Dubai luxury property prices falling

Dubai

Dubai, long claiming to be immune to the financial crisis has finally come clean and admitted to the fact that nary a property has been sold in the last six months, CityScape was a disaster, their debt to GDP ratio is a shocking 148%, property job losses are rising and real estate prices in Dubai are in freefall.

A number of measures have been implemented to prevent a complete collapse of the market - Dubai’s two main mortgage providers have gone bust and Adu Dhabi’s Real Estate bank has stepped in and merged the two lenders together, and a new mortgage provider, Abu Dhabi Finance has been formed . ADF will attempt to resuscitate the market by offering loan to value ratios of 85%, up to 30 year mortgages and flexible repayments.

Perhaps the most startling piece of news is the admission of a debt to GDP ratio this high. Just a few months ago, analysts were suggesting a ratio of just 7.7%. Certainly, more transparency needs to be introduced to the UAE’s financial markets, and hopefully this will eventually result in a little more faith in the region. For now, foreign investors are bailing out as fast as possible.

New York

Sales are falling, inventory is rising and prices are down, says Reuters. Not only is the market suffering from Wall Street’s current state, the rising dollar has put paid to the idea of attracting more foreign investment. It is fair to say, most Russian millionaires have enough worries at home to be thinking of a condo in New york.

Median prices are still rising in Manhattan, but this is largely down to the fact that sales of anything but the very high-end have dried up almost completely. New York has artificially avoided the foreclosure problems facing much ofthe rest of the country, but that is about to change. In August, state legislators in Albany placed a 90-day freeze on foreclosures. The 90-day moratorium ends next month. One of the first states that enacted a foreclosure delay was Massachusetts, with a 90-day freeze starting in May. At the end of the 90-days, foreclosure filings jumped 456% between August and September and the median home price fell 15%. Many legislators in other states considering a similar moratorium will be watching New York closely over the next few months.

London

As the pound drops in value, so interest from foreign buyers increases, although this demand seems to be limited to large single-family homes, and a recent trend is to reverse the practice of chopping up large terraced houses and turn them into apartments, with the reverse starting to happen. The Telegraph reports that house prices fell in London and the rest of the UK for the 13th month in a row, and no end appears in sight. The average price reduction this month was £17,000, and as much as £100,000  in some parts of London. Knight Frank’s latest figures show that prime residential property prices fell 3.9% in October - the fastest rate of decline on record.  A recent conference of real estate agents focused on “attracting Russian buyers.” One assumes they are not aware that Russia is having it’s own troubles?

One bright spot in the UK’s market was a record price of £1 million set for a penthouse in Birmingham, in the West Midlands. “Flat in Birmingham defies credit crunch,” reports the Times online. Seeing as the original price for the apartment was quoted as £1.65 million, I am not quite sure how they came to that conclusion, but a notable sale nonetheless.

France

French property prices have already fallen 10-15% this year, and according to Euler-Hermes, bankruptcies of real estate companies soared 28% during the first half of 2008. Nicholas Sarkosy, France’s President, announced a bailout plan which involved the French government buying as many as 30,000 unfinished homes.

Spain

The news in Spain goes from really, really bad, to really, really, really bad

The world famous La Manga Club Resort in Murcia has sought protection from it’s creditors after failing to refinance it’s E97 million debt. This is, in fact, the second time the club has gone bankrupt; the first time back in 1978. The club has applied for and recieved a “Concurso Voluntario de Acreedores,” which basically defers all debts and financial charges until 2010. This does not bode well for the Spanish tourism industry, and the glut of available housing, even in luxury developments continues to rise as prices continue falling.

Hong Kong

The stock market slump is taking a toll on Hong Kong’s luxury property market, with prices falling 17.7% since June, and analysts predicting a further fall of 30% in 2009. The Hang Seng Property Index has fallen 34% in the last month alone.

European aristocrat Baron Jean van Gysel de Meise (Jean van Gysel), owner of the luxurious five star Le Plaza in Brussels and the boutique V…Vejer in Spain, today revealed his plans to launch a luxurious boutique haven on the island of ‘Greece’ on Nakheel’s mega The World project. Valued at AED624 million (US$170 million), ‘V…Greece on The World’ brings a new concept in luxury, beauty and business to Dubai and the Middle East.

Believing that the percentage of younger customers going to traditional hotels is decreasing compared to boutique hotels, Jean van Gysel decided to move to a more dynamic, smaller product with much more attention to detail. He plans to launch a hotel under the V… brand every year for the next five years in the Middle East. More on ‘V…’ Launches Region’s First Boutique Island on The World, Dubai