Roshan you have a good point. But I've been hearing that same argument for the past 15 months. Prices are too high and correction is around the corner. More specifically "The bubble will burst"
I also feel prices will increase. Specially at Cityscape. The developers keep selling out at these exhibitions. And use these opportunities to raise their prices. I don't blame them as the buyers are there in the market. So I feel in the short term there is no correction. At least not in 2008.
Then I guess when things begin to max out, people will look to cheaper areas to invest rather than BB, downtown etc.
What do you others think?
Sameer,
We need to understand that Dubai was and still considered an emerging market. An emerging market is always bound on speculation.
When you hear reports that Dubai estimates that so many people will come in, that itself is a speculation. On the other hand markets like India, you already have people within India to absorb the supply.
Speculation is a decent form of gambling. If I am a speculator and I have another 100 speculators in the market, I can always pass the parcel like in musical chairs, when the music stops the person who has the parcel becomes the victim. Now that's what has happend in the last 15 months and is continuing to happen to a point when the music will stop.
On the other hand the developer seeing the investor mania is driven by greed and increases the prices to the heavens, and you still have people falling over one another to buy. Then you have some developers who have a sold out board in the first few days ( In the case of Damac minutes as the ads said ) of the launch and that sets another cycle of speculation. Basically we are looking at a Domino effect.
When you say that you feel the prices will increase during Cityscape, that itself is speculation. This years Cityscape might not be as successful as the previous years.
I believe the next phase of Remraam will be launched at Dhs 1600 psf. A classic developer like Union Properties who is considered as a premium developer and is constructing in the same region as Remraam which should be completed in the next 9 months has the secondaries going at Dhs 1200 psf. Isn't Dhs 1600 psf a price based on hype & speculation, I think it is.
Projects like Remraam & Badrah were marketed so well, that it became a ball of speculation.
Markets do not crash overnight, there are tell tale signs before an actual market slip. Prices will reach sky high like what is happening now, which shows signs of overheat. I see some projects launched at ridiculous prices, some cases I could see people buying at 2500 to 3000 psf which would equate Dhs 2.5 to 3 million for a single bed. We do not need a cyrstal ball to say such investors will loose their pants.
Many developers came and will come out with an articles that the markets will go up for some more time just to ensure that people will buy their developments. For the first time we have developers coming out and telling us that a correction is at hand. I salute these guys for the simple reason they are developers and selling property is their bread, butter and dollars, but they have the guts to come out and tell that a correction is at hand.
On a parting note, no markets go up for ever and there has to be a correction sometime and nobody can predict that. One feels that Dubai is building too much and the scandals that have erupted in the past has dented it's image and the markets could go like Spain where the big developer I understand filed bankruptcy and setting the whole market into reccession.
On the other hand Dubai has proved so many people wrong in the past. When H.H. Sh. Rashid built the regions first free zone, you had the world laughing but now that has become a model for the other regions. Emirates is another classic example posting a Dhs 3 billion profit while others are finding it hard to survive. Let's hope Dubai proves everyone wrong once again.
Regards
Roshan
