Over the last decade an oasis has opened up in the Arabian Gulf.  First, The Palm Jumeirah grew from the sandy depths of the Jumeirah coastline, followed by its bigger siblings, The Palm Jebel Ali, The Palm Deira, and of course, The World.

These major land reclamation projects, funded by Nakheel Properties, were stimulated by the growth of the financial and entertainment prosperity of Dubai during the time of escalating crude prices and easy money.

Well, Dubai may have benefited from grandiose economic times, but the new world icon is not impervious to other end of an economic cycle.

The economic impact felt in Dubai has become evident with the halting of construction work on the Nakheel Tower; a building that would rise more than 3,290 feet to be the world’s tallest when completed.

Additionally, according to the Colliers International House Price Index, overall house prices in Dubai have dropped by 8% in the fourth quarter of 2008.

Other developments in Dubai have been affected as well, including the Trump International Hotel and Tower, Frond N villas, and Gateway Towers, as well as parts of the Waterfront and Palm Deira.

It’s been clear to me that Dubai has gambled big on its real estate ventures, with massive capital outlay for oasis-like resorts to draw in tourists to compliment the attraction to the financial sector.

Dubai House prices have in­creased 42 per cent in Dubai between the last quarter of 2007 and the first quarter of 2008, ac­cording to a report re­leased recently by global property consultants Col­liers International. -Source

What goes up like a rocket, comes down like a lawn dart!

Crude oil prices have fallen 75% since their highs during the summer of last year.  The global financial industry hasn’t fared well either, and Dubai is not immune to real estate whoas.

Late last year, Nakheel laid off 500 employees, about 15 per cent of its labor force, due to global market conditions.  Seeing as how the Nakheel Tower was to take 10 years to complete, a stoppage in construction and a layoff of a good chunk of their employees is a sign that the company doesn’t expect a quick turn around in global economic conditions.

It will be interesting to see how Dubai weathers this global economic storm.

Finance, Real Estate Dubai, global markets, Nakheel Properties, Real Estate, The Palms, The World

I just received the 2008 tax valuation from my county treasurer. It’s clear that my local housing industry is feeling the effects of the national housing “crisis”, as the appraised value of my house increased less than 1% this year. Compare this to last year where the increase was 4.9%, and the year before when the valuation increased 6%.

Truthfully I’m not terribly disappointed about this, nor am I shocked. Other areas around the country are seeing the value of homes actually decrease, so I’m counting my blessings that my area isn’t yet in that boat.

Looking around the real estate market, there are a ton of houses on the market, and the area is certainly overbuilt. Commercial real estate is even more so. There have been strip malls built that have been vacant for 6 months or more, but curiously this has not deterred builders from building more commercial space.

The current state of the local market makes it attractive to buy a house, but I’d hate to have to sell one right now.

How about your area? Are your valuations still positive?

Real Estate housing, Real Estate

One aspect of investing in real estate is trying to take advantage of a short sale. Being unfamiliar with what a short sale is, I thought I’d do some research.

A short sale involves buying a house for less than the amount the seller owes the lender, pure and simple. A more sophisticated way of making real estate purchases, short sales probably require more tact and patience than buying a foreclosure, as it involves knowing more about a persons situation than you might let on.

A short sale usually occurs when a seller can’t make his loan payments because of death, divorce, job loss or other hardship. When homes are rising in value, owners can sell the house and pay back the lender. But when home values are dropping, like they are in many places today, and the owner hasn’t built up much equity, that’s not an option.

So some lenders will accept less than the amount owed to avoid the hassle and expense of auctioning the house, providing the owner proves that he doesn’t have other assets to make up what he owes.

As with many foreclosure listings, you’ll be buying the property as-is, so you’d have to include opportunities to back out of the deal (i.e. via home inspections) if things are not as they appear on the surface.

Searching for short sales is probably more work than I have time for at this moment, although I hear they are becoming more prolific as adjustable mortgage rates reset…

Does anyone have any experience with short sales?

Real Estate investments, Real Estate, REI, short sales