By Gavin Davids
Landmark notes rise in foreign investor interest as real estate prices show signs of stabilising
Real estate prices in Dubai’s battered property market are bottoming out more than two years after the financial crisis sparked a slump that devastated values, an analyst has said.
Fifteen months on from the Dubai World debt crisis, which saw the state-owned conglomerate seek to alter terms on $24.9bn of debt, investor appetite is picking up, said Saeed Hashmi.
“We’re now a year on from the whole Dubai World situation. We’ve moved on, mature markets have stabilised again. Declines are slowing down, we’re getting close to the bottom of the market,” the head of valuation and advisory at Landmark Advisory said.
“People are really looking at Dubai because there are some really good opportunities as prices have moved down,”
The emirate’s housing market has been in decline since 2009. The value of real estate deals in Dubai plunged 65 percent in 2010, data from Jones Lang LaSalle shows, while the number of transactions fell by more than half.
Average house prices in Dubai have tumbled 62 percent from their peak, Deutsche Bank said this month.
Complicating the matter is the threat of new supply, which could further the price slump. As many as 48,000 homes will be completed in the next two years, increasing current supply by 12 percent, Landmark Advisory estimates.
But the property brokerage said Wednesday it has seen growing interest from foreign investors attracted to Dubai’s devalued property market.
“From the end of last year onwards, we have seen a definite increase in interest from overseas clients,” Michael Michael, director of sales at Landmark Properties.
“Such investors are mainly from countries within the GCC or Eastern Europe, indicating a growing sentiment that Dubai’s property market is now offering investors greater value for money.”
The city now compares favourably to global hubs such as Singapore, Hong Kong and London, offering a similar lifestyle at a cheaper cost, said Hashmi.
“If you’re comparing Dubai to other international sectors like Hong Kong and Singapore, it’s now very cheap. They [investors] think that buying an investment now will get capital appreciation going forwards,” he said. “They’re trying to buy it as close [as possible] to the bottom of the cycle, or at the bottom of the cycle.
“The main point is that Dubai is now becoming attractive in comparison to other cities.”
The UAE’s trade and tourism hub may also benefit from the political unrest sweeping the Arab world, as investors seek comparatively safe markets for their funds.
John Sfakianakis, chief economist at Banque Saudi Fransi in Riyadh, said in February the emirate could see the biggest influx of investment in the wake of the Arab world protests.
“[What] may help Dubai is obviously the crisis in the GCC,” said Hashmi.
“Any instability in those markets will probably bring capital into the emirate because [people] want to keep it within the region, they want to keep it within what they know.”
Of course they are reaching bottom - isn't that what every Real Estate Agent/Firm been saying for the past 2 years? Does anyone really believe a word/forecast these people put out there? Believe NOT! You can toot the trombone as much as you like, does not mean squat!!
Yet another article claiming that the real estate market is about to turn around - please get real and stop this now - just because you keep repeating it, doesn't make it so.
And as to implying that Dubai will profit from unrest in the region, that is just sad
These are nothing but self serving statements . I can bet by the end of the year they will be saying the same thing that prices are still falling and we expect them to stabilise by Mid 2012 and then end 2012 and so on.
What amazes me is that people will believe this article . Landmark are talking up their own interests , of course they want people to invest it's their buisiness for goodness sake.
What we do know is that there's a glut of over supply for at least another 2 years and with the lack of Accountability , Transparency , enforceable property law and changes to the current residency laws there will be no major investment . Speculation does not help anyone , everyone knows what the bottom line is.
Move on people , it's the economica of supply and demand and confidence in the market all of which are against the current status of Dubai , we've got 5 years of this.
Nothing but a magnificent piece of self-fulfilling prophecy.
Unless structural changes to ownership , mortgage and property law are implemented no real growth can be expected.
This could be a very long depression in property upto 12 years from the peak . There has been tremendous loss of wealth and it will be very difficult to bring new interest unless radical changes are adopted . Business enviroment is currently not conducive to lift local buyers to look at new real estate investment.
I have been trying to find those opportunities with little success.
The prices quoted are still above Europe, the yields are low and the rents are still falling which results in even lower yields.
The only way opportunities arrive is if the yields are in excess of 8 pct.
So letâ€™s find the bottom in rents, work out the yield, work out the value then determine if it is an opportunity.
Meanwhile invest in more lucrative areas.
If however I really have missed those opportunities please advise where as I would like to buy at some stage. However please do not come up with the unique opportunities I have been offered over the last two yearsâ€¦.they all continued to fall and fell lucky that I did not trust those offers.
What about the demand side of the properties? Everybody talks about the supply with out looking at the demand drivers. I opine that Dubai pundits have learned their lesson and have been working lately on basics and it core strengths. If Dubai can keep focus on its core business activity; trade, tourism and aviation/logistic hub then definitely we are close to bottom as 30,000 to 40,000 units are not a big deal if demand generators keep creating 30,000 to 50,000 well paid or wealthy new immigrants to Dubai.
I also believe that naive investors can not take a plunge in this market it will be bottom feeders and vultures who are hunting for deals and will keep hunting until their is up tick in the market and then they will start off loading and all of us will be buying in heard mentality. I see 2013-14 years of prices moving up gradually and peaking in 2015.
Where is the opportunity for rebuttal of commentary such as this other than in the limited forum on offer in the comments section?
An estate agent offering ill informed and self interested observations on the market does not constitute news and their unsubstantiated claims can be easily dismissed with ample evidence that destroys their thesis. But where is the opportunity? If, as part of balanced coverage an alternative viewpoint is sought and published then all well and good. Yet it is not. All we get is the glitzy"Dubai is back" nonsense.
The head of valuation at Landmark is no better a position to determine the bottom of the market than a monkey guessing the next stock market winner. Give the monkey a voice and you could be said to be offering balanced reporting
the facts and ground realities does not support the statements made by these so called advisory firms. They say one thing today and take a complete u turn next day. The return on investment is still very low, many projects are in pipelines and demand is non-existing.