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52% of UAE's construction projects suspended
by This email address is being protected from spam bots, you need Javascript enabled to view it on Thursday, 5 February 2009Posted on Saturday, 7 February 2009
Speculation or Investment
Posted by Ametis at 10:15 UAE time
I think that many have confused speculation with investment.
Speculators who bought on the ground floor in the early days have made their money and if sensible moved on..
The Property Hype was fueled by speculation, sadly this was not just in Dubai, but also in USA where people who could ill afford the property were given high mortgages....
In Dubai those that worshiped the temple of eternal wealth borrowed money jumped on the gravy train.....
That Gravy train has derailed...
The market is now ready for serious business............
What the government needs to do to curb speculators is to introduce Tax of 65% on sale of any second property, first property being tax free...
Same system as is available in UK and other countries....
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Posted on Friday, 6 February 2009
why are the fireworks still on?
Posted by worried at 22:05 UAE time
Why is good money being squandered in such a display. Could this money not be put to better use? Im sure readers will be able to come up with thousand ways to put this "up in smoke " money to some much better use. This mus t be stopped with immediate effect unless there is some really good reason to hve the fireworks go on.
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Doing the maths
Posted by No Einstein at 13:18 UAE time
If "Nearly 53 percent of the UAE’s development portfolio, worth a combined $582bn, has been suspended", yet "Dubai-based market research firm Proleads show that of a $1.3 trillion-strong industry, only $698bn is still in operation on active construction projects" how does $582bn suddenly become "nearly 53 percent"?
I am no mathematical genius, but isn't $582bn a smaller number than $698bn?
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Speculators are gone but speculations remain
Posted by Ganesh at 12:15 UAE time
Hi,
The good news is the traffic within and inter-Emirates is slowly improving but has to go a long way. The effects of global crisis on local life is yet to be felt looking at the way traffic moves, search for parking continues in residential areas and above all the rents are revised upwardly by landlords citing the Rental Index. Unless the situation is affected there won't be a difference felt. Recently the Modern School increased the school fee by 90% and all parents protested. These are the indicators that the economy is going positive for the ones who have money and those who cannot afford are supposed to leave the country. All the speculations that Q2-2009 will be the realistic one seems to be funny because everyone here is looking at increasing price of basic necessities - food, shelter, school, healthcare etc.
Best is to wait for next 3 months as someone said if the economy does not start stabilizing in 6 months then it is going in negative direction and recession can be expected after that.
Ganesh
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Dubai
Posted by Neilius at 08:38 UAE time
I agree with ColonialB about the fact that property, for the near future, will not figure as an investment. That said this does not define Dubai, it did but not now. The recession will not last forever, this is a fact. A country with a low tax system, relatively cheap housing and commerical premises, excellent schools and transport infrastructure (or will have) and sun in the sky is still a desirable place to live and work. My point and thoughts are that yes its all a bit gloomy now but once a recovery starts Dubai is probably one of the best placed to take advantage. Frankly it has done the advertising all ready all it needs to do is make it clear to the world the crazy rents etc have gone, or will have by then, and hightlight the tax system. People will realise it is a sensible option.
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The Naked Truth
Posted by Post Colonial at 08:20 UAE time
Thanks ColonialB for the Buffett quote. There must be an awful lot of people running around in Dubai without bathing suits! The naked truth about Dubai is that from the very start of the property invention there was no actual reality, and all the now-broken promises of visas etc. show that the average investor was duped by the promise of funny money. Stagging profits on Palm properties, and even squalid little flats in the Greens, fooled almost all of the people. The greedy who believed the spin have only themselves to blame.
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VIRTUE REWARDED
Posted by prem at 07:21 UAE time
The real estate crash is inevitable. Speculators and greedy real estate mafia was taken the poor majority for a ride.
Common man in Dubai found its difficult to find a place to live for his family and was forced to live to Sharjah, Ajman etc.
Although the crash affected the whole economy., This hype met its deserving end.Westerners have a big credit crunch back home and now they will not come back to Dubai to buy those atrocious free hold nonsense.
NOW SANITY IS RESTORED.
Common like me can afford a housing in Dubai below 5000 aed pm now.
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Posted on Thursday, 5 February 2009
Dubai Property maket
Posted by gee at 21:05 UAE time
Some of the comments have mention projects which are dead in the water but the developers will not anounce any delays until late as possible.
I am looking to invest and I am wondering what it the right time to get in? I have seen some off-plan units being offered for sale in the Alfurjan phase1 &2 does anyone have a idea whether this will be delayed or not????
Please advice.
Thanks,
Gee
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$1.3 Trillion Construction Industry
Posted by PEN at 18:00 UAE time
The $1.3 trillion UAE construction industry included non-starter projects like the mega theme parks at Dubai Land, Ski Slopes, Snow Dome (by Saudi investors), Arabian canal and the townships that would have sprouted around it. These were announced at CityScape exhibitions 4 & 3 years ago, but non were ever started and of late the gigantic Meeras project of $95 bn has now been shelved. These projects made up the bulk of the 1.3 trillion, but few people actually worked on them as they were only on the drawing board.
What the Proleads study needs to explain is how many of the remaining $700 bn or so projects will actually get completed and in how many years. Many of these projects are facing funding problems. These have real people working on them and the bulk of the existing construction work force currently in the UAE.
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Redundancies in all segments...
Posted by Still employed... at 17:56 UAE time
My friend just lost his job too, he works in Oil co and the company is closing its Dubai office, he said about 70 people loosing their jobs...
He is in HR and says there are no jobs! He applied for many positions advertised, but it seems they are not real, agencies are just filling their pre-paid advert!!!
Scary times....
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Cancelled projects
Posted by ColonialB at 17:36 UAE time
Morten, it is not "negative tunnel vision" it is reality; as Buffet said, when the tide goes out we see who isn't wearing a bathing costume. Of course Dubai will not go away, but the exponential growth of the last few years built solely on property speculation funded by cheap credit and a tsunami of hyperbole will not be back. In our newly de-leveraged world, only those who can really afford it will own property and for the majority, simple economics will mean renting is the only option.
Buyers from places like the UK and Russia who helped to drive the market here have been hit by massively devalued currencies on top of crashing asset prices in their own countries; they will not come back to the UAE market anytime soon.
For the foreseeable future capital preservation, not investment return, is the name of the game and unfortunately, neither commercial nor domestic property has a part to play in this strategy.
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Diversify... the employment market as well!
Posted by ZeTallGerman at 15:44 UAE time
Over half of Dubai's population is employed in the the real estate and construction industries... so yes, although a recovery is still possible in the long-run, right now the city is being "abandoned" by those who have no more sourve of income. For those of us that manage to weather the storm and remain in Dubai, I think good times are ahead.
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Who's going to live in all these apartments
Posted by Mart at 15:10 UAE time
So when 52% of projects are cancelled, then tens of thousands of people will be going home.
Who's going to live in all these apartments that have been built over the last few years? The boom was dependent on ever greater numbers of people coming to Dubai to build new flats for even more people to come. Now the population is falling who on earth is going to buy any apartments they do build?
There is already lots of empty apartments and rapidly falling rents and free hold prices. What happens when the building slows and even more people lose their construction and real estate jobs.
The crash has a long way to run!
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A Shrink Anyone?
Posted by morten H at 14:31 UAE time
The old pessimists at work again.
The construction report is not exactly rosy, still your reactions to a vague notion of something "upbeat" pretty much describes the biggest challenge with this crisis. And thats the fact that a lot of people adopted "negative tunnel vision" and lost any sense of proportion.
And why is that Dubai is taking so much heat when in fact this place and UAE as a whole, is probably in a less difficult situation than many other. I have a cousin in Iceland....he for one has a right to be gloomy. Whole country going bust!
One thing is for sure, moaning and groaning about "Dubai - Paradise Lost" is not going to help. Guess what, Dubai is still here and Dubai will recover. Hang in there and drop the kleenexes.
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52%
Posted by paul at 14:23 UAE time
The spiny nature of this article implies that we can assume 52% of projects cancelled is 'good news' because it means 48% are still going. But for how long? 52% cancelled in just 5 months or so since the troubles hit is a pretty fast attrition rate. Who's to say the cancellations and suspensions will suddenly stop now?
And what happens to all the staff working on these 52% of projects?
That is a huge number of people, developers shelving projects to save money want those salary costs of their books as soon as possible.
That is a huge exodus of people which will feed back in lower rent and real estate prices in much the same way that the influx of construction staff forced up rent and real estate prices.
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