Well, don’t say I didn’t warn you. Back in 2008, I questioned the viability of building an 80 hectare golf course in the middle of the desert in Dubai – Tiger Woods Golf Dubai.
Things in Dubai seem as dire as ever, the crash continues to take its toll with the amount of foreclosures in Dubai still climbing and developers struggling to stay afloat. The latest news fro Dubai concerns Dubai Holdings subsidiary, the Dubai Holding Commercial Operations Group, which has just been granted a two month extension to their revolving credit facility of $555 million.
More on Dubai Property Investment :: Dubai Holding Gets $555 Million Credit Extension
The 1st public auction of reclaimed mortgage properties is anticipated to be held the month after next at the Dubai Land Department Offices. Despite numerous statements claiming that there were no foreclosures in Dubai,we reported on this phenomenon at the beginning of 2009, but with no laws in place and numerous hastily produced new laws – at last some repossessions will – maybe – come to market. Navigating strict Sharia laws against money lending with interest and “unusual” private property laws seems to have been the delay. As interest cannot be charged, and no one in the past having dared not to repay a loan, it will be interesting to see how this plays out.
Abu Dhabi Finance has recently announced that they are reducing their interest rates to a minimum of 5.5%. This has been seen as a positive move by many of Dubai’s property agents who believe that if the Dubai banks follow suit it could lead to an increase in market activity. It is obvious that the key factor in business is cash flow and if the cost of a mortgage and maintenance is higher for the landlord than the rent he is receiving for the property, it undoubtedly causes inequality and restrictions for the market place. Furthermore it does not encourage future buyers to enter the Dubai real estate market. Currently the lowest available interest rate in Dubai is 7.5% which may not be allowing existing and new landlords to maintain or grow their business.
Although the Burj Dubai is now “finished,” we still have not seen an influx of tenants or investors, but this rather entertaining video of the windows being cleaned makes up wonder what is going on. Surely this is not a practical solution. Or is it? With labor being cheap and readily available. Not a job we would fancy though. Scary…..
Dubai property values have fallen (depending who you ask) between 50-70% from peak and at any other time, in any other market, this would almost certainly be signal to jump in with both feet. But – and this is a huge but – Dubai has probably got a long way to fall before bottom is reached, and our opinion is that we are nowhere near there yet.
Notice to the holders of the U.S.$3,520,000,000 Trust Certificates due 2009 (the “Certificates”) of Nakheel Development Limited ISIN XS0277553052
Unless otherwise defined in this Notice, terms shall have the meaning ascribed to them in the Declaration of Trust dated 14 December 2006 between Nakheel Development Limited (in its capacity as Issuer and Trustee) and Nakheel Holdings-1 LLC, Nakheel Holdings-2 LLC and Nakheel Holdings-3 LLC.
The Dubai property market is in a mess right now, but the implications for the small investor are unclear. Although Dubai is world famous for owning some massive real estate developments in Dubai such as the Dubai Palm Island projects, it has also built up a $100 billion portfolio of assets in international property around the world and if Dubai world defaults on her debts, as is seeming more likely, international creditors wilkk be looking at their overseas assest as a way to recoup some losses. The fact is – it is illegal for foreigners to own land in Dubai, so the offshore properties, which include Turnberry golf resort, and numerous other holdings, including P&O, the British based shipping company, are going to look far more attractive. Prime real estate in the U.K. is the more appealing target for creditors than the desolate, undeveloped patch of desert that was earmarked for the Waterfront project near Dubai.
More on Investing in Property in Dubai – What Do the Defaults Mean?
Following the announcement on November 25 from the Dubai Government, property developer Nakheel said Monday it has asked for three of its listed Islamic bonds, or sukuk, on Nasdaq Dubai to be suspended until it is in a position to inform the market more fully. “Following the announcement on Wednesday Nov. 25 from the government of Dubai, Nakheel has today asked for all three of their listed sukuk to be suspended until it is in a position to fully inform the market,” it said in a statement on the Nasdaq Dubai. Nakheel is one of two flag ship companies, along with Dubai World, which announced last week that they would seek a debt standstill agreement from creditors, until May 2010.
The ongoing financial crisis has hit Dubai hard and the rather silly approach being taken by the authorities is to pump out press release after press release claiming that there is not a problem. We have gone through phases with these press releases. First – there was no problem and Dubai was immune to the downturn. Then, Dubai was affected, but only slightly, next up – OK, Dubai has a problem, but we are now at bottom.
