Real estate chief sees sales, valuations slump

PROPERTY VIEWS: Cluttons Dubai says it has seen a big decline in sales and mortgage valuations. (Getty Images)

A leading UAE property agent has said that both sales and mortgage valuations have taken big hits amid the slowdown in the real estate industry.

Ronald Hinchey, resident partner, Cluttons Dubai, revealed that company sales were at two or less a month, compared to about 15 during the peak months of July and August last year.

Mortgage valuations, which peaked at about 250 a month for around 17 mortgage providers were also down to 50 per month, Hinchey added in an interview with Arabian Property magazine.

“[Property] management has continued and commercial valuations have continued, and those two departments have kept our business going,” he said.

Hinchey added that he expects to see a drop in the price of residential rents.

“I think residential rents will need to come off their highest peaks by at least 50 percent,” he said, adding that prices would also be affected by the number of people leaving the country, which would slow demand.

However, with some contracts running for one to two years, he said the full scale of price drops would not be felt until 2011.

Hinchey also stressed the importance of affordability in Dubai’s real estate market, adding that young executives should only be paying between 20-25 percent of their salary towards rent, compared with a current figure of approximately 60 percent.

Asked when he believed the market would begin to pick up, Hinchey said: “Given the fact we’re looking into a bit of a black hole at the moment - we really don’t know where the world economy is going, we really don’t know what’s happening to liquidity, we really don’t know what’s happening to demand, a lot of projects have been shelved or cancelled – for people to say everything is going to come right in the second, third or fourth quarter is just wishful thinking.”

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READERS' COMMENTS

I have friends who have invested in year 2008 and have lost their peace, sleep & also burnt their hands
Posted by Ramesh, dubai uae, uae on Sunday 15 March 2009 at 09:33 UAE time

I have friends who have invested in year 2008 and have burnt their hands. They jumped in late, they are suffering too much, their money is stuck, because their investments are just sand and only on paper as the construction has been done only 10% in the projects where they have invested. Also the rate per sq ft has been reduced to 50% of what they paid in year 2008. This is what happened to people who jumped in the share market in the year 2008 , they went and jumped in when it was very high and lost money when it nose dived. How do they get out of this, also they paid high rates per sq ft which was the highest in the year 2008, now the construction costs, building materials costs have been reduced by 50% or more. The rate what they paid for booking the properties have dropped by 50%, how do you expect them to continue making payments and in the end get a property which as on todays date is just 50% in value to what they have paid. Therefore RERA must get involved and sort out these cases before the defaulters list bursts in Dubai during may and june 2009. In India, there are number of developers who have slashed the rates even after bookings were collected in the year 2008, because they have to pay less for building materials and construction, and they know pretty well that the buyers will not pay if the rates are high and they will end up with a snowball of defaulters. RERA of Dubai and Ajman must get involved and act as a negotiator between investors and developers and create a buffer zone of rates which will be realistic for the end users and buyers. In Ajman 95% of the projects are still sand, and all of it has been booked. Imagine what will happen there as the action started very late in Ajman.

Investor?
Posted by Watching from the sideline on Monday 9 March 2009 at 14:03 UAE time

Ramesh,
you sound like an investor who has been able to enjoy the highlife, but now that the business climate is turning against you, you are crying foul and are asking the government to make up for your losses.
Sorry, but that kind of behaviour does not demand any respect. Sometimes you win and sometime loose. It is the true business man who plans for the bad times and can weather the storm only to come out of it stronger.

The people we should feel sorry for are the hardworking people who bought a house at an over-inflated price (due to the speculators who are now crying foul) for their family to live in, lost their job and now have no means of ensuring their family has a family a roof over their head.

When Dubai said its gonna rain we came out wearing raincoats and umbrallas in hand THAT TRUST WE HAD IN DUBAI
Posted by Ramesh, dubai uae, uae on Sunday 8 March 2009 at 11:32 UAE time


When we were thrown up like a child in the air, WE had total trust that UAE will always catch us down and then throw us more higher for more fun and joy.
When we were told it will rain WE immediately came out wearing raincoats and umbrellas in hand, We had that much confidence and trust in UAE, and therefore We invested blindly because of the trust and confidence in the UAE
When we were given umbrellas in hot weather but when it rained the umbrellas are being snatched now.
WE humbly request RERA to help us get our money back which we invested in UAE purely on trust and confidence.
Please Cancel all running projects which are completed less than 25% and return our money back to us.

Real Estate Chief sees sales and valuations slump
Posted by Rajiv Sehgal, Dubai, UAE on Sunday 8 March 2009 at 07:48 UAE time


It was a pleasure to read a candid and objective view from a real estate professional. The dire need of the hour is to take some urgent steps to spur demand and control supply. Some of the suggested measures are residence visa for minimum 10 years to expatriates buying property, UAE Central Bank must push banks to start lending albeit with prudent lending policies, milestone based payments to developers, price reduction by developers on existing off plan projects commensurate with the drop in construction costs, cancellation of projects that are yet to start and immediate refund of down payments, RERA must direct developers to complete projects on a "first in first out" basis.

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