that it made a mistake in engineering the cheap-money-driven property boom, and there *will* be a reckoning. Interest rates are still artificially low in the UK; the "normal" rate should be about 8-9%... which would crucify the property market. The BoE can stave it off for now, but not indefinitely.
I disagree, the economy is in a sufficiently healthy state in the UK to maintain the status quo. Personal debt has skyrocketed and there is a chance that buy to letters will sell when rates go up this year (twice in the next 4 months I reckon), but the market will absorb it with a minor decline. And of course, as rates rise, so will the rentals market.
 
Old Apr 29th 2007, 7:13 pm
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Default Re: The property apocalypse draws closer...

Originally Posted by expat.brat
At current prices (and given the impending release of several thousand apartments) I would not buy, but my view might change a year or two down the line.
At the end of the day, if you are looking to stay in the UAE for a good number of years and get a company housing allowance, it makes sense to look into buying property since your company is practically helping you to subsidise the mortgage.
One thing is for certain, the days of buying property on Monday and selling it 30% higher on Wednesday are well and truly over. But there are still some gains to be made if you invest very wisely and carefully.
Prices in real terms are already falling on new builds (and before Border Reiver starts - yes I can name projects...for example - every single Damac one ;-)) There are potentially massive discounts to be had from cash strapped developers, that is one way you could make money I guess.
 
Old Apr 29th 2007, 7:16 pm
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Default Re: The property apocalypse draws closer...

Repent!!!and Ye Shall Be Saved...
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Old Apr 29th 2007, 7:20 pm
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I don't know what BR is so tetchy about anyway...if the market falls 30% then there will still be a healthy profit on the original investment anyway.

PS - Anyone know if Emaar managed to sell any of the Lakes and the Greens yet?
 
Old Apr 29th 2007, 7:21 pm
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Default Re: The property apocalypse draws closer...

Originally Posted by Confucius
Repent!!!and Ye Shall Be Saved...
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Old Apr 29th 2007, 7:25 pm
  #75  
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Default Re: The property apocalypse draws closer...

Originally Posted by W10
Personal debt has skyrocketed and there is a chance that buy to letters will sell when rates go up this year (twice in the next 4 months I reckon), but the market will absorb it with a minor decline
That's assuming no unforeseen circumstances, of course!

But the basic underlying problem remains; cheap money, self-cert mortgages and a more relaxed attitude to lending by the banks have led to a situation where a great many people have their income completely committed each month. The old "your mortgage should account for no more than 30% of your monthly outgoings" benchmark has been well and truly abandoned, with the result that too many people are walking a knife-edge; they can cope while interest rates stay as they are, but even a small rise will render their home unaffordable. And that's before you factor in credit card debt.

If the banks hadn't been so keen to throw money at people, the UK property market wouldn't be in the vulnerable state it is now - and it *is* vulnerable, simply because so many people are so heavily committed.
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