By Claire Ferris-Lay
Demand flat in October says Asteco, other agents report decline in prices in some areas.
Dubai residential property demand was flat in October according to broker Asteco as a global economic slowdown saw further weakening of international real estate markets.
“On the secondary market, the last week has been flat and not a lot has happened. We are getting sales but about half to three quarters of what it was two months ago,” said Andrew Chambers, managing director of Asteco.
Other agents have reported a decline in prices in some locations.
Timur Usmanov, a real estate agent for Dubai-based Monshaat Properties, said he has seen declines of up to five percent across Dubai in the last month.
"Investors are confused and they think prices will drop," Usmanov said.
The global financial crisis has hit demand from foreign investors, which make up a large percentage of property buyers in Dubai, while tightening liquidity has made home financing more difficult, agents said.
Local mortgage providers have slashed home financing from 90 percent to as little as 60 percent in recent weeks.
Recruitment consultant Ellie Rankin, who has been trying to sell her one-bedroom apartment in Dubai Marina, said she has not seen the interest she had hoped.
"[My apartment] has now been on the market for a couple of weeks... I expected more interest more quickly,” she said.
Media professional Phil Smith, who also owns a one-bedroom apartment in Dubai Marina, said his property has been on the market for over a month and that he has received only one offer that was below his asking price.
Dubai was the first UAE emirate to open up its property market to foreign investment in 2002, triggering a six-year boom. Real estate broker Colliers International said earlier this month Dubai house prices rocketed 76 percent in the year to June.
Colliers’ House Price Index for Dubai showed house price growth slowed from 42 percent in first quarter to 16 percent in the second quarter.
And so it should. The real estate market has been so artificially overinflated in the gulf, and particularly in Dubai in the recent years that it's about time that prices drop. You pay the same amount for a 2 bedroom apartment in the heart of New York as you pay for one in the far end of the Marina in Dubai, or in Business Bay or in Old town for a 1-bed... but what do you get here for it... a lovely view of construction work, the desert, or at best an empty concrete bucket they are already dubbing "a lagoon" which is likely to get converted to a carpark anyway because planning didn't allow for enough spaces. Believe me... it hasn't come anywhere too soon.
I read all the" I told you so" comments on this website on the real estate related articles and I cant help but laugh. All these people are showing is the lack of basic understanding on how property markets function. The Real estate crash is a worldwide phenomenon, its even worse in the USA, Canada and elsewhere even the UK is suffering. Granted the UAE real-estate market is a baby, with little regulation and maturity, however the doomsday scenarios that are being discussed are just ridiculous, so what if the prices go down, this is as normal as the sun shining people. Now if you are bitter expat who cannot afford properties up to this point I can understand the venom and pompous attitude you are currently displaying. Let me tell you something, I own property in Dubai and it has gone down in value, I am fine with it for 2 reasons, first of all I am not stupid enough to bet the farm the wife and the kids and I didn't put all my eggs in one basket, second of all, when its ready I will move on or rent it. I will by more property now that it is even more affordable, and for those of you who are dancing around the bone-fire enjoy it from the outside, the property market in Dubai will pick up again and you will be left out in the cold again just like the first time around.
stop lying, u know that market have dropped waaayyyy more then that! i've seen properties selling for 40% of it's value in dubai marina! the thing is THERES NO MARKET VALUE KNOWN in dubai. we still dont know how much per sq. ft. in any area in dubai and im talking standard prices...so the drop cannot be known or measured!
No... just further down the road. Give it a year in Dubai and then see what happens. Unlike the US or UK, the Dubai economy is basically construction and real estate and very little else. Except tourism... which is hardly likely to boom with UK and Europe in recession and the AED value soaring. Dubai will pick up again. But I spent some time in Taiwan in the 90s and witnessed a similar boom. Nearly 20 years later and prices are *still* some 20% below the levels of 20 years ago. Boom can turn to bust, and the biggest booms very often turn to the biggest busts... stay tuned.
Think about it - DM is now actively preventing sharing of villas except for families, and will soon be starting on apartments. As a result, no-one can afford the extortionate rents charged in Dubai. This means people who own properties won't be able to rent out their properties. Which means they won't be able to pay the mortgages on them. Which means all of the banks and financiers who have given these people the credit to buy property are going to find thousands of people defaulting on the loans - exactly what happened in the US subprime market. We are on the verge of not just a real estate crash, but a total economic collapse in Dubai.
Yes M, I told you so, so did a few lonely voices like myself. The only thing we are bitter about is how greed, deception, hype and short-term mentality enriched a few while spoiling it for the many and selling Dubai's long term future. And yes, I know, it is worse in the US and UK, so far. But that is because the US and UK are on the leading edge, they are the canaries in the coal mine. It will get worse in the Gulf, especially Dubai, much worse. It could very well be the mother of all melt downs. Why? For two reasons. First, the US and UK do not have to import speculators to buy their over-hyped properties. Second, just look at tht numbers. According to Kuwaiti newspaper Al Qabas, the size of projects under construction or under planning in the Gulf is US$2.5 trillion (not including completed property), compared to US$400 billion in oil revenues (probably at high oil prices) - the rest is made up in borrowed money. If you add up these projects under construction along with the ones that have been completed (which are already over-priced and held mainly by speculators), I can see the size of assets subject to distress to easily exceed US$1 trillion. What is the potential size of the meltdown? History offers some insights: real estate in Singapore declined by 80% in just 18 months in the 90's, and property prices in the US have already declined 25% on average and are expected to drop another 10-15%. Just to put things in perspective, this subprime mortgage mess in the US is estimated at US$1-1.4 trillion. Get the picture? The only thing that I find laughable is how so called "experts" like Mr. Chambers enlighten us with their knowledge. Just a couple of weeks ago he was insisting in an interview on this website that based on his long experience and expert analysis, property prices in Dubai could not drop. Now read his expert observation. Thank you Mr. Chambers for this remarkable observation.
If the market falls drastically and people default on thier payments to either the banks or the developers, how will your property get built that you propose to sell or rent out? The developments here are funded either by the payments made by the buyers or by construction finance loans. Since both of these are affected by the economy at the moment, it is highly unlikely that you will get your property delivered on time, if at all, or that anyone can afford to rent it from you if it does get completed. Having been a VP with 2 major developers here and the marketing director of the largest real estate service provider in the GCC, I can tell you that Trojan is exactly right in his conclusions, as is Doug and BV. Ask yourself these questions. What is fueling the market here? Why would you pay these inflated prices when you can buy a place in NY or Miami for far less and for better value? Why will tourist come here to visit the malls to pay inflated prices for items when it's cheaper at home, why will they come to swim in the poluted beaches. Greed, excess, poor planning and world economics have hastened the bursting of this bubble, but it has been something that was inevitable, all of the developers are feeling the pinch. Many of us saw this coming 18 months ago, it's just been all the more sudden due to the world economic crisis.
I have worked and lived in Dubai for the last 5yrs. I have been in real estate (Working) from the very begining. I've personally bought and sold and made great money whilst the 'jealous expats' sat on the side lines just complaining...I've been there, done and got the Tshirt so to speak. But, from the inside, I have to say, this market is going down and it will overtake the USA and UK very, very quickly. Dubai doesn't have the ability to stand on its own two feet within its own populous to use/buy the property glut that there is. We/Dubai rely on outside buyers to keep the market afloat. $US has gained strength by 25% in the last 12wks or so. That makes property here 25% more expensive to a foreignor without the Dirham price tag changing. Then factor in the banks reducing their loan to values down to 60-65% and it gets even harder for jolly foreignor to purchase property here. Then you have to factor in that jolly foreignor is being hit hard in their own economies. Wealthy people have lost millions from deleveraging their debt positions. Second homes are in less demand. Then factor in the Dubai's new laws with regards to villa share, visa renewal, RERA and land department rules and you have the makings of a disaster. Don't get me wrong, I love Dubai but I see what I see and it is for real. I, like many others, have been spending tomorrows income today not thinking this could ever end...but it is...and it makes you think twice about spending. If we stop spending because we fear for our incomes...what effect will that have on the economy here. I understand Mikes strategy for buying and living/renting the property he has...and he is right on that score. BUT...that is not what 90% of buyers here are in the market for. They are flipping properties to make money for immediate capital growth (greed in many cases). Once that game is over, and in reality it is, you will see the money and the owners of that money leaving Dubai. I know I have gone on a little but there are so many other factors that make the Dubai property market a bigger risk than people realise. The Risk/Reward balance is now way out of kilter and heavily swinging to the risk side of the equation.
I think it's safe to assume that all the people saying the market is or has crashed are the ones who do not own properties in any of the emirates. So you have to admit, your opinion is biased. I have invested in Ajman and Iran heavily, but also in Malaysia and Philipines. I'm perfectly happy with any adjustments that might happen in the market here. I have seen my money triple in a matter of a couple of years. So what if it goes down 50%. I've still done ok. Plus, I have not invested on speculation. I buy to rent, so there is always income. Sometimes more, like now, and sometimes less, as it might very well be in the future. But still I feel I have done OK. I think what a lot of people are forgetting is that a decade or longer ago when there was no tourism or a construction, there was a lot of business here still. That's why a lot of us moved here years ago. Those things will still be here. I think this 'bust' might be just the right thing to take the speculators off the market and make things a bit more 'real'
Dear All I was watching Habitat on TV last nite and the head of RERA stated that the Market is great in Dubai!!! Reading your comments is giving me a different opinion and its not only you but loads of others whom i interact are absolutely lost on Dubai property. Yes i own property. Why would RERA comment otherwise?