Tuesday, March 30, 2010

Dubai property market indicates signs of equilibrium

The latest Property Beat report by HC Securities and Investments reveals that the market indicates initial signs of 1 percent stabilization in January, and 6 percent in February.

Following nine months of decline, the Dubai rental prices actually stabilized in November last year, recording strong gains until February, with a 6 percent increase month on month.

When compared to figures during the same period last year, the market is going through a phase of stabilization, and stabilized rental and sales prices are all positive indications, the report said.
However, the demand-supply formula cannot be underestimated. It has to be cautiously looked into, considering what is in pipeline, the projects to be announced and those that will be cancelled, warns Mohanad Al Wadiya, Managing Director, Harbour Real Estate.

According to the report, the increases in prices were initially attributed to growing supplies. The report indicates that the areas that saw maximum deliveries, also witnessed major price declines, wherein the Downtown Burj area recorded a 5 percent drop and Dubai Marina recorded 10 percent decline.

The report forecasts greater solidity in rental and sales rates for the year 2010. The report states that the spillover from neighbouring emirates (mainly Abu Dhabi) helped rental rates in Dubai further last year.

The report also said that mortgages have continued to tighten ahead of Dubai World debt re-structuring proposal. The mortgage volumes dropped to 11 percent in February from 25 percent in September.

The report said that re-structuring of Nakheel controls almost 50 percent of expected supply, and this may lead to further project delays and cancellations fuelling sector dynamics. But, with recovery in global economy and stronger growth shown by UAE this year, there is likely to be increased demand.

Dubai Government to inject $9.5bn into Dubai World Group

The Dubai Government has committed itself towards injecting $9.5bn into the Dubai World group, to help pay off $14.2bn worth debt to creditor banks.

If the debt-restructuring proposal by the Dubai World is accepted by its creditors, it would serve as a welcome boost to Dubai real estate sector.

The Chairman of Dubai Supreme Fiscal Committee, Shaikh Ahmad Bin Saeed Al Maktoum, said that the Dubai Government is taking decisive action to meet the challenges pertaining to global economic crisis and to build a foundation for strong and balanced growth in future.

The Dubai World has put forth proposals yesterday offering full loan re-payment to creditors in a period of five to eight years, and 100 percent repayment of real estate developer Nakheel's 2010 and 2011 bonds.

The support comes largely from the $10bn offered by the Abu Dhabi Government last year, and by the internal resources by Dubai Government, said a Government Statement.

Nakheel will be re-capitalized by $8bn, with $1.2bn debt-forequity swap, which also forms part of the initiative to take the property developer off the hands of Dubai World, and place it directly with the government.

It will also pump $1.5bn into Dubai World, as part of re-capitalization, which would include $8.9bn debt-for-equity swap.

The government injection is subject to the proposed plan being approved by 97 creditor banks. Discussions are likely to take weeks, as Dubai World secures the deal.

Speaking on the proposal, the chief re-structuring officer of Dubai World, Aidan Birkett, agreed that the plan will offer Nakheel a stable financial footing, enabling it to meet outstanding obligations to customers and continue its role in the ongoing development of UAE real estate market.

The market yesterday welcomed the announcements with the Dubai Financial Market increasing 4.31percent, the highest in recent weeks.

Friday, March 26, 2010

New rental law unlikely to affect rent levels in Abu Dhabi

The new rental regulation is unlikely to leave a significant impact on rent levels in Abu Dhabi in the short-term, but in due time, it will help in bringing down rents, a report said.

One of the leading real estate consultancy companies in the Middle East, Landmark Advisory, has issued its March lease guide for the Abu Dhabi market. The report was compiled together with LLJ Property, a leading real estate agency in Abu Dhabi.

The guide shows further decline in the capital, but the Director of Research and Advisory Services at Landmark Advisory, Jesse Downs said that even before the amendment in the rent law, it was predicted that lease rates in Abu Dhabi would gradually decline in 2010.

However an adjustment phase is expected when the rents are likely to remain static, but the actual rents will continue to decline, she said.

The report revealed that after a fall of 10 to 15 percent on an average during the last quarter of 2009, apartment rents in the Capital have continued to show its negative trajectory with another 5 to 10 percent decline.

According to Andrea Menown, Leasing Manager, LLJ Property, low quality apartments showed an average decline of 5 percent in January and February 2010. But similar units in certain areas such as Muroor and Tourist Club Area showed a decline of up to 20 percent.

However, rentals in off-island communities such as the Mussafah and Khalifa City areas are more buoyant than the on-island communities such as City Center and Muroor. This difference could be largely because the off-island communities had already experienced major decline in rents during the previous quarters and the rents are now very affordable.

As for the villas, rents are continuing to adjust. After an average rent decline of 10 to 15 percent in Q4 to Q9, average rents fell another 5 percent during the first two months of 2010, the report said.

In the case of villas, on-island villa rentals seem more resilient than off-island villas, where there has been a 5 to 10 percent decline in rentals, particularly in communities such as Khalifa City A, Golf Gardens and Al Reef.

In the case of commercial rentals, a decline of 10percent on an average was recorded during January and February, while areas such as City Center, Al Nahyan Camp and the Corniche, recorded a 20 percent decline.

The demand for offices is more for smaller units, as people are not willing to commit to large office spaces. Majority of demand for large office space is linked to government bodies or government-related companies.

With more supply entering the market, an adjustment phase is expected when the landlords will bring their expectations on par with market fundamentals, between Q4 of 2010 and Q1 of 2011, when the new law takes effect, the report said.

Tuesday, March 23, 2010

Reduction in litigation cases in Dubai realty sector

Litigation cases in Dubai's property sector have actually narrowed down following the aftermath of the property crash. Further, the new property law likely to be announced soon, will help in improving market transparency, further, revealed a lawyer at an international law firm.

Following the initial wave of claims, there has been a reduction in the number of court disputes, said Clyde & Co's Richard Bell.

With the developers making efforts to accommodate purchasers in the light of economic meltdown, including lowering selling prices, and offering installment payment options towards completion of projects, the numbers of litigation cases have reduced, he said.

Prices in the real estate sector of Dubai, which includes the world's tallest tower Burj Khalifa, had fallen by 60 percent from its peak in 2008, with billions of dollars worth projects being either cancelled or suspended owing to global economic recession.

The numbers of litigation cases were on the rise, and the Dubai-based contractors agreed that they owned millions of dollars by the state-linked developers.

However, a new legislation to be announced by the Dubai Executive Council, likely to be implemented in the market soon, will include provisions granting the Land Department the right to investigate delayed projects and determine the manner to proceed.

The new legislation will also include a set of criteria, through which a development would be assessed, and provisions enabling purchasers to terminate their contracts under certain circumstances.

According to Bell, such a law aims to bring in more clarity about projects that are not making progress.

The Land Department and Dubai's RERA (Real Estate Regulatory Authority) are taking measures to strike a balance between purchasers and developers.

This, followed by another decree that regulates ownership of industrial and commercial plots granted to UAE nationals, will help in improving market transparency, the main factor in attracting investors who continue to shun Dubai property sector favouring more mature stable markets.

Bell pointed out that transparency is improving in Dubai real estate market, which is way ahead of several other Middle East markets. The Land Department is one among the more transparent government departments.

"The Land Department is listening to purchasers. Probably not as much as purchasers would like, but it is surely trying to catch-up with market conditions as they actually are," he concludes.

Monday, March 22, 2010

Union Properties announces assets for sale

Union Properties has expressed its willingness to sell any of its projects, if it receives a reasonable price, the Chairman of Union Properties revealed.

Being the third-largest developer in the UAE, it has been hit by the global economic recession, which had led to fall in property prices within the emirate by up to 50 percent from their peak in 2008.

The developer has received offers for its Ritz Carlton Hotel in Dubai, which, the Company is planning to sell for Dh.1.5bn ($408.4mn).

The completed projects of the Company have met their investment targets, and therefore it is not alarming when the company offers them to investors for sale, particularly, when there are other major projects by the company that are underway, said Khalid bin Kalban.

The buyers are mostly investment companies or individuals seeking to purchase completed and rented properties with an income of 7 to 8 percent, he said.

The funds, so collected from asset sales will be utilized to repay financial commitments and to finance other property projects that are in progress, Kalban said.

Union Properties had recorded a quarterly loss for the third time in a row, on provisions for contracting and property revaluation. The company currently has an outstanding debt of Dh.6.5bn, out of which Dh.2.8bn had been re-scheduled for payment to 2011 from 2009, with the reminder maturing the long-term.

Saturday, March 20, 2010

Dubai will remain Hong Kong of Middle East

The real estate market in Dubai will recover by end of 2011, with more easy access to mortgages and with increased population entering the city, revealed an official at the Dubai Pearl.

The Founder and Chief Executive Officer of Dubai Pearl, Santosh Joseph, when speaking during an interview, said that with Dubai property market having experienced a slump following global economic crisis, and with the selling prices having fallen by more than 50 percent, and with $300bn worth of projects being cancelled, Dubai Pearl is now depending on the $1.5bn paid-for apartments in advance, and another $500mn committed by Al Fahim Group.

Dubai Pearl is constructing four 73-storey towers, linked together with a single roof, and has the same name as the company. The main structure will be surrounded by an artifical beach and other low-risers, apart from malls, theaters and major hotels. The project was due for completion by 2013.

However, the onset of property crisis, prompted Dubai Pearl to review its project and include health and entertainment components to its design. The company also re-negotiated terms with buyers, such as offering longer payment schedules, to reduce instances of defaults.

Joseph said that there may not be much improvement in 2010 or 2011. Real estate cycles are usually three years peak-to-peak, with the best locations bouncing more quickly.

Meanwhile, the Chief Executive of KM Properties, Sanjeet Joher said that although the growth has slowed down considerably, certain trends in the UAE property market at present, will help in putting the market back to track.

Although, the growth in the market may not be the same as seen during the years 2007-08, keeping in mind the market value locally and globally at present, a more realistic vision needs to be maintained.

In the near future, supply will be restricted from 500 buildings to 200, and it will be delivered in a more staggering fashion, allowing the market to be more realistic. The prices too will be aimed at end-users and not speculators, Joher said.

According to Joher, one of the main issues faced by Dubai today is the lack of liquidity. The Tamani offices by KM Properties have 5 to 8 percent defaulters. Joher revealed that the company is assisting them on case by case basis, depending on their cash flow.

However, Joher has expressed confidence that Dubai will continue to do well. Being centrally located in the world, it was allowed to do well in the past, and this trend will continue in the future. Dubai will always remain the Hong Kong of Middle East, given its secure tax-free environment with good investment returns and infrastructure.

Friday, March 19, 2010

Business Bay to be the Business Capital of the region

The Business Bay will be the new business capital of Dubai soon, with several new buildings heading towards completion, to be delivered in the next two years, says Sanjeet Joher, Chief Executive of KM Properties.

When Business Bay is fully complete, the global attention will turn towards that area. Business Bay is already the prime locality in Dubai, with all businesses, tourist centers and governmental authorities focusing on Business Bay, Joher said.

Spreading across 5.85mn square meters, adjacent to Shaikh Zayed Road and Downtown Burj Khalifa area, the Business Bay development features a good blend of commercial and residential towers. The freehold development aims to be the business capital of the region, when complete.

One of the main reasons behind businesses choosing Business Bay as their preferred location could be due to the infrastructure, prices and lack of taxes that Business Bay offers. With majority of the population working in Diera, the Bur Dubai locality will gradually seek re-location to Business Bay, as the Bur Dubai area will be saturated.

KM Property currently owns three buildings that are under construction at Business Bay, with Tamani Hotel at Park Lane Office Tower, B2B Office Tower, and Tamani Arts Offices, all under construction. The buildings will be ready by 2011 of 2012, so as to coincide with completion of infrastructure in the Business Bay development.

The infrastructure of Business Bay is being built in phases. Other necessities such as electricity and water will be done by the time of handover of the projects. RERA and the Dubai Land Department are being contacted to get the product done at the scheduled time, Joher said.

Thursday, March 18, 2010

RERA mandates online registration of tenancy contracts in Dubai

All tenancy contracts in Dubai must henceforth be registered online with Real Estate Regulatory Agency (RERA). Landlords or tenants failing to do, will not be protected by the law, the officials at Dubai's RERA have warned.

The announcement is based on Law No.26 of 2007, which regulates the relationship between landlords and tenants in Dubai.

The tenancy contracts for all Dubai properties should be registered at RERA's new Ejari online portal, said a statement by the Agency.

Tenants failing to comply with the new ruling should make note that their tenancy agreements fall beyond the protection offered by the law, and the government agencies will not be in a position to enforce the provisions of the agreements that they enter into, the Agency said.

According to the Director of RERA's Regulatory Department, Mohammed bin Hammad, the new announcement will curb violations and malpractices happening in the rental sector.

The law aims to ensure that all tenancy contracts, and parties entering into such a deal are registered and their details recorded. This will help in increasing market transparency, and making Dubai market one among the best regulated markets, Bin Hammad said.

He also added that the online registration system will also help RERA in collecting an accurate image of Dubai rental market, which plays a crucial role in influencing the future of the sector, based on supply and price levels.

Wednesday, March 17, 2010

DIRC completes handover of Ritaj Phase I units

The real estate arm of Dubai Investments PJSC, the Dubai Investment Real Estate Company (DIRC) has announced completion of delivery of the Phase I units of Ritaj, the state-of-the-art residential complex, located at the Dubai Investments Park (DIP).

The apartments in the first phase of the projects have already been handed over to owners, while the work on the second phase of the project is currently under progress and on schedule for completion by April 2010.

According to the General Manager at DIRC, Obaid Al Salami, Ritaj was aimed to bring in quality residential space within reach of a wide cross-section of people, featuring a range of modern amenities offering a comfortably lifestyle for its residents.

Spread across a built-up area of 2,580,00 square feet, and covering 11 residential blocks, the first phase of the project comprises six apartment blocks with a total of 1426 units, including 1243 studio apartments, and 183 single bedroom apartments.

Residents here get to enjoy several amenities, including 24-hour concierge service, maintenance and cleaning. A major highlight of the project is a fully-equipped community center, with several amenities including green areas, children play areas, swimming pool, restaurants, jogging tracks, cafes, clinics, supermarkets, salon, pharmacy, and Mosque, all of which, would together turn Ritaj into a self-contained community.

The second phase of Ritaj, where construction is currently in progress, will offer 598 apartments spread across five blocks, with 100 studios, 264 single bedrooms, 194 double bedrooms and 40 triple bedroom apartments.

On completion, Ritaj will no-doubt, be the centerpiece of the the residential zone in DIP, said Al Salami.

Sunday, March 14, 2010

Burj Khalifa is officially the World's Tallest Building at 828mts

Burj Khalifa has been officially declared as the world's tallest building at a height of 828.00 meters by the Chicago-based The Council on Tall Buildings and Urban Habitat (CTBUH).

The non-profit organization, in its statement, revealed that CTBUH has received and examined detailed drawings of the Burj Khalifa submitted by Emaar Properties, and can now confirm the official building height at 828 meters, and the title of The Worlds Tallest Building.

When the building was officially announced completion on 4th January 2010, Burj Khalifa surpassed the World's Tallest (Taipei 101) by 320 meters, an unprecedented increase of 61 percent.

The Burj Khalifa represents four major trends, with respect to location, function, structural material and height, in the current tall building construction category.

The trend of the world’s tallest buildings was dominated by the North American continent until the 1990s. But two decades later, the trend moved to Middle East and Asia, due to the dramatic increase in tall building construction in these regions. The Burj Khalifa is the third successive World's Tallest located outside North America.

As for the function of the building, the Burj Khalifa is the first mixed-use building to hold the World's Tallest title and is inline with the current tall building trends. At present only 20 percent of the world's 100 tallest buildings are for mixed-use.

For several years in a row, steel was the material of choice for tall buildings. However, at present composite, concrete and mixed-structure construction is more prevalent in tall buildings. Only 24 percent of the world's 100 tallest buildings at present have a purely steel structural system.

The height of super-tall structures keeps increasing. The number of completed super-tall now stands at 44, up from 11 in the year 1990. The figure is hoped to increase considerably over the next decade, with 70 projects 300 meters or taller under construction internationally.

Burj Khalifa has also been rated as World's Tallest in the primary height category of Height of Architectural Top the Council confirms. Burj Khalifa has also surpassed previous record heights in the Height to Tip category and Highest Occupied Floor category at 829.84 meters and 584.50 meters respectively.

Apart from this, the Burj Khalifa also contains record-breaking number of floors, at 163. The observation deck also becomes the second highest in the world at 452.1 meters.

Thursday, March 11, 2010

New rule for offshore companies in Dubai

The Dubai Land Department will shortly announce a new legislation for offshore companies investing in Dubai Freehold market. This move aims to improve transparency in the market.

Due to lack of transparency, the Land Department had halted the transaction of offshore companies for a month.

The Director-General of the Dubai Land Department, Mohammad Sultan Thani, said that at present there are guidelines for offshore companies. A new set of regulations is now awaiting approval, and will be introduced by this week-end.

An offshore business company is one that is incorporated outside the jurisdiction of its primary operations. In the UAE, the Jebel Ali Free Zone Authority in Dubai and Ras Al Khaimah Free Zone offer offshore licenses.

Industry experts consider the new regulations as a welcome measure. The Managing Director at Jones Lang LaSalle, when speaking to the media, mentioned that the relationships between corporate units and regulators needs understanding of their issues, obligations and opportunities to strengthen their requirements for their companies to operate in Dubai and UAE.

There needs to be more transparency during these turbulent times, and understanding about the manner of doing business. A regulator can contribute its best to improve this clarity, and that will be well received, he added.

The registration of titles for freehold firms in the name of foreign offshore companies were suspended throughout the month of February, while the Land Department updated its system.

Effective February 1st, the new directive had instructed the transaction department not to register the titles in the name of foreign offshore firms. However, the ownership of properties registered in the name of foreign offshore firms prior to the said date remained unaltered.

UAE property market to see demand-supply balance this year

The UAE real estate market is likely to attain demand-supply balance this year, revealed a top official of Shaikhani Group, a leading business conglomerate.

The UAE economy is hoped to grow by 3.2percent this year, and therefore the Company revealed that it plans to go ahead with construction of all launched projects worth Dh.1.34bn.
The Shaikhani Group reported that construction work on its Champions Tower I (CTI), Champions tower II (CTII) and Champions Tower III (CTIII) is witnessing continuous progress.
The Company revealed that it has already completed 14 levels of CTI, and 8 out of 13 floors and 7 out of 15 floors have been completed for CTII and CTIII respectively. Moreover, it has completed 9 out of 10 storeys in Cambridge Business Center (CBC) project, its commercial venture in Dubai Silicon Oasis.

The company had earlier announced that it is speeding up the works on Gardenia I & II and Frankfurt Sports Tower I, and has already handed over major contracts to several reputed contractors.

The Company in its statement said that the Dubai Government is taking all necessary measures to bring back the real estate sector to its previous levels.

All the projects undertaken by the Shaikhani Group will be completed on time within specified timeframe, inline with commitment to our investors, Shaikhani said.

Sunday, March 07, 2010

Slashing of mortgage rates to boost UAE real estate market

Following high mortgage rates, the Banks and Finance companies in the UAE are finally reducing lending rates for homes, say analysts.

The Banks are relaxing their lending criteria, a measure expected to broaden the buyers base and boost the sagging fortunes of the real estate sector in the country.

Several banks have reduced their charges and have increased their loan-to-value ratio, since the start of the year, said Dean Biddulph, Senior Mortgage Advisor, Independent Finance, a Dubai-based company offering financial services.

Although this comes as good news to property developers, who are to release thousands of completed property units in the UAE market this year, the changing economic scenario has kept the lenders and borrowers focused on low-risk investments, with completed properties being their first choice of investment, says Faisal Iqbal, Head of Secured Lending Business, Barclays.

Among the lenders that have slashed mortgage rates for new and existing clients are Amlak, one of the largest Islamic mortgage providers. The profit rate of Amlak has dropped to 6.9percent for few of its existing clients.

Both Amlak and Tamweel are currently ready to lose part of their profit margin to gain the advantage of reducing their non-performing loan figures as much as possible. The companies believe that by slashing mortgage rates, the mortgage holders can keep away from missing out on their monthly mortgage payment.

Few other banks offering lesser mortgage rates are HSBC Home Finance, Standard Chartered UAE, and Mashreq.

Saturday, March 06, 2010

Investors concerned over Ivory Towers delay

Following the halt in construction of the long-delayed Ivory Tower, several property investors fear that they would lose money on their investments, reports The National.

Located in the International Media Production Zone (IMPZ), the Ivory Tower was completely sold off-plan in 2006. However, there has been no progress on the site, apart from the foundation works which began last summer at the site.

According to Khaled Mahmood, Consultant, Homes Real Estate, the project was stalled, as the investors had stopped paying.

The website of Sokook Investment Group, the developer of the project has also been closed and the message reads that the site is yet to be updated.

About 700 customers are said to have purchased units in the sprawling 20-storey Ivory Tower.

Mahmood said that he is to make a report to Sokook to check who is paying them and who isn't. People who have paid 30 percent or more of their money can wait until the construction begins, but people who have paid less than 30 percent are likely to be forfeited, he said, while adding that the construction of the tower is on hold in the first place, as only 10 to 15 percent of people have made payments.

Mahmood says that the feasibility report is being done to check the number of investors who are ready to continue with the project.

According to Mahmood, one of the options before the buyers, is to switch-over to other projects in Dubai that are completed or are nearing completion. However, this will happen only through agreements with other developers, as for Sukook, Ivory Tower is the only project in Dubai.

The original delay on the project was caused over a land dispute with TECOM investments, the master developer of IMPZ. The row was resolved only with the help of Dubai Land Department in 2008 summer.

Thursday, March 04, 2010

Nakheel begins delivery of Marina Residences

Nakheel has begun handover of the sixth and final tower of Marina Residences in the Palm Jumeirah and the residents will move into the new premises within weeks.

A Nakheel statement revealed that the phased delivery of Marina Residences located at the tip of island's trunk began late last year, with about 100 families taking occupancy.

The handover of Marina Residences is another major milestone for Palm Jumeirah, said Marwan Al Qamzi, the Managing Director of Nakheel Development Projects.

Marina Residences feature six residential towers that are a mix of apartments and penthouses. The luxurious penthouses are designed over four storeys, offering about 14,000 square feet of living space. The development has several townhouses, located along the marina-fronted promenade.

The Palm Jumeirah is home to more than 12,000 residents at present with occupancy rates across villas and apartments on the Palm Jumeirah touching 60 to 75 percent.

The Shoreline apartments, Palm Jumeirah villas and Marina Residences are the Nakheel projects on 'The Palm'.

The Marina Residences, located at the tip of the Palm's trunk offers 940 apartments across six towers and penthouses, marina-fronted promenade and forty townhouses.

Tuesday, March 02, 2010

Steady progress of infrastructure works at Al Marjan

RAKIA (Ras Al Khaimah Investment Authority), a major provider of investment opportunities and one-stop solutions in its Free Zones, Industrial Parks and Offshore facilities, in real estate developments and other ventures, has announced that the infrastructure work at Al Marjan Island, the first man-made island in Ras Al Khaimah (RAK) is progressing steadily.

The Phase one of the infrastructure comprises Island No.1, Island No.2 and the Peninsula, which was awarded to Kumho Industrial from South Korea, which began working in September 2008.
The Phase two infrastructure comprises Islands No.3 and 4, awarded to Italian contractor Rizzani De Eccher, who began mobilization in November 2009.

Completion is expected within 20 months as per the contract. However, the street lighting, roads and channel crossings for both phases will also be completed.

The project Director at Rakeen (project management authority for Al Marjan Island), Dr. Fawzi Shadid, said that about 80 percent of infrastructure services such as potable water system, irrigation system, storm water system, rising main system and vacuum system have all been finalized. The infrastructure facilities will be ready for a hook-up with their developments by the time the first developers on the island complete their projects.

The RAKIA CEO, Dr. Khater Massad, said that Being an unique investment opportunity, Al Marjan offers everything sought for by any investor, including wonderful location in white sandy beaches located just five minutes away from major industries of RAKIA free zone, an 18-hole golf course, completed Al Hamra Village, five and seven star international hotels, the Al Hamra Mall, and several other general services.

The developers at Al Marjan will enjoy 100 percent freehold ownership and construction regulations with maximum flexibility and service. Irrespective of whether it is residential, commercial or mixed-use property, Al Marjan welcomes all, as long as they are in sync with the community that is planned, Massad said.

Al Marjan Island was established aiming to re-define the lifestyle in RAK, where the luxury of living in an island is affordable. This iconic landmark will offer an unparalled work-life-balance, combining peaceful island living, with all amenities required in a self-contained community apart from great employment opportunities that are just within minutes of drive away.