Why real estate in Dubai has always been dangerous for investment

08.12.2009 15:58
Markets, dangerous to invest, have always been - and in times of crisis, and before him. The Dubai market was high-risk and without any crisis.

Igor Indriksons, director of overseas property investment IntermarkSavills recalls that this market was built on a strategy of Real Estate Option Trading (trading in options of real estate), which could make investors fabulously rich in the shortest possible time, but real estate markets, based on this strategy are very low liquidity of the real estate and high liquidity options (contracts). Indriksons, explaining the riskiness of investing in property in Dubai and Panama, results similar to other financial instruments - futures contract for crude oil. "The trader, who buys the futures contract for 1000 barrels of oil, the oil itself is not needed for resale. He is not interested in the product itself, but plays on the derivatives of this product (derivatives). So it is in real estate. And in case of failure, the resale of the contract can suffer more, and the failure of resale finished object ", - he said. In such markets typically loses the last in a chain of investor, the one who gets the keys to the facility. According Indriksonsa, Panama and Dubai markets are dangerous not because of the crisis, but by themselves as a classic example of speculative markets.

Other countries, dangerous for investment

To markets with high risk today is the majority of developing real estate markets. Prices there will continue to fall until the full recovery of these economies, says the head of the department of foreign real estate Knight Frank Elena Yurgeneva.

President of investment group Sesegar Irina Zharova Wright dangerous to invest in real estate believes Croatia, Montenegro, Mexico, Vietnam, Thailand and Bali. Speaking of the markets of Croatia and Montenegro, it leads to arguments unfriendly government policies towards foreign investors, because of which many times have decreased foreign investment, as well as the slowdown in the tourism business, which accounts for 20% of GDP in these countries.

According to her, Mexico, with its hyped stories about the epidemic of swine flu, drug war, and remoteness from Russia, a fall of 80% of the flow of tourists from the United States gets to the list of disadvantaged countries.
"Very high inflation in Vietnam, reaching 25%, economic growth projected at 4% reduces the interest to the region as an investment. And the Russians to fly far. In the list, so get Thailand and Bali, "- says Zharova Wright.

Danger of some of the other markets covered in the issue of virtual price growth - when real estate is growing on paper, but not actually growing. Today, the countries affected are the virtual growth in property prices, according to Indriksonsa, include Thailand, Vietnam, Tunisia, Egypt and the coast of Bulgaria and Spain.

Market, threatening to invest in the aftermath of the crisis, remains the U.S. housing market, said Indriksons. According to him, the flywheel securitization was again promoted the U.S. Federal Reserve (Fed) with the redemption of MBS (collateralized mortgage) for more than $ 1 trillion. "Accordingly, the banks have not been virtually no risk, since together with the resale of all the debt problems automatically transferred to the Fed. And the banks again began to issue mortgage loans. Of course, to offset such costs, America has had to turn on the printing press. And now more and more analysts are inclined to believe that the U.S. expects hyperinflation "- said the expert.

Country attractive for investment

Interest to the Russians should be the same countries that are included within the scope of investment interests such large funds and banks, such as, Morgan Stanley, announced that in Europe they are only interested in England, Italy, Germany and France, and all Eastern Europe is forgotten years five, said Zharova Wright.

Knight Frank analysts recommend investors today focus on mature markets - Britain, France (Cote d'Azur), Italy, Austria and Switzerland. Elena Yurgeneva says that if we consider the Asian markets, the stand out major financial centers - Hong Kong, Shanghai, Singapore, where the recovery will occur faster than in other markets. Today, Knight Frank advises clients to exploit the situation and to buy real estate in these towns - on the market until there is a very good offers on quality and price. According to Knight Frank Global Price Index, home prices in Singapore fell for the year by 27,7%. However, the dynamics of price changes by quarter shows that the vector has changed to positive. As noted Yurgeneva, investors are not recommended to defer a decision more than one quarter, as a growing market conditions dictated by the seller.

According Indriksonsa, in terms of investment by Russian buyers are interested in the markets of the least affected by the crisis (Western Europe, particularly France, Cyprus, etc.). Always popular, and also the market in London, where this year due to the devaluation of the pound and the decline in property prices in the UK (by 16,6% compared with a peak in 2007) there were very interesting from a financial point of view of the possibility of property acquisition, he said.


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