By Peter OBIORA investadvocate

Aug 16, 2010 15:41 GMT

 

Nigerian Investors who invested in the Dubai Property Market in the past few years have lost 73 percent (73%) of their investments in that country. Kingsley Snomi, a Property Consultant confirmed this to investadvocate recently in Lagos Nigeria.

 

“Most Nigerians that invested in the Dubai property market have lost about 73% of their investments in that country” he said.

 

Snomi attributed this to the dwindling prices of houses in the United Arab Emirate (UAE) in the review period.

 

“This is because the prices of houses in the area came down drastically; most of the Real Estate Companies are not able to meet their obligations. Properties that they promised then would be ready in three years; most of them are still at the foundation stages. And people made their plans based on these projections” the Real Estate Consultant said.

Snomi confirmed to investadvocate that properties bought for about $300,000 in year 2006 now worth $80,000 indicating a loss of 73% in the period under review.

 

“Most of these investors had projected that from years 2006/2007, they will start to reap on their investments by years 2009/2010 based on what the Dubai developers told them when they were making the investments” he said.

 

He further affirmed that some of the projects right now have been abandoned and when these Nigerian investors go to get back their funds, they will be denied that opportunity.

 

“If you go back to them, they will tell you that you cannot get your money back. “I can confirm to you that people still prefer investing in real estate in Nigeria to other places; because in Nigeria, the sector has a way of absorbing financial shocks; unlike in the developed nations; where once there is a tilt, the whole system is affected due to the way things are arranged” Snomi said.

 

To confirm the above, Reports have it by “The National” a Newspaper based in the UAE that two of Dubai’s biggest developers Deyaar Development and Union Properties reported second week of August 2010 their biggest losses as they took provisions on properties and recorded few handovers of homes to buyers.

 

According to The National, Deyaar Development, the second-largest developer in Dubai, affirmed it lost Dh243 million (US$66.1 million) about N9.915 billion in the second quarter (Q2) of year 2010, but did not produce any accompanying financial statements to confirm same.

 

The second company, Union Properties, the third-largest developer, reported a loss of Dh349.4 million ($95.204 million) about N14.280 billion for the quarter in year 2010, up from a loss of Dh227.9 million ($62.098) about N9.314 billion in the same quarter last year.

The Dubai based newspaper quoted Analysts as affirming that the results are the latest sign indicating that the sector was yet to find a way to deal with the declining asset values and slow sales it has experienced before now.

 

Chet Riley, an Analyst at Nomura Securities in Dubai affirmed that these results are a wider reflection of the market. “There are falling asset values across the board and they are causing major write-downs.” Riley said.

“A catalyst for the write-downs was the transfer of vacant flats in the developers’ buildings to their investment property portfolios, which requires the companies to revalue the assets according to prevailing market prices” the Nomura Securities Analyst was quoted as saying.