Dubai and oversupply

[georgihh]

At the moment the prices are stabilizing.
There is enough property to rent out and enough tenants to occupy them.
What will happen next year?
International city 10000 flats to be delivered
Discovery gardens 10000 flats to be delivered
JLT 5000 flats to be delivered
At least another 20000 flats and villas to be delivered from miscellaneous projects.
That’s 45000 thousand units’ average of 4 people per unit 180000 people.
This is double than the people currently immigrating to Dubai.
10 % of the properties will not be occupied
Still Ok but comes 2009 will be even worst 20 % of the buildings wont be occupied and that’s the turning point where the landlords will start dropping prices just to rent out their properties. And ones this starts the property market will crash.
The only solution is to delay the delivery of the new projects and postpone the crash.

Conclusion – buying a property in UAE it’s a gamble

[DoBuy]

Georgihh do you think the dubai goverment would give permission to build all of these premises if they didnt believe they could be filled?If Business Bay gets filled up with workers then that in itself is a lot of people.Perhaps the way it will go is that in 2009 there will be an oversupply because there are too many residential properties and not enough people to fill them.Then once all of BB towers get filled and the projects at Dubailand get completed,more and more workers will come into the area and the oversupply will then again become a situation of undersupply?

[DAYFox]

Originally Posted by georgihh

At the moment the prices are stabilizing.
There is enough property to rent out and enough tenants to occupy them.
What will happen next year?
International city 10000 flats to be delivered
Discovery gardens 10000 flats to be delivered
JLT 5000 flats to be delivered
At least another 20000 flats and villas to be delivered from miscellaneous projects.
That’s 45000 thousand units’ average of 4 people per unit 180000 people.
This is double than the people currently immigrating to Dubai.
10 % of the properties will not be occupied
Still Ok but comes 2009 will be even worst 20 % of the buildings wont be occupied and that’s the turning point where the landlords will start dropping prices just to rent out their properties. And ones this starts the property market will crash.
The only solution is to delay the delivery of the new projects and postpone the crash.

Conclusion – buying a property in UAE it’s a gamble

Not correct, currently 30.000 new immigrants per month are coming to Dubai (I have read it on ZAWYA.com). If you take this number into account your whole calculation does not make sense any more

[DoBuy]

Originally Posted by DAYFox

Not correct, currently 30.000 new immigrants per month are coming to Dubai (I have read it on ZAWYA.com). If you take this number into account your whole calculation does not make sense any more

I read also it was 800 per day which is equal to what u are saying.I'm surprised at this figure however,not sure how reliable it is.Does it involve construction workers and other low paid workers also?who knows

[DAYFox]

Originally Posted by DoBuy

I read also it was 800 per day which is equal to what u are saying.I'm surprised at this figure however,not sure how reliable it is.Does it involve construction workers and other low paid workers also?who knows

Thats the big question. If out of 800 200 are workers then the calculation above is closer to reality. Because they put those workers in warehouses which can take 100workers + each.
I assume much depends on BusinessBay. If those towers get filled, than many new companies are in Dubai which bring their own staff. The companies than can afford to pay those high rents...
Sometimes you might think "Who can afford to pay this high rent levels?". The answer is; Most of the times the company is paying, and they compensate the costs out of lower fees/"taxes" in comparison to other countries.

[Rammah]

Originally Posted by DAYFox

Thats the big question. If out of 800 200 are workers then the calculation above is closer to reality. Because they put those workers in warehouses which can take 100workers + each.
I assume much depends on BusinessBay. If those towers get filled, than many new companies are in Dubai which bring their own staff. The companies than can afford to pay those high rents...
Sometimes you might think "Who can afford to pay this high rent levels?". The answer is; Most of the times the company is paying, and they compensate the costs out of lower fees/"taxes" in comparison to other countries.

Who's doubting that Business Bay will be filled?
Well, rest assured that we're [DAMAC] selling whole towers in 48 hours! We have waiting lists for floors at a time.

Regards,


Rammah

[DoBuy]

Originally Posted by Rammah

Who's doubting that Business Bay will be filled?
Well, rest assured that we're [DAMAC] selling whole towers in 48 hours! We have waiting lists for floors at a time.

Regards,


Rammah

Rammah when u say u sell out in 48 hours,is this to investors or to actual companies intending on using it for business and housing their employess cos that makes a huge difference?BB will take a hell of alot of workers and with alot of them ready at the same time thats alot of workers coming in at once.
Like I said before I think maube the undersupply that there is now will become oversupply,then as workers come in over a period of time it foes back to undersupply.Agreed?
Do u think office space is a better investment then residential?
Also,as for who can afford to pay these huge rents.I guess if it gets to be on a par with other cities then if London,New York etc fill their cities then why cant Dubai?

[Rammah]

Originally Posted by DoBuy

Rammah when u say u sell out in 48 hours,is this to investors or to actual companies intending on using it for business and housing their employess cos that makes a huge difference?BB will take a hell of alot of workers and with alot of them ready at the same time thats alot of workers coming in at once.
Like I said before I think maube the undersupply that there is now will become oversupply,then as workers come in over a period of time it foes back to undersupply.Agreed?
Do u think office space is a better investment then residential?
Also,as for who can afford to pay these huge rents.I guess if it gets to be on a par with other cities then if London,New York etc fill their cities then why cant Dubai?

Very good question. The buyers now are still investors. The plan for many of them is to start selling them to companies/corporations within 6 month from completion.
I certainly think that office space is better than residential. Without a shadow of a doubt.
a bit of facts about some of our commercial projects:
- launched early 2007 at 1400 per sqft.
- already selling at around 2500 per sqft [with very limited availability]

Besides this capital growth, we know some companies that already have rental agreements for them on completion, at £375 per annum per sqft! If you calculate the yield for that on today's selling price, you're guaranteeing 15% return from the rental, without looking at your capital growth, nor at the hike in commercial rentals that I personally think will keep going up!

If you are looking to invest over £350K, I'll solely advise you on commercial, and obviously through DAMAC

Rammah

[John]

Originally Posted by Rammah

IMHO there's no oversupply in Dubai, and no market crash for years/decades to come.... if not FOREVER!!!
All the land is owned by the government, and therefore supply and demand is being controlled accordingly!

The issue of Government being in control is a major factor in my opinion. This new Dubai as we see it is the result of a LOT of planning. The property boom there is only one element of what's going on. I would expect a lot more action being taken by the powers that be in the next couple of years to ensure the new business areas do what they have been designed to do.

[Rammah]

Originally Posted by John

The issue of Government being in control is a major factor in my opinion. This new Dubai as we see it is the result of a LOT of planning. The property boom there is only one element of what's going on. I would expect a lot more action being taken by the powers that be in the next couple of years to ensure the new business areas do what they have been designed to do.

Strategic plan 2015 is a great read about this topic! Everyone should google it and read. if you struggle finding it, I'll be able to email it to you. pm me but expect a bit of delay in responding if you do so.