Tuesday, March 31, 2009

RERA's updated version of rental index still uncertain

It is still uncertain, if Dubai's RERA would update its rental index in April this year, as was previously announced, or would just expand its current version of rental index, by including the areas left our in the original survey, reports AME Info.

During a press conference in Dubai, during the end of February this year, RERA had indicated that its rental price index would be updated and re-released early this April.

The announcement was made following the disputes that occurred after the release of the first version of Dubai rental index, which was compiled when the rents were at their peak in 2008, much before the slowdown hit the emirate. This version of the index was released in January this year, following which, there were arguments about the rates in the index not being in accordance with the post-slump market.

It has now been learnt that instead of completely updating the current index figures in April, RERA may just fill in the averages for the areas and bands, not covered in the original chart.

An official at RERA is told to have mentioned that there will be no changes to the existing figures, and RERA is only updating the areas that were not mentioned in the last index, and a new survey would be conducted this summer.

This implies that rental contracts would be measured against average figures that bear little resemblance to prevailing market rates.

The Managing Director of Better Homes, Ryan Mahoney, who spoke to AME Info, agreed about the huge drop in rentals in Dubai, and urged RERA to regularly update the index, and maintain it inline with the fast-changing market, else, people may stop referring the index.

Monday, March 30, 2009

Dubai acts to resolve property disputes

Dubai has formed professional groups and mediation center to resolve the numerous disputes arising among investors and developers, as the property sector suffered under the impact of global economic turmoil.

The initiative, which is a joint-effort by the Dubai Land Department and Dubai's RERA, has been aimed at integrating the main parties in the property sector into a regulatory framework, under the leadership of RERA.

A mediation center was formed to resolve the disputes in a quicker and efficient manner, away from the Property Court. At present about 500 or more such cases are said to be awaiting the court orders. The center has resolved 95 cases over the past month.

This idea has been welcomed by the industry so far. Next month, property investors, developers, evaluators and brokers will form groups within RERA. These committees will meet on a regular basis to review and develop a regulatory strategy to create plans and manage conflicts in the property sector.

Off-late, groups of investors have been filing petitions to developers regarding cancelled projects. Even last week, hundreds of investors appealed to Nakheel's Dubai sales center, urging the developer to reschedule its payment plans for villas on Palm Jebel Ali, due to delays.

Emaar has revealed its plans to put on hold three of its projects, following a petition from the Emaar Investors Group. Both individuals and homeowners' associations form a part of the new investors' community within RERA.

This is the latest among the measures taken by the Government to increase market confidence. Last month RERA had announced that the agency would begin publishing monthly progress reports on each of the 695 projects with Escrow Accounts. The progress on the developments would be published online with photographs about progress in construction.

Saturday, March 28, 2009

Lack of mortgage lending may plunge property prices further

Property prices in the UAE are likely to drop further, if the banks continue to hesitate to begin mortgage lending.

The Managing Director of Gulf Lenders Network, Damian Hitchen, also a master broker, expressed his opinion that once the finance and liquidity flows into the market, it will help soften the price correction, and property prices will not drop further.

This is particularly true as far as Dubai is concerned, as it is here that the prices have dropped the most, said Hitchen.

"The overall portfolio exposure by the banks, are getting worse by the day, and the banks are likely to have real problem. By stopping lending, they are increasing default cases and worsening the situation," he commented.

The banks across the UAE have greatly reduced lending, despite the demand for mortgages. Banks have suffered lack of liquidity, as international banks have pulled out their funds following the collapse of Lehman Brothers. With this, the loan-to-deposit ratios of several banks are much higher than the 100 limit, and they are now seeking to reduce the ratio by collecting deposits and restricting lending.

Hitchen said that the demand for mortgages has regained momentum and his network is currently processing more requests than during the summer 2008, when the prices were at their best.

The banks need to be more "vocal" about their requirement for assistance. The Government should initiate more effort to assist the banks with sufficient funds, provided, they lend it back into the market. The Banks, will have to report back to the Central Bank every month, regarding the purpose for which the money was utilized, he explained.

Property Regulatory Authority for Middle East underway

According to senior officials at the Dubai Land Department, plans are underway for establishment of a Middle East Real Estate Society (Meres).

The real estate community groups, which include developers, brokers, investors and valuers, are likely to join together with their GCC counterparts to from a region-wide entity.

A real estate regulatory authority, which spreads across the whole region, will surely bear a positive impact on the economic conditions of the region, and in the wider Arab world. This move is aimed at establishing an Arabian Real Estate Society, as soon as possible, said the statement from the Dubai Land Department.

The Federal National Council revealed plans for UAE Real Estate Regulatory Authority. The officials at the Dubai Land Department and Dubai's RERA supported the plan, stating that such plans were positive, as the establishment of a federal regulating body, would promote consolidation among all seven emirates.

The Chief Executive of RERA, Marwan bin Ghalita, said that a federal body would help real estate professionals immensely, as developers are then free to work in any of the emirates, and they need to deal with just one authority.

At present, however, there is no federal body to monitor the property sector in the UAE. Individual emirates such as Dubai and Sharjah have established their own regulators, while Ajman recently announced the establishment of its own authority.

Friday, March 27, 2009

Middle East property sector shows signs of recovery

According to a new report by Jones Lang LaSalle, the real estate market in the Middle East and North Africa are showing signs of recovery, although the prices in the region may continue to fall during the next six to twelve months.

The first quarter of 2009 has shown some progress in the sector, with green shoots of recovery beginning to crop-up. However, the necessary conditions for recovery are yet to be met, the report points out.

The major factor for recovery of the sector are improved sentiment which would boost confidence and reverse the credit default spiral, which has been widely experienced during the past six months.

According to the report, Dubai lays out vast options for opportunistic investors, given, the correction in prices happening in the emirate. Although the yields can be hoped to increase only in the medium term, the long-term outlook for Dubai continues to remain positive, particularly, with the decline in supply, as several projects are being put on hold or are scrapped off.

The "green shoots of recovery" in the regional property sector was noticed during the first quarter of the year, and the markets are hoped to be in the process of recovery as early as in the autumn, revealed a property consultancy, in its report.

The Jones Lang LaSalle report states that the Middle East and North Africa (MENA) economies have begun making progress on 12 out of 17 major requirements for the economic recovery, which includes re-capitalization of Banks, Reduction in future supply of homes, and "concerted government action".

However the economies may still have face serious challenges during the year. Even with so many positive factors noticed during the past three months, the region may still be in the recession stage, with several markets expected to witness downward correction in prices during the year, the Jones Lang LaSalle report states.

However, Abu Dhabi indicates chances of "significant long-term potential", while Dubai has opened up to "opportunistic investors" seeking medium-term and long-term investments. In the meantime, Qatar and Saudi Arabia would remain as the most lucrative markets during this period, the report suggests.

The company expects that following the transition phase, the region will be well-positioned to emerge stronger, with more transparent and better regulated sustainable pattern of real estate development and investment, meant for the longer term.

Thursday, March 26, 2009

Abu Dhabi's Tameer Towers under review

Tameer Towers
Tameer Holding announced yesterday that its Dh.5.78bn Tameer Towers project at the Reem Island in Abu Dhabi, has been put under review.

According to the company sources, the developer is planning to cancel its construction contracts with Al Habtoor Engineering, Al Rajhi Contracting and Murray & Roberts. However, the company is also said be thinking about the option of hiring the same contractors at re-negotiated prices.

According to a company official, Tameer has however confirmed that the Tameer Towers project will move ahead. The enabling works are already completed, and the residential sub-structure works would begin on completing this assessment.

Currently several real estate developers are re-negotiating construction contracts, as the prices of raw materials such as steel and concrete have fallen, and in few cases, the developers have even passed on the savings to buyers by lowering home prices to increase sales.

Tameer Holding had laid off more than half of its employees late last year, when the property sector swept into recession. The Tameer Towers is expected to be a major project of the Shams Abu Dhabi development on Reem Island. The project was planned to include six towers, with four residential and one commercial building, and a hotel, apart from other amenities.

UAE Government steps-in to streamline property sector

The UAE Government has established a Federal Real Estate Regulatory Authority in order to co-ordinate regulatory efforts at the local and federal level, revealed a senior official at the Federal National Council (FNC) yesterday.

The Minister of State for Financial Affairs, Obaid Humaid Al Tayer, said "There are local real estate regulatory authorities and the government considers assuming a role at the federal level to co-ordinate between them."

While Dubai and Ajman have already set up regulatory bodies to govern the property sectors of their respective emirates, the concern is about foreign property developers, who wholly finance their projects from local banks, without sufficient capital.

A FNC member from Abu Dhabi, said that few foreign developers, even depend on the local banks for complete funding, putting the lenders at risk of losing their finances, when the developer fails to complete their projects, or flee the country, leaving behind a huge debt.
The member urged that a regulation is required to limit the finance being made available to foreign developers, who do not have a stake in the capital of their projects.

According to Al Tayer, the Central Bank and the UAE banking system are committed to a loan ratio of nearly 20 percent. The government is striving hard to keep its property sector safe even during such tough times.

The Minister emphasized that UAE has a free economy. Although the global economic and financial difficulties may prompt certain precautions in all sectors, including real estate, the investments in private sector should not be restricted.

He added that the banks are already following some precautions towards financing the real estate sector, and hence no additional restrictions are required for this sector, unless deemed necessary in future.

The Minister revealed that the government is also considering issuing freehold property visas with respect to foreign ownership of properties in various emirates. Several emirates have developed their own freehold visa arrangements as of now. Efforts are on to regulate this process at the federal level, by announcing a unified guideline for all emirates.

Such a measure was thought about, when leading developers like Emaar and Nakheel, who were earlier helping foreign buyers to gain a three-year renewable residence visas on purchase of freehold properties, suddenly stopped facilitating them.

Tuesday, March 24, 2009

Dh7.3bn sidelined for distressed property assets in GCC

About Dh.7.3bn worth of equity is awaiting to be invested in distressed property assets, across the GCC, particularly in Abu Dhabi, Saudi Arabia and Qatar, reveals Jones Lang LaSalle, leading property consultants.

The funds, which were raised during the initial three quarters of last year, was kept on hold, ever-since the collapse of Lehman Brothers in September, and the subsequent regional market downturn.

The Head of Investment Transactions at Jones Lang LaSalle, Ian Ohan, says that investment opportunities are now being sought for these funds and more capital will begin accumulating, once the investors regain their composure. Even investment funds that were previously focused on international market are now being directed regionally. The funds are now being pooled among high-net-worth individuals, investment banks, and institutional investors.

"Investors today are clearly focusing on taking advantage of the market downturn, by targeting prime distressed asset sales on an opportunity basis," said Ohan.

Investors are also seeking assets with long-term contractual income attached, such as the 10-year plus leases attached with strong covenants, he added.

Regional investors are good entrepreneurs, and unlike in other international markets, there is active real estate deals taking place, despite the very low volumes, compared to the peak witnessed in 2008, he pointed out.

Investors seem more cautious about investing in Dubai property market, and prefer Qatar, Abu Dhabi, and Saudi Arabia, where, the property cycle is at a less advanced stage.

However, there is no denying that Dubai investors are still actively cherry picking opportunities that could represent stand-out deals as the region's economies stabilize, Ohan said.
"The year 2009 will be a challenging year in all aspects, and the economic situation will get worse, before it gets better," Ohan said.

The company has commenced a two-month study to identify opportunities for taking over projects that offer long-term revenue.

The President of the company, James Tate, says that there is a two-year buying opportunity for property assets in downturn markets. The study would focus on opportunities in residential and commercial sectors, targeting projects that are half or fully completed.

Sunday, March 22, 2009

UAE Economy may shrink in mid-year, based on global crisis: Minister

The UAE Economy may shrink further, during the second half of the year, if the global downturn intensifies, announced the Ministry of Economy, yesterday.

The Minister Sultan bin Saeed Al Mansouri, said "There could be some contraction. But, it depends on what happens in the world economy as a whole, during the second half."

"I would like to be conservative and say that UAE will be affected by the slowdown in the world economy," he added.

Just the last month, the Central Bank Governor, Sultan in Nasser Al Suwaidi, had said that UAE is likely to see "low single-digit" growth in 2009. The GCC region have however, been reluctant to agree that their economies which saw a boom during a six-year rally in crude oil prices, could contract when the demand for petroleum drops. UAE is the fifth-largest exporter of oil and had generated 48 percent of its GDP from crude shipments.

Dubai has seen a major set-back in its property market, which was a strong pillar for the local economy. The emirate, together with federal help, is now trying to support the property companies that have been hit hard by the tumbling prices of residential and commercial properties.

In such a scenario, Al Mansouri has denied any possibilities of closing down the two largest mortgage lenders of Dubai - Amlak Finance and Tamweel, and is considering several other options, including merger of the two mortgage providers.

The two lenders were under the control of the Federal Government since November, and thereafter new home loans were suspended, due to their mounting debts and cancellation of new projects. The officials had set up a committee last month to decide whether to merge, liquidate or restructure Tamweel and Amlak. The Committee completed its review merger and submitted the report to the Cabinet.

Dubai had also announced a $20bn bond programme last month, with the Federal Government purchasing half of them. The officials in Dubai have mentioned that the proceeds from the sale of the bonds would help the government-affiliated companies, including property firms.

Early this week, the President H.H. Shaikh Khalifa bin Zayed Al Nahyan denied the rumours that the oil-rich Abu Dhabi would bail out its neighboring emirate Dubai, provided, it gained control on few of the major assets of Dubai. He explicitly supported Dubai, and, this instilled investor-confidence and buoyed the stock markets of the nation.

Al Mansouri, however, emphasized that UAE would be less affected by the global recession, than other parts of the world.

However, it is a fact that the oil prices are the key determining factor of the economic health of UAE. The yearly nominal gross domestic product grew by 9.4 percent in 2006, 7.4 percent in 2007 and 6.4 percent in 2008. Oil has been a major contributor to more than 40 percent of the country's GDP in each of these three years.

Friday, March 20, 2009

Damac signs 10 new projects worth Dh2bn for 2009

Damac Properties, UAE's largest private sector developer, has announced plans to sign Dh.2bn worth contracts this year, which includes construction of 10 new towers, to take advantage of the current low construction costs and overheads.

A top official of the company revealed that towards the end of this year, the company will sign contracts worth Dh.2bn for construction of 10 projects.

The cost of construction materials have declined considerably over the past couple of months, owing to lesser demand. Contractors are now in search of fresh projects, as several projects have been shelved due to recession. Few of them are even willing to work at cost prices, to save jobs and continue their businesses.

This situation is an opportunity for developers. Developers who had been selling properties at higher prices till last year, can generate more profits by signing new projects now, when constructions costs are lower, the official said.

The Damac CEO, Hussain Sajwani, says "We are well aware of the market condition, and hence are focusing on deliveries. We would like to begin construction of all remaining projects, before the market rises by early next year."

The company already delivered 2300 units during the last six months, and hopes to deliver 7,100 units more by the end of 2010. The company has already sold 10 projects and plans to deliver 25 more projects, by end of next year.

By adhering to timely deliveries, the company plans to bring back investor confidence in the market. According to Sajwani, the market may see an upturn by the end of this year.

A recent survey by Ernst & Young, on companies managing their businesses in the event of global economic slowdown, about 74 percent of the companies were found focused on "securing the present".

Although, it may sound perverse, the period of crisis can actually be an opportunity to drive change more rapidly and effectively, than during a period of prosperity, the report suggests.

Thursday, March 19, 2009

Deyaar unveils 2009 Business Strategy

Deyaar Development has sketched out a strategy for 2009, to reduce the default rates by the company, revealed the Chief Executive, Markus Giebel.

"About 60 percent of our customers have come back to us, saying they were unable to pay up on their property. We hope that our new strategy would help in bringing down our existing default rates to around 20 percent," Giebel said.

He said Deyaar will not see any major impact on its profitability, as it has adopted a consolidation strategy, and projected that the 2009 projects of the company would be about Dh.500mn touching 2007 levels.

"Profits and revenues are not the major issues for us today. What is more important, currently, is to ensure sufficient cash flow, and help our customers facing financial difficulties," Giebel said.
As per Deyaar's new consolidation strategy, the Deyaar Park, Deyaar Enclave and Mirar Residences, comprising four million square foot area in Dubai, would be consolidated with the rest of Deyaar portfolio.

Investors in these projects will be given the option to transfer their ownership to projects which would be completed on a fast-track basis.

Deyaar plans to do a project consolidation of up to 10 percent cash-back of the paid-up amount, and a 50 percent consolidation option on Deyaar Park, Mirar Residences and Deyaar Enclave. On Deyaar Enclave, the company plans to give the option of 100 percent pay-back to the investor.

"We will first return the money to the investor and go to RERA, saying we have no liability. Only then will RERA release the Escrow," Giebel said.

The prices of units that were sold at the time of launch, or during the initial stages of construction, will be reduced inline with lower construction costs, reveals the new strategy by Deyaar.

For instance, the prices of Deyaar's Oxford Tower will be reduced by an average of 30 percent from Dh.2450 per square feet to Dh.1715 per square feet. In Fairview Residency, price reductions will be an average of 25 percent from Dh.1845 per square foot to Dh.1385 per square foot.

The Bristol Residence sales prices will be reduced by an average of 25 percent from Dh.2079 per square foot to Dh.1560 per square foot. The Bristol Office prices will be reduced by 30 percent on an average from Dh.2788 per square foot to Dh.1950 per square foot.

Deyaar will offer lower installments to customers on certain units through soft payment plans, and this will be implemented by adjusting original payment schedule, permitting customers facing liquidity problems to avoid default and meeting their obligations.

Giebel also mentioned that in certain locations with infrastructure problems, the company plans to give buyers an option to swap for properties in other locations. However, this option will be on a purely voluntary basis, and this will give customers the option to transfer ownership to premium projects in prime locations. It will also allow them to consolidate their total outstanding payments.

Deyaar pointed out that it has not cancelled any of its projects so far, not are there any defaults being recorded. Deyaar's strategy is inline with regulations by RERA, and all of its projects will adhere to the Escrow Law. The company is also under negotiations with financial institutions to develop special mortgage packages for customers and has already signed a deal with Dubai Islamic Bank, he concluded.

Few Dubai projects may physically disappear in 2009

Few projects in Dubai will physically disappear in 2009, as the emirate witnesses a flight to quality among investors, predicted the industry experts early this week.

The Chief Operating Officer at Gulf Housing Solutions, Christopher Sims, say that developers did not do adequate market research, and did not bother about who they were building the projects for.

"Although this natural culling of the market is a good sign, few projects will physically disappear. Few were very far-reaching and extremely ambitious. Therefore, amateurs are leaving the market, and professionals remain," Sims said.

Prior to the onset of financial downturn in Dubai, speculators and investors were just looking for a piece of the Dubai property cake. But, now, they are only considering those projects that are complete and have good quality finishes and amenities.

"It is not a recession, but, a technical correction. The market will move to a flight to quality - The Springs, Jumeirah. People will not live in the middle of the desert, without infrastructure." Sims pointed out.

Nakheel, for instance, had to postpone few of its projects such as the Trump International Hotel and Tower, and a kilometer-tall tower, and developers across Dubai and over the globe, had to tighten their purse strings.

According to the Regional Director at Jones Lang LaSalle, Ian Ohan, in terms of defaults, the projects that have not yet begun works, are best to resolve. The off-plan sales were effectively used to finance projects, and off-plan purchasers are now defaulting, putting the developer in a difficult situation.

A recent report by Jones Lang LaSalle states that more than 50 percent of its commercial and residential projects, due to come online between 2009 and 2012 are either on hold, or have been completely scrapped off.

A survey carried out during the third quarter of 2008 in the Middle East and North Africa region reveal that the major issue was that the investors were mostly concerned about their level of returns. Only less than 2.5 percent expressed keenness in an exit plan, and this indicates the state of the market back at the peak, Ohan explained.

However, the year 2009 will continue to be a year of correction, and 2010 will be a year of stabilization, before the market recovers in 2011, said Jones Lang LaSalle.

Tuesday, March 17, 2009

Property hotspots in Dubai for 2009

A leading property portal in the UAE, propertyfinder .ae, today released its findings, which reveals the top locations in Dubai for rent and purchase during the current year.

According to the findings, both buyers and renters are moving out of traditional residential hubs to areas such as the Jumeirah Lake Towers, The Springs and Discovery Gardens, with new communities high on priority list for both buyers and renters.

The findings were based on approximately 500,000 unique page visits to the website during the month of Feb'09. This highlights the current activity in the Dubai real estate market, despite the slowdown.

The Head of Marketing at propertyfinder.ae, Marcello Sambartolo, when speaking about the survey results, mentioned that the survey brought out some interesting statistics, wherein a real transition in rental interest towards new residential areas such as Jumeirah Lake Towers and Discovery Gardens have been observed, where the rents are more competitive. The data also reveals that end-users are still looking to invest in Dubai properties, which is now offering opportunities to capitalize on the recent drop in housing prices.

This is the right opportunity to locate good property investments. The research would help in locating the best deals and being aware about the new communities coming on stream, Sambartolo said.

The survey is generated out of user-generated figures on the property portal from 1st to the 28th February 2009. The figures are based on 644,148 page views and 492,838 unique page views on the website. The figures have been verified by Market Intelligence, Nielsen Site Census and Google Analytics.

The hot zones as revealed by the website are as follows:

Property Hotspots in Dubai

Monday, March 16, 2009

Work on Abu Dhabi's Second Downtown to begin in a year's time

The work on Second Downtown in Abu Dhabi would begin in a year's time, following the approval by Executive Council, it has .

The Capital District, to be built 7km inland from Abu Dhabi Island, will eventually house a population of 370,000, including all embassies and federal government institutions.

The General Manager of the Urban Planning Council (UPC), Falah al Ahbabi, said that work on the district would begin during the first or second quarter of 2010.

The first phase of the project includes houses, universities and government offices, all of which will be completed in three years time.

The massive project, which spreads across 4900 hectares of space, comprises commercial buildings, government buildings, residential buildings, parks and schools. The place will turn out to be a truly sustainable city that will accommodate a population of 370,000 in a span of 25 years.

The residential component of the district would keep aside 3000 units for Emirati Citizens. The plots have been designed and are ready to be allocated.

The true vision of the project will be revealed during the Cityscape Abu Dhabi to be held next month. The Capital District is hoped to ease the burden on Abu Dhabi Island, and create a recognizable center for the Capital.

The infrastructure work would commence during the first quarter of 2010. The infrastructure for the first phase would be completed within two years of launch of the project. But, the completion of the whole infrastructure, may take six years, or even ten years, depending on the rest of the phases.

Phase One of the project involves the development of federal government offices at the Town Centre, a Sports City, the Emirati housing and new headquarters for Khalifa University and Zayed University, and an exhibition or convention center.

The cost of the project is yet to be revealed by the UPC.

Al Ahbabi, said that Abu Dhabi is facing a shortage of housing, and hence these developments need to be taken forward aggressively. In the meanwhile, the Department of Transport revealed that the Capital District would be linked to the Abu Dhabi Island by a tram, high-speed and metro rail, all of which, will, also be linked to Dubai by 2030.

Saturday, March 14, 2009

Dubai property prices drop to mid-income levels

According to experts, mortgages in Dubai would be easier to reach, with the property prices likely to drop to mid-income levels. Applications from potential buyers seeking mortgages have dropped considerably in recent months.

Property prices are plummeting throughout Dubai, thereby bringing about a ray of hope for those that were earlier considered out-priced. But the huge mortgage requirements and large deposits are keeping them away from easy reach.

The Managing Director of Almas Capital, Barmak Besharaty, when speaking during a Cityscape networking forum, yesterday, mentioned that Dubai would surely be a better place to live in, once the families can afford to buy or rent. This is likely to happen when the real estate assets align with the mid-income margin in the country.

Until a few months back, property in Dubai was meant only for the wealthy. Several developers were offering luxury lifestyle, which were out of reach for majority of the common population. Developers were pushing up prices of their properties, to keep up with the speculators and market forces, aiming to make money.

However, at present, one can get a decent mortgage in Dubai, if they are free of car loans and personal loans, and have atleast Dh.300,000 in a bank account, as a handy deposit, and ideally, draw a huge salary, said Shohail Zubairi, Chief Executive of Dar Al Sharia, the Legal and Financial Consultancy.

However, the average mid-income person already has atleast one loan, and does not have several thousands of dirhams as balance in their bank account. Moreover the current mortgage rates are not too attractive either, he points out.

However, in the current situation, even the developers need not bother about building new affordably housing developments aimed at mid-income bracket, as several developments in Dubai that had earlier been branded as luxury developments, now fall within the mid-income bracket.

Al Barari residential development to release 500 units into the market

The officials at Al Barari residential development in Dubai revealed that the second phase of their project would release 500 apartments, ranging in size from 2000 square feet to 10,000 square feet, and will be worth $1.3mn to $5mn, depending on the size.

Al Barari Luxury Villas Dubai
The apartments are targeted at people who wish to live in Al Barari, but, find the villas beyond their reach. The second phase of the project would include a spa, a hotel, and a cultural village, said David Stafford, Chief Sales and Marketing Officer, Al Barari.

About 5000 workers are working on-site at Al Barari currently, as the project enters into the final stretch of phase one, with 95 villas more to be handed over in September.

The first phase of the project comprises 290 villas and 170 units, that have already been sold to clients, who include buyers from the UK, Asia, the US and Australia.

Zaal Mohammad Zaal, the Chairman of Al Barari, said that the landscaping for the project is being planned considering the geographical location of Dubai, and comparing it to other countries that share the same geographical location, and same climate zone. About Dh.1.4bn has been dedicated to plants and greenery in the project, and emphasis is being laid on the greenery of the project.

Funds on way to help Dubai companies; property firms on priority list

The companies in Dubai can expect funds within two weeks time, out of the US$10bn (Dh.36.73bn) which the Dubai Government borrowed from the Central Bank, to help ease the cash squeeze situation in the emirate.

This was revealed by Nasser al Shaikh, the Head of Dubai Finance Department, when speaking during a conference today. The funds, which form a part of the $20bn bond programme introduced last month to help Dubai in meeting the short-term requirements for funding, helped calm down investors, who were worried that the companies may face hurdles repaying debts this year, as the banks were reluctant to refinance loans due to the global credit crunch.

The emirate is yet to decide on how to administer the funds on a case-by-case basis, although Al Shaikh confirmed that the property sector companies would be given special priority. The Economist at Standard Chartered, Shady Shaher, said that although firms outside property sector too, would be eligible for funds, he expects majority of the money to flow into property companies, particularly, those that are partially-owned by Dubai Government.

Several large Dubai-based groups have already applied for funds. Al Shaikh said that the cash flow to the companies, affected by global crunch, would be given based on their requirements.
The Dubai Government is believed to set up a special fund through the Department of Economic Development, to lend a portion of the $10bn to small and medium-sized companies that require cash.

Speaking about the real estate market in Dubai, Al Shaikh said that the finance department would keep bringing out measures to stimulate the sector. The focus in the present situation should be on settling the disputes between buyers and sellers, he pointed out.

As for the current talks between Tamweel and Amlak, the two largest mortgage companies of UAE, Al Shaikh, who is also the Chairman of Amlak, said that the management of both companies were holding discussions about the same with the Ministerial Committee. Although it was thought that the companies were planning a merger, the statement from government officials earlier this week, ruled out the possibility and suggested other options.

However, al Shaikh said that more companies are also planning consolidation, amidst slowdown, although a potential consolidation should make sense to shareholders and to the economy at large.

Al Shaikh also did not deny the likelihood for consolidation between companies in Dubai and Abu Dhabi, either.

Thursday, March 12, 2009

Damac's new futuristic tower at TECOM, completes 15-storeys

Smart Heights Developments from Damac
Damac Properties will be adding a new futuristic tower to the TECOM skyline, with its Smart Heights development already half-way towards completion. Featuring the latest in office technology and gadgetry, the Smart Heights tower has reached its 15th storey, and is on schedule to hit the final 21st storey, by end of this year.

The project has ECC as their main contractors. The other project by Damac at TECOM is the Executive Heights project, which saw completion in 2008.

Covering 288,000 square feet of office space, the Smart Heights has all the 21 storeys of the project, being either leased or purchased. Among the smart facilities included in the project, are the security card access control, automated boardrooms, energy efficient lighting systems, touch pad request screens for elevators with LCD response panels.

The electrical, mechanical and plumbing works are underway at Smart Heights, so that all wiring, pipes and cabling is well-integrated, and contracts for internal fixtures and fittings, such as lighting, signage and sanitary ware are in the process of being handed-over.

According to Hussain Sajwani, the Chief Executive of Damac, offering the latest technology is now a necessity for developers, and that office locations in Dubai had to differentiate themselves this way.

TECOM is hoped to be a vibrant business community, and will be a great location for companies offering excellent access to both Al Khail Roads and Sheikh Zayed Road, apart from TECOM metro station, which will be at just a walking distance of few minutes.

Sajwani added that Smart Height will be unique not only for its futuristic design, but also for its modern technology. Apart from 21 office storeys, the building will have a day-care center health club and outdoor swimming pool to relax after a hectic day at work, al l situated within the lush landscape surroundings.

Dubai likely to house 90,000 new housing units in two years

Dubai property market will see the advent of about 90,000 new housing units over the next two years, despite the global economic turmoil.

Nearly 32,000 new housing units were completed in 2008, touching the total number of residential stock in Dubai to 253,000.

The Jones Lang LaSalle Report, however, mentions that construction delays and project cancellations will reduce the total announced residential supply by more than 50 percent. About more than half of the announced residential and commercial projects due for completion, during the two years, have been halted or cancelled, due to lack of available funding and ease of demand.

Even top developers, including Nakheel and Meraas have either rescheduled or cancelled few of their major projects. Since the last quarter of 2008, there has been a drop in prices and rentals, by up to 50 percent, depending on the area.

Prices are expected to plummet further, for residential properties, throughout the year, hitting the bottom at 2010, said Craig Plumb. In the meanwhile, the Managing Director of Memon Investments, Ahmad Shaikhani, had mentioned that he expects the UAE property sector to spring back to normalcy within next 8 to 12 months, due to the fall in construction costs.

The report agrees for the need for increased financing options, and the need for implementation of few 'radical measures' by the government, such as removing the link between residency status and employment, clarification of law regarding residency for expatriate buyers of housing units. Such measure may be required to help the market emerge stronger.

Several people are opting to rent out, rather than to buy, as the people are hesitant to buy in a declining market. "It is like catching a falling knife. Nobody knows when the market will stabilize, so it is hard to predict the bottom," Plumb concludes.

Tuesday, March 10, 2009

Developer modifies Jumeirah Gardens project to suit market needs

Meeras Development plans to speed-up the Dh.350bn Jumeirah Gardens project, upon stabilization of real estate market.

In view of the rapid changes in the property market, and owing to global economic conditions, Meraas Development is now focusing on adapting its master-plan, designs and product mix, inline with present market conditions.

The company, in its statement, said that it plans to redefine the short-term strategy and approach to focus on developing initial phases of Jumeirah Gardens, while also confirming its commitment towards developing an integrated city in the heart of Dubai. The project, when progressed in phases, would provide an opportunity for the company, to analyze investor interest and develop details of the master plan and state-of-the-art infrastructure.

Launched in October 2008, the Jumeirah Gardens projects by Meraas is a mixed-use development, including seven district areas spread across an 110mn square feet land area. Located along the northern end of Sheikh Zayed Road, between Safa Park and Diyafa Street, the project would require 12 years for completion.

The existing site would be re-developed to create a mixed-use freehold and leasehold development, which will be an integrated city within city. A transportation network will link low, medium and high-density areas with business, retail, residential, leisure and recreational components.

Covering about 820,000 square meters, the phase one of the project would include six main blocks of low, mid and high-rice office, residential and retail buildings, two hotels, and high-end shopping space.

The developer plans eight buildings in Jumeirah Gardens, including One Park Avenue, One Dubai, and Park Gate, with six buildings. The project aims to cater to a population of 50,000 to 60,000 residents.

Revised rentals applicable for The Gardens from June '09

Beginning 1st June '09, the rents for tenants in The Gardens will be revised inline with the guidelines issued by RERA (Real Estate Regulatory Authority), announced master-developer Nakheel.

In its circular to the tenants, Nakheel confirmed a rental revision, affecting all contracts from 1st June, as per the rules and regulations announced by concerned authorities in Dubai.

The circular also stated that each tenant would be advised individual about the new rents shortly. A Nakheel spokesperson, who spoke to the media, said that The Gardens is one of the most sought-after rental communities in Dubai.

RERA's residential rental index, compiled during the second half of last year, indicated a rent of Dh.130,000-140,000 for a triple bedroom, Dh.100,000-115,000 for doubled bedroom and Dh.90,000-95,000 for single bedroom apartments in The Gardens.

The new decree by RERA, being applicable to both residential and non-residential properties, curbs rental increases this year for tenants who intend to renew rental contracts signed last year, provided, the rental value in 2008, was equivalent to or less than 25 percent maximum than the average rents in the RERA index. Also, a landlord can increase rent upto 20 percent, the decree stipulates.

RERA is currently working on a rental index which has more realistic values, considering the decline rentals in the emirate. The revised index will be released in April.

As for the The Gardens, Nakheel does not offer the option for freehold ownership for properties in the community. The Gardens signifies the commitment by Nakheel to an affordable family living, combined with quality lifestyle and amenities.

Located in proximity to the Ibn Battuta Mall, The Gardens development comprises 129 low-rise buildings with single, double and triple bedroom apartments and accommodated 10,000 residents and is 100 percent let.

The property prices and rentals in Dubai are likely to decline across most sectors this year, before attaining stability by 2010. Dubai may be handicapped by considerable levels of new supplies and the market is unlikely to experience any sustained growth in prices and rentals until 2011, reported a leading property consulting firm.

Sunday, March 08, 2009

Abu Dhabi property market indicates strong confidence

The Abu Dhabi property market indicates a strong confidence, based on stable and genuine market demand, rather than speculation, which has led to fundamental growth of the UAE capital, according to development experts.

Speaking during the first Cityscape Connect Business Breakfast in Abu Dhabi, about 150 real estate executives and investors got together and discussed the current challenges faced by the market, ahead of Cityscape Abu Dhabi, due to take place between the 19th and 22nd April 2009 at the Abu Dhabi National Exhibition Center.

The global economic turmoil has cast a shadow over the property sector, growth prospects and changing market dynamics, said Rohan Marwaha, the Managing Director of Cityscape.

The Cityscape Connect initiative is introduced by IIR Middle East, the organizers of Cityscape Abu Dhabi. Speaking during the session, Marwaha, said that this year's event is quite strong with the growth of 30% of last year, and 48% increase in advance registration of visitors.

Charles Acworth, Director-Research and Head of Commercial Leasing for Aldar, said Abu Dhabi is the 'location of choice in Middle East' for retailers.

He expressed strong confidence in the Abu Dhabi retail market, hotel and residential sectors. Though some "reworking" is still being done, there is an undersupply of residential property for end-user occupiers, and the situation is hoped to continue for next five years.

Speaking about the residential market, Gurit Singh, the Chief Property Development Officer of Sorouh, said that stability is likely to return to rental marked within four quarters from now, depending on supply of new properties to the market.

The Managing Director of Burooj Properties, Adel Zarouni, said that the overall growth of Abu Dhabi property marked is genuine, and is not affected by speculation.

The Legal Consultant with Clyde & Co., Scott Ajtken, said that the only challenges identified are the need to find new finance options for new developments and the need for regulations covering both developers and investors.

Cityscape Abu Dhabi 2009 has generated good response and support from industry leaders.

Mada'in Properties slashes property prices by 30%

Mada'in Properties, the Dubai-based developer, has slashed prices of its properties by 30 percent, due to drop in property prices across the UAE.

All existing customers of Mada'in Properties will receive modified contracts with purchase price of properties being discounted by up-to 30 percent, the developer said on Wednesday.

The CEO of Mada'in Properties, Abdul Aziz Al Awar, said that the market conditions have been studied and a strategy has been formulated that deals with the past, present and future.

With a desire to assist the customers in their investments, not only during good times, but, also in the current market conditions, the company has taken such a decision, he added.

The construction costs have considerably reduced now, and this has enabled the company to pass on the savings to current customers, he said.

Dubai real estate has dropped by 25% from its peak in September, due to speculations, global downturn and reduced lending by banks.

Last month, another Dubai-based developer, Deyaar, also announced that it plans to reduce property prices under the current market conditions.

Friday, March 06, 2009

Dubai Properties confirms delivery of Al Waha villas

Dubai Properties has announced its decision to hand-over the Dh.735mn worth Al Waha Villas, towards the second quarter of this year.

A spokesperson of Dubai Properties, said that the company is particular about the timely delivery of Al Waha residential units, and the eagerness of buyers to move into their new homes.
Inline with this, Dubai Properties also plan to offer lease units at the "558 Community Development", which comprise 414 Mediterranean-styled exclusive villas and 144 apartments.

A member of Dubai Properties Group, Salwan Property Management, said that it plans to provide facilities management services to residential communities.

Waha is an exclusive gated residential community, located in the heart of Dubailand. A luxurious enclave of 260 Mediterranean-styled villas is located among rows of towering palm trees and well-manicured gardens.

The architectural concept of Al Waha, includes beautiful buildings, warm hues and terracotta roofs and cobbled driveways. The freehold Mediterranean-style residential development includes 260 exclusive villas and townhouses with luxurious enclave.

Spreading across a built-up area of 1.9million square feet, the Al Waha villas includes 48 double bedroom apartments, 96 three-bedroom apartments, 102 three-bedroom villas, 180 two-bedroom villas and 132 four-bedroom villas. The 558 Community Development features children playgrounds, and 24-hour concierge services too.

Supply of Dubai residential units to dip 20% in 2009

About 20% of residential units may not enter the market in 2009, due to the current market conditions, say Dubai Land Department officials.

In 2008, Dubai market witnessed entry of 29,319 units this year, and another 31,003 units are likely to hit the market this year. But, in order to balance the supply situation amidst the current financial situation, this number is likely to drop by 20%.

Approximately 70% of housing supply in Dubai is under the control of three government-supported developers - Nakheel, Dubai Properties and Emaar.

There is also a 40 percent decrease in the 43,880 units projected to hit the market in 2010. There is also a 45% drop in transactional value, says Assistant Director General of Dubai Land Department, Mohammad Sultan Thani.

Currently a total of 875 projects are registered with RERA, out of which, 685 projects have escrow accounts, while the rest 180 units are either more than 60% complete or have total bank guarantees. The numbers of developers too have reduced to 427 from 800.

Among the projects announced, RERA predicts that 25% of the projects may have a delayed start, or will be put on hold due to tight market conditions. Another 25 percent of the projects may see a merger of companies, while about a quarter of the projects may be rescheduled. The rest 25 percent of the projects will see a timely completion by 2009 or 2010.

According to bin Galita, controlling the supply may be a good sign, as it is easier to manage, and will render the market only the number of units required.

So far, only two projects have been cancelled. Another 27 projects may have to be cancelled, says Bin Galitta.

Beginning next week, RERA will begin a monthly progress report of various construction projects in Dubai on their website. This monthly report will be for every project with escrow account, under progress in Dubai.

This initiative is hoped to generate confidence in investors about the comfort and knowledge they require about their investments, and help in further preventing investor-developer disputes.

Tuesday, March 03, 2009

Dubai, Abu Dhabi, witnessing lack of demand for office space

Dubai has been increasingly witnessing a lack of demand for commercial plots, reports CB Richard Ellis (CBRE), the real estate services company.

The latest report by CBRE said that although there is no considerable change in the office lease market during the fourth quarter, prime rents saw a growth of 29 percent year-on-year.

Speaking about the commercial rental growth from 2004-08, the firm says that much of the new entry during the fourth quarter was located in Al Barsha and Freezone developments of TECOM.

With only limited new offices entering the market, a drop in lease is not yet apparent. A correction in rentals is necessary during the first quarter 2009, admits CBRE.

CBRE is expecting more drastic declines and considerable increases in the availability of incentives for landlords. It expects a rent correction during the first quarter 2009. According to CBRE, the other districts are likely to see a more notable decline and marked increases in availability of landlord incentives.

Speaking about Abu Dhabi, CBRE mentioned that a situation of uncertainty is evident in the subdued commercial rental market. Demand for office accommodation dropped considerably in the prime segment, leaving an impact on rental rates.

Under the present conditions, more opportunities would be presented to developers and end-users, and the developers would get more cautious, by pursuing only well-planned premium quality projects and end-users would benefit from better quality property product as a result, CBRE's report said.

According to real estate services firm, Abu Dhabi market remains considerably under-supplied across all property sectors, offering a conducive environment for growth, estimates CBRE.

The firm considers that this year would be the right time for Abu Dhabi government to lay-down the much awaited property regulations befitting a mature market, which would not only enhance the market appeal, but would also place Abu Dhabi in an international competitive stance.

Monday, March 02, 2009

New rental index likely in April: RERA

Dubai's RERA (Real Estate Regulatory Authority) will announce its new rental index in April, aiming to bring out a more realistic market.

This decision by RERA follows the huge protests over rental values that were included in the original index published by the Authority last month.

The index is more like a guide, intended to help landlords and tenants in Dubai, with approximate rent levels based on various areas in Dubai. The index is actually scheduled to be republished every six months.

The Chief Executive of RERA, Marwan Bin Galita, said that the rents in the emirate have already begun to plunge, and depending on the location, rents could drop from 10 or 20 percent to nearly 50 percent this year, based on the location.

However, owing to the global economic slump, nearly 20 percent of the 31,000 or more residential units may not come on stream this year. A 40 percent decrease in the total number of units projected for 2010, is also likely.

The first rental index by RERA was released in January this year, which caused resentment among tenants, who felt that the rates quoted were based on last year's rents, when rentals were at their peak, before the onset of financial crisis.

RERA launches new initiative to safeguard investors

Henceforth, property investors can get complete details about the work progress of their new homes, or details about whether the work has been cancelled or delayed, based on an initiative designed to protect investors.

The Independent Progress Monitoring Report (IPMR) is an online scheme announced by RERA, which will see Government Engineers touring the housing construction sites in Dubai to check the progress being made.

A report will be published with photographic evidence and details about the progress of building work, with details of various stages reached. The monthly updates of the work will be available from next week on the website www.rpdubai.com.

The property sector lacks confidence currently, with the investors being worried that the projects are either cancelled or postponed, which has prompted RERA to take this initiative, agreed the Chief Executive of RERA, Marwan bin Ghalita.

The IPMR will keep a watch over only the projects with Escrow Accounts, which constitutes a total of 695 out of 875 projects registered with RERA. RERA, together with few other agencies will control the supply of new units entering the market by restricting building permits and developers.

During its launch in 2006, RERA had 875 developers on its books. The numbers of developers have reduced to 427. Property developers have reported that anywhere from 1 percent to 80 percent of buyers are defaulting on their payments, based on the building and construction progress and confidence in the developer.

According to Bin Ghalita, the housing projects in Dubai can be broadly categorized as those that are likely to be cancelled, those to be rescheduled, those to be merged, and those that would be completed in two years time. The new developers will have to adhere to the tougher guidelines and prevent the market from getting overheated in future.

The new guidelines by RERA depicts that no project will be able to commence sales unless the land occupied by the project is fully owned by the developer, with at least 20 percent of finances required to build it has been secured.

After attaining those standards, developers will be able to collect not more than 30 percent of the purchase price before beginning the construction, following which the payment plans will have to be connected with construction milestones.

According to Blair Hagkull, the Managing Director of the Regional Office of Jones Lang LaSalle, RERA's announcement represents a major change for Dubai property sector.