By Dylan Bowman
Resale prices drop as speculators struggle to sell on units and buyers face financing problems.
Property sales in Dubai and Abu Dhabi have ground to a near standstill and resale prices have dropped for the first time due to the global financial crisis, agents have said.
Off-plan sales have been the hardest hit as speculators struggle to sell on their properties because potential buyers are finding it more difficult to secure financing, UAE daily The National reported on Sunday.
Speculators then face problems meeting instalments plans, forcing them to lower prices in an effort to make a quick sale, the newspaper said.
“It has been going on for a week now. I have seen prices going down about 10 percent everywhere, even in Dubai Marina and Downtown Burj Dubai,” Khaled Elqassim, the sales manager at Dubai-based property broker AAA, was quoted as saying.
“Pretty much all the secondary market is trading at less than it was before the financial crisis,” Karen Lay, the marketing manager at LLJ Properties in Abu Dhabi, was quoted as saying.
This is turning into the perfect storm for UAE property. Credit tightening is only one factor. There are plenty of others now contributing to what will be a spectacular crash: 1) massive oil price crash, with prices threatening to head much lower 2) sharp rise in USD (and hence AED) value making Dubai far less attractive to those bringing in GBP and EUR to buy with, and giving those holding property a big incentive to slash prices and bail out while they still have some profit 3) recession in the UK and Europe is very bad news for Dubai tourism I expect now we will hear all those who denied there was a crash in the offing switch to damage limitation mode, as their counterparts in the US and UK did. "It won't be as bad as the UK/US" Oh yes it will... it will be far, far worse. The bigger the bubble, the bigger the pop...
As long as dollar gains value. Property prices is going down further. Just think if you have house purchased for 600k(~70k GBP gpb/usd=2.05) dirham 1 year ago. and if it cost now 1M dirham (~175 GBP gbp/usd=1.6) . now compare it 70k GBP to 175k GPB. :) Wouldn't you like to sell the house here and buy one in London where prices already headed down.
Its finally arrived - the much anticipated dip in Dubai property prices. If prices have been slashed by 10% in a week, what can we expect in the next six months.?
It was commented by more learned persons than I over a year ago that the speculative buying of properties would implode on itself - this was also when the leaders of the comunity started to implement controls hopeing that real estate compnies would start self regulation. Maybe this will bring properties to their real value
The secondary market for Downtown Burj is 20- 30 % less than what Emaar is offering directly to its buyers. It looks like there is an opportunity for interested investors if they look at Burj Downtown.
The inevitability of prices coming down in Dubai (and Abu Dhabi) has long been foretold it was never IF it was always WHEN. The question now is how much - the report of 10% drops is insignificant with the rises seen even this year in the UAE - my belief is that we are about to see significantly higher drops as the word gets out and speculators try to offload. In some areas 50% drops are possible but I would suggest 30%-35% will be the norm. OK if you bought a couple or more years ago - tough if you bought in the last few months!
I fully agree with the article, the issue as i see it is that Banks and Financial institutions have dropped their financing percentage to 60% and 65% , not only they are giving an indication to the market that the expected correction in the real estate sector could be in the range of 40% to 45% but also they are making it really difficult to buy a house in Dubai, which will lead to an inevitable correction I donâ€™t understand the contradicting position between Government officials and banks, either that UAE has a strong real estate sector as per the Government officials or it does not as per the Banks financing position. If banks do not have the financing ability then they should not push away investors by putting unreasonable financing conditions.
This is the beginning of your end dear speculators/real estate agents. You guys deserve that, you guys earned exorbitant amount by squeezing end users. Just imagine, till recently an end user could not buy a apartment/villa directly from a well known developer such as Emaar/Nakheel. Every unit from these developers had been gobbled up by so called speculators with in hours. (I would say greedy fly by night business men). When a real buyer/end user wants to buy Prices of flat/villa shoots up in few hours after the sale.
This was bound to happen. In my case, I was denied the loan even though the combined amount of me and my brother was in the amount of AED 20,000. UAE has a sound domestic demand for housing. However, the banks look at the age and the income of the individual when it should be looking at the credit rating. To add salt to the wound the speculators raise the prices to almost 45% of the actual price and expect people to buy. With America already going down,it will be a matter of time that the speculators will start to suffer once this vicious circle of greed completes itself. Personally I think it is time for market regulations to be put in shape and sound laws implemented. The speculators are getting what they have sown all this time.
Honestly, a sigh of relief! The Real Estate SEctor was giving a hard time to the residents of the UAE using monopolistics and hoarding practices. You will find advertisements coming in the paper claiming that 90% SOLD!!! That is how they maintained these hype pricing so far. Now that the world financial support system is crembling a highly geared state like Dubai can not do much. A country who is putting an national budget of 60 Bn but announcing projects with trillions does not make sense... there was something wrong somewhere and this testing times will get it all fixed... The time of living on credit cards and borrowed money seems to be coming to an end..good bye speculators and gamblers!!!. At least honest people can lead a calm life after this potential turmoil, I hope!