2008 the year when the supply will surpass the demand

[Roshan]

Originally Posted by savais

Agreed, price corrections will only impact short-term investors, not the long-term investors or end users because in the long-term, they are not likely to make a loss.
I bought my property in dubailand and was very excited at the time. Sure, these delays have toned down my enthusiasm, but even though it will take longer to complete, when dubailand is eventually ready, it should be a fantastic location.

As the saying goes " Dont wait to buy propety - buy property and wait ". Real estate is all about long term and not short term investing. I for sure am not bothered about the markets correcting as I believe in passive income over long term.

[dubaiboy]

But Above everything , I beleive that rentals will surely come down in a year or two. . .

[Roshan]

Originally Posted by dubaiboy

But Above everything , I beleive that rentals will surely come down in a year or two. . .

Every investor should expect a correction. It's always good to prepare yourself for corrections.

It is advisable to finance the first few projects as much as possible with less finance considering the delays that are experienced in todays market. Just imagine the interest which needs to be paid in case of delays.

If prices of property go up, it would become expensive for people to buy, if so, then rentals should not correct much as long as the supply and demand curves don't meet.

Regards

Roshan

[Rammah]

May I ask for pple predicting a fall in price in 2008 to write down the prices of some flats now, and look at them again in august and give us the result?

[eyeC]

first

around 80% of buyers in dubai are cash buyers so for them to sell less

than purchase price out of the question

second

high income producing property is good in any Portfolio so why sell it

so the demand for them will stay high

third

i read somewhere that if rent goes down property prices go up and not the opposite


yet to agree with the last point but if anyone could explain why the inverse relationship i will be
grateful


regards

[fws]

The usual view is that if rents go down, people can afford to save the deposit and therefore more people buy. If landlords find rents going down, then they are more likely to sell so the supply increases. More supply and more demand means property prices increase.

Eventually prices of properties for sale go up beyond a certain point and people are unable / unwilling to buy, so then more people want to rent and rents go up again.

Personally, I think it's far more about the availability of mortgages and finance at low enough rates for people to buy more expensive properties. Then there's the incessant media comments which can also trigger either a crash or a frenzy to buy. Statistics can be interpreted any way you choose.

The situation in Dubai is an interesting one as it is such a new market. Investors have noticed the vast profits to be made and have been piling in. If the market becomes more regulated, yet more finance is available, it will create an interesting scenario - especially coupled with an increasing population.

[eyeC]

thanks fws i guess you have a point .....more saving will lead to more buying

i think of it this way


if your valuation is based on cashflow

the value of any investemnt will go down if the expected cashflow reduced keeping everything else equal

i guess the second important thing is growth

i think no matter how big is the cash flow for the property if it is fixed over time inflation will catch up


so if more restrictions are placed on rent in dubai there will be no growth or very limited and with high inflation it willturn the investemnt unprofitable

so the governemnt need to leave the market to the laws of economics



regards

[Roshan]

Originally Posted by eyeC

thanks fws i guess you have a point .....more saving will lead to more buying

i think of it this way


if your valuation is based on cashflow

the value of any investemnt will go down if the expected cashflow reduced keeping everything else equal

i guess the second important thing is growth

i think no matter how big is the cash flow for the property if it is fixed over time inflation will catch up


so if more restrictions are placed on rent in dubai there will be no growth or very limited and with high inflation it willturn the investemnt unprofitable

so the governemnt need to leave the market to the laws of economics



regards

End of the day, it would all depend on the entry level in the market. Earlier the entry level better are the chances.

I entered Business bay at 1295 dhs psf in Dec 2006 and I am not bothered even if there is a correction. Today Business bay entery levels are 2200 dhs psf. For people entering at 2200 dhs, there might or might not be a problem, but the exposure to risks are more.

I really don't know where Dubai is heading with all the prices going up. Is it a hyped up market or is it real....only time will tell.

Regards

Roshan

[DoBuy]

Regards to prices and rent going up etc.When you consider that Dubais prices are still some way below major cities in the world then maybe the only way for them to go is up?
Although its hard to imagine they will compare with London and New York but why shouldnt they be on the same level as somewhere like Hong Kong?Why should prices in Dubai be expected to be way below other cities especially when you consider what a place it will eb in say 5/6 years when so much more has been built.

[Rammah]

Originally Posted by DoBuy

Regards to prices and rent going up etc.When you consider that Dubais prices are still some way below major cities in the world then maybe the only way for them to go is up?
Although its hard to imagine they will compare with London and New York but why shouldnt they be on the same level as somewhere like Hong Kong?Why should prices in Dubai be expected to be way below other cities especially when you consider what a place it will eb in say 5/6 years when so much more has been built.

same applies to singapore, tokyo, and many other cities in the world...
u r right... only 1 way... UP!
The doubters of today will become the regretful of tomorrow. Mark my words.

Rammah