Dubai, Abu Dhabi property sales at near standstill

NEAR STANDSTILL: Resale property prices in Dubai and Abu Dhabi have dropped for the first time, agents have said. (Getty Images)

Property sales in Dubai and Abu Dhabi have ground to a near standstill and resale prices have dropped for the first time due to the global financial crisis, agents have said.

Off-plan sales have been the hardest hit as speculators struggle to sell on their properties because potential buyers are finding it more difficult to secure financing, UAE daily The National reported on Sunday.

Speculators then face problems meeting instalments plans, forcing them to lower prices in an effort to make a quick sale, the newspaper said.

“It has been going on for a week now. I have seen prices going down about 10 percent everywhere, even in Dubai Marina and Downtown Burj Dubai,” Khaled Elqassim, the sales manager at Dubai-based property broker AAA, was quoted as saying.

“Pretty much all the secondary market is trading at less than it was before the financial crisis,” Karen Lay, the marketing manager at LLJ Properties in Abu Dhabi, was quoted as saying.

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READERS' COMMENTS

High rents for real?
Posted by DXBRAT, Dubai, UAE on Monday 2 February 2009 at 15:38 UAE time


Leo,

I hate to say this. Not only is your analysis intellectually dishonest, but it also intellectually flawed.

First of, rather than foreseeing, you can actually experience the drop.

http://evolve.ae/forum/viewtopic.php?t=6960

Now regarding people moving to Dubai: Don’t want to be rude here, but I am wondering which brand of cigs you smoke.

Simple math: Hiring freeze and layoff (you realize this is a reality right?) = lack of jobs. No jobs = expats leaving. Less people (even with the current inventory) still equates to greater supply (however the reality is that there will be a few more units coming in this year).

As for cap rates being 12% and rents being as high as 40% of income. See the thread link above.

Cap rate = net income/price of property. If rents are falling then how is your cap rate static? Unless property prices falls along with the rent, there is no way in hell you are going to see 12% here. In mature markets you see lower rates because of market stability and most folks bank on YOY capital appreciation as well (please do not compare DXB to major cities).

Are you saying they are lending up to 80% on apartments?

It’s irritating to see that people are STILL making 'feel good' statements shooting from their hips.

Realitybitesgetusedtoit.

Congrats to brokers and agents
Posted by Happy for Agents, United Arab Emirates on Wednesday 29 October 2008 at 17:29 UAE time

Finally you'll have to work hard for your commissions... long gone the days where you had the luxury to mistreat your customers.

want to cool the market - stop immigration
Posted by Leo, Dubai, UAE on Monday 27 October 2008 at 20:56 UAE time

I do not foresee a substantial drop in prices for the properties.

As long as new people are coming to Dubai and the stock for completed properties is still very short, you cannot expect rents to go down. Currently rents after bills give landlords 10-12% income on their property. Would you sell the milky cow? Same rate in Berlin or London will hardly do 6%. Forget about the drop - more than 100 000 people are coming to Dubai each year.

High rents in Dubai have the basis of higher - than in other places - incomes. We have no income tax here. So people decide to pay more for better places compared to cheaper locations. This results in rents, driven by end-users, hitting the sky. That's how the market works.

Offplan is different. Paper property might fall, many speculators are defaulting currently, some of the developers may freeze their construction works.
But... this will not increase the supply, right?

One of the recent polls showed that more than 50% of Dubai citizens are paying more than 40% of their incomes for rent. In couple of coming years they will decide to take the mortgage. Or probably they will leave to their homes to fight for working places? As rent market continues hitting the sky, It seems that they will substitute investors soon.

When you tried to rent an appartment for the last time? Dont make your judgement before you try. It is crazy now.

By the way, major banks has already increased their lending rate to 80%. Check NBD, Amlak

Dubai-Abu Dhabi Property-IS IT A BUBBLE?
Posted by MUKESH BHATIA, mumbai, india on Monday 27 October 2008 at 20:29 UAE time

What goes up rapidly,comes down MORE rapidly! The hype which was created by UAE property developers was unheard of from any other world markets-the UAE BOOM is man-made hype created by vested interests!

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