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Dubai promenade is 2.8 million for a one bed...off plan!

This is getting ridiculous.

Patience.....

With the exception of very unique properties, housing prices are set for a fall within the next couple of years. Demand is currently oustripping supply by a fair margin. Hence the ridiculous rental prices. However, the underlying factor is that the actual housing prices are NOT reflective of the current rental incomes. i.e. The current yield in Dubai is >10% for investment properties. In every other property market in the world you'd be happy with 3%. Why is this so? Because institutional and large private investors realise that the rental market is grossly inflated at the moment and these type of returns will not continue. They also know that within the next 4-5yrs, the accommodation capacity of Dubai will more than double and reverse the current trend of inflated rentals and increasing property prices. They won't nessesacrily go backwards a great deal, but they will plateau and lose ground on inflation therefore making the cost of housing cheaper than it is now (In relative terms). Whilst it's NEVER a bad time to buy property for the long term, there are much more attractive times to buy if you are looking for growth in the short and medium term.

Most independant reports are suggesting property prices will increase for the next 2-5years.Supply is way behind demand due to late completion times.Dubai property and rental prices are still behind other major cities.
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Other reasons to invest in Dubai :STOCK MARKETS: Following stock market crashes in the past investors have looked to property to put their money in.Dubai is one country that would benefit from the current state of the markets.
IMPROVED FINANCING:With the passing of time Dubai banks will offer more choice,better packages,and better rates for borrowing money.This will create more potential buyers.
ESCROW ACCOUNT:This will cut down the amount of properties being built and reduce chances of oversupply.It will also bring more buyers into the market especially overseas who will feel more confident to invest.
INCREASED CONSTRUCTION COSTS:With material prices soaring and labour shortages new projects will start off at a higher and higher price bringing up with it the prices of started or completed projects.TOURISTS:Some of the properties in dubai will be used for holiday lets and not for residents meaning less available properties for them and so less chance of oversupply.

you pay 2.8M dirham for 1 bedroom apt in dubai = you stupid! you can buy same in paris, london or NYC or 3 towns in pakistan.

Simple answer:

DON'T BUY IN DUBAI!

They have been talking about a slump in the property price since camels walked down the Sheikh Zayed Road. They can't afford for them to drop as all the investment in construction has been done on financed deals and it would ruin the people trying to service the loans with money they don't really have, the all important outside investors from the other GCC countries and the businesses they own...which is everything.

It will be artificially pumped up for long enough for the big players to have received their returns...then they won't care what happens.



Knight

DK, you speak as if Dubai is the only place in the world this happens.

If this were true then why is Damac offering Bentleys and BMW' as an incentive to buy??

If this were true then why are JBR's prices dropping.

I agree now is not the time to buy. Once the scheduled completions come on stream for 2008 and 2009 the market will fall quickly.

Those "investors" who have paid current/2006/7 prices will be desperate to sell their "empty" properties. Just drive around the Marina and look at the completions then look at how many lights are on at night.

Compare the thickness of the propery section in KT and Gulf News now compared to 2 years ago, resales are not selling.

Last month i negotiated a purchase on a 2 bed at a tower nr the Oasis down to the original selling price of 2006

They are not selling period. The prices advertised are totally unrealistic and do not represent what resales are actually achieving.

There is no indication of there being a slump in prices anytime soon. It all depends where you buy, where it is from the master developer and what sort of deal you can get.

There are some amazing developments out there and people who invested in them early will be laughing, but some developemtns are starting to top out, so ar not really worth the investment.

I invested in an apartment off plan and it's gone up by 25% since I bought it. I could sell it tomorrow with no problem whatsoever if I wanted to.

It's all about research and making informed decisions. There are big changes to the way the property market is working, with the introduction of escrow accounts for all developers, which is already weeding out the bad ones.

Just 5 years ago Dubai was way at the bottom of the scale when it came to transparency and having a credible market, now it's up there with most European markets. It has learned the hard way from it's mistakes, but is slowly but surely coming into line with reputable property markets.

Sorry Chocs i disagree with most of what you say. The is every indication of serious readjustment of around -20% by 2009. Yes you will always get certain developments that hold their value, but this is the exception rather than the rule.

Escrow makes no difference to the market, it never did and wont. I only know of 2 developers since 2002 that went under and and done a runner.


Indications are that around 125,000 properties will complete and flood the market by 2009. Ian probably has more accurate projected figures

THe only thing i agree with is that you say Dubai is coming into line with the european markets - Yup thats right and thats currently downwards Chocs. Spain is finished everyones getting out and loosing buckets of cash and the UK market is forcast to drop around 10-15% this year. The States ? forget it, down mega buscks and the yanks can hardly give their homes away.

I bought a wheelie bin in Karama, 'off street', and it has depreciated badly. I used an e-screw account and expected the property to capitalise at market rate, especially on market days. I used to be able to charge the flies 1Dh a day in rent, but that rate has now dropped to 25Fils and I am finding they are able to get a better deal at the dumpster down the road.

Oh woe is me! All I am left with is negative equity and a bad smell!



Knight

All the economic forecasts say prices are going to continue to rise.

However, they're called crashes specifically because not many people see them coming... remember that.

is that a tip Ian ?

arniegang wrote:is that a tip Ian ?

Um... I am not even going to speculate on what the market is going to do.

As Sheikh Mohamed says, there is nothing like Dubai in history, so history cannot say what shall happen to Dubai.

Weel as I'm dabbling in the property market on both sides now and from my current experience there is no shortage of overseas investors, and residents are seeing buying as a better option because of rental increases.

Like I said it depends on where you buy, you have to invest smart.

Chocs - overseas investors only exist where and whilst there is a market ie "rental income" + short term gains", once that market ceases to exist so do the investors - its as simple as that.

When supply exceeds demand this is the time the foreign investment will go elsewhere.

The question of whether supply outstrips demand is an interesting one.

JBR is currently estimated to be about 15% occupied (independent figure, not from source) which leaves quite a lot of empty apartments. Meanwhile there are other apartments in the marina just sitting empty rotting... all while the landlords refuse to lower rents, perhaps not having the financial pressure you or I would have to rent out an apartment quickly.

'They' are now pushing people out of Villa sharing situations in an effort to move the largely single and independent expat workforce into the skyscrapers that the 179 developers in this Emirate have built or are attempting to build.

Everywhere I see "TO LET" signs, Al Barsha and the Marina especially (but also some cropping up at JLT) and not many lights on in the evenings.

It would see that in terms of supply and demand, cheap affordable and ready accommodation is indeed in demand and the supply is not there. Take out the cheap and affordable bit, there is certainly an oversupply, but at a price many are not willing to pay.

It will be interesting to see what happens this year.

interesting post Ian. Is there something you are not sharing with us??

arniegang wrote:interesting post Ian. Is there something you are not sharing with us??

You keep insinuating that Ian knows something the rest of the market doesn't.

Only thing I would say is, if anyone offers you advice on the pretence that they 'know the market'... run. Fast!

Nobody truly knows what's going to happen next week, next month, next year. It quite well could go on booming until 2525... or next week the US could bomb Tehran and the guts will fall out of the entire region.

Nobody knows, and those who claim to do, are wrong.

Also don't forget the 3 most important things about property.

^ian^ wrote:Also don't forget the 3 most important things about property.

location location location?

http://www.zawya.com/story.cfm/sidZAWYA ... lmarketing

just seen this...

I am not nearly as aware of the ins and outs of the UAE property market as I should be. To me it seems that developers are delaying delivery of apartments and villas on purpose to keep the market from crashing. I think that the market is highly inflated and buying now even for rental purposes is inadvisable.

This is just my opnion, I am sure if I am grossly mistaken someone will correct me.

Dubaidude007 wrote:To me it seems that developers are delaying delivery of apartments and villas on purpose to keep the market from crashing.

Pure unfounded rumour. I can say without question that developers certainly want to get their developments finished... there are no intentional delays.

gezza wrote:http://www.zawya.com/story.cfm/sidZAWYA20080124043726/lok043700080124?weeklynewsletter&zawyaemailmarketing

just seen this...

Ian

do you know anything about this? I am lost regarding the article posted by Geeza. In my Dev as im sure in JBR and many others there already exists an "owners association" or the "right" for owners to form one.

For example in ours, the Articles of Association clearly states that we have a right if enough members attend and vote to dismiss Emrill if we so wish and we have the right to appoint a management company of our choosing. Presently Emrill are accountable to us in justifying how the management charges are spent by way of an annual meeting that can be called by a minimum of 5 owners.

Two years ago there was a near revolt by the owners of Marina Phase1 (the original 5 towers at Marina Walk) when they objected to the annual maint charges and Emrill learnt a very quick lesson in how not to piss off owners.

I therefore dont see the relevance of this new proposal. Why would owners pay their maint charges into a sep account for maintenance charges and then pay the developer an annual fee (for what).?

On a general winge, as the freehold and and Association rules were based on the Brit System, i dont see how the Gov't can interveine in a legal document made previously between owners and the developers??

found this which is a bit more informative

http://www.ameinfo.com/127854.html


I belive this will only be implimented for newly completed developments.

I totally disagree with the earlier statement that escrow accounts wont make a difference because it will.Overseas investors who make up a large portion of buyers will feel more confident to buy in dubai.

Alex1111 wrote:I totally disagree with the earlier statement that escrow accounts wont make a difference because it will.Overseas investors who make up a large portion of buyers will feel more confident to buy in dubai.

This is only because those stupid foreign investors now bow to the developers whim of asking for anything upto 90% of the purchase price before they take possession. This is almost unheard of in the west.

Back in 2002/2003/2004 developers like Emaar only asked for 30% deposit and 70% on completion.

Those who bought off plan on the new pay as you build system from 2005/2006 are approximately 25% down on the deal because the dollar was weaker then.

Anyone who buys off plan and pays 90% upfront before handover quite frankly need their heads examined.

However anyone who thinks thier money is safe regarding Law No. 8 concerning Guarantee Accounts of Real Estate Development in Dubai are also fools. If you read the small print, any developer can withdraw funds from the Escrow Account lodged with the Land Department as long as they produce the correct paper work. The only caveat in the Law provides that a developer cannot take the final 10% until ALL apartments have been sold and registered with the Dubai Land Registry. So in reality the money is not really that safe apart from 10%.

(law no8 only applies to developments commenced after July 2007)

Hi I am close to agreeing to a job in Dubai for a 2 year initial period and am considering what is the best option either rent or buy.

I have been told that I would need to budget for between 2 to 3k sterling for a good 2 bed apartment - yet I could but the same apartment for approx 200k.

I would appreciate any thoughts or advice

Thanks

suncoast wrote:Hi I am close to agreeing to a job in Dubai for a 2 year initial period and am considering what is the best option either rent or buy.

I have been told that I would need to budget for between 2 to 3k sterling for a good 2 bed apartment - yet I could but the same apartment for approx 200k.

I would appreciate any thoughts or advice

Thanks

Your figures are about the minimum.
Around the marina is a good place to look if you are after something to move into sooner rather than later.

Everytime I hear something like ' don't buy the prices are silly...' it just makes me laugh. I came 3 yrs ago and that's the advice I got from my friends and colleagues. I wasn't new to the buy / sell ppty thing though , thank god otherwise I would be still sitting there like most of them now payig ridiculous rent and getting no thanks for it , packing and unpacking... See I wouldn't even waste my mental energy try predict what the hell is going to happen in any ppty market in the world let alone Dubai's, I think and I believe in a very simple principle and that is : ppty is better than no ppty. Believe me , I've seen it over and over again.

oh , and a piece of advice , try buy somewhere little decent ... because yes in today's vain world location , location , location is very important.
You pay a bit more and you get a bit more in the future ...it works .