Dubai´s property market which already saw a plunge of more than 40 percent in the first quarter of 2009 suffered another blow after a respected ratings agency forecasted that the country is in debts that it may have trouble repaying.
According to a report by Property Frontiers, Standard & Poor´s Ratings Service (S&P) downgraded ratings for three government backed entities, namely, port operator DP World, the Jebel Ali Free Zone and Dubai Multi Commodities Centre Authority, putting the trio on credit watch since April.
“The rating actions reflect Standard & Poor’s reappraisal of the likelihood of extraordinary financial support by the Government of Dubai to ensure the timely repayment of their financial obligations,” the agency told Property Frontiers.
S&P said the reappraisal also was the result of “increased uncertainty in regards to the government’s willingness to provide such support” to Nakheel, the property developer who built Dubai’s manmade islands.
On a separate report by Property Wire, the downturn in the property market in Dubai has resulted in about 400 people losing their jobs at major developer, Nakheel.
Property Wire reported that Nakheel, whose ambitious projects include the Palm Islands, has made the latest redundancies on top of 500 that were carried out in December.
´Nakheel continues to re-adjust its current business objectives to match supply and demand in the most effective way,´ a company spokesman told Property Wire.
Developers, who were mostly reliant on off-plan sales to finance the construction of their projects, have struggled to collect payments, leading to rising defaults, while payments to suppliers have been delayed.
High profile development projects have also been delayed and it is estimated that currently over £335 billion of projects have been halted or are on hold.
Dubai´s real estate market is the second worst performing housing market according to a global housing price research, coming in 44th in ranking – second only to Latvia.
S&P said the downgrades “reflect our view of the stand-alone credit profiles of the entities, which in certain instances, we consider to have deteriorated.”
Showing posts with label dubai property news. Show all posts
Showing posts with label dubai property news. Show all posts
Sunday, 19 July 2009
Monday, 24 November 2008
Dubai Property Prices Falling
It’s not news that Dubai’s property market is expected to experience corrections next year and according to Morgan Stanley gradually decline by up to 10 percent by 2010. However, a real bombshell was dropped last Thursday when Arabian Business reported that Palm Jebel Ali’s island prices have depreciated some 40 percent in the last two months.
After all the hype and excitement about Dubai’s market, this news is certainly a wake up call for many would be investors who are standing on the brink of making a decision right now.
This fall in property values has been pinned on the global crisis and current investors who liquidate their assets in Dubai in order to keep their cash flow going.
This turn of events puts the development (and more to follow for sure) back to where they were some two years ago. To make matters worse, local Dubai mortgage providers acted and reduced home financing loan-to-value (LTV) to about 70 percent down from 90 in October. Of course this isn’t helpful for those looking to finance a property loan right now.
Five and six bedroom villas on the island used to be valued at around 16 million Dirham (approximately $4.35 million). In the last couple of months however these prices were depreciated to 9 million Dirham instead - a huge loss for current property owners.
Despite this, they didn’t really lose out on a bargain since overall the value of properties on the island increased by as much as 80 percent from the original launch buying price.
As reported from various realtors in Dubai, sales have dried up and making them seems harder these days, unless they accept a significant drop in property prices.
It will be interesting to see whether those predictions will come true in the near future. As for now, it is probably a wise move to hold on the investment for existing property owners while new buyers can snap up a bargain.
After all the hype and excitement about Dubai’s market, this news is certainly a wake up call for many would be investors who are standing on the brink of making a decision right now.
This fall in property values has been pinned on the global crisis and current investors who liquidate their assets in Dubai in order to keep their cash flow going.
This turn of events puts the development (and more to follow for sure) back to where they were some two years ago. To make matters worse, local Dubai mortgage providers acted and reduced home financing loan-to-value (LTV) to about 70 percent down from 90 in October. Of course this isn’t helpful for those looking to finance a property loan right now.
Five and six bedroom villas on the island used to be valued at around 16 million Dirham (approximately $4.35 million). In the last couple of months however these prices were depreciated to 9 million Dirham instead - a huge loss for current property owners.
Despite this, they didn’t really lose out on a bargain since overall the value of properties on the island increased by as much as 80 percent from the original launch buying price.
As reported from various realtors in Dubai, sales have dried up and making them seems harder these days, unless they accept a significant drop in property prices.
It will be interesting to see whether those predictions will come true in the near future. As for now, it is probably a wise move to hold on the investment for existing property owners while new buyers can snap up a bargain.
Wednesday, 12 December 2007
Tennis Legends Wowed by Dubai Sports City
“City Dedicated to Sport Offers Huge Opportunities,” say Former World Champions
A group of international tennis stars in town to take part in “The Legends ‘Rock’ Dubai” tournament were today provided with an exclusive overview of Dubai Sports City, the world’s first integrated sports city.
Tennis legends Jim Courier, Michael Stich, Thomas Muster, Cedric Pioline were introduced to Dubai Sports City and took the opportunity to learn more about the project’s ambitious plans.
Tennis is one of the core sports supported by Dubai Sports City, which will be home to the David Lloyd Tennis Academy as well as providing the future venue for the “Legends” event once Dubai Sports City’s indoor arena is completed in 2009.
“We’re honoured by the presence of these tennis champions, who have done so much to shape the modern game,” said Malcolm Thorpe, Marketing Director, Sports Business, Dubai Sports City.
“We’re positioning Dubai Sports City to be one of the most advanced destinations for tennis enthusiasts, so The Legends’ enthusiasm for the project is extremely significant,” he added.
During their visit to Dubai Sports City’s offices, the stars reviewed the Masterplan for the development, and were provided with a full overview of the major sports venues, including the 10,000 seat multi-purpose indoor stadium and the facilities at the David Lloyd Tennis Academy, which will include nine outdoor courts and six indoor courts.
“We’re all really excited and impressed by the support for tennis in Dubai, and by the big plans for the future. Building a city dedicated to sport is a huge step that will create important new opportunities for the game,” said Jim Courier, former world number one tennis player and two-time French and Australian Open champion.
Dubai Sports City is one of the co-sponsors for The Legends “Rock” Dubai, organised by Delwood, which takes place at Dubai Tennis Stadium from 22-24 November 2007.
Tickets are available from regular ticket outlets such as Box Office Middle East, Virgin Mega Store, ITP Ticketsonline.com, Lacoste Boutiques (Mall of the Emirates and BurJuman), The Aviation Club reception and Dubai Tennis Stadium Box Office.
Dubai Sports City is a firm supporter of a number of the region’s leading sporting events, including the upcoming Mohammed Bin Rashid International Football Championship and the Masters Football Dubai Cup, as well as the Dubai Desert Classic.
Global Interest in Dubai Sports City Reaches New Heights
Delegation from Maharashtra, India, Tours Major Development as Countdown Begins for 2008 Opening of Key Assets
Global interest in the US$3.6 billion Dubai Sports City project is reaching new heights, according to a delegation of senior property developers from the State of Maharashtra, India, who viewed the project on a special visit organised by the Department of Tourism and Commerce Marketing. ‘Marathi Bandhkam Vyavasaik Sanghatana’, is an Association of Real Estate Developers and is currently organizing a study tour for its members consisting of 50 real estate developers / investors in order to gauge Dubai’s real estate offerings and investment opportunities to promote Dubai as a hub for realty investment opportunities:
The UAE’s positioning at the heart of a potential market of two billion people – as well as Dubai Sports City’s focus on globally-popular activities such as cricket, soccer and golf – provides the development with the potential to become a major sporting hub.
Over 60 delegates from Maharashtra toured the site this week and were offered exclusive access to some of the major assets of the project, including the landmark cricket stadium and the magnificent 18-hole championship golf course.
“Dubai Sports City has already achieved a very high profile in India, where there is real excitement about the scale of the project. Obviously, there are a number of elements that appeal particularly to the Indian market – such as the range of cricket facilities – but it is Dubai Sports City’s comprehensiveness and range that have really captured people’s imagination,” said Sandeep Joshi, one of the senior property developers from the State of Maharashta, India.
One of the highlights for many of the visitors was a discussion on the rapidly-developing plans for the ICC Global Cricket Academy, the purpose-built facility which will allow players, coaches, umpires, curators and administrators from around the world to develop their skills.
Also of significant interest were the residential and retail facilities under construction. Two of the flagship residential communities – the exclusive golf course villa community, Victory Heights and a waterfront Riviera-style apartment offering Canal Residence West – have attracted buyers from around the world.
“Dubai Sports City is entering into the next phase of development and promotion, particularly in relation to the international market,” said Khalid Al Zarooni, President of Dubai Sports City. “We continue to welcome delegations from around the world to inspect the site, and the increasing volume of these trade visitors is a reflection of the international excitement that the project is generating.”
Saturday, 8 December 2007
Trump, Armani Refuel the `Dubai Bubble' Debate: William Pesek
Even amid a skyline jammed with massive construction projects, the Burj Dubai is a standout.
In September, it beat the 31-year-old record held by the CN Tower in Toronto to become the world's tallest free-standing structure. When it's completed in 2008, Dubai's tower will be the tallest building in every category and home to one of Giorgio Armani's first hotels.
This is kind of a Dubai obsession -- having the biggest this, grandest that, most ostentatious the other thing. Developers have designs on the biggest shopping mall, the largest theme park, the first submerged luxury hotel and an artificial archipelago that is expected to be visible from outer space.
Dubai seems a unique amalgam of Hong Kong, Riyadh and Las Vegas. No doubt this latter quality -- giant themed hotels and countless construction sites cropping out of the desert -- explains Donald Trump's interest. The Trump Organization's 48- story tower will include about 660 hotel rooms and condominium apartments.
It's no wonder economists are buzzing about the ``Dubai Bubble,'' especially with crude-oil prices near $100 a barrel.
Actually, they have been talking about Dubai's property markets imploding for years -- to no avail. As oil prices rise and Dubai, one of seven sheikdoms of the United Arab Emirates, diversifies its economy, it continues to confound the skeptics.
Bright Future
``Just look around this place,'' Faisel Hoodbhoy, a managing director at Dubai International Financial Exchange, said at an Institutional Investor conference last week. ``The future for Dubai is very, very bright.''
Of course, doomsayers may have some ammunition in the ``skyscraper curse.''
There's an old saying in journalism that if you have a good story, write it from time to time. We all have a couple of favorite issues, causes or quirky lenses through which to view complex problems. One of mine is the uncanny correlation between tallest-building projects and financial crises.
It happened in Kuala Lumpur in 1997, Chicago in 1974, New York in 1930 and in biblical times with the Tower of Babel. A bizarre coincidence perhaps, yet humankind's propensity for architectural overreach has been a reliable omen of meltdowns.
Taiwan, which in 2004 became home to the tallest building, was arguably affected. Its economy didn't implode, so much as it's disappearing. China has done a masterful job marginalizing an island it sees as a breakaway province. Now, among Taiwan's main allies are Kiribati, Swaziland and the Holy See. An economic crisis? You decide.
Development Miracle
The thing about record-breaking skyscrapers is that they can say as much about hubris as wealth, ambition and technology. Is Dubai a development miracle? Or is it the center of an Arabian asset bubble tied to surging oil prices?
At least for the moment, it would appear to be the former.
The rise in oil prices may prove more secular than cyclical. Demand from China and India alone almost ensures it. Officials point out that oil revenue accounts for just 6 percent of Dubai's gross domestic product. Even so, it's not clear its banking and tourism industries would offset an oil crash. Luckily for Dubai, oil prices are likely to stay high.
Also, much of the oil proceeds are being invested at home. Dubai's boom isn't being financed with debt the way previous ones were in Asia and the West; it's being financed with something closer to equity, if you will -- shares in Dubai Inc.
Dubai Inc.
Speaking of equities, DP World Ltd., the Dubai-owned port operator with terminals from the U.K. to China, last week raised $4.96 billion in the Middle East's largest initial public offering. It was Dubai's biggest step to date in establishing itself as a global financial center.
Dubai is stepping up efforts to attract more IPOs. The small size of Dubai's stock market explains why so much money is flowing into property. Dubai is working to change things, including building a bigger bond market.
``It's going to be a bonanza for investment banks,'' said Henry Azzam, chief executive officer for the Middle East and North Africa at Deutsche Bank AG.
In a dangerous world filled with geopolitical risks, Dubai might be considered a ``Green Zone'' for Middle Eastern investment. Attracting cash from Muslim investors is only part of the push; another is attracting the biggest institutional investors from New York, London and Tokyo.
Boom and Bust
Yet oil booms have an erratic track record; just about every one has been followed by a painful bust.
The outlook for energy is cloudy as Venezuelan President Hugo Chavez and Iranian President Mahmoud Ahmadinejad try to use oil as a weapon against the U.S., and as concerns mount that the dollar will collapse or that the U.S. might attack Iran. Also, inflation in the U.A.E. rose a record 9.3 percent last year amid surging property prices.
To sustain the boom, Dubai needs to beat the system, so to speak; it has to overcome the skyscraper curse. Trouble is, few economies have done so.
In September, it beat the 31-year-old record held by the CN Tower in Toronto to become the world's tallest free-standing structure. When it's completed in 2008, Dubai's tower will be the tallest building in every category and home to one of Giorgio Armani's first hotels.
This is kind of a Dubai obsession -- having the biggest this, grandest that, most ostentatious the other thing. Developers have designs on the biggest shopping mall, the largest theme park, the first submerged luxury hotel and an artificial archipelago that is expected to be visible from outer space.
Dubai seems a unique amalgam of Hong Kong, Riyadh and Las Vegas. No doubt this latter quality -- giant themed hotels and countless construction sites cropping out of the desert -- explains Donald Trump's interest. The Trump Organization's 48- story tower will include about 660 hotel rooms and condominium apartments.
It's no wonder economists are buzzing about the ``Dubai Bubble,'' especially with crude-oil prices near $100 a barrel.
Actually, they have been talking about Dubai's property markets imploding for years -- to no avail. As oil prices rise and Dubai, one of seven sheikdoms of the United Arab Emirates, diversifies its economy, it continues to confound the skeptics.
Bright Future
``Just look around this place,'' Faisel Hoodbhoy, a managing director at Dubai International Financial Exchange, said at an Institutional Investor conference last week. ``The future for Dubai is very, very bright.''
Of course, doomsayers may have some ammunition in the ``skyscraper curse.''
There's an old saying in journalism that if you have a good story, write it from time to time. We all have a couple of favorite issues, causes or quirky lenses through which to view complex problems. One of mine is the uncanny correlation between tallest-building projects and financial crises.
It happened in Kuala Lumpur in 1997, Chicago in 1974, New York in 1930 and in biblical times with the Tower of Babel. A bizarre coincidence perhaps, yet humankind's propensity for architectural overreach has been a reliable omen of meltdowns.
Taiwan, which in 2004 became home to the tallest building, was arguably affected. Its economy didn't implode, so much as it's disappearing. China has done a masterful job marginalizing an island it sees as a breakaway province. Now, among Taiwan's main allies are Kiribati, Swaziland and the Holy See. An economic crisis? You decide.
Development Miracle
The thing about record-breaking skyscrapers is that they can say as much about hubris as wealth, ambition and technology. Is Dubai a development miracle? Or is it the center of an Arabian asset bubble tied to surging oil prices?
At least for the moment, it would appear to be the former.
The rise in oil prices may prove more secular than cyclical. Demand from China and India alone almost ensures it. Officials point out that oil revenue accounts for just 6 percent of Dubai's gross domestic product. Even so, it's not clear its banking and tourism industries would offset an oil crash. Luckily for Dubai, oil prices are likely to stay high.
Also, much of the oil proceeds are being invested at home. Dubai's boom isn't being financed with debt the way previous ones were in Asia and the West; it's being financed with something closer to equity, if you will -- shares in Dubai Inc.
Dubai Inc.
Speaking of equities, DP World Ltd., the Dubai-owned port operator with terminals from the U.K. to China, last week raised $4.96 billion in the Middle East's largest initial public offering. It was Dubai's biggest step to date in establishing itself as a global financial center.
Dubai is stepping up efforts to attract more IPOs. The small size of Dubai's stock market explains why so much money is flowing into property. Dubai is working to change things, including building a bigger bond market.
``It's going to be a bonanza for investment banks,'' said Henry Azzam, chief executive officer for the Middle East and North Africa at Deutsche Bank AG.
In a dangerous world filled with geopolitical risks, Dubai might be considered a ``Green Zone'' for Middle Eastern investment. Attracting cash from Muslim investors is only part of the push; another is attracting the biggest institutional investors from New York, London and Tokyo.
Boom and Bust
Yet oil booms have an erratic track record; just about every one has been followed by a painful bust.
The outlook for energy is cloudy as Venezuelan President Hugo Chavez and Iranian President Mahmoud Ahmadinejad try to use oil as a weapon against the U.S., and as concerns mount that the dollar will collapse or that the U.S. might attack Iran. Also, inflation in the U.A.E. rose a record 9.3 percent last year amid surging property prices.
To sustain the boom, Dubai needs to beat the system, so to speak; it has to overcome the skyscraper curse. Trouble is, few economies have done so.
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