Now is the time to buy...

Stephendxb · #1 17-11-2008, 08:25 AM

It was only in 2002 that foreigners were allowed to invest in the Dubai property market when certain areas where designated for development. Since then Dubai has seen unprecedented growth, something I personally believe in my lifetime will never be repeated anywhere else in the world. The frenzy began to grow with many wanting a slice of the pie. Non more so than the speculators, who were literally buying and selling within weeks and making huge returns on their investments.
At the same time the longer term residents saw an opportunity to own and replace rental payments which were starting to escalate. This despite the fact that the laws governing ownership had still not been drafted let along finalized. Still it was deemed a huge improvement on the negative return of renting; it also showed faith in the system.

As the laws were introduced for freehold purchases, “transparency” became the buzz word and this attracted further investment. It also paved the way for the legal framework for international banks to offer mortgages.
All seemed rosy for the Dubai market despite the subprime crises that was gaining momentum in the US. At the time the only real worry from many appeared to be the possible oversupply of units coming onto the market in 2009.
Then at around the time of Cityscape the global financial crises that had gained momentum across many parts of the world... hit Dubai.
The Dubai property market is still in its infancy compared to many of the other global markets and many of the speculators that had been riding the wave had no idea what was coming. Property investment has, and will always have ups and downs. Dubai will be no exception.

The current drop in the market represents a great buying opportunity now for shrewd investors. Why I hear you ask.

In case an investor now defaults, the developer may now retain 30 per cent of the 'contract's value', and the rule of (30-70 per cent of the money paid) shall be applied on amounts exceeding 30 per cent. The developer shall first notify the purchaser and grant him a reasonable period to perform his contractual obligations, and provide the Land Department with a copy of the notice, and the Department shall notify the purchaser in person or registered mail or email, and give him 30 days to fulfill his contractual obligations, otherwise the contract will be cancelled as mentioned above, in the event of non compliance. So for example if someone has bought a property for AED 1,500,000 and has paid 50% but defaults on the balance they stand to lose 450,000. So faced with no option other than selling many would rather sell at a lower price, certainly up to the 30% figure, in the hope of limiting the loss. Many of the “speculators” bought at pre-launch prices so it can be a double gain.
The new laws will protect the market and phase out future speculators. This increased transparency will further boast the market. Remember, demand has still not satisfied supply and like all markets prices will once again rise. If you have the opportunity to buy now do so, unless you have a good reason not to.
If anyone would like further advice on properties let me know.