Dubai is a bubble waiting to burst, but Hong Kong looks good

[dealdydoc]

This is the title of the dubai article in moneyweek. make sure you guys and gals read it.

[DoBuy]

Personally I take much more notice of in-depth reports carried out by companies such as 'Hermes'.It takes alot of research,i.e.how many properties will come on-line in 2008( not many predicted)and how many people are moving to duabi each each(800 per day)etc etc before your qualified to give a prediction.the muppet who wrote this article read a few mags and wrote his report.Lazy and bad journalism.

[dubailover]

Originally Posted by DoBuy

Personally I take much more notice of in-depth reports carried out by companies such as 'Hermes'.It takes alot of research,i.e.how many properties will come on-line in 2008( not many predicted)and how many people are moving to duabi each each(800 per day)etc etc before your qualified to give a prediction.the muppet who wrote this article read a few mags and wrote his report.Lazy and bad journalism.

Well said DoBuy, no one can predict the future....it was morans like that who stopped me from investing in Dubai in 2001.... at that time I was offerred villas on the palm with a free mercedes...only to sign on the dotted line.

Dubai is forever,...it may cool down but the fire will keep buring...

[georgihh]

Originally Posted by dubailover

Well said DoBuy, no one can predict the future....it was morans like that who stopped me from investing in Dubai in 2001.... at that time I was offerred villas on the palm with a free mercedes...only to sign on the dotted line.

Dubai is forever,...it may cool down but the fire will keep buring...

how many people are moving to duabi (800 per day)
how many people are moving out of duabi(500 per day)
Don’t be that much optimistic
On top of that the burst is on the way 100000 thousands flats are being delivered this year.
Early next year the market will collapse.
A lot of flats are empty and for how long – I say not more than a year
Watch out for some special deals by the end of the year

[DoBuy]

'Investment bank EFG-Hermes expects 64,000 units to become available in 2008 and 68,000 in 2009'(not 100.000)

Personally I think u have to look at Dubai as a long term investment.There will be a slowdown and maybe a reduction but once u ride that out in a few years time things will stabalise and slowly rise once Dubai finsihes all its projects and becomes a great city.Remember,residential property is still way cheaper then other major cities.

[DoBuy]

P.S If your lucky enough to have a villa then your lucky.Whilst there will be an oversupply of appartments in the next few years probably,it will be a lot longer before theres an oversupply of villas.

[DubaiDMC]

If only everyone thought like you.....

Originally Posted by dubailover

Well said DoBuy, no one can predict the future....it was morans like that who stopped me from investing in Dubai in 2001.... at that time I was offerred villas on the palm with a free mercedes...only to sign on the dotted line.

Dubai is forever,...it may cool down but the fire will keep buring...

[mpat]

Guys
It will slow down and might cool down for a while , but if its considered for long term investments , its very much worth.
If its considered short term , than it should be for a year only.
if its for business or commercial properties its for long run with good return.
Good luck to me and all of us ( investors like me )

[DoBuy]

From EFG-Hermes -
The residential property market in Dubai continues to mature but with supply set to outstrip demand in the next 12 months, a decline in prices is now not expected until 2009, according to a research report from regional investment bank EFG-Hermes.
The report highlights that the market has witnessed a far slower pace of completed project handovers so far in 2007, with approximately only 11,000 units of the expected 57,000 units coming on stream, meaning that supply continues to lag behind demand. This supply lag has led to revised housing unit supply forecasts for the next three to four years, with estimates of 25,000 housing units for the whole of 2007, 64,000 in 2008, and 68,000 in 2009. On the other hand, demand for property continues to rise with population growth. Based on the assumption that the population of Dubai will rise to almost 1.9 million by 2010, up from 1.4 million currently, demand now calls for 45,000 to 50,000 new units per annum.
Dubai Chronicel:
Rental rates and property prices will start softening in 2010 when 70,000 residential units enter the UAE market, followed by a similar number in 2011, according to a new report.
"This is expected to lead to a decline in prevailing rental levels in 2010 and 2011, especially of the current stock in reflection of the lower comparative qualities with new master-planned supply," Shuaa Capital said in a report titled Vision 2008.

A downward adjustment is expected in property prices after an initial resistance to market forces from the prevailing price levels in 2010-2011. The Dubai-based investment bank anticipates that pent-up demand will free up with the price and rental rate correction and allow the market to balance. All in all, it expects a healthy net gain post correction over today's property prices.
All in all things looking ok for around 3 years.
If the population is set to increase by 500.000 in 3 years, that means with an average of 3 people per 50.000 units predicted per year that’s about right

[DoBuy]

From AME Info:
1. Dubai mortgage rates are around 8.5 per cent and have yet to adjust to the recent US rate cuts, which they have to do because of the dollar peg to the dirham. Just a couple of years ago local mortgage rates of seven per cent were available. Therefore the downward pressure on the cost of home finance is clear, and if the local mortgage market follows Hong Kong and becomes more competitive, then interest rates could go much lower, making it significantly cheaper to buy than rent. Real interest rates are already negative due to high local inflation.

2. Rental yields in the Dubai market of 7-10 per cent are abnormally high by international standards. Rents are unlikely to fall in a booming market, so it is more likely that rising capital values will gradually pressure yields down towards global levels. There is no reason why rental yields should be higher in a booming city like Dubai than in a city where the economic outlook is poorer.

3. The hype about Dubai development projects has admittedly duped even this skeptical correspondent over the years. The fact is that far less supply is coming on stream than promised by overenthusiastic developers, due partly to limited supplies of manpower and materials. Dubai Properties is one of the biggest and has just said it will deliver 5,000 units to the freehold market in 2008 which is not nearly enough to meet surging demand.

4. Dubai house prices are still low in absolute terms in comparison to other global cities with similar salary levels. The HSBC survey of house prices in comparison to per capita GDP put Dubai and Abu Dhabi near the bottom. This is a historic anomaly that will be eliminated by price rises.

5. Six years ago, when Dubai freehold began, it was a market without any formal legislation and regulatory infrastructure. Now it has world-class laws, a state-of-the-art land registry and a strongly-led regulatory authority. Hope has been replaced by experience.

6. The Dubai Financial Market crashed in 2006 pushing local investors into property as an alternative. It recovered in late 2007, but is now again trending downwards with global stocks, and has become highly volatile, shifting over 10 per cent in a day. Expect stock market participants to again seek a more stable alternative.

7. Indeed, the absence of investment alternatives is a major theme for 2008. Global stock markets have had their worst January in history. Recent US interest rate cuts leave deposits paying 2.8 per cent. This makes Dubai real estate look attractive as an alternative. Where else offers such a return?

8. In the same way that the local stock market crash attracted foreign bargain hunters to invest last year, foreign investors in search of yield are also increasingly investing in Dubai real estate. Problems in the UK housing market might be dissuading some buyers, but large numbers of oil-rich Russians, for example, are now buying in Dubai.

9. Dubai still has some undeveloped market niches in real estate, such as holiday lets and fractional ownership, which are big and even dominant market phenomena in many beach resorts around the world. This source of higher rental yield on property has therefore yet to be fully tapped.

10. The Dubai Government has been the most proactive developer in the emirate, and its recent legislation and regulatory initiatives suggest that this support is not only likely to continue, but will respond appropriately to any adverse market developments.