Over the last year or so, UAE Uncut has touched on every conceivable aspect of the UAE. We have plumbed the bottom of the barrel as far as subject matter is concerned and thrashed out some in depth thoughts from tourism to live bands, from school runs to indicating and from plumbers to the emergence of Chinese industrial supremacy. But through all the gabbling, misguided opinions and highly questionable facts there is one major talking point that has gone unmentioned. It is the subject that must not be mentioned, the Voldemort of the UAE; real estate.
There are several reasons why I have yet to write about real estate in the UAE, chiefly because I would have more luck understanding the schematic diagrams of the Saturn V rocket. The whole property question in the UAE is mind boggling, except of course, it isn’t. Effectively it all boils down to money and who can make the most. You want it? You buy it for the stated price. You sell it for profit. Easy. Just make sure it is built.
Now, my father is a property expert, it has been his job for the best part of 30 years so I have been brought up to understand the basics about how a property price is defined. Things like the age of the building are important and of course its classification by era, i.e. Victorian, Edwardian, 1930’s or Blair. Then there is the house itself and its condition. Then of course location is the big one, so too is proximity of the nearest shops. Is it on a main road? That can change a house price by thousands. Is it within walking distance of a railway station, where is the nearest bus stop? Does it have a driveway or garage? Was it recently owned by a 1970’s BBC presenter? Are there any celebrities living nearby? There are so many factors that determine a house price in the UK that to understand the full criteria is remarkably difficult.
In the UAE, however, things are far more black and white, as you would expect. Is it on Palm Jumeriah? Yes. Right, that will be one million Dirhams. Is it in Dubai Marina? Yes. Right, that will be one million Dirhams. Is it near the Abu Dhabi Corniche? Yes, right, that will be one million Dirhams. Does it have windows? Yes. Right, that will be one million Dirhams. The property developers and land lords just look at what the guy next to them is charging and charge the same. That is why you will find swanky apartments complete with personal Jacuzzi and poolside bar for the same price as you will find a refrigerator box under an intersection.
It does not matter if your new one million Dirham wonder-apartment sits next to Sheikh Zayed Road, the busiest 14 lane road in the Gulf, all the traffic noise and pollution is what you are paying for. Besides, it is a small price to pay for the pool that you have to share with the other 130 families. You would sooner die than catch a bus and you are banned from riding the Metro because you were caught eating a Snickers last year. The age of the apartment is irrelevant since the builders are still working on it and apart from the highly suspicious grocery downstairs the nearest shops are a 15 minute drive away, through the Dubai traffic. You could walk, but it is too hot outside.
The problem with real estate in the UAE is that it does not seem to conform to any rules and every day in the papers we are told different things. One day we hear the prices are coming down and things have never been cheaper. Then the next day it is the other way around, with all the line graphs going up. Is it just lies? Is there a property market at all? Who is in charge?
I will never buy a property in the UAE for two main reasons. Firstly, I cannot afford it, not even close. Secondly, I am afraid. If in a hypothetical world, however, I did buy a property, then at the very least I would only buy one that had been built. Well, that is an obvious clause I hear you murmur. But you would be surprised. Before the collapse of Lehman brothers in 2008 Dubai was having a massive property boom. People were buying up all these swanky new places as investments at the property fairs and selling the investment on to those behind them in the queue with a 10% mark up. Not a bad way to make money, is it?
There was, however, one small flaw in the plan: the swanky abodes hadn’t been built. The “investors” had merely – and knowingly – only bought pictures. The lucky ones had bought pictures of buildings that had got as far as uninhabitable skeletal structures, but the unlucky ones had been left with nothing, not even the earth had been turned. In some cases, the developers hadn’t even received planning permission.
I would like to feel sorry for the people who bought the pretty pictures, but I don’t. If you trade your cow for a bag of magic beans with a man wearing a jaunty fedora and gold tooth then more fool you. The whole property boom from 2002, when foreigners were legally allowed to buy, to the collapse six years later wasn’t so much a boom, it was a scam. Selling pictures of things that might be built for millions? I’m surprised we didn’t see Matt Allwright and Dan Penteado from Rogue Traders turn up. Hell, because Dubai lost so much money back then I am even more surprised that we didn’t get a visit from Bob Geldof and Lenny Henry.
Property prices, in all their lunacy, were diminished by over 60% after the Lehman brothers killed themselves. But apparently, depending on what day of the week it is and what paper you read, they are climbing back up. In fact, property prices of existing buildings are returning to the height of the boom in 2008.
The last time they were this high it all went belly-up and collapsed and things became cheap. Hmmm…if I wait a few months maybe I will be able to afford a place after all?