Dubai developers drop off as credit crisis bites

Posted by: Mart Monday, 2 February 2009 3:25 PM[UAE]

Mohammed Furqan's post suggests that halting new developments would restrict new supply and therefore support property prices. I assume he's advocating that as an existing property owner? Around 50% of the population work in construction or real estate. No new development means most of them go home - leaving hundreds of thousands of empty flats and villas. What do you think that will do to freehold prices or rents? They'll crash through the floor. There is no easy way out - prices in Dubai will crash whatever happens because they are just far too expensive. They were driven up by a tidal wave of cheap money that will no return. Hong Kong and Singapore experienced a similar boom and bust 10 years or more ago, and prices are still 70% or so from their peak. Dubai was the classic pyramid scheme - reliant on ever more construction to fill the houses and villas that had been previously built. When the construction slows as it is doing, a crash is inevitable.

Posted by: Mohammed Furqan Monday, 2 February 2009 10:13 AM[UAE] - UAE

Real Estate Regulatory Authority (Rera)?s steps are in right direction. Trimming the number of developers as well as cancellation of all yet-to-start-construction off-plan projects is essential to improve market. Many developers are keen to start construction because cost of construction has substantially come down and their units were sold at much higher price than the current price of the similar ready to move in property. Rera should not go by the claims of the developer even if escrow account compliant but itself should check the financial credential as well as commercial viability of all yet-to-start-construction off-plan projects and if found not up to the mark, cancel them and refund the money with marginal deduction. It will boost the confidence of the buyers and save the developers from being stuck in the middle if the construction is started on the assumption that all investors will be able to pay all the remaining installments in time. Cancellation will reduce the supply and refunded money can be used to buy ready to move in property, helping to improve market condition further.

Posted by: Robert Lam Sunday, 1 February 2009 10:24 AM[UAE]

I think it is only a Technical Correction due to rapid Over-development, glut and current Global economic pause. The next upper level marching shall come after 2010.

Posted by: Josh Jennings Sunday, 1 February 2009 9:54 AM[UAE] - UAE

I invested with a property developer named Al Barakah (with projects throughout Dubai and Ajman) and have learned that the CEO has fled the country and cannot be tracked down. What protection do the laws in the UAE offer for such circumstances? Have we lost all of our investment?

Posted by: vijay Sunday, 1 February 2009 9:30 AM[UAE] - india

further to Theresa query abut the condtion of the workers the latest is lay off the workers for one month or 2 keeping them on false promises to retn for work at better times and than to send them back to their home countries for 6 months or 12 months with a further assurance that they will be called back when times improve but this seems to be just excuse by the constructon companies not to pay the final dues.the construction companies hardly have money to pay the regular monthly salaries so to expect them to have funds to finally pay the settelement dues is to expect too much from them