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Sun 31 May 2009 12:51 PM

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Panic selling is hurting Dubai property market - CEO

MAG Group Properties chief lays blame on speculators, causing price confusion in sector.

Panic selling by Dubai property speculators is driving prices down, eroding confidence and making banks reluctant to lend, the CEO of MAG Group Properties said on Sunday.

A mass sell-off by speculators, whose frenzied buying and selling of off plan properties before the global crisis contributed to Dubai’s housing crash, is ‘undercutting the fair market price’ according to Mohammed Nimer, the boss of developer MAG Group Properties, which has a portfolio worth AED3bn.

“Speculators were originally responsible for driving property prices to unrealistic levels. Now, although they are on the receiving end of the slump in prices, they are still blighting the real estate landscape by panic selling and undercutting the fair market price,’ he said in a statement on Sunday.

While this was good news for buyers, it was creating confusion as to when the market would bottom out, spooking investors and banks, he said.

“It’s a vicious cycle. Forget the benefit of lower construction prices, we have to wait until these distressed sales are pushed out of the system. Only then we will witness some stability and a return to fundamentals instead of sentiment based on fear and uncertainty,” he said.

But he remained upbeat on the UAE’s long term prospects.

“Although property prices fell dramatically in the last quarter of 2008 and the first quarter of 2009, the rate of decline has now slowed considerably, indicating that the market could be approaching the bottom,” he added.

Real estate consultant Colliers International said house prices in Dubai fell 41 percent in the first quarter of this year.

Geriant 10 years ago

Where was the vitriol directed against these vile speculators during the good times? Not a whisper was heard from the likes of MAG when there was no tomorrow. Now the speculators, the only real buyers, are in a state of high hysteria it is almost time for a dose of schadenfraude to read that the likes of this little CEO are up in arms because the people who made them rich are not able to do so any more.

Mohammad 10 years ago

He is only trying to please RERA with such comments. Both speculators AND developers are responsible for bringing the prices to unrealistic levels. If the developers were so wise to begin with, which did they fall prey to such speculators and keep increasing their prices every few hours (case in point: launch events of large developers like E & N). How convenient!

Dude 10 years ago

Do you want them to wait after both developers and those speculators caused a panic to every living human in Dubai during the good times (for them and for developers) that he/she will not be able to pay his/her rent because rents and prices of real estate are shooting outside the roof? Pathetic

Vincent 10 years ago

I have one word for this CEO. 'Right' There is something known as regulation which protects all during good times and bad. If speculators were chosen to be ignored at a time when it was profitable to developers, then please do not WHINE when the situation heads south. Someone pass the CEO the cheese please.

Yusuf.T 10 years ago

WAKE UP MR.MAG stop blaming the ONLY people who had money and PUT there MONEY in the Real ESTATE MARKET of DUBAI. IF THEY DID SPECULATE AND YOU DID NOT ENCOURAGE THEM, by launching one project after another then Dubai would not be in the sorry state of Real Estate affairs that it is in Today. Greed accross the board was the cause, stop trying to pass the buck and own up to the fact that you too were more than any one also responsible, and this was FREEHOLD. FREEHOLD is dictated by one principal demand and supply.

Confused Chappy 10 years ago

Ok so they are partly to blame for this whole fiasco but the developers are also to blame due to selling 1,2,3,4 apartments to the same people knowing what they were doing which pushes prices up, do you expect them to hold on for a loss? Prices rose so much from original purchase that even a 41% drop gives these people a good return as it rose 200% from new.... Do your maths and come up with a law that you have to own the property for a least one year before selling, that will get rid of flippers and maybe help people that want to buy to live in....

Steve 10 years ago

An astounding comment from a supposedly educated man... Who should decide what the "fair" market price should be? Is it the developers and realtors, as has been the case during the boom, or should it be that invisible force called "the market"? Mr. Nimer; your Economics 101 lessen for today: A fair price is wherever a willing buyer and willing seller agree to conclude a transaction. I would have felt sorry for you if you had no hand in creating this mess, but you did. If I was sitting on an AED3bn portfolio which is probably worth closer to AE1.5bn today, I would also feel it’s unfair. My advice: go back and mark-to-market your portfolio properly; take a aspirin; and call me in the morning!

gordon robertson 10 years ago

The speculators and the developers worked hand in hand. The fact is, there is going to be a glut in property. This will result in substantially lower rents. Which investor would buy a property with such a low yield and going lower. The result has to be lower prices to match the oversupply. They are talking about 30% oversupply by the end of next year. Rents can only go one way till the end of next year. The consequece is pricing falling in the same direction as rents. Only when the supply tightens up will we see a rise in pricing. Gordon

Ametis 10 years ago

So much whingeing because there is downturn in the market... Yet the same voices were jubilant when the market was running out of control fueled by the same speculators today being labeled frenzied Sellers... There were no voices calling out for the control of the spiralling unrealistic prices... Everyone believing the spiral was eternal and only one way..upwards.. Now reality sets in, the spiral has become a Chute and its all coming down... Thank you the market is getting realistic.. Your losses are others Gains....

Ametis 10 years ago

London has been through at least downturns, recovering and moving up.. Even at present conditions Middle East buyers are buying in London because its a safer investment than anywhere else.. During the time when prices of property were going up on the GCC, Middle east buyers were buying up prime property in UK, Dubai market too will return..........but not tomorrow morning, first the developers will go out to re tender the projects. Than appoint new Builders.......and slowly the sun will rise.. What has happened is the best thing for not just Dubai, but for whole region, it has got rid of the dead leaf...........