Dubai developers are in denial |
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Some of Dubai companies are in "denial" about the viability of projects in light of the global financial crisis, according to the CEO of DepaDepa
. "We are at the denial stage where lots of developers know for a fact that their projects should be cancelled and they're either not announcing it or they're saying it's going to be delayed," said Mohannad Sweid, speaking on future Dubai growth at the Nasdaq OMX Investor Conference.
"We cannot deny the effect [the crisis] has been having, we are a part of this world and I believe it's just not right to say we haven't seen any impact," he added.
In its capacity as an interior contractor in the Gulf region, Sweid said DepaDepa
had seen a lot of project announcements that had not necessarily been fully researched and he expected these to stop as the crisis takes hold."What we have had in the GCC in the last three years is the difference between reality and non-reality.
"Our market research showed there will be 280 new hotels built over four years within the GCC. That was advertised all the time... If we look at the reality - how many hotels have been delivered - it's hardly more than five or six hotels a year," he said.
In terms of risk to his own firm, Sweid was confident that infrastructure projects would still go ahead.
"In this region, a lot of infrastructure is not developed yet and these elements of infrastructure have to be developed - it's not a choice," he said, citing Dubai's new metro system as an example.
He added that DepaDepa
was still on track for growth for next year, but the "fears" were for 2010 and 2011.
© 7Days 2008
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True, the bubble has burst, and many have been left carrying the bag. nevertheless the blame cannot be all government sided... remember, analysts have been sceptical about Dubai's explosive growth since early 2000, but individual investors never bought into that, and were worried about missing out on the new gold rush, thus, The Bubble. Therefore, the government did have a role in pushing sentiment further, but at the same time, individual greed played a major role. Notice, that although Dubai is a recently new economy, most players in the market are to some extent sophisticated investors that understand and have seen bubbles before... not long ago did we have the Tech bubble in the U.S. (90% decline in tech related equitities), and government did have a role, but not all of it in the run-up to such situation. My point is, noone is asking for favorable treatment, just fair treatment ! Note: i am not invested in Dubai as i had been sceptical about long term sustainability. [Report Abuse | Email to a Friend | Reply to this Comment]
Dear friends;
There will be little or no developers refunding clients their hard earned money because most if not all developers took the up front payments of clients and speculated at the stock market!!!!
So be prepared to see major losses and major sorrow to come. [Report Abuse | Email to a Friend | Reply to this Comment]
Saeed Rahman,
Very good comment. Now the Bubble Burst. The goverment has to be blamed for this Bubble. They exaggerated and promoted all this projects. Their projections were non realistic. There are many houses looking for tenants in JLT. The rents are coming down. where is teh much awaited tourists, visitors and residents.
With the assurances of more peopel visiting Dubai, people started investing their moeny in Dubai. And now every one lost. [Report Abuse | Email to a Friend | Reply to this Comment]
The bubble in Dubai is going to be something our next generation will be talking about for long time.There is no economics foundation there with sustainable industry.The music has just stopped and the new comer will be holding the bags.
In 1845 Charles Mackay in Britain wrote a book"extraordinary popular delusion and the madness of the crowd"that talked about bubbles going back to 11th century Crusades and the Tulip bulb mania.
Dubai will make for a new chapter in that.Sorry party is over we need to pay up now. [Report Abuse | Email to a Friend | Reply to this Comment]
Law # 13 is one sided favouring and protecting the interest of the Developer only. This law should also be specific in imposing penalty on developers who have misappropriated investors' funds by not depositing investors' cheque amounts in the Escrow account of the project instead diverted funds on their other projects. 2) Also be specific on the compensation to the investors if the developer has not started the construction of the project even after lapse of six months. [Report Abuse | Email to a Friend | Reply to this Comment]
Developers should be realistic, cancel unfeasable projects and refund the investors hard earned money.Rera should review Law 13.We are the Group of Investors against interpretation of Law 13 and for the protection of property buyers
IF you or anybody whom you know cannot or does not want to make the next payments on their
property for whatever reason or if the project is cancelled then 30% of total price will be forfeited.
Apart from that we feel there should be some further regulations for developers such as the all payment plans of all projects HAVE to be linked to construction.etc
So if you feel this new interpretation of law 13 affects you or your friends and you want to protect yourself and you want to give your viewpoint then join this group by sending email to:
investorslaw13@hotmail.com [Report Abuse | Email to a Friend | Reply to this Comment]
Hi Could all you guys you contact me as soon as possible?
Nathalie Gillet
Business reporter
Property
nathalie.gillet@ecomondearabe.fr
The National [Report Abuse | Email to a Friend | Reply to this Comment]
Hats off to Mr. Mohannad Sweid, atleast he has come out and hit the bull's eye, that developers are in denial.
Last time, i wrote that there are going to be major job losses in the reality sector, and there is no such thing as easy money, i was labeled as jealous of real estate brokers on this site. [Report Abuse | Email to a Friend | Reply to this Comment]