Was just going to say.. Depends on how much time you have. There is no doubt that Dubai will rise significantly in 3 years. I'd say you can double your money. Right now there are people desperate for cash, so much so that you can buy stuff and sell it to some sucker who takes out a mortgage almost immediately for a higher sum. Rents are now around 1/3rd of what they were at the peak, with some speculating a further drop next year before a steady long-term rise. For someone like me though Abu Dhabi is just an awesome opportunity because demand still far exceeds supply, the city is going to witness intense development for the next 20 years and foreign investment rules are still pretty tight relative to Dubai. I know I'm buying any kind of property ASAP in Abu Dhabi. I know that if I had enough liquidity to make an investment, I would buy something in Abu Dhabi and wait for end of 2011 to sell it. Great opportunities if you know the market. Things can't get much worse in Dubai because several projects are going to start generating revenue for the semi-government entities and there's no more hidden losses once Dubai Holding announces it's debt restructure. While in Abu Dhabi, the government is pumping cash into the city while demand for housing continues to soar. I might also take some exposure through the stock market once the market dips one more time (according to my expectations), except I have a government job and they're very strict about us investing in anything related to government. Another problem is I have some money tied up in a nice little private project on the Dubai-Abu Dhabi highway which I expect to sky rocket once plans for a metro line between the two is announced. Basically if you have a million dollars right now and you know the UAE real estate market, you'd have to be an idiot not to double it in 1-2 years.
Eek, I really can't recommend anything dude! I would have to disclose it and it would be highly unusual haha
You people are nuts to be investing in these places with only your individual selves and not through institutions with bargaining power. Dubai and these Arab states are horrendous at transparancy and their governmental setups are hardly sustainable being at the whim of the next spoiled kid turned king. When things start going bad, the laws begin and limit commerce and spiral their problems. As Beirut was a great investment in the 1970's i'll hold my investment capital into something with a stronger more sustainable legistlature, more transparancy and stronger internal fundamentals. They still don't allow public reit's access to the country which provides scale, diversification and professional management to scores of investors. Its fun to play there, but the risk the reward metrics are not favorable.
You're right, except I don't think you realize that those institutions will make the investment not worth your while. They will offer you a sliver of return over what you would make back home, versus basically all the risk they can possibly pile on you. However, seeing as the government can only really take one more dip without collapsing, I am saying that the risk of you actually losing your money after that dip is the same as the likelihood of the entire government of Dubai collapsing due to debt. Personally, I'm taking that bet any day. The Middle East, and specifically Abu Dhabi, can't afford to let Dubai collapse in the forseeable future. That's why I say don't invest in things you don't know. One way or another, you'll get screwed. If you must, do it through someone who knows the market, not through an institution that is acting as a filter for you. Remember their bargaining power goes both ways - they have that same bargaining power with how much profit to make off you as long as they propogate the idea (rightly or wrongly) that Dubai lacks so much transparency and political stability that you would have to be insane to invest there on your own.
Then you don't understand how private/public REIT's work. There are global REIT portfolios and mutual/hedge funds that own REIT's. Usually they take a percentage of profits or a fixed percentage to do so. If they take a percentage of profits only then they are making money with their investors and not at the expense of them. If there are returns less 0 or a hurdle rate, they essentially make nothing. If they make 20% for example you keep 15% and they keep 5% of your return. Interests aren't perfectly aligned but I think your statement about the modern investment system regarding global real estate is incorrect.
But this doesn't solve your initial premise that the market is not stable and lacks transparency. If the regulatory framework is as weak as you claim, you really have no idea what is happening before the 20% profit is achieved and that's usually where the monkey business takes place. Think about the huge number of cases where individuals who are privvy to confidential informaton are setting up brass plate entities to buy assets before selling them off to the REIT. Also, 5% of 20% is 1/4th the profit. I'm not sure if you were just using random numbers, but that's not a great deal. I'm just of the opinion that, given adequate knowledge of the market, you should be getting a far better return/risk proposition than the one that REITS are currently offering. As you said, their power is in bargaining, but again that power goes both ways. Their bargaining power is factored into the fixed or variable fee they receive at a rate they consider reasonable. You are paying for it, that doesn't come free.
The market is not stable because you don't investors able to access the markets through managed funds to stabilize prices during extreme declines. When you're depending on the whim's of the next 'Crown Prince' or 'King' or whatever, its hard to place a long-term view of regulatory and legal issues in an area which has had a history of radicalism. I remember staying in Dubai many years ago and the rule was that any hotel owned by the princes brother wouldn't allow non-married couples, alcohol or the like. Who's to say the next guy will believe that infidel's can even own land there? During the crisis from a transparancy standpoint it actually became illegal (if i remember correctly) to talk negatively about the horrendous real estate market in Dubai! When dealing with a CBRE, Behringer Harvard or other multi-billion dollar companies that have REIT's, I have to believe there is oversight and due-diligence to make sure there is not backroom dealings. These firms have oversight, auditing and the like and something like that from one of their many REITs would destroy the company's reputuation forever. I honestly believe you've been in the middle east too long where corruption is prevalent and so common its assumed. I had friends considering investing there in 2006-2007 and I begged them not to based on the above criteria and I believe their pocketbooks thanked me.
Yeah, that's a load of crap. Officially, no hotels in Dubai allowed non-married couples. Those that do allow it are breaking the law, and I acknowledge that there are significant number of hotels which take that risk. Anyone can apply for a liquor license. My brother is applying for one as we speak and he is certainly not a prince lol. That's a load of crap as well. The liquor license is not granted to hotels which are less than 3 stars because they pose a greater risk due to their poor systems and controls. This is why the other hotels make up the Prince story because they think it's elitist since obviously the loaded people will have the 4/5 star hotels. When the racist portion of the expats get together they make up and propagate the most hilarious stories. Also FYI, you are severely misinformed. The rulers of Dubai are not religious at all. You still can't buy land in Dubai if you're not an Emarati (except in designated 'free hold' areas). The likelihood of Dubai turning to Islamic radicalism is minute. If anything, there is day-to-day proof that it is exactly the opposite. Dubai's success is centered on tourism (hello alcohol and sex), finance (hello 'interest' which is banned in Islam) and expatriate workforce (80% of the country is non Emarati). There's no oil here, and the support from the federal government is clearly contingent on Dubai's ability to convince outsiders that it's a success. The notion that the country is radicalized or can possibly become radicalized is frankly a joke. Perhaps you should read up about the royal family a little bit, specifically the next generation. Also, it has aways been illegal to slander the government in Dubai. The law you are referring to was specifically created for media outlets who were telling lies to the market in order to improve their own profits in the market, essentially hurting the economy for selfish reasons during a time when market confidence couldn't be shakier. Admittedly, it's a terrible law that I don't agree with and extremely poorly worded, but if you think this had any effect on the behavior in Dubai you are delusional. Just off the top of my head look up Dhahi Khalfan and Sultan Al Qassemi who were constantly talking negatively about the government yet have not been touched. I see where you're coming from now though. Thanks for the chat.
