Dubai property prices going down

Hi guys and gals,

This is a fresh article in the Wall Street Journal covering the property boom and consecutive slowdown (I wouldn't say bust). I think now is the time to make investments in Dubai real estate while the prices are down.

DUBAI -- Developers here are scrambling to prevent a wave of investor defaults as they struggle to survive this city-state's real-estate bust.

During a frenzied property boom, many investors bought property on speculation, expecting to be able to quickly flip homes -- sometimes entire floors in buildings -- before construction was finished. But in recent months, prices have cratered, some falling by more than 50%.

Buyers of unfinished homes have all but disappeared. That has left many investors either unable or unwilling to make final payments, which often are due upon completion and amount to as much as 50% of the total price of the home.

Analysts had forecast that Dubai developers could weather a mild property correction. Even if sales dried up, they figured, many could live off of cash flow coming from installment plans.

But many big developers are struggling to pay their contractors and subcontractors. In some cases, payment disputes have halted construction altogether.

The government has stepped in, offering funds from a $10 billion bailout program to companies with unpaid bills or overseas debt. The government has said more than half of this $10 billion has been disbursed.

Most of Dubai's biggest companies have pledged they will finish developments that are already in progress, including a handful of towers along Dubai's crane-choked skyline. But they are also offering investors eased payment terms and schedules. In some cases, executives are coming up with more creative strategies to avoid defaults.

Deyaar Development PJSC Chief Executive Markus Giebel says his company, one of Dubai's biggest, is plowing "full speed ahead" with 50% of its projects but is bracing for defaults by investors. "The problem is my customers can't pay," he said.

Deyaar is delaying plans for the other half of its portfolio -- projects it hasn't started building. It is offering investors who have already paid for some of this property the chance to swap into other projects that would be fast-tracked for completion.