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Discuss this article (56 Comments)Everyone’s talking nonsense
by This email address is being protected from spam bots, you need Javascript enabled to view it on Thursday, 11 June 2009
If you’re planning on buying a new home, I guess you only need to know one thing: have property prices bottomed out?
Depending who you believe, prices are now stabilising. Or they are actually rising again. Or they are falling just a tiny bit more. Or they are in freefall. Or you better get in now. Or don’t touch property with a barge pole.
Before you blog comments accusing me of being negative again, these are not my words but those of the experts. HSBC said in May that real estate prices in the UAE were stabilising after agreed prices in the two largest cities rose 4 percent in April and 5 percent in May from the previous month.
And earlier this week, Standard Chartered said that the market was stabilising after being in “freefall” for several months.
Yet today, from Deutsche Bank: “We expect UAE property prices to decline another 15 to 20 percent from current levels and only expect a bottom by year end.”
Hang on a minute. Two days ago, the respected National newspaper stated the following: “In Dubai, the price of homes in The Springs, Jumeirah Village, The Greens, The Green Community and Jumeirah Islands have risen from their lows in January by between five and 30 percent, according to Cluttons, an estate agency.”
Oh, and let me add that on Sunday, Arabian Business will publish an interview with ex-World Bank boss James Wolfensohn, in which he predicts that for global economies, “the worst” is yet to come.
So what is really happening? In the absence of any genuine and reliable data, I have come to only one conclusion: everyone who is trying to sell their property is lying.
They are lying about the price they will take, they are lying about how long it has been on the market, they are lying about how desperate they are.
Let’s take the quote from Cluttons, which says that in some parts of Dubai prices are up 30 percent since January. I hate to be blunt, but this is absolute, utter, complete and total nonsense. Codswallop. Tosh.
I’m not accusing the very respectable Cluttons of lying. They are a great bunch of guys who have been around since 1765. (So please don’t call my CEO to complain late on a Thursday night, as some of your contemporaries like to do).
But they rely on statistics from their clients, and whatever they are getting are clearly flawed. A 30 percent rise since January would represent the biggest property boom taking place anywhere in the world during the last ten years. Is this really going on in The Springs?
And it’s not difficult to see why everyone is lying. Many speculators stuck with countless properties are facing ruin. Their multi-million dollar property portfolios are just a few thousand dollars away from collapse. They have to claim that prices are rising, in the hope that if everyone says it enough, everyone will start believing it.
This will, eventually, lead to a herd effect. We will all pile in asap, and therefore actually force prices up.
The only way to measure what is really happening in the market is through actual transactions made (not advertised or hoped for). But with virtually no transactions being made, everyone is giving it their best guess – hence so many different reports from highly respected organisations.
Where do I sit in the middle of all this? I am still of the view that things will get worse before they get better – as suggested by Deutsche Bank and James Wolfensohn.
But I might be lying...
READERS' COMMENTS
Disclaimer: The views expressed here by our readers are not necessarily shared by ArabianBusiness.com or its employees.
Liars ??
Posted by Amused, Dubai, UAE on Friday 31 July 2009 at 06:19 UAE time
Not only do the Sellers Lie, The agents Lie to squeeze as much as they can.
The whole market has been driven by Lies and Greed.
RERA is supposedly putting measures in place to counter this but how effective are they ? When the agent, Seller & Buyer lie so that they can reduce Transfer Payments and other Government fees.
Demand and Supply statistics are NOT realistic. You only have to look at the levels of sublet and Multiple owner?investors out in the market.
Good luck with all the corruption scandals, Lying and Cheating.
Posted by Amused, Dubai, UAE on Friday 31 July 2009 at 06:19 UAE time
Not only do the Sellers Lie, The agents Lie to squeeze as much as they can.
The whole market has been driven by Lies and Greed.
RERA is supposedly putting measures in place to counter this but how effective are they ? When the agent, Seller & Buyer lie so that they can reduce Transfer Payments and other Government fees.
Demand and Supply statistics are NOT realistic. You only have to look at the levels of sublet and Multiple owner?investors out in the market.
Good luck with all the corruption scandals, Lying and Cheating.
A property is only worth what someone will pay for it - Lady SNY
Posted by SNY, Dubai, UAE on Saturday 25 July 2009 at 14:20 UAE time
A property is only worth what someone pays/perceives it to be worth. Pure economics the world over.
I had offers of Dhs 5 million and Dhs 4.6 million last August on my villa at Arabian ranches but chose to keep the villa as I decided to carry on living in it rather than move/keep commuting back and forth to Abu Dhabi. My choice. I couldnt believe the amount of people putting in offers and going to envelopes!
Instead I sold 3 apartments I had at discovery gardens and all the buyers perceived them to be worth Dhs 1.250 million. I happily sold and helped all of them with all the formalities of their purchases. Good service always gets referrals and no I am not a third party real estate agent - most should be shot in Dubai - but did own my own real estate agency in Qatar previously.
I am a seasoned investor though, have looked after/managed peoples private property portfolio's and developers property portfolio's and have a passion for what I do. Being transparent and having morals & ethics as well helps which is so lacking here.
But at the end of the day a property is still only worth what someone will pay for it - simple.
Posted by SNY, Dubai, UAE on Saturday 25 July 2009 at 14:20 UAE time
A property is only worth what someone pays/perceives it to be worth. Pure economics the world over.
I had offers of Dhs 5 million and Dhs 4.6 million last August on my villa at Arabian ranches but chose to keep the villa as I decided to carry on living in it rather than move/keep commuting back and forth to Abu Dhabi. My choice. I couldnt believe the amount of people putting in offers and going to envelopes!
Instead I sold 3 apartments I had at discovery gardens and all the buyers perceived them to be worth Dhs 1.250 million. I happily sold and helped all of them with all the formalities of their purchases. Good service always gets referrals and no I am not a third party real estate agent - most should be shot in Dubai - but did own my own real estate agency in Qatar previously.
I am a seasoned investor though, have looked after/managed peoples private property portfolio's and developers property portfolio's and have a passion for what I do. Being transparent and having morals & ethics as well helps which is so lacking here.
But at the end of the day a property is still only worth what someone will pay for it - simple.
Mr. Simpson
Posted by Arsalan, Dubai on Wednesday 22 July 2009 at 16:07 UAE time
Mr Homer Simpson,
If you read again, the same message has been conveyed on a contrary note. I said, to look and collect statistical evidence before negating the market or saying comments stated by a particular report were inaccurate. I didnt negate the report entirely, i asked for more reasonable sources of information.
Read carefully or stay quiet to maintain the intellectual level of the communication here.
Posted by Arsalan, Dubai on Wednesday 22 July 2009 at 16:07 UAE time
Mr Homer Simpson,
If you read again, the same message has been conveyed on a contrary note. I said, to look and collect statistical evidence before negating the market or saying comments stated by a particular report were inaccurate. I didnt negate the report entirely, i asked for more reasonable sources of information.
Read carefully or stay quiet to maintain the intellectual level of the communication here.
This is responsible journalism!!
Posted by Homer J Simpson on Sunday 12 July 2009 at 23:08 UAE time
Anil, great article, very refreshing.
If Mr. Arsalan or the guy from cluttons has got some real statistical data about the number of transactions executed at the Springs or any other area that would inform without a reasonable doubt that there is indeed a sustainable increase in prices then put it forward.
Otherwise just stay quiet as your rambling propaganda is really not wanted.
Personally, i think this is very responsible journalism as it breaks from the usual spin that is so prevalent from persons active in the RE industry and provides investors (current and potential) a contrary opinion.
Two thumbs up, mate!
Posted by Homer J Simpson on Sunday 12 July 2009 at 23:08 UAE time
Anil, great article, very refreshing.
If Mr. Arsalan or the guy from cluttons has got some real statistical data about the number of transactions executed at the Springs or any other area that would inform without a reasonable doubt that there is indeed a sustainable increase in prices then put it forward.
Otherwise just stay quiet as your rambling propaganda is really not wanted.
Personally, i think this is very responsible journalism as it breaks from the usual spin that is so prevalent from persons active in the RE industry and provides investors (current and potential) a contrary opinion.
Two thumbs up, mate!
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