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Palm Jebel Ali

Discussion in 'Dubai property' started by Daniel Ryan, Mar 16, 2009.

  1. Daniel Ryan

    Daniel Ryan New Member

    All arrows are pointing toward Palm Jebel Ali at the moment, in terms of beach front investment.

    With the current market situation, and upcoming payment date nearing for current owners, it is now possible to purchase Beach and Waterfront villas on the second island in Nakheel's Palm Trilogy at prices lower than the developer's original sale price.

    Depending on location, the three main villa types (Signature Villas, Garden Homes and Waterhomes) are now available on the resale market for anywhere between their Original Sale Price and negative premiums of up to -12%.

    For further information on villas currently available for re-sale, or updates on the current market situation, feel free to get in contact.

    Daniel Ryan
    Palm Sales Specialist
  2. PropGuy

    PropGuy New Member

    I'm looking for one around -25% which would make it approximately 2.1m for 4-bed, which is my assessment of price I'm will to pay with consideration of further price fallout and potential risks with PJA project. Maybe that price is not psychologically acceptable to seller(s) yet, but if prices fall to 2003 level (1.6m 4-bed) then nobody will even pay -30% for them. I doubt it not many would sell even at -25% except few. There are not many buyers in the market especially for off-plan properties. So this good opportunity for the seller to off-load a unit and exit with some cash.
  3. desert dream

    desert dream New Member

    Don't buy..this is a risky project..nakheel is bust..god knows when they will deliver..
    better to pay a bit more for something finished..
  4. PropGuy

    PropGuy New Member

    Well I can take risk between -25% to -20%, if anyone interested, pm me.
  5. desert dream

    desert dream New Member

    give them 1.8 or so cash or a 4 sure someone desperate will bite
  6. PropGuy

    PropGuy New Member

    yes I'm giving cash.
  7. Daniel Ryan

    Daniel Ryan New Member

    The Facts

    Let us look at a Garden Home on Palm Jebel Ali as an example:

    Original Price: AED 2,860,000
    30% Paid: AED 858,000

    Now if an owner has paid AED 858,000, why would they accept AED 143,000 cash back? (Equivilant of your -25% Offer)
    Nakheel is not "bust": Have you any evidence to base this statement on?
    "Nakheel, the real estate arm of Dubai World, yesterday said it has enough cash to complete existing projects and foresees "no issues" when its $3.52 billion (Dh12.9bn) sukuk matures in December 2009, its CEO said.

    The developer has no plans to sell an equity stake to a sovereign wealth fund, a spokesperson added. Neither is there any discussion on merging with sister company Limitless

    "We expect the debt markets to improve and as such we do not foresee any issue regarding the expiry of our November 2009 sukuk,"

    Nakheel Chief Executive Chris O'Donnell said The sukuk, issued on November 29, 2006, is trading at a yield to maturity of 17 per cent.

    O'Donnell had said in October Nakheel would study various options, including a share issue, on paying down the sukuk. He said Nakheel has enough cash to fund existing projects but would not launch new developments.

    It will launch real estate investment trusts "when market conditions permit", the spokesperson said."

    With relation to the "god knows when they will deliver" see the latest construction update:

    Construction Process

    Step 1 – 40% of total work
    • Reclamation, soil improvement and breakwaters (key element of the development enabling the rest of the project to start).

    Step 2 – 30% of total work
    • Infrastructure works which includes:
    1. Main utility services (electricity, water, sewage, telecom and gas).
    2. Main bridges and roads.
    3. Retaining walls.

    Step 3 – 30% of total work
    • Works within plots:
    1. Villas
    2. Pool
    3. Landscaping

    Most Recent Updates

    Step 1
    • All reclamation and soil improvement works to enable construction of the committed villas is completed.

    Step 2
    • On Frond A & P main utility works in progress.
    • The Bridge connecting Palm Jebel Ali Trunk with Spine started and scheduled for completion by April 2009.

    Step 3
    • Design is completed.
    • 6 mock-up villas are in progress, scheduled completion by 2009.
    • Construction of Signature Villas & Garden Homes is scheduled for completion no latter than December 2012.


    The end of the "wait and see"approach is nearing.... Liquid investors are now picking up units on this great project at fantastic prices.

    I have been to Nakheel Sales Office 3 times in the last 10 days for transfers and after speaking with a "Property Transfer Executive", he has confirmed that there has been as massive increase in transfer activity in the last two weeks.


    Get your facts straight.

    "Be Fearful when others are greedy, and greedy when others are fearful" - Warren Buffet

    Daniel Ryan
    Palm Sales Specialist
  8. PropGuy

    PropGuy New Member

    That depends on the seller, there are very few buyers for off-plan even if any. I can close the deal in -20%

    International financial institutions are putting 50% default rate on Nakheel, thats the reason they weren't able to secure any financing from international institutions.

    That means they can take 70% the monies even before starting the structure on villas.

    Interesting discussions here:
    Dubai Forums : United Arab Emirates, Dubai Discussions - Villa prices fall by up to 45%
    Dubai Forums : United Arab Emirates, Dubai Discussions - Villa prices fall by up to 45%
    Dubai Forums : United Arab Emirates, Dubai Discussions - Villa prices fall by up to 45%
    Dubai Forums : United Arab Emirates, Dubai Discussions - Villa prices fall by up to 45%

    Dubai Forums : United Arab Emirates, Dubai Discussions - Villa prices fall by up to 45%

    After reading peoples' experiences who would in the right mind would pay even 2.5m for that and esp. when mean prices for similar off-plan properties are between 1.75m to 2m according to my estimates.

    These are the straight facts: FT Alphaville » Blog Archive » Bubble theory and UK housing

    Above is for UK housing market, but Dubai market is not any different.

    Economic bubble model as devised by Dr Jean-Paul Rodrigue’s, economist at Hofstra University:
  9. PropGuy

    PropGuy New Member

  10. desert dream

    desert dream New Member

    ok, thanks for the clarification, mr.palm sales specialist...
  11. Daniel Ryan

    Daniel Ryan New Member

    Thanks for the reply,

    - We have buyers at the moment paying between -12% and -15%, and they are buying and transferring.

    - Nakheel are having cash flow issues - but are in no way "bust"

    - Yes they can take 70% of full payment before villa structures are started however that is because villa is only 30% of the construction work of the whole project. Bear in mind we are talking about a LAND RECLAMATION island project here, and not a standard ready land development

    - What "similar"offplan developments (mean land reclaimed, beach front properties) are you calculating your mean pricing on??

    - I like the economic bubble theory, where would u suggest we are now in the model?
  12. Daniel Ryan

    Daniel Ryan New Member

    You are most welcome Mr. Desert Dream
  13. Daniel Ryan

    Daniel Ryan New Member

    This is the first time owners are being asked to make a payment after the prices dropped to original price or below.

    Why would someone invest an amount equal to 2/3 of there current outlay, and then look to sell at a loss. It makes business sense now to sell at below value, if you are strapped for cash. However, if you are liquid and can make the next payment - you will not be looking to make a loss on your investment.

    The payment is due in April, with 30 days grace period, after that penalty fees will be applied.

    This would suggest we are in the "despair" part of your posted Economic Bubble and looking at a "return to the mean".

    The model ends there, but I have read about "double boom" theories which would suggest repettion of the cycle (to a certain extent), I think there is a possibility of that applying to the dubai market, and there are many people taking the "wait and see" approach, itching to make there money back, which could lead to mania once again as the market turns......

    Your thoughts?
  14. PropGuy

    PropGuy New Member

    But investor has to risk 70% of the monies without any construction on the villa(s). This also makes it more risky than conventional development.

    Don't know exactly, but we are in the blow off phase. If my mean calculation is correct then market is near the bottom. I know a hedge fund manager, he is valuing these villas at 1.2m (off plan) for the bottom of the market. Completed between 3m to 4m (PJ 4-bed villas) which is almost same as my valuation. For the mean calculations we are using PJ development for the initial off-plan phase. Value for completed are based on projection from the price trend lines since the peak. PJ prices fell much faster than Arabian ranches. Possible reasons vs PJ:
    (1) AR were not as much hyped as PJ.
    (2) Maintenance costs could be higher for PJ. I don't know the maintenance costs, but if that is true then technically these villas are suppose to be discounted more.
    (3) These villas might have shorter expected life span too due to their location.
    (4) Other potential risk factors due unconventional and untested type of development for these villas on artificial Island.

    During boom times people ignore these things, but in bust.... Warren Buffet put it nicely, "you only learn who has been swimming naked when the tide goes out".
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