It's slowly dawning on the Dubai real estate speculators that the game is over.House prices on the Palm Jebel Ali, second largest of Nakheel’s palm-shaped islands, have fallen by as much as 40 percent in the last two months as the global financial crisis sees foreign investors move to liquidate assets in Dubai, according to three Dubai-based real estate agents.Dubai has experienced the greatest real estate bubble in recorded history. Hundreds of thousands of speculators, primarily from Europe and the Middle East, will be wiped out over the next 2 years. I think that prices in Dubai will drop 90% from peak value. Yes, that is my prediction. And due to substandard construction, many of these glittery buildings will be essentially worthless. (More on this issue here.)
Not only will this devastate the speculators, it will cause a great deal of peripheral damage. Those construction workers will go back to Pakistan and India without any more pay checks. Construction firms, engineering firms, architects, steel manufacturers... the world's largest building site has just shut down. I said on Thursday what this will do EADS.
To get an idea of the sheer size of the Dubai real estate mania, check out this page of current and proposed projects.
7 comments:
I would not take the other side of your prediction after your wonderful call on oil shooting down to $50 when everyone else was calling for $200.
I have a friend who just completed an architectural intenrship in Dubai. He thinks it has to crack because there are skyscrapers and then empty desert all around.
There are a few tales of Florida beach condos where some unscrupulous contractors used salt water to mix the concrete. This is not a smart thing to do.
In Dubai, fresh water is much, much rarer and expensive.
Yet the cities are along the salty, salty sea.
Hmmm
You just can't imagine how crazy it is without going there. I'm not sure there has ever been anything like it.
The "local" contractor's who have family connections and just hire paki's are utterly clueless about the business.
Paul writes,
Other than the radioactivity, it's going to make cool ruins in five hundred years.
The bubble bursts but the debt remains.
It's a nice picture, I think we can't avoid the talent behind the shot, isn't? I think we need more initiative like this one to understand the main importance of the financial crisis using pictures and illustrations.
Bitter for investors and real estate businesses. It is a disaster this financial crisis.
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