Summer over for DFM?

After Saturday, when the DFM only traded €14.6 million, today the DFM did almost €100 million in trades, and was up sharply. Optimists have been predicting that, once people start returning from their summer holidays, they will want to buy at current levels. Yesterday and today could be the first signs that those optimists were correct.

Another view said that, while no one wants to buy following the crash, current prices are so low that no one wants to sell, either, so volume will remain low and the trend will be neutral, and the last two days only represent a small blip.

More than 60% of today's trading on the DFM was Emaar and Amlak, a property developer and a mortgage lender.

One commentator to this blog, who lives in one of the freehold properties, says that, at night, very few lights are on. This could be from the fact that most of the people rich enough to live in these properties can afford to be away from Dubai for the summer, or that the properties are by one of the more dodgy developers, and are not representative of Emaar properties. But it could mean that most of the Emaar properties, while sold, are owned by desperate investors who have been trying, unsuccessfully, to sell at a profit. If the latter scenario is true, the consequences are:

1. continued declime of the DFM; combined with
2. a property crash.

Right now, however, it looks like there is still a lot of demand, especially for the new, more affordable properties. Emaar has a new arrangement with the lenders so that the buyer only needs to put 5% down and starts paying upon completion. Loan payments will be less than rents in the older parts of Dubai. This offer is restricted to Citizens and professional workers employed in Dubai, a small minority of the residents. And some are concerned that Emaar needs such an arrangement, as their first properties sold out immediately, when the buyer was required to put 30% down and the full balance upon completion (though buyers could try to find morgage loans on their own). So, again, is the property market maturing (with new, more convenient, purchase arrangements), or is the property market getting desperate?

Because, for now, the property market is the DFM.