Thursday, July 10, 2008

Dubai faces property glut

The prospect of being unable to stimulate sufficient demand for the massive projects due to come on stream in Dubai is the biggest challenges facing the emirate’s property sector over the next year or so, a new report says.

The report, published yesterday by Fitch Ratings, said a record-breaking number of new homes are due to come on to the market next year and in 2010, leading to a situation where supply far outstrips demand.

Residential property in Dubai averages about Dh1,579 (US$434) per square foot, but oversupply could lead to a drop in prices.

“If supply exceeds demand, prices of property would fall, thereby reducing expected revenues, which in turn could have an unfavourable effect on a developer’s credit profile,” the report said. The report also predicts an oversupply of office space in the next couple of years.

“Contingent to delivery plans being met, the market may start experiencing a price correction as a result of the massive new supply in 2009–2010,” the report said.

Although Dubai has a population of 1.6 million, the emirate is constructing the same amount of office space as Shanghai and Moscow, which have populations of 20 million and 10.4 million respectively.

However, as developers and contractors grapple with labour shortages and the escalating cost of building materials, project delays or even cancellations could narrow the gap between supply and demand.

The Fitch report said that foreign demand would also be hit if there was a deterioration in political relations with other countries in the region.

“A geopolitical deterioration or a real estate downturn in Dubai may have an impact on the foreign demand, and could be more damaging to the economy than the correction in stock markets which took place in 2006,” the report said.

Dubai’s property sector might also feel the impact of the credit crunch and subprime lending crisis that has hit the UK and the US, due to the fact that most of the demand for property in the emirate is driven by expatriates and foreign investors.

But according to Bashar al Natoor, an analyst at Fitch Ratings and the author of the report, most expatriates will still be attracted by Dubai’s property market as their own standard of living improves.

“Many of the buyers are working and living in Dubai, so at the end of the day their job prospers as the region prospers,” said Mr Natoor.

Dubai’s ability to maintain its leading position over the next few years will also be tested with the emergence of new property centres in the region, such as Abu Dhabi and Doha.

“Abu Dhabi and Doha are emerging, but Dubai has a certain advantage: many large companies have established their regional offices here and that will be hard to change,” said Mr Natoor.

“This will act positively for Dubai in the future and a lot will need to be done for others to catch up.”
The report predicted strong revenue growth for developers in Dubai but said that there could be more delays due to labour and materials shortages.
About 50 per cent of Dubai’s upcoming property stock is either fully or partially-owned by the government, which could work to the advantage of the sector in the event of a market downturn.
“The large state-owned developers are likely to retain better access to raw materials and labour than smaller developers,” the report said.
The report also called for more transparent data to help investors and developers mitigate risk.
“Compared with Western markets there is little transparency or reliable sector data in Dubai’s real estate market,” said Mr Natoor.
“But the Dubai government is moving forward with this; it is producing tools such as a price index, and has introduced escrow accounts and other measures, which will act to mitigate this risk in the future.”

By Angela Giuffrida

A whole new world: Jaws up close


The day I became a Dato'

I have to admit that it is hard to adapt to Malaysian approach on customer service. Been trying unsuccessully to book some resorts for a weekend retreat with family and friends. I used to get free hotel rooms or rental vehicles based on returning favour by some friends who I had assisted during their business trips to Dubai.
This year like last year, as I would like to be on my own even though been struggling to do so. Most resorts are already fully booked. It was my mistake not to arrange any reservations while still in Dubai.
Their responses were a bit cold and unfriendly to say the least. I was so frustrated not to get any replies or some times nobody bothered to answer my desperate calls.
Learning the right way to get immediate response, I left messages and signed off as , "Dato' Mohamed".
Incredibly, I received immediate replies with warm voices. They would promise to assist this Dato' and keep me updated.
Well, I am already a datuk by having ten or so grandchildren through nieces and nephews. Therefore it is not really a con-job. Except it is half-truth as most politicians and main stream media always do, by baking half truths and spinning the other lies.
Then again, "Hello Dato'!" keeps ringing in my ears and I am still enjoying my Dato'ship while it lasts!

I Drive On The Wrong Side Of The Road

Once a year, like other overseas Malaysians from other parts of the world, it takes a bit of adjustment to drive on our roads.
Yes, I drive on the wrong side of the road and the brain has to work overtime before making any turn or use the signals. It just takes one drive to return to normal, driving on the right side.
Today's trip to Shah Alam was okay. Less traffic on the road and enjoyed driving in the highway as no need to switch right or left until exit.

Undi Tidak Percaya - Parlimen Isnin 14 Julai 2008


A'km to all. Mesyuarat khas malam ini Rabu 6 Rejab/ 10 Julai memutuskan bahawa usul undi tidak percaya terhadap kerajaan PeeM/Be End akan difailkan esok.

Ketiga-tiga Presiden Pakatan Rakyat akan menandatangani usul tersebut. Kami jangka ianya akan didengar di Parlimen pada hari Isnin 11 Rejab/ 14 Julai. Beberapa Ahli Parlimen Be End akan turut menyokong usul tersebut. Saya berharap Speaker tidak akan menghalang usul ini kerana arus kebangkitan rakyat semakin kuat.

Kami mengambil keputusan mengemukakan usul ini sekarang kerana keluhan dan rintihan rakyat makin kuat mendesak supaya kami segera mengambil alih Putrajaya. Kesan kenailkan petrol sudah mula dirasai. Rakyat sudah mula resah dengan kos kehidupan yang makin tinggi dan menghimpit.

Kami tetap berpegang kepada janji kami bahawa harga minyak akan diturunkan sebaik sahaja kami mengambil alih Kerajaan. Sdr/i boleh mengikuti debat DSAI di TV3/ Awani Astro/ TV9 pada hari Selasa 12 Julai untuk mendengar sendiri penjelasan DSAI bagaimana mekanisma penurunan harga itu akan dibuat.

Kami menyeru rakyat supaya turun ramai-ramai ke Parlimen pada hari Isnin ini untuk usul undi tak percaya tersebut. DSAI sendiri akan turun bersama ke Parlimen hari itu.

Saya menyeru rakyat supaya mari kita bersama menunjukkan kesatuan rakyat menuntut kembali hak kita. Jangan ketinggalan untuk bersama mencipta sejarah Malaysia baru ini.

Stand up & be counted. Jadikan generasi akan datang berbangga dengan pengorbanan & perjuangan yang kita ambil hari ini. Make them proud of us.

Isnin 14 Julai adalah hari yang tak akan dilupakan oleh sejarah. Masanya telah tiba. See all of you in Parliament on Monday 14 July @ 10am.