The report from Emirates business below could be more political than economic matters. It is hard to revive the current bad fortune in the real estate and property market.
However, it is not yet the right time to grab the ever increasing number of property-for-sale as the market is still falling. The question is how low will the prices go? I bet we have not seen the end of the correction period yet.
That could be either good news (for prospective buyers) and bad news (for the property owners) as well as those in the property development business (like me).
Reversing rents, decelerating market prices and the chance to pick up a bargain if you have the readies – property has never been a hotter topic in the UAE.
It is the one conversation guaranteed to draw opinions from even the most reticent of people, because the cost of putting a roof over our heads affects everyone.
After years of unchecked rises – which saw annual rent double in as little as two years – there is no denying the global economic slowdown has impacted this region. But the recently published Rental Index put the cat among the pigeons by suggesting, in a declining market, many people were still paying too little for their homes.
As the situation seemingly became a riddle, wrapped in a mystery, inside an enigma, Emirates Business attempted to answer the questions on everyone's lips, from defaults, development stallings, to the outlook for the market, short and long term. In a far-reaching round-table interview, six experts – regulators, developers, property services, financial services and agents – over four-pages of the print edition of the paper last Friday, gave frank and realistic responses.
They welcomed the end of an era of speculation, which had fuelled prices, and suggest the scales had tipped in the favour of the buyer.
Developers also face heftier fees in the future and the real threat of having their licenses revoked by the Real Estate Regulatory Agency (Rera) for the failure to honour sale and purchase agreements, they said.
They also spoke of the options open to investors faced with the prospect of a property on hold, or a developer that has defaulted on payments. Pertinently, the panel suggested drawbacks to the Rental Index and they evaluated the best buys for investors with cash and in search of a bargain.
Markus Giebel, CEO of Deyaar and one of the panel, said: "A positive outcome from this crisis has been the end of speculative demand for off-plan property."
Fellow panellist Peter Riddoch, CEO of developer Damac Properties, said: "The outlook will be better regulated and safeguarded to protect the interests of the investors. This means the developers will have to undertake considerable more preparatory work."
And Mohammed Kamran, Associate at Al Tamini and Company, in response to a question about the outlook for property prices in 2009, said: "Completed properties will have fallen significantly and should bottom out in the second quarter."
Andrew Chambers, MD of property services firm Asteco, said: "We are seeing secondary property sales at lower levels than developer prices in certain areas, primarily owing to distress sales."
This lengthy Q&A was the second best-read story online last week, bearing testament that people want clear guidance as they take tentative steps through a minefield of conflicting information.
As a counterpoint to these interviews, on the same day of publication, Sheikh Sultan bin Khalifa Al Nahyan, a member of Abu Dhabi's executive council, touched on the situation in the capital.At the end of the three-day Abu Dhabi Real Estate and Investment Show, he said the real estate market in Abu Dhabi had become tempting to investors because of a decline in prices due to the global financial downturn.In a story that also made it into the top five best-read stories online last week, Sheikh Sultan s
aid the property sector in the emirate was passing through "a correct period" triggered by the global crisis and the ensuing crash in crude prices.
"The current period is extremely encouraging and tempting for investment in the real estate market in the emirate following the decline in property prices, which have become very attractive compared with the previous period," he said.
Ultimately, the facts seem to suggest that people in a position to weather a battering in the current economic storm will be better placed to invest once the clouds clear. And those with the money to invest now – and not later – are well placed to pick up a bargain.
Press Clippings –Sunday 08 February 2009
· Construction costs per square foot in Dubai are falling once again by around 70.83% from a high of Dh1,200 per sq. ft. and developers are taking advantage of the situation and renegotiating contracts. Business 24/7
· Findings by Dubai-based market research firm Proleads on Dubai’s property market. Arabian Business
· Real estate developers in the region will need to focus more than ever on end-user requirements. Business 24/7
· RERA has told developers not to increase or modify service charges on their property without the regulator's approval. Business 24/7
· Pakistani master-developer of real estate projects, Chapal World is offering an eight-year flexible payment plan with just Dh5,000 deposits to attract end-users, that analysts say, could stimulate the UAE's stagnant property market for a solid growth. Gulf News
· Property management firms will buck current market trends and grow at least 15 per cent in 2009. Growth in sector will be fuelled by the handover of more completed projects this year. Business 24/7
· · Top tips to home in on a loan. Business 24/7