Property & Investment in Dubai: Your questions about the market

[Mistermark]

Originally Posted by Dubai_Steve

Is there any update on whether Dubai will be enacting a personal and corporate income tax before 2012.

... also known as 'killing the goose that laid the golden egg'

[234sale]

Originally Posted by Dubai_Steve

Is there any update on whether Dubai will be enacting a personal and corporate income tax before 2012.

Won't happen, vat would be 1st and still nada.

[Cayman]

Originally Posted by Dubai_Steve

Is there any update on whether Dubai will be enacting a personal and corporate income tax before 2012.

The day it happens, it will be 'bye bye Dubye'

[Dubai_Steve]

Were you under the impresssion that Dubai's waterfront properties were impervious to real estate fundamentals? Perhaps you believe that location is the only differentiator when it comes to building and selling such properties? Perish the thought!

While there is no denying that living near the water is an attractive proposition, that in itself is not enough. Those time-honoured maxims of quality and even affordability come into play when judging a property.

“Unfortunately, there is a broad range of quality levels between the various developments,” says Linda Mahoney, CEO of Better Homes. “The real victims of the crisis will be those developers who scrimped on quality in order to save some money during the boom.”

In her opinion, buyers who were waiting for prices on waterfront properties to fall are now taking advantage. But their sphere of interest is limited to select properties built by premier developers. As a consequence, those units which are deemed to be iffy on the quality of build aspect are suffering. “The secondary developers who were only out for a quick profit have only themselves to blame,” says Mahoney. Be it Dubai Marina, Jumeirah Islands or Palm Jumeirah, it is the same situation and one cannot just go by a developer’s name.

“For instance, Nakheel used several contractors for Palm Jumeirah. Some properties are of excellent built quality, while others are not,” says the senior manager at Investment Boutique, Safina Rangooni Lakdawala.

Wear and tear
To compound matters, some of the premium residences have not received the after-care they should have. “Some developers haven’t looked after their asset after completion and they are now showing signs of wear and tear,” says Linda. “The Palm is a perfect example: the swimming pools, common areas, and so on are not being cleaned and painted.”

The lack of proper maintenance is irking residents. “How much are they willing to pay on top of what they must pay to the developer?” Linda asks.
Will this lead to a spiral of eroding values and returns on waterfront properties? “People now differentiate between buildings, for example if one is not as well serviced as the other it represents a lower investment yield and is not so attractive,” says Elaine Jones, Asteco’s CEO.

She makes a further valid point by noting that everyone loves a sea view and beaches and, in the local context, an Emirati’s heart is closely linked to sea by heritage. “The Palm enjoys the advantage that you can only build so many properties on there, so it will maintain an air of exclusivity.” It also seems to be the only area where location tops the quality parameter, while in Dubai Marina, buyers are only willing to pay a higher price for perceived quality developments.

Villas on the Palm’s frond seem to have stabilised, as advertised rates start at Dh8 million and are well over Dh20 million for the larger ones. Launch prices were around Dh4.65 million.

Cluttons’ Ronald Hinchey remarks that whether prices are on the up is not the priority today. The market needs to see the transactions take place to regain confidence. Indeed, he believes a price rise now would not be favourable. “It would deter transactions,” Hinchey says categorically. “It is liquidity that will change things. It is all about movement.”

Even a neglected property can still be sold, though buyers will demand a reduction in the asking rate to make allowance for the expenses they incur personally on the renovations.

However, one could say that waterfront properties have been more resistant to price falls. And where there have been declines, they are now staging a recovery. The Jumeirah Islands’ lake environment has served its prices well, but it should
be duly noted that values at The Springs have recovered equally well, albeit for different reasons.

There’s competition for luxury property investors out there, too. Take Al Barari, an exclusive ‘jungle’ with water features that evoke a Zen living experience. At starting prices of Dh20 million, these pose a challenge to the Palm signature villas.

In a soft market, investors are known to prefer to play it safe. That could mean the end-users and high-end investors feel more comfortable investing in areas such as Dubai Marina, which in the medium- to long-term represents less risk.

In summation, quality could surpass location as the only differentiator that a property investor should take note of.

Dropping Values
Prices have fallen from their peak for water-related properties:
Jumeirah Lakes Towers fell 46 per cent
Dubai Marina fell 40 per cent
Palm Jumeirah fell 57 per cent

http://gulfnews.com/business/propert...ks-up-1.528239

[TMZ]

Originally Posted by Hanna

KPM Tower was initially scheduled to be ready by end-2010. (SUPPLIED)


Some investors in KPM Tower, a residential project in Dubai Marina, have claimed that the developer is asking them for more money although they have paid more than 30 per cent of the value of their units.
"We are tired of waiting for the construction to begin. We have paid up to 50 per cent of the amount to the developer, but they keep calling us to ask for more payments. They claim that there is some construction going on, but when we visit the site there is nothing happening there," an investor, who wished to remain anonymous, told Emirates Business.
A Real Estate Regulatory Agency official confirmed that developers cannot ask for more than 30 per cent payment from investors if there is no construction progress on a development.
Hamzah Abu Zannad, Director, Marketing and Operations, Al Masah International Real Estate, said the tower has been delayed by more than a year and they received a new payment plan in May from the agency, and they "shared this with the customers".
Abu Zannad said the 30 per cent payment collected by the developer is to cover preliminary charges, such as land payments, consultant fees, project management fees, land registration, unit registration, foundation contractor payment, etc.
"If the developer is unable to cover such payments from collection, chances are the project will be delayed indefinitely. Some will not appreciate this rule, and these are speculators. Serious investors and developers have stood side-by-side to weather this storm along with the swift action of the government strengthening these ties," he said.
Investors said they are also concerned about the slow progress on the project while the developer is pushing them for payments.
"They even sent out letters to buyers putting a delayed penalty clause of Dh200 per day to be charged to buyers for payment delays," said another investor. "Some of us have paid more than 50 per cent and the developer is asking us to pay more. Also, we are not seeing any progress on the project then why should we pay more?"
Asked why the project was delayed, Abu Zannad said: "We are committed to accelerate construction to compensate for this delay. The project was initially scheduled to be completed by the end of 2010, however, now we anticipate the project to be delivered in the first quarter of 2011. From now, the anticipated time of delivery of the project is 20 to 22 months."
The developer also cited reasons for the delay and said just next to the location of the plot is a Dubai Electricity and Water Authority substation that feeds the entire Dubai Marina.
"For shoring works on the plot we needed a no-objection certificate from Dewa and we had to acquire the necessary approvals for the designs to ensure safety of shoring works and anchoring procedures. Until we reached the final design approval the process took a long time with a number of back and forth communications with Dewa," he said.
He said the developer will compensate investors with the developer's penalty to its investors for the delay in the handover of the tower.
"In all our issued contracts that are approved by the authorities, there is a penalty clause stating a nine per cent per annum fee on my part as a developer and we will pay this accordingly with respect to how much our project is delayed."
Marina Exclusive, the developer of the project, is a subsidiary of Al Masah.
KPM Tower has an escrow account with Badr Al Islami. In February, the project saw an escrow account adjustment from Amlak Finance to Badr Al Islami.Abu Zannad said the KPM Tower is 97 per cent sold out and is not on hold and will not be cancelled.
He said the developer has sat with more than 6,000 of its clients and individually sorted out their issues such as delayed payment plans, transfer of funds, downsizing investments, etc.
"The crisis has affected all people in all segments in several industries, and we believe we have offered many creative solutions that suit all parties," said Abu Zannad.

GOOD TIMING ON THIS , this is the developer i was thinking of swapping with , i sent them a nice e-mail regarding this, i'll post the response as soon as i get it

[gerald.d]

Reads like it was written by a committee of 7 year olds.

The quality of journalism and writing in The Gulf News is absolutely diabolical.

[HateTorch]

Originally Posted by iownyou

what is the averege salary for a worker(philipino,indian) in dubai?
as a receptionist or working as casher in a resturant? or a taxi driver? normal jobs not really skilled no education required.
--- snip ---

An asian resturant recep - 2000aed
An asian office admin - 4000aed
A local-only recep - 18,000aed
An asian doctor - 20,000aed
A local-only director - 80,000aed
The last 3 are based on newspaper ads, the first 2 are from friends.

[Dubai_Steve]

Do locals buy property for themselves or are all given free land?

So only the asian doctor would be a buyer in that list, but since he is transient he would prefer to rent in a down or stable market and pay an expat investor's mortgage

2 or 3 asian office admins could possibly live together and share a mortgage for a long term investment but that is not allowed in Dubai I think? Anyway they would leave after 2 or 3 years so better to rent for them.

I wonder if there will be a market to sell property to anyone other than other investors, in which case it is like a long term speculation/flip with the last one in the chain being burnt in 10 years time.

I think workers will only buy if the prices are rising as it make more sense than renting in that case.

[moscowboy]

Originally Posted by 234sale

How about 1 AED extra per sqft in everyone’s service charge, then you could double the salary of all staff in your building.

The truth is that if you can get a services for half the price, would you want to pay more. I think the stories of workers being brought under some trick contract where initially valid, people in home countries tricking them on some golden deal. Today though, go to the ministry of labour will block or ban a company who mis-treats his staff.

Today if a member of staff gets a visa from a company, if he doesn't want to stay. The hiring company will be responsible for paying outstanding money and their ticket back. (Without a no objection an automatic 6 month ban.)

The situation has improved for many low paid workers, I feel it will continue to improve as their embassy’s are now very involved with complaints.


Our Two drivers Earn 4000 AED a month each, but they have been sharing the same flat in SHJ for the last 6 years and the rent is 2000AED a month. They have new mobiles which they bought themselves, free sim card provided by the company, free use of car at weekends and evenings, 30 days holiday paid, plane ticket paid. I asked one of them how much he spent a month on himself. He answered 1000, 2000 for home. He has land, 3 children and everything in India so he feels he is doing quite well for himself.
What really gets to me is how the west for the last 10 years has managed to get it cheaper from overseas, but this is going to change soon.
If construction labour cost was to double, that would probably increase the cost by around,,, right I’m borred already. Hence stopped my rant mid rant.

It was getting interesting.. why stop.. keep going.. I liked it.

[TMZ]

Originally Posted by gerald.d

Reads like it was written by a committee of 7 year olds.

The quality of journalism and writing in The Gulf News is absolutely diabolical.

who gives a hoot how it was written, the only thing that matters is a company was exposed, thats all i care about, it doesent matter if they spell you with a U and escrow with ASCROW,

[gerald.d]

Originally Posted by TMZ

who gives a hoot how it was written, the only thing that matters is a company was exposed, thats all i care about, it doesent matter if they spell you with a U and escrow with ASCROW,

(My post was in response to Dubai_Steve's post, not yours.)

[iced]

Originally Posted by peacesells

As a demographic, they probably represent about 5-7% of those renting and much less than 1% of those who are buying. I assure you that if you take a sample of 200 people of that age group in Dubai, probably one or two own property at most (and therefore have a negligible impact on buying/selling of property without going into their impact on the overall economy).

Interestingly enough, a few years back my colleagues and I have touched upon this particular subject and the fact that this particular demographic was almost underserviced as a market segment when it came to buying property. The conclusion we came to was that there are very good reasons why - as a whole, these guys generally have no savings for a deposit, no desire to settle down and, most importanly, no need/desire for extra income on the side. Not to mention the fact that this is the most transient group of all and when you're twenty-something in Dubai and earning the kind of income that you need for a property, you generally worry little about investment and mortgages and more about getting to Barasti before end of Happy Hour.

funny but true. Altough this is a small segment buying along with low salaries of workers on average compared to property prices, it appears that prices will fall further but that may rents stabilise before property prices do.

The vast majority of people dont have (or dont wish to use) enough money to buy property. This will mean further falls in rent and property for at least the next few months especially wiht the new supply dripping in. Looks like 2010 will also be a quiet year as well for dubai properties.

[iced]

Originally Posted by Wannaberich

Just a theory,construction costs goes up,Dubai gets in proper skilled builders/tradesmean from around the world who are paid a proper wage and can afford rents/to buy.Developers earn less so build less which is a good thing but they still make a profi.
Good all round?

Nice idea but what will happen is that everything will be inflated along with food etc. Developers wont earn less but just increase there prices. Good news if you have property already but not so good for savers and the retired.

The other more likely alternative would be to reduce the salary of the workers so that developers would make profits. Welcome to capitalism!

[Wannaberich]

Originally Posted by iced

Developers wont earn less but just increase there prices.

If they increased off-plan prices no-one would buy.Their prices would be alot closer to the prices of completed so why buy something thats not even built.
Instead they would have to accept less profit.As a result less would be built
which is probably a good thing.
Projects like Burj Dubai would never have been built if proper wages were in place.This project would have been way way too expensive which is why these kind of fantasy projects will probably never get built in the west.

[moscowboy]

Originally Posted by Wannaberich

If they increased off-plan prices no-one would buy.Their prices would be alot closer to the prices of completed so why buy something thats not even built.
Instead they would have to accept less profit.As a result less would be built
which is probably a good thing.
Projects like Burj Dubai would never have been built if proper wages were in place.This project would have been way way too expensive which is why these kind of fantasy projects will probably never get built in the west.

Empire state building, WTC, Sears tower, etc were all built. Chicago Spire has started. More will be built in the west. These were all built with union labor at high wages. Labor cost will not stop anyone from building anything. Half of BD's work force is Samsung employees. they are well paid.

[moscowboy]

Originally Posted by iced

Nice idea but what will happen is that everything will be inflated along with food etc. Developers wont earn less but just increase there prices. Good news if you have property already but not so good for savers and the retired.

The other more likely alternative would be to reduce the salary of the workers so that developers would make profits. Welcome to capitalism!

I compared internet advertised prices of housing in Dubai versus other parts of the world.
Dubai prices are very high.
Who wants to spend millions of dollars for housing?
Only some oil barons, I guess.

[Wannaberich]

Originally Posted by moscowboy

Empire state building, WTC, Sears tower, etc were all built. Chicago Spire has started. More will be built in the west. These were all built with union labor at high wages. Labor cost will not stop anyone from building anything. Half of BD's work force is Samsung employees. they are well paid.

Empire state was built when your grandmother was still in nappies so it dont count.WTC and Sears are babies in comparison to Burj Dubai.The one that impresses me is the Chicago Spire.However the height and circumference
is still considerably smaller.Also lets not forget the Middle East is looking at buildings to surpass the Burj.I really cant see anything on this scale being built in the west.

[DXBQuantum]

the price of labor and materials in the west makes building something like the Burj or taller very unfeasible....

[Wannaberich]

Originally Posted by moscowboy

Half of BD's work force is Samsung employees. they are well paid.

Maybe so compared to a farm worker in Vietnam.

[peacesells]

Originally Posted by moscowboy

Empire state building, WTC, Sears tower, etc were all built. Chicago Spire has started. More will be built in the west. These were all built with union labor at high wages. Labor cost will not stop anyone from building anything. Half of BD's work force is Samsung employees. they are well paid.

Firstly, worker wages are a SMALL piece of the puzzle that is construction. In fact, in my opinion, the main factor contributing to Burj Dubai's feasibility as a project cost-wise was the land (that was given for free). Secondly, workers in US are a lot more productive than workers in UAE so there's no reason to suggest that 'higher' wages would have made BD unfeasibile. Thirdly, Samsung and other Korean companies (like Shinsung) operate here as follows - bring the top level guys and project managers from Korea and outsource everything else to local sub-contractors (who employ the low=paid Indian-Pakistani-Nepalese labor). So no, they do not have better paid workers, not significantly more so than others anyway.