Blue Cat

I had to look at that twice too!!!

IndieG

Yes they have the cash - but this is debt (think Nakheel borrowed around $6 billion, two syndicated loans, and in addition they had a sukuk issue also). The loans are to finance new projects - and not to keep the markets propped up artificially!

Dubai is run like any other business and being run very well I guess - do you think they will spend billions of dollars (and borrowed at that)just to 'prop up' the market? No way - how will they service their debts if they go around spending money trying to keep the market afloat?

Yes, the goverment will help - doing so by improving infrastructure, building more tourist attractions, ensuring that Dubai remains a safe destination, ensuring that the cost of doing business remains competitive (and to this end the govt. also wants to see rents coming down).

Another thing - using the same logic - the share market should have also been propped up to keep up investor confidence?

W10

Didn't govt institutions do their best to stop Air Arabia IPO being a complete disaster??

I'm talking about the govt subsidising projects on the sly, subsidising tourism, 'encouraging' officials to buy into developments...

Remember - no-one knows about Nakheel's finances, much like Jumeirah Int...because they don't have to declare.

IndieG

I have my doubts whether the IPO was over subscribed at all (reported 150%) - anyway the issue was fully underwritten by Shuaa. Have taken a week off work - when I resume, will try and find out more.

Nakheel and JI have very detailed financials and they do declare it to their financiers - how else do you think they manage to raise debt?

W10

Quite...so you mean they lied??

What I meant by the govt institutions was at least 15% of the shares were bought by Sharjah and Dubai govt departments - who all very publically announced this with a few days to go....And they still didn't sell out (from what i've been told)

The Deyar IPO will be a complete disaster...well...until the govt departments step in to magically invest.

Autonomy

it was interesting to have the view from The Economist, which has been talking about real estate bubbles around the world for the past two years.

'I don't see a bubble in Dubai,' said Dr. Thorniley. 'It is more like a plastic ball that will let a little air out but it will not explode. But no economy booms forever.'

He pointed out that 80 per cent of the Fortune 500 companies are now located in Dubai, and that such diversification would support the real estate sector going forward with Dubai achieving the critical mass to support further economic growth.

more here

W10 and The Economist seem to agree...

IndieG

yep.

Investment - right! They're taking it out from pocket and putting it in their other......

Eeyore

If there is no shortage of people happy to pay 200k and upwards per year, how come all the demand in Dubai is in the sub-200k bracket?

Seriously, if you want to pay 200k or more in rent per year, you've got a wide choice of options, be they villas or apartments. There's no shortage of property at that price. But *why* is there no shortage, if there is - as you seem to be suggesting - a surfeit of people with the money to afford it? Isn't that somewhat paradoxical?

This must be the third time I've asked you now, but where did you get the figures for expected population expansion and demographics that have led you to your conclusions?

Even the Dubai government admits that just 4.6% of the population earns more than 20k per month; all this property is being built, and it will be completely unaffordable to 95% of the population - how does that work?

There will need to be a *huge* increase in the number of high-earning expats before there will be a demand to match the supply that will come on stream in the next year or so. Where are they going to come from? When will they get here? Again, the Dubai government's own figures support the idea that too much of the wrong sort of property is being built, and that it'll take 10 years for demand to catch up with supply.

W10

As if they would dare to disagree ;-)

W10

Well the smart people (you being one of them) are bracing themselves for Air Arabia to dip below Dh1 on day one.

There are ads in the arabic papers already for people looking to offload in bulk as individual investors applied for tonnes of shares, expecting it to be massively oversubscribed, only to find themselves getting their full allocation...and a massive headache

So the other question is...if companies (listed ones at that) can lie horrendously about an IPO...do you trust that Nakheel's financials are 100% accurate?

IndieG

LOL, my husband thinks they've been paid to come here or have been given some very very good incentives Top investment banks flock to the region...blah blah. Anyway here's something interesting:

http://news.efinancialcareers-gulf.c...wsItemId-10075

And no, the last line in the above article is not a rumour....

http://news.efinancialcareers-gulf.c...ewsItemId-9828

Deutsche Bank, with dozens of staff in Dubai’s purpose-built international financial centre, is among the most active, not just in Dubai but across the region, and it’s gung-ho about hiring. (Maybe a tad too much. One insider says, “In my sector, they’ve built a great team. Now they’re trying to find something for them to do.”)

W10

It's true - massive expansion but little for people to do.

I believe Shuaa and the like still have the local market sewn up in terms of corp finance etc.

It's style over substance. Eg: Merril Lynch, big DIFC sign, two desks...

Like Media City...big CNN sign, small CNN office, Big BBC sign, a few desks..huuuuge Reuters sign...etc etc

IndieG

No, I don't trust any financials. I simply said that Nakheel do declare their financials to their bankers. I guess they're all heavily window dressed.

Jammy_Dodgers

Just got this in my email...guess they are making an effort for the middle income expats...albeit in RAK..

The Royal Breeze from £50k
Frontline beach facing development in RAK — The new hot location in the UAE. This development is private and exclusive with a whole host of water sport facilities, as well as a private beach and golf course. The site is also the location of a fabulous new 7 star hotel.

Executive 3 Bedroom Villas £125k
Get either 10% rental guaranteed for 3 years or a guaranteed 30% profit buy back option on completion. Exclusive deal only available through Homes Dubai and subject to conditions. Offer valid until 17 May 2007.

Metropolis Lofts
Buy on the first phase as apartments are selling quickly and prices will only go up. Studios are sold out but we have 1 bedroom apartments from £100k and 2 bedroom apartments from £141k.


I was going to attach the pictures they sent through....utterly pointless me thinks as it will end up looking nothing like the artists over-optimistic impressions

Madam Medusa

oh don't you just love those artists' impressions...almost as good as those court room sketches you see on the news!

MM, xx