Mortgage Defaults - Double Hit

[dubister]

Seems like mortgage defaults will be coming soon and hitting the market hard, espeically for those in double whammy!! AGREE OR NOT?

What will most of expatriates do when faced with this situation described below? There is no bankruptcy protection here, only Debtor's prison ......

HYPOTHETICAL CASE:

- One buys a property for 3m from developer (2008) and now its worth 1.5m (Feb 2009).

-Bleak chance for the property prices to recover to 2008 values in the next 10 years. (I think ALL should agree)

-And banks in UAE are actively raising interest rates highger or keeping it the same, although EIBOR is being cut.

-And Developers like Nakheel & Emaar have been increasing maintenance fees i.e from 7k to 13k per annum

-Rental Yields coming back to reality i.e 1-5%

-Houses with "Construction Sand Pit" view, rather than park view (i.e Delivery of subdivisions on ambitous masterplans that are halted with no prospect of building/launching anymore anytime soon)

What will happen? What will the mortgagers in this situation do, especially if they are expats? Any thoughts?

I am trying to guage/predict market situation in the months to come, since there hasnt been any transparency on this subject, which seems to me a HUGE ISSUE!!!!

Some news that to back this overal notion
= Dubai's Amlak Finance Expects To See Mortgage Defaults In 09

 

[davidps]

What will happen? What will the mortgagers in this situation do, especially if they are expats? Any thoughts?

I think the answer is rather obvious - if it comes to choose between running and prison, they will run. If the government finally decides to enter the 21st century and introduce bankruptcy protection, they will think about it for a while and it will really depend on the individual's situation.

 

[Sixgun]

I think it's a very interesting point,
Would/will, they actually start throwing ex-pat investors in prison if they could not pay their debts, or is it hypothetical?
I realise the " different" way of thinking with the "Sex on the beach" case, and i also read about a middle-age English female tourist who was locked up for months, because a single seed of maruihana was found in the tread of her shoe.

So ok, massive culture difference, but is it still reality that the gov. in current well known state of affairs worldwide, would actually lock up the English, german, USA citizens etc?
case studies and gory stories welcome!!??

 

[georgihh]

Seems like mortgage defaults will be coming soon and hitting the market hard, espeically for those in double whammy!! AGREE OR NOT?

What will most of expatriates do when faced with this situation described below? There is no bankruptcy protection here, only Debtor's prison ......

HYPOTHETICAL CASE:

- One buys a property for 3m from developer (2008) and now its worth 1.5m (Feb 2009).

-Bleak chance for the property prices to recover to 2008 values in the next 10 years. (I think ALL should agree)

-And banks in UAE are actively raising interest rates highger or keeping it the same, although EIBOR is being cut.

-And Developers like Nakheel & Emaar have been increasing maintenance fees i.e from 7k to 13k per annum

-Rental Yields coming back to reality i.e 1-5%

-Houses with "Construction Sand Pit" view, rather than park view (i.e Delivery of subdivisions on ambitous masterplans that are halted with no prospect of building/launching anymore anytime soon)

What will happen? What will the mortgagers in this situation do, especially if they are expats? Any thoughts?

I am trying to guage/predict market situation in the months to come, since there hasnt been any transparency on this subject, which seems to me a HUGE ISSUE!!!!

Some news that to back this overal notion
= Dubai's Amlak Finance Expects To See Mortgage Defaults In 09

One buys a property for 3m from developer (2008) and now its worth 1.5m (Feb 2009).

Ok the guy who has bought the property has spare cash or income to carry on with the payment. The question is – is he willing to lose one million or will stop paying and reduce loses? I think 50% will carry on paying.
Let’s say, last year only 20% of the properties available were sold or resold. That’s mean only 10 % will default. Not a real effect on the prices or the market.
My concern is the guy who buys cash – is he going to enter the market again and when?
All of the people with the hard cash are waiting to enter the market again at bottom prices. When you start hearing properties are sold in volumes for cash than you should enter the market again. Banks and loans will not change the current prices much, but will trigger the transactions again.