Panic selling is hurting Dubai property market - CEO - Real Estate

Sunday, 31 May 2009 12:51 PM

Panic selling by Dubai property speculators is driving prices down, eroding confidence and making banks reluctant to lend, the CEO of MAG Group Properties said on Sunday.

A mass sell-off by speculators, whose frenzied buying and selling of off plan properties before the global crisis contributed to Dubai’s housing crash, is ‘undercutting the fair market price’ according to Mohammed Nimer, the boss of developer MAG Group Properties, which has a portfolio worth AED3bn.

“Speculators were originally responsible for driving property prices to unrealistic levels. Now, although they are on the receiving end of the slump in prices, they are still blighting the real estate landscape by panic selling and undercutting the fair market price,’ he said in a statement on Sunday.

While this was good news for buyers, it was creating confusion as to when the market would bottom out, spooking investors and banks, he said.

“It’s a vicious cycle. Forget the benefit of lower construction prices, we have to wait until these distressed sales are pushed out of the system. Only then we will witness some stability and a return to fundamentals instead of sentiment based on fear and uncertainty,” he said.

But he remained upbeat on the UAE’s long term prospects.

“Although property prices fell dramatically in the last quarter of 2008 and the first quarter of 2009, the rate of decline has now slowed considerably, indicating that the market could be approaching the bottom,” he added.

Real estate consultant Colliers International said house prices in Dubai fell 41 percent in the first quarter of this year.

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Posted by: Prayag Sunday, 2 August 2009 11:02 AM[UAE] - AUE

I've somewhat closely watched the property market in Dubai (read always felt tempted to join the bandwagon, but at the same time remained skeptical about the conditions here). Fact remains, 6 yrs back, property related laws were different. Then the law was changed and most of the investors felt comfortable about their rights and future prospect with the property. Came the boom time in real estate sector, loads and loads of property developers flooded the market with different property options, several of them bundled with residency claims, assured rent returns, luxury cars or even private jet for people who fancied that. People invested 'cause they felt one of the following will always remain true, 1. They may use the property anytime they want 2. May return good in rent 3. May appreciate in value over time as Dubai develops into the next generation City that it promises to be. And then came the downtime, property prices started dropping, banks were no more lending money to people who wanted to pay those sky high prices, lots of construction project stopped and developers remained secured while investors money got locked in unfinished properties. To finish the story then came the new rules about property ownership and related Visa rules. All that promised resident visa claims were taken back and now as a property owner you need to get Visa re-issued several times a year including leaving UAE and returning back. This also doesn't allow anything else but living here. 1. So rents were falling 2. People now have very limited access to their own property 3. Law hardly does much for defaulting developers Is it really surprising that people are eager to sell out whatever they can and cut their losses?

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Posted by: Ametis Monday, 1 June 2009 10:20 AM[UAE] - UAE

London has been through at least downturns, recovering and moving up.. Even at present conditions Middle East buyers are buying in London because its a safer investment than anywhere else.. During the time when prices of property were going up on the GCC, Middle east buyers were buying up prime property in UK, Dubai market too will return..........but not tomorrow morning, first the developers will go out to re tender the projects. Than appoint new Builders.......and slowly the sun will rise.. What has happened is the best thing for not just Dubai, but for whole region, it has got rid of the dead leaf...........

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Posted by: Ametis Monday, 1 June 2009 9:45 AM[UAE] - UAE

So much whingeing because there is downturn in the market... Yet the same voices were jubilant when the market was running out of control fueled by the same speculators today being labeled frenzied Sellers... There were no voices calling out for the control of the spiralling unrealistic prices... Everyone believing the spiral was eternal and only one way..upwards.. Now reality sets in, the spiral has become a Chute and its all coming down... Thank you speculators....now the market is getting realistic.. Your losses are others Gains....

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Posted by: gordon robertson Monday, 1 June 2009 9:45 AM[UAE] - UAE

The speculators and the developers worked hand in hand. The fact is, there is going to be a glut in property. This will result in substantially lower rents. Which investor would buy a property with such a low yield and going lower. The result has to be lower prices to match the oversupply. They are talking about 30% oversupply by the end of next year. Rents can only go one way till the end of next year. The consequece is pricing falling in the same direction as rents. Only when the supply tightens up will we see a rise in pricing. Gordon

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Posted by: Steve Monday, 1 June 2009 9:36 AM[UAE] - UAE

An astounding comment from a supposedly educated man... Who should decide what the "fair" market price should be? Is it the developers and realtors, as has been the case during the boom, or should it be that invisible force called "the market"? Mr. Nimer; your Economics 101 lessen for today: A fair price is wherever a willing buyer and willing seller agree to conclude a transaction. I would have felt sorry for you if you had no hand in creating this mess, but you did. If I was sitting on an AED3bn portfolio which is probably worth closer to AE1.5bn today, I would also feel it?s unfair. My advice: go back and mark-to-market your portfolio properly; take a aspirin; and call me in the morning!

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