Serious concern about UAE Property Market

[Roshan]

Originally Posted by savais

Question for you guys. We all know a correction is likely, we just don't know when. But, my question is what is the WORST case scenario in terms of price per sq ft in the following places:
Sports City
City of Arabia
Greens
Springs
Arabian Ranches
Internaitonal City
Jumeirah Village

Nobody can predict that. Dubai has adopted the "build and they will come approach ". If the people come in and the supply and demand equation holds, then we could see a small correction. If the equation does not hold obviously ther could be a deeper correction.

Regards

Roshan

[savais]

I know it is one of those questions which you need a crystal ball for. I guess I just want people's opinions on whether the price per sq ft of a place anywhere in Dubai could go less than 800 for example.

[Roshan]

Originally Posted by savais

I know it is one of those questions which you need a crystal ball for. I guess I just want people's opinions on whether the price per sq ft of a place anywhere in Dubai could go less than 800 for example.

Certainly not. I feel Dubai would never below Dhs 800 psf. My guess is Dhs 1,000 to 1,200 would be an acceptable price in the future in the event of a correction.

I bought my investments at Dhs 700 to 850 and I know for sure I cannot go wrong whatever happens. I confidently say that even if the market corrects by 50% I will make money in terms of rent.

Regards

Roshan

[NAZ_2_NAZ]

Agreed. These corrections people keep on talking about i believe will just be a slow down in the increase of the market prices as of todays prices. If the short term speculators are allowed to continue to further create this false demand in the market for another year by flipping again and again, then yes it is only time before we see a major correction of 20-30%. As the flippers margins are constantly reducing now. or the time it takes to sell is getting longer, i think flipping will slow down harshly soon. So this should not happen any way.

Even flippers need clients to sell onto, usually people who have experience in investment and thus knowledge of the market, they have had to be savvy to create the funds to purchase these deals at 5-10% + premium, so they can go on and make money on it. The quick return days, double your money in a queue are very numbered.

[Roshan]

Originally Posted by NAZ_2_NAZ

Agreed. These corrections people keep on talking about i believe will just be a slow down in the increase of the market prices as of todays prices. If the short term speculators are allowed to continue to further create this false demand in the market for another year by flipping again and again, then yes it is only time before we see a major correction of 20-30%. As the flippers margins are constantly reducing now. or the time it takes to sell is getting longer, i think flipping will slow down harshly soon. So this should not happen any way.

Even flippers need clients to sell onto, usually people who have experience in investment and thus knowledge of the market, they have had to be savvy to create the funds to purchase these deals at 5-10% + premium, so they can go on and make money on it. The quick return days, double your money in a queue are very numbered.

I call that a "WOW " words of wisdom.

What you are saying is absolutely right. Flippers are finding it hard to operate as the market matures. I do agree there are pockets where flipping still exists, for eg : Badrah and that was only because the price was reasonable. That too, in time to come will stop.

Once the flippers are out. The artifical pricing will not last and the developer would be forced to bring his price down - OR - offer incentives like free children education for 10 years

I would be preparing myself for ready properties, buy and rent and be happy for the rest of my life.

Regards

Roshan

[NAZ_2_NAZ]

Originally Posted by Roshan

I call that a "WOW " words of wisdom.

What you are saying is absolutely right. Flippers are finding it hard to operate as the market matures. I do agree there are pockets where flipping still exists, for eg : Badrah and that was only because the price was reasonable. That too, in time to come will stop.

Once the flippers are out. The artifical pricing will not last and the developer would be forced to bring his price down - OR - offer incentives like free children education for 10 years

I would be preparing myself for ready properties, buy and rent and be happy for the rest of my life.

Regards

Roshan

Thanks for the compliment mate.

Dubai has still got a lot of money to be made, its just how you go about doing it. I think trying to not follow the crowd is always a good option. Yeah, i agree buy finished properties get excellent rent in one payment no headache, it is a good option.

[harbkalsi]

Originally Posted by Roshan

Certainly not. I feel Dubai would never below Dhs 800 psf. My guess is Dhs 1,000 to 1,200 would be an acceptable price in the future in the event of a correction.

I bought my investments at Dhs 700 to 850 and I know for sure I cannot go wrong whatever happens. I confidently say that even if the market corrects by 50% I will make money in terms of rent.

Regards

Roshan

I have an optimistic view on this. Although I agree that AED 1000 to 1200 is a realistic price, I feel that Dubai will continue to appreciate in the long run. The government is delivering everything that it promised and this coupled with very strong marketing, and the fact that many new attractions like Dubailand are still to be developed, demand will continue to grow, though not at the rate that we have seen in last 4 years. There may be some price correction but I don't ever see the prices going south beyond the 50% mark. If it does, my cash is ready !

Assuming that there is 20% - 30% capital growth/appreciation p.a what sort of percentage rental return (on market value as opposed to purchase price) should one expect on residential units between now and next 24 months in desert areas like DSC, JV ?