| 02 Feb 2009 |
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Dubai's Palm Jumeirah Prices Plummet as Crunch Sets In
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But an increase in 2009 buyer activity according to PowerHouse Properties
Dubai, February 2, 2009: Property prices on the Palm Jumeirah, the island dubbed the 'eighth wonder of the world', have fallen by over 50 per cent since September 2008 amid fears the global credit crisis is stalling the emirate's economy.
Four-bedroom garden homes on the Palm are now selling as low as Dh6.5 million, down from Dh14 million in September 2008 according to sales agents PowerHouse Properties.
Ian Hainey, Palm sales specialist for Dubai brokerage, PowerHouse Properties, said: "We've seen a steady stream of bargain hunters in the market shopping for these prestigious addresses, with many motivated primarily by price. Many end-users who previously could not afford to live on Palm Jumeirah are also now turning their attention to the bargains currently on offer.
"Palm signature villa prices have also fallen, with even the most popular styles that were selling for over Dh30 million six months ago now appearing on the market for under Dh15 million.
"However, there has been a noticeable increase in Palm Jumeirah buying activity during the month of January. Sales are still being made on the island, with an upsurge in those buying to rent, taking advantage of the bargain prices while still capitalising upon the high rental yields. Garden homes are renting at over Dh400,000 and furnished signature villas still commanding rents up to Dh1 million."
When work started on the Palm in 2001, the villas were quickly snapped up at prices from Dh2.8 million each, with celebrity buyers including David Beckham and Michael Schumacher. The Palm Jumeirah quickly became one of Dubai's most desired locations and prices rocketed as the hype surrounding the island grew.
As 2008 drew to a close, the decision to halt work on Palm Jumeirah's Dh2.9 billion Trump International Tower is one of the more notable effects of the economic downturn. NakheelNakheel
has already announced delays on some of its other projects, such as aspects of the Palm Jebel Ali. There is a connection between the lack of finance available, slowdown in projects and the intense downward pressure on property prices.
Dubai-based mortgage advisor Jack Czechowski from propertyfinancelink.com explained: "There has been a marked reduction in people seeking to buy properties on the Palm Jumeirah, and therefore obtain finance, but this is true in developments throughout Dubai
"Those who are still looking to buy are finding it very challenging to obtain finance at the moment. Banks have tightened their policies, reduced lending ratios and increased interest rates. Most lenders have reduced their maximum borrowing ratios from 90 per cent to less than 80 per cent.
"Interest rates have increased from approximately 6.5 per cent to 8.5 per cent and banks will generally no longer lend to non-residents or people employed in the real estate sector. Unfortunately this is preventing many potential buyers from being able to purchase.
"It is difficult to make an accurate prediction on the immediate future, as Dubai has never faced this problem, but it is quite possible banks will review their policies early in the year."
Middle East construction and development in Dubai has slowed down over the past few months. Reduced lending from banks and falling confidence about the future of the market have combined to slow down both the primary and secondary property market.
The Palm Jumeirah was built as the flagship part of Dubai's ambitious 'Universe' development, which planned to extend Dubai's coastline to around 625 miles, around 15 times its natural size.
-Ends-
PowerHouse Properties currently specialises in end-user properties such as Emirates Hills, Greens, Views, Palm Jumeirah, Springs and Meadows. Based in Al Barsha, PowerHouse has 13 sales professionals from Europe, USA and Australia.
Official figures published recently by HSBC showed the first signs of downward pressure in property prices, falling estimates that property prices fell four per cent between September and October. This is the first fall in the six years during which the market has been open to foreigners.
Palm Sales at PowerHouse Properties can be contacted on
+97143476853
ian@powerhousedubai.com.
For more media information, please contact
Myles Bush
mb@powerhousedubai.com
call 04 3476853.
© Press Release 2009
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Community Comments (5)
See this interesting report from TV yesterday:
http://arabianmoney.net/2009/02/05/al-jazeera-tv-clip-on-dubai-property-crash/
Please Zawya show these types of "articles" as marketing. This is just a press release from a business who's interest is to sell properties so they'll put the best spin on it! I'm sure they want to make sure the printed "prices" fall within the expectation of property owners...especially so that it meets the owners financing obligations.
It's definitely better to wait, this is just the beginning of the downturn, you have this year and probably next year to judge the full impact given the time it takes to actually foreclose on property out here...
Those prices are laughable. Just check the online classifieds website dubizzle to see the asking prices...and that's just asking, you can shave a haircut off that price! if it gets rented out. Don't leverage yourself in this environment just because you want to live in the Palm....if you really want high saline water to bath in dump some salt in your bath.
Thanks for that Jack, you have raised a very interesting issue.
The information is labelled as a "press release" with contact details of the content provider clearly visible.
Please note that this is part of our aggregaton service, and we are looking at ways to empower our members to agree or disagree with the articles that appear on our platform.
I will keep you posted.
If the experience of foreign property crashes is anything to go by then the best bargains usually come later, but the reductions now are very tempting particularly if you are paying high rents. But for the pros and cons, see this blog post:
http://arabianmoney.net/2009/01/31/best-dubai-realty-bargains-now-or-later/
The asking prices for Palm villas were overstated from day one and were only spurred by the speculative wind that was blowing over Dubai. Today they are going down to still over-inflated prices. The location is not as prestigious as others in mature markets and there are quite some issues related to the environment of the beaches as far as I have heard.
Once Dubai enters the mature property market area, we will hopefully see the correct pricing advertised and not some over-inflated ones.
Furthermore, the supposedly safe rental income is not at all safe. Some owners might be offering their villas for 400 k to 450 k but they will seldom meet demand. When Palm villas go down to around 280 to 320 k, you will see a real market developing for rentals.
Dubai will finally develop into what it should have continued to be, a land of opportunities in building businesses not castles in Spain.
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