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Dubai Property Where She Blows Nobody Knows
March 12, 2010Article by Ray Withers
This week’s news on the Dubai property scene is another mixed bag — isn’t it always at the moment? On the one hand you have a statement from the hardly-impartial Deyaar group — one of Dubai’s largest developers –, that says the recovery in the UAE property market (including Dubai) will begin in 2011.
On the other hand we have the fact that the overseas investment arm of state-owned Dubai World has defaulted on a second loan for prime US property. This has got to worry Dubai World creditors, who are currently eagerly awaiting a restructuring proposal from the organisation.
The Deyaar prediction comes from none other than the company director Markus Giebel, he has been quoted as saying: “In my personal opinion Dubai will see a recovery in year three, by which I mean 2011.”
Mr Giebel did not speculate on whether the Dubai property market would go up or down in 2010, but he remained confident that recovery would start the following year.
“Dubai’s fundamentals are still strong. If you believe in Dubai, you should believe in Dubai’s real estate sector. Because if Dubai is healthy, then the real estate sector will be as well,” he added.
The loan defaulted is a 300bln dollar mortgage from Danske Bank for the former Knickerbocker Hotel in New York’s Times Square. Danske Bank (DANSKE.CO) has now taken over the property and hired Jones Lang LaSalle (JLL.N) to market it, Henrik Hoffmann, executive vice president for group credits at Danske Bank told Reuters on Thursday.
Ironically, another report this week has highlighted how Dubai office space is more expensive than that of New York City — despite the price drops seen in the last 6-12 months. This is according to a new report by global real estate consultants Cushman & Wakefield.
The report found that office space in the Dubai International Financial Center, one of the most attractive locations in the emirate for business fell to $1358 per square meter, making it 4th most expensive in the world. This is still less expensive than office space in the financial district in London’s west end, which ranked 2nd most expensive in the world at $1843, but more expensive than Midtown New York, which is 6th most costly location on earth where office space costs $1188 per square mer.
The report noted: “Dubai has a vast over-supply of office space and as a result of falling demand, rental levels moved down over the year.”