By Andy Sambidge
Arabian Business poll reveals widespread pessimism amid global crisis.
Cityscape Dubai may have broken all records for visitor numbers this year but the results of an Arabian Business poll suggests widespread pessimism still exists about the Gulf real estate market.
The property show attracted more than 70,000 visitors over four days earlier this week and organisers were forced to extend opening hours in a bid to meet customer demand.
Billions of dirhams of real estate business deals were signed during the show but 75 percent of Arabian Business readers said they would not put pen to paper to buy property at the moment.
Their views came as a Colliers International report predicted that house prices in Dubai are expected to remain flat until 2010 following five years of sharp gains.
Around 140,000 new homes in Dubai are expected to be completed by 2010, adding to an existing stock of around 300,000 units the real estate broker's report said.
And with that in mind, three quarters of respondents to our online poll - which ran during Cityscape - indicated that it was the wrong time to enter the Gulf real estate market.
Of those, 51 percent through the global slowdown, which has crippled property sectors in the US and UK, would soon have a "big impact" on the Gulf region, meaning any investment would not be wise.
A further 24 percent said they were adopting a "wait and see" policy because so much uncertainty surrounded the global and Gulf financial picture.
But organisers of Cityscape insisted confidence in the real estate sector was high and there was a huge international audience who were interested in investing.
Nine percent of respondents to our poll agreed. They said that the doom mongers predicting a big crash in local property markets should not be taken seriously and they believed prices in the Gulf would continue to rise.
Another 16 percent of respondents agreed that prices would keep on an upward trend but that the rate of return on investments might not match previous years.
A second report by Colliers International earlier this week revealed rampant inflation and a booming economy resulted in house prices in Dubai rocketing by 76 percent in the year to June.
But its House Price Index for Dubai showed house price growth slowed from 42 percent in first quarter of 2008 to 16 percent in the second quarter of the year, fuelling fears the market is heading for a slowdown.
That sounds about right. It's usually the top 10% that take the risk and then reap the rewards, while the other 90% stand back and watch overnight property millionaires emerge from the other side of the "credit crunch" crisis. Funnily enough, its that 90% who then bitch about how they "should have" invested when everyone was saying otherwise. That's the way it works. I'm amongst the 10% minority - going against the majority opinion. And I like it that way. It's not (and should not be) for everyone. People who don't take risk don't deserve investment success, after all, they need something to moan about!
One must not see the success of the Cityscape 2008 as a positive impulse of real estate investors, nor can it instantly mirror the sector's fate. The recent US financial woes, the grueling inflation in the Gulf and the 76 per cent increase in RE prices in Dubai, rolled into one, will contribute to a worst scenario for the sector. This financial picture must be deemed with, both by RE mavericks and investors, before they plunge into a more devastating end. Better be forewarned that blamed.
What goes up, must come down. Very simple.
Your comment is very naive! I can not agree with your attitude towards risk. Different people have different appetite towards risk. Taking risk is not and should not be a bold move just trying to beat the market or based on personal hunch. It should be a calculated decision based on what return you get for the risk, if you can take higher risk (based on your wealth) you would be compensated with a higher return. Otherwise, it is just like gambling!!
Well said SR. I couldn't agree more with you. In fact adding further to what you've very rightly said, my opinion is that out of that so called bold or elite top 10%, majority are people who have got money easily from family, friends or even in some cases through wrong means and is not hard earned money. So they don't mind loosing it (if they do). Where as people who earn their money by real hard work, are judicious enough and make nformed decisions and never 'bitch' about it.
Well, up until now the sentiment was that you could throw money at anything and it would come back bigger. Now even 'macho' investors like Naz here are talking of 'risk'. There you have it.