Is the Dubai Property Market Hiding a "Distress Deal" Scam?

**Tim Elliott** (0:00)
It's Real Estate Now on Mira Business FM. This is the Morning Drive with me, Tim Elliott, and Ajay Menon is here, CEO of Luxe Vista Real Estate here in Dubai. Nice to see you, sir.

**Ajay Menon** (0:09)
Nice to see you, Tim.

**Tim Elliott** (0:11)
Why do people invest in Dubai real estate? That's the question today. I have no other questions. 20 minutes from now, go.
You know, that's the headline today. But actually, it's a really good question, because there are obviously so many motivations for buying real estate. You want to live there, you want to rent it, you want to start an Airbnb business, whatever it is. Why do, that's the emphasis, people invest in real estate in Dubai?

**Ajay Menon** (0:39)
Just because they've got a lot of money and they just want to throw it at something and then lose all the money.

**Tim Elliott** (0:44)
Just to see what sticks. It's like spaghetti when you... You're right. Okay. There's got to be more to it than that, Ajay Menon.

**Ajay Menon** (0:50)
The idea is definitely, when you see what... When you're investing in something, what do you need? You need returns, right?

**Tim Elliott** (0:56)
Yes.

**Ajay Menon** (0:57)
So basically, when anybody is investing in Dubai real estate, they are looking for capital appreciation, whether they're buying a 350-square-feet studio or they're buying a 20,000-square-feet mansion. That is the general idea.

**Tim Elliott** (1:13)
Sure.

**Ajay Menon** (1:13)
Right. So that is the reason why people invest in real estate.

**Tim Elliott** (1:17)
Okay. So people want capital appreciation.
It could be a studio, all the way to a mansion, as you say. Until it's time to buy, they want capital appreciation.

**Ajay Menon** (1:29)
And then they talk about, you know, can we get something below the market? Do you have any distrust deals?

**Tim Elliott** (1:36)
Okay.

**Ajay Menon** (1:37)
So it really doesn't make any sense. See, these investors, they are willing to buy.
They will talk about investing happily in off-plan. They expect capital appreciation. They talk up to their friends about, you know, the capital appreciation, the buyer's vision 2040, the population increase, the infrastructure development. But when it comes to them, they're really desperately hunting for distrust deals. They call up brokers like us and say, you know what, we want to buy something which is market price below 20%, OP below 10%, especially during a crisis like this.

**Tim Elliott** (2:19)
I detect a little bit of you're a bit fed up with this.

**Ajay Menon** (2:23)
Really? It's a bit of a sarcasm that is coming up.

**Tim Elliott** (2:25)
Yeah, I'm sort of detecting that. So this is not all investors, but lots of kind of average Dubai property investors are living in a state of, well, that's almost like this kind of contradiction.

**Ajay Menon** (2:41)
Yeah, it's very contradictory because it's not that there are distrust deals. Don't get me wrong. Yes, there is a lot of distrust deals, but not everything and not everybody is distrust.
And there is a lot of people who's willing to buy distrust deals, then there are people to sell distrust deals.

**Tim Elliott** (2:58)
Right, that makes sense.

**Ajay Menon** (3:00)
But we need to take a moment here. I mean, we just have to, they have to think a little bit. They want appreciation on their own properties that they have invested. But they expect to buy a distrust deal from somebody else. So how does a distrust deal happen? A distrust deal happens when one investor loses the money.
And for that, there are a few reasons. The main reason is greed and a combination of greed and ignorance.

**Tim Elliott** (3:34)
That's true.

**Ajay Menon** (3:35)
Greed can come from developers. I will get to that part later.

**Tim Elliott** (3:38)
Okay. I'm looking forward to that.

**Ajay Menon** (3:41)
And then your own greed.
And what do I mean by that is basically many investors, they have money to buy one property. But then, you know, what they do is like this, okay, maybe if I stretch a little bit more, because I've got this beautiful payment plan from the developer, let me buy two instead of one, or even more. And you know what, I will sell it at a handover, I'll make some profits, and then that will reduce my payments to the first unit. I will keep one unit. Okay. So that is the general thought process. But again, that is a speculation and hope. Hope is not a strategy.

**Tim Elliott** (4:24)
Is that a general kind of Dubai-U.E. thing? Because I don't know, I'm just going to go and buy a property that I'm not a property investor, obviously. I'm going to buy somewhere I want to live in.