Our reasons were five fold:
1. Major oil price decline that began in 2014, longest ever, most sustained in history, until date.
2. Bans on Iran, Yemen, Bangladesh, Libya, Syria (now Qatar) and more countries (for trade, tourism, banking, visas, real estate, everything)
3. Massive currency drops in Russia, Nigeria, South Africa, Angola, Europe and more.
4. Five active civil wars in the region (Yemen, Iraq, Syria, Libya and Afghanistan).
5. Damage to every regional economy caused by ISIS and other terrorists across the region plus missiles flying all around.
Except for the bans, other 4 are external catalysts and, thus, are not within the control of Dubai/UAE.
We predicted at the time in July 2015, that if ALL 5 reasons mentioned above were to be reversed on one given day, then we would see a recovery begin, 6 months thereafter.
Even if 1 of the 5 reasons mentioned above did not happen ON THE SAME DAY, then there will NEVER be a recovery.
All 5 reversing simultaneously, and going to peaceful and stable/growth days of years gone by, is an IMPOSSIBLE task.
Fast forward to August 2018, we have been 100% accurate.
We have seen oil price recover, but the reserves of all GCC nations are depleted so acutely that they are selling assets as fast as they can, issuing bonds for several years and now even seeking loans indicating more troubles ahead.
In addition, the friction amongst GCC nations has reached high stress and war like levels.
Qatar (pop of approx 2.7m) has been banned by 4 other “brotherly” Arab neighbours since June 2017. All flights, trade, shipping, television, internet sites, real estate, banking etc have been banned and severely restricted.
GCC union is almost disbanded. Saudi and UAE have started their own council. We expect GCC to formally collapse by Dec 2018 when their annual meeting may not be attended by all members.
GCC rail and all such projects have been halted, except between Oman and Qatar.
VAT was agreed to be implemented by all 6 GCC nations, but as on date, only 2 nations (Saudi and UAE) have implemented VAT.
S&P claimed in Feb 2018 (almost 3 years after our prediction) that things are bad and real estate values will not recover until 2020.
We continue to differ with the inaccurate forecast of S&P.
They are completely wrong like they were from 2015 until Feb 2018.
Just on last Thu, 3 Aug 2018, Dubai Govt froze all assets of Schon Properties, one of the largest developers in Dubai/UAE. Loss is estimated at around USD 2bn.
This has happened for the first time in the history of Dubai/UAE and probably around the world and is very shocking. More shocking details are yet to come out.
This is the kind of damage we are expecting all around for everyone concerned from investors to sellers to developers to banks to public shareholders to bond holders and indeed to the Govt.
It will be even more SHOCKING whatever else happens over the next few months.
This has never happened in Dubai/UAE previously, not even during the 2009 crisis.
Collapse of Abraaj Group and Schon Group is just the start, expect more billionaire collapses and expect them soon.
We had seen recovery in sales transactions and prices between 2010 and 2014 but the prices have been dropping since 2015, which almost everyone can attest.
Meanwhile, Pakistan Govt. has just yesterday sent tax evasion investigation notices to 1,500 investors from Pakistan who own property in UAE and UK.
We believe that the numbers for UAE are at least double of the number mentioned.
Hence, Pakistanis have suddenly turned into quick and willing sellers (who already have been selling since Jan 2017) when the data sharing OECD regulations were implemented by UAE.
Pakistanis alone have been buyers of USD 2-3bn of real estate every year in Dubai/UAE as well as in Ajman, UAE who, like Qatar, have now suddenly turned to become 100% sellers and no buyers whatsoever.
Finally, today, 7 Aug 2018, one more developer has woken up to the reality of the real estate markets in Dubai/UAE, Tiger Group from Sharjah.
The Chairman, Mr. Waleed Zabi, claims that Dubai prices may not recover for “years”.
Chairman, Mr Zabi, is a Syrian and knows very well the troubles that Syrians are going through in UAE and almost all are being deported. It is also mentioned in the article.
Just in Jan 2018, he had announced that his group will invest AED 10 billion / USD 2.72bn by 2020.
We wonder what has changed in the last 8 months?
This is the main article of today from Bloomberg:
He says that the price slump in Dubai/UAE will go on for another 3 years which takes us to 2021 (which is a total of 7 years already - from 2015).
We disagree with him as well.
Prices will continue to drop every single month as they have done so since Jan 2015.
There can not be any meaningful recovery for property prices in Dubai/UAE.
We appreciate any comments that you have on our viewpoints.
We appreciate any comments that you have on our viewpoints.
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