Bahrain
Kuwait
Oman
Qatar
Saudi Arabia
UAE
Print
Email
Discuss this article (46 Comments)Dubai real estate among 'riskiest post war markets'
by This email address is being protected from spam bots, you need Javascript enabled to view it on Monday, 22 June 2009
PROPERTY RISKS: Dubai is considered one of the riskiest real estate markets post war, according to UBS. (Getty Images)
Dubai is one of the "riskiest" property markets of the post war era, a senior analyst claimed on Monday.
Saud Masud, analyst at Swiss investment UBS, said problems of over-supply and population shrinkage with thousands of jobless expatriates expected to return home when the schools break up next week, would mean continued pressure on house prices.
“In my view Dubai's property risk profile appears to be one of the highest in the post war era and while one may debate the potential support factor from Abu Dhabi the fundamental oversupply and population dynamics risks are very much there,” he told Arabian Business.
He said the scale of Dubai’s real estate collapse was easily on a par with Hong Kong’s housing crash at the start of the decade - and boom and bust cycles in other markets such as Singapore and Ireland.
“While Singapore, Hong Kong, Ireland are considered property market comparables, Dubai is very unique due to its demographics, supply pipeline and relevance in the Middle East,” he added.
This follows Masud’s stark warning in a UBS research note two months ago that house prices in Dubai could plunge up to 70 percent from their peak in the fourth quarter of last year.
At the time, the bank predicted investors would return to the Dubai market in the second half of 2009 when prices would be at their most attractive.
Speculative interest saw prices rocket during Dubai’s six year real estate boom but investors fled after the global crisis last year - with liquidity also hampering mortgage availability.
However in a report last month, HSBC reported that agreed prices in Dubai rose four percent in April and five percent in May.
In Hong Kong the Asian financial crisis triggered a 70 percent collapse in real estate prices between 1997 and 2003.
READERS' COMMENTS
Disclaimer: The views expressed here by our readers are not necessarily shared by ArabianBusiness.com or its employees.
Rants and Raves but life must go on..
Posted by ametis, Dubai, UAE on Monday 6 July 2009 at 08:06 UAE time
Its healthy reading everyones opinions and analysis of Dubai, all the experts yet No One ever believed that the bubble would burst and all the Glittering cofetti there in, will shower down.
Dubai like any other emerging markets was seen by many as the Gravy train that will keep going around in circles eternally and everyone will get a spoonfull...sounds like another Harry poter story.
I came to Dubai 5 years ago, I liked what I saw and stayed, like many other places that gets popular, prices started to crep up, slowly but surely...
Do I move on??, No I like it here so I stayed, I bought and sold and made money, than reality sets in that its out of hand, stop buying in Dubai hold back...
Signs were there who remebers the earthquake tremmours that shook buildings in Sheikh Zayed Road??..
Anyay invetment is a risk, its another form of speculation, some you win, Some you loose..
Dubai for me is still attractive in many forms, Long Term investment and there are many opportunities if you think with your head and not with greed, it will be sttractive to Golf Lovers, once the exchange rate improves the Brits will be back by the Plane Load...
Me I will be here for eons to come.........You will have to be pretty Lazy not to make Money in UAE
Posted by ametis, Dubai, UAE on Monday 6 July 2009 at 08:06 UAE time
Its healthy reading everyones opinions and analysis of Dubai, all the experts yet No One ever believed that the bubble would burst and all the Glittering cofetti there in, will shower down.
Dubai like any other emerging markets was seen by many as the Gravy train that will keep going around in circles eternally and everyone will get a spoonfull...sounds like another Harry poter story.
I came to Dubai 5 years ago, I liked what I saw and stayed, like many other places that gets popular, prices started to crep up, slowly but surely...
Do I move on??, No I like it here so I stayed, I bought and sold and made money, than reality sets in that its out of hand, stop buying in Dubai hold back...
Signs were there who remebers the earthquake tremmours that shook buildings in Sheikh Zayed Road??..
Anyay invetment is a risk, its another form of speculation, some you win, Some you loose..
Dubai for me is still attractive in many forms, Long Term investment and there are many opportunities if you think with your head and not with greed, it will be sttractive to Golf Lovers, once the exchange rate improves the Brits will be back by the Plane Load...
Me I will be here for eons to come.........You will have to be pretty Lazy not to make Money in UAE
Property over supply
Posted by BH, Sydney, Australia on Sunday 5 July 2009 at 17:44 UAE time
As much as we all luv a good dream, eventually the alarm goes of and we have to wipe our eyes and get out of bed. As a regular visitor to the UAE I have seen the rocketing rents and the massive building projects planned and underway, but could never figure out the maths, I mean who did the demographics on the numbers off people in a small country who could afford to rent let alone buy in the high end property developments. I see billboards with (twice as big as Hong Kong) etc etc and now it seems most of these sites have very little activity at all, the problem is that every is man made and therefore is at war with the natural elements of heat and dust and will break down to its original state (sand) if not maintained. Hence these huge high rises, (empty) and enormous villa estates will quickly feel the effects if not occupied and allowed to decompose. I would luv to see things turn out the way it was in the dream but sadly it is just not going to happen, I know of lots of people whom have had to leave the UAE because of work reasons and anyone that say that no one is leaveing mus be blind, you only have to drive around Dubai to see how much less traffic there is. The realestate companys and developers want everyone to believe that the market is on the recovery. It will take 10yrs to recover and maybe more. The only way to reduce the timeline is for landlords to stop trying to make a quick buck and look at long term investment and returns. by keep rents at a realistic and affordable price. When a 3 br flat in Abu Dhabi cost more to rent than a house on Sydney harbour then you know that it is unrealistic and I don't mean that in an offensive way as I luv the UAE but lets be honest is takes time (hundreds of yrs) for a city to mature and have the character of London, Paris, New York. and Dubai Abu Dhabi are no different. Let development slow to a marathon pace on a 100m sprint and it may just make it in the long run. Good Luck
Brad
Posted by BH, Sydney, Australia on Sunday 5 July 2009 at 17:44 UAE time
As much as we all luv a good dream, eventually the alarm goes of and we have to wipe our eyes and get out of bed. As a regular visitor to the UAE I have seen the rocketing rents and the massive building projects planned and underway, but could never figure out the maths, I mean who did the demographics on the numbers off people in a small country who could afford to rent let alone buy in the high end property developments. I see billboards with (twice as big as Hong Kong) etc etc and now it seems most of these sites have very little activity at all, the problem is that every is man made and therefore is at war with the natural elements of heat and dust and will break down to its original state (sand) if not maintained. Hence these huge high rises, (empty) and enormous villa estates will quickly feel the effects if not occupied and allowed to decompose. I would luv to see things turn out the way it was in the dream but sadly it is just not going to happen, I know of lots of people whom have had to leave the UAE because of work reasons and anyone that say that no one is leaveing mus be blind, you only have to drive around Dubai to see how much less traffic there is. The realestate companys and developers want everyone to believe that the market is on the recovery. It will take 10yrs to recover and maybe more. The only way to reduce the timeline is for landlords to stop trying to make a quick buck and look at long term investment and returns. by keep rents at a realistic and affordable price. When a 3 br flat in Abu Dhabi cost more to rent than a house on Sydney harbour then you know that it is unrealistic and I don't mean that in an offensive way as I luv the UAE but lets be honest is takes time (hundreds of yrs) for a city to mature and have the character of London, Paris, New York. and Dubai Abu Dhabi are no different. Let development slow to a marathon pace on a 100m sprint and it may just make it in the long run. Good Luck
Brad
I agree and respect Raj's comments
Posted by Omar, Dubai on Thursday 25 June 2009 at 21:23 UAE time
I fully agree with Raj's comments 100%.
Posted by Omar, Dubai on Thursday 25 June 2009 at 21:23 UAE time
I fully agree with Raj's comments 100%.
Saud Masud: Right Analysis
Posted by Mohamed Djirdeh on Thursday 25 June 2009 at 18:04 UAE time
Thanks Mr. Saud Masud your analysis is fair and focused on reality of Dubai property market. All of us, authorities and investors should wake up to this reality. This is what will assist us getting Dubai back on to it's position; instead of wasting our time on brokers and bankers who are still claiming 'all is sweet'. The gravy train is gone!
Posted by Mohamed Djirdeh on Thursday 25 June 2009 at 18:04 UAE time
Thanks Mr. Saud Masud your analysis is fair and focused on reality of Dubai property market. All of us, authorities and investors should wake up to this reality. This is what will assist us getting Dubai back on to it's position; instead of wasting our time on brokers and bankers who are still claiming 'all is sweet'. The gravy train is gone!
Click here to post a comment
MORE FROM ARABIANBUSINESS.COM
TOP IN MIDDLE EAST REAL ESTATE
TOP MIDDLE EAST BUSINESS STORIES
ALSO IN MIDDLE EAST REAL ESTATE
LATEST MIDDLE EAST BUSINESS NEWS
- Financial Markets: Saudi index down, banks and petchems weigh
- Real Estate: Merger technical talks to conclude in a month - Emaar
- Banking & Finance: Dubai's Abraaj eyes property investments
- Banking & Finance: Emirates NBD launches bank’s new brand identity
- Transportation: Abu Dhabi Int’l Airport records 7% growth in Oct
SHARE PRICE CHECK
RELATED STORIES
Market Turmoil Focus
3 stories- EXCLUSIVE: Boeing chairman sees more job cuts in 2010
19 Nov '09 | News - More UAE bank mergers predicted in 2010 - Ethos
19 Nov '09 | News - Dubai property market 'may take 10 years to rebound'
18 Nov '09 | News
UBS, Switzerland
| 9 stories- Bullion bandwagon
13 Sep '09 | Features - Dubai ranked 19th in new expensive cities list
25 Aug '09 | News - Zain mulling $10bn sale of Africa unit - sources
30 Jun '09 | News
Mobile
