Dubai real estate on road to recovery

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REAL ESTATE: Dubai market on the road to recovery, according to industry experts. (Getty Images)

Although cash and confidence issues still prevail, Dubai's property market will witness the first green shoots of recovery sometime between the end of 2009 and the second quarter of 2010, according to a panel of industry experts speaking on Wednesday at the Cityscape Connect business breakfast in Dubai.

Elaine Jones, CEO of Dubai-based real estate agency Asteco, echoed the sentiment of the panel: ''It's about cash & confidence. For example, we need to reduce interest rates, relax lending criteria and address the residency visa issue.

''This will at least start to bring back much needed confidence to the market and begin to stimulate growth,'' she said.

Indeed investor confidence was debated at length, examining numerous issues such as defaults, incomplete projects, late payments and fraud.

''Trust is strained,'' stated Sunil Gomes, of Guru Real Estate. ''Credibility is king, if we lose that we have nothing. Projects must be completed and investors better protected.''

Steven Henderson, Partner in legal firm Clifford Chance, agreed that trust was paramount but added that the law had previously been struggling to keep up with the rapid growth of the market and that an over regulated market might have an adverse effect and stifle growth.

''Dubai has introduced Escrow accounts and the Strata law, but a federal law for real estate would also help to restore confidence. Banks also have a role to play here, especially when developers experience credit or cash flow problems,'' he said.

Difficulties in the banking sector have been widely reported; however the panel agreed that although credit was available for exceptionally low risk customers, besides rates and approval ratings, the sector needed consistency.

''Historically, the region has practiced 'relationship lending' but now with the credit crunch, banks are more cautious and have raised their minimum lending criteria, especially for real estate projects. They can no longer just use the project as security they often also require ring-fenced assets independent to the project as security.''

However, despite industry issues the panel was cautiously optimistic about the timescale for recovery. Asked when Dubai could expect a market recovery, the general consensus was sometime between the end of 2009 and the second quarter of 2010.

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READERS' COMMENTS

Oil Price = ?
Posted by Pop, Dubai, UAE on Saturday 6 June 2009 at 15:31 UAE time


Seems none of the lessons of tha past have been learned...... commodities and oil are all up significantly yet none of the UAE laws have been amended to proect investors.....

Nobody is checking to see how many mortgages any one individual has against their name........ and their ability to pay back those loans.....

Part of the speculative bubble came from these flippers who put down a deposit, sold out and repeated the same across many many properties........... good for them and they were brave when others were cautious.......... but it doesn't mean their actions are correct, just that they played the system.

To prevent future failures, it is the system that needs overhaul....

Ask yourself - why is Emaar up so much from 4 weeks ago.... has their fundamentals really changed........ not from where i am sitting.....

Hot, short-term money is starting to flood back into markets worldwide......... this is not a good thing!!!

Accept the reality and move on
Posted by prem, Dubai, United Arab Emirates on Thursday 4 June 2009 at 16:55 UAE time


Accept the reality and move on that's the only way out.
I see no light at the end of the tunnel for the greedy real tors, they had their last laugh. Now its back to real fundamentals and intrinsic value.I like DXB ,now the authorities need to accept the reality and diversify the economy and capitalize on the recovery that will happen world wide soon. Dont let the greedy real estate devils to free wheel any more.
I hope together we can do it and make it like business hub of ASIA

What a crock
Posted by Simon, Dubai on Thursday 4 June 2009 at 11:31 UAE time


Something that was very evident in this article is that there isn't one single tangeable 'positive' fundamental already in place to counter the falling market.

The panel expressed views of what SHOULD be in place to help the property industry but agree none of them are in place at the moment...and YET...the panel of experts IGNORE all of that and declare the market will be back by the end of 2009!!

The stupity of these people is unbelievable! Not one is an expert or else they wouldn't have talked up the market purely on personal positive thinking. Nothing is underpinning this market to make it rebound/recover.

Like the USA, Dubai has a phoney economy, in that, we are a consumer nation, we are not producers/manufactures of goods. predominently we rely on international money and spending power to make Dubai 'tick'. When that wealth has gone what underpins Dubais economy? I guess, very little, which is why the credit crunch has had such an effect here.

Schoff as some people may at my comments but there are laws of economics like there are laws of physics. I throw an apple in the air...the apple falls to the ground.

We can not ignore the laws of economics like the Panel in the article think they can.

Experts?
Posted by paul, Dubai, UAE on Thursday 4 June 2009 at 11:27 UAE time


From Gulf News March 13th 2009

"Elaine Jones, chief executive officer of Asteco Property Management, notes that there's been a "marked difference" in Dubai's property market in recent weeks. She says this is happening because some people believe that "the market has bottomed out and that there are opportunities to be had now." "

Ok, so it was apparently bottoming out in March. How did that prediction turn out? I really wonder at what point an 'expert' demonstrates such a poor track record of predictions that they no longer warrant the title 'expert'?

As an aside, a quick look at Asteco's web site gives a perfect demonstration that these real estate agents really don't know what they're doing.

"April 14, 2009
ABU DHABI RENTS FELL BY UP TO 20% IN Q1 - REPORT"

and right next to it

April 14, 2009
RENTS IN ABU DHABI STAY STRONG

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