85% believe real estate sector woes will get worse

Posted by: Padmanabhan Sunday, 23 November 2008 5:19 PM[UAE] - United Arab Emirates

Sir The property price correction is a long overdue issue. Particularly now with the construction cost dwindling with almost 50% drop in price of key building materials, it should happen right now. Ir you may estimate the cost of construction per square feet, you could appreciate the enormous profit that sector has been taking. With overseas investors getting western markets opened up with cheap property prices and also the potential to get permanent visa to stay in their possession, the interest in the ME properties should come down. With the alarm bell rang with the financial crisis, even the few expatriate workers who might have planned to take properties here will now back track. So it will really be mostly the gulf buyers who will invest in properties and in that case prices will have to be sensibly in line with potential cost of construction with rational value escalation. The earlier it happens, the better it is as the property market then will start to perform again.

Posted by: Profit Proof Friday, 21 November 2008 4:59 PM[UAE] - uae

The real effect in UAE will be felt in the first quarter of 2009. The real estate will hit the floor and you will have lots of building stuck half way through next year. So better sell and sit on cash. Even cash will devalue once the hoarding of USD stops and it will move to the next asset class GOLD.

Posted by: brandaid Thursday, 20 November 2008 2:26 PM[UAE]

Guys, think about it...85% of the buyers are non GCC expatriates. In any other market people either have to rent or buy because there is no choice, but here, over 85% of the population can leave and go home. The fundamentals are very very bad! Banks aren't lending and when the next financial quarters figures come in in Jan 2009, you will see a major disaster here. The economy is fueled by construction which is fueled by speculators investing in the market, no speculators, no construction, no money overseas, no tourists, no tourists, no shopping, Dubai will be back to what it was in the 1990s. only about 5% of the population earn enough money to afford to buy properties in Dubai based on their income, but since they have to come up with about 40-50% down to qualify for a loan this number will shrink to about 2%. The best example is the California Gold Ruch in the 1880s, how many thriving developments turned into Ghost Towns over night. Would you rather buy property in a country where the vast majority of people HAVE to live there or a country where the vast Majority can just leave? Established markets are a safer bet, but to anyone left in the place who's job doesn't revolve around construction, real estate, tourism, hospitality or retail, rent will be cheap, because there will be masses of place available, either through desperate landlords or through banks (after forclosures).

Posted by: Mohamed Maricar Wednesday, 19 November 2008 10:26 PM[UAE]

I read an article about a year and half before in GN, where the author who was an analyst closed his statement by saying 'expect the unexpected'.. I think we still haven't seen the unexpected part of the Real Estate industry boom. And in simple economics they say 'everything that goes up, comes down'.. so we have seen the rents go up, due to demand driven by construction and real estate boom. But now that we have all these properties (free hold) ready and no buyers, we can see them being rented-out at a more reasonable rates (unlike Aed 250K-350K p.a. for a 2-3 B/R aprtmt in Abu Dhabi). And don't blame the news.. they are just trying to create a 'Feel Good' factor among the citizens and residents. Only my opinion..

Posted by: Aneesh Wednesday, 19 November 2008 9:03 PM[UAE] - UAE

The worse factor has already started in the UAE realty, sector only it has not come to surface yet, internally many projects are on hold or cancelled. Some employers are forcing employees to take forced long leave rather than cutting their higher margin level which they have enjoyed over a long enough period. see more real panic soon