Dubai property crash stuns holiday home investors
DUBAI – The UK Daily Telegraph has a revealing story about the state of the property market in the UAE.
The newspaper reports that an 800-strong group of mainly UK expat investors, from individuals who put deposits on holiday flats to property brokers, claim hundreds of millions of pounds is at risk.
Work has slowed or stopped on swathes of building sites, including on a second “Palm Island”. The city was planning a series of artificial peninsulas in the shape of palm trees packed with seafront holiday villas, but only one is finished.
Of all the world’s property crashes, says the Telegraph, Dubai’s has been among the most spectacular.
According to an estimate from Morgan Stanley, projects worth £165 billion have been delayed or cancelled across the United Arab Emirates.
Prices in Dubai have fallen by more than 40 per cent since September.
As prices soared, many investors bought off-plan, either because it was cheaper, in the case of small-time buyers looking for a home in the sun, or because they could “flip” or sell on for a quick profit without ever having to pay the full value.
Investors on the end of a chain of “flippers” have been hit particularly hard as prices fell while building was put on hold. But even those who bought from developers now face the dilemma of whether to keep paying or cut their losses.
The situation has been made worse by local authorities which are revising rules on repaying money for property bought “off-plan” which could mean investors cannot get their full investment back.
The Dubai Real Estate Regulatory Authority (RERA) has drafted new rules under which investors who pull out of contracts are refunded on a sliding scale, depending on how much has been built.
But developers are still entitled to 30 per cent of the money paid even if nothing has been built at all, giving them an incentive to claim projects are still viable.
RERA is preparing further revisions. It may also order 27 projects to be cancelled with full refunds – if the money is left.
Alexis Waller, a lawyer at the Dubai offices of legal firm Clyde and Co, told the Telegraph that many investors signed contracts which did not specify what would be built when.
“Investors signed up to payment schedules that were in no way linked to milestones,” she said. “That’s how the market worked here, and purchasers didn’t query it because they were making so much money from property.
“It’s become an issue because they are no longer making money.”
Source: Daily Telegraph, London
Ian Jarrett
Vegas’s Billion-Dollar Secrets – What They Don’t Want Tourists to Know
Visit Florida’s New CEO Bryan Griffin Shares His Vision for State Tourism with Graham
Chicago’s Tourism Renaissance: Graham Interviews Kristin Reynolds of Choose Chicago
Graham Talks with Cassandra McCauley of MMGY NextFactor About the Latest Industry Research
Destination International’s Andreas Weissenborn: Research, Advocacy, and Destination Impact
Graham and Don Welsh Discuss the Success of Destinations International’s Annual Conference
Graham and CEO Andre Kiwitz on Ventura Travel’s UK Move and Recruitment for the Role
Brett Laiken and Graham Discuss Florida’s Tourism Momentum and Global Appeal
Graham and Elliot Ferguson on Positioning DC as a Cultural and Inclusive Global Destination
Graham Talks to Fraser Last About His England-to-Ireland Trek for Mental Health Awareness
Kathy Nelson Tells Graham About the Honour of Hosting the World Cup and Kansas City’s Future
Graham McKenzie on Sir Richie Richardson’s Dual Passion for Golf and His Homeland, Antigua
ADS PRO 
TAP Air Portugal to operate 29 flights due to strike on December 11
Qatar Airways offers flexible payment options for European travellers
Airlines suspend Madagascar services following unrest and army revolt
Digital Travel Reporter of the Mirror totally seduced by HotelPlanner AI Travel Agent
Strike action set to cause travel chaos at Brussels airports