Gulp in the Gulf?

Dubai house prices ‘to fall’ by 10% – The National via Paul Kedrosky’s Infectious Greed -Bradley Hope – 5 August 08

…Property prices in Dubai will drop 10 per cent by 2010 as a major supply of new apartments floods the market, the investment bank Morgan Stanley said yesterday…The abrupt change in price growth could eventually spill over into Abu Dhabi and other major economies of the Middle East and North Africa, the bank said in a research note…”Dubai is the bellwether of the whole GCC property market,” the report said. “A potential oversupply or price correction here would, in our view, extend to all markets as investor confidence is shaken.”…Excluding a severe correction in Dubai, Abu Dhabi, which is at an earlier phase of development than Dubai, could still see prices increase 25 per cent by 2010, the bank said. Likewise, Qatar’s property market is expected to increase by 15 per cent during the same period…Morgan Stanley also announced that its analysts would begin coverage of 12 property companies in the Middle East from today…The bank’s top picks – companies that are tipped to do well in terms of share price, for example – are Emaar, Aldar, Qatar Real Estate and Palm Hills in Egypt.

But while Morgan Stanley likes Emaar, the market doesn’t:

Emaar stocks slide to 12-month low - The National – Asa Fitch – 11 August 2008

The Arab world’s largest property developer has seen its share price drop 37 per cent since January.

Emaar, the Arab world’s largest property developer, saw its stock drop to a 12 month low at the closing bell, continuing a slide that began at the beginning of this year, when it peaked at Dh15.70 (US$4.27) on Jan 6. The share price has fallen about 37 per cent since then, and closed at Dh9.

Emaar reported healthy profits last month for the first half of the year, but was cited in a Morgan Stanley report released last week, which warned that the UAE’s property market was overheated and could contract in some sectors by as much as ten per cent.

But unfortunately it isn’t just residential. Check a comment made as an aside towards the end of an article about Adrian Smith, an architect who worked on the Burj Dubai and is presently designing six 100+ story buildings in the U.A.E.

Reaching for the Clouds in Dubai – New York Times – Fred A. Bernstein – 8 August 08rint

And then there’s the possibility that the building won’t serve much of a purpose in the first place. Mr. Smith isn’t clear on who will be filling his towers in the Middle East. The clients “have an attitude of, ‘If you build it, they will come,’ “ he said.

Buzz in the industry is that there is a growing amount of office and residential space in the Emirates “waiting for someone to come.”