Sunday, November 23, 2008

Dubai's Burj Tower Prices Crash 50 Percent in 3 Weeks

Speculators in Dubai's Burj Tower - the tallest tower in the world - are in for a rude shock. They have woken up to find that their property values have plummeted up to 50 percent, that too in just 3 weeks. According to brokers, most properties in the Burj Tower district have slumped by at least 22 percent. These were same apartments and commercial establishments that had risen 88-200 percent in the year until September 2008.

Zero premium and even discount sales have become rampant as investors rush out of sand castles and in to cash. Prices outside the tower fell from an average of AED 3,500 ($952) per square foot to AED 2,700, and on 8 Boulevard Walk, for instance, dropped from AED 3,300 per sq ft to AED 2,500 per sq ft in three weeks – a 24 percent decrease. Old Town quarter of the development had fallen 30 per cent in the past month, along with nearly 20 per cent at the South Ridges and Residences areas.

Price fluctuations in the Burj Dubai tower had been far more volatile because of the high percentage of speculators owning these properties, according to brokers. Some had since been sold at significant losses to generate cash. However, they said, the most expensive floors, such as those branded by Armani, sold at about AED 14,000 per sq ft and were holding much of their value.

Abu Dhabi’s high-end developments have also been affected. Many of the buyers appeared to have no intention of holding on to the property long enough to make the first required payments to keep possession of it. Like Al Reem Island, which had 95 percent speculators with no intention to make any payment after the deposit. Residential properties in some cases [are now put into the market] at minus 15 per cent premium.

A floor of offices that was offered in Al Shams Abu Dhabi at AED 2,500 per sq ft three weeks ago is now being offered at Dh2,100. Reem Island's properties purchased at up to AED 2,700 per sq ft are now available at AED 1,800.

Read the story here





Consider how the crisis has unfolded over the past eighteen months. The proximate cause is to be found in the housing bubble or more exactly in the excesses of the subprime mortgage market. The longer a double-digit rise in house prices lasted, the more lax the lending practices became. In the end, people could borrow 100 percent of inflated house prices with no money down. Insiders referred to subprime loans as ninja loans—no income, no job, no questions asked. - George Soros in latest book

everything’s going up, there’s a feelgood factor and people tell each other how much their houses are going up at dinner parties,” says Professor Mark Stephens of York University’s Centre for Housing Policy. “Then the music stops, as it always does.”

year, Japan was a more attractive market to put money in. If you look at the US, we can now get an internal rate of return of 25% there, so why would anyone want to come to India?” - a senior executive at an international financial services group, who did not wish to be named.

people told us house prices never go down on a national level, and that there had never been a default of an investment-grade-rated mortgage bond, "Mortgage experts were too caught up." - John Paulson, trader, who bet against subprime market and made $15 billion.

most puzzling are the real-estate projects of Parsvnath. Just have a look at the Pride Asia project near Chandigarh. They are asking almost US $300K-$350 K dollars for 2 bed room apartments. They have Villas in this project that costs more than US $1.5 million dollars. It is true that some people in India have that kind of money in India. However most of their wealth is black money and that can not be used to buy these properties. Obviously, these projects have been launched keeping NRIs in mind. - Sanjeev, comment from another site

Desai, aka Bani, the star of Balalji Telefilms's soap, Kasam Se, has been house hunting for over a year. She had almost closed a 2-BHK deal last year for Rs 1.5 crore in a Oberoi Constructions' building located at Andheri, Mumbai, but when she went back to confirm it, she was asked to cough up Rs 2.61 crore. Since then, she is still house hunting. - Mumbai Mirror


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