Thursday, February 22, 2007

EMAAR to sell Lakes too

As predicted here previously, EMAAR appears to be dumping the whole of its rental stock into the market for urgent sale. Lakes tenants of EMAAR are being informed in similar fashion to those of us in the Greens that they have just three weeks to decide to buy, or their homes will be sold from under them.

EMAAR press release

The speed and timing at which EMAAR wants to get rid of its stock of rental properties has obviously raised eyebrows. One can only speculate at the reasons for the almost unbelievable urgency and EMAAR's insistence that everything must go one way or another within a few short weeks. With most of the properties having leases of several months remaining, there seems no obvious reason why a more carefully planned sale could not be phased in at the point each lease is due for renewal.

EMAAR's PR states that with the freehold laws, people prefer to buy rather than rent. But the reaction of tenants in the Greens, and the tiny number who're actually considering buying, suggests otherwise. It seems disingenuous for EMAAR to suggest that their decision to sell is driven by the wishes of tenants, when it's virtually impossible to find a tenant who welcomes the EMAAR decision and hardly any tenants seem to be taking up EMAAR's offer.

Why the desperation to sell now rather than in a few months time? Many market pundits have viewed the oversupply of middle and high-end property in Dubai that will emerge in 2007 as a possible turning point for prices, but any declines are likely to be drawn out affairs, so that alone does not seem to explain the sense of urgency.

So, on the face of it there doesn't seem to be any particular reason for the urgency to dump the whole rental portfolio into the market in a matter of weeks for a snap sale. Perhaps EMAAR knows something we don't?


Anonymous said...

Hi All, Honestly I am rather surprised that we are still asking (why) actually I my self was not clear of the reason why Emaar is selling but now it is very obvious and logical. Before stating my thought on this I need to mention that every one has been putting the blame on (Dubai and how unsafe it is here, that there are no written laws, how expats can be treated here ...etc) Now Look at it from a different angle!. Emaar bought a new UK Real Estate company "Hamptons" they started operations in Dubai and as it is very normal and very Logical for anyone of you who has a very small knowledge of such purchases or even company merges, the first top priority action Hamptons will have is to start evaluating the Emaar real estate business, profitability and possible improvements and Hamptons purchase by Emaar will be the MOST successful if it is proven that Hamptons was able to 1.) decrease any losses 2.) reduce cost 3.) increase revenue and in simple words and (no one of us needs to be an economist) it is very clear that a Property that is rented below Market rate is evaluated a loss even if there is no actual cash Loss, We all know that the rent is at least 40% less then market rate, looking at the rate Banks are taking here in Dubai of around 8% profit “reducing” that reaches after the complete loan or finance term to approx 4% fixed yearly profit rate any one again can say that investing the value of the properties after selling them with a MARKET RATE, is the correct economic advice and Hamptons as a new merger with Emaar will be able to show an extreme raise in the profit curve. Trust me all, in business it all ends up as curves on slides that are presented to the big Guys. Imagine, the organization or company you are working at hires a consultant or purchases (merges) with another company in the same field, you will find the result is (reduction in benefits, adjusting in policy, reduction of Employees …..) there are so many examples around us.

the once who blamed the system and even unfairly judged on the mentality of the People or business here or even in general the ME, were wrong, especially that during the past days we heard several times ((back in Europe…., or back in the UK…. or similar statements)) indicating that its better over there should clearly know and understand that HAMPTONS made the cold blooded recommendation that makes perfect business sense and shows towards the EMAAR organization that buying UK Hamptons was the right decision and correct move for Emaar’s business. ((hint:: without going into any political issues here, just look around you in the ME region and see who makes/made the COLD BLOODED decisions)) Again I want to make clear that the decision is with no doubt commercially correct.

Anonymous said...

yes but TWO WEEKS? A business decision is a business decision, but asset sales can normally be done in 2 or 3 months without giving the impression of a desperate closing down sale.

When EMAAR act like they're heading to the fire exits and climbing over others to do so, people need to look around and see where the smoke is coming from.

The other thing to ocnsider is that EMAAR is part owned by the Dubai govt which is trying to convince businesses that it is tackling the overheating economy and putting a lid on costs. If they are deciding to sell properties and therefore take lower rents out of the market to be replaced by owner occupiers paying much more, while displacing the tenants to other rental property at higher cost, it shows that the Dubai govt might talk the talk, but it doesn't walk the walk.

The government is not serious about reducing rents, like most things in Dubai, it's nothing but public relations twaddle. The government seems to be happy for EMAAR to cash in despite the effect this will have in ramping up the cost of living in Dubai even further.

Actions speak louder than words. The government via EMAAR has demonstrated that it is not serious about creating a stable cost base in Dubai and will bank a quick profit instead everytime. Businessmen beware - Dubai's economy is a train wreck heading for the cliff, and the driver isn't even reaching for the brakes.

Anonymous said...

just a hint,
Hingkong, Singapure are more expensive then Dubai.

Anonymous said...

Can easily rent a 900sqft apartment for 60,000 AED equivalent in Singapore dollars. You could in Dubai too. Well, at least you could 2 years ago. And that's really the point isn't it? Now you'd have to pay 95k for the same.

The inflation rate in singapore is 1.0%. So you can afford to rent your apartment and save your money, and you'll be able to next year, and the year after and so on.

The world bank ranks Singapore number one as the best place to do business and the 5th most competitive. Remind me where the UAE is?

Anonymous said...


In another rating.
Denemark has been rated as the happiest country in the world and the UAE/Dubai the Happiest in the ME.
Guys, the whole point is that the focus should be on the issue it self from a business point of view verses a human / emotional one. But starting to relate it to a country, nation or region is simply not acceptable and is turning the cards arround. Dont even think that I am in any way for the Emaar decision or happy about the Dubai pricing and some of the price jumps without control but drifting from the real issue and going into todays fashion of putting it on a cetrain region, nation, color or even ending up at religon is not acceptabel. in addition the so frequent comment of Back in the UK or Germany or similar places, is one of the greatest bullshit. simply if it was soooooo great overtheir, you would not be here!!!!
by the way, whats the rent / in London? and what is the percentage of this rate compared to the income? and also, what is the average percentage of Monthly saving in the UK or Germany?
anyhow, lets just not drive it into this direction. Simply my opinion is, Dubai is a great place to be and the Government is a very caring one and this is even reflected in that every one of us foreigners feels here at HOME, you can even review all the comments on the site you will find us all talking about HOMES, so lets not twist things and stay on the fact that it is unfortunate that the rates are getting higher and higher and that the Market has to stop where it is now, hoping that the construction raw material does not get more expensive and that the political situation in the region gets more stable and no one come to the silly idea of having another action in the region such the one in Iraq that had a major effect on the economy.
I think its time for everyone of us to move on and decide if he/she is willing to deal with an new ladlord that might mean needing to use the help of the rent committe that in fact looks after the tanants rights, buy the property through the available bank financing, move to another location within Dubai, or make even a harder decision of moving back to our home country, which I think would be the right decision for those who think it better there.

Anonymous said...

Just received the newsletter from EMAAR, one week extension... I'd kill to know how many tenants are going to buy their apartments??

Anonymous said...

Me too. I was so keen on buying it, but not any more. I'll just wait for current lease to expire and hope for the best. If the new landlord wants to increase the rent drastically, he will have to search for another fool.

Anonymous said...

So is that it ?
has everyone given up and resigned to the fact that EMAAR are a bunch of #####!!
Have the organisers of the meeting got any further news?
Surely the people in the lakes are kicking up a right stink as well.

Still positive............

Anonymous said...

am still positive as well, but not very optimistic.. I think we need to accept the fact that EMAAR is going ahead with the selling, but we need to focus on the aftermath... we can still ask EMAAR to extend our tenancy contracts by three years, or we can try to get a firm answer from the rent committee regarding all the possible scenarios, even if it will cost us 2,000 Dirham we can all chip in...
Sitting back and doing nothing will not help at all, we need to have another meeting, am sure seven days would be interested to join us... and EMAAR will have to compensate us, at least for the 5% commission we paid at the time of signing the contract... the cost of moving to another place are tremendous, we have to pay a new commission for the real estate agent, moving will cost at least 2,000 dhs, your new apartment might not be equipped with white goods, so you’ll have to buy the fridge and oven...
lets have a meeting...

Anonymous said...

completely agree!!!

Another meeting needs to be arranged as soon as possible given the very nice newsletter we recieved from Hamptons!!

I would try and organise it myself, but would kindly ask the organisers to try and set another meeting up within next day.

We need to get clear, concise answers and commitments as to what our position is when they sell these flats.

ie do we have one year automatic extension etc

Alternatively get Emaar to extend our current agreements.

Anonymous said...

Am in for the meeting, I got nothing to lose, its better then doing nothing at all...
Count me in if you need any volunteers...
nevertheless, thanks a billion times for the organizers, we appreciate your work, please let us know how we can help, you’ve already done so much, no need for anyone to redo the work, besides, we shouldn’t show emaar thugs any sign of splitting between the tenants...

Anonymous said...

To the organisers

Have you got any intention of arranging another meeting??
Or should somebody else take up your mantle?

IIt seems to have gone very quiet from your end
Is there anything further to report?
Or have people just simply given up!!

We need to act very quickly......

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