Monday, Jul 14, 2008
Mixed Thoughts About Dubai
Hiday.net: DUBAI OR NOT DUBAI
Dubai heralded as one of the hot property investment spots for the future has plenty of speculators, highlighting the advantages of long term capital growth and good rental yields. However for some it is a property bubble waiting to burst.
Posted by kitkat @ 12:24 PM (1122 views) Add Comment
16 Comments
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1. denzil said...
Sheep I know who were keen on BTL are now singing from the Dubai property hot-spot hymn sheet.
When the masses start touting that something is a "great investment opportunity" it probably isn't.
I'll think I'll look to see what Arsetz have to say about it.
2. Steve99 said...
This will be the worlds biggest white elephant. The King of Dubai has stated that what is going on there will be a replacement for the oil which will not last for ever. In which case then, who the hell will be flying to a hot deserty part of the world when most of us wont be flying anyway? Or does this King belive that Dubai is the only country in the world that isnt going to run out of oil?. Seems to be the same level of thinking at the rest of the worlds leaders. Perhaps they should have thought about buying up big on solar energy systems instead of indoor ski runs. And also, who the hell would want to buy a nice apartment less than spitting distance from Iran?
3. Fwiw said...
I know Ajay Ahuja called Dubai a white elephant in 2003/2004....can't find the article, but it was on UK MSN Money!
4. shipbuilder said...
I'm wondering about what the 'fundamentals' are in Dubai?
5. Global Citizen said...
Dubai real estate is also in a bubble. no doubt about that. But the difference is that there are many oil rich countries around which has a lot invested here and they will bail out. So, when the time comes when oil price goes down, then is the time for Dubai real estate to go bust.
6. renting2 said...
Fundamentally another Ponzi Scheme.
7. jonb said...
When there are ads in the Metro saying you have a "guaranteed" 50% return on your investment, it can't be anything other than a bubble waiting to burst.
8. drewster said...
jonb,
I agree. When the Metro ads offer you the chance to win a private jet for buying a flat in Dubai, you know it's a bubble. I remember timeshare touts in Spain in the early 1990s (before legislation caught up with them) offering the chance to win a flash car for buying a timeshare. This is the same, but now everything is leveraged so the sums are far greater (plane instead of car, apartment instead of timeshare, etc.)
fwiw,
Ajay Ahuja doesn't like Dubai, even Stuart Law of Assetz doesn't like Dubai! Now that's saying something!
9. Fwiw said...
Isn't this just more VI crap? I mean a site about Bulgaria property comments about Dubai property? Doh - what are they gonna say?
Drewster - i always like to bet against those guys! LOL - but for now cash is king!
10. housebear said...
drewster said...
"even Stuart Law of Assetz doesn't like Dubai! Now that's saying something!"
Well, he iz an expert you knowz !!
11. it_is_going_with_a_bang said...
The fact that they intend to 'keep planning and building' is hardly reassurance for anyone buying now.
The bottom line is a desert and when the oil becomes worth less and when it eventually disappears nobody will want to touch the place with a barge pole.
Short term gain maybe - long term - nope.
12. rumble said...
They've been doing a fair bit of offshore investment, possibly covering themselves knowing they're about to get flushed.
13. fahrenheit451 said...
Read somewhere, that some of the Gulf States actually import oil/gas, and this is one of the problems caused by the overdevelopment + lack of infrastructure. Apparently it's a case of they have the wrong sort of oil/gas. It's like selling freezers to the Eskimos, or sand the Bedouin. There is some development in the solar farms, but they have an energy shortage (is it caused by the need to run all that air-conditioning and purifying drinking water). Waste brackish water then goes to water all the planting that would otherwise not survive, because it is Mediterranean, not arid.
It's just not sustainable ...
Now, why was it that they fell so far behind European education & economy?
And fundamentally? has their society changed since the 5th Century.
14. brian t said...
Dubai is definitely low on oil & gas, compared to its neighbours - it's the primary reason why they opened up to Western trade and tourism. I've been there a couple of times, and I think the word "bubble" is totally apt.
The first time (summer 2004) I could have put down a 50% deposit on a condo. The second time (late 2006), fuhgeddabouttit. Loads of people from the UK & Ireland piled in there with cash, to the point that Aer Lingus flew direct flights three times a week. (They've stopped doing that now.)
15. montesquieu said...
Iran has Indeed been heavily hit by the rising oil price - it's woefully short of refining capacity so has to import petrol, which it then subsidises to keep the masses submissive. With over 60% of the population under 30 it's a revolution waiting to happen, the US should just leave well alone and let demographics take their course. So curiously, oil will be the current regime's downfall. Also explains its quite legitimate interest in nuclear energy (which it's perfectly entitled to).
BTW on a similar point, Iran is also 100% entitled to nuclear weapons as it never signed the nuclear non-proliferation treaty, but then again the US or the UK are long past caring about international law ... they were at it again last week, Mugabe is a seriously bad guy - much worse than Ahmadinejad - but the UN charter expressly forbids interference in internal affairs, something upheld by china and russia, quite correctly but to Broon's reported 'annoyance'.
As for Dubai, remember the skyscraper index and its relationship to the economic cycle - with so many tall buildings completed/completing, a crash is now absolutely imminent. The oil price is a bubble and it must correct (probably quite soon).
16. Wendy Ragiste said...
I think that might just be the problem. If they slowed the building down rather than swamping the property market with development after development then it might be different. But the way things are now they are going to end up with more properties than buyers.