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Dubai property to cool down

Discussion in 'Dubai property' started by Roshan, Sep 1, 2008.

  1. Roshan

    Roshan New Member

  2. benho

    benho New Member

    i certainly think so. :(

    I am looking to purchase something in JLT, and the sellers have gone too greedy, phone in during the morning with an agent with 1.90mil, and the same apartment different agent during afternoon with 1.94mil.

    This is just showing the price is on the rise, but no one is actually buy it. It just the seller think a lot of people enquire about the apartment and he / she put the extra $$ to the selling price.
     
  3. docc

    docc New Member

    Actually, the prices will rise till 2200-2300/Sft and then either come down a notch or stay stagnant at the same price. You have to understand that JLT is perhaps one of the first freezone masterplanned mixed use community to be complete! It should be done in another 2-3 years and with the metro right in front of it, prices are bound stay on the higher side.

    JLT is always a great investment, especially if you purchase close to the Metro. (Advise : Purchase CLOSE to the metro!!!).

    Regards.
     
  4. sameer.dada

    sameer.dada New Member

    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?
     
  5. DAYFox

    DAYFox New Member

    There will no correction be soon! I think as well the maket will come down and adjust in 2011-2012 but not before that! Besides, whole Dubai is government-supply-demand controlled, which is a good thing for all of us!
     
  6. Wannaberich

    Wannaberich New Member

    All the reports coming out now seem to suggest prices will level off in 2009/2010 and I think they could be right.By then many more completed properties will be avaliable.
    Prices went up 80% from June 2007-June2008 but that can't continue.Many more projects will be ready by end of 2009 plus these new laws will make a difference.Take the flippers out of the market and the price rises that they cause will be greatly affected.
    Also the stronger dollar will deter alot of buyers from Europe.Gulf news reported only 1 in 5 buyers in 2008 were from Europe.Although the falling house prices in Europe will still bring some investors to Dubai.
    I'm not sure sometimes if the notion that there is a lack of completed properties is just a myth.
    I still read stories of owners having trouble renting their properties.I've had personal experience of this also.
    I'm also really curious as to who will buy off-plan properties in,say,2011.Lets assume by then prices have levelled off.No increase and no decrease.A project is launched at Waterfront or Arabian Canal.So why would you buy?not to make money cos flipping plus crazy price increases is a thing of the past.So with all the many many launches due at these two projects who will buy?
     
  7. docc

    docc New Member

    Why will the flippers be out of the market?
     
  8. sameer.dada

    sameer.dada New Member

    good point of view. interesting.
     
  9. Roshan

    Roshan New Member

    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
     
  10. docc

    docc New Member

    No one has answered my previous question. Roshan, maybe you can enlighten me.

    How do the new laws in Dubai affect the flippers? Why would they get weeded out?

    Regards.
     
  11. benho

    benho New Member

    Well... the rumors has it, Dubai may going to bring in Capital Gain Tax (CGT) of 50% when the exchange of contract within the 1st year...

    However, not confirmed yet, we have to wait and see.
     
  12. sameer.dada

    sameer.dada New Member

    Where can one find more info about these new re-sale policies. I've also heard new terms and conditions have been proposed. Can anyone find out more info on them and capital gains tax.
     
  13. Roshan

    Roshan New Member

    A new property law no13 ,has been announced by the Dubai government , which might come in to effect soon (later this year).


    1. All off -plan property sales has to be registered with the lands department within the next 2 months by all developers

    2. These properties may not be sold on the resale market unless a minimum of " between 20 - 30 % has been paid by the investor( seller)

    The article also mentioned that no developer may charge a transfer fee, only an administration fee, and the government was waiting to finalize an amount either 0.5 % or 1 % ( or possibly a flat fee?))

    To answer your question. Flippers usually would like to pay 5 to 10% of the project value and then flip the property and make money.

    Flipping usually becomes difficult as you progress through your installments. More deeper you go into your installments, the more difficult it becomes.

    With the above law, it becomes more difficult to flip and it could possibly deter flipping like before.

    Hope this answers your question.

    Log onto Land Department for more info

    Regards

    Roshan
     
  14. docc

    docc New Member

    Hi,

    Thanks for in for everyone.

    I guess, it would be easier if you purchase a good property and actually wait till you make the 30% payment and then flip it. This way in a matter of 12-18 months, there will be capital appreciation and hence a TRUE premium can be asked for which would definitely be around 20-30% higher depending on the progress in construction.

    Good law, i like it :)
     
  15. Fran

    Fran New Member

    In my opinion, it will take quite some time to implement all the new laws ( 4 during the last 10 days only).

    Simply the authorities should have the system, human resources and space to accommodate all the new laws. If the land department doesn't stretch a bit, new offices in different locations should become effective; new staff should be trained, the software modified; the brokers, companies, developers and buyers educated.......This can't happen in such a short period of time as stated in the new regulations.
     
  16. SAVIO

    SAVIO New Member

    I myself am keen to gain a sentiment about the future of dubai's Real Estate
    I was looking to buy first time but have put it off due to the "talk" of the correction.
    defintitelly dont want to be the last person holding the parcel!
    does it make sense to enter the market now as a long term investment?
     
  17. docc

    docc New Member

    Mark prices are said to rise another 35% before taking a 15% dip which means you will still be up by 20%. I can see them leveling off but i don't think you will lose any money. Make sure you make smart investments.

    For instead, i saw an ad in the paper today for a 2BR apartment in Remraam for less than 1000 AED/sft....grab such kind of deals. You will never go wrong with these kind of deals. Invest...but smartly! :)
     
  18. benho

    benho New Member

    guys,

    If i buy a property from resale market, and the apartment is underconstruction, will the transfer fees apply?

    I heard some talks that Developer can't legally enforce the fees, and land department can just do the registartion for 1%?
     
  19. docc

    docc New Member

    From what i have been told, transfer fee applies to each and every sale. Hence, why you see the ads saying, purchase price + 2% transfer and 2% commission fee.
     
  20. benho

    benho New Member

    That's why i ask the question. :confused:

    http://rpdubai.ae/rpdubai/jsp/template.jsp?pageID=40012&&lang=0

    Buying/Selling Costs

    No property developer is permitted to charge a transfer fee. Transfer fee is only payable to the Dubai Land Department.

    Seller - Agent’s Commission & fees as agreed in FORM A
     
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