By Anil Bhoyrul
I had a rather silly idea last week - to buy an apartment in the iconic Burj Dubai, soon to be the world's tallest building.
I had a rather silly idea last week, which was to buy an apartment in the iconic Burj Dubai, soon to be the world's tallest building. You know, up on the 100th floor, a nice two bedroom pad with spectacular views. Crazy, I know.
Then I decided to do some research on a few property websites, and soon realized this may not be the worst idea ever. Especially if you wait a few months.
Right now, you can find a two bedroom apartment in this tower for around US$1.32m - that's a good 10% more than the original price, and prices are still rising. But here's the catch: as I write this, the current owner needs an urgent cheque for US$839,000 - 60% of the original price. And by the time this article is published, on May 1st, I would need to fork out US$198,000. The same again in January next year, and the balance in December next year.
I have checked the site a few times, and each time more and more of these ads appear.
In fact, the more sites you try, the more "desperate" some of these owners (or rather speculators) seem to have become. They have been doing what all speculators do - snap up a great property, put only a small amount of cash down, and hope to sell in a hurry before the next big payment is due. They get out just in time, usually with a hefty profit to show for themselves.
But that "getting out just in time" is becoming a close call. With increasing numbers of apartments now coming onto the market, buyers can be more choosy. If they don't like the price, they don't buy. Which means the speculators - who have to sell quickly because they can't actually afford their next installment - will start dropping their own profit margins.
Coincidentally, we also report this month on the dangers of bouncing a cheque. If you don't have the funds to honour a cheque, then you could be heading to jail rather than into your cosy new apartment. I suspect that this fear factor alone is enough to drive many speculators into rethinking their asking prices.
I'm not for a moment suggesting there is a property crash coming - Dubai's economy is just too strong for that, and there is no way properties on the Burj Dubai are going to lose their original value. The emirate's economy stretches far beyond property. But as supply increases, the sky high profits being made by speculators will fall.
It means the likes of me and you may at least be able to get a slice of the action at close to the original prices.
It may soon be possible to actually afford that dream home in the Burj Dubai.
And if not the Burj Dubai, where else? In my small circle of friends, I am increasingly starting to meet people who actually do own a property in Dubai. For the past three years, I always thought this was a privilege reserved strictly for rich speculators.
Not any more. With speculators being forced to drop their margins, and finance companies heading for 95% mortgages, the options for buying are rising, and so are the number of expatriate buyers.
With so many new developments still coming onto market, it is well worth having a look at the deals on offer. Trust me, you may well end up in a better place and a better deal than your current rented apartment. Even though prices have undoubtedly risen, Dubai property is still in my view a good investment not necessarily one that you will make a very fast buck on, but as a long term investment. And in the meantime, actually living in one of these properties isn't that bad a thing is it?