The charms of Dubai property :: Money Week

No exit strategy, no evacuation plan. Financially and physically

Extract:

I wouldn’t put a penny of my money into Dubai, says Stuart Law of investment property firm Assetz in The Independent. “It’s a city based on consumerism. I’m not sure that guarantees its role as a long-term holiday home location. I wouldn’t buy there.”
. . .
According to a spokesperson for Standard Chartered Bank, also in The Independent, “development of the Palms, Dubai Marina, Business Bay and Arabian Ranches, to name just a few [schemes], is going to boost supply in the coming five years in dramatic fashion. To us, this suggests that a decline in property prices is just a matter of time.”

Kevin Fleury, a mortgage broker specialising in overseas loans at Conti Financial Services, agrees. He tells The Times that when investing in property abroad, an exit strategy is needed. With Dubai, though, there isn’t one. “There is a severe danger that there will be an oversupply because so much is being built. This will suppress rents and capital growth, and I think many people will find it difficult to sell.”

Even when it comes to selling a home, the vendor will face additional problems. Dubai may well have just granted the right to own freehold properties to expatriates, but “there is no conveyancing system for property purchases”, says Gill Kerby in The Sunday Times. “The developers and agents offer to undertake all contract exchanges on your behalf (not a good idea).”
. . .
“Palm Jumeirah is a peninsula, with one way in and out,” says William Kistler, European President of the Urban Land Institute. He tells The Daily Telegraph that “the question of how the road provision is going to connect into the transit infrastructure is something that we have got a not very satisfactory answer to”.
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The only road from the resort (down the palm’s trunk) leads directly to Dubai’s main highway, the Sheikh Zayed Road, where traffic “moves as slowly as water down a blocked drain”, says Kistler. People were wondering whether the infrastructure was sustainable even before they built the Palm Jumeirah. Although two new road projects are planned for the area, so too are 100 residential towers, accommodating up to 40,000 people.

The reason for the extra towers seems to be that Nakheel, the property development company owned by the Dubai government, grossly underestimated the number of properties that would be built on the palm-shaped idyll, says The Daily Telegraph. The result makes scary reading. According to a former construction worker for the company, the current plan has 150,000 people living there, “but there are no medical facilities and no evacuation plan in place”.

UPDATE: nzm recommends Dubai Property News.