Saturday, August 9, 2008

Dubai - Tax Free Sand Castles in the Sun?

The hype for Dubai and the surrounding Emirates has been going on for some time now, but little seems to be known by the public as to what really goes on, and quite how it all works. With a completely different culture to the west, and a country that made its living very quickly from "Black Gold"

The problems that arise from this though is a large amount of belligerence from the developers themselves, with huge belief that people will just throw money and whatever they build, and all is good!

There are only a few main "authorized" developers (I guess the ones with the largest pockets, or those that know a prince) the top 3 are Damac, Profile and Emaar.

There are what would appear to be 100's of companies developing and selling there, but these are the big guys, the ones that pretty much control everything.

Emaar. Once revered as the highest quality, has decided to enter the timeshare market, "Emaar Hospitality Group plans to enter timeshare market" as much as timeshare has had a bad name over the years, it is trying to clean up its act, but as we all know, where there is timeshare, there are timeshare salesmen. I dont know about you, but something I cant stand. Emaar, as fancy as your developments are, you just cheaped out buy a vast amount, pulling down the quality in a country where you pride yourselves on delivering the best. I don't care what anyone says, timeshare is not an investment. It might save you money long term, but there is a vast difference between saving and investing.

Profile. Responsible for "The World" and most noteably the "Island of Ireland" built entirely on reclaimed "land" (I'm sorry but a heap of sludge you dredged out of the sea and sprayed about the place with a few rocks around it doesn't constitute land in the real world) One has to wonder how long this will last, I mean it's all very nice, and aimed at the uber riche and so on, but we have all seen the discovery channel documentry about the race against the storms and trying to fix it as the build and hoping it won't sink. On top of all that, who in their right mind wants to drink Guiness in 50 degree heat surrounded by a bunch of Irish timeshare salesmen? I'd rather lick the path.

Damac. Now this is an interesting one, Damac have started to sell a great many projects, and been doing so many u-turns on them they appear to be spinning like a fairground ride, with unbelievable things going on as a result. Their latest ploy was their annoucement to build a multi billion dollar project in the Kurdish region of Iraq. Now I'm no historian by any stretch of the imagination, but was there not a war going on in Iraq? didn't some bloke called George W Bush decide he wanted a new sand pit? I am all for investing early, but do you really think this is going to happen? show us your "entrance strategy" never mind the exit!

What few people realise is that Damac actually started as a catering company and runs many restaurants. With the number of clients out there that have bought there properties, only having been told that the odd project here and there is being cancelled, one should ask should they have made the transition? With numerous projects delayed or cancelled, many investors have "flipped" their properties. For those that manged it and got their money, all is good, but those that bought at the flip end are left holding fresh air!

The Emirates in general?

Well, going direct to the developer is one thing, but you have no idea what wonderful new scheme they could bring in before they finish, in some cases even if they finish at all. Buy through an agent and you end up with even more confusion and higher prices. In a land as unstable as it is, both physically and politically one really should be wary. VAT will be introduced soon which removes a large chunk of profit, the developers aren't advertising that! The other thing to consider is the desperation factor, the Emirates have gone about as far as they can on their oil, do you really think they can sustain the same financial status on tourism?

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