Construction of luxury mega-projects in the UAE may result in bankruptcy. Late last week it became known that one of the world's largest real estate developers - Dubai World - is on the verge of default. In essence, Dubai World is a state corporation of Dubai. Its main project is the construction of luxury mega-complex "Palm Islands" and "World Archipelago» (The World) in the United Arab Emirates (UAE). It would seem that the scenario of default to the developer of one of the most pompous luxury projects in the world in one of the richest oil-producing countries, more recently, was just incredible. However, experience shows that many elite projects suffer from a crisis in the first place. And, according to experts of the analytical center "Indicators of the real estate market," the reasons for this are obvious. In addition, there is an underlying believe that Dubai's scenario may take place on Russian soil, particularly in real estate in Sochi. And, as in Dubai, from the collapse of the region could save public investment. November 25, 2009 Holding Dubai World announced the suspension of the semi-annual payments on debt of about $ 22 billion or almost 30% of the total debt of Dubai. In response to the rating of S & P and Moody's announced a serious decrease in credit ratings of Dubai and its related entities. The reason for the temporary suspension of payments on the debt was a collapse in the construction industry of Dubai. Until recently, ambitious projects to build artificial islands in the form of palm leaf, and the archipelago resembling a map of the world, caused raptures of most buyers and investors from around the world. But with the onset of the crisis the average cost of 1 sq. km. m not only in unfinished luxury projects, but also on the secondary market of the United Arab Emirates (UAE), according to Global Property Guide, for the year fell by nearly half (48.1%). Against this background, foreign investors rush for real estate in the UAE noticeably cooled. As a result, projects, Dubai World to create bulk artificial Palm Islands and The World archipelago in the Persian Gulf had to be frozen. Not surprisingly, soon after the developer of the projects requested a six-month deferral of payments on debt. However, the real estate in Dubai, initially caused a lot of questions - too many "but" was originally incorporated in the Dubai real estate. To begin with, that the two mega-project is clearly not built for the domestic market. For the UAE as a huge amount of luxury housing was clearly excessive. What about foreigners, especially Americans and Europeans, it is unlikely that someone from buyers and investors of real estate Dubai real was going to live there permanently. It is one thing - relax in your own apartment a couple times a year, and another - to live there permanently. It should be noted that the UAE - a sun-scorched desert sands, and with a fairly heavy for a European climate. Moreover, it is a Muslim country with their orders, and customs. And the number of activities and businesses there also is limited. And, therefore, for an American or European, has a first home in the city, the second - a country house in the suburbs, the third - somewhere on the Mediterranean Sea (or the Caribbean), apartment or villa in Dubai was not even a second, and 4 or 5 house. It is not surprising that with the coming crisis, real estate in Dubai is the first, from which all declined. Notably, the growth rate of prices for Dubai property in previous years. So in 2006 - 2008 years, it averaged 50% per year. For comparison, even in Moscow, where housing is desperately short supply, and all previous years, the market was roaring, the growth rate exceeded the cost per square meter 40% per annum from 1 time only in 2006, and on average they accounted for about 30% per annum. And even with this rate of growth of real estate prices in Moscow have been overvalued and have experienced a significant downward correction. Quite naturally, the "drawdown" of real estate in the UAE had become deeper. Moreover, such high growth in property prices in Dubai have been associated with the scheme and the sale of housing. Since the buyer is not acquiring real estate itself, as an option on it, and that was enough to make a 100% no cost, but only 10%. In fact, Dubai has taken place not so much real estate as such, but speculation in securities, futures game similar to oil or gold. So the buyer, making only 10% of the cost at resale receives revenue from the increase in the price of the asset. Even if the price of the asset growth of 10%, the invested money, this gives a double gain! However, a loss is the one who does not have time time to "jump" from the pyramid. And even if the Moscow real estate market where home sales this scheme did not exist, and the share of investment purchases estimated www.irn was no more than 30%, with the advent of the crisis experienced noticeable difficulties, what to talk about real estate in Dubai, where investors and speculators accounted for the lion's share of buyers. However, in addition to a significant drop in demand for property in Dubai with the advent of the crisis to another cause of default Dubai World was insufficient diversification projects of this developer. Although Dubai World has invested in other projects, and in other countries, the share of these investments was not so significant compared to mega-projects in the UAE. Moreover, other Dubai World's investment is also largely focused on the luxury segment. And a similar problem of low diversity and obsession with similar projects does not occur too often. Faced with a similar problem, and one of Europe's largest real estate developers - the company Martinsa, - what think tank www.irn wrote in his article "The housing market looks like Russian to Spanish." In general, it should be noted that the property market in Spain is partly similar to the UAE real estate market. Thus, the volume of holiday homes in Spain, built in the last 10 years, considerably exceeds the domestic demand and is designed largely to foreigners and foreign investors. In this case, although Spain - part of Europe, its climate is very hot and heavy for the people of Northern Europe, as well as for Russian citizens. And if, before the crisis, investors and speculators have always supported the demand and growth in property prices in Spain, with the advent of the crisis "drawdown" of the market accounted for more than 50%. In this sense, and in Russia, it seems, is a region that is similar in its characteristics Spain and the UAE - a Sochi. In Sochi, after the announcement of this city the capital of the Olympic Games in 2014, growth in real estate prices outstripped even Moscow. However, and their decline during the crisis was deeper than in Moscow. Thus, according to official data mayoralty of Sochi, was already reduced to 50%. As a result, many foreign investors out of Sochi projects. And if the Russian government had planned to participate in the construction of facilities for the 2014 Olympics on equal footing with business parties, but now many of the objects had to take leadership of the country completely under his own care. The volume of government investment was originally contemplated was substantially reduced. Thus, we can conclude that if at the beginning of the Russian government to earn implied by the project "Olympia 2014", it now has the task of "saving face" by pulling the Olympics in many ways to budget money. By the way, even before the crisis, when the euphoria around Sochi real estate market was in full swing, many experts note that it is unclear the fate of all of the Sochi facilities after the Olympics. After all, even the amount of housing that is planned to be built, seemed excessive for Sochi, not to mention items of sports infrastructure and commercial property. In this sense, the real estate in Sochi in many ways resembles the situation in Dubai, and Spain. It is noteworthy that, as our Government intends to extend the Sochi project and save the main developer 2 building projects UAE Emirate government is going with oil money, debts restrukturiziruya Dubai World. However, to expect that even after the completion of these projects it will invest in return at least in the medium term is unlikely to be, analysts say www.irn. In fact, according to the International Monetary Fund, although the economic recovery in Europe and the U.S. began a revival due solely to lower costs, rather than the revival of demand. Therefore, an extremely low likelihood that representatives from developed countries over the next few years will be able to afford to live as lavishly as before the crisis, the more do reskovannye investment. Therefore, if the cost of building the Palm Islands and World Islands will not be significantly revised downward, as it did the Russian government with the restructuring project of the Greater Sochi Olympics for 2014, it is likely that the Palm Island and the archipelago and the world will not be completed in the foreseeable future.
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