Dubai property has turned corner - Oxford Business Group

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(Credit: Bloomberg News)

(Credit: Bloomberg News)

Research giant Oxford Business Group (OBG) is claiming that Dubai’s property market has turned a corner, with the residential sector having “posted solid growth over the past few months."

In an article to be published in Arabian Business, OBG regional editor Oliver Cornock added that “other areas of the sector are also showing signs that recent declines are beginning to reverse.”

Property prices in Dubai soared after the city opened its real estate sector to foreign investors in 2002, granting them freehold ownership rights at many developments. From start-2007 to mid-2008, prices rallied almost 80 percent, Morgan Stanley estimates showed, with billions of dollars worth of new projects launched by local developers. But home prices in Dubai suffered the biggest reversal seen in the Gulf property market as result of the financial crisis, declining on average 60 percent.

Nevertheless, Cornock said he is now confident the corner has been turned, adding: “While the rate of growth given by different agencies may vary to some degree, all point toward a slow but steady recovery in Dubai’s residential property market.”

According to Cornock,  investor confidence is also being driven by a new law proposed by the government and put forward by the Dubai Land Department (DLD). “Under the draft Investor Protection Law (IPL), which could be enacted this month, the rights of owners will be reinforced, including their ability to cancel their contracts if the developer does not provide all the facilities and services listed under the buyer’s agreement, or if property is not handed over within the designated eight-month period,” he said.

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Posted by: ADJ


(Contd)...that it is foolish to look at Emaar?s share price and establish a direct (and linear) correlation between that and Dubai property prices. The original comment almost implies tracking developer stock to capitalise on real estate investment, which is a ludicrous suggestion. The two, while co-related, have relatively different dynamics (while they do share a few, as you suggest) and are of very different characteristics and largely uncorrelated. A simple example can be given of India, where property in major metropolitan areas have risen at an average of about 40-50% in the last 3 years or so, whereas share prices of major developers in the same areas have remained more or less static, and in some cases actually fallen, over the given period. Reason? Most of these developers are burdened with really expensive debt, which is what is hurting their future earning potential (that you speak of). All that despite rising property prices...

Posted by: ADJ


I don?t know which part of my commentary you missed. But I did clearly suggest (at least I tried) that while the financial specifics of Emaar may not exactly prove worthwhile of my universally accepted theory simply because its stock HAS largely been affected the Dubai RE market conditions, it doesn?t mean that there exists a correlation between these two, very specific, asset classes (you may want to call RE a commodity, which I don?t essentially disagree with, but that does not make any difference to the general analysis). Further (and don?t get me wrong) it?s easy to say ??oh I dont know about this market or that market?, Is Dubai really any different than any other real estate market? It would be highly imprudent of anyone to even remotely suggest that ?just because the stock price of a developer has not gone up, the property market cannot see an upside?.

Posted by: Wildwine

@ADJ, "hypothetically" what you say may be correct. But based on available market information; do you realistically see any other reason why Emaar stock price may be depressed (e.g. expensive debt, poor Management, Key Managers leaving the company etc.I don't think so).
So you can not call the argumernt ludicrous; the argument is valid; whether you want to accept Paul's argument or not is up to you.
I am not in a position to comment on the situation in India.

Posted by: pete jaspen

Best of the lot is OBG's take on Syria, which they are charging 130 pounds for. " National economic objectives are supported by a stable political system that has improved ties with the international community under President Bashar Al Assad." Congrats OBG, another fine piece of work.

Posted by: pete jaspen

This is what these guys say about Bahrian in their latest report priced at 104 pounds. "Bahrain has weathered the effects of a difficult global economic period well, and its recovery has been solid, demonstrating the strength and flexibility of its economy."
Amazingly not one mention of the troubles there. Why is AB even giving them so much credibility?

Posted by: Wildwine

What is the definition of "real estate price" in dubai;
Is it;
1) Price listed on paper & RE websites
2) Price at which most recent actual transactions took place
3) Present value of rental income

If the report is based on (1) above; I have serious doubts.

Posted by: mama

All I would like to ask is why and why when one normal with a brain in the head will invest money here in property when he could invest the same in his country with little bit of rules and regulations which could at least support him somehow? if I have 1,000,000 to 2,000,000 dhs in my pocket, I can buy the best brand new 3 bedroom apartment in my country in a decent location with 100% ownership, till I die citizenship, insurance and security + 8% net return every year, why would I invest that here and get no citizenship, not 100% ownership, with everyday morning a new rule and blah blah blah. Ohhhhhhh wait a second I know why? maybe a donkey kicked my brain so I will invest my money here...

Posted by: John

I dont know whether you are being sarcastic, but i do not see a single way in which you are agreeing with Mama's comment. on the other hand your post seems to be with blinkers on which raises some irrelevant points. For e.g. most developed countries have continuous water/electricity. If you are coming to the UAE from Lahore or Delhi, you may find it amazing that you dont have shutdowns but its considered something normal in developed world.Unemployment is also irrelevant as no one without a job can have a visa and so unemployment will obviously be close to 0.
I would love to hear from you after you have been stung by a developer and seeing all "authorities" siding somehow with the developrr.

Posted by: Expatriate since 2005

I completely agree with Mama.
More than 90% of the comments posted here are from UAE resident. We accepted to come based on UAE's merits and demerits, then why complain. UAE is new compared to various other countries in the world but is significant on world map today, that too in a short span of maybe 30 years....there is something why we'all here her, let's be true!!!!!!!. Just think on some positives/negatives.....

1. What is the crime rate here?
2. What is the per capita income here?
3. How many times are you without water/electricity?
4. Is their a wait of week & months to visit Government hospital?
5. Cost of water?
6. Rate of unemployment?
7. How much do you save here?
8. Do you feel safe to go out late with your family?

We're 202 nationalities in UAE and I believe there is a reason. What do you think my friend?

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