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.
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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.
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.
Deyaar developments in Dubai has admitted to a default rate of 60% on works-in-progress, and has agreed to reduce prices in an effort to bring defaults down to a manageable level. “Around 60 per cent of our customers came back to us saying they were unable to pay up on their property.” said Markus Giebel, CEO Deyaar.
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The Gulf property market still has attractive opportunities for investors seeking to escape a global fall in property investment transactions according to a leading real estate consultancy
Robin Williamson, managing director of DTZ’s Middle East operations, said although the worst of the first phase of the sub-prime crisis appears to have passed, the credit crunch has further to go and will continue well into 2009, particularly across the European and US property markets.
More on Dubai is Still an Attractive Investment Market and News of Another Super-Tower in Dubai
