It appears Dubai is not the only emirate facing financial issues, and another UAE developer has gone broke causing many British investors to lose their money. The British were enamored of the idea of making a fortune in property investments in the UAE, using money from “equity release” programs on the British property. As the British property market contracts and house values in the UK fall, a similar fate is befalling their traditional investment markets in Spain, France, the UAE and Cyprus.
More on More Bad News for British Property Investors in the UAE
These are findings from YouGov’s second ‘Reality Check – UAE’, a monthly research report, designed to help companies prepare for survival in a downturn. The research tracks how UAE consumers are reacting to the global credit crunch and gives industry specific recommendations. 779 UAE residents responded to the survey between 20th-29th January 2009.
More on UAE Reality Check Shows Big Increases in Job Losses and Dropping Confidence
You can almost smell the desperation emanating from the UAE at the moment. The latest in a long line of cancelled projects is the “Salam,” a luxury hotel resort that had been planned om the beach front close to Bahrain’s formula one track. Bahrain’s Nass Corporation and South Africa’s Murray and Roberts Holdings were due to build the luxury resort in a joint venture.
More on Dubai Property Crash Spreading Across UAE – Luxury Resort Scrapped – Confidence Level Falls
As usual, it is hard to sift the genuine information from the press releases coming out of the UAE. To read some stories, anyone would think that the global financial crisis has passed the region by. According to Business 24/7 “Sweet Homes, an Ajman-based developer, said it will not lower selling prices for either of its two projects.”
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.”
Dubai’s property prices are falling like the proverbial rock and the government of Abu Dhabi has stepped in, in an effort to prevent a complete meltdown in Dubai’s property market. Dubai’s two largest mortgage lenders, Tamweel and Amlak Finance have reached the point where they are unteneble and Abu Dhabi’s state owned “Real Estate Bank,” will take over both lenders.
More on Abu Dhabi steps in to prevent complete meltdown in Dubai and The Atlantis is Empty
However one chooses to look at the current financial situation, there are winners and losers. The current losers, to our minds, are developers with excess stock to move in a slow market. The winners are well-funded buyers in a good bargaining position. Prices are being reduced on property around the world, and any developer worth his salt knows that it is far better to take a drop in price and move the stock rather than sit on it until the market picks up.
More on Buyers in stronger position to bargain over property prices
For those property professionals in the hardest hit markets such as the US, Spain, and, dare I say it, the UK next year, should take note of a recent survey in the Middle East. The average monthly salary (basic, housing and transport allowances) of professionals in the property sector has risen by 10.7 per cent since 2007, to reach Dh39,181, ($10,000) according to the second “Middle East Salary Survey” for the property segment.
Macdonald & Company partnered with the Royal Institution of Chartered Surveyors and Cityscape Market Intelligence Service to conduct the study on trends in the real estate market. More that one thousand property professionals responded to this year’s online questionnaire, which is a 21.5% increase from last year.
Despite previous claims that the UAE would be “unaffected” by the collapse of the US investment bank Lehman brothers – It is now turning out that this is not the case. Just exactly what impact this will have on the UAE is uncertain at this time, but it is likely to be substantial.
An Abu Dhabi-based developer, Saleh Amer Al Katheeri, and German investors International Capital Trust (ICT) on Wednesday launched a Dh500 million project, Triple Towers, at Park View development in Ajman, the smallest Emirate in the UAE.
More on German Investment Company launches New Tower Development in UAE