Property Investor’s Dilemma – Who to Trust ?

Small property investors will be facing an enormous dilemma in the coming years. Who to trust for advice. Very few of the institutions saw the housing bubble coming, and the few that did, mentioned "a small correction, perhaps single digits."

We are all watching the smaller investor being crushed while the institutional investor gets government handouts, so the market has just become a far less safer place. The big will eat the small, and getting impartial advice in the future will be paramount.

Citigroup as an example - Citi have just dumped $8 billion into infrastructure projects in Dubai, as proof of their "commitment to the UAE market in general, and reflects our positive outlook on Dubai in particular." But, lets face facts, Citigroup just went broke, and had to beg for a bailout from the US government to the tune of $300 billion. What on earth do they know about property markets? Nothing apparently. If they were an individual investor, they would be fending off bailiffs and transferring the Jag into their wife's name about now.

Credit Suisse has just reiterated a positive outlook for the UAE real estate sector. With property prices in the UAE falling faster than they rose, and bearing in mind that Credit Suisse has just announced that they will be paying their executive staff bonuses using illiquid and opaque assets, I will be taking everything Credit Suisse says with a very large pinch of salt, and I wonder just exactly how many of those illiquid, opaque assets are tied up in the UAE. They managed to lose billions this year, and oddly enough, when they went looking for funds, Qatar Holding LLC was first in line, buying 93 million treasury shares. Impartial advice? Not on your nelly.

Up-market real estate agents, Savills, have just pulled out of the Hungarian market after less than two years. I am sure they managed to squeeze a few commissions from would-be offshore investors before that particular bubble burst, but proved pretty conclusively their advice is worthless.

Just last month, analysts in Singapore were predicting falls of less than 10% in Singapore property prices, but are increasing that estimate almost on a daily basis.

There is no doubt in my mind that the financial landscape is going to change in the short term future. Just exactly what it will look like is anybody's guess. Partly dependent on just how many banks the US and UK government will end up nationalizing before the fallout stops. Merely printing money is unlikely to fix the problem. Should be an interesting year in 2009. For now, I am going with the usual maxim. "If it looks too good to be true, it is." One person who saw this coming, Nouriel Roubini gave an interview in October voicing his views on the next year -