Serious concern about UAE Property Market

[uae properties]

I agree, the signs are all there as u mentioned.
First came the mass deportation of unregisterd labourers, thus ending the small developers, so that the larger ones survive, thus delaying the delivery of the units and avoiding the inevitable = a surplus of properties and devaluation of properties.
Second, the entrance of institutional speculators who have raised property prices to dizzying heights.
Finally, now properties are selling in the secondary market cheaper than the primary market.
To backup as to what I am asaying, just look at the property section in the newspaper and they count for 3 volumes of adverts for sale!
The property market has reached its peak and with global credit crunch ( and mind u 95% percent of uae propert owners are non-end users) will start selling their properties to cover the losses.
Regionally the drums of war is beating and there was a recent article that there will be no automatic residecny visas for propert purchasers.
Enough said, liquidate b4 it is too late.

[Investoman_uae]

Guys I want to discuss something else now. Maybe you can share your views on it.

Its an issue that is bothering investors and is also a serious concern in this buyant market.

When there is a constant supply of projects to the market... erm, how will investors sell their properties? It would take considerably longer to market it.

For example, investor bought and wants to flip, puts it in market for a while. .. why would someone buy his property when there are projects hittin the market on a weekly basis. Why think of the resale market when u can buy direct from developer. . . in some cases in the same tower.

Whats your views guy? its a concern in the UAE market that we havnt discussed it alot.

Buying is easy,... selling is not that easy.

Inv.

[Design Architect]

The reason why people are buying from "secondhand" market is because they can't buy it directly from developer.

As I can see - on this market there are some "big" players. Big players with big money and contacts. As soon as some good developer lunches promising project - they buy off full floors and buildings - just to resale them a week or month later. Money earned is measured in millions, and it gives them a head start for next thing.

Most of us - fortunate ones and informed ones - are buying that second hand - just to try and sit on it for a while - and sell it for 10-20% premium...after them usually come ordinary people, who are trying to copy everybody’s else's success.
These ones will lose everything - is something go wrong. Not the well informed ones, and the BIG players....

Unfortunately - UAE market have 6-7 layers of people after BIG players and well informed ones. Every one of these layers don't know anything about financing, and they are deep in dept already. But all want to sell at 10-20% premium and that will lead to bubble burst. People won't be able to pay monthly installments for property they bought - and bank won't be able to sell it either...end of story...

Problem is - as long as all of 6-7 layers are buying - demand is bigger then supply. It's not real demand - it's artificial...

It needs just couple of cases - where people are not able to payout the whole thing - and chain reaction is going to follow.

Disclaimer: all things above is written by novice property investor - without any property bought whatsoever. This is just his way of looking at things in this country - and if it gives some info, than it's good otherwise just skip it

[Design Architect]

Things are starting to get a bit ridicilous. I just browsed through some expat ads, and apartments are renting for 15-20 000 a month! International City 8000...

Obviously - with prices for bought apartments and monthly instalment - this is what we get to. Basically - off plan projects planned for couple of years will hit 50 000 a month (with prices of 3000-4000dhs/sqft). Let's see.

People who are thinking of coming here to live - are going to think twice I tell you that. Familly with kids and decent job - will definately skip this place in a year or two, because thay wouldn't afford it!

Looks like the only peole who are comin here are property buyers...

[Investoman_uae]

Originally Posted by Design Architect

People who are thinking of coming here to live - are going to think twice I tell you that. Familly with kids and decent job - will definately skip this place in a year or two, because thay wouldn't afford it!

Looks like the only peole who are comin here are property buyers...

The market will push them to consider other destinations within the UAE... such as Ajman, Sharjah, Abu Dhabi (slightly cheaper than Dubai not alot). Um Al Quwain is abit far.

If I was a developer right now, I would hit the middle to low class audience and develop (lower quality accommodation than Dubai standards) but it will definately fit the budgets of the biggest section of the population.

Thats where the money is right now.

Inv.

[Design Architect]

Funny enough - I agree with you, and fact that middle to low class apartments are good in this moment...

Funny is - that if speculators would see this as a potentially good investment (although it would be cheaper then rest) which it would be - resale process would start - and prices would soar to new heights

There is enough empty apartments in Dubai - but resale is going so fast - that none of them is ever available! And - why would they be - as the owner is making more money if he holds them for just 6 months...

Hmmm - definately this crazy thing will go on for 1 or 2 more years, but after that - it will be interesting

[Investoman_uae]

Originally Posted by Design Architect

Funny enough - I agree with you, and fact that middle to low class apartments are good in this moment...

Funny is - that if speculators would see this as a potentially good investment (although it would be cheaper then rest) which it would be - resale process would start - and prices would soar to new heights

There is enough empty apartments in Dubai - but resale is going so fast - that none of them is ever available! And - why would they be - as the owner is making more money if he holds them for just 6 months...

Hmmm - definately this crazy thing will go on for 1 or 2 more years, but after that - it will be interesting

No, what I would do is have a rule. . .. for sale to end-users ONLY. Cool ha? None of those money hungry investors will be able to take advantage of MY development.

Watch out for the next best Developer in the market.

Inv.

[lesplaces]

I agree with these views and have real proof. I bought Metro Tower in COA from developer for roughly 900 per square foot before it was sold out a year ago. Can't even sell it now for price I bought it for even though developer is marketing resales at 40% premium (who are they kidding).

Lucklily I bought on initial release of palm at crazy price and made 4 * growth in 4 years.

Reality is tjat no investor that buys at list price on release should plan on resale prior to completion - it is unlikley to be there for the reasons expressed in this thread. My advice:

- Buy good developments if you can afford to make the payments until completion.
- Estimate minimum 4 years to completion and do the maths and see if it still worth doing for a 25% - 50% premium in 4 years.

If anyone fancies holding Metro for another 3 years for last years price - let me know.

[tony ben]

Originally Posted by Investoman_uae

Guys I want to discuss something else now. Maybe you can share your views on it.

Its an issue that is bothering investors and is also a serious concern in this buyant market.

When there is a constant supply of projects to the market... erm, how will investors sell their properties? It would take considerably longer to market it.

For example, investor bought and wants to flip, puts it in market for a while. .. why would someone buy his property when there are projects hittin the market on a weekly basis. Why think of the resale market when u can buy direct from developer. . . in some cases in the same tower.

Whats your views guy? its a concern in the UAE market that we havnt discussed it alot.

Buying is easy,... selling is not that easy.

Inv.

Is the party nearly over? it is in Spain, Dubai has the oil boom from Abu Dhabi next door helping it. Are prices coming down yet in Dubai?

[lesplaces]

Can't see any evidence of them going down.

Depends on the development. - As I said off plan and nowhere near cmplete is less likley to go up now unless it is the best development in Dubai.

Established resales where development is complete like Palm are shhoting up at 5% a month.