Saturday, May 30, 2009

RERA freezes escrow accounts of major developers

Dubai Real Estate Regulatory Authority (RERA) has frozen the accounts of several major property developers, until such time that they prove that construction is in progress, and that the land has been properly registered.

This move by RERA to freeze escrow accounts of developers is being done in the interest of property market, as it is grappling with fall in prices and shortage of lending.

All money made from the sale of off-plan properties must go into an escrow account, and be used solely for property construction.

The Chief Executive of RERA, Marwan bin Ghalita, said that the developers will have to provide technical reports detailing the progress of construction prior to withdrawing money from the accounts. Payments will be linked to progress made in construction.

The developers will also have to prove to RERA that they have registered investors' rights with the Land Department.

RERA is yet to reveal the number of accounts frozen.

Friday, May 29, 2009

Dubai's luxury homes fail to generate sales at the auction

Four multi-million dirham properties in Dubai, which were recently completed, failed to sell, which further indicates that UAE's appetite for new homes is still struggling.

The auction on Tuesday night saw only nine people come forward for registration of three villas in Arabian Ranches, a penthouse in Jumeirah Beach Residence. Of these, only three actually entered bids, and these failed to meet the reserve prices of properties.

The first public auction at the Al Murooj Rotana Hotel for Madania Real Estate attracted a crowd of more than 100. However, most of the crowd gathered mainly to gauge the market condition, rather than to invest.

The Chief Executive of Madania, Raymond Kuceli, said the gap between the expectations of buyers and sellers was huge, but the future looks positive.

The investors are of the opinion that the property being sold at an auction is a distress sale, but the actual reason for such an auction is that they require a price that is more in line with their needs.

Developers are trying to gather information about people who registered for auction, but, it will now be used to try and generate sale privately. Although, Dubai market has seen property auctions even before, they have never been the market trend.

Thursday, May 28, 2009

New rule bans buyers from terminating off-plan sale contract

According to legal experts, the Law No.9 of 2009 does not permit buyers to terminate contracts. The only way an investor can terminate a contract is to go via the court and present a strong termination case, or go directly to Dubai's RERA (Real Estate Regulatory Authority) and seek for project cancellation.

The Partner at Hadef and Partners, Michael Lunjevich, said preventing buyers from cancelling their contracts will help in ensuring that people do not take advantage of a down market. If the law permits the investors to cancel, there will be a huge influx of people intending to cancel projects.

With the developers being permitted to cancel contracts under the Law No.9 of 2009, the law indicates sympathy towards developers, the legal experts say.

The Law No.9 was implemented only recently, and relates to cancellations of all off-plan sale contracts, irrespective of when the contract was signed, which makes the amendment more retroactive.

When the law was first read, it seemed very developer-friendly, but in reality it also favours the buyer a lot, Lunjevich pointed out.

Currently, three new regulations for Law No.9 are awaiting approval, including one which the developer says will not be able to cancel contract without a letter from Land Department, else, the cancelled contract will not have any value in court.

Secondly, the Land Department should attach a letter supporting technical aspects from the site.
Finally, although the investors seeking cancellation of projects must do so only in court, the Investors Group have desired to be able to cancel in the Land Department.

If an investor seeks cancellation at the last minute, and if the developer has already completed 80 percent of a project, it can keep the full amount paid, and ask the purchaser to settle the remaining amount of the contract price. If this is not possible, the developer can request the property be sold at auction.

If the project is atleast 60 percent complete, the developer can revoke contract and deduct upto 40 percent of the purchase price of the unit, as stipulated in the contract. If the developer has completed less than 60 percent of the project, it can revoke contract and deduct 25 percent of purchase price as stipulated in contract.

If the construction is yet to commence, the developer can revoke contract and deduct up to 30 percent of the amount paid by developer.

Commercial rents drop by 40 percent in DIFC

The Dubai International Finance Centre (DIFC) has seen 40 percent drop in commercial rents during the past six months, reports CB Richard Ellis (CBRE), a leading property consultancy.

The rents have dropped from Dh.750 per square foot to Dh.450 per square foot, and few private landlords are offering further deduction in rents, the report said.

DIFC, being the prime business centre located in the heart of Dubai, commercial rents are far better here, compared to several other areas in the emirate, says Matthew Green, Associate Director-Research, CBRE.

DIFC offers excellent business amenities with high quality office space, generating considerable demand. There was a lengthy wait-list for space in 2008 and the consistency in demand has been continuing since 2004. This is because the firms are seeking quality offices, located in proximity to Sheikh Zayed Road.

The Managing Director of CBRE, Nicholas Maclean, says that the drive in the market is mainly from the financial sector during the past one yea, as the firms want to be located close to DIFC.

Apart from DIFC, the Emaar Square, a business district at Downtown Burj Dubai has also been generating considerable demand, although the Business Bay is the most popular, when it comes to office buildings. Both these projects are on the Sheikh Zayed Road. These properties will soon face stiff competition from the new World Trade Center, he said.

The CBRE report this month said that the prime office rents in Dubai dropped by 18 percent during the first quarter this year, in comparison to the final quarter of last year, dropping from Dh.550 per square foot to Dh.450 per square foot.

The areas most affected by the decline in occupancy and lease rates are Jumeirah Lake Towers and Site C, the areas developed by TECOM, located close to The Greens.

The report states that landlords with properties in localities away from business districts are offering incentives such as relaxed payment terms, to attract tenants.

Tuesday, May 26, 2009

Dubai to introduce a standard property contract

Dubai plans to establish a standard property contract, which would form the norm for all real estate transactions. This is being done with the sole aim of avoiding small print misleads.

A senior official at Dubai Land Department mentioned that having a basic contract would be the norm, and that it would be difficult for buyers and developers to wriggle out of contracts or add fine print to current contracts.

A senior legal advisor at Dubai Land Department, Emmad Eldin Farouq, said that it would provide a clear, transparent guide to the rights of both developer and buyer.

The contract is ready, and we are awaiting directions, Farouq revealed. These will be standard contracts, to be given for all properties.

The contracts will remain unaltered, whether completed or incomplete. Any contractual agreement will have to be simple, clear and transparent. There are too many small prints in contracts now, Farouq said.

There are chances that developer can make additions to any contract, as different developments have different regulations. But the basic contract will remain the same, said Assistant Director-General of Land Department, Mohammad Sultan Thani.

According to the Lawyers, the main points of contract will remain the same, but more clauses may be included. The Partner at Hadef and Partners, Michael Lunjevich, said the standard contract would be for completed properties, signed between the buyer and seller. But, an element of freedom is necessary in a contract. Therefore, it will have standard terms as per the market norms, and thereafter, any alterations will go to a separate section, to avoid any confusion.

A single basic contract will seem easier for buyers and developers, reducing the number of disputes.

Dubai's RERA, together with the Land Department are trying hard to make the real estate sector more secure, but, are insisting that there ought to be a large onus on the buyer to read contracts in full.

During the peak times, several investors entered Dubai market with the sole intention of purchasing property and concentrated less on the contracts, than they would otherwise do so in more mature markets.

"The contract should be clear, and people should read them carefully," Thani pointed out.

Salwan announces leasing of Al Khail Gate Phase II units

A property management company and a subsidiary of Dubai Properties Group (DPG), Salwan LLC, has announced leasing and special offers on about 5600 units at phase II of Al Khail Gate Community.

Al Khail Gate Community
Located in proximity to the arterial highways in Dubai, Al Khail Gate is an affordable housing community offering premium facilities to corporate and residential clients. With a range of leasing options, the Al Khail Gate development comprises studios, single, double and triple bedroom apartments. Ranging from Dh.35,000 per year and more, the apartments are available in various sizes.

The CEO of Salwan, Saeed Bushalat, said that the delivery of Phase II closely follows the successful leasing of Al Khail Gate Phase I of the development. Dubai has great need for affordable and convenient housing, and the company aims to fulfil the demand in these segments.

Within a year of establishment, the company portfolio has grown to 18,000 units and an additional 8000 properties would be available for leasing towards the end of this year. Within just three months following the launch, Salwan successfully leased out 3835 units at Al Khail Gate Phase I.

Salwan currently operates residential and commercial units such as the Cordoba Villas and Jumeirah Beach residence among several others.

Saturday, May 23, 2009

40 villas on the roof top of Mall of Arabia

About 40 new villas are being planned on the roof top of Mall of Arabia, the centre-piece of the project, due to be the largest mall in the world, revealed senior officials at Dubailand's City.

The Executive Director at the City of Arabia, Syed Khalil, agreed that with projects such as City of Arabia, the Falcon City of Wonders, Dubai Sports City and the Universal Studios, Dubai will bounce into the next level and will do better than many other American cities in terms of tourism.

Although not much of progress is seen in Dubailand these days, the construction work at City of Arabia is making steady progress. There are about 9200 piles in the mall section of the project, making it one of the largest piling projects in Dubai, said Alex Vacha, the Deputy Director-Projects.

Spreading across 20 million square feet, with a total built-up area of 40 million square feet, the whole project will be encircled by a six-kilometre, battery-powered monorail circles, which will eventually mesh into Dubai Metro network.

The Mall of Arabia will be the largest mall in the world in terms of saleable area, with the first phase alone being 30 to 40 percent larger than Dubai Mall. The Mall of Arabia will include about 1400 retail outlets, spread across 10 million square feet of Gross Leasable Area (GLA). The mall will be home to several big anchor stores, and is due to be ready towards first quarter of 2011.

A residential and leisure venue, Wadi Walk, which includes restaurants, cafes and a six-kilometer stretch of water-way can carry people into mall on boats.

Attached to the Mall of Arabia is Restless Planet, housing 107 animatronic dinosaurs, designed by Steven Spielberg himself, who was also the man behind the movie Jurassic Park. Few of the dinosaurs are ready in Japan and are awaiting their flight to Dubai. One of the dinosaurs is about 16metres high.

Other features included in the theme park are the world-renowned Natural History Museum in London.

The development also includes about 8500 apartments, 34 towers for mixed-use purposes and seven to eight hotels.

Friday, May 22, 2009

Sweet Homes property prices un-affected, despite recession

A leading real estate developer, Sweet Homes, is maintaining the prices of its property units, despite the current recession in the global economy.

At present the company's apartments in Ajman Uptown, are being sold at Dh.600 per square feet, and the company is taking all necessary measures to ensure timely delivery of its projects and to leverage the expected recovery of the market and the UAE economy as a whole.

The CEO of Sweet Homes, Fahad Sattar Dero, said that maintaining the current prices of properties is a strategy which is considered appropriate amidst the current market developments, which indicates a recovery from the current crisis.

The recession in the market has made investors more demanding than before, and this motivates the company to intensify our efforts so as to ensure that our clients gain considerable returns on their investments.

This is evident as the company had recently entered into agreement with Dubai Islamic Bank for the escrow accounts of both of the projects. It is making good progress on the Sweet Home Rainbow Towers project, which is due for completion by 2010.

Thursday, May 21, 2009

Tamweel to begin sale of re-possessed properties

The largest home-lender by volume, Tamweel, is also the first to sell re-possessed properties on completion of legal formalities.

Due to legal uncertainties, mortgage lenders were hesitant to hold forced sales or auctions during the past, as the system has never been tested. Instead, the lenders have negotiated with distressed mortgage customers to try and recover some capital to avoid costly legal proceedings.
According to Mohammed Sultan Thani, the Assistant Director General at Dubai Land Department, no repossessions have been completed by UAE banks, which would oversee the sale of any re-possessed properties under the Mortgage 2008 Law. The banks are seeking to resolve things on their own.

The Chief Executive of Tamweel, Wasim Safi, said that Tamweel would go ahead with the next step of disposal of properties, after completing the legal procedures of foreclosure. In fact, Tamweel has already begun foreclosure process for few customers, Saifi added.

He agreed that a growing number of mortgage customers were behind with payments. Amlak and Tamweel account for more than half of the mortgage market in the country, worth about Dh.35bn. The rest Dh.25bn is divided among Abu Dhabi Commercial Bank, HSBC, Emirates NBD and Standard Chartered and several smaller players.

Both Amlak and Tamweel had stopped new mortgage lending in November, when trading in their stocks were suspended. They will shortly receive approval to restructure and secure their financing within a few weeks, revealed Sheikh Khaled bin Zayed, Chairman of Tamweel.

Bonyan International plans hand-over of 1000 units in 2009

Bonyan International Investment Group, a leading real estate company in Dubai, has announced that it will deliver about 1000 property units by the end of second quarter of this year.

The developer revealed that three of its projects Dubai Gate 1, Sharjah Gate Tower and Abbco Tower have been already sold to investors.

Currently, all three projects are in its final stages of completion. The developer is finalizing the legalities for Abbco Tower and Dubai Gate 1, while the Sharjah Gate Tower is undergoing construction.

Located in the Al Nahda area, the Sharjah Gate Tower is all set to be one of the tallest towers in Sharjah. It comprises 42 storeys, with luxurious double and triple bedroom apartments, a basement, nine parking storeys, a pool, a gymnasium and two service floors.

Abbco Tower is another Sharjah-based project, offering affordable studios, single and double bedroom apartments overlooking the city and an array of state-of-the-art facilities.

Strategically position in the heart of Dubai, the Dubai Gate 1 is a 35-storey tower, which include comfortable and stylish single, double and triple bedroom apartments.

The Vice Chairman of the Board at Bonyan International Investment Group, Anas Atatreh, said that the company plans delivery of 1000 property units within its project portfolio, particularly at present when developers are facing hurdles in completion of their committed projects.

Few other projects by the Group are the Lulu Tower, Rose Tower and Dubai Gate 2 amongst others.

Tuesday, May 19, 2009

More than 200 project constructions on-the-go in UAE

The UAE construction industry, with more than 200 projects on track, due for completion towards first half of this year, totals to more than that for the whole of last year. A total of only 184 projects have been completed last year.

About 135 projects have been completed during the first quarter of 2009, with about another 70 to be completed during the second quarter, said industry analyst, Proleads.

According to Proleads, only 2.4 percent of the 1289 UAE construction projects, worth $1.28 trillion, which were in progress during the beginning of the year, have been cancelled. This implies that around 30 projects have been cancelled.

Prior to global financial crisis, both investors and speculators wanted to be a part of the Dubai property boom, and were looking for investments. But now, investors are seeking only those projects that have been completed, and have facilities.

EFG-Hermes, in its recent property report, however, said that project cancellations and delays are necessary for the market.

The Dubai Land Department is current reviewing several projects in Dubai and about 500 developers will determine the projects that will go ahead. The Chief of Dubai's RERA (Real Estate Regulatory Authority), said that a special committee was considering 27 projects that may be cancelled.

Salwan successful in leasing out Phase I of Al Khail Gate

Al Khail Gate Community
Salwan LLC, the leading property management company, also a subsidiary of Dubai Properties Group (DPG) has successfully leased out the First Phase of its Al Khail Gate Community, and is due to release Second Phase shortly, due to unprecedented interest from clients.

Located along Al Khail Road, the Al Khail Gate development is an affordable housing community located centrally, offering all possible amenities to its residential and corporate clients.

Following three months of launch, Salwan has successfully leased out 3835 units at the development, and is offering pre-leasing options to the clients interested in second phase of the development.

The CEO of Salwan, Saeed Bushalat, revealed that several corporate clients have shown interest in the Al Khail Gate Community, and are planning to extend the offering to wider community with the launch of second phase, which will bring in an additional 5600 units into the market.

Offering a range of leasing options, the Al Khail Gate development units include studios, and single, double and triple bedroom apartments. Starting from Dh.35000 per year and upwards, the apartments are available in various sizes.

With a growing portfolio of properties across Dubai, Salwan offers a range of residential and commercial space for lease. At present, Salwan owns and manages about 14,000 residential and commercial units in various locations around Dubai, including Jumeirah Beach Residence (JBR), Mirdiff, Cordoba Villas, the Office Park at Dubai Internet City and The 558 Community at Dubailand.

Dubai RERA plans global expansion

The Dubai RERA (Real Estate Regulatory Authority) plans to expand internationally and serve as an international real estate reference point, with the abbreviated name Menares, officials announced here yesterday.

Menares is the abbreviation for Middle East and North Africa Real Estate Society, and has already been a part of several international property bodies.

The Director-Real Estate Development Department at RERA, Mahmoud Al Burai, said "We are almost in the final stages of establishing Menares. We aim to build a professional real estate market and are serious about being on the top, globally."

RERA is a member of the five organizations controlling the real estate issues across the world, including International Real Estate Federation (FIABCI), the Royal Institute of Chartered Surveyors (RICS), the World Association of Valuation Organization (Wavo), the Asian Public Real Estate Association (APREA) and the Urban Land Institute (ULI).

RERA and Al Burai plans were in-line with that of H.H. Shaikh Mohammed Bin Rashid Al Maktoum, the Vice President and Prime Minister of UAE and Ruler of Dubai.

Although Menares will only serve as a 'reference body' rather than a regulatory one, Al Burai agreed that the authority will be "happy to assist" any country in the region with its own property regulation framework.

Al Burai agreed that all are focusing on Dubai, and using RERA as reference. Menares aims to encourage real estate education, real estate practices and professionalism.

The actual details of collaboration with other organizations are still being discussed.

Sunday, May 17, 2009

Risk factors for Middle East property sector

The major risk factors for the Middle East real estate sector this year, is the uncertainty of markets and continued fallout from the global credit crisis. The market volatility and negative surprises arising out of the credit crisis are the two major risk factors for property sector this year, according to a poll by Ernst & Young and Oxford Analytica.

The poll involved more than 100 analysts speaking about the top business risks threatening global firms in this sector. The top ten risks were rated for global business 2009. The other risk factors apart from the said are - the inadequate infrastructure, global war for talent, changing demographics, pricing uncertainty, inability to exploit global and non-traditional opportunities, green revolution, sustainability and climate change, economic vulnerability and regulatory risks in developing markets and volatile energy costs.

In the Middle East, the property sector also faces risks arising due to economic vulnerability and regulatory risks.

Those polled also said business growth plans should take into consideration the shifting demographics to determine the location, and funding of the project. The growing middle class, for instance, will lead to demand for basic services, including education, and create demand for tourism and leisure infrastructure. The unbalanced surplus luxury properties will continue in this sector, as long the regional players factor in the rise of growing middle class with a liking for affordable housing.

Saturday, May 16, 2009

Sherwoods announces property auction on 4th June '09

Sherwoods, the leading Property Consultancy, will hold its first public sale, comprising more than 50 properties on 4th June 2009, aiming to create a platform to trigger transactions.

The Managing Director of the Company, Iseeb Rehman, said that transactions would continue irrespective of the price, as long as the buyer and the seller are willing.

This will bring some mobility to the market, and also help in creating a transparent, fast transaction process that would seem attractive to buyers, he added.

The properties on the go, include villas, apartments, plots, offices and retail space. The auction will happen during the Worldwide Property Show, due to take plae next month. Sherwoods will also hold a charity auction, and the proceeds will go to the Dubai Special Needs Center. A reserve price will be kept for all properties, and this will be in tune with the present market levels.

Property auctions are the latest hit in Dubai property sector. During the recent weeks, both sales and rentals have eased in Dubai, with several tenants upgrading their property, and many still seeking to purchase and take advantage of lower prices. If the rents in Dubai continue to remain low enough, to compete with the global market, the companies are more likely to consider Dubai as the right place to relocate their staff.

Thursday, May 14, 2009

RERA confirms the new rental index

The rental calculator on Dubai's RERA (Real Estate Regulatory Authority) website is the new rental index, the RERA officials have confirmed.

During recent weeks, there has been lot of confusion about the rental index. The original rental index was released during end of 2008, but the rates were on the basis of mid-2008 rates, and hence were unrealistic.

A revised index was due during April-end, but the rental calculator was installed unannounced on RERA's website. However, the rental calculator is actually the new rental index.

Bin Galita said the new index is good and more trustable. Beginning January, all disputes coming in to the Rent Committee will be judged on the basis of the current index. Contracts signed from January to March and also previous contracts have all been taken into consideration. The calculator index has been compiled using data from the Ejari website, and after discussions with management companies, agents, and checking listings and site surveys.

The next index is expected to be released in September, after summer. RERA will also share its extensive database with Ajman's ARRA (Ajman Real Estate Regulatory Agency). The federal laws too will be unified, when the same database is shared. Agents in Ajman wishing to market in Dubai will be registered with both ARRA and RERA, Bin Galita said.

Previously agents in Dubai could market in Ajman without being registered there and vice versa. This practice may no-longer be permitted, as agents will have to register in both emirates if they want to market in both Dubai and Ajman.

Dubai likely to scrap 27 projects

The Head of RERA (Real Estate Regulatory Agency) in Dubai, Marwan bin Ghalita yesterday revealed that Dubai is considering cancelling 27 projects.

The decision about this issue would be taken by the end of the month. The projects likely to be scrapped off include third party projects handled by sub-developers that are scattered across Dubai.

Ghalita revealed that 25 percent of projects will be cancelled in Dubai, owing to global economic turmoil. Last week the RERA and Dubai Land Department had established a committee to cancel projects in the emirate that are not feasible.

Prices of properties dropped 41 percent during the first three months of the year, as per the report by Colliers. The drop in property prices has already led to project cancellations in the region, worth billions of dollars.

More than half of the construction projects in the UAE are worth $582bn and more. These have been put on hold currently, either following a request from developers to cancel projects or, due to complaints from project investors.

Wednesday, May 13, 2009

Dubai, Ajman property agencies plan unified strategies

The Dubai RERA (Real Estate Regulatory Agency), together with ARRA (Ajman Real Estate Regulatory Authority) has entered into a joint-agreement to develop a unified strategy to develop the property sector.

The agreement underscores the need to build a unified strategy to develop, organise and modernize the activities pertaining to real estate, including developers, brokers and property management companies, and the workforce of such companies. The agreement also emphasizes the importance of strengthening the co-operation ties between the two organizations.

The agreement was signed by Marwan bin Ghalita, the CEO of RERA and the Director-General Omar Al Barguthi of ARRA, in the presence of Sultan bin Butti, the General Manager of the Land Department.

The agreement signifies a major step ahead in the real estate sector. It focuses on developing a unified vision in developing, updating and streamlining all real estate activities, companies and individuals working in brokerage offices and real estate management.

The Bin Ghalita said that apart from the said, the agreement will regulate the work of brokers and real estate advertising between the emirates, in addition to establishing a unified database in Dubai and Ajman with all necessary information pertaining to the brokerage business, real estate development and management.

This agreement re-iterates the strong relationship between ARRA and RERA, said Al Barguthi.

Monday, May 11, 2009

Ajman to announce sales price index for freehold areas soon

Ajman is on its way to introduce a sales price index for freehold areas in the emirate towards the end of the year, followed by a rent index.

The Director-General of ARRA (Ajman Real Estate Regulatory Agency), confirmed the launch of sales price index for freehold areas this year, and said that the prices of the properties will be determined on the basis of supply and demand.

Established in January this year, ARRA has been introducing measures to regulate the emirate's property sector. The agency said that developers who failed to meet the registration deadline on 1st May 2009 will be liable for a fine of Dh.100,000 per month.

Dubai's RERA was the first regulatory body in the UAE to announce a rent index in January, as a reference point for rent regulation.

The Associate Director of CB Richard Ellis Middle East, Matt Green, said that the creation of a price index in Ajman is a good positive sign. The declining real estate and economic situation in the emirate has had a big negative impact during the past nine months, and this will go a long way in instilling confidence in the Ajman market.

The index released by ARRA reflects the true market status, so that landlords, investors and end-users have the necessary tools to make good decisions in a market where the transparency levels are low, he added.

Green pointed out that transparency is on the increase in the UAE, with few initiatives from the government which has helped in the flow of information into the public. The trend is likely to flow into other emirates too, during the year, and more regulations will be passed which will help in further evolution of the local property market.

Saturday, May 09, 2009

Dubai and Ajman to merge property database

The property watchdogs in Ajman and Dubai have got together to identify the blacklisted developers and agents, and hence have agreed to co-ordinate data in both emirates.

An MOU to this effect was signed between ARRA (Ajman Real Estate Regulatory Agency) and Dubai's RERA (Real Estate Regulatory Agency).

The Chief of Dubai RERA, Marwan bin Ghalita, said that "We will share the same database of agents and developers. If any developer is blacklisted in Dubai, it will also be reflected on their database, and they will be aware of it."

This move follows receipt of complaints that estate agents were working in both emirates, but have been registered with only one.

"We will regulate this kind of activities between the agents too. The establishment of common database will give developers and regulators and investors a clear picture of the market" Ghalita said.

The database will be made available online for people to view. The database is almost ready and will be released soon, said Omar al Barguthi, Head of ARRA.

Burj Al Alam contract to be awarded within four weeks

The main construction contract for the Burj Al Alam, the 501-meter tall commercial tower at the Business Bay district of Dubai, due to be one of the tallest buildings in the world, will be awarded within four to five weeks.

The Sales Co-ordinator of the project at Fortune Group, Muhammed Athar, said that the company is carrying on the final stages of negotiation with contractors, but declined to reveal the names of the firms who had been bidding for the deal.

About Dh.1bn had been kept aside from the original budget, and the construction is now likely to touch Dh.3bn. This is mainly due to lower building material costs, and the contractor for the project would be announced within five weeks, Athar said.

Athar also pointed out that the finances would be managed by the company's own resources, although other sources may be considered, if required.

Launched in 2006, Burj Al Alam was more than 50 percent sold. The foundations work was done by Middle East Foundations and is now complete. The tower, as per the scheduled, will be ready by the first quarter of 2012.

Thursday, May 07, 2009

More details about multiple-entry visa revealed

The multiple-entry visas for property owners can be renewed just after their exit from the country, clarified the officials at the Interior Ministry yesterday.

Earlier, the property owners were eligible to renew their visas, under the condition that they stay away from UAE for minimum of one month. Early this week, the Minister of Interior, Lt. Gen. Shaikh Saif Bin Zayed Al Nahyan, issued a decree permitting expatriate property owners to obtain multiple-entry visas for six-month validity, provided, the owners met the criteria required to be eligible for the visas.

This rule has been made applicable to all of the emirates, provided, the property in question is worth Dh.1million or more, and should be wholly owned by the investor seeking visa. The property should also be ready for the investor to move in, and the investor should earn a monthly income of Dh.10,000 or more, or the equivalent in foreign currencies.

The visa can be renewed any number of times, without any waiting period, although the visa holders cannot stay in the country for more than six months at a stretch. After staying in the country for six months, the investors will have to leave the UAE before renewing their visas.
Further, the law also emphasizes that the apartment/villa should be capable of comfortably accommodating the family of the investor. The investor will have to obtain the title of the property from the Registration Authority in the respective emirate.

With this rule getting effective, the earlier trend of leasing of properties for up to 99 years, with the promise of residence visas, as advertised by few developers, stands nullified.

Dubai, leading FDI destination in the region

According to a special report by the Financial Times, Dubai has been ranked as the topmost destination for Foreign Direct Investment (FDI), even surpassing London and Shanghai.

The UAE continues to be on the forefront in the MENA (Middle East and North Africa) region, accounting for 50 percent of the total projects happening in the region.

Being the top destination for FDI in 2008, Dubai has had a total of 342 projects, with $21billion worth of capital investment, making way for 58,000 new jobs. UAE is the leading destination for FDI in the region, with 480 projects, with a capital expenditure of $35bn, creating about 87,000 new jobs last year.

According to sources, the total number of FDI projects in the Middle East alone, have amounted to 969, creating 237,000 jobs with a capital expenditure of $154bn.

The Governor of Dubai International Financial Center and Vice Chairman of the Central Bank of UAE, Dr. Oman Bin Sulaiman, said that the number of projects initiated, the jobs created and the capital investment, are all sufficient proof of the economic strength of the country.

It is a remarkable achievement for Dubai, to be the leading city in the world for FDI, and we are committed towards continuing to demonstrate the benefit of investing in the UAE and Dubai, Dr. Sulaiman said.

Wednesday, May 06, 2009

Dubai free zones record significant drop in rent rates

With the drop in demand owing to global economic crisis, rents for office spaces in Dubai Free Zones have also dropped considerably, noted an industry analyst.

The Research Analyst at CB Richard Ellis, Mohammed Faheem, said that the average rates of privately managed buildings in the free zones have dropped from the Dh.240-380 per sq ft range, to Dh.92-180 per sq ft during the first quarter of this year, thereby indicating a 52 to 61 percent drop.

This is a clear indication of decrease in demand. The free zones included in the survey were the Media City, Internet City, Dubai Silicon Oasis, Knowledge Village and Jumeirah Lake Free Zone.

Rents within the various zones vary from one another with few zones implementing rate restrictions to stimulate demand from occupiers. The buildings managed by free zone authorities have rents in the range of Dh.170-190 per sq ft.

The Dubai International Finance Center (DIFC), the special economic zone located in the central business district of the city, has fared much better, standing out above the rest of the prime locations in Dubai, with average rents ranging from $115-123 per sq ft. This is mainly because DIFC is a popular location among companies seeking to move in to Dubai.

Although, the lower rent rates in few of the free zones in Dubai, makes it more attractive, it really depends on the motive of the free zone managers. The rents are affected within the free zones mainly because the authorities have a different agenda than the commercial landlords, says Nicholas Maclean, Managing Director, C B Richard Ellis.

Damac announces Dh2bn worth construction contracts for 2009

Damac Properties has announced plans to award Dh.2bn worth construction contract this year, with an aim to deliver an additional 7100 units by the end of next year.

Damac also announced successful completion of 500 storey across all its projects in Dubai.

The Chairman of Damac Holding, Hussain Sajwani, said "Our focus for 2009 and 2010 is construction and delivery. We plan to give away Dh.2bn worth contracts for construction of ten new projects. Damac has already achieved a milestone by completing 500 floors of residential, commercial and retail units so far, and we plan to double this number soon."

Last year, the company had awarded Dh.2.5bn worth of contracts. This year, majority of the contracts awarded will be main contracts.

Damac has already delivered about 2300 units during the past six months and is considering an aggressive delivery plan during the next two years. This includes plan to deliver 25 towers by the end of 2009.

The developer is currently focussing on full-fledged construction. Damac has already completed enabling works at the Lincoln Park at Arjan, Dubailand. The XL Tower at Business Bay has reached the third storey, while the Smart Heights has reached half-way point of construction at 15 floors. External cladding and painting has already begun at Emirates Garden in Jumeirah Village, while the company has completed the enabling works for Executive Bay development at Business Bay.

Monday, May 04, 2009

Multiple entry visa for property owners in UAE

Property owners can now enter UAE on a multi-trip entry visa, which permits them for a stay of up to six months, according to a new decree issued by the Interior Ministry.

This move is hoped to improve the local economic environment and offer all fundamentals that would help ensure prosperity and economic growth in the country. The multiple-entry permit can be renewed under certain conditions.

The regulation forms a part of the efforts by the UAE government to introduce adequate regulations to boost the local economic sector and offers all factors that aims to contribute to the growth and prosperity of the local markets and be of benefit to the public.

This initiative would benefit people seeking to bring in their families to the UAE, and this emphasizes the keenness on the part of the government to provide them with family stability.

A new clause has been added to the Article 33 of the new regulation, which states that owners of built-in properties are allowed to stay for a six-month period, after which, the owner can depart to his home country or stay in any of the GCC countries. He can however, enter the country again, after meeting the necessary criteria.

Another new article of the new regulation, states that the owner must submit a multi-trip entry visa, with respect to the property, under the following conditions.

  • The property should be a built-in property, and should not include owners of vacant lands.
  • The title of the property should be obtained from the Property Registration Authority in the emirate, by the owner. Also, the house or the apartment should be wholly owned by the owner.
  • The cost of the unit should not be less than Dh.1million. The unit should have the capacity to accommodate the members of the family. The owner can include his spouse and children's details in the visa application, and attach an insurance cover for himself and his family, which would be valid during he period of their stay in the country.
  • The fixed income of the owner should not be less than Dh.10,000 or its equivalent in foreign currencies, whether inside or outside the county, although the visa doesn't offer the owner the right to work within the country.

The permit would be considered invalid if any of the above terms are not met. The regulation would be effective from its date of issuance.

Deyaar to commence Flamingo Creek construction within weeks

Flamingo CreekThe delayed residential project by Deyaar Development, the Flamingo Creek, will commence construction within few weeks.

The project will be the first to be completed at The Lagoon, a development, including seven artificial islands, along the Dubai Creek, launched by the master developer Sama Dubai in 2006.

Deyaar undertook Flamingo Creek project from a subsidiary of the National Bond Corporation last July. The Chief Executive of Deyaar, Markus Giebel, said that the fencing contract has been awarded and the work would begin soon.

However, the confusion still remains about whether management of The Lagoons will be done by Dubai Properties or Sama Dubai, both of whom are a part of Dubai Holding Group. Currently, Deyaar is carrying on talks with RTA and DEWA for the infrastructure of the project.

Deyaar recently announced a Dh.54.4mn profit for the first quarter of this year, although it is a decline of 73 percent from the same period of last year. Deyaar also plans to sign deals for overseas projects this year in India, Libya, Saudi Arabia and Kazakhstan.

Sunday, May 03, 2009

Omniyat signs partnership deal for leasing services at Business Bay

Omniyat Property Service (OPS), an arm of Omniyat Asset Management has entered into a strategic partnership with leading leasing service providers for major projects at Business Bay.

Omniyat is the first company to lease in Business Bay, the major accomplishment by Dubai, announced Mehdi Amjad, the Chairman and CEO of Omniyat Properties.

The company will deliver two major projects, namely, One Business Bay and Bayswater, worth a total of Dh.1billion. OPS, together with Jones LangLa Salle and CB Richard Ellis Limited-Middle East, guarantees unique leasing solutions to address the individual needs of owners and tenants in Omniyat.

The partnerships ensure that the development attract tenants from markets all over the world and ensures higher occupancy rates in the buildings. Moreover, the rent-free incentives, fit-out offerings and international standard of property management will help in attracting quality tenants.

With six commercial developments in the master plan, the OPS team is the first to deliver the new Central Business District in the region. Being the only company with leasable space in Business Bay, the partners will help in establishing standards for lead market research on vacancy rates and lease rates and pipeline stock.

The Director and Head of Agency Mena at Jones Lang LaSalle, Matt Hammond, said that great emphasize is being laid on customer service and Jones Lang LaSalle will help in finding the right fit for each tenant and owner through innovative deal structures, by bringing the right people together.

Saturday, May 02, 2009

RERA's new Rent Increase Calculator helps in stabilizing rents

Dubai Real Estate Regulatory Authority (RERA)'s website now includes a new Rent Increase Calculator, which halts any uncertainties prevailing in the real estate market.

The calculator has helped reduce the maximum rental increase in few localities, and the rents have now decreased by nearly 50 percent. In order to control spiralling rent rates, RERA had introduced a rental index last year. This year's index is yet to be released.

The calculator limits the maximum rents for all locations in Dubai. A triple bedroom villa in Barsha has a ceiling of Dh.140,000 down by 50 percent from Dh.270,000, compared to rental index of 2008. Similarly, a triple bedroom villa at The Springs now has a ceiling of Dh.160,000 in place, compared to Dh.280,000 fixed last year.

Even Al Karama witnessed a drop of 25 percent (from Dh.280,000 to Dh.135,000) for a triple bedroom apartment. In Garhoud, rents dropped to Dh.105,000 from Dh.240,000, marking a 56 percent drop.

Rents in the Mirdif area are down by 42.5 percent from Dh.20,000 to Dh.115,000 for three bedroom villas. The Managing Director for MENA (Middle East and North Africa) region for Jones Lang LaSalle, Blair Hagkull, said that housing affordability is utmost important for continued growth and competitiveness in Dubai.

The downward pressure on rental rates for mid and long-term is a positive indication, although it has implications for future projections of landlords, he said.

Meanwhile, the global real estate consultancy, Colliers International, in their study said that Dubai has seen a rental drop in residential units by 20 to 40 percent, since the last quarter of 2008.