This is an interesting discussion.
I don't know so much about world economics but me and my wife absolutely adore Dubai.
We moved here 2 years ago, and we've first hand seen the city improve from strength to strength.
We lived in Spain and Singapore for a long while but its nothing in comparison to Dubai
Its such a well run city, and we feel safe, and secure here.
When we first came here we were nicely surprised to find it so westernised, but with all the improvements
Everything is fresh and new
We've seen so much change in 2 years.
So many new people coming into the city and settling and contributing to the community
This is a very exciting time

Why don't you just go and live in the western world instead ?

What kind of job do you do there? speculating real estate or advising expat fools to buy there?

I meant that if you move in Dubai because you have the skill the country need, it's all great and fine and you will be rewarded accordingly.
If you go there because you kindda like the culture and the people living there - not looking to hang up only with expats - then I admire you.

But if you go there because "a mate" tod you that big bucks could be made overnight, then I will question your motive.

People got to be informed, price are going to go down in ALL real estate world wide, as a delevering is ongoing.

The credit crisis is much more serious than people thought at first and the consequence as serious as at least 1990. My guess- it will be worse.

People on the ground, the one some try to fool, just don't get informed correctly...

The Abu Dhabi Securities Exchange General Index slumped 3.5 per cent, its biggest one-day drop since August 11.

UAE shares retreat, led by Emaar, Aldar Bloomberg
Published: September 07, 2008, 14:23

Dubai: UAE shares declined on Sunday, led by real estate stocks as foreigners exited the region.

Emaar Properties, the Middle East's largest real estate developer, dropped to its lowest in more than three years.

Aldar Properties retreated the most since January and Emirates Telecommunications Corp. fell for the second day.

"I don't think there is confidence in the market and in the real-estate sector in particular," said Nadim Abou Jalad, a trader at Naeem Shares & Bonds in Dubai. "We are in a very aggressive downturn. Foreigners are net sellers."
The Dubai Financial Market General Index retreated 5.2 per cent to 4,446.33.

The Abu Dhabi Securities Exchange General Index slumped 3.5 per cent, its biggest one-day drop since August 11.

Emaar Properties lost 7.1 per cent to Dh8.15, its lowest since April 2005. Aldar Properties slid 8.4 per cent to Dh8.35. Emirates Telecommunications fell 2.5 per cent to Dh17.4.

did you just come into this forum to insult people? I am quite offended by your comments
where do you live? I am sure I could slate your beloved city and run it down and the people you hang around with
People like you in the world destroy good faith
Me and my wife have settled in Dubai and made it our home
we are really happy and we dont need bitter people like you insulting us for our freedom of choice
I didn't come in this forum to be insulted

When people are franck and give an honest answer, you call that insult?

I'm just comdemning the obvious, which is the main topic of this thread: Dubai is a highly speculative market.

Maybe you should come to this forum to get realistic answer and quite often judicious one.

listen to your self. . . an honest answer:
(IN YOUR PETTY OPINION)
did i ask a question, eh no
i simply posted my thoughts and experiences on living in Dubai
and you thought you had identified a weakness and thought it was an opportunity jump on a band wagon and attack

but here's a question to you:
you call people the ex-pats that live there 'fools'
what makes an expat a fool?

if you want to run down a country then lets talk about the UK in comparison to Dubai:
being depressed living in the U.K day after day in a gloomy economy with negative characters like you jumping on every oportunity to run someone's way of life down. the U.K only had 2 days of sunshine this summer,crap weather. School kids pulling knifes on old ladies and stealing they're pension money,that would never happen in dubai. Reposesions everywhere you look, people getting laid off from work. People topping themselves cos they cant cope with the stress of day to day living. At least people of Dubai are being constructive and building a future rather than sitting round running down other peoples way of life and freedom of choice. Now whos the fool?

Then don't come here if you don't like the forum.

I, like many people, are offended by posters who spout how wonderful Dubai is.

I'm sorry, but there is nothing there and I believe in personal freedom, something that you won't get in Dubai.

Dubai property shares slump
10 September, 2008 07:29:00 Karim Kanji


Leading Dubai property shares plunged to new lows on Wednesday laying bare the doubts surrounding this previously booming sector, with analysts uncertain over how much further it could still fall.

Investors have fled the emirate's real estate sector in recent weeks, spooked by corruption probes, tightening regulations designed to limit speculation, and talk of a looming over-supply in the market.

Shares in Emaar Properties EMAR.DU, developer of the world's tallest building in Dubai, on Wednesday closed down 3 percent at 7.85 dirhams, their lowest level in 41 months, making it one of the worst-hit stocks in the sector.

"We are definitely going through tough times," says Rami Sidani, head of MENA investment at Schroders Investment Management.

"It's a combination of bad news coming at the same time with investigations, concerns over the real estate market and extra supply coming to the market."

"It's hard to assess the market going forward. We need more insight into the real estate sector, either from the government or from the large developers," Sidani said.

Mortgage lender Tamweel TAML.DU tried to reassure investors on Wednesday with a statement after its shares dropped 4 percent to say that the detention of its deputy chief executive by Dubai police would not affect its operations or financial performance.

Overall negative sentiment in UAE markets makes it trickier to call the bottom. The main Dubai index .DFMGI has fallen more than 25 percent this year, after gaining over 43 percent in 2007.

"We don't know how bad it can get," said Sana Kapadia, equity research analyst at EFG-Hermes.

"The market has been through a crash before but overall everything is languishing. The corrections we see on some days are not enough to make up for the losses."

Property shares have fallen so low that some experts are calling them a bargain.

"It's a great time to get into the market...but it is now driven by the sentiment rather than by valuations," said Bikash Rout, senior financial analyst at Global Investment House.

Emaar has fallen over 26 percent since the beginning of August, leaving it with a forward price-earnings (PE) ratio of 7.54, well below that of rival Union Properties UPRO.DU at 11.13 and Abu Dhabi firm Sorouh Real Estate SOR.AD at 9.18.

Union Properties plummeted over 8 percent on Wednesday while Sorouh Real Estate fell over 5 percent.

"Stocks are looking especially attractive -- it's a great buying opportunity, but interest has been limited," Kapadia said.

.......catch a falling knife comes to mind with the last statement DD.

To DubaiExpat:

What is the main reason of the builder correction?

I understand that in the U.K , U.S., the builders have corrected by more than 60% in a matter of a year due to a sharp fall in starts and housing price.

In Dubai, everybody knows that it was a bubble in the making. But has housing starts began to slow or price started to retreat?

I suppose as long as oil price are elevated, money can still flow there? unless oil price continue its downward correction thus drying up liquidity in a market that rely on it...

Many different factors affecting sentiment

* Lack of liquidity in credit markets are affecting developers/players in Dubai
* Dubai stamping down on real estate speculation, landlords and corruption with major developers all who are related to Dubai Govt.,
* Global trends and margin calls forcing foreign investors to get out
* Abu Dhabi has the oil money not Dubai, Dubai is highly leveraged. Dubai is more suseptible to tightening credit
* UAE and double digit inflation is dampening investment and business confidence.
* Investors worried about transparency of pricing in market which is notoriously rigged both in real estate and equity.


Example :

Plantation comes under scanner over land deal
By Suzanne Fenton, Staff Reporter
Published: September 12, 2008, 00:30


Dubai: Plantation Holding, the $3.5-billion equestrian development in Dubailand, is under further scrutiny following confirmation that Dubai Islamic Bank (DIB) repossessed a substantial amount of land in the development.

Amid frenzied rumours that DIB had bought assets of Plantation, the Dubai Financial Market (DFM) suspended trading of shares in DIB until they provided confirmation that they had taken over the assets of Plantation.

DIB has taken over Plantation in order to recover funds previously lent to the company.

In a statement on the DFM's website, DIB yesterday confirmed that they have "assumed ownership of the land which is the site for a premium property development project, known as Plantation project."

DIB is also keen to assure investors that they have always maintained control.

Foreclosure

"At all times, DIB had strong control of the security, as well as other securities covering the same transaction and waited on foreclosure as per the legal requirements of the foreclosure process," DIB said in the statement.

Investors are wary of such news as recent events of corruption and fraud have ravaged Dubai's valuable reputation, especially in the real estate sector.

Tom Woolf, former England rugby-pro and now joint director at Plantation, initially said through a spokesperson the company was "unable to comment until the DFM and DIB finish investigations."

In a statement later, he said: "Dubai Islamic Bank has enforced security over Plantation Polo & Equestrian Resort located in Dubailand. The owner of Plantation strenuously disputes that Dubai Islamic Bank had the legal grounds to do so."

Woolf made no comment on the news that his friend, business partner and Plantation owner, Arthur Fitz-william, is in police custody.

During an interview in June, Woolf had told Gulf News that the Plantation development would be "up and running" in two years. Plantation was also due to hold its first international polo events next April.

However, the likelihood of this now happening is now unclear as the future of the 20 million square foot development hangs in the balance as does the futures of first-time players in Dubai real estate, Woolf and Fitzwilliam.

Here is a well written piece that underlines the regions exposure to debt.

Rising prices, sinking standards
The National

Wayne Arnold

Last Updated: September 08. 2008 2:02PM UAE / GMT

Analysts say that the sell-off in commodities and related equity markets is being driven not by supply-demand fundamentals, but by the unwinding of hedge funds hit by the widening credit crunch. Highly leveraged, the hedge funds are forced to liquidate cash positions if capital gains don’t allow them to meet interest payments. So any sudden shift in the funding environment could trigger a broad sell-off by hedge funds that contradicts the macroeconomic reality. The drop by the pound and euro against the dollar in recent weeks — the pound has fallen 10 per cent in the last month — is apparently one catalyst behind the latest retreat by hedge funds and one that has hit emerging market equities very hard.

Notice that I didn’t refer to this as the dollar’s rally, even though the dollar rallied sharply in response to the US government’s takeover of Fannie Mae and Freddie Mac. Rallies most often imply positive developments. But economists point out that the dollar’s rise is more an expression of the fact that the rest of the developed economies now appear to be sliding along with the US into recession than any new appraisal of America’s near-term prospects. In fact, it now appears that the focus of concern in global markets may shift away from the US — where things really can’t seem to get any worse — to Europe, where the most certainly could. Europe’s consumers appear to be succumbing for the first time in a decade to concerns that their economies are likely already in recession and are spending less.

Thanks to the world’s twin addictions to driving and the much more essential chore of eating, however, economists say the fundamental argument in favor of commodities remains and that in both food and fuel, supplies are tight and vulnerable to supply shocks like force 5 hurricanes. So while stagflation has faded as an investment strategy for the time being, it may yet return, with the appetite for emerging market equities favoring commodities producers and countries with strong current account balances. Countering this will be fears that the developed world slowdown will have a greater-than-forecast impact on global growth. If developing world growth fell lower than, say, 6-7 per cent, it would be disastrous. Real growth would be largely negative and unemployment would rise rapidly. Amid high inflation, this would be a recipe for civil unrest and political upheaval.

This has helped tighten liquidity in the Gulf, a region where oil revenues and government spending are supposed to be creating loose liquidity. But hedge funds aren’t the only reason, according to bankers and financial executives.

Part of the problem is a simple question of competition: with funding costs and interest-rate spreads rising everywhere, borrowers everywhere have to pay more and investors tend to move capital where the returns are highest and the risk lowest. The Gulf’s own investors and sovereign funds have a world of choice for their capital and don’t have to keep it here if returns are not competitive. And the risk is clearly high. Not only is there the ever-present political risk, but there is regulatory risk, as well as inflation risk and operational risk, the kind that translates into things like paying thousands of dollars a month for flats that don’t have running water or reliable plumbing. As the real-estate analysts here in the UAE say, quality is becoming the primary issue.

The other problem is the peg. Investors moved a pile of money into the region earlier this year speculating that central banks would allow their currencies to move upward against the dollar to help fight inflation and reflect their growing, oil-driven trade surpluses. That they haven’t means that not only is inflation likely to remain in double-digits, eroding any earned profits, but that investments here have to be treated as dollar-denominated. Despite the dollar’s rally last night, most people still believe the dollar is likely to remain under pressure and last night’s seizure of Fannie and Freddie provides new evidence as to why. Buying up whatever new shares the two mortgage giants need to issue to offset the red ink they’ll be ingesting as they buy up mortgage-backed securities will cost the US government plenty, some estimate up to $25 billion. In the meantime, the dollar appears to be rallying on hopes that the rescue will help end the housing slump.

Then there are other local risks, in particular the increasingly rickety property market. While bankers and property executives are quick to point out the prudential lending standards here remain high, the 1) absence of a robust credit bureau, combined with 2) a perception that the regulator — i.e. the central bank — lacks sufficient resources to adequately enforce those standards and that 3) breaches are common and pervasive, leads many to believe the potential for widespread losses should property prices falter is high. Recent investigations into alleged fraud in Dubai’s property sector are not building confidence in asset quality.

Add to this that Gulf borrowers have an estimated $60 billion in debts they need to refinance in the next year. Many in the financial industry fear that the cost of rolling this debt over in the current credit environment is going to be higher than most people think.

At the risk of being simplistic, it strikes me that purchasing in Dubai is property "speculation" not "investment".

1. There is no leverage. You have to cough up most of the cash due to poor selection of mortgage products.

2. No proven exit strategies.

3. Over-supply of apartments.

4. No shortage of land. In fact, one of the few places in the world where they are actually creating new land!

I personally am too risk averse to invest there, although I have researched it in great detail. I actually like Dubai as a place, and have visited it on several occasions. However, it does not tick all my boxes for investment purposes.

do we have a land reg/nethouseprices.com thingymabob for searching house prices in Dubai? TIA

In which way is Dubai so much better than Singapore?


Except for the changes during the past 2 years I think all these apply to Singapore too.

Let me start saying that I do not know Dubai very well (been once in 2005), but I have been often to Singapore. Walking on Orchard Road does not one second give me the feeling that I am in Asia. Singapore has the highest migration level in the world, 3.5% annually, read people come and go all the time and nobody in the end seems to like the place. When asking people about it they may give you comments that the place is boring, people are unfriendly, the government is too strict or even corrupt in their own way. Personally I think after many years I discovered what the real reason is why people that know the world quite well do not want to end up staying in Singapore and the reason is: Singapore is 365 days a year just 5 degrees too hot and too humid. Even in Singapore it can be nice to sit outside and enjoy the hot temperatures knowing that others in the world need a heater to stay alive, but you will never have these gorgeous late summer evening sit outside dinners. You always end up being airconditioned. In regards to Dubai the winter months are undoubtedly fantastic, but during the summer?!

Why Dubai villa prices will outperform apartments

While it is true that smaller apartments offer the best rental yields, it has also been true that capital gains on villas have been far higher in recent years. This trend is set to continue this autumn with villas in shorter supply than ever, and hordes of villa-dwelling bankers moving into Dubai.

United Arab Emirates: Thursday, September 25 - 2008 at 11:59

Property buyers in Dubai have thus far tended to prefer the prospect of greater capital gains on villas than a better rental return on their capital.

A new report from Bahrain-based investment bank SICO notes that villas have appreciated in value by twice as much as apartments since 2002, while rental yields presently stand at around 5% for villas and 8% to 8.5% for studios and one-bedroom apartments.

This is a reflection of the preference for expatriate families to live in a villa rather than an apartment, with a garden, parking and independent access.

Then there is the simple fact that about ten times more apartments have been built than villas since 2002, so villas have both a scarcity value as well as being perceived as the better lifestyle choice.

This is not about to change anytime soon. The legions of bankers, stock brokers, lawyers and other financial professionals moving into Dubai are exactly the kind of person who wants to live in a villa, preferably in an upmarket community.

Global financial expansion target
Over the summer one independent study concluded that Dubai was the number one target for expansion by global financial services for the next few years. That is an awful lot of high-earning staff who are by nature villa dwellers.

Moreover, the supply of villas coming on to the market over the next few years is relatively small, and by contrast the number of luxury apartments is going to be fairly big, so the scarcity of villas is going to increase and not decrease.

Villas also offer a crucial extra feature. You actually own a piece of land rather than multiple occupancy rights. And in most countries of the world independent houses command higher prices than apartments, especially in the best locations.

Downside protection
In addition, investors point to the defensive qualities of villas in a possible downturn. People actually want to live in apartments more than villas so they are unlikely to ever be short of a tenant. In addition, villas in the best locations are more likely to keep their value, or at least suffer the smallest falls in value.

Finally villa owners are more able to determine their own maintenance bills. Apartments face annual hassles over the amount of their service charges; community charges for villas are generally far lower and maintenance is at the owner's discretion.

So it would be surprising if the Dubai love affair with its villas ended anytime soon and indeed with the red hot local economy this autumn putting further upward pressure on local house prices, villas will come out on top again for capital gains. Whether that will match the stellar house price increases of last year remains to be seen.

Can someone pass the mustard?
I find that spam doesn't go down too easily on it's own...

Dubai have decided to tackle the demand side equation and to fill up all those empty apartments in the emirates by evicting people who share accomodation in villas. Unfortunatley the very people its affecting would not be able to afford the rigged rental prices, unless of course they share apartments. Paradoxically rental rates do not reflect the majority of people who have been living in Dubai for more than 3 - 4 years. My organisation employs over 100 people, their average rents are 80,000 ...when a landlord buys and tries to jack the rents we go to the rent committee who promptly extend the lease for 1 - 2 years and fix the rent with a 5% increase. I am point in question, I have a 3 bedroomed villa in Emirates Hills, my rent is 95,000 AED the landlord has tried unsuccessully to increase to 250,000 AED and evict. The lease has been extened by the Rent Committee for two years. This is not a free functioning market and the smart money is looking for better returns elsewhere.



Evictions postpone fall in Dubai properties
Travis Pantin

Last Updated: September 27. 2008 11:27PM UAE / September 27. 2008 7:27PM GMT Analysts have revised their predictions of a sharp drop in Dubai’s property market, saying a recent surge in property prices combined with a flood of people coming on to the rental market because of a villa eviction campaign will delay any price decrease.
“Demand will rise, and prices will follow as a result,” said Cecilia Rabess, a senior analyst at Investment Boutique.

According to a recent Morgan Stanley report, Dubai property prices were due for a correction of at least 10 per cent by 2010, following a nearly 79 per cent increase since the beginning of last year. As a property-related downturn spreads across the globe, analysts have doubted whether Dubai will buck the trend entirely.

However, last week’s eviction notices distributed by Dubai Municipality to families living in shared villas have led some to believe that a correction may be further off than previously thought.

Two months ago, a one-bedroom flat in the Dubai Marina area was renting for an average of Dh120,000 (US$32,600) a year, according to analysts. By the end of last week, it was nearly impossible to find one for less than Dh140,000. Over the past year, the sale price of villas in Dubai have skyrocketed by 76 per cent, while apartments have shot up 63 per cent, a survey by The National found last week.

Even Morgan Stanley, which first predicted the downturn, is now warning of a soft landing.

“The good news for Dubai is that you have underlying economic strength and, as a result, our base case reflects a soft landing for the emirate,” Sean Gardiner, head of MENA research at Morgan Stanley, said last week.

Andrew Gilmour, an economist with the Samba Financial Group, said the fundamentals of the Dubai property market remained strong. “The demand is there and, so long as they can access the credit, I don’t think you will see a particularly strong downturn too soon,” he said.

However, if demand remained strong and prices continued to rise, ”eventually it will become more a question of affordability,” said Ms Rabess. “Prices can only go up so much before people will no longer be able to afford to live in Dubai.”

Ms Rabess said the Government’s campaign could have been intended to encourage people to move into apartments in places such as International City and Discovery Gardens, which they may have previously avoided in favour of sharing a villa. Eventually, however, it could push people outside of the city.

“Unless the developers start building more affordable housing, people may start looking to places like Sharjah or Ajman for places to live,” she said.

The city began the villa eviction campaign in July, but declared a final 30-day deadline last week for all over-occupied villas in the city. Families in Jumeirah, Umm Suqeim, Al Rashidiya and Abu Hail were hit especially hard.

A spokesman for Dubai Municipality said last week: “No more notices would be issued to villas. Even those families who are sharing villas but have not received notices must move out within the deadline.” Once the deadline expires, violators will have their water and electricity supplies cut off, and landlords would face heavy fines – up to Dh50,000.”

The move comes at a time of increasing uncertainty in the Dubai property market, amid fears that foreign investors and the cash-strapped banks may cut off funding for local projects.

Cash scarcity could destabilise the market, analysts say, and possibly precipitate a fall in prices. Last Monday, the UAE central bank announced an emergency Dh50 billion lending facility meant to ensure banks have enough money to keep local infrastructure and property projects running.

In August, a Morgan Stanley report described Dubai the “bellwether of the whole GCC property market”, saying that a drop in prices there could extend to Abu Dhabi and all of the other major economies in the Middle East. However, barring such a fall, Morgan Stanley predicted that Abu Dhabi could see prices increase by 25 per cent before 2010. Qatar’s property market is expected to increase by 15 per cent during the same period.

“The Dubai real estate market is one of the real Achilles heels of the UAE economy,” said Giyas Gokkent, an economist at the National Bank of Abu Dhabi.

* with Reuters

O.M.G america is in a poor state isn't it, and its dragging everything down with it :0(
I wonder where I can still spend my money on property and still get stability
em...let me think....
oh, I've got it...Dubai
Happy Days

This week saw property prices in Dubai notch up again as once again in the global economic crisis only one country except India is offering any promise
and in the short term coming months the Dubai climate is forcast to improve again
Dear oh dear ..
i bet your sorry you didn't snap up a few of those apartments in Dubai last year

Credit noose tightens on highly leveraged Dubai.......


Liquidity shines light on debt renewals
Travis Pantin

Last Updated: September 30. 2008 7:54PM UAE / GMT The growing scale of the crisis afflicting the global banking industry has thrown a spotlight on the financing needs of the country and particularly the renewal of a large stock of short-term debt held by Dubai.

Few doubt that the UAE has the means to refinance its debts and carry out its long-term expansion plans from its reserves, if needed, but the liquidity crisis has caused some to worry that international banks may be unwilling to renew some US$20 billion (Dh73.47bn) they have lent to the Dubai Government and its companies.

That in turn could slow economic growth, which is founded to some extent on a burgeoning property market heavily dependent on borrowed money.

“People are worried whether the big Dubai names will be able to roll over their debt, especially those who are related to real estate,” said Ibrahim Masood, a senior investment officer at Mashreqbank in Dubai.

“Given the level of growth we’ve seen, there must have been a large amount of funding raised to fuel that growth, and the funding is not of an indefinite maturity. The credit prices for guys like Dubai Holdings are so high right now, that people are beginning to take a serious look at whether the those guys will be able to roll over the debt when it reaches maturity,” he said.

According to Eckart Woertz, an economist at the Gulf Research Center in Dubai, “Commercial lending is becoming more expensive and less available. The UAE is vulnerable to a liquidity squeeze, especially Dubai and its real estate sector,” he said. Farouk Soussa, a credit analyst at Standard and Poor’s, a rating agency, said the government may be using the liquidity squeeze to cool off the economy and rein in excessive lending. Loans grew by 31 per cent in the first half of 2008, compared to a 13 per cent growth in deposits, according to Merrill Lynch.

“I call it a ‘luxury liquidity crunch’”, Mr Soussa said. “In this case it’s helpful for the government to tolerate a moderate liquidity shortage, so long as it doesn’t go too far and undermine confidence in the solvency of the system.”

According to Mr Soussa, the government has more than enough extra money stored offshore in sovereign wealth funds to ease even a serious liquidity squeeze at home. Bringing some of it on shore, however, risks stoking already strong inflationary pressures.

Were the money shortage to reach a point where large Government-related bodies such as DP World and Nakheel could not refinance their debt, the UAE government would almost certainly come to their rescue with the necessary cash, he said. However, in the meantime, the Government will likely be content to see some new projects put on hold for lack of funding.

The liquidity shortage has already put a damper on project finance, when banks provide financing for large infrastructure and industrial projects, whose revenue stream is then used to pay off the loan. Until recently, project finance was a popular way to fund large industrial initiatives, including oil extraction facilities.
Now, banks are charging a much higher rate for such loans, often making them prohibitively expensive. In the past two years, the number of banks actively seeking project finance deals has declined by around 75 per cent, according to London-based industry sources.

The turmoil has also caused some to speculate that more emergency measures from GCC central banks may be in the offing, intended to bolster the as-yet ineffective actions several of them took last week. Nine day ago the Central Bank of the UAE announced an emergency lending facility designed to inject Dh50 billion (US$13.6bn) into the local money markets. No bank has yet come forward and made public its use of the facility. However, the action failed to stem a steady rise in interbank lending rates. Yesterday, the central bank of Kuwait began extending loans to Kuwaiti banks. Saudi Arabia also signalled last week that they were ready to inject extra money into the market, if necessary.

The Emirates Interbank Lending rate climbed to 4.19 per cent — the highest since January — before Gulf markets closed for the week on Monday. According to Giyas Gokkent, an economist at the National Bank of Abu Dhabi, the rates need to fall back to around two or three per cent before things return to normal, and that will require further action. “I would urge the central bank to cut the reserve requirement,” he said.
Cutting reserve requirements is equivalent to injecting cash into the money market, because banks can lend out money that was previously frozen in the central bank vaults.

So Dubai has reserves "if needed", which means its not in the red just yet, when every other country is in meltdown,
looks like a good place to be doing business

thanks very much for that piece of information

Some interesting observations on 'leverage' Dubai style in response to a bullish news paper article. Its not only the developers facing a crunch its also the speculators buying studio's built for flipping rather than homes.


Alex said...
Dubai's version of Subprime
One aspect of the subprime mortgage in the US that got a lot of homeowners into trouble was the initial teaser low interest and payments suddenly ballooning. Off-plan property sales in Dubai are similar in that initial deposit and low payments suddenly balloon as construction progresses. And as a lot of purchases are speculators leveraging themselves to the maximum in anticipation of price rises, the slightest loss of confidence in price rises will have a maximum downward effect.


Posted on Wednesday, October 01, 2008 at 11:08 AM (UAE Local Time)
Sam said...
Good Article, and valid points, however...
I do agree with hammondo73, that most "cash buyers" are in reality over committed and highly leveraged flippers. The real challenge facing the real estate market today lies is in the ability to provide mortgages to real home buyers (the end user), folks with steady jobs and humble savings to invest. Given that most banks in the country are already way over their lending limits with loan growth outstripping deposit growth, due to artificially low interest rates, this may prove challenging.
Posted on Monday, September 29, 2008 at 4:24 PM (UAE Local Time)


hammondo73@gmail.com said...
Very Naive "analysis"
“Perhaps 70-80 per cent of sales are for cash” This claim is very suspect and the argument that there is massive speculation and risks of overheating in this market is clear. This BOOMING market that has seen such heady price increase has created the psychology of excessive and optimism feeding the expectation of further stellar gains. People rationalize that what HAS HAPPENED will continue TO HAPPEN and thus SEE LESS RISK than actually exists. In the UAE market the majority of sale contracts are on a payment plan basis – for plots of land, units, villas, and office. These plans are skewed to fund construction whilst remaining attractively low, particularly at the beginning, to attract investors. The security backing these “Unconditional Contracts” is non-existent – ie: no valuation backed mortgage in place to enable/force the purchaser to complete on the contract. Thus this market has many buyers, entering into contracts, that they have no hope in completing on the the basis that they will on-sell/flip, (for a profit) prior to being unable to complete. As this market losses confidence, these speculators will rush to exit, and those that cannot will default and lose their deposits. This will be tough for these speculators but even tougher for the “Developers” who have irresponsibly entered into contracts with unqualified buyers and will now need to FIND 80-70-60% of the construction costs to complete the building/project–either from sales of bank finance. All in a distressed, falling property market – not a pretty sight. Think Asia late 1990’s with derelict building sites complete with cranes still attached. Alarmist? Time will tell

Thursday, 02 October 2008
Dubai Land Department
Dubai Land Department

As property markets around the world continue to face falling prices opinion is divided over whether the boom in Dubai could come to an end.

Most analysts agree that a price correction is inevitable and welcome a slowing down of speculation. But the property industry believes these predictions are over pessimistic and point out that demand is not going to suddenly disappear.

The debate began in earnest last month when a report from Morgan Stanley predicted at 10% fall in property prices by 2010. Then last week Egyptian investment bank EFG-Hermes said that property prices in Dubai are set to slump by 20% 2011.

However officials at Dubai Land Department believe any slowdown will be much more modest. 'In 2007, they said prices would go down. And the recent reports say prices will go down. But I said then it will be a very strong market. And it is,' said Sultan Bin Butti Bin Mejrin, DLD director general.

And Dubai's Real Estate Regulatory Authority (Rera) is optimistic. 'There will be a correction in some places but a correction in profit only. Rather than making 20% profit, maybe investors will make 5% profit. What have they lost?' said CEO Marwan Bin Galita.

A slowdown in prices should be regarded as a buying opportunity, according to Standard Chartered. 'I don't think the current situation is a healthy situation. Doubling your money in one or two months is not a situation driven by fundamentals but one that is driven by market psychology and excessive speculation,' said Marios Maratheftis.

But he added that investors who take a long term view can still achieve good profits. 'Doubling your money in a couple of years is perhaps not going to be as easy. But the global economy has seen the strongest growth in more than thirty years and this is now changing,' he added.

The basic fundamentals that make Dubai attractive to property investors are unlikely to change according to Abid Junaid, executive director of ETA Star Properties. 'Dubai's popularity with investors is to do with the lifestyle Dubai offers, it's strategic positioning in the Middle East and it's tax free status. None of that has changed,' he said.

Now from some info without vested interests. Ex Emaar chief creates doubt. Guess his residence visa will not be renewed. Gradual slowdown or panic exit from the market, time will tell. Dubai needs to provide accommodation for 'real working people', a correction in rents and property prices are needed.

Oil-rich nation facing property crash threat


Catherine Fegan September 30 2008
Comment | Read Comments (1)Dubai: Fears are growing that one of the richest regions in the world is on the brink of a property crash.

Dubai's once-buoyant property market is in danger of sinking as lenders in the oil-rich region become more cautious.

Despite a £7.39bn emergency lending fund issued by the Central Bank of the United Arab Emirates, investors remain sceptical.

The Gulf's property boom has succumbed to a reality check, according to analysts. Richard Rodriguez, the former chief executive of Emaar Properties in Dubai, said: "Either the pace will drop or the prices will. Both cannot be sustained in these conditions."

The Gulf's property boom makes it particularly vulnerable to a credit crunch, with massive development projects funded through loans. With a decrease in the amount of foreign speculative money going into the UAE, lending cash between banks has dried up, sparking the same clamour for liquidity that has affected the UK market.

Most analysts agree the slowdown will be gradual. Credit Suisse said global market turmoil and negative sentiment will dent property demand in Dubai and in neighbouring Abu Dhabi.

Some more good Dubai property news to keep the market fluid and stable in Dubai

as follows:

New Dubai property law comes into effect
Law number 13 of 2008, governing off plan property sales in Dubai is set to come into effect this week. The law will introduce a mandatory system of pre-registration for sales contracts at the emirate's Land Department. Any off plan sales regarding real estate units in the city that are not registered will be legally invalid.
United Arab Emirates: Thursday, September 04 - 2008 at 09:33
The new Dubai property law will mean that all off plan contracts must be registered
The new Dubai property law will mean that all off plan contracts must be registered

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The registration system is the next stage in the government of Dubai's efforts to increase the levels of transparency in the local real estate market, along with the introduction of a specific arbitration agency, the Real Estate Regulatory Authority (Rera), and legislative measures such as the escrow law.

These initiatives come at a time when investor confidence in both upcoming and existing projects has been shaken following a series of scandals in the local industry.

Although the system will initially be undertaken by the Land Department, the duty will eventually pass to master developers, who will be obliged to register all purchases by sub-developers.

According to an explanatory report authored by Chloe English and Alexis Waller from legal firm Clyde & Co's Real Estate department, the registration system is already up and running and will work in tandem with the current project registration system in place at Rera following the introduction of Law number 8, the escrow law.

Law number 8 declared that all developers had to be approved by Rera and have an escrow account, which all monies from investors would be paid into and would be used solely for the construction of the development.

The system also paves the way for easing in the emirate's Law number 14 of 2008, regarding mortgages, allowing investors to register against off plan projects.

Contract and purchase fees
Developers will still be obliged to pay a fee of Dhs370 per off plan unit contract when registering their site plan. The developer will not need to have taken possession of the land before registering off plan sales, registration of the concluded purchase agreement at the Land Department will be enough.

There will also be an additional 2% registration fee, payable at the split of 1% by the seller and 1% by the buyer, on all third party sales prior to the beginning of construction.

The good news for buyers is that developers will no longer be able to charge transfer fees on off plan sales.

Administrative charges will still be payable but the exact amount is currently being determined by the department. The Clyde & Co report estimates the figure at Dhs5,000 for off plan transfers and Dhs500 for completed properties.

Breach of contract
Under the new law, if buyers default on a sales contract it becomes the developer's responsibility to report the breach to the Land Department.

They will then issue a notice granting the buyer 30 days grace to comply with contractual obligations. If the issue is not resolved within the period the developer can cancel the contract and return all money paid, minus 30%, which they are allowed to keep. The new law means that the 30% is now a value of money paid by the buyer, rather than 30% of the value of the project.

In a further boost to buyers, developers will also no longer be able to claim additional money if a project is larger once completed than set out in the original contract.

If the project is smaller than specified, however, the buyer must be compensated (the size difference has yet to be specified but the report anticipates a threshold of 5% and over from the advertised area).

Restrictions on property 'flipping'
The new law is also part of the government's efforts to help curb the market speculation that has seen prices rise at fever pitch levels, and ensure that all transactions are monitored by the government rather than by individual companies.

Unfortunately, for many of the investors currently undergoing problematic handovers, the law will not retroactively govern projects that are already underway or completed - although all developments still in the off plan stage only have 60 days to register sale contracts with the Land Department.

Although some of Dubai's major developers, including powerhouses Nakheel and Emaar have set their own restrictions on the resale of off plan units, placing a hold on sales until either a set period of time has elapsed or a percentage of the contractual value has been paid, the new law does not make these restrictions mandatory across the board.

I was saying that a crash would occur in the UK at some point in the medium term since late 2004. I was accused of being a doom monger and of being wrong in 2005, 2006 and 2007.

The fact that a bubble has not collapsed does not mean it won't. On the contrary, it means that when it collapses it will be bigger and more spectacular. Witness the UK. If the slowdown in 2005 had not have fizzled out, an orderly decline might have ensued.

The credit crisis has hit Dubai, this is now clear. The UAE central bank had to inject 50B dirhams into the banking sector. That looks rather similar to what happened in the US, UK and Europe. How so? We were assured that it could not happen in Dubai. And now the same warning lights are flashing red. Ignore them at your peril.

As for the predicted population growth in Dubai, lets just analyse this. Drive around Dubai and what do you see? 95% of building is residential, high end. Only around 10% of the population in Dubai could even afford to live in these places. How much affordable accommodation is being built for general workers? Waiters, cooks, shop staff, supermarket checkout girls, hairdressers, telephonists, computer networkers, etc. Precisely zero. So Dubai is going to fill all this property under construction with rich professionals. Sure. And these rich people will be happy that there are no restaurants, that they cannot get a haircut or have their computer fixed and have to wait in a massive queue at the supermarket because the manager is the only one manning the tills.

The bottom line is that you cannot expand the population of the wealthy without a corresponding rise in the population of the average workers. Since there is no property for them, then they would have to live in some of the luxury apartments now being built. But they cannot afford to even if they shared 5 people to a room (which won't be allowed). So the only alternatives are (1) many flats are rented out at much lower levels (2) salaries for lower level staff are put up from around 3-4000 AED to around 15000 AED. Then watch these new rich folks complain that a haircut costs 80 bucks instead of 15 bucks and see how long the economy survives.

Let's just summarise the Dubai economy in Oct 2008:

(1) HSBC reducing LTV to 60% and Tamweel and Amlak to 80%. Credit crunch is in Dubai and mortage lending is tightening fast.
(2) UK and Europe in, or heading to recession. Good luck to Dubai doubling tourist numbers from these countries with a recession.
(3) Oil down 40% in last 3 or 4 months and looking set to continue sliding
(4) Stock markets down some 50% this year.
(5) Banks short on liquidity, EIBOR rate soaring (just like LIBOR did in UK)

All around Dubai you see suspended building projects. Big one right opposite my office in DIC. They sent in bulldozers, dug holes for a month and then left. No one on site and work has stopped for last 2 months.

As for your arguments for continuing rises in Dubai prices, the attack on Iran one is perhaps typical of the clutching at straws. Would a massive war in France boost UK property values? The UAE might be a safe haven for Iranians, but most of the ones with money got out long ago. How safe will Europeans and Brits feel seeing warships off the coast and seeing Iranian threats to bomb the UAE for collaboration with the US and Israel. You don't get that in Worthing. An attack on Iran might spur a few more Iranians to come, but Brits, Europeans and Americans would flee in droves.

The doom mongers were right about the US, UK and Europe. They were just a little out on the timing. But now the signs are already there that Dubai is following the same script. Arguing that because it hasn't happened means it won't is juvenile and absurd, especially considering that the boom mongers in the US and UK used exactly the same defence. They are not anymore.

Dubai's economy is not well diversified and I think will be crippled far more heavily due to its reliance on real estate and oil money, both of which are in deep trouble for the next few years. Unlike other countries, most Dubai workers are expats - if they cannot get a job, they will leave. So the population would fall sharply in a recession.

WHAT CREDIT CRUNCH!! EVEN TALLER TOWER THAN BURJ DUBAI BEING ANNOUNCED TOMORROW AT CITISCAPE 2008
I have seen the piling for this tower when i was in dubai in July

Revealed: Plans to build the world's tallest building at 1km high
By Daily Mail Reporter
Last updated at 3:14 PM on 05th October 2008
Comments (0)
Add to My Stories

High times: An artist's impressionof a new sky scraper in Dubai that, when built, could become the world's tallest building
Plans to construct what could become the world's tallest building, at more than 1km high, were unveiled today.
Dubai developer Nakheel - the company that created man-made islands in the shapes of a palm tree and the world - said the structure will be the centre-piece of an inner-city harbour set to become the emirate's new, unofficial capital.
It would not comment on exactly how high or how expensive the Islamic design-inspired Nakheel Tower will be. The building will have "more than 200 floors" and be part of "a multi-billion pound development", the company said.
But "tallest building" claims are notoriously difficult to make. Debates about what counts as a candidate include whether buildings under construction should be considered and whether roof-top antennas count.
What is certain is that the tower will climb above what is said to be current holder of the "world's tallest building" position - the emirate's own Burj Dubai.
Speaking at a press conference today, a cautious Nakheel chief executive officer, Christopher O'Donnell, said: "From our perspective, we are building a tower that's going to be over 1km in height. This is a complete iconic development. It may be the tallest. Someone may build something taller."
The Nakheel Tower will have around 150 lifts and be built with some 500,000m3 of concrete. If the reinforcing bars planned were laid end to end, they would stretch from Dubai to New York.
The building will have enough cooling capacity to air-condition more than 14,000 modern homes.
It will be so tall that it experiences five different microclimatic conditions over its height. The temperature in the atmosphere at the top of the building could be as much as 10 degrees cooler than the bottom.
Planned high speed shuttle lifts will allow people to see the sunset twice - from the bottom and again from the top of the building.
Asked if Nakheel was concerned about embarking on such a development during a banking crisis, Mr O'Donnell said: "It was always going to be a project that would take 10 years-plus. When you go about trying to fund a project like this, you have to take account of the economic cycles."
The tower and harbour project will take more than 10 years to complete.
Apart from the landmark structure, there will also be another 40 towers, ranging in height from 20 floors to 90 floors. The entire development will be home to more than 55,000 people and a work place for more than 45,000 people.

Giant ambition: The structure will be the centre-piece of an inner-city harbour set to become the emirate's new, unofficial capital
Nakheel executive chairman, His Excellency Sultan Ahmed bin Sulayem, said: "There is nothing like it in Dubai. Nakheel Harbour and Tower is located in the heart of 'new Dubai', where we have focused on creating a true community, a location for living, working, relaxing and entertaining, for art and culture. All of this is concentrated in one area."
Nakheem said the designs of the planned harbour and tower were inspired by landmarks of Islamic design - including the gardens of Alhambra in Spain, the harbour of Alexandria in Egypt, the promenade of Tangier in Morocco and the bridges of Isfahan in Iran.
"With the Islamic influences governing its design, Nakheel Tower has been able to reach its height of more than a kilometre," said His Excellency.
"This inspired approach has enabled us to achieve a number of amazing feats of engineering, for example the tower will be the world's tallest concrete structure."
Nakheel's other developments in Dubai include the Palm Jumeirah and The World - man-made island communities for the wealthy.

ANOTHER ARTICLE ON THE TALLEST TOWER

http://canadianpress.google.com/arti...djiFHAm5kzMsIA

With its world's tallest building nearing completion, Dubai said Sunday it is embarking on an even more ambitious skyscraper: one that will soar more than a kilometre into the air.

That's the height of more than 10 football fields, 13 Airbus A380 superjumbo jets or three of New York's Chrysler Buildings stacked end-to-end.

Babel had nothing on this place.

"This is unbelievably groundbreaking design," CEO Chris O'Donnell said during a briefing at the company's sales centre, not far from the proposed site. "This still takes my breath away."

The tower, which will take more than a decade to complete, will be the centrepiece of a sprawling development state-owned builder Nakheel plans to create in the rapidly growing New Dubai section of the city. Foundation work has already begun, O'Donnell said.

The area is located between two of the city's artificial palm-shaped islands, which Nakheel also built. The project will include a manmade inland harbour and 40 additional towers up to 90 floors high.

About 150 elevators will carry employees and workers to the Nakheel Tower's more than 200 floors, the company said. The building will be composed of four separate towers joined at various levels and centred on an open atrium.

"It does show a lot of confidence in this environment" of worldwide credit problems and a souring global economy, said Marios Maratheftis, Standard Chartered Bank's Dubai-based regional head of research.

As part of government-run conglomerate Dubai World, Nakheel has played a major role in creating modern-day Dubai, a city that has blossomed from a tiny Persian Gulf fishing and pearling village into a major business and tourism hub in a matter of decades.

Besides the growing archipelago of man-made islands for which it is best known, Nakheel is responsible for a number of the city's malls, hotels and hundreds of apartment buildings.

The company said the new project is inspired by Islamic design and draws inspiration from sites such as the Alhambra in Spain and the harbour of Alexandria in Egypt.

"This is nothing like it in Dubai," said Sultan Ahmed bin Sulayem, Nakheel's chairman.

Perhaps not quite. But Dubai is already home to the world's tallest building, even if it remains unfinished.

That skyscraper, the Burj Dubai, or Dubai Tower in Arabic, is being built by Nakheel's chief competitor, Emaar Properties.

Emaar has kept the final height of the silvery steel-and-glass tower a closely guarded secret, saying only that it stood at a "new record height" of 688 metres at the start of last month. It's due to be finished next September.

The final height of Nakheel's proposed tower is likewise a secret, as is the price tag. The company would only say it will be more than a kilometre tall.

O'Donnell said he was confident that Nakheel could pay for the project despite the financial troubles roiling the world's economy.

He also brushed aside concerns by some analysts that Dubai's property market is becoming overheated and due for a potentially sharp correction.

"In Dubai, demand outstrips supply," he said. "There might be a slowdown, but there definitely won't be a crash."

Hello George, I enjoyed reading your post this morning
I PMSL
your basing the Dubai economy on the price of a haircut ha ha
I think your information is inaccurate

to highlight your points:
"The fact that a bubble has not collapsed does not mean it won't." - I don't think we should be talking about Dubai being a bubble, fact is Dubai was so cheap to start with, as the city has grown, its prices have reached equilibrium on the world stage, I believe at worst, growth slowdown or prices stabalising a little would be conceivable


"How much affordable accommodation is being built for general workers? Waiters, cooks, shop staff, supermarket checkout girls, hairdressers, telephonists, computer networkers, etc. Precisely zero. So Dubai is going to fill all this property under construction with rich professionals. Sure. And these rich people will be happy that there are no restaurants, that they cannot get a haircut or have their computer fixed and have to wait in a massive queue at the supermarket because the manager is the only one manning the tills." - There is a high levvy of residential and commercial space being developed in Dubai to support the infrastructure.
Where do you shop? At present the shopping malls and supermarkets are quite satisfactory in Dubai, good standard of service, well staffed, and
there are plenty of restaurants in Dubai.


[b] "salaries for lower level staff are put up from around 3-4000 AED to around 15000 AED. Then watch these new rich folks complain that a haircut costs 80 bucks instead of 15 bucks and see how long the economy survives."

[/b]
You would only pay 15 bucks for a haircut? My missus would die if she had a 15 buck hair cut
There is an abundance of accomodation for all range of classes in Dubai. The Deara, gold souk areas, ect. all provide low level accomodation, and there is more low level stuff being developed on the edges of the city with transport links and shuttle services daily

"UK and Europe in, or heading to recession. Good luck to Dubai doubling tourist numbers from these countries with a recession."
There are increasing numbers of tourist coming in from China, russia, Australia

[b]"Oil down 40% in last 3 or 4 months and looking set to continue sliding"[/b]

and why is oil down 40% in the last few months? because it hiked up over 40% in the 3 months previous, so it's back to where it started



"All around Dubai you see suspended building projects. Big one right opposite my office in DIC. They sent in bulldozers, dug holes for a month and then left. No one on site and work has stopped for last 2 months."
- that is one development example you have used to base a whole economy on, It was probably a badly managed company undertaking the work.
Overall building is continuing at a good and steady pace in Dubai with the good developers.


"How safe will Europeans and Brits feel seeing warships off the coast and seeing Iranian threats to bomb the UAE for collaboration with the US and Israel. You don't get that in Worthing." that one really made me laugh! nuff said!

Very hot and interesting thread... Seriously made me reconsider investing a significant proportion of my bonus into a hotel in the Dubai area. When I visited Dubai over summer it seemed like a buzzing enough place that was on the up and up however, after reading this I am starting to doubt what all the sales people were telling me...

Thanks for the insight. Here is a link offering numerous impartial news stories which may be of interest to anybody else contemplating investing money into dubai property

Hope this can help you make the right decision. As for me, the views expressed in this thread makes me think I should buy a farmhouse in South Wales instead

Oh dear .......but isn't it different here?



Bad loan fears loom over Cityscape’s extravaganza
Sara Hamdan

Last Updated: October 05. 2008 7:54PM UAE / GMT
UAE investors are bracing themselves for a possible correction. Ryan Carter / The National
Lina al Madi, the wife of a general practitioner, owns five properties in Dubai with mortgages on three of them. She is worried. While she spent hours at Cityscape booths last year, this year she is not bothering to attend. A year ago, the property game was fun. Now, with the liquidity crunch and merger talks between the main mortgage lenders, Mrs Madi is getting nervous.

“Everyone is talking of a price correction in the property market and at the same time, banks are being more difficult with home loans,” said Mrs Madi. “I’m not sure how to act.”

She is not the only concerned property investor who enjoyed the boom period in the past few years and is now worried about the future. The fear is growing that banks have lent recklessly to the property sector. If anything should occur to derail its boom, they will be left sitting on a pile of devalued assets, just as has happened in the US, Britain and Spain.

It is also becoming clearer that global markets are more interrelated than ever. The Gulf region is no outcast to the trend. The turmoil has prompted foreign investors to pull their money out of the region, sending sensitive markets downwards and putting liquidity into a lockdown with an ensuing credit crunch in the UAE.

The Central Bank’s capital injection of Dh50 billion (US$13.6bn), designed to encourage banks to start lending again to each other, is an indication that something needs fixing – in particular, that regional banks are exposed to an overheating property sector.

“Local lenders have got a huge exposure to the real estate market by lending directly and indirectly through working capital, contractors’ loan facilities, providing mortgages and heading up their own development arms, so exposure is quite substantial and in the back of everyone’s minds,” said Miles Payne, the regional head of Strutt & Parker, a UK-based property consultancy with offices in the UAE.

“Banks are heavily exposed and could take a hit if the property market declines, but because there’s such a concern of having an impact the necessary precautions are already in place.”

As investors brace themselves for a possible property correction, nerves are wrought over who exactly would be at risk once the cards are shown on bank balance sheets.

“Initially, the people taking out mortgages will be more at risk, but if prices go down and individuals decide not to pay – then it becomes the banks’ problem,” said Ashley Painter, a partner at the law firm Clyde and Co who covers the property sector. “Major banks have large government shareholdings, so if there was risk of defaults, it could potentially provide a safety net.”

The Central Bank sets a lending limit of 20 per cent for banks to lend to the property sector, which could contain the issue. When times are good and business is growing, it makes sense for banks to be lending both to customers and to companies. However, when times turn bad, they need to be sure that they have not exceeded these limits. Moreover, Islamic banks and contractors are allowed to sidestep these limits, which means exposure could be more substantial than is let on.

Part of the risk is that many banks have a total exposure to the property market that exceeds their equity. According to research at EFG-Hermes, Dubai Islamic Bank has exposure of about 250 per cent of equity; Abu Dhabi Commercial Bank and the National Bank of Abu Dhab have 150 to 175 per cent exposure; and Emirates NBD has exposure of about 100 per cent of equity.

“Banks’ exposure to the mortgage sector is minimal compared to that in the US, the UK or Spain. The main exposure is to the contracting sector. Within that, 90 per cent is due to the main property developers,” said Raj Madha, an analyst at EFG-Hermes who monitors the property sector. “It would take more than a 15 to 20 per cent decline in the property market to really adversely affect the banks. However, any loss beyond that wouldn’t be on a linear scale.” In other words, if property prices fall by 20 per cent, Dubai’s banks will be in big trouble.

He added that a decline in the property market does not necessarily have an impact on banks unless it is associated with a weakness in the labour market, which has shown no signs of slowing thus far.

While many analysts agree that a property market correction could be imminent, there are still signs of strength amid troubled times. Expatriates continue to flock to opportunities in the Gulf and avoid distressed markets abroad – and they need housing.

“Key markets, including India, Russia and GCC markets, are still buying into the UAE and economic fundamentals are still strong; oil has dropped in price but liquidity remains ample in the region. If necessary, SWFs [sovereign wealth funds] can be utilised to prop up liquidity, so I don’t see complete meltdown,” said Mr Payne.

Mr Madha is also sanguine. “Any surplus in the property market can get soaked up because immigration is strong,” he said. “If there was weakness in the immigration and labour market, which there isn’t at this point, then problems in the property sector would get amplified, which would in turn adversely affect the banks as well.”

Property stocks have shown a steady decline over the summer, and analysts have begun cutting target share prices for top property companies including Emaar and Union Properties.

A Credit Suisse report released in mid-September saw “a high degree of speculation in the Dubai real estate market which is beginning to diminish, which will lead to a slowdown in property sales and put pressure on property prices in the short term”.

The report continues that “we have a bearish case for future operations in Dubai whereby we cut our property sales forecasts in Dubai”. As a consequence, Credit Suisse cut its target price for Emaar by 50 per cent, to Dh6.2 per share, from its previous estimate of Dh12.4.

When Dubai emerged as a global destination and real estate centre back in 2002-2003, it was a boom period and people didn’t have to think too hard about investing in property and generating high returns over short periods.

The market is now maturing and it’s not as easy to make quick money. Cityscape in the next few days will be interesting to watch as new projects are launched and property investors eye each other to gauge the strength of the market. According to Mushtaq Khan, an economist at Citigroup, Dubai real estate is “too big to fail, especially since the booming financial sector is booming precisely because of real estate”. Nearly every other sector of Dubai’s non-oil economy – including tourism and retail – depended on a strong property market, Mr Khan wrote in a report.

Of course, most people thought that Wall Street was too big to fall, but in the space of a couple of weeks America’s fourth-biggest investment bank was bankrupt, the two biggest mortgage lenders were effectively nationalised, AIG was bailed out, and Goldman Sachs and Morgan Stanley became ordinary banks. These are not normal times.

However, analysts point out that the handful of government-backed developers who dominate the Dubai property sector have perfected the art of managing supply. An excess of homes and offices have already been built, but developers are holding back the new units to help ensure prices continue to rise.

The liquidity crisis was likely to hurt the smaller property developers “but government assistance for established players is expected”, said Mr Payne.

“Managing a soft landing for [the property] sector is likely to dominate policy concerns for the medium term, as built-up units are slowly released onto the market.” Nonetheless, if an economic slowdown continues to pull down property prices around the world, Dubai is unlikely to be immune.

Video of the Nakheel Harbour and Tower from Cityscape 2008 - today

http://www.ameinfo.com/170471.html

Will be released for first sale next year with prices upwards of 3500 USD (12800 dirhams) per square foot

So Nakheel Tower is going to be the world's tallest eyesore...
Congrats Dubai

Thats a stunning piece of cutting edge design and architecture
It reminds me of the Chrysler tower in new york,
its got an art deko look.

Once again Dubai is coming up with something new and exciting
I'm really looking forward to the future in Dubai
this is great news

Thanks for posting the link Ferarri

cracking post that. Keep us informed if you have the time. These childish one dimensional zealots/robots on this thread are the most annoying posters bar none. They found the thread due to Google's high ranking of HPC and believe they now have a mission of some sorts.

The tea leaves are telling me that you work in real estate 50cool50 & Ferrari430.
They are not often wrong...

Well I had my palm read yesterday that said Dubai is gonna stay nice and stable during these bad economic times in the world
and a lucky black cat crossed my path this morning,
and a fortunes teller looked into her crystal ball and told me that all the doom mongers on this forum will be kicking themselves in a few years that they didn't snap up a few bargains while it was still cheap and the world was crying poverty

I agree with 50 cool 50

I live in Dubai and the supermarkets are really well staffed and there is no problem with service in Dubai

Me and my wife have found loads of international restaraunts we like

as regards developement for the future of commercial space, there is massive amounts of commercial, retail and shop space being built in the different developements

It will be interesting to see what effect this might have on price growth..............


From ArabianBusiness.com
Banks cut mortgage lending limit by up to 25%


MORTGAGE RATIO: Banks and finance houses in the UAE have cut their loan to value ratios.

UAE banks and home finance firms have cut their loan to value ratios by as much as 25 percent as the global credit crunch continues to tighten its grip on regional markets.

Tamweel and Amlak, the biggest Islamic mortgage lenders in the UAE, have both dropped their loan to value ratio in the last two weeks. Tamweel has lowered its maximum amount from 90 to 75 percent while rival Amlak has dropped its loan to value ratio from 90 to 65 percent.

“The base case has always been between 70-80 percent and anything in the 90 percent range was on a promotional basis, we have now stopped the promotion,” Nabil Alwan, head of marketing & product development at Tamweel told Arabian Business.
Story continues below ↓
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The deepening global credit crisis has forced governments to bail out banks as liquidity dries up. Last week the US approved a $700bn plan to prop up its financial institutions while the UK today announced that its own banks would get an $87bn lifeline. Last month the UAE central bank pumped $13.6bn into the UAE banking system in a bid to ease the impact of the liquidity crunch.

Lenders are lowering mortgage rates as credit tightens and home price growth slows.

In September HSBC Middle East lowered its loan to value ratio from 80 to 70 percent. Lloyds TSB, which currently lends a maximum of 80 percent against villas and 70 percent against apartments, is also expected to lower its rates next week, according to one of its mortgage advisors.

Emirates NBD, the Gulf's largest lender by assets, on Wednesday announced it would offer fewer large loans and long-term repayment schemes in a campaign to encourage responsible lending after the global credit crunch.

“Large loan amounts and long repayment periods that can place a considerable strain on the borrower will be minimized through this process,” the bank said in a statement on its website.

UAE liquidity squeeze driven by real estate fears

by Amy Glass
Wednesday, 08 October 2008

LIQUIDITY SQUEEZE: S$P said the credit crunch in the UAE was being driven by real estate fears. (Getty Images)The UAE's liquidity squeeze is being driven by fears over the real estate sector rather than the global financial crisis, Standard & Poor’s (S&P) said on Wednesday.

The ratings agency said in report tightening liquidity was "only slightly related" to the global credit crunch and was mainly driven by country-specific factors including speculative investor activity surrounding the dirham’s peg to the US dollar, concerns over the real estate sector and rapid domestic growth.

S&P said economic growth could be hit by developers struggling to find funding for future projects.

However, a slowdown in growth was "not necessarily a bad thing" as it would alleviate infrastructure and resource pressures, while preventing a real estate oversupply, the ratings agency said.

S&P said that while financing conditions were becoming more challenging, it did not expect the credit-worthiness of rated domestic entities to be affected.

“Refinancing risks will be contained, and the willingness and ability of the government to provide implicit or explicit support in the event of serious financial distress remains strong,” the ratings agency said.

Mortgage curbs to hit first time buyers

Thursday, 09 October 2008

BUYERS HIT: Home buyers could be forced from the UAE property market. First time buyers could be forced out of the UAE property market after mortgage lenders reined in loans, analysts said on Thursday.

But the move could also curb speculators hoping to make a quick profit from “flipping” properties on.

“It is going to affect people that are trying to get a foot on the ladder,” Jean Luc Desbois, managing director of Dubai-based mortgage consultancy firm Home Matters, told Arabian Business.

“Dubai is attracting a number of younger people and with the rents continuing to increase, the opportunities for them to buy is going to be reduced because the amount of deposit they need to find is higher,” he said.

Tamweel and Amlak, the biggest Islamic mortgage lenders in the UAE, have both dropped their loan to value ratio in the last two weeks.

Tamweel has lowered the maximum amount it is willing to lend against the purchase price of a property from 90 to 75 percent while rival Amlak has dropped its loan to value ratio from 90 to 65 percent.

The deepening global credit crisis has forced governments to bail out banks as liquidity dries up.

Last week the US approved a $700 billion plan to prop up its financial institutions while the UK yesterday announced that its own banks would get an $87 billion lifeline.

Last month the UAE central bank pumped $13.6 billion into the UAE banking system in a bid to ease the impact of the liquidity crunch.

Lenders are lowering mortgage rates as credit tightens and home price growth slows.

In September HSBC Middle East lowered its loan to value ratio from 80 to 70 percent. Lloyds TSB, which currently lends a maximum of 80 percent against villas and 70 percent against apartments, has said it is reviewing its loan to value ratio in line with its international mortgage offerings.

Speculative buyers, blamed for driving up the cost of housing across the emirates, could also be put off investing into the real estate sector following the changes.

“It will reduce the number of speculative buyers and that would not be a bad thing. It would help ensure the real estate market remains fundamentally sound for the long term,” said Mohamed Jaber, an analyst for the GCC region at US bank Morgan Stanley.

“It may reduce the number of first time buyers, but on the other hand, at a time when there are concerns about the banks exposure to the real estate sector, it could signal to the markets that they are taking good precautions,” he said.

oo more good news for Dubai today ......

Dubai authorities showcased a state-of-the-art airport terminal yesterday, vowing “not to blink” in face of the global financial turmoil and to press ahead with their $4.5bn expansion plans.

“We are in front, and we intend fully to stay there. This is not a time to blink,” Paul Griffiths, chief executive officer of Dubai Airports, told reporters after guiding them on a tour of the new terminal due for a soft opening next Tuesday.

“Emirates Terminal 3”, dedicated to the state’s Emirates airline, adds a capacity of 20 million passengers a year to Dubai International Airport, taking total capacity to 60 million while construction goes on at another airport intended to be one of the world’s largest.

Dubai airport will have handled around 40 million passengers by the end of the year, about five million more than in 2007, Griffiths said. Dubai “is in a unique geocentric position where we have by default become the world’s most significant hub,” Griffiths said.

“You haven’t got to look very far around the region to see airports and airlines that would love to take some of the market share that Emirates and Dubai Airports are achieving.”

Dubai boasts the biggest airline and busiest airport in the Middle East, but neighbouring Qatar is using its vast gas wealth to expand its national carrier and build a new airport. Dubai also faces competition from the oil-rich emirate and UAE capital of Abu Dhabi, which has its own airline and airport development plans.

The new airport under construction at Jebel Ali on Dubai’s outskirts will come on line over several years, with the first cargo flights due in the summer of 2009 and the first passenger flights shortly afterwards.

Griffiths said Dubai cannot afford to slow down expansion plans because of the global financial crisis. “Investing in airport infrastructure is by definition a very long-term programme... There’s probably more risk in slowing down than there would be in keeping on track” because it could entail rising costs from penalties and the loss of contractors, he said. Officials have opted for caution in launching the new terminal, which will have cost $4.5bn once another concourse still under construction is completed next year. Emirates will move its operations to Terminal 3 starting on October 14 in four phases stretching to December.

This is “the best way for us to fix the glitches that will undoubtedly come up without any customer service impact,” Griffiths said. He dismissed a suggestion that the new terminal could experience the kind of difficulties that turned the launch of Terminal 5 at London’s Heathrow airport last March into a debacle.

“We deliberately decided to do a completely different transition in four phases,” he said. Heathrow’s Terminal 5 was blighted by logistical problems that centred around the baggage handling system, at a heavy cost to British Airways, which has exclusive use of the facility.

Griffiths said work on Dubai World Central, or Al Maktoum International, a new airport on the outskirts of Dubai was “on track” with the first runway expected to be ready in the first half of 2009, and total completion after 12 or 13 years.

The investment programme for the new airport, which will have a 120 million passenger capacity when complete, was around $32bn he said, adding that the company did not have any borrowing plans to fund the expansions.

“Because of the strong growth in traffic, we’ve recorded a very strong increase in revenues and that has obviously helped to fund the entire infrastructure ... the finance to manage and build the new airport should be available from our own internal sources.” Griffiths said Dubai Airports would continue its strategy of investing and expanding despite the global financial turmoil.

“This is a very long-term proposition and to interrupt it because of some short-term blips in the financial markets, I believe in hindsight in the future would be a mistake.”

and more realistic news about property in Dubai.......

Predictions that property prices in Dubai will fall by up to 20 per cent have been dismissed

But prices will level off as the rate of increase slows, says Andrew Chambers, Managing Director of Asteco. And the market will fragment, with price levels varying from area to area as more end-users enter the market.

"A lot of people are now buying property to live in," said Chambers. "EFG-Hermes is talking about a 15 to 20 per cent drop in prices but I don't see that happening. What I see is a drop in the rate of increase which will mean a levelling off of prices and a cap for investors.

"What has steadied is the amount of profit investors may gain from property. The cap rate is dropping for investors, the investment may not be so brilliant as you may not get high returns. If the market is to cool off it will probably happen by the end of 2010 because by then a lot of office and residential unit will be completed and people will have a choice."

Chambers said the continuing strong demand for property would prevent prices from falling.

"People come to Dubai because of many factors such as the working environment, job opportunities, safety and security and the fact there is no tax - all these keep demand high.

"It is the opposite scenario abroad - 180,000 jobs have been lost in the US. Here it's the opposite, there is a shortage of skilled people, so I don't think you will see a 15 to 20 per cent decrease. And EFG-Hermes has now moderated its statement to say there will be a levelling off rather than a decrease.

"Sales prices for commercial property have doubled year-on-year although there has been a levelling off in rental levels in the last three to six months. There is a major shortage of office space and villas are also in very high demand.

"People are moving out of villas which are overcrowded. And even in the lower end of the residential market, such as Discovery Gardens, the price of studios and one-bedrooms is very high, so the market is really not showing any signs of slowing down."

Chambers said some areas - such as the Palm Jumeirah, the Palm Jebel Ali, the Dubia International Financial Centre and Business Bay - would not even see a slowdown or levelling off.

"These areas will carry on increasing regardless of prices in other areas. People are now starting to have a choice, they can select from hundreds of available properties. So what will occur is a breakdown into separate markets, as is the case in London where prices in areas such as Chelsea and Knightsbridge are double those in suburbs close to them.

"This differentiation of areas is going to occur in Dubai and Abu Dhabi, and I think this is important. As they become mature markets you are going to see different prices in different locations."

He said most investors came from the region and - despite Russia's problems with its stock market - from Eastern Europe.

"There is still a lot of wealth out there and at Cityscape we have had a lot of people from those regions who are interested in buying property. Countries such as Qatar and Saudi Arabia still have big sovereign wealth funds so they can easily bring money into the market with all the wealth available.

"The credit crunch may affect the real estate market here but not to a great extent. There has been some caution from some European and American buyers that's been picked up by regional buyers. The Far East has shown quite a lot of interest. China, Malaysia and Singapore have been investing here, they haven't been as badly effected by the sub-prime crisis. Many countries have been investing here.

"Where projects have sustainability and good business plans there will still be money to borrow.

"Chinese companies are looking into developments here, they see it as a chance to expand out of their homeland."

Chambers said that even though rents were sky-high tenants were still willing to pay up. "People are saying, 'We can pay the rents that are being asked now but we can't pay much more,' and landlords are listening. But people are still willing to pay whatever the market rate is.

"Rents have gone up over the past two years though they have steadied in the last six months."

A dose of reality away from Dubai PR Spin Machine.....from a neutral source : The Economist.


Not-so-hot property
Oct 9th 2008 | DUBAI
From The Economist print edition

Is Dubai being hit by the turmoil?


YOU may have thought that if anywhere would be insulated from the financial chaos, it would be Dubai, the ritzy commercial capital of the oil-rich Gulf. Not so. Events across the world are causing pain there too, even though much of the emirate’s cash has not made its way to the banks; it is held by ruling families and in their sovereign wealth funds.

Dubai’s oil revenues are small. Sheikh Muhammad bin Rashid al-Maktoum, the energetic ruler of the second largest emirate of the seven that make up the United Arab Emirates (UAE), has chosen to diversify, especially into real estate, as his way forward. Investors in Dubai property have done well in recent years, enjoying returns of roughly 80% since early last year.

Two factors have underpinned prices. The first is negative real (ie, below-inflation) interest rates, which track those in the United States. Borrowers can apply to banks and still borrow very cheaply. And since some think the official inflation rate seriously underestimates price increases in Dubai, there is a big incentive to borrow from banks and invest somewhere else.

The second factor is the continuing influx of workers into the emirate. Less than a fifth of Dubai’s 1.5m people are local. Many of the immigrants are building workers from South Asia who are provided with accommodation during their stay, but not in the smart apartment blocks that Dubai developers favour.

Bad timing
Then, over the summer, Morgan Stanley issued a note which said that Dubai property prices would fall by 10% by 2010. Quite simply, there may not be enough demand for the wave of new property coming onto the market. To a society used to easy returns, this was a shock. The report coincided with a withdrawal of deposits and investments from the UAE by speculative investors who had previously been betting that local currencies would shoot up as Gulf states let go of their dollar pegs to deal with double-digit inflation. But things did not work out like that. The dollar strengthened, so the bet failed and speculative flows went home. As a result, there was less cash sloshing around in the Gulf.

It was the wrong time, then, for a slew of corruption allegations. Since April, investigations have centred on Dubai Islamic Bank, an institution with a history of problems, and on various mortgage lenders and developers. Those investigated include a minister of state and two Britons. Sheikh Muhammad made a rare public announcement recently to say that the public prosecutor would not tolerate “illegal profits”. The investigations are thought to be continuing; no charges have been made.

At this week’s Cityscape real-estate conference, the emirate’s pushy public-relations people were busy pretending nothing was amiss. Nakheel, a state-backed developer, said it would build another tower block that would be the tallest building in the world, even higher than today’s tallest, the Burj Dubai. Another developer heralded a spectacular new development called Jumeirah Gardens, at an estimated cost of 350 billion dirhams ($95 billion).

The markets have been less impressed. So far this year, shares in the Dubai Financial Market have lost 48% of their value. Emaar, a high-profile developer, fell from a high of 15.7 dirhams to 5.5 on October 9th. In another sign that not all is well, the Dubai authorities merged two Islamic mortgage lenders, Amlak Finance and Tamweel; the latter is one of the firms involved in the investigation. Some of the more sober developers, Tamweel included, have stopped the widespread practice of “flipping”—paying only a percentage of the purchase price of a property and selling it on before instalment payments begin.

Dubai is not going to go bust. The state controls the larger property developers and can alter supply and demand by releasing land when and how it wants. Average percentage yields from rented properties are still in the high single digits, so demand persists. Business people are still likely to come to the Gulf. But expect more mergers along the lines of Amlak and Tamweel. Some smaller developers may go bust. The huge profits of the past will dip.

The ructions may also strain relations between Dubai and Abu Dhabi, which still has the biggest money bags because it has most of the oil—and may no longer be willing to sit back and let Sheikh Muhammad and his men make all the running. Sheikh Mohammad seems to get on well with Sheikh Khalifa bin Zayed al-Nahyan, Abu Dhabi’s ruler. But financial arrangements between the two emirates are opaque. Sheikh Mohammad may need to be more deferential to his fellow ruler.

Dubai: One of the world's last property booms
Even a little over a year ago the UK real estate sector could be said to be booming, while the US lost it perhaps a year earlier. But like a house of cards, property has gone from boom to bust across the world. How much longer can the Gulf boom last?
United Arab Emirates: Wednesday, October 08 - 2008 at 11:55

European realty markets started to drop late last year, while China, India, Russia and even Brazil are also now seeing property prices decline sharply.

Only in the Gulf States are the property markets not only alive but positively thriving.

In Dubai, anecdotal evidence shows 15% to 20% price rises in the most popular areas of the city over the summer, normally a quiet time, but coming on the back of a 78% surge in the previous 12 months, according to Colliers International.

One reason why the Gulf States now have the last property boom in the world is pretty obvious: High oil prices have sent the economies of consumer nations diving into recession while the same high prices sent petro-dollars back to the Gulf.

High oil prices
Oil prices are off their $147 spike of this summer but still stand at very high historic levels.

Gulf economies had not even started to digest $100 oil so even if prices tumble to $50 next year, as Merrill Lynch predicts, alarm bells will only just be ringing.

But the global credit squeeze is beginning to worry developers and local bankers. Banks have lent up to their maximum quotas for real estate this year, and at the same time inter-bank lending rates have doubled pushing up loan costs, and banks are reluctant to lend even to their best customers.

In the mortgage market higher interest rates have pushed up monthly borrowing costs, while the percentage of equity relative to the size of the loan has gone up.

For a real estate market in an advanced country this would be suicidal. But the Gulf property sector is still driven by cash, at least as far as individual buyers is concerned.

In the UAE just 4.5% of GDP is mortgaged as opposed to 20% to 30% in most emerging markets, and well over 100% in advanced economies - one reason for their mortgage busts.

Small markets
Gulf freehold property sectors are also tiny. Dubai is the most advanced with approximately 30,000 to 35,000 completed units and 160,000 to 170,000 under construction or booked.

This means that the government holds tremendous influence over the sector. It can stop developments, rationalize projects, finance all mortgages and manage the whole sector in a way that embattled economies can only dream about.

So even if off-plan sales hit the wall in the Gulf, the governments are not about to let their plans for diversified, modern economies be derailed.

They are in an enviable position of control - with shareholdings in many key developers and the banks as well as having oil and gas revenues and massive sovereign wealth funds - and can keep the whole show on the road until the global financial crisis is a thing of the past. But this political will is about to be tested.

Evidence is hard to come by in Dubai.


In Dubai, anecdotal evidence shows 15% to 20% price rises in the most popular areas of the city over the summer, normally a quiet time, but coming on the back of a 78% surge in the previous 12 months, according to Colliers International. .......from a vested interest quoting anecdotal evidence?


One reason why the Gulf States now have the last property boom in the world is pretty obvious: High oil prices have sent the economies of consumer nations diving into recession while the same high prices sent petro-dollars back to the Gulf.

No ...Dubai is highly leveraged and borrowed money on international markets to finance its expansion and construction read here
http://www.bloomberg.com/apps/news?pid=206...id=a4sAgqSD_LIA

In the UAE just 4.5% of GDP is mortgaged as opposed to 20% to 30% in most emerging markets, and well over 100% in advanced economies - one reason for their mortgage busts.
No ..............Tamweel and Amlak have increased deposits to 20% because of the lending squeeze.
http://www.thenational.ae/article/20081004.../896541425/1005



Small markets
Gulf freehold property sectors are also tiny. Dubai is the most advanced with approximately 30,000 to 35,000 completed units and 160,000 to 170,000 under construction or booked.

This means that the government holds tremendous influence over the sector. It can stop developments, rationalize projects, finance all mortgages and manage the whole sector in a way that embattled economies can only dream about.

So even if off-plan sales hit the wall in the Gulf, the governments are not about to let their plans for diversified, modern economies be derailed.

They are in an enviable position of control - with shareholdings in many key developers and the banks as well as having oil and gas revenues and massive sovereign wealth funds - and can keep the whole show on the road until the global financial crisis is a thing of the past. But this political will is about to be tested.

Proving that there is no free market operating within Dubai and hence no transparency in information ...people believe what they are told here. The majority of the population is made up of sub-continent labourers earning less than 200 US dollars a month. The majority of property purchases are speculators who never intend to live in them. I wonder whats going to happen to the 250,000 units coming online over the next 3 years.

These pilots blinked....! Fair enough, it's Etihad, which is Abu Dhabi....

Dubai is a little smasher of a City - More smashing good news for Dubai:


UAE sees increased interest

The increased attendance at this year's Cityscape real estate expo in Dubai indicates interest in UAE property is growing, it has been suggested.

Organisers of the event said the number of attendees in the first two days equalled the total of the whole three-day expo last year, the Associated Press reports.

While Dubai thronged with potential property buyers, Abu Dhabi saw the unveiling of a tower branded by former racing driver Michael Schumacher.

Robert Troup, the managing director of architecture firm Aedas, said the mood in the emirates was "upbeat", telling the news provider: "There's a lot of confidence in the region. Both Abu Dhabi and Dubai have development plans in place and they'll see those plans through."

Another official, executive director of ETA Star Abid Junaid, told AFP News that if there is a property correction in Dubai soon it will be confined to the "uppermost end" of the sector.

and before i forget......there's more good news....

patriates are accounting for an increasingly large proportion of the population of the United Arab Emirates (UAE).

According to official figures cited by Business24-7, the country is becoming more and more popular with foreign nationals.

Whereas the number of expatriates was rated at about 4.48 million a year ago, estimates suggest it could reach as much as 4.76 million by the end of 2008.

This would represent an increase of 6.12%.

The economy ministry believes a similar and possibly higher rate of growth could be seen next year, as the number of expats in the UAE is tipped to cross the 5 milli