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Discuss this article (20 Comments)Property flippers start to spin
by This email address is being protected from spam bots, you need Javascript enabled to view it on Wednesday, 11 March 2009
If you want to hear positive news about the housing market, ask an estate agent.
The Middle East is hamstrung at the moment with a lack of reliable facts on which to base house buying decisions.
For example, Ryan Mahoney, managing director of estate agent Better Homes, was not alone on Tuesday when he painted a rosy, but misleading picture of the market.
He says that buyers are coming back to the Dubai real estate market, leading in one case to an “unprecedented” 16 viewings of a single property one day last week.
I have no reason to doubt his statement is true, but he fails to say whether the property in question actually sold. I suspect not.
In fairness to Mr. Mahoney, he goes on to say that there is a lot of shopping around, and appears to concede that most people are only browsing rather than buying right now.
This is inevitable in a market where the credit crunch prevents virtually everybody from securing the mortgage they need to buy a home, and prices are still falling.
Mr. Mahoney needs to be careful that his marketing messages do not overstep the line into counterproductive spin.
His assessment that property prices have fallen by up to 50 percent in some parts of Dubai is a helpful guide from somebody with firsthand knowledge of the market.
But going on to say that buyers can secure up to 15 percent more off the asking price as they close a deal shows an estate agent’s classic instinct for self-service.
The fact is that lowball offers of 50 percent below asking prices are being offered and accepted, even in today’s market that has already seen prices halve since their peaks last summer.
Better Homes would be shocked and delighted if a mere 15 percent discount was all that was required to seal a deal.
Any economic recovery will be delayed while there is a vacuum of reliable information. Nobody wants to invest in a declining market, but money could flood back once the economy finds a solid floor.
Mr Mahoney needs to be careful that his faux-optimism doesn’t elongate the current downturn and should speak sincerely if he wants to stimulate sustainable demand.
READERS' COMMENTS
Disclaimer: The views expressed here by our readers are not necessarily shared by ArabianBusiness.com or its employees.
Dreamers
Posted by concerned, dubai on Wednesday 18 March 2009 at 14:03 UAE time
I think both doc and DAg have very valid comments! Personally I think it is both the developers and the investors fault for gettign carried away with the hype! If anyone needs to start doing something as a first step, is to stop all off plan projects asap, half finiashed projects should be completed from the outside and left empty and investors who have paid more than 5% should get a refund. I thin the larger developers need to formally announce that certain prjects are either cancelled or postponed, the big white elephnat is in the room! this is the correction to the bubble and then let Dubai take the time to hit reality and over the next few years mature into the economy it knows it can become!
Posted by concerned, dubai on Wednesday 18 March 2009 at 14:03 UAE time
I think both doc and DAg have very valid comments! Personally I think it is both the developers and the investors fault for gettign carried away with the hype! If anyone needs to start doing something as a first step, is to stop all off plan projects asap, half finiashed projects should be completed from the outside and left empty and investors who have paid more than 5% should get a refund. I thin the larger developers need to formally announce that certain prjects are either cancelled or postponed, the big white elephnat is in the room! this is the correction to the bubble and then let Dubai take the time to hit reality and over the next few years mature into the economy it knows it can become!
6 month visa
Posted by connieB, dubai, UAE on Tuesday 17 March 2009 at 15:08 UAE time
The Malaysian government introduced Malaysia My Second Home (MM2H) program in the early 2000s initiated as an international residency plan to allow foreigners to reside in the country on a long-stay visa of up to 10 years, renewable.
6 months is hardly enticing enough!
Posted by connieB, dubai, UAE on Tuesday 17 March 2009 at 15:08 UAE time
The Malaysian government introduced Malaysia My Second Home (MM2H) program in the early 2000s initiated as an international residency plan to allow foreigners to reside in the country on a long-stay visa of up to 10 years, renewable.
6 months is hardly enticing enough!
Wake up
Posted by Trojan on Sunday 15 March 2009 at 22:54 UAE time
Wake up folks and stop living in denial. The real estate situation in Dubai is not about a temporary negative sentiment or regulation issue. The fact of the matter is that we had an unprecedented real estate bubble in Dubai, there was way too much over building, and now the bubble has burst. That's it, it is that simple. It does not matter how much RERA regulates or tries to keep shadey developers under taps, too little too late. Supply exceeds demand by a wide margin, and only a major crash will bring equilibrium back. Simple economics.
Only in the Middle East do I see this foolishness of buying properties off plan. If you pay for fish in the sea now, you will suffer the consequences of this stupidity later on. I couldn't believe it when I saw people lining up in lines to pay cash for plans on paper and glossy catalogs. I was used to the US where you would put no more than $5 or 7K as a deposit and not pay another penny until you take delivery of the keys. I hope what happened will teach people a lesson and end this rediculous practice.
Posted by Trojan on Sunday 15 March 2009 at 22:54 UAE time
Wake up folks and stop living in denial. The real estate situation in Dubai is not about a temporary negative sentiment or regulation issue. The fact of the matter is that we had an unprecedented real estate bubble in Dubai, there was way too much over building, and now the bubble has burst. That's it, it is that simple. It does not matter how much RERA regulates or tries to keep shadey developers under taps, too little too late. Supply exceeds demand by a wide margin, and only a major crash will bring equilibrium back. Simple economics.
Only in the Middle East do I see this foolishness of buying properties off plan. If you pay for fish in the sea now, you will suffer the consequences of this stupidity later on. I couldn't believe it when I saw people lining up in lines to pay cash for plans on paper and glossy catalogs. I was used to the US where you would put no more than $5 or 7K as a deposit and not pay another penny until you take delivery of the keys. I hope what happened will teach people a lesson and end this rediculous practice.
I have a few facts
Posted by gordon, Dubai, uae on Saturday 14 March 2009 at 12:02 UAE time
fact 1. My developer run off and abanonded the property. Loss aed 750,000
fact 2. another property was delayed by over 1 year (I was lucky)
fact 3. the quality was low despite being advertised as luxury.
fact 4. I would never ever buy an off plan again in Dubai.
Perhaps other people have similary experience, and they wonder why no one ones to buy. The developer will have to pay and build himself before he can market the finished product.
They dug there own holes, so they get zero sympathy from a someone who has suffered at the hands of such people.
Posted by gordon, Dubai, uae on Saturday 14 March 2009 at 12:02 UAE time
fact 1. My developer run off and abanonded the property. Loss aed 750,000
fact 2. another property was delayed by over 1 year (I was lucky)
fact 3. the quality was low despite being advertised as luxury.
fact 4. I would never ever buy an off plan again in Dubai.
Perhaps other people have similary experience, and they wonder why no one ones to buy. The developer will have to pay and build himself before he can market the finished product.
They dug there own holes, so they get zero sympathy from a someone who has suffered at the hands of such people.
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