Distress Sales in Dubai - Why?

[financier888]

Originally Posted by PropGuy

Distress sales for The Address, Burj Dubai Tall Tower, JBR, J. Park, or PJA signature villa. Or good land price in sport city or JVS. Yesterday there was sale for approx 15,000 sqft land sale for aed 5,000,000.

IF you wait till around April / May and going into the summer- you'll start to see real bargains coming on the market - in the areas you specified. In the downtown Burj area - many investors are still holding out hoping the market would come back by March - which it won't. As the impact starts to settle in - then the hard choices will have to made and with less and less tenants available - owners will start selling and dropping prices.. (like the Address, etc..) I think the Burj Tower may be an acception due to it's unique iconic status.... But, you may find some investors needing cash and then they'll come on the market. JBR should be easier... Time is on your side but you need to network with some good brokers that intend to stay here and work the market

[financier888]

Originally Posted by jomonanu1

I do not know why people wanted to do Distress Sales. Dubai, it will take time to mature, the correction, I mean the real correction will take only after many years. The government is giving protection to the Dubai Investors. The projects are announcing in Dubai is still at the beginning. The government has a plan behind this, they will protect the investments.

Some people want to buy distress sales because the prices were hyper-inflated and now, the supply exceeds the demand. As such, the prices will start dropping to reasonable levels.. (2006OP prices in many cases) making the residential and commercial more affordable. In the same way, Dubai has these annual sales promotions of 50% off etc - it attracts buyers..well, it used to anyway

Look at the new Investments, Meraas for the example. It will cover and spread over Satwa and Jumeirah 1&2. With in a couple of years, the tenants have to move out of this area and look out for new areas to live. They can move to JLT, Marina or to the Dubailand only, so there is not going to be any more vacant flats or villas.

Meraas has placed most of the aforementioned projects on 'hold' - indefinitely and you cannot compare rental prices in Satwa with JLT or the Marina. Don't be suprised if the projects are delayed for 2-3 years. It's about liquidity - and demand. Why build in absense of demand? - how would the developer exit?

The same way, there are projects, the government is going to launch , revamping the entire Ras Al Khor and Rashidiya by next year, again the tenants have to move out to new destinations. Followed by Al Qouze, Deira and Al Ghusais and at the end, it is Bur Dubai and Jumeirah, Umm Suquiem area. All these projects will be finishing by 2025. Think, once Deira and Bur Dubai is going for a shift, where all this public will move in to.By the time, all Dubailand will be congested and the rental Income will be more.

Considering the amount of rising unemployment here (and across the world) "where will these people go'? - back to their country! Dubai is very expensive and once you lose your job and visa is cancelled - you go home. Even if you could stay - you wouldn;t want to - it's simply too expensive. Expecially if you have a family - as some of the private schools have increased tutition by 90% ! Do you have any idea how much these schools were monthly BEFORE they raised they price? Rental income will rise based on demand and don't expect to see that anytime soon in Dubai or for that matter - most major cities across the world. If there are 50-100 vacant flats for each new persepctive tenant - how do you think that will impact rental prices? and... as the sales prices drop - people that are working and renting - will buy. Expect another wave of rental price decreases as we approach the summer... Rental prices in the downtown Burj area are already down 30% and this is just early Feb - and that's after several months of sitting vacant... more to come

Other than this, please look in to the projects announced already. The new Al Maktoum International Airport at Jabal Ali needs 135000 employees, once it is operational. This airport will open in the 4th quarter of 2009. Look at the number of hotels are coming up, according to Movenpick, they alone need around 12000 new staffs by the end of 2009. The Metro line will be operational from 2009 and the construction will start for the Blue Line and Purple line from 2010. Once Business Bay is complete more global giants are moving to Dubai.

For the first time in years, the vacancy rates in the hotels here has dropped with many five star hotels dropping their prices during the week. Some are still enjoying decent occupancy rates (85% +) because of prior booking packages that were done months ago. These will decline as less people are travelling and businesses are cutting back. 5 star hotels will drop and 3-4 star hotels may continue to be firm ( AED 500-700 per night pricing) for business guests that have to travel here. The largest hotel project here ASIA ASIA HOTEL - 6,500 rooms - cancelled. Others delayed. This is about a global liquidity issue and based on demand. With some of the amusement park and tourist attractions on hold or cancelled - you won't see the spike in tourism that these projects were intended to draw. Retail sales are already off 50% - and that's during the 'Sale' month - so - many people will shop at their local malls rather than fly here - only to find higher prices on comparable goods - because the retial rents are too high...

Right now, Dubai is the only safe heaven for the Investors. People they lost jobs in US, UK and Europe, they have move towards Middle East. 90% of those people are eyeing Dubai. With in months they will move to Dubai and they started buying properties, the prices will again go up.

Dubai may be a safe 'heaven' for some - those that liquidated their holdings by May 2008. Although it is a safe haven for many, if UAE pushes through income and corporate taxation - other more attractive 'safe havens' will emerge. Considering the debacle connected with the EIDA (national identity cards) imagine the fun you'll have when having to deal with a new tax authority! 'Moving to Dubai in the months ahead?' - perhaps in heaven.... with 85% of the populas being expats and many on their way out - who will be moving here? Especially if you cannot get a residence visa if you buy and you cant' find a job? Will these buyers coming in to buy only to be able to stay here for 30 days and then fly out. People that have lost thier job in the USA, UK & EU will not flocking to Dubai to find work. Even unskilled labout in India won't be able to find work here. Do you really expect people from Europe and USA to come here, pay US $500- US $700 to share one room with 4 others, sleeping in a bunk bed and try to find work? Firms are cutting jobs every month here and will continue to do so because it will take some time for the global economy to get back on track.

After all, as RERA and govt departments say, Dubai is not a market for speculators. This should be ended. Right now, the Investors are looking for resale from day one of the properties, In future; they can only resell it only after one year or after the completion of the project.

Well, that's certainly true now!! Dubai is now NOT a market for speculators!! However, what i think many people lost sight of is - this is largely an expat market and many people that have bought here - this is their secondary residenance - for investment - whether long or short term. the problem occured beacuse developers did not qualify the people that purchased and many, were in no position to make the second installment. - They should have never been able to buy in the first place! The way the market is going - you should wait a year till after completion - because it may be cheaper!! I am sure that some the buyers who purchased in 2007 and continued to make payments would have been delighted by your suggestion to hold for one year after completion before they sell but unfortunately, on some of those plots, the developer hasn't shifted one spoon of sand yet...

Dear investors, please note, Dubai is not ruled by Democracy but Monarchy. In democracy, there are ruling party and opposition and they can adopt any type of policies. That can lead destruct ions in the market. Dubai is ruled by Visionary, Business Oriented Leaders. They also have Business Interests. So they never let you down.

I agree and Dubai has indeed captured the imagination around the world. It's not an issue of Dubai letting anyone down, (although some investors that are being burnt by errant developers may disagree.. but it's too soon to say as dubai is stepping-up enforcement....) It's a GLOBAL condition. No One has escaped unless you were already living on less than a 1 dollar a day. Trillions have evaporated from the global cash flow - many people have lost significant amount of the savings and may lose their job - it's a pandemic problem.

Look at the Rent, it is just increasing only, I never saw it is decreasing. Again it will go up all these coming years. The present City cannot afford the flow of people right now. And Dubai is growing and it will grow only.

Rent increasing only? My freind, I think you are believing the rents being quoted in the paper and haven,t spoken to any rental agents - the few that are left. If you haven't seen rents decreasing i don't think we're in the same city. (better talk to Sash....) cannot afford the flow? - the current flow is OUTBOUND. Tens of thousands of apartments are VACANT. When you pass most of these developments at 8-9 PM and see the lights out - its not that the tenants are out smoking shisha somewhere - THE APARTMENTS ARE EMPTY.



I just saw the movie THE DAY THE EARTH STOOD STILL - and after reading this post - I was wondering.. are we on the same planet? (comments in RED)

[sasherwani2]

This was an old post. The guy probably has woken up from his beauty sleep by now. Reading his post was like watching a Disney movie with the happiest of endings for all!!

[heat_wave]

Originally Posted by PropGuy

Distress sales for The Address, Burj Dubai Tall Tower, JBR, J. Park, or PJA signature villa. Or good land price in sport city or JVS. Yesterday there was sale for approx 15,000 sqft land sale for aed 5,000,000.

I have a number of good deals in JBR and Burj Dubai area, let me know if you want a chat.