Dubai real estate correction 'very close'

Sunday, 28 September 2008 12:15 PM

VERY CLOSE: Maratheftis said a correction in Dubai's real estate market is imminent, but that people should see it as an investment opportunity. (Getty Images)

Dubai real estate prices are “very close” to a correction, but investors should view a slowdown in the market as a buying opportunity, the regional head of research at Standard Chartered has said.

“I think we’re very close to this being over, I don’t think it’s a healthy situation,” Marios Maratheftis told Arabian Business in an interview.

“The fundamentals are positive but doubling your money in one or two months is not just driven by fundamentals, it’s driven by market psychology and excessive speculation, which is not healthy.”

Going forward, a deceleration in growth will be inevitable, especially as the global economy grinds to a halt.

“Doubling your money in a couple of year is not going to be as easy,” he said.

“The global economy has seen the strongest growth in more than thirty years... and this is changing, so it’s not going to be as easy.”

But he added that investors who take a long-term view can still make a profit.

“When there is a correction people get to carried away with risk aversion and negativity, they never acknowledge and realize the opportunities,” Maratheftis said.

Concerns have been growing over the last few months that Dubai's real estate market could see a significant price correction in the next year or two as large quantities of housing supply flood the market.

Egyptian investment bank EFG-Hermes said in a report last week that property prices in Dubai are set to slump by as much as 20 percent by 2011 from their peak in the first half of 2009 as housing supply begins to outstrip demand in the emirate.

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Posted by: brandaid Wednesday, 1 October 2008 12:06 PM[UAE]

Karl..I have been involved in property marketing here for the past 6 years at a very high level (Marketing Director Better Homes, VP Omniyat, Damac etc) and I can tell you that you must be one of the only fools around that still has your head in the sand....which is better than the contaminated beaches. Yes, a few folks are still buying and flipping locally, but this will be coming to an end very shortly my friend. Everyone I know in this industry that has any commen sense can feel it, knows it and has seen it coming on for the past few months...now with the global banking crisis you will see the non-Gulf based investors running for cover...and since 70% of the market comes from these people..you do the math, sunshine. It's funny how all the people who have vested interests in selling property seem to see no problems..the eternal sunshine of the spotless mind...time to wake up to reality and take a look around you.

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Posted by: SR Monday, 29 September 2008 6:34 PM[UAE]

From all these comments, what I gather is that no one knows what will happen!!! Obviously people associated with the real estate sector would always be optimistic because otherwise they'll be out of business.

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Posted by: Mohd Ali Monday, 29 September 2008 5:21 PM[UAE] - UAR

In response to your claims, isnt it apparent that the only ones predicting prices to keep on increasing forever are either real estate investors or owners, why should we take their word for it when they have a very strong interest in high prices? Banks may not be the best sources for predictions, but neither are investors.... Investors in the UK were confident their bubble woudlnt burst, but it sure did....similarly we hear boasts of how prices in Dubai will keep on increasing (from the ones who will benefit from it inceasing...), only time will tell.... Also banks

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Posted by: Salim ALSuwaidi Monday, 29 September 2008 2:47 PM[UAE] - UAE

Prices will never ever reach prices which was more than 8~10 years ago. i remember i was looking for an appartment for a friend of mine in Sharjah, it was not furnished but it was big, 2 bed rooms big hall 2 toilets kitchen blabla all for around 20.000 AED only a year, now see how much does a small 2bed room cost a year. Maybe after 10years ahead properties will remain the same prices as of today. No one will do anything about these prices as UAE is having an open policy for business investors here in the UAE

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Posted by: Karl Monday, 29 September 2008 1:03 PM[UAE] - United Arab Emirates

Im amused as to how the only people who predict downfalls in real estate prices are always coming from people sitting at their desks in cushy financial institutions. I suggest you get some advise from people working in real estate and learn to collate the property parameters for bubble theories... the fact that u mention the world correction/bubble implies a limited understanding of the market fundamentals here whether it be the facts that the largest investor in property is the UAE gov, or other facts such as the fact a bubble happens due to mortgages playing a dominant force in the market. the GCC in general has a mortgage infancy that dictates otherwise and the last thing you will see here is a bubble. FYI; I sold 2 buildings for 1.7bn last week and ive seen people fighting over property. from where i am standing, you could you use a couple of courses in real estate.. and probably quite few more in banking as its seems you guys are have your own issues to deal with at the moment.

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