There is a lot of hosh and poffel being talked about the Dubai property market at the moment. According to Colliers International prices were 2% higher in the first quarter of this year compared to last year, the 4% quarterly increase was the third consecutive growth recorded by the firm. Echoing Colliers findings of a market currently stabilising, Asteco said that prices were flat in the second quarter compared to the first.
But then comes a cold stark report in Bloomberg of a barren market with insufficient sales to allow buyers to gauge prices. If you ask me this is the most realistic story, and I am sure anyone who watched the recent Homes from Hell Dubai Dreams program on ITV will be of the same opinion.
Let us not forget that £50 billion worth of construction is on hold in Dubai, and that several of Dubai's largest developers are still juggling huge debts that could yet be defaulted. At a time when French leasebacks giving returns of 4% max are more popular than off plan properties capable of returning twice that, because investors just don't want to take any risk, it is hard to see sales increasing in such a volatile market.
Dubai property prices have fallen a reported 50% since the start of the downturn, but in reality that may only tell a fraction of the story; if a property is only worth what someone is willing to pay for it then how much is a property worth that no one wants?
Further, how much is a property worth that has views on 1-4 sides of unfinished foundations and uncompleted towers?
What's worse is I can't even see any hope in Dubai's future. Okay, if sales do increase on the towers that are complete or being completed and the market verifiably stabilises, then new developers will undoubtedly want to take over the uncompleted ones and get them up and going ready for the growth cycle. It is worth that initial sales spurt will come from that I can't envisage. Answers on a postcard, or in the comments, whichever is easier.
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