Real Estate bubble bursts in Dubai

Burj KhalifaImage via Wikipedia
Telegraph:

The revelations came as Dubai laid out plans for a bond issue, in part designed to restore its finances in the wake of the crisis.

The bond documents showed that the country's real estate watchdog cancelled the registered real estate projects over the past two years after the bursting of the property bubble.
The Real Estate Regulatory Authority (RERA) determined that the properties were unlikely to be completed after a review of 450 projects.

The Gulf Arab emirate, known for extravagant projects such as the artificial islands Palm Jumeirah and Burj Khalifa, the world's tallest tower, is planning a benchmark sovereign dollar bond issue this week.

...

The property sector has been hit hard by the downturn, with projects worth billions of dollars put on hold or cancelled, while property prices slumped as much as 60pc.

Land sales fell by 14.9pc in the last year, according to data from Dubai's Department of Land and Properties.

The prospectus said only 129 projects have been completed since the beginning of 2009.

...
Dubai is over built and over priced. Apparently real estate values have been held artificial high because of the wealth of the UAE government, but the real value of the real estate is substantially below current pricing. One of the ways they keep the prices high is by supplying ex pats with these properties at inflated rents paid by the government or by companies in Dubai.

China also has some markets that are overbuilt and over priced. They are sustaining the ghost cities for the time being through their command economy model, but the true market would be substantially below the price they are offering to rent or sell.

These real estate bubbles are very different from the one the US has had to deal with. Ours was caused by government policies pushed by Democrats that put people in homes they could not afford and the subsequent defaults had a cascading effect on the market and on the companies who were forced to finance the bad loans.
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Comments

  1. arrielle_p11:32 PM

    Hope someday I can visit Dubai. Thanks for the read.

    real estate ph

    ReplyDelete
  2. Anonymous5:27 AM

    Love this blog, keep up the great work wish you all the best

    sell your house fast

    ReplyDelete

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