Saturday, January 31, 2009

Buyers can approach Property Court for terminated off-plan contracts

A senior government official has revealed that property buyers can contest their "terminated" off-plan contracts signed after 31st August 2008 in the newly established Property Court, by going through the Dubai Land Department (DLD).

The buyers can also claim compensation from the Property Court, if he establishes a ground for the termination, said Emad Eldin Farouq, Senior Legal Counsel at the DLD. The Land Department, issued a circular, which states that developers, and not buyers, will have to initiate the official procedure to cancel the off-plan transactions.

However, for sales contracts signed prior to 31st August 2008, the terms of the contract would be applicable to both the parties involved, as per the UAE Civil Code. But, these need not go through the DLD.

Detailing the meaning of the Article 11 under Law No.13, the department said that in case of termination of an off-plan contract, the developer will be entitled to 30 percent of purchase value plus 30 percent of any further investment paid over and above the purchase price.

In case of a buyer intending to contest this, the buyer could approach the Property Court, which would apply the civil jurisdiction on this. The Property Court may agree or disagree with this and the court has the right to choose to adopt or cancel these terms or apply any other rules to this. The Property Court will abide by the regulations under the Civil Code Law, clarified Farouq.

Any agreement can be terminated in a legal manner, either voluntarily, amicably or through a court order depending on the facts.

As per the Civil Coder, the buyer has the right to terminate the contract, in case of a breach by the seller. Farouq also said that investors facing cash-flow constraints can approach the Dubai Land Department for re-scheduling payments for their properties.

Major property developers in Abu Dhabi reports decline in profits

Abu Dhabi property market, which so far was able to cope with the pressure of global slowdown, is slowly beginning to feel the heat, with its two major property developers, the Aldar Properties and Sorouh Real Estate, witnessing considerable decrease in profit during the fourth quarter of 2008.

This fact emphasizes that the impact of global credit crisis has been felt on the capital's real estate sector too. Although Dubai has been seeing several layoffs and delays ever-since the end of summer, Abu Dhabi has remained immune to the turmoil. Now, with sales almost coming to a standstill, the prices of properties too are declining, and developers are reconsidering their plans and focusing on construction.

An analyst at EFG-Hermes, Sana Kapadia, said that both Aldar and Sorouh feels are the most important thing is to have the resources to implement in today's environment. So even if they don’t make much sales this year, they will continue to gain revenues as they begin delivering units.

Sorouh is the second largest property developer in Abu Dhabi. The quarterly profits of Sorouh fell 94 percent during the final quarter of 2008. The announcement follows, the report of fourth-quarter profits by Aldar, the largest developer in Abu Dhabi, whose, profits had dropped 89 percent, after focusing to stay away from selling.

Both companies had reported major increase in profit due to record sales during the first three quarters, but, executives in the companies felt that this year would be more challenging, as they were making necessary preparations to complete the projects.

Sorouh has strengthened its cash reserves, so as to guarantee its ability to complete the announced projects. About Dh.6.8bn of cash reserves in the company have been earmarked for construction and infrastructure of projects.

Sorouh is renowned for its major projects such as the Shams Abu Dhabi development on Reem Island, which is one of the tallest structures in the emirate and Lulu Island, is another major project. Sorouh is also focusing on construction of affordable housing for middle-income sector, hoped to meet high demand this year.

Aldar too revealed that its income in the fourth quarter of last year, remained low, as it had stopped sales operations during that part of the year, due to a changed market. The company is also re-considering few aspects of its construction projects.

A UK-joint venture company, Aldar Laing O'Rourke, has laid off 320 skilled employees to "re-align" the company based on changing economic environment. Aldar also recently said that it plans to increase its rental holdings to guarantee its income during the coming months.

An analyst at Shuaa Capital, has said that the companies will continue to suffer from the decrease in sales and property prices and increasing financing costs this year, but, the sector as a whole, will still be stronger, when compared to Dubai. Unlike in Dubai, Abu Dhabi will not see a decline in population owing to financial crisis, and the housing sector here is basically still undersupplied.

The analyst predicts that although the market conditions are tough right now, and this would continue to be so during the next two quarters, an improvement could be expected towards end of the year, with the marketing present more opportunities for Sorouh and Aldar.

Thursday, January 29, 2009

Poor response to Abu Dhabi Property Show IREIS 2009

IREIS 2009
The Abu Dhabi Real Estate and Investment Show at the National Exhibition Center, unveiled yesterday, witnessed a rather empty scene, except for few exhibitors who were seen peeking at each other's stalls.

This is a total contrary to the frenzied buying seen during other property shows in the same venue, when the housing boom was at its peak last year.

The IREIS 2009 Property Show, which included participation of all major property developers in the region, including Aldar and Hydra, saw only a few scattered buyers, a scene completely different to the Cityscape Exhibition, when people were constantly selling to the packed crowds.

A Partner in an estate agency, who spoke to the media about the event, expressed his shock and said that several projects that the developers exhibited in this show were already revealed to the public earlier, while, the new projects being announced are long-term future developments, which seems vague and without proper schedules.

He added that the opportunities for investing, however, still exists, but is meant only for cash buyers.

Property transactions have been badly hit, with the drying up of cheap credits and banks demanding higher mortgage deposits from borrowers. These high interest rates by banks are adding pressure on existing borrowers who had taken large home loans when rates were lower. To add to the misery, this happens when people are worried about their job security on the other side. The prices of housing in Dubai softened towards last quarter of 2008.

The Commercial Director, Hydra Properties, Mohamad al Habech, said that while there is no dearth for number of developers, there are very few buyers.

"We have been badly affected by the current financial situation. Several visitors here seem to be existing investors who are trying to catch a feel of the current market situation, so that they can appreciate the worth of their investments. People are drawn in by the curiosity factor, but, we do not expect a great deal of sales to happen," he said, when speaking about the event.

The Director-Marketing & Sales of Plus Properties revealed that his firm has stopped bringing out new projects and are focusing on completing the existing ones.

He said that his company is participating in the show, not to focus on sales alone, but also to show that the company is still operating, confirming that the firm is here for long-term, regardless of whatever happens in the market.

Pointing to the positive side of things, he said that the crisis is in the international property market, and Abu Dhabi is only experiencing the ripples of the problems happening elsewhere and the economy here is still healthy.

He also said that his company has no loans to maintain, and there is the added advantage of lower construction costs and lower prices of raw materials.

Dubai Government steps-in to curb cancellation of real estate projects

To prevent further cancellations of property projects and to motivate developers to extend payment plans, so as to keep the economy floating, the Dubai Government has stepped in, says legal officials at the Land Department.

A Senior Legal Adviser at the Dubai Land Department, Emad Eldin Farouq, said that the Government is trying to stop the panic.

The RERA (Real Estate Regulatory Authority) and the Land Department will have to give their final approval before the developer could cancel any contracts for all properties purchased after 31st August 2008, it has been confirmed.

31st August 2008 was the date, when the regulation giving authorities opportunity for increased involvement in property sector, was introduced. The authorities, therefore, have better control over the cancellations process and are able to broker agreements between buyers and developers.

As for purchases prior to 31st August, the parties concerned must abide by the contract and authorities will not have much power to mediate in a contract dispute.

The Land Department had also passed a regulation in November, wherein the numbers of cancellations were reduced, based on emergency reinterpretation of Article 11 of Law 13, which stipulates how much an investor would stand to lose on termination or cancellation of their contract.

As per the interpretation, the developer would keep 30 percent of the property value and 30 percent on any payments made after that. According to Land Department officials, such a change was required to avoid a property crash.

The authorities are also in the process of preparing regulations that change the manner in which property is being developed in Dubai, to prevent the sector from overheating in future. The regulations expected to be announced in coming weeks would require developers to enter into payment plans for buyers apart from construction milestones.

In the other regulation, expected to follow the first one, developers should have completed 20 percent of their building prior to announcement of sales. This will help prevent developers from focusing on sales, before making major equity investment in the project, the situation prevalent in the market for past two years.

Tuesday, January 27, 2009

IREIS 2009 to kick-start in Abu Dhabi on 27th Jan'09

The Abu Dhabi Real Estate and Investment Show - IREIS 2009 will be unveiled to the public at the Abu Dhabi National Exhibition Center on 27th January 2009. Organized by Dome Exhibitions, the show will be held under the patronage of H.H. Sheikh Dr. Sultan bin Khalifa bin Zayed Al Nahyan.

The Director of Dome Exhibitions, Antonie Georges, said that IREIS 2009 is particularly important, as it one of the first major real estate shows to be held, following the global turmoil and its economic repercussions worldwide.

About 100 companies from 10 countries are participating in the event, and the area where the event is being hosted has also been expanded by 25 percent. About 50,000 invitations have been sent out to property developers, banks, real estate brokers, and financing establishments and personalities to participate in this big event.

George said that Dome Exhibitions is organizing a seminar, considering the global financial situation, and the real estate markets in the region, wherein several property experts, and representatives of brokerage firms and other financial institutions will highlight about the recent developments in property sector in the region and globally.

George, when speaking about the UAE economy, said that the economy remains strong with the measures taken by Federal Government and Central Bank to ensure enough liquidity into banks, allowing them to function normally and restrict the impact of global economic turmoil.

Property companies in the UAE are going ahead with their projects and there are no projects being scraped off in Abu Dhabi, as the financing companies have come forward to fund their clients.

George said that IREIS 2009 at this time is extremely important as it seems promising to investors who seek to re-enter the market. The current market is the best opportunity to invest in a new property, as indications are that prices would decline further, and economies in the Gulf and UAE would continue to grow, even when other economies record zero growth or even contract.

Among the sponsors of IREIS 2009 are the Platinum sponsor, Tameer, Real 21, Plus Properties, Sorough and Falconcity of Wonders.

The Chairman of Plus Properties, George Chehwane, said that there is a tremendous growth in the past three years and this would continue at a steady pace. The government of UAE is taking measures to deal with the current financial turmoil, and this serves as an incentive to investors for continued growth.

Shawqi Kurkumaz, Director of Real 21 for real estate brokerage, said that the market is gathering momentum and there are positive signals about UAE economy too. The demand will continue as long as supply falls short of strong demand and economy of UAE.

Monday, January 26, 2009

Dubai property prices to reach lowest levels by later-half of this year

According to analysts in Dubai, property prices will hit the lowest during the second half of this year, while the distress sale subsides and layoffs in property and financial sectors will continue.
During the last four months, property prices in Dubai have been pushed down by homeowners and speculators, who are struggling to make their payment instalments, further pressurizing the price index.

The brokers and analysts however, did not comment or predict how far the prices would drop. A Dubai-based property analyst said that it would all depend on the number of subsequent layoffs and fire sales, and the manner in which developers would restrict supply to spur demand.

A Property Analyst with Shuaa Capital, Roy Cherry, said that the market is largely being driven by panic, mainly due to lack of transparency and information, which is preventing people from making a good assess of the market situation, and is stopping them from facing economic recession with confidence.

The government, from its end, however, is continuing to take measures to revitalize the mortgage market.

The Director, Investment Bank, Arqaam Capital, Ali Khan, said that prices are likely to hit the bottom during the second half of this year. However, a gradual return of liquidity in the market is required, and layoffs need to subside, for the investor confidence to return in the market, apart from resurrection of visa guarantee.

Fire sales are already happening in the market and prices have dropped more than 50 percent in few areas such as Downtown Dubai and Palm Jumeirah, compared to their peak between June and September last year.

"Dubai has already been three to four months into fall, and we should expect stability to return by second half of the year, although, this does not imply that prices will recover this year," Khan said.

Dubai has been witnessing job redundancies and cancellation of projects, due to factors such as liquidity pressures and lack of funding. The investors have therefore begun to redeem whatever best they can from their investments to cut losses.

Although the Central Bank has deposited capital into the financial system, and has introduced a swap facility to raise funds and cut down interest rates, hoping to ease lending conditions. The market remains tight, indicated a note from Standard Chartered Bank.

Government officials are trying to control the number of units arriving at the market, to boost demand. According to Khan, the fall in prices would be drastic for properties that have been already delivered to investors, and will be slightly less for those under construction or for those that have been delayed.

Saturday, January 24, 2009

Dubai property prices slump 23%: HSBC

According to a new report by HSBC, property prices in Dubai have dropped 23% last month. For the first time, the survey measured the actual prices at which properties were purchased and sold.

The HSBC report for the last quarter of 2008 showed a 23% decline in property prices in Dubai, with villas showing considerable decrease in prices than apartments.

The once-booming property sector of the emirate has slowed down, owing to global economic turmoil, with the plunging prices and developers scaling back on their projects, and rising job layoffs.

Average prices for villas fell by 30 percent from their peak in September, but went up 33% year-on-year, while prices for apartments dropped 20% from last September, but grew 16% year-on-year.

The figures for December 2008 also indicate a drop of 23% from the peak in September 2008.

Transaction volumes fell from November 2008, but maintained healthy levels. The advertised rentals however, continued to increase 9% month-on-month, but HSBC expects rents to soften further with more units being converted from sale to lease.

The prices of properties in Dubai could drop by as much as 60% this year, from their peaks last year, Shuaa Capital predicts.

The latest report by Asteco, however, confirms that rental rates for villas and apartments have been levelling off throughout 2008 with an average growth rate of 4% for apartments and 8% for villas.

Thursday, January 22, 2009

RERA announces Rental Index for Residential Properties

The Real Estate Regulatory Authority (RERA) in Dubai has announced its rental index for residential properties, classified on the basis of various categories. Last week, the agency released the commercial property index.

The posting on RERA's website lists the residential index, which focuses on the apartment and villa rents in three main areas - Deira, Bur Dubai and freehold. This is further segregated into individual localities and home sizes.

According to analysts, the rental index lists values that are far higher than the prevailing market values. The index was compiled based on the market situation of 2008, when the rental rates were at their peak in Dubai. The agency may therefore have to re-look the index values soon, keeping in mind the current situation, following the impact of global economic recession on the GCC economies, one analyst pointed out.

However, RERA has highlighted the fact that the index should be used only for reference and is not any sort of legal obligation.

But, the analysts feel that landlords would utilize the index in their favour, as a justification to increase rents, irrespective of market conditions.

The decree issued by Dubai's Ruler on Monday, has further clarified that new rental contracts (both residential and commercial) signed last year, should not be increased, based on certain conditions. The decree states that rental contracts could be increased in steps up to a maximum of 20 percent.

Rental Values of Residential Apartments (Dhs '000)
Rental Values of Residential Villas (Dhs '000)

Rental Values of Freehold Property (Dhs '000)

[Source : RERA]

Diamond Views - Phase I by Diamond Developers ready

Diamond views in Jumeirah
Diamond Developers have announced that the first phase of 'Diamond Views' project is complete, and that, this is the first-of-its-kind project to be completed in the Jumeirah Village South.

With a total of 1528 units delivered to investors, this milestone achieved implies that Diamond Developers now have seven projects in hand.

The four stages in the development phase of Diamond Views will witness development of 1000 apartments and 150 villas. The units will range from studios, to single, double, triple and four bedroom apartments.

Speaking about the project, Engineer Faris Saeed, expressed his excitement over the realization of the project, despite tough market conditions.

The scheduled delivery of Diamond Views project reflects the company's commitment towards investors. It also strongly reflects the determination by the company to fulfill the contractual obligations, while also maintaining transparency, a principle employed by the company, since its first day of inception in the Dubai real estate market, he said.

Located in proximity to the Mall of Emirates and Emirates Road, Diamond Views offers all luxury and comfort of any new project in Dubai. This is further strengthened by its easy access to a range of sports amenities, parks, and roads, including shopping amenities, cinemas and restaurants, all created for the purpose of serving its residents.

Diamond Developers ventured into Dubai property market in 2003, by the launch of Marina Diamond Towers, which constitutes seven residential towers in the heart of Dubai Marina. The company met with a successful sale of 1300 apartments in its towers.

Tuesday, January 20, 2009

Landlords need to realize tenant requirements for quick recovery from crisis

It is essential for the landlords to understand the requirements of tenants, for the real estate sector in Dubai to bounce back, industry analysts reveal.

Markets are more flexible back in UK, and they bounce back much faster from economic turmoil than in mechanical markets, says Nicholas Maclean, MD of CB Richard Ellis. This is because in transparent markets such as the UK, landlords are quick to act and reduce rentals to meet market demands. Such a decision is vital for the recovery process.

In the UAE, if the landlords understand the requirement of tenants, the market would recover faster than in any other markets around the world, opinioned Maclean.

The fundaments in real estate market of Dubai are still positive, and there is 100 percent occupancy, particularly in the commercial sector, unlike in Europe or other parts of the world, he pointed out.

In the meanwhile, the fourth-quarter report by CB Richard Ellis indicates that rentals in Dubai are leveling off in residential, commercial and retail sectors.

Rents are likely to soften to decline, but, in the rental index released last week by RERA, this will help in bringing about transparency in Dubai’s real estate sector.

Rentals in three commercial sectors, including retail, industrial buildings and offices remained stable in the fourth quarter of last year, the report said.

Monday, January 19, 2009

Work on Nakheel Tower paused for a year

Nakheel TowerConstruction work on Dubai's Nakheel Tower will be halted for a year, the company spokesman revealed to the media yesterday. The tower was destined to be one of the world's tallest towers on completion.

Several workers who have been working on the project have been laid off. A Nakheel spokesman, who spoke to the press, mentioned that all further work on the foundations of 'Nakheel Harbour and Tower' will be halted for a year. The works are likely to take nearly three years for completion.

A senior official of the company told the media that the employees have been laid off as "work on the project has been stopped until further notice."

The tower was planned to be the centr-piece of the 270-hectare 'Marina Development', called 'Nakheel Harbour and Tower' adjacent to the Ibn Battuta Mall and the Arabian Canal in Dubai.

About 200 floors and 150 elevators would comprise the Nakheel Tower, which will rise to height of more than a kilometre, and take about 10 years for completion of work in phases.

Owing to global financial turmoil, Nakheel announced towards end of last year, that it planned to put on hold several flagship projects, including the Turnip International Hotel and Tower, apart from 500 or more job layoffs due to global financial turmoil.

Nakheel also revealed that projects such as 'Gateway Towers', 'Trump Towers' and 'Frond N Villas' on the Palm Jumeirah, would also be delayed. Even most of its Waterfront projects, including a series of man-made island will be delayed, the company said.

However, Nakheel has confirmed that work would progress on the Madinat Al Arab, Badra, Venetto and the Canal District, although the area of construction on the six man-made islands would be stopped temporarily.

The series of man-made islands, named 'The Universe', is shaped in the form of the Sun, the Moon and the Planets, which wraps around Nakheel's The World project. It has been delayed with work being restricted to preliminary engineering studies.

As for the Palm Jebel Ali, Nakheel said work on the fond villas and infrastructure for the crescent would continue, while other phases would be delayed, while the duration of delay has not been disclosed.

The company confirmed that work on all other projects by the company, including 'The World' and 'Palm Deira' would continue as planned.

Sunday, January 18, 2009

Work on Dubai Festival City to be delayed: Al Futtaim Group

Dubai Festival CityThe developer of Dubai Festival City, Al Futtaim Group Real Estate has delayed works on part of the development, to take advantage of fall in construction costs.

A company spokesman yesterday revealed that the company was being more cautious in reviewing the Dh.11billion residential, entertainment and business hub, where the construction began in 2003 and is likely to be completed in phases over 20 years.

Although the overall development plans have not been altered, the work on certain elements will continue as had been originally planned. The projects are being managed in manner so as to maximize potential reductions in construction costs occurring due to current economic realities.

"Al Futtaim Group Real Estate will always consider ways to manage its portfolio in the best interest of its shareholders. The project continues as per our long-term business plan," said the company statement.

Sources reveal that three projects by the company have been put on hold, including the Al Badia Business Center, the W Hotel and an extension to the retail facilities which began in 2007, and the construction works of Four Seasons Hotel too, has been delayed due to changes to the design.
About 10million square feet, which forms large part of Dubai Festival City, has already been completed including the two hotels, the Festival Center Shopping mall, and Al Badia Hillside Village.

Saturday, January 17, 2009

Dubai more vulnerable to real estate slowdown, than Abu Dhabi

The population in Dubai is likely to decline by 8 percent this year, due to recession in property sector, according to a new report.

The report, released by the UBS Investment Bank indicates a drop in population by 8 percent this year, which in turn would result in an oversupplied market, leading to 30 percent fall in house prices within next two years.

The researchers at UBS Investment Bank, in their report, mentioned that a slowdown in housing market, apart from the challenging macroeconomic conditions, may result in decrease in the number of foreign workers moving into the region for job purposes, and fewer investors being involved in local investments, including real estate.

With reduction in sales, property companies in Dubai, and in other emirates have been laying off staff, reducing marketing budgets and delaying projects. This in turn, has affected all major businesses, including construction companies, advertising firms and contractors.

According to the report, in case the property-related labour force dropped by 20 percent this year, and by 10 percent next year, this would result in a housing surplus of 87,000 units, which constitutes 27 percent of total stock in Dubai, towards end of the next year.

Such a situation would result in 30 percent decline or may be more than 50 percent decline, in prices, the report stated.

Dubai is getting more vulnerable to the recession in property sector, than in other emirates, mainly because of the major construction works happening here, and due to the fact that more than 50 percent of its economy is involved in property sector, the report said. On the other hand, its neighboring emirate Abu Dhabi is already witnessing an undersupply of housing, and the economy there is dependent on petrochemicals, and hence, may be less severely affected than Dubai, the report said.

The UBS researchers have recommended that the Dubai Government pass should pass regulations that make life easier for laid-off expatriates to continue their stay here, while looking out for new jobs, as maintaining expat population is critical for long-term property market and economic sustainability of Dubai, the report concluded.

No necessity for a rent cap in 2009: RERA

According to Marwan bin Galita, the Chief Executive of Dubai's RERA, a rent cap is not necessary year.

The companies are cutting down on allowances, and the cutbacks are hitting the rental market in Dubai. According to property agents, the rentals of luxury properties, dropped by 25 percent last month.

Residents in Dubai are still confused about the necessity of a rent cap in 2009, while the cap for 2008 was set at five percent. However, in the opinion of Bin Galita, a rent cap is not required in 2009, as the current year, being a tough one may not interfere much with rents. But, the rental rates should be fair to both tenants and landlords.

Rents in Dubai would begin to decline in third quarter of the year. But, with the market witnessing correction, commercial properties seem more affected than residential.

With increase in job lay-offs, it is likely that more families would leave the country, thereby the availability of apartments and villas would increase. To add to this, about 32,000 new housing units are likely to be released this year, which would further increase the number of units available in the market.

However, as of now, the Gulf News has reported that in the absence of a new announcement, the current five percent rent cap would remain valid.

The Rent Committee feels that the landlords still cannot increase rents beyond five percent, and tenants are free to file complaints against landlords if there is a violation to existing law.

Thursday, January 15, 2009

Properties in UAE being sold by owners at discounted rates

The homeowners are offering discounted prices to sell-off their properties, in a stumbling market, it has been learnt.

On further enquiries being made by media persons about several advertised prices, it was found that a prospective buyer could easily knock-off about 10 percent of the value announced for a double bedroom apartment in Dubai or Abu Dhabi.

For instance, a double bedroom apartment advertised in the Palm Jumeirah Shoreline Apartments for Dh.2.55mn was reduced to Dh.2.3mn, a reduction by 9.8 percent, without much bargaining.

Similarly, an apartment worth Dh.2.3m in Marina Quays was offered for Dh.2.1m with hardly any fuss.

These instance implies the extent to which the homeowners, particularly speculators, who had purchased off-plan properties years ago, who had no intention to occupy their homes, now, wants their purchase to be passed on before a further drop in prices, before their next payment due date.

"People are begging for you to give them any contribution," said Dr. Mohamed Guidom, CEO of Re/Max Absolute Realty, the Abu Dhabi-based estate agency, an affiliate of Re/Max International.

According to Dr. Guidom, the market is either filled with speculators who, after making huge profits, want to sell off their properties before the prices further go down, or the end-users are being unable to afford it now due to job-losses or other such threats.

Sellers are now offering commissions and transfer fee to pay brokers to fix a deal.

British buyers, who constitute majority of home owners in Dubai, are particularly keen on selling their properties to take advantage of the current favourable exchange rate, reveal property analysts.

According to Asteco, the Dubai-based property services company, a buyer with Dh.2.5mn worth money to spare, can easily pick-up a three bedroom medium-quality apartment in Jumeirah Lake towers, although villas may still not be affordable at this price.

The case has been similar with Abu Dhabi, too, wherein, the brokers were seen offering up to 15 percent discount on advertised prices. A double bedroom apartment in Al Muneera district (Al Raha beach) was instantly brought down to Dh.2mn from Dh.2.37mn, for instance.

Asteco, however, hopes that the mortgage market would improve in 2009. There will be an increase in money for lending, and developers would ease their payment plans. Banks, too will begin to recognize the fact that mortgages signify 'an excellent and safe use of their available funds'.

For 2009, Asteco predicts that sales activity would grow, while lending conditions would soften. Developers in Abu Dhabi and Dubai will also focus more on building affordable homes, rather than luxury homes, the supply of which is now severely lacking.

BID makes swift progress with its Bawabat Al Sharq project

Baniyas Investment and Development Company (BID), the investment arm of Bani Yas Sports Club, has reported considerable progress in its Dh.3billion Bawabat Al Sharq project, the mixed-use development community located in Bani Yas of Abu Dhabi.

Bawabat Al Sharq

The Phase I of the project is likely to be completed towards third quarter of 2010, and has already cross 15 percent of its completion landmark, with other infrastructure plans already underway.

The company has also revealed that 90 percent of the Phase I of the project, totaling to 190 units has already been sold and leased.

The CEO of BID, Wael Tawil, when speaking about the progress of the project, revealed that following the successful sale and lease of Phase I of Bawabat Al Sharq, the contracts for various other components of the project have already been awarded and the company is now carrying on with planning stages for Phase II.

Being the ideal representation for a family living environment, Bawabat al Sharq offers world-class amenities in healthcare, education, sports and entertainment.

BID is carrying on discussions with major financial institutions to offer effective financing options for all customers, due to slowdown in property financing in the market.

Being one of the top contracting companies, BID has appointed 'Target Contracting' as contractors for Phase I of the project. The landscaping design contract for the project has been awarded to Maunsell/AECOM, while the overall design and supervision contract has been awarded to World Planner Consultant Engineers. The company is carrying on talks to finalize the contracts for amenities in entertainment avenues.

Spreading across 108 hectares of land, Bawabat al Sharq comprises international school, nursery, health club, medical center, and specialty training clubs, apart from international hypermarket, 16 food courts, cinemas, pharmacies and coffee shops.

Established in 2005, Bani Yas Investment & Development Company (BID) is a majority-owned subsidiary of Bani Yas Sports Club, and focuses on development, investment and management of real estate projects.

Tuesday, January 13, 2009

UAE may introduce unified freehold visa regulation

The Federal Government in UAE is considering the issue of freehold property visas pertaining to foreign ownership of properties in various emirates, revealed a top government official in Dubai on Saturday.

The Director-General of Dubai Government's Department of Finance, when speaking to the media during the sidelines of government's 2009 budget announcement, said that the Advisory Council of Dubai Government has put forward a proposal to the Federal Government regarding issue of property-linked visas for a review.

Several emirates have developed their own freehold visa arrangements, and streamlining the process is being planned at the federal level, to announce a unified guideline for all the emirates.

A new law may be announced soon, he said, although did not mention by when the regulation would be passed.

The issue of freehold visa was on focus when big developers such as Emaar and Nakheel, who were earlier helping foreign buyers to get three-year renewable residence visas on purchase of freehold properties, suddenly stopped facilitating them.

The unified guideline regulation is welcomed by experts in the country, as they streamlined the procedure to keep up confidence of the investors.

The Advisory Council was established by the Dubai Government last year, to judge the impact of global financial crisis on Dubai's economy.

Sudhir Kumar, the Managing Director of Realtor's International, a property consultancy said that the issue of freehold visas has been a major concern for property investors, and the government has shown its strength and resilience at this time of crisis by addressing this issue.

Since the year 2002, master-developers in Dubai have been pledging the freehold visas to attract foreign investment to real estate sector in the emirate. This has also drawn plenty of foreign investment into the sector.

This promise was facilitated to buyers in co-operation with Dubai Naturalization and Residency Department, and master developers in RAK and Ajman have followed suit, by attracting major investments into the property sector.

Among the seven emirates in UAE, five have certain designated areas for foreign nationals to buy and own properties on a freehold and leasehold basis. Sharjah, however, does not permit foreign nationals to own properties on freehold basis.

According to UAE constitution, the land in each emirate belongs to the Rulers, and they take decisions pertaining to ownership, usage or allocation of land.

Sunday, January 11, 2009

New regulatory authority in Ajman established

Ajman Government has amended its regulation to create Ajman Real Estate Regulatory Establishment, aimed to regulate the property and construction sector of the emirate. The sector has seen more than Dh.340 billion worth of investment in the last two years.

Due to this investment, the neighbourhood of the once-sleepy Ajman is being transformed into vibrant economy where-in foreign developers are creating master-planned communities on barren sandscapes which would soon be homes to several thousands.

The Member of Supreme Council and Ruler of Ajman, H.H. Shaikh Humaid Bin Rashid Al Nuaimi, passed an emiri decree No.11 for 2008, which amends emiri decree No.8.

The decree stipulates finding of a general establishment, affiliated to Ajman Government, named as Ajman Real Estate Regulatory Establishment, with an independent corporate existence, which enjoys administrational, financial and legal independence.

The establishment aims to regulate the activities of real estate development in the emirate, and establishing a legal system for licensing property buildings and investment projects in the emirate. The establishment also aims to supervise, implement policies, work projects and systems and regulate joint ownership.

The establishment is also responsible for issuing policies for property, construction of buildings in Ajman, and suggesting legislations and necessary systems for regulation the property operational schemes in the emirate.

Friday, January 09, 2009

Experts predict rental growth in Dubai, Abu Dhabi, but, at slower pace

Rental demand will remain robust this year, but will increase at a slower pace in 2009, predict industry experts. The officials also expect a drop in residential rents in Dubai and Abu Dhabi.

The Chairman of Chamber of Commerce and Industry, Salah al Shamsi, said that rents are likely to drop between 10 and 15 percent in Abu Dhabi during second half of this year, and may fall even further during 2010, with several new units likely to appear in the market.

A study conducted by Truth Economic Consultants, revealed that 72,285 units would hit Abu Dhabi market by 2008-09, out of which 37,851 units would be available in 2009.

Al Shamsi said that rents and value of property have not yet been affected by the global crisis, and the prices have not fallen as much as in other emirates, probably due to high demand for residential units in Abu Dhabi.

However, experts say that rental demand in Dubai would grow at a much slower pace than before. The Chief Financial Officer of Landmark Properties, Charles Neil, when speaking to the media said that although rental prices are likely to remain stable in 2009, they will initially soften during the first and second quarter.

The Managing Director of Asteco Property Management, Andrew Chambers, when speaking to the media, said that there still exists strong demand for rental properties across all emirates including Abu Dhabi and Dubai, as the two emirates are already witnessing scarcity of readily available units.

The real estate agents in Dubai state that in 2008 the villa market in UAE has seen maximum increase in rental prices due to limited availability of villas.

Several real estate experts including Asteco's Chambers, Landmark's Neil, and Cluttons' Macfarlane, CEO of Wasl HEsham Al Qassim, and Dubai Real Estate Corporation have all said that rental yields in UAE have remained attractive in comparison to international markets.

However, the market is now more demand-driven, and keeping up to customers expectations would be the key for growth in future, they said. The experts advised that investor should carry on research and invest in buildings with design elements, finishing and layouts preferred by customers, apart from areas only preferred by end-users.

Thursday, January 08, 2009

Dubai RERA's rental index ready

Dubai's Real Estate Regulatory Agency (RERA) has completed the much-awaited rental index and is awaiting the approval of the Rulers Court. A senior official of RERA has revealed that the index would be rolled out soon after obtaining approval.

The Director of RERA, Mohammed Khalifa bin Hammad, said that the rental index for commercial and residential units would soon be launched. The regulation for its execution has been already finalized and is awaiting approval of Rulers Court. Once approved, the index will be published in newspapers.

RERA revealed that it is not mandatory for landlords to abide by the rental index, although, a range would be set for residential and commercial units which the people can use to refer for comparing rents in various areas of Dubai. This would serve as a reference point during a dispute between tenant and landlord.

During a dispute, Dubai Municipality or any such concerned authority will have to consult the index before taking any decision. The index would form a benchmark in solving rental disputes, Hammad explained.

RERA has been involved in the index compilation work for the past six months. It has now completed updation until the fourth quarter of 2008.

The current rent cap for Dubai is five percent as of 2008, and the government has not amended the cap ever-since.

The Rental Index would also be a base to calculate rents for the authorities and people concerned, said Andrew Chambers, Managing Director, Asteco.

In mature markets usually a broad range would be available and so introduction of index is a good step for maturity, Chambers said.

View RERA Rental Index 2009

Dubai likely to tighten property market regulations

With several developers withdrawing their projects in wake of global financial meltdown, Dubai is considering tightening rules on property market, say recent reports.

As per a report in The National, the real estate authorities are likely to issue new regulations to help avoid delays and cancellations that have shattered the once-buoyant sector.

Once the new regulation is passed, buyers may be required to pay 30 percent of property price to the developer as a deposit, and the rest 70 percent payment could be made in installments, based on the stages of development.

Developers too, will not be permitted to begin selling units in a property, until 20 percent of the planned project has been completed, as this would ensure that only the most feasible projects proceeds further, revealed Lisa Dale, the Head of Property Department, Al Tamimi Law firm.

Being a member of the seven-strong UAE Federation, Dubai welcomed foreign investors into its property sector in 2002, which triggered the real estate boom through windfall revenues generated from oil prices that touched an all-time high in July 2008. The ever-growing population and investor speculation in the emirate further contributed to surge in property prices.

However, the, international financial crisis and resulting credit crunch has cut down the ability of few developers to complete projects, and this coupled with limited access to loans by buyers’, has resulted in property market slowdown.

Wednesday, January 07, 2009

Amlak-Tamweel merger hoped to boost mortgage finance in UAE

Two major Islamic mortgage providers in the UAE - Amlak Finance PJSC and Tamweel, have merged into a new $8billion lender to ensure that mortgage thrives in the country for several more years.

According to Rami Sidani - Head MENA (Middle East and North Africa) Investments at Schroders Investment Management, although there is no direct added value or economic benefit to be derived out of the merger, having both major companies under a single entity would be the ideal strategy for the government to offer much-required support for the two largest players of mortgage finance in the country, which is a vital segment for real estate recovery.

With both companies being placed under the Emirates Development Bank, it is a strong indication that the government is acting quickly to stimulate the real estate sector and offer the required support, he added.

The Fund Manager of Al Mal Capital, Tarek Qaqish, said that the merger would improve the capability levels of both the companies. The merger of both under Emirates Development Bank would be supported by the Federal Government, and this would enhance the liquidity of both companies, he said.

The Chief Executives of both companies are hoping that the merger would be complete towards the first quarter of 2009.

Tuesday, January 06, 2009

RERA introduces new regulations to streamline realty sector

Dubai's Real Estate Regulatory Authority (RERA) has introduced a new regulation, wherein the property developers in Dubai would be ranked on the basis of their financial stability and market experience.

Developers registering off-plan projects will henceforth be required to completely own the land first, before registration of the properties, states the new regulation.

The regulation aims to reduce the number of developers and to give RERA a better hand in re-instilling investor confidence amidst falling prices, fraudulent and contractual disputes hitting the sector.

According to another new Regulation passed by RERA last week, aimed in streamlining the property sector, developers in Dubai are not allowed to collect more than 20 percent of the cost of property from the buyer prior to construction.

Head of Trust Accounts, Essa Saeed Ahmed Al Mansoori at RERA's Real Estate Development Trust Account Department said that an 11-member team will monitor the construction process and ensure that the escrow amounts are collected in accordance with the schedule.

RERA continuing to introduce new regulations aiming to streamline the real estate sector of the emirate and protecting all concerned parties involved in property transactions, other emirates where property sector is witnessing considerable growths, too, are following suit.

A Real Estate Regulatory Authority is likely to be established in Abu Dhabi within next couple of months. Ajman Government too, plans to introduce an agency similar to Dubai RERA.

The Federal National Council (FNC) is in the process of preparing draft legislation aiming to regulate the property sector in the country and protect UAE by restricting expatriates from automatically acquiring residency visas through freehold property ownership, so as to reduce dependency on foreign labour.

Damac unveils XL Tower at Business Bay

XL Tower -Commercial building at Business Bay
Damac Properties has announced the launch of 'XL Tower', a modern, elegant commercial tower, located at Dubai's Business Bay.

The tower, which has reached Podium level 3, has been in records for utilizing maximum concrete pour ever, in the company's history, when about 5,500 cubic meters of concrete was poured in less than 25 hours.

Covering 153,000 square feet of space and with 8,700 square feet of retail space at the ground level, including shopping arcade, and covered walkway and parking for staff and customers, the modern, the XL Tower is an apt business location.

The XL Tower is equipped with all modern amenities such as hi-speed internet, 24-hour security cameras, swipe access, parking on 7 levels and 3 basements, swimming pool, gymnasium, aerobics room, outdoor jogging track, cafeteria, and health club.

Speaking about the progress of the tower, CEO of Damac Properties, Peter Riddoch said that being an emerging and most sought-after district for freehold residential and commercial properties, all the 13 properties by Damac at Business Bay, have received commendable response.

He revealed that CSHK Dubai Contracting (LLC), a group member of China State Construction Engineering (Hong Kong) Limited have been appointed as contractors for XL Tower.

So far, about 120 nationalities have purchased properties from Damac Properties, and the property developer has provided good support services. The company offers solutions through its vast regional network with offices location in UAE, Saudi Arabia, Kuwait, Qatar, Iraq, Jordan, Egypt, UK and Lebanon.

Friday, January 02, 2009

Global economic recession fails to slowdown Ajman's stride

Property investors looking for a strong UAE property investment, then property in Ajman should be right at the top of their list as Ajman has outshone other emirates in attracting foreign investments, according to reports.

Reports indicate that investments into Ajman's property sector have crossed the Dh400 billion mark. The impressive foreign investments indicate that the global financial crisis has not affected the market and Ajman is experiencing a property boom due to its investor-friendly property laws and reasonable project rates and Property prices also saw an overall appreciation of 40 per cent in 2008.

Fahad Sattar Dero, CEO of Sweet Homes, also developing in Ajman, said that the global financial crisis has resulted in an undervaluation of properties however the region is strategically positioned to attract more foreign investments into the real estate sector. He added that companies and residents are forced to cut down on expenditure, thereby driving the demand for inexpensive housing.

The CEO said prices certainly dip as more families opt for Ajman instead of neighboring emirates. He said there would be 33 per cent dip in housing prices in Ajman -compared to pre-recession years -in the first quarter of 2009. Ajman is growing popular among expatriates on the lookout for quality yet comparatively cheap accommodation as developers are offering multiple incentives, zero initial payment and offering more number of installments besides furnishing the properties.

"The market gradually is becoming buyer-oriented and Ajman government soon to formulate a body in early 2009 to monitor realty transactions and has started implementing the escrow account, which guarantees the security of real estate investments within the emirate," Sattar Dero added.

In related news, Sweet Homes recently announced 70 per cent of its Dh3 billion Ajman Uptown project has already been sold.

Thursday, January 01, 2009

No more freelancers will operate in Dubai's property sector

The introduction of a new system of licensing rules for Realty brokers and online Registration of rental contracts in Dubai in 2009 is expected to make the sector more transparent and also the real estate investors in Dubai will feel safer investing in the emirate's property sector.

Real estate licensing procedures to control the operations of freelance real estate brokers are now set to be operated under one, uniform system, according to an agreement signed by the Department of Economic Development (DED) and Dubai's Real Estate Regulatory Authority (Rera). Earlier anyone who was a national of the United Arab Emirates or GCC could operate as an estate agent. According to the new rules, anyone opening a real estate brokerage will need to apply for a license and meet new criteria to operate.

Marwan Bin Galita, chief executive of Rera, told that those who apply for license should to be over 18, they need a good conduct certificate by CID and They must also under going training and attend courses run by RERA.

The DED will use its own license and business registration system according to RERA regulations for issuing licenses related to real estate activities. RERA will train a number of DED staff on how to use these new licensing procedures. The aim is to make the Real estate agents are qualified to complete real estate deals, and to have ethical standards for real estate agents, brokers and companies.

All tenancy agreements in Dubai must be registered on RERA's new online registration website, Ejari starting in January, so that the final rental index may be prepared by RERA. The rental index will map out rent structures in Dubai and is all set to launch the property rental index at the start of next year.

Marwan Bin Galita, chief executive of RERA said that Registration of all contracts is compulsory, under Law 26. This will assist in finding a rent data base which will make the whole system more efficient and transparent. The online registration, when complete makes it easier for RERA to monitor the rental market and track any landlords or tenants deviating from their tenancy contract.

Along with the recent amendment of law 26 relating to tenancy contracts, the Dubai's rental market is getting a good look. Nearly more than 100 companies have already registered their tenancy contracts on RERA's website.

RAKIA RERA to monitor implementation of escrow account laws

RAKIA (Ras Al Khaimah Investment Authority), the government body responsible for the socio-economic growth of the emirate, has revealed that the recent establishment of RAKIA RERA (Real Estate Regulatory Agency), according to an Emiri Decree, has led to increased protection for real estate investors, as the Agency will monitor the implementation of the escrow account law for freehold projects under RAKIA.

Several of the property developers have registered their projects with RAKIA RERA, which now supervises real estate developments worth a total value of Dh.6bn or more. Developers can register with RAKIA RERA once the concept design of the project has been approved. This will enable them to open an escrow account, and begin selling properties. RAKIA RERA will monitor whether the construction is happening as it should be, and will appoint a team of engineers to inspect projects and ensure that the major points in the contract are followed.

The General Manager of RAKIA RERA, Eng. Yahia Kambris, said that the establishment of the new real estate supervisor signifies the interest by RAKIA RERA to safeguard and protect the interest of investors and reinforce the reputation of RAK as an attractive investment destination in the region.

The developers registered under the RAKIA RERA are the developer of Pacific, Manazil Real Estate, developers of Marbella Bay, Pure Real Estate, developer of Blue Mirage, Stallion Properties, and Santorini and e-myproperty, developer of Bab Al Badr, and Yes Properties, the developer of The Quay, all of which are now completing the registration process, will soon open an escrow account.

Several banks, including the Bank of Baroda, Commercial Bank of Dubai, Abu Dhabi, Badr Al Islami-Mashreq, have all signed agreements with RERA to offer Escrow Accounts.

Ever-since its establishment in 2005, RAKIA has been one of the pillars for the economic progress of the emirate, with several groundbreaking investment initiatives in the emirate and across the international markets.