With some analyst predicting a 70% drop in prices in the emirate –what next for Dubai?
UBS reported in April that their research suggested prices have already fallen 25% since their peak last year – unsubstantiated claims say it’s nearer to 40%. Either way, as with the rest of the world real estate in the area has suffered due to the lack of liquidity. Which brings me onto my next point, has the world wide increase in real estate been fuelled by cheap credit rather than organic growth?
This may sound a silly question now, but I asked the very same in 2006 and was pillared by a number of Spanish developers. Many people I know, who sold property in Spain then up sticks and went to Dubai when their market fell.
Remember the claims? The emirate is loaded with oil money, people from all over the world will want to live and do business in Dubai and ultimately, the ruling family won’t let it fail.
Well, as someone far wiser than me once said, “You can’t buck the market”. No matter how much money the ruling family has, no matter how desirable the tax regime is or the positive life style, if there is no work, then there is no desire to be there. The number one job opportunity in Dubai in recent years has been real estate (and associated businesses) – the tales of Porches being left at Dubai International Airport car parks are true!
One overriding principle of investing in real estate is supply and demand. Whilst others will talk about location, I believe it is the very essence of market forces. Too many buyers, prices rise, too many properties, prices fall. It is as simple as that. As for location, well lets face it, unless you are buying on an over crowded island, then it is usually a bargaining chip!
UBS reported in April that their research suggested prices have already fallen 25% since their peak last year – unsubstantiated claims say it’s nearer to 40%. Either way, as with the rest of the world real estate in the area has suffered due to the lack of liquidity. Which brings me onto my next point, has the world wide increase in real estate been fuelled by cheap credit rather than organic growth?
This may sound a silly question now, but I asked the very same in 2006 and was pillared by a number of Spanish developers. Many people I know, who sold property in Spain then up sticks and went to Dubai when their market fell.
Remember the claims? The emirate is loaded with oil money, people from all over the world will want to live and do business in Dubai and ultimately, the ruling family won’t let it fail.
Well, as someone far wiser than me once said, “You can’t buck the market”. No matter how much money the ruling family has, no matter how desirable the tax regime is or the positive life style, if there is no work, then there is no desire to be there. The number one job opportunity in Dubai in recent years has been real estate (and associated businesses) – the tales of Porches being left at Dubai International Airport car parks are true!
One overriding principle of investing in real estate is supply and demand. Whilst others will talk about location, I believe it is the very essence of market forces. Too many buyers, prices rise, too many properties, prices fall. It is as simple as that. As for location, well lets face it, unless you are buying on an over crowded island, then it is usually a bargaining chip!
UBS analyst, Saud Masud goes on to say in his report, “We think a 70% fall from peak to trough is not unreasonable, especially given the four years of white-hot growth Dubai has experienced” and in his opinion “we will get closer to market troughs over several quarters out into perhaps 2011”.
Who will take up the slack in Dubai and what are they willing to pay?
Who will take up the slack in Dubai and what are they willing to pay?
