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Discuss this article (5 Comments)Half of Dubai agents sold no homes in last month
by This email address is being protected from spam bots, you need Javascript enabled to view it on Monday, 17 November 2008
DEMAND DROP: Half of agents in Dubai have sold no properties in the last month, the survey found. (Getty Images)
Half of all real estate agents that responded to a survey have not sold a single property in the last month, TheEstateAgentsDubai.com revealed on Monday.
The website, a forum for agents in the emirate, said agents blamed a lack of lending from banks and "self-perpetuating panic" as the main reasons behind the current drop in demand.
Many banks in the region have tightened their lending criteria due to the global credit crunch, a move that has left customers unable to secure a loan to buy a property.
Local lenders have slashed home financing from 90 percent to as little as 50 percent in recent months.
Paul Allen, TheEstateAgentsDubai.com webmaster, said in a statement that agents felt the tightening lending conditions had "caused a seizure in the market".
Agents also blamed a lack of regulation by Dubai's newly-formed Real Estate Regulatory Agency (RERA) and unclear information regarding new laws and procedures from Dubai's Land Department, according to the survey, which polled more than 170 agents.
Despite the current climate, the survey found agents were optimistic about the medium- to long-term outlook for the market, with three-quarters of respondents stating the market would pick up within three to six months.
HSBC said last week property prices in Dubai fell four percent between September and October, with the price of villas tumbling 19 percent due to slowing demand and tighter lending conditions.
READERS' COMMENTS
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Half of Dubai agents sold no homes in last month
Posted by Mary on Tuesday 18 November 2008 at 12:11 UAE time
Dear Real Estate Agents, I really really feel sorry to say that, but you deserve it. After all what you have been doing to expats, treating us a bit like garbadge etc... by selling/renting to whom ever pays you more just to get more commission.... I just hope this is a lesson to put an end to your voracity
Posted by Mary on Tuesday 18 November 2008 at 12:11 UAE time
Dear Real Estate Agents, I really really feel sorry to say that, but you deserve it. After all what you have been doing to expats, treating us a bit like garbadge etc... by selling/renting to whom ever pays you more just to get more commission.... I just hope this is a lesson to put an end to your voracity
Expect more bad news
Posted by omar, Dubai, UAE on Tuesday 18 November 2008 at 10:55 UAE time
I just called an agent to inquire about the rental of a small 2 bed flat in the T Com area (Dubai) whereby he recklessly told me 155,000 (45,000$$). Well, i wonder how much this man's salary is to talk in that tone. 45,000$$ is higher than a flat in New York or California or the French Riviera my friends. The bubble has EXPLODED simply bcz the entire real estate market has gone beyond any logic or common sense. Everything goes up fast goes down fast. It's the ABC of business + the entire mortgage system is far from being realistic. It's just crazy. How can you lend someone for 25 years when he is 40 years old. What about his life expectancy?+is not it logical that 99% of foreigners do not think long term of Dubai. Many of them rarely visit the region and their children dont know where on the map the entire gulf is located! + very soon ALL the gulf governments must review their budgets completely. The oil is no longer 147$, nor 100$ nor 80$ nor 60$ nor 50$, today it's in the 40s and by Obama's inauguration on Jan. 20th, it's expected to be in the 20s or maximum 30s. Did you forget Clinton's days when it was 8$$!
I believe everybody starting by the real estate developer CEO up to the ice cream salesman MUST review his budgets ENTIRELY - TODAY rather than tomorrow.
Just today, a prominent agent offered me a villa in Dubai with 35% discount, but i asked for 50% discount. It might sound an odd request but even with 50% discount, the owner would make 20% net profit in 2 years! NOT BAD AT ALL. I wish i were in his shoes. The 300% profit in few months phenomena are gone forever - More than 1000 people in real estate lost their jobs in the last 20 days.
Posted by omar, Dubai, UAE on Tuesday 18 November 2008 at 10:55 UAE time
I just called an agent to inquire about the rental of a small 2 bed flat in the T Com area (Dubai) whereby he recklessly told me 155,000 (45,000$$). Well, i wonder how much this man's salary is to talk in that tone. 45,000$$ is higher than a flat in New York or California or the French Riviera my friends. The bubble has EXPLODED simply bcz the entire real estate market has gone beyond any logic or common sense. Everything goes up fast goes down fast. It's the ABC of business + the entire mortgage system is far from being realistic. It's just crazy. How can you lend someone for 25 years when he is 40 years old. What about his life expectancy?+is not it logical that 99% of foreigners do not think long term of Dubai. Many of them rarely visit the region and their children dont know where on the map the entire gulf is located! + very soon ALL the gulf governments must review their budgets completely. The oil is no longer 147$, nor 100$ nor 80$ nor 60$ nor 50$, today it's in the 40s and by Obama's inauguration on Jan. 20th, it's expected to be in the 20s or maximum 30s. Did you forget Clinton's days when it was 8$$!
I believe everybody starting by the real estate developer CEO up to the ice cream salesman MUST review his budgets ENTIRELY - TODAY rather than tomorrow.
Just today, a prominent agent offered me a villa in Dubai with 35% discount, but i asked for 50% discount. It might sound an odd request but even with 50% discount, the owner would make 20% net profit in 2 years! NOT BAD AT ALL. I wish i were in his shoes. The 300% profit in few months phenomena are gone forever - More than 1000 people in real estate lost their jobs in the last 20 days.
Sales
Posted by Chris J, Dubai, UAE on Tuesday 18 November 2008 at 10:26 UAE time
Perhaps the purchasers of Dubai property are rapidly realising that there are two factors to owning a property in Dubai which do not apply elsewhere in the world. One is the purchase price and the other is the rapid escalation in Maintenance fees. To have a 100% escalation in maintenance fees for Union Properties in some projects and 80% in Marina Properties from Emaar, and not be transparent in accountancy as the fees are goping to other bloated companies within the group, is unacceptable to most purcahsers.
Posted by Chris J, Dubai, UAE on Tuesday 18 November 2008 at 10:26 UAE time
Perhaps the purchasers of Dubai property are rapidly realising that there are two factors to owning a property in Dubai which do not apply elsewhere in the world. One is the purchase price and the other is the rapid escalation in Maintenance fees. To have a 100% escalation in maintenance fees for Union Properties in some projects and 80% in Marina Properties from Emaar, and not be transparent in accountancy as the fees are goping to other bloated companies within the group, is unacceptable to most purcahsers.
Effect on social situation in UAE
Posted by Oracle, Dubai, UAE on Tuesday 18 November 2008 at 09:48 UAE time
While I can clearly feel the glee in Arys’s post given below – I would also like to point out the darker side of the situation on the social / economic scenario in this part of the world.
The four main pillars of the UAE economy are Oil, Real Estate, Trading. All these are supported by Banking. Revenue earned through manufacturing as a %age of the above is very small.
Oil prices are down ie: margins are down. OPEC may look at cuts in production – which will further result in loss of volumes for the oil trade, which means less turnover (or sales) – new investments / upgradation in technology in the oil sector will be down. Oil demand show no sign of increasing – scenario looks bleak in the mid-term (5 – 8months).
Scenario for real estate does not look good for the next 6 months. When I say “not good” I mean speculative buyers will be out of this game. Real buyers (read: end users) will get better deals. However, volumes will be drastically low. Banks are not ready to fund the “middle class” earners. End users from the middle class background can only provide volumes (Fundamentals anybody ?).
Trading worldwide is on a downswing and the scenario is same here. Bankers are in no good shape……
Reality – The job scenario in an economy like UAE is going to take a hit. NO sector is safe because SENTIMENTS are down – and end-user spending has come down. (I am from the retail industry – I know what I am saying….)
However this is not the end of UAE….
Leaders need to re-visit their Vision and use the current learning (after-all every vision has its shelf life). They need to plan to keep the “majority” of the people happy, because SENTIMENTS count and we can see that. Leaders have to realize that “Majority” of the people do not earn +20K but are in the bracket 5K to 15K. When this majority spends….volumes go up and total margins (not just %age margins) go up. When their sentiments are down because of job insecurity, high rents, irritability due to road conditions, staying away from their loved ones as they cant sustain families here – they spend less.
Bottom line - Leaders need to focus on this income group and go beyond lip talk.
Posted by Oracle, Dubai, UAE on Tuesday 18 November 2008 at 09:48 UAE time
While I can clearly feel the glee in Arys’s post given below – I would also like to point out the darker side of the situation on the social / economic scenario in this part of the world.
The four main pillars of the UAE economy are Oil, Real Estate, Trading. All these are supported by Banking. Revenue earned through manufacturing as a %age of the above is very small.
Oil prices are down ie: margins are down. OPEC may look at cuts in production – which will further result in loss of volumes for the oil trade, which means less turnover (or sales) – new investments / upgradation in technology in the oil sector will be down. Oil demand show no sign of increasing – scenario looks bleak in the mid-term (5 – 8months).
Scenario for real estate does not look good for the next 6 months. When I say “not good” I mean speculative buyers will be out of this game. Real buyers (read: end users) will get better deals. However, volumes will be drastically low. Banks are not ready to fund the “middle class” earners. End users from the middle class background can only provide volumes (Fundamentals anybody ?).
Trading worldwide is on a downswing and the scenario is same here. Bankers are in no good shape……
Reality – The job scenario in an economy like UAE is going to take a hit. NO sector is safe because SENTIMENTS are down – and end-user spending has come down. (I am from the retail industry – I know what I am saying….)
However this is not the end of UAE….
Leaders need to re-visit their Vision and use the current learning (after-all every vision has its shelf life). They need to plan to keep the “majority” of the people happy, because SENTIMENTS count and we can see that. Leaders have to realize that “Majority” of the people do not earn +20K but are in the bracket 5K to 15K. When this majority spends….volumes go up and total margins (not just %age margins) go up. When their sentiments are down because of job insecurity, high rents, irritability due to road conditions, staying away from their loved ones as they cant sustain families here – they spend less.
Bottom line - Leaders need to focus on this income group and go beyond lip talk.
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