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Dubai Property Market Crash

Housing-Market / Middle East Mar 08, 2009 - 03:09 AM

Best Financial Markets Analysis Article Whilst the US housing market crash enters into its third year with house prices down approaching 30%, and the UK house price crash fast approaching its second anniversary this August with average prices lower by more than 22%. The developing worlds housing bubbles have only more recently started to pop, especially following last Septembers financial markets crash in the aftermath of the Lehman Brothers bankruptcy.

For instance the financial capital of the middle east Dubai that saw house prices during the whole of 2008 soar by 40%, however this masks the fourth quarter reversal that saw an 8% drop that has continued to accelerate during the first two months of 2009 into a full blown crash in property prices. The pace of decline is put at an eye watering 7% per month which is prompting panic amongst many foreign investors that bought into the Dubai property bubble including many of the worlds celebrities as the Mirror reports CELEBS LOSING £80K A WEEK ON THEIR DUBAI MANSIONS

Stars including David and Victoria Beckham, Michael Jackson and Brad Pitt are losing £80,000 A WEEK as their luxury Dubai villas crash in value.

Celebs who bought the properties in their droves over the last few years have seen prices halve, with pads worth £3.2million in October now on the market for £1.6million.

Already some of the mainstream press's property sections are implying the fall in prices is a great time to buy i.e. the Property Times Online - " For Dubai's fans, this makes it a great time to buy."

A warning to those investors being swayed, the Dubai property crash has only just begun which seeks to correct a 6 year property boom. The Dubai construction boom is expected to come to an imminent halt with many partially finished projects littering the landscape as investors walk away from the off plan deposits in the wake of the ongoing crash in property values. It remains to be seen how much of this excess supply will eventually be reclaimed by the desert as many foreign investors in off plan Spanish properties are painfully experiencing. My expectations are for an average 50% retracement in Dubai property prices from the peak, with many of the more over-leveraged high end properties possibly crashing by as much as 75%.

Youtube - Dubai Real Estate Crash

Dubai realtors report a non existent market as buyers evaporate, thousands of apartments remain empty with little sign of a recovery for at least another 9 months. The option of renting out expensive properties has also evaporated which puts developers and landlords under extreme pressure. Desperate developers have embarked on a publicity campaign in regional press and media in an attempt to attract buyers.

The crash in property values is just another manifestation of the ongoing crash in Dubai's economy which barely a week ago required a $10 billion bailout by the United Arab Emirates to prevent a government debt default as parts of the $80 billion of debt come up for refinancing. The huge over leveraging borrowing spree helped fuel the property boom and global investments that sought to turn Dubai into a world financial centre. The property crash follows hard on the heels of the stock market crash of more than 75% as the economic gains of recent years turn out to be a mirage.

Britain is expected to be especially hard hit as the property bug bit Briton's more than many other foreign investors that amount to some 65% of the Dubai real-estate market. For the indepth UK house price analysis and forecast see - UK Housing Market Crash and Depression Forecast 2007 to 2012

By Nadeem Walayat
http://www.marketoracle.co.uk

Nadeem Walayat has over 20 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis specialises on the housing market and interest rates. Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication. We present in-depth analysis from over 250 experienced analysts on a range of views of the probable direction of the financial markets. Thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

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Comments

mcash@sify.com 08 Mar 09, 23:45	dubai property I think it is the temporaray factor.
mongrelpuppy 09 Mar 09, 13:34	Dubai temporary? that has the risk of dysfunctional investment thinking. my first comment was perhaps too strong for the audience. moderation in moderators.. i used to advise governments on this stuff..gave up..introverted cultures of the rich and distracted..but still loveable cuteness if not frustrating.. but a small word of advice.. if those Dubai Empire builders were to consider the investment potential in design-building a space age eden, food-energy-shelter sufficiency..eg. Eden project in Cornwall Britain.. greenhouses in the desert, solar power.. space age technolgy to do so has been building for the last 40 years..geodesic domes, living water systems..it's all there..use it.. at the edge of the desert perhaps the investment could lead the way for the entire middle east where all these internecine family arguments could use some hope. those movie stars would buy into it in spades.. go for it.
Nadeem_Walayat 10 Mar 09, 15:46	Crashing markets Yep, the greater the bubble the greater the collapse. It's why chinese and indian stocks crashed far ,more than western markets
26 Nov 09, 19:45	The banks who sponsored this madness Shelly's poem Ozymandias springs to mind OZYMANDIAS "My name is Ozymandias, king of kings: Look on my works, ye Mighty, and despair!" Nothing beside remains. Round the decay Of that colossal wreck, boundless and bare, The lone and level sands stretch far away. The banks who sponsored this madness are now going to pay a horrendous price, some will be bankrupted. It was their job not to sponsor the construction of "shipping hazards" in the seas off Dubai but of course that would have meant having a modicom of common sense.
sumaira 03 Dec 09, 10:33	its not temporary facter. its alarming! dubai property crash is not temporary. look three year back, same crash begun in USA which didnt get end yet. i just hope it dont go that bad as it was in USA.
susana 30 Jun 10, 01:06	It's just temporaray This real estate crisis in in fact global and no place in this world is safe from this global real estate crisis then why only to blame Dubai real estate and I think that Dubai real estate business is in much better condition than others as I have recently read an article about it at
Susana 08 Aug 10, 23:38	Hi, I do agree that it is the most severs bust and depression for Dubai real estate industry but I don't agree that investors in Dubai Property will suffer for long as I believe that Dubai has a very economic strong basis and Dubai authorities are trying their best to recover the previous position of Dubai real estate industry. http://www.bayut.com

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