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Wednesday, 3 December 2008
Dubai Sees Increase in High-End Property Defaults
Dubai is witnessing a rise in defaults on high-end properties as financing conditions worsen and is likely to see smaller developers merge, according to a member of the Gulf Arab trade hub’s financial crisis committee.
Dubai is witnessing a rise in defaults on high-end properties as financing conditions worsen and is likely to see smaller developers merge, according to a member of the Gulf Arab trade hub’s financial crisis committee.
“There are more and more defaults on the high end if banks do not give mortgages and speculators are [many] in the market,” said Marwan bin Ghalita, the chief executive of the Real Estate Regulatory Authority. Tighter mortgage lending, a liquidity squeeze and a real estate slowdown have hit Dubai, part of the seven-member United Arab Emirates federation, in recent months.
Signs Dubai’s property boom days are over are increasing as developers scale back projects, property prices fall and jobs are cut.
Secondary prices in Dubai and Abu Dhabi fell 4 to 5 per cent in October from the previous month, with Dubai’s advertised villa prices falling 19 per cent after several banks tightened lending conditions in August and September, HSBC said recently.
Mr. Bin Ghalita sits on a nine-member panel set up to tackle the affects of the global financial crisis on Dubai. The council reports to Dubai’s ruler.
He said now would be a good time for smaller developers to join forces, and that he expected some to do so. “If you look at the market a merger between smaller companies would give it confidence.” Last month, Dubai developers Deyaar and Union Properties denied they were in merger talks but were unable to say if the government might order a tie-up.
Mr. Bin Ghalita said developers should review projects that had not yet been launched, or where only a few units had been sold. “This is not a good time to start a new project if you don’t have enough liquidity to construct.”
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Dubai Sees Increase in High-End Property Defaults
Reuters in Dubai
3 December 2008
Dubai is witnessing a rise in defaults on high-end properties as financing conditions worsen and is likely to see smaller developers merge, according to a member of the Gulf Arab trade hub’s financial crisis committee.
“There are more and more defaults on the high end if banks do not give mortgages and speculators are [many] in the market,” said Marwan bin Ghalita, the chief executive of the Real Estate Regulatory Authority. Tighter mortgage lending, a liquidity squeeze and a real estate slowdown have hit Dubai, part of the seven-member United Arab Emirates federation, in recent months.
Signs Dubai’s property boom days are over are increasing as developers scale back projects, property prices fall and jobs are cut.
Secondary prices in Dubai and Abu Dhabi fell 4 to 5 per cent in October from the previous month, with Dubai’s advertised villa prices falling 19 per cent after several banks tightened lending conditions in August and September, HSBC said recently.
Mr. Bin Ghalita sits on a nine-member panel set up to tackle the affects of the global financial crisis on Dubai. The council reports to Dubai’s ruler.
He said now would be a good time for smaller developers to join forces, and that he expected some to do so. “If you look at the market a merger between smaller companies would give it confidence.” Last month, Dubai developers Deyaar and Union Properties denied they were in merger talks but were unable to say if the government might order a tie-up.
Mr. Bin Ghalita said developers should review projects that had not yet been launched, or where only a few units had been sold. “This is not a good time to start a new project if you don’t have enough liquidity to construct.”
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