This fall brought many surprises to those who believed in the stability of world stock markets and that the mortgage crisis in the US could not turn into a tsunami that, one way or another, would affect all countries without exception, connected by such a simple but tangible now the term "world economy". The financial collapse affected not only exchange brokers and bank employees, who joined the ranks of the army of the unemployed, but also ordinary people who once placed their labor savings in securities. Inflation "eats" and the money that was once converted into foreign currency. Almost daily sharp jumps in cross rates and falling indices of interbank currency exchanges show the failure of the desire to protect their hard-earned money from depreciation.
What to do? This question has worried many before us. The answer should be sought in the real estate market. Despite a noticeable decline in prices for the secondary, investment in real estate today remains the most profitable allocation of funds, given the increase in inflation. Even a bank deposit cannot be guaranteed to save your money, and you can’t even dream of increasing it.
Amid growing panic, managers of local developers and brokers insist that the real estate market continues to be the most attractive platform for investing. We are interested in what ordinary buyers think about this.
IMEX Real Estate arranged a meeting with an investor who placed his funds in Dubai's residential real estate - in a project on the artificial islands of The World and several projects in the Sport City area. Arthur Somov kindly agreed to answer our questions.
- Arthur, in your opinion, how much did investors' risks increase at the time of the crisis, what are they expressed in? And in what, in your opinion, is it more profitable to invest now - in projects under construction or in the secondary market?
- Risks increased quite noticeably. The most attractive side of the Dubai property market has always been high liquidity. That is, the investor could at any time buy and at any time sell the property. Therefore, most financial investors played one big game - they purchased real estate at the pre-launch stage (until the official launch on the market).
Due to the fact that almost 100% of the objects under construction could not be paid immediately, but by installments, investors made one or two payments, and then, after a slight increase in market prices, they sold this object further. This created the so-called “shoulder effect”, when it was possible to speculate with an object that cost, for example, $ 1 million, having only $ 150-200 thousand in hand, which attracted a lot of small and medium investors to the market. None of them expected that they would have to make all 100% of the payments (i.e. $ 1 million) at once.
As soon as the market liquidity level decreased, the mass of such investors realized that it was simply not able to continue to pay the next installment installments. Therefore, it seems that a huge part of buyers are ready today to "throw off" part of the property at bargain prices in order to have at least some money on hand to complete the construction of the most attractive objects. Under these conditions, the most popular part of the property is already finished, or close to the deadline for commissioning. In this case, you can rent it and receive at least some rental income.
- Do you trust large local developers, given the high-profile criminal stories associated with the managers of some companies?
- Now for the government of Dubai, the moment of truth has come. The cessation of real estate price growth is an objective market reality. But if only a subjective factor comes into play, such as the bankruptcy of large developers, the whole real estate market will collapse, and behind it the whole system of creating a regional business center called Dubai. And this is serious. The Dubai government is unlikely to allow this. Therefore, I think you can trust local large developers.
- Which real estate, in your opinion, is the most liquid - exclusive "brand" projects or budget options?
- Of course, budget ones. The segment of luxury real estate in times of crisis may completely stop, and budget options, the so-called economy-class objects, will live on.
- Is it worth it to hurry with the acquisition of real estate now when you can find very interesting offers on prices with convenient installment payments, or is it better to wait until the prices "sink" even more?
- Prices are unlikely to fall much. Like it or not, but real estate in Dubai is still fundamentally underestimated. The cost of 4-4.5 thousand dollars per square meter in one of the global financial centers is inexpensive. It is enough for comparison to look at prices in Singapore, Hong Kong, not to mention Moscow (where there are no prices below 6 thousand dollars per square meter), London or New York. The question is what is necessary to survive 2009, and further growth will continue.
On this optimistic note, we thanked Arthur Somov for the answers provided, as well as IMEX Real Estate for arranging an interview with the investor.
We add that today in the portfolio of offers of the IMEX real estate agency there are various investment options with guaranteed profitability.
For more information, please contact:
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