Off-plan scams could turbo-charge completed Dubai home prices

Just my two cents for today: if the scams now being investigated in the Dubai real estate sector begin to frighten off would-be buyers of off-plan apartments and villas, then what is that going to do to the only alternative investment, completed property?

My guess is that higher demand for the very restricted supply of apartments and villas in Dubai that are actually completed and available will send prices spiraling over the summer.

This is already happening really. It is not rocket science. Oil is $120 a barrel and Goldman Sachs just said $150-200 is likely over the next two years. The UAE earns $360 million a day at today’s oil price or $131.4 billion a year. How about doubling that?

The liquidity is enormous here and there are few places to invest as local stock markets lack depth. Real estate offers 6-8 per cent return at a time when local base rates have fallen to two per cent alongside the Fed discount rate, due to the dollar peg.

If this huge money supply expansion is directed into completed property there will be a price explosion of a kind usually seen in a stock market spike.