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[Alyapal]

Dont buy in Dubai ... Here's Why.

http://www.7days.ae/local-news/no-stopping-roads.html

http://www.7days.ae/letters-to-the-edit ... ction.html

[Chocoholic]

Yeah I read that - how hilarious. The developers says it's non of the residents business! Well I'd like to put a thumpnig great highway outside their front door and see how they like it.

[sniper420]

atlast some free press in Dubai

[Liban]

atlast some free press in Dubai

7days.... I don't give much credance to that "publication"...

[kanelli]

The standard of journalism in the articles is pretty poor in the 7 Days paper, but 7 Days is the only paper that really knows and reports what is going on on the ground, so to speak. For this reason, 7 Days can be very valuable.

[Chocoholic]

I had this conversation with a friend last week and we compared some of the front pages of 7 Days, Gulf News and Emirates Today. 7 Days always has somehting that grabs you and that is relevent to people living in Dubai of the UAE, or a big international story that will get people going. With the other two it was HH Sheikh blah blah receives letter from blah blah blah - I mean how boring and totally irrelevant is that?

7 Days might be a 'free' paper but at least it addresses issues that are important to people living here.

The others are all government run so they pander to that and you often find that important 'issues' are hidden away in tiny little articles.

[Alyapal]

A gathering storm? (22 Jan, London Times Article)


The view from the 41st-floor terrace of Grosvenor House hotel in Dubai is the oddest — and most optimistic — anywhere. To the right, towering cranes outnumber palm trees. To the left, lines of half-built skyscrapers snake into the shimmering desert haze. Out to sea, 300 sand islands form a map of the world. It is no surprise estate agents bring clients here to sell the dream of desert living.

"Impressive, isn't it?" says Michael Grant, of Cluttons Dubai, as he points out the lagoons and skyscrapers of Dubai Marina, whose residents include the comedian Jim Davidson. Cluttons has been hired to sell Miramar, a luxury tower block to be built in the marina in which flats start at £670,000 and rise to £2m. "Frankie Dettori and Vinnie Jones are buying into the development because they believe it represents the best that Dubai has to offer," Grant gushes.

Sun, sand, celebrities and hard sell: a typical morning in a country that likes to describe itself as "the eighth wonder of the world". But there is another Dubai, where life is anything but wonderful. It is a place Laurie McWhan knows all too well.

McWhan is standing in the shadow of the Grosvenor House hotel, on a patch of wasteland next to a low-rise apartment block. "I shouldn't be here getting covered with dirt; I should be sitting up there on my terrace, enjoying a glass of wine in the sun," he says, pointing to the seventh floor.

McWhan's desert dream has turned to dust. The 44-year-old from Islington, north London, and his wife, Marie, bought an off-plan flat in the Waves development in Dubai Marina two and a half years ago for £127,000. The developer, Damac, said it would be ready last May. It is still not finished.

"They now say it will be ready this spring, which means I can move in next summer at the earliest," says McWhan. "Three years after I made my investment, I don't have my house, a year's potential rent of £12,000 is down the drain, and all they have offered me is a few thousand pounds in compensation. It's scandalous."

McWhan wishes he had never invested in Dubai, and he is not alone. British residents at Jumeirah Islands, a development of 800 villas and lagoons in the desert, are so incensed at what they term "shoddy workmanship and poor management" that they have written an open letter of complaint to Dubai's new ruler, Sheikh Mohammed bin Rashid al-Maktoum.

British-born Gill Green, who moved in there last year, claims third-rate materials have been used to build "luxury" villas and that standards of workmanship are dangerously low. Her three-year-old son was treated in hospital after contractors fumigated properties without warning residents. Owners also complain that the developer, Nakheel, has failed to build planned communal facilities, notably a clubhouse and a golf course.

Even in completed schemes, there are problems. Residents in Dubai Marina are embroiled in Dubai's first service-charge strike, refusing to pay the full amount because, they say, developer Emaar has hiked fees by 30%. Stephen Exelby, the residents' spokesman and a fellow of the Royal Institution of Chartered Surveyors, says: "The figures are simply too high and we have not been properly consulted."

Overshadowing construction and financial wrangles, foreign homebuyers are confronting a larger and even more worrying issue. In spite of repeated promises from developers and government ministers, Dubai's laws have still not been changed to grant foreigners the right to own freehold property and land. Buyers are in legal limbo until new legislation is passed.

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the combination of the disputes and the legal imbroglio has left many buyers regretting their decision to invest in the emirate. As McWhan puts it: Dubai likes to say it is the new Hong Kong. The property market feels more like Romania on a bad day."

What's gone wrong? Getting answers here is a tough business. Dubai does not do "problems": it does snow-covered ski resorts in the desert and razzle-dazzle seven-star hotels. Through boundless optimism and vast oil wealth, it has created a climate-controlled zone of opportunity for expatriate property investors. Or, at least, it thought it had.

In a sign of how seriously the country is taking the rising chorus of complaints from wealthy expats, one of Dubai's leading figures, Sultan Ahmed bin Sulayem, agreed to meet The Sunday Times last month. He is a member of Dubai's executive council, the country's ruling body, which is chaired by Sheikh Mohammed. He is also executive chairman of Nakheel, the emirate's largest developer, which has construction projects worth £20 billion under way, including Palm Jumeirah, the island in the Persian Gulf that is shaped like a giant palm tree.

On a tour of new developments in his white Range Rover, Sulayem admitted that, as Dubai moves from a "sell, sell, sell" market to a "deliver, deliver, deliver" market, it is suffering teething troubles. "Definitely, there are growing pains," he said. He sympathized, he said, with buyers who felt they had not got what they had paid for. "When people buy, it is with their own money. They are committing themselves to pay a mortgage. I feel the frustration of somebody who says, 'My God, all my resources are put in this house. It is going to be bad.' “

Nakheel was working overtime to address complaints about fit and finish, he insisted.”If you build a villa or you build a palace, they will have a snag list. We have hired extra workers to fix snagging." He assured residents of Jumeirah Islands that all the planned communal facilities would be built, although some, including the golf course, might be located on neighbouring Nakheel developments.

What about the freehold issue? "The law is being drafted. It has been presented to us in the executive council and I expect it to go very soon . . . within the next three months. The law is going to happen."

Damac and anther big developer, Emaar, also admit they have encountered unforeseen problems. Peter Riddoch, the Scots-born chief executive of Damac, confirmed that the Waves project, in which McWhan invested, was behind schedule. Contractors and sub-contractors had failed to meet deadlines. "There will be times when things don't go well," he said. "We should not try to disguise things with smoke and mirrors. As long as we recognise those challenges and effectively deal with them, we can move forward."

He said investors had been offered compensation, and reminded buyers that the value of their homes had risen by 60%-120% over the past three years, making up for any loss of potential rental income.

Ahmad al-Falasi, director of property management at Emaar, conceded that some "dissenters" had objected to service-charge hikes in Dubai Marina, but said most agreed the rises were "reasonable".

The developers' comments have not appeased disgruntled buyers, however. "It's the same old story every time," McWhan said last week. "It's always somebody else's fault. Damac can't simply blame the contractors. They hired the contractors. Get real!" Exelby insisted that service-charge rises in Dubai Marina had not been agreed with Emaar, and called for a fresh meeting between the company and the residents' association. Residents at JumeirahIslands, meanwhile, welcomed Bin Sulayem's assurances that construction faults would be fixed, but were furious at his suggestion that they would have to share a golf course with a neighbouring development.

But at least these people have homes. Shortly after Cluttons Dubai showed off the Miramar development in Dubai Marina, it rang The Sunday Times to say that the project would not now be going ahead "due to unresolvable legal issues". A representative said: "At the time of your visit, Cluttons was not aware that this was going to be the case. I can only apologise for any inconvenience caused."

To Frankie Dettori, Vinnie Jones and thousands of other ordinary investors who want to buy into Dubai's desert dream, the view from the 41st floor of the Grosvenor House hotel — like the view of the Dubai property market as a whole — looks a lot less optimistic these days.

[arniegang]

Thanks for that post.

Interesting they pointed out 2the waves". Its behind schedule because the construction stopped last September. Nothing has been done since then, the site is deserted and in darkness.

[Chocoholic]

I went to the launch of a new building the other night and got chatting to a construction company owner and he said many of the building's here are messed up.

The Deira Palm has now been scrapped as it's just not feasible, and after several independent reports, the other Palm Islands will have to have the beaches replaced, extra sand and foundations, worked on every single year!!!!

He was saying that many companies want the construction companies to tie into a building life bond and actually guarantee the life of a building here, which apparently is virtually impossible as the life span of the majority of buildings will only be approx 30 - 35 years - that's a scary thought if you're investing in property. And the life span is due mainly to what I've said all along, unskilled labour throwing the constructions up as quick as possible.

[Alyapal]

Great point about the buildings lasting 30 - 35 years, that was about the expected time scale that was told to me by two project managers that have since resigned there posts, they said 25 - 40 years was the expected life span of these properties, and this renewable 99 year lease is a total scam, you and I wont be around in 99 years the argue the facts out with someone that was not even born in 2006, about a property that once stood on land that we never ever owned, think about it.

[jag]

Great point about the buildings lasting 30 - 35 years, that was about the expected time scale that was told to me by two project managers that have since resigned there posts, they said 25 - 40 years was the expected life span of these properties, and this renewable 99 year lease is a total scam, you and I wont be around in 99 years the argue the facts out with someone that was not even born in 2006, about a property that once stood on land that we never ever owned, think about it.

Yikes, glad I didnt buy into anything there.

[Chocoholic]

Yep, you see you have to really look into this stuff here, it's all smoke screens and gloss, but underneath, much of it is a disaster waiting to happen.

I certainly wouldn't put my hard earned cash into property here, and think about it, if everyone is now starting to get wise to these facts, who's going to want to buy off you at a higher price?

[arniegang]

Choc

I totally agree with your points regarding building life expectancy etc.

But you have to remember that people like me, here in the UK cant even buy a garbage can on the road for less than equiv 1 million Dhs.

for example i have just completed on a crappy 3 bed house in a crappy area where i livr to develop and turn into 2 appartments. The purchase price was equiv 900,000 Dhs and i will spend a further 50000 dhs on it.

This is why the property market in the UK is shot, young couples here cannot afford to get on the "property ladder" because of the high cost of starter homes.

So my point is that people like me see the property in Dubai as "cheap as chips".

[Chocoholic]

Yeah but Arnie, after a few years the property quite literally will be chips! So is it really worth the investment, for something you might not be able to shift in a few years time.

All this stuff is now coming out to become public knowledge and it's really putting people off.

[arniegang]

I would in all probability disagree Choc.

Emaar in particular use Atkins as their contractor. Atkins is the most reputable company in the UK in design and project management contractors.

I dont forsee any of the issues you have raised within my complex.

However i would probably agree with you regarding the build quality issues of the numerous smaller private developers.

[arniegang]

A further point for someone like myself that had the foresight to purchase all my Dubai properties back in May 2002, is that the original price i paid was so low.

This in turn means that to date, i have effectively doubled my money, so any loss in value in the future would not affect me.

Also the importance of build quality by a government owned/part owned is very important. For example if there were issues about build quality in say 20/30 years time, then it would not be difficult to sue the contractor if they are still in existance.

A contractor would almost certainly loose in a court case if the building had defects in say 20/30 years time. And makin it worse for the developer would be the fact that it would be "a class action". This means that if it were to goto court then all the occupiers of that complex jointly sue the developer.

[Alyapal]

Just a couple of points to add to this, one of the project managers that I spoke of was from Atkins, and dont forget these service charges that people are locked into on a 99 year lease.

Long after your building is not fit to live in and you cant rent it out you will still be having to pay these service charges, grass wont cut and water itself ect.

And as for sueing the developer ect, no chance, nope, you got more chance of seeing the queen take a poo.

Read your agreement/contract.

I heard of another scam tonight, but I am going to ask around just to double check the source, this is a good one if it is true, wish that I had thought of it.

[arniegang]

The contract has nothing to do with the build quality or the long term serviceabilty of the building. There is nothing in the contract that takes away our right to sue if the building collapes afer 25 years because of negligent workmanship or materials. I have 3 contracts so i can confirm this to be the case.

Regarding the "service charge", i dont really see your point. The money we pay is nothing compared to the UK. I pay 3 times the amount for a 600 sq ft appt where i live, compared to my 950 sq ft appartment in the marina. The service charge has an amount for renovations built in, but in the main it pays for things like security, pool maint, public area lighting and cleaning, garbage, central air con, water pumps etc.

Furthermore you are incorrect regarding Service Charges for 99 years. The developer has used the same system as the UK regarding associations. If enough residents so wish, we have the right to dismiss the current company "Emrill" (which is part of Emaar) and appoint our own agents, to run service and maintain the complex.

I can only speak for Emaar developments, you maybe totally correct in some of your points regarding the small private cowboy developers.

Let me know if you find anything out from your sources wink wink please

[Alyapal]

I will keep you posted.

[Chocoholic]

But Arnie, They know these buildings aren't going to last that long, no matter who the contractor is, who it's built by etc. So to tie into a 99 year lease on something which won't even last a third of that is nuts.

There is no coverage to sue any contractors here, buildings are not covered by the construction guarantee like in the UK where all new buildings have a 10 year builders warrantee.

Don't forget this is all out the mouths of people who work for the top consulting, construction and development companies here. They point blank refuse to be tied into bonds on the buildings they construct because of all these issues, so there is no come back.

These guys invest their money, building the thing, get their original investment back plus whatever interest they've agreed then wash their hands of it.

[GAB]

I did filing for a civil engineer co. and it is common to say buildings only have a short life span, however Arnie is right-if it hasn't been pulled down in 50 years time and something goes wrong due to poor design or construction liability still exist. This is why hand written computations (originals) were kept 45 years down the track!!
I read also on another website about "shoddy" workmanship and the fact is the owner/occupiers are so thick they don't know the difference between types of construction...it was along the lines "I couldn't nail into the walls to hang pictures-the walls are all hollow-we've been ripped off" -DUH-ever heard of brick veneer, gyprock/plaster board-you don't use friggin nails!! As far as defects go there is usually a time frame in which you can present these and get them fixed. If someone is clueless about these things they should employ a person in the construction industry to do a detailed list for them.
Service charges occur at home on apartments too-so no big deal there.

[Guilo2]

I thought this thread to be most informative. Glad you guys brought this up so the rest of us will be the wiser.

Anyhow, just to add... 99-year leases are common where I'm from and construction standards aren't shoddy either. The point I was gonna make was these buildings may or may not last the entire 99 years but it's typically for other reasons apart from the crumbling structure/foundation that renders an edifice inhabitable.

Deteriorated fixtures and fittings/wirings and plumbing would need replacements long before the building actually gave way. While it may be warranted to replace these things some of the time, the cost of the exercise would have been prohibitively exorbitant, if it were possible to carry out the swap in the first place. To not replace them would make the place a fire hazard, or worse... a plumbing nigthmare! Friends in the business tell me that the likely decision at times, is to tear the dilapidated building down and build a new one where the last one stood... all within the 99-year lease. Mind you the lease applies to the use of land (not sure what it is here in Dubai).

Cheers! Thoroughly enjoyable mates!

[Guilo2]

Curious though as to how the Land Codes that are being drafted now, addresses the issue of strata titles.

Any ideas?

[jag]

Well, to each his own opinion. Stuff mite be cheaper here than the UK.. but there's a reason why!

Anyways, I have now over the past year spoken to dozens of people who have bad a bad experience with their purchases and thats enough for me not to invest here with all the uncertainties.

Happy with my investments elsewhere

But at least people can now decide for themselves armed with much more real information than was available in the early days..

[arniegang]

Some of you guys have this notion of a 99 year lease. It doesnt exist, well certaily in my case. My appartment is not "leasehold". When the land regisrty is set up the "title" will pass to me the "owner".

Furthermore lets do some calculations.

Rent 1 bed appartment currently say 80,000 Dhs

Lets multiply that rent by 30 years = 2,400,000 Dhs

Assume a drop in rent after year 10 say to 50,000Dhs = 1,800,000 Dhs

Original cost = 590,000

Balance/profit anything between 1,210,000 - 1,181,000 Dhs


As you can see on the assumtion the building collapased after 30 years, the profitability speaks for itself.

I have not even taken into account the short term rentability for which i currently let the apartment for 15,000 Dhs per month on a ad hoc basis.

Property to me, is nothing short of a item on a balance sheet within the profit/loss. Its no different and opposite to purchasing a car and taking into account depreciation.

I am most happy that my accquisitions will supply a home for myself, my children and my childrens children, and unlike my car will appear as an assest in my accounts that perpetuates a decent profit.

People need to think long term, maybe some of you dont see yourselves being in dubai in 30 years time and i can understand and appreciate that. You, however, have to calculate the cost of your living there in the term you decide, as time goes on and whether or not you decide to jump on the property ladder, you can be assured it will always cost you more.

Wherever your origins, the property you left/sold will no doubt cost more to repurchase. To me, it matters not, if my investments crumble to dust after 30 years, it will have amply served its purpose and "paid it's way".

[Liban]

Owning property/land is always the best method to maintain or grow ones net worth.... This has always been a historical fact.

Cars and renting are sinkholes for you money....

Owning land/property is most definatly NOT.

I plan on buying a place in Dubai in a few years once I get a better feel for the RE market here which is currently too unstable for my tastes.

[arniegang]

Blimey Liban

We agree once again

And as it happens, your post was an excellent short summary and generalisation.

[Liban]

Blimey Liban

We agree once again

And as it happens, your post was an excellent short summary and generalisation.

Thanks dude!!

I like short and sweet... LOL

I actually really appreciate and enjoyed your point of view on this topic. I am 100% with you here bro!

[jag]

There is good and bad in the real estate in Dubai and while some people are happy with their purchases, many are not.

Bottom line is one should do his homework, think things through carefully, and make the decision that is right for him or her.

One would hope that over time the industry matures, rules are enforced, and workmanship improves.

[arniegang]

If i were to be honest my main beef with the finish in my appt is the floor and wall tiles in the bathroom and Kitchen. The tiles are crap and the grouting i think was done by a blind man, who mixed the white grout with mud

But at the end of the day i have been quoted 3k to take them off and replace with the dogs tiles, so for such a small cost i can live with that.

Last week i was over JBR looking at the show flats. I have to say the finsih was very nice. But this comes at a cost. for example none of the appts come with any form of appliances in the Kitchen.