Leaking through the cracks
Jumeirah media couple Kiki and Maurice are desperately seeking a permanent nest in Dubai - but the current property boom is pricing them out of the market. The problem, according to Kiki, is that banks will only give mortgages on the original price of a villa.
"So if the villa originally sold for 1.2 million, and is now being resold for 2 million, the bank will give a maximum 80 per cent mortgage on the 1.2 million," she explains.
What this possibly reveals about local banks' confidence in property prices is less than encouraging.
But Kiki and Maurice can at least be thankful they didn't choose to buy at Guantanamo View Villas. The story has finally slipped out about the huge cracks that appeared:
"Properties in Nakheel’s multi-million dollar Garden View Villas complex within Dubai’s ‘The Gardens’ residential community went on sale in June of 2003. However, soon after tenants moved into the three- and four-bedroom villas, cracks appeared on the walls and occupants were quickly moved out."
But Nakheel has denied, according to Arabian Business, that there are any problems with villas on The Palm, although it confirms the project has been delayed a year:
"But it has denied site reports that some villas on the man-made island have had to be demolished and re-built. The developer has informed all owners of residential properties on the project that the final handover of their properties will be delayed by one year. The handover is now expected in November 2006."
"So if the villa originally sold for 1.2 million, and is now being resold for 2 million, the bank will give a maximum 80 per cent mortgage on the 1.2 million," she explains.
What this possibly reveals about local banks' confidence in property prices is less than encouraging.
But Kiki and Maurice can at least be thankful they didn't choose to buy at Guantanamo View Villas. The story has finally slipped out about the huge cracks that appeared:
"Properties in Nakheel’s multi-million dollar Garden View Villas complex within Dubai’s ‘The Gardens’ residential community went on sale in June of 2003. However, soon after tenants moved into the three- and four-bedroom villas, cracks appeared on the walls and occupants were quickly moved out."
But Nakheel has denied, according to Arabian Business, that there are any problems with villas on The Palm, although it confirms the project has been delayed a year:
"But it has denied site reports that some villas on the man-made island have had to be demolished and re-built. The developer has informed all owners of residential properties on the project that the final handover of their properties will be delayed by one year. The handover is now expected in November 2006."
14 Comments:
This is the story no one is talking about! How can Dubai sustain this real estate growth spurt? It seems built purely on speculation. I know of a friend who sold his house in Emirates Hills for more than double what he paid for it after only living in it for one year! I have heard on the chat shows accounts of homeowners getting their investment back on property after three years. It's no wonder banks are only willing to finance 80% of the initial purchase price. That would seem to indicate they know the game is up! Why do people continue to buy these high priced units and is it true, as I have heard that developers have waiting lists for their new or in progress built units?
When the GV Villas were being built on steeply-sloped and unstable land, I thought it was odd that the retaining walls to keep them sliding down onto the road were the last things to be built!
The property market still has a few more years to go and unfortunately, there are no provisions to stop people from making a quick buck, hurting the overall market.
As with all so-called 'free market' economies, it will self-correct. Question is, how much noise will it be making while it's self-correcting.
When they can offer _true_ property ownership, then we can talk. Until then, I'm not buying into this scam.
I wish them best of luck.
It is worrying for the future of Dubai's property market that problems are appearing what is essentially the first of the major projects.
What is hilarious about the "property demand" is the amount of empty villas which has been empty since the beginning of the year. Even the property sections in the newspapers are all selling the same properties.
As someone's aptly put it... it feels like a scam! They've built a whole new city out there but there's no legislation to back it up! NO LAW EVEN FOR THE 99YR. LEASE-HOLD! Now that Aboodaabi saying 's it wont offer free-hold to expats, I'm certain doobai wont either!
I hear that there's a lotta black money coming into the market - wont that bring a whole lot of the 'wrong' sort with it? what good would that do to doobai? More and more of doobai's original residents are calling it 'quits' and heading back to their home towns - A fellow collegue packed up his bags and went back after living here for twenty five years! he couldnt afford to spend over fifty percent of his salary on rent anymore. "I dont even remember that place as home anymore... what will i do there? But i cant stand the expenses here anymore and i havent gotten an increment for over five years!"
That's the plight of the common man... Despite an official inflation rate of around 4% (yeah right!), most of the expats (unlike what the press has been reporting lately) don't get any pay-raises! Has doobai got no use for its old residents anymore? Is doobai only interested in a temporary western tourist + dishdash population? can it work?
Am I the only one asking myself these questions?
its meant for people with a big cash availability - going to get a mortgage is just too expensive for me.
I can understand your friends problem. if my living expenses become too high... rent/low pay/etc. i will also be forced to move to greener pastures. I was born here and call this home - but i wont go bankrupt over it.
Mohd.
they just announced a "rotating city" to be built in Dubai Properties! How wierd, but still quite tame compared to the "bubble city"!
If anyone thinks that these are just names and not to be taken literally, wrong - the rotating city would actually rotate and the bubble city would actually be a city in a bubble above the ground!
Madness!
Interesting to see that prices have doubled since this was written and other Emirates have jumped on the bandwagon......., he who dares whines?
Well - the cracked Garden View villas are now back on the market - but interestingly, only the rental market. Dh220,000k pa for a three bedroom, Dh250,000k pa for a four bedroom.
I take that to mean they are not regarded of sufficient quality/durability to sell.
They have spent years, literally (see the date of this original post), "shoring" them up - but in all honesty I don't understand how one shores up a cracked building. Not being an engineer, I can only speculate that they have (a) done some cosmetic job of concreting over the cracks, and (b) waited this long in the hope that the worst of the subsidence is over.
Either way they are beautiful villas in a wonderful location. Just not something that would be safe to invest in longer-term. But if I had a sheikh's pocket money, I'd rent one rather than my grim cell.
I think the ever growing demand for prime property has also engulfed the emirates and in the last few years, prime locations in the emirates like Dubai have seen a real estate boom. Considering that Dubai was a highly competitive but low priced market, this real estate boom is the last thing that the government wants. A lot of experts feel that Dubai is heading pretty much the same way where some of the Asian markets have headed in the past, towards overpricing. The reason for this is pretty simple. There is not enough supply to meet the demand in Dubai.
I agree with the last comment.
Only a fool would buy now in Dubai.
I am in the construction game and I would buy a shed, before I buy a property in Dubai.
The reason,poorly built and poorly finished apartments yeilding 500,000 GBP in some places
with a 99 year lease that you would have to renew at a price.
Dont trust the law here in Dubai as its a social law governed by in capable people.
Beaware of your domestic/chilled water rates as they do not monitor these per apartment in some places.
Las Vegas in Dubai?they'll have no choice!
After years of advertising that property owners in Duabi will be entitled to an Automatic Renewable Residence Visa, the goverment has finally dropped the bombshell by saying the following which was reported in the local Gulf News Paper:
I posted the full contents of the report and the link because im sure the Dubai Government will one day request Gulf News to remove the report.
Link
http://archive.gulfnews.com/articles/08/06/27/10224035.html
Report
"Dubai: Foreigners could be less likely to buy properties in Dubai after the emirate's real estate regulator said expatriate homeowners are not automatically entitled to long-term residency rights, ING said.
"There is no direct link" between owning a property in Dubai and obtaining a residency visa, chief executive of the emirate's Real Estate Regulatory Authority, Marwan Bin Galita, was quoted by Gulf News as saying on Tuesday.
The comments were contrary to prior statements from local developers such as Emaar Properties, the Arab world's largest real estate firm by market value, ING said, noting the remarks could trigger "negative sentiment" and impact Emaar's stock.
Dubai has witnessed a boom since the government allowed foreigners to invest in property in 2002. The emirate passed a real estate law in 2006 allowing foreign freehold ownership in some areas.
Expatriates from neighbouring countries facing political instability, such as Pakistan, Lebanon and Iran, have been lured to Dubai largely on the assumption that owning a property would entitle them to long-term visas, ING said.
"People from politically or economically unstable countries in the region bought residences in Dubai assuming they would automatically be granted residency, a huge asset to have if the situation in their home countries turned sour," ING said.
"Dubai was the only market in the region to offer such a link."
Dubai property is too dangerous to invest your hard earned money.
I bought a property on a time sharing arrangement of 2 weeks a year from Arabian Falcon / Royal Club Bonninton. I had paid almost 70% of the value in installment, suddenly i was called upon over the telephone by one of the sales ladies, that if i dont pay a final balance of $12,000 in 5 days, i will forfit my initial purchase price, i thought it was a joke, i told the lady that i am following the monthly payment schedule, therefore i cannot send $12,000 until the appropriate time. That was the last i heard from them. Their telephone went silent, you can't reach them on the phone and they will not respond to my mail. This behaviour looks like a scam, as if they have been waiting for me to default. No clause, no warning, no propabation, they just block me off with my 70%. This can never happened in the West, never!
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