Investors hunt for bargains

Investors hunt for bargains after debt scare

Property sales enquiries have picked up, despite Dubai World’s request to creditors for an extension of debt repayments for its subsidiaries, Nakheel and Limitless, say real estate agents.

Mohanad Alwadiya, managing director of Harbor Real Estate, believes the hike in interest is a result of the debt crisis. “Since the Dubai World announcement, we have recorded a noticeable increase in the number of queries from private and institutional investors who are interested in taking advantage of the impact that the announcement may have on the overall prices of property in Dubai and in Nakheel developments in specific.”

Aditya Awtani, of Fine and Country UAE, has also witnessed a surge in investor interest. “We have already noticed in the last few days that vulture investors are pooling together, forming informal/quasi funds, in order to take advantage of the so-called distress situation.”

Although the Dubai World request caused global markets to plunge and attracted criticism in the international press, Alwadiya feels the situation has been overblown. However, he feels the incident has affected investor confidence. “Since the beginning of the economic crisis, consumers and investors have been extremely cautious. Whether we like it or not, they are fragile. The old adage of ‘once bitten twice shy’ will never be as apt as in the next few months. It is as much understandable as it is unavoidable. Simply put, many people have been hurt by the Dubai real estate crash and they don’t want to be hurt again. In effect, they have lost confidence and trust in the industry and have developed a risk aversion which will take some time to overcome. The recent request by Dubai World for an extension on debt repayment timings, resulting in speculative press coverage around the world regarding Dubai’s ability to avoid defaulting on its debts, will further erode confidence in the emirate. We definitely feel that the international media is blowing this news out of proportion but unfortunately, perception is reality and a major effort will be required to reverse world opinion.”

Aditya says investors with the means should shop around, “It’s a great time if you are a cash buyer, because banks are anticipated to get more tight-fisted, as they will come under pressure in a bid to keep a safety net due to their exposure to Dubai World.”

Myles Bush, managing director, PowerHouse Properties, thinks the debt issue is unlikely to stop the market from rebounding. “I believe in Dubai and am very confident about its property market in the long term.”