# Negotiating Property Price



## miloo (Aug 22, 2015)

Hi everyone,

Me and my wife are in the process of buying a property in Business Bay, we found a 1 bedroom apartment which we fell in love with.

One agent we spoke to told us the price was 1.4m AED but he reckons the price can be dropped to 1.3m AED.

Another agent told us from the offset the price was 1.3m AED and she didn't think there was much room for negotiating as the price has already been reduced.

I want to know whats the best way to go about negotiating, how low of an offer should I go in with and any tips or suggestions would be highly appreciated.

Thanks


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## Stevesolar (Dec 21, 2012)

Hi,
Find 10 places you like.
Then offer 20% lower than asking price on all 10.
See which ones bite and go with the one that accepts your lowest offer.
Cheers
Steve


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## TallyHo (Aug 21, 2011)

I don't know if this is a good time to buy an apartment.

As you know, prices have dropped substantially since the beginning of the year. The world economy is softening again (have you noticed the stock market drops across the world?). Oil prices just dropped below $40 a barrel for the first time since 2009. UAE government has announced budget cuts. 

I'd wait six more months. I think there's a very good chance prices will drop even more by January. Quite often there's a pattern to property prices: hit a peak, level off, stagnate for half a year or so, drop by 10-15%, some people jump on board thinking it's a bargain, then the bottom falls out and the bargain is no longer a bargain! Your 1.3MM apartment may be asking only 1MM by January. 

The real trick is judging when the bottom is and having the confidence to buy during a bear property market. Do you have economic stability? Not in danger of being made redundant? 

But this is just me. 



miloo said:


> Hi everyone,
> 
> Me and my wife are in the process of buying a property in Business Bay, we found a 1 bedroom apartment which we fell in love with.
> 
> ...


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## miloo (Aug 22, 2015)

Thanks for your reply, after the markets crashing over the last few days, I am less confident than I was last week.

You mentioned judging when market hits the bottom but how do you really judge that.

The problem I found in this country is that different news outlets report contradicting information especially when it comes to the property market. One website quoted a senior manager at dubizzle as saying property prices are up, which clearly they aren't.




TallyHo said:


> I don't know if this is a good time to buy an apartment.
> 
> As you know, prices have dropped substantially since the beginning of the year. The world economy is softening again (have you noticed the stock market drops across the world?). Oil prices just dropped below $40 a barrel for the first time since 2009. UAE government has announced budget cuts.
> 
> ...


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## Stevesolar (Dec 21, 2012)

miloo said:


> Thanks for your reply, after the markets crashing over the last few days, I am less confident than I was last week.
> 
> You mentioned judging when market hits the bottom but how do you really judge that.
> 
> The problem I found in this country is that different news outlets report contradicting information especially when it comes to the property market. One website quoted a senior manager at dubizzle as saying property prices are up, which clearly they aren't.


Hi,
Prices have bottomed out when they are more expensive this week than last week!
Information depends on the vested interest of the person spouting it - anyone who earns their living from the property market has a vested interest in giving information that does not destabilise the market.
I would not be buying now - I truly believe prices need to fall by 20% this year.
Cheers
Steve


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## miloo (Aug 22, 2015)

It seems like everyone I speak to about this truly believes the market will fall further by the end of this year. But my question now to you guys, especially those who have lived here for a while, is the property market seasonal here. 

So, if prices fall further lets say by December, for how long would you expect them to remain low?



Stevesolar said:


> Hi,
> Prices have bottomed out when they are more expensive this week than last week!
> Information depends on the vested interest of the person spouting it - anyone who earns their living from the property market has a vested interest in giving information that does not destabilise the market.
> I would not be buying now - I truly believe prices need to fall by 20% this year.
> ...


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## Stevesolar (Dec 21, 2012)

Hi
Look on the back of a 100 dirham note - it shows a picture of the World Trade Centre on Sheikh Zayed Road - it was the tallest building in the GCC when built in 1976 and was surrounded by desert.
The oldest building in Dubai is the fort that is now the museum.
My point - this is a very new, immature, artificial housing market that does not have a long history of prices and trends to compare - unlike London, New York, Hong Kong, Paris etc.
I would put purchasing in this market as a "high risk" strategy - unless I had a suitcase full of cash and came from a volatile country like Libya, Syria, Pakistan etc.
Cheers
Steve


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## TallyHo (Aug 21, 2011)

Never believe anything said in the local media and press. 

It's all heavily censored. 

During the last recession the main media were literally gagged from reporting on any bad economic news and kept churning out articles about how great everything was and how everything was just a temporary dip and the market would be roaring right back soon. Despite that prices were dropping by the tens, if not hundreds, of thousands weekly. 

Real estate in the UAE is a cowboy show. You enter at your peril. 

That aside, it doesn't mean it's always a bad thing to buy property. You just have to be prepared for the very real risk of declining property prices, even if only temporary, and what happens if you're made redundant (all too common) and then what do you do with the property in a bear market? Rent it out? But if rental prices halved (which they did the last time) it won't cover the mortgage. 

A lot of people were royally f*cked up buying at the peak and even post peak and unable to rent to cover the mortgage + maintenance charges.

Then you have the reality of construction quality. Even in premier buildings the decay after only a few years is real. The combination of poor construction standards, harsh heat and heavy wear and tear by renters means that buildings become shabby very quickly. To use as a perfect example, the Meadows/Springs were first opened in 2004 and within ten years people were already rehabbing houses. 



miloo said:


> The problem I found in this country is that different news outlets report contradicting information especially when it comes to the property market. One website quoted a senior manager at dubizzle as saying property prices are up, which clearly they aren't.


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## Mr Rossi (May 16, 2009)

Stevesolar said:


> I would put purchasing in this market as a "high risk" strategy - unless I had a suitcase full of cash and came from a volatile country like Libya, Syria, Pakistan etc.


This or if you were seriously looking at a 15-20 year stay here. Offset the cost of a house against rent and still be financially ahead if you have to walk away with a pile of dust.

To the OP, houses are not built to last and nor are they intended to be. If any are in a state of disrepair the done thing is to flatten it and rebuild another one.


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## rsinner (Feb 3, 2009)

and to give an example of the volatility: 2 bed in Greens:
- When I came to Dubai in late 2008/early 2009, the apartments were renting out at 140-150K
- in 2010 I rented one at 90K
- by the time I moved out in 2012, I was paying 110K 
- I looked at ads on dubizzle last year, the same apartments (same building) were listed at 150K
- Quick look at ads today, and apartments in the same building listed at c. 150K

With these kind of swings, anyone claiming to be able to talk about the bottom of the market is making a bold statement.

Prices in international city dropped by 80% in the last recession. Prices elsewhere of course did not fall as much, but c. 50-60% was the norm for a number of areas.

If you are buying for the purpose of living there, do make sure that in the rent versus owning argument you have factored in the service/maintenance charges, and the one time like charges like brokerage and registration fees. If you are taking out a loan to finance the purchase, be aware that you will be personally liable as a number of banks take post dated cheques (even though this is a secured loan).

If you have made up your mind to purchase, then 100K here and there does not make a big difference. Just be prepared to hold on to your property for the long-ish term (and wait out the volatility), and have the financial cushion to not have to do a runner with unpaid debt.

If you are buying as an investment, my simple (free) advice will be to wait. 

At the end of the day, for a global city, Dubai's property prices are still lower than a number of other cities worldwide. There is definitely population growth happening, and Dubai has become much more mainstream than it was 15 years (or even 10 years) ago. 

Location wise (since property is a lot about location) Business Bay is not too bad. However, what is central today, may not remain central in 20 years' time (ask Deira, Bur Dubai; hello Dubai "South"?).


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## rsinner (Feb 3, 2009)

miloo said:


> You mentioned judging when market hits the bottom but how do you really judge that.


If anyone can judge that with certainty, they will certainly not be posting on a forum - will be somewhere at a beach 

There are professionals whose full time job is real estate private equity investing - YET they have lost billions of dollars (and there are ones who have made billions of dollars). 

No easy answers. Luck has a lot to do with timing the market.


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## imac (Oct 14, 2012)

rsinner said:


> If anyone can judge that with certainty, they will certainly not be posting on a forum - will be somewhere at a beach ...


what if they were posting on a forum _from_ the beach?


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## QOFE (Apr 28, 2013)

imac said:


> what if they were posting on a forum _from_ the beach?


Nah, most devices would overheat in this heat. Apples usually shut down telling it's too hot to operate...


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## imac (Oct 14, 2012)

QOFE said:


> Nah, most devices would overheat in this heat. Apples usually shut down telling it's too hot to operate...


that's actually the only way people who use apples can know its too hot... they are too sophisticated to iOSweat...


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## dubaiman2014 (Mar 4, 2015)

Hi 

Any update on this topic? After 5 months


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## BedouGirl (Sep 15, 2011)

dubaiman2014 said:


> Hi Any update on this topic? After 5 months


The RERA guide will be published in January. It will be valid for a year. I believe there's going to be some changes in the rental values and the age of a property will be taken into consideration.


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## dubaiman2014 (Mar 4, 2015)

And for buying?


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## LesFroggitts (Dec 30, 2013)

dubaiman2014 said:


> And for buying?


Caveat Emptor - I don't think that there are any restrictions put in place defining the price of places for sale, only for rental.


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