Dubai Property – Honesty is a Major Issue that needs resolving before Dubai can think about recovering

Honesty and trust are two major issues plaguing the Dubai property market at the moment. Dubai is crashing hard and fast, with The Trump International Hotel and Tower in Dubai canceled, and numerous developers in Dubai firing staff, yet still the developers and government insist on putting out dis-honest press releases aimed at presenting a false picture of the market. And so-called “news,” sources in the Gulf continue to publish them. Even when they directly contradict the facts.

This is an example. On 30th November 2008, Arabian Business published this article:

High-end property defaults on rise – RERA

Dubai is witnessing an increase in defaults on high-end properties as financing conditions worsen and is likely to see smaller developers merge, a member of the Gulf Arab trade hub’s financial crisis committee said on Sunday.

“There are more and more defaults on the high end if banks do not give mortgages and speculators are [many] in the market,” Marwan bin Ghalita, chief executive of the Real Estate Regulatory Authority (RERA), told newswire Reuters in an interview. Tighter mortgage lending, a liquidity squeeze and a real estate slowdown have hit Dubai, part of the seven-member United Arab Emirates federation, in recent months.

Signs Dubai’s property boom days are over are increasing as developers scale back projects, property prices fall and jobs are cut. Secondary prices in Dubai and Abu Dhabi fell 4-5 percent in October from the previous month, with Dubai’s advertised villa prices falling by 19 percent after several banks tightened lending conditions in August and September, HSBC said recently.Bin Ghalita sits on a nine-person crisis panel set up to tackle the affects of the global financial crisis on Dubai. The council reports to Dubai’s ruler. He said now would be a good time for smaller developers to join forces, and that he expected some to do so.

“If you look at the market a merger between smaller companies would give it confidence. I always support… good mergers in any sector if it adds value to the sector,” he said. Last month, Dubai developers Deyaar and Union Properties denied they were in merger talks but were unable to say if the government might order a tie-up.

Bin Ghalita said developers should review projects that had not yet been launched, or where only a few units had been sold. “This is not a good time to start a new project if you don’t have enough liquidity to construct,” he said.

“Slowing down is very important and this is what we at RERA asked the developers to do about a year back. Slow down and review is very important for the market.” Mohamed Alabbar, a Dubai government official who also chairs the crisis committee, said last week the emirate would pull back on its building spree in light of the financial crisis.

Bin Ghalita said the only market that was truly suffering in Dubai was that for off-plan properties. “The only market that is not doing well is the off-plan … because there are a lot of the speculators on some of the projects. Some of the banks are not dealing with this crisis professionally so they stopped financing,” he said, noting some developers were also asking for too high a price.

Prices for “affordable” off-plan properties could pick up in the second quarter or 2009 if banks increase lending, he said. Bin Ghalita said that RERA would enforce a law on the registration of off-plan property sales, after a Muslim holiday next week. Rules for time shares were also being finalised.

“People will be selective in where they put their money,” he said. It’s not like before where people came to buy anywhere.”

Original article

The very next day, this “article,” was published:

Trump Tower Dubai

No payment defaults on Dubai luxury units

Dubai is not witnessing payment defaults on high-end properties by buyers, according to the Real Estate Regulatory Agency (Rera).

“Every project on the ground and under construction would be completed. Master developers are intact and the high-end third party developers may find alternatives to carry on with their projects through bulk selling of units to private equity funds and hedge funds,” Marwan bin Ghalita, Chief Executive Officer, Rera, told Emirates Business.

“We recently saw a sales transaction for a Dh24 million property. Ultimately, the fate of a luxury property will depend on the affordability of a buyer.”

Ghalita said lending in the market would have to be eased in order for real estate buying to increase and gain momentum.

He told Reuters that developers should review their projects that had not yet been launched, or where only a few units had been sold.

“This is not a good time to start a new project if you don’t have enough liquidity to construct. Slowing down is very important and this is what we at Rera asked the developers to do about a year back. Slowdown and review is very important for the real estate market,” he said.

Prices for “affordable” off-plan properties could pick up in the second quarter of 2009 if banks increase lending, he said.

Ghalita said Rera would enforce a law on the registration of off-plan property sales.

Rules for time shares were also being finalised.

“People will be selective in where they put their money. It’s not like before where people came to buy anywhere,” he said.

Original article

Surely this “news” source has some responsibility to check the press releases they publish for accuracy and honesty?

The problem is not a new one, and developers have been putting out information that clearly contradicted reality for some time. Tameer for instance, claim to have 300 billion dirhams under development, which is around 75% of Abu Dhabi’s GDP, and at the same time, claim $20 billion invested in Libya. more than 50% of that country’s GDP. All the time there was an opportunity to get in, flip and get out, these seem to have been largely ignored. But with the credit crunch biting, and law suits starting to fly, it is time Dubai grew up. Transparency and honesty are vital if Dubai ever wishes to begin attracting foreign investment again.