By Andy Sambidge
Four-bed garden homes on Palm Jumeirah down from $3.8m to $1.8m since Sept 2008.
A real estate agent dealing in top-end properties on Palm Jumeirah in Dubai said on Monday he has seen prices fall by more than 50 percent since Sept 2008.
Four-bedroom garden homes on the Palm are now selling as low as AED6.5 million ($1.8m), down from AED14 million ($3.8m) in Sept, according to sales agents PowerHouse Properties.
Ian Hainey, Palm sales specialist for the company, said: “We’ve seen a steady stream of bargain hunters in the market shopping for these prestigious addresses, with many motivated primarily by price.
"Many end-users who previously could not afford to live on Palm Jumeirah are also now turning their attention to the bargains currently on offer.
“Palm signature villa prices have also fallen, with even the most popular styles that were selling for over AED30 million six months ago now appearing on the market for under AED15 million."
He said there had been a noticeable increase in Palm Jumeirah buying activity during January as buyers sought to take advantage of lower prices.
"Sales are still being made on the island, with an upsurge in those buying to rent, taking advantage of the bargain prices while still capitalising upon the high rental yields. Garden homes are renting at over AED400,000 and furnished signature villas still commanding rents up to AED1 million.”
Dubai-based mortgage advisor Jack Czechowski from propertyfinancelink.com added: “There has been a marked reduction in people seeking to buy properties on the Palm Jumeirah, and therefore obtain finance, but this is true in developments throughout Dubai.
“Those who are still looking to buy are finding it very challenging to obtain finance at the moment. Banks have tightened their policies, reduced lending ratios and increased interest rates. Most lenders have reduced their maximum borrowing ratios from 90 per cent to less than 80 per cent.
“Interest rates have increased from approximately 6.5 per cent to 8.5 per cent and banks will generally no longer lend to non-residents or people employed in the real estate sector. Unfortunately this is preventing many potential buyers from being able to purchase.
“It is difficult to make an accurate prediction on the immediate future, as Dubai has never faced this problem, but it is quite possible banks will review their policies early in the year.”
The Palm Jumeirah was built as the flagship part of Dubai’s ambitious Universe development, which planned to extend Dubai’s coastline to around 625 miles, around 15 times its natural size.
Last month, a report showed property prices in Dubai dropped eight percent in the fourth quarter of 2008, the first quarterly decline since foreign ownership became legal in 2002.
Sales volume also dropped by 45 percent in the last quarter, providing fresh evidence of the global credit crunch hitting the emirate.
When work started on the Palm in 2001, the villas were quickly snapped up at prices from AED2.8 million each, with celebrity buyers including David Beckham and Michael Schumacher.
As 2008 drew to a close, the decision to halt work on Palm Jumeirah’s AED2.9 billion Trump International Tower is one of the more notable effects of the economic downturn.
So here we have it, banks charge 8.5% on mortgage loans, banks pay 3%, or less on 1 year fixed deposits, Landlords want between 10-15% if you pay in 12 cheques-- I rest my case!!
An apart from loan interest costs what exactly are the annual maintenence charges by Nakheel on a Palm Jumeirah Villa ? What assurance does a buyer have that Nakheel will not double these rates when they need to repair the island or increase their revenues to compensate for other issues they face ? Its probably better to buy a property in Meadows, or Ranches, that is not a "tourist fantasy"and has held up the price in these hard times
They should go down by 50% more. 1 million$$ maximum. Please give me a break. They can not be more expensive than california!1 million $$ MAXIMUM.
Now with the economic slow down atlast brought some resemblance of sanity in the real estate market with price coming to some sensible and realistic level.It is good for the real investor and end user as well.Greedy real estate agents ,middle men and speculators spoiled the name of Dubai by taking the price to dizzy height even double the price of London or other highly developed countries which took more than 50 years to reach the present level of development.If the real estate agents or developers are licking the wound now ,i would say they deserve it.
A villa like Palm garden home would easily sell for US $ 10 million in most places in California such as Santa Monica, even in this market. Dubai will be very quick to recover as this recession is imported and a much larger percentage of investors, compared to other countries are cash buyers.
there seems to be no method to this madness. As you sow , so shall you reap. These are unreal real estate prices. Even a boom follows some sensibilities, this was a case of excessive greed, not a boom and every one looking for a fast buck will now have to pay the price. everyone is a loser.
High end Villas in Palm should go down further by atlest 30% only than will it be worth for a end user,whereas rental returns are concern not very sure as to get tenants who will pay such high rents in this crisis ???
Less than 1 million would be appropriate for this market. Now it is 50% fall i think it will fall for another 30% - 40% with in 4 - 6 months.
I have to say Bryan just called it as it should be...when you look at the comments of Sid iftab you realise that this mania is still running in the blood streams of the shockingly to say still disillusioned bunch, who for that matter i'd like to know how much they're earning, if they still have a job that is...hmmm or maybe they're one of those who made a quick buck and want the good times to continue. What i'm waiting for is for someone to now say dubai is not going to be affected by the global crisis...Imported, is that a joke. one more thing...for every buck someone brought in from overseas to invest in property in dubai, remember that the local banks are exposed to 4 times (assuming that they paid 25% deposit) with the loans they dished out. I wonder how much loss is brewing up inside those birds nests!!!!!
They have killed the goose which laid golden eggs out of greed! Greedy people never learn ..do they?