What Next for Property?

Listened to an interesting podcast recently by "renegade economist" Fred Harrison on the need to tax land not income as the basis for public finance and long term market stability.

His ideas, if implemented, would challenge the need for a blog such as this one (hardly a great loss in the overall scheme of things.) This was the man who in April 2005 predicted a property price down turn in the UK at the end of 2007 and into 2008.

Worth a listen as lots of people in developed countries are now starting to ask fundamental, structural questions about the nature of the economies they are a part of - questions which go way beyond the short term issue of whether the value of my house will rise or fall next month.

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John Templeton on Investment

The death this week of global investor and philanthropist John Templeton provides an opportunity to quote one of his maxims and apply it to the world of property investment.

Although he was not talking about real estate as such, there remains wisdom in his perspective when applied to the issue of when to buy and when to sell property:

If you want to have a better performance than the crowd, you must do things differently from the crowd.... I have put these philosophies into a simple statement: help people. When people are desperately trying to sell, help them and buy. When people are enthusiastically trying to buy, help them and sell.

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Before Investing in Dubai, Read This

Dubai, famed for its real estate and luxury hotels, has sought to promote itself as the world's leading real estate investment location.

Properties in Dubai are now being bought by investment companies and individuals and benefit from low entry prices, high yields, generous mortgage offers and year round rental opportunities.

Dig a little deeper, however, and you will find in the heart of the UAE, an upsurge in labour strikes and riots in the construction industry as the thousands of migrant workers who are building this investors' paradise in the desert protest against low pay and harsh conditions.

This week has seen the latest in a series of strikes, with hundreds of labourers protesting in Sharjah. Indian, Afghan and Bangladeshi workers blocked a main road and began attacking police. After riot police were brought in from neighbouring cities, over 600 of the protesters were arrested.

The strikes - which are illegal in the UAE - are occurring against the backdrop of an unprecedented economic boom in the Gulf states since the Gulf War, due in large part to rising oil prices.

Jobs in Dubai are highly sought by workers from the Indian subcontinent, who are paid in the local currency, the dirham, which is pegged to the US dollar. As the dollar has depreciated in value, the real value of workers' salaries - which are regularly sent home to families in South Asia - has plummeted.

Two weeks ago, Sharjah police arrested 1,000 workers protesting low wages and their forced residence on their construction site in sub-standard housing.

The recent disturbances have been by workers from Dubai based Tiger Contracting, founded by a member of the ruling family, and a leading player in the real estate investment boom in Dubai. The basic pay rate for Tiger construction workers is approximately 800 dirhams per month ($230) - equivalent to about $7.50 a day. Tiger Contracting recently announced the opening of its new multi-million dollar Marine Residences - the tallest building in the Dubai Marina development (pictured). Three-bedroom apartments in the complex start at £765,000. The tower is dwarfed, however, by the Burj Dubai, which when finished will be the world's tallest building.

Other strikes and recent labour disturbances in the area have included:

• Around 200 workers of Bhatia Contracting held a sit-down protest in front of the Dubai Courts to demand a wage rise and to protest alleged unfair employment practices. The workers claim the company was deducting money from their wages as "water provision fee" and would not allow them holidays.
  
• Police were called this week to control 400 workers from an Ajman engineering company in a dispute over wages. Eye-witnesses report rioters attacking company buildings and vehicles.
  
• Around 1,500 striking labourers were involved in a riot which rocked Sharjah last month, during which they set fire to management offices, real estate and vehicles.
  

The enclosed video from Al-Jazeera highlights the experiences of low paid workers from the Indian subcontinent who are often charged up to two years' wages by local recruiters to find jobs in Dubai and other countries along the Gulf shores, where living conditions are poor and work-related accidents common.

For some, the pressure of the work and conditions proves too much. The Indian embassy in Dubai reported that in 2006, 109 Indian labourers committed suicide in the UAE. Figures for suicides among other nationals are not currently available.

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