90,000 New Real Estate Units in Dubai Will Add Further Downward Pressure to Property Prices and Rents

90,000 housing units to enter market

03/10/2009 09:24 AM | By Suzanne Fenton, Staff Reporter

Dubai: New units are set to enter the Dubai realty market over the next two years, despite the global financial downturn.

However, this figure is likely to drop due to declining demand, tight liquidity and strict financing options.

Approximately 32,000 new residential units were completed in 2008, bringing the total number of residential stock in Dubai to around 253,000.

Cancellations and construction delays will reduce the total announced residential supply by more than 50 per cent – with around 90,000 more units set to come on to the market between 2009 and 2011 – according to a Lang LaSalle report.

More than 50 per cent of the announced residential and commercial projects due for completion between 2009 and 2012 have now been put on hold or cancelled due to lack of available funding and easing demand.

Because of the global financial downturn, even top developers, such as Nakheel and Meraas have been forced to reschedule, postpone or cancel some of their projects.

These projects include Nakheel’s kilometre-tall tower and Trump International Hotel and Tower and Meraas’ Jumeirah Garden City which, at a cool Dh350 billion, involved various microclimates and a mini-Manhattan.

Since the last quarter of 2008, prices have dropped and so have rents, up to 50 per cent in certain areas of Dubai, according to officials at Dubai Land Department.

Prices generally, not just for residential properties, are expected to continue falling throughout this year and bottom out some time in 2010, said Craig Plumb, head of research in Mena region, Jones Lang LaSalle…

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Oil’s Last Hurrah?: Why the Gulf May Never See $100 a Barrel Oil Again

When the Saudis upped their output to try to save the Republicans in Washington last Summer, few thought that  it would be the beginning of the same time of glut that hit in the early 1990’s when gasoline dropped to under $1.00 per gallon in the U.S.  However, that’s exactly where things are headed now.  It’s another perfect economic storm for the oil producers.  Demand crashed just as the KSA was trying to leverage political power in Washington D.C. through oil.  This was supposed to keep the economy on-track until after the November elections.  However, the wheels came off the economy a few months earlier than expected (in October).  This left OPEC in a very bad position.

Now, the price has fallen so much that there is almost no safety net.  Virtually every OPEC member (with the exception of Abu Dhabi @ $25) are at or below break-even pricing for oil.  This is going to put huge pressure on the Gulf economies going forward.

The bigger question is what happens to price now?  The situation is very similar to the crash of the early 1990’s.  Unless OPEC gets serious about controlling supply, I may take 5-10yrs to get the price where the Gulf economies want it. However, the push to keep some revenues coming in will keep the oil flowing.  OPEC’s problems will be much bigger over this price breathing space.  The world is gearing up to give up oil.  Alternative vehicles of many different types will come online over the next few years.  This will keep a permanent downward pressure on oil prices from about 5 years out when the manufacture and sales of such vehicles reach critical mass.

In the near term, oil will see $20 a barrel long before it reaches $100 again.  Peak oil theory is dead.  The new theory is ‘dead oil’.  Within 20 years the oil market will be relatively insignificant on the global stage. And, unless the Gulf can reposition itself economically there will not be a positive future going forward.

Here is the latest article on oil price from the Gulf News:

Oil dips to four-year low

http://archive.gulfnews.com/articles/08/12/05/10264892.html

12/04/2008 11:35 PM | By Himendra Mohan Kumar and Shakir Husain Staff Reporters

Abu Dhabi/Dubai: The price of global benchmark crude on Gulf News fell to below $46 (Dh168.9) per barrel to its lowest in nearly four years, causing more concern among major producers about the commodity’s sliding value.

Leading members of the Organisation of Petroleum Exporting Countries (Opec) with huge infrastructure projects to fund are worried about their shrinking export revenues.

With the prospects of global economic growth weakening, oil has shed about two-thirds of its value since July when it traded more than $147 per barrel.

In yesterday’s early trading, US light crude for January delivery was down 57 cents to $46.22 a barrel. It earlier touched a low of $45.30, the lowest since February 9, 2005. London Brent crude was down 67 cents at $44.77.

Yesterday Iran said $75 a barrel was a fair price, echoing earlier comments by Saudi Arabia’s King Abdullah Bin Abdul Aziz and Oil Minister Ali Al Nuaimi.

Iran also believes that the market is oversupplied and producers should cut output to balance the fundamentals of supply and demand.

“It is obvious that the market is oversupplied,” Reuters quoted Iran’s Opec governor Mohammad Ali Khatibi as saying.

Opec will announce a production cut at its meeting in Algeria later this month, Qatar’s Energy Minister Abdullah Bin Hamad Al Attiyah told reporters in Dubai on Wed-nesday.

Industry analysts said the fall in oil price could harm the Gulf economies, but for now these countries are cushioned against lower crude prices because of the financial reserves they have accumulated from the previous high revenues.

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