Wednesday, July 28, 2010

Rise in Dubai villa prices by 6.9 percent

The villa prices in Dubai grew by 6.99%%, while apartment prices fell by 5.23 percent between Q2 2009 and Q2 2010, as per report by a leading real estate information company.

Based on the June figures of Sales Price Index for Dubai (SPID) announced by Reidin.com, an online database of proprietary real estate indices for UAE, there is a decrease of 0.35% between the months May and June 2010, in comparison to the decline of 1.23 percent of corresponding period between April 2010 and May 2010.

During the same period, the prices of apartments grew by 0.71%, compared to a drop by 2.88% last month. On the other hand, villa prices fell 2.18%, in comparison to 0.63% during the month of May. This reflects a marginal increase by 0.26% over June 2009 figures.

According to Ahmet Kayhan, the Reidin.com CEO, the slight drop noticed during the past two months, is just reflection of the seasonal adjustments, rather than a trend.

The Reidin.com SPID indicated that all residential units dropped by 1.47 points in Q2 2010, to the level of 174.74 basis points, a decrease by 0.84% from Q2 2009.

For the month June 2010, Reidin.com Residential Sales Price Index was a mere 69.21 points above its base value of 100 points in January 2003. However, the Apartment Sales Price Index was 54.22% above and Reidin.com Villa Sales Price Index was 195.54%, above its base value of 100 points in January 2003.

Arabtec signs deal to construct La Hoya Bay project

Arabtec has announced that it has signed a contract to construct the La Hoya Bay project at Ras Al Khaimah, worth about $680mn (Dh.2.5bn).

The project, located on Marjan Island, will be constructed within five years, with the first phase set to begin immediately.

The La Hoya Bay project has so far met delays, as it was launched amidst the global recession and downturn in the Dubai real estate market.

Rakeen, the RAK-owned real estate firm, took over custody of La Hoya Bay's parent firm Khoie Properties when it became insolvent.

Arabtec said that the project will be completed within two and a half years and that the first phase of the project, worth Dh.900mn will begin immediately.

The project will comprise five mixed-use elements, apart from external landscaping works. The Sector A (LA Hoya Residences) will include seven residential buildings and recreational amenities; Sector B (La Hoya Bay Business Village) comprising offices with free zone status, apartments and retail space; Sector C (LA Hoya Bay Regency) which includes a European Village consisting of 12 residential buildings a 200-room hotel and retail space; Sector D (La Hoya Bay Autumn Leaves) which include premium service apartments with medical amenities, private yacht, and community centre for the semi-retired, and Sector E (La Hoya Bay Bermuda Hotel and Apartments) which consists of 800 quality condominiums, a 300-room hotel and yacht club.

The external works include landscaping, swimming pools and three marinas, all spread across gross built-up area of around 5.5mn sq. ft.

The Chairman of Khoie Properties, Frank Khoie, said that the project will help Ras Al Khaimah in its effort to grow into a destination of quality waterfront and resort environment living.

Monday, July 26, 2010

Rental declines pressurizing landlords in Sharjah

The landlords in Sharjah are having a tough time, with major decline in Dubai rentals. This, coupled with the latest round of power failures, may force tenants to flee to the neighbouring emirates, fear landlords.

Now retaining their current tenants is a major challenge for landlords, as tenants are preferring locations such as Discovery Gardens, Al Ghusais and Mirdif in Dubai.

Few landlords in Sharjah have already reduced their rents to remain competitive with their Dubai counterparts. They could offer more incentives in the wake of power crisis during renewal of tenancy contracts.

Several new residential high-rises in Sharjah are also nearing completion. Another major factor affecting rentals is the amount of supply entering the market, points out the new report by Asteco, when speaking about the situation in northern emirates during second quarter.

Until the recent power crisis issue in Sharjah, the rate of decline for apartments in Sharjah was eased, it was thought. The three-bedroom apartments in Al Khan and Al Nahda, too, recorded a drop of 4% during the second quarter, following 9% decline during the first quarter.

Although there was no rental change for studio apartments, the single and double bedroom units witnessed 8% and 4% drop respectively. This decline is more in the case of villas.

Now, it needs to be watched, how Sharjah's residents, landlords could fallout from the power breakdown during their upcoming contract renewals.

In fact, soft market conditions continue to prevail in the northern emirates in the UAE. Rents in Ajman dropped at the same pace as during the previous quarter, while properties near the Corniche fell 12 percent, following 7% decline during first quarter. But the Corniche area still continues to draw in people working in the emirate.

In Fujairah, Ras Al Khaimah and Umm Al Quwain, there are not much changes reported in apartment rental rates.

The office rental segment in Sharjah is more or less parallel to that of residential. The rents saw a steady decline in rents during the second quarter. Sharjah government is coming out with a tourism masterplan and as a part of this plan, about ten new hotels are hoped to be built in the emirate.

Monday, July 19, 2010

More tenants in Abu Dhabi, Sharjah migrating to Dubai

A major dip in rents across the UAE has prompted more than a third of tenants to switch homes last year, with several opting for homes with larger rents, said a survey report.

The findings of the survey, conducted by YouGov Siraj Omnibus in June, also revealed that with rents dipping, Dubai has again turned out to be the preferred destination for those planning to shift residences from Abu Dhabi and Sharjah.

The online survey included 770 adults over the age of 18.

The survey reveals that 35 percent of UAE residents are of the opinion that the real estate outlook will improve in 2011, in comparison to 32 percent who feel it would deteriorate, while 21 percent feel that it will remain the same.

Compared to tenants' optimism, the property owners' have exhibited more confidence about outlook on 2011 real estate at 47 percent.

Although there is optimism, it is a cautious optimism, and the UAE residents are grabbing the current opportunity of low rentals when upgrading their accommodation, the survey report said.
The survey reveals that about 40percent have moved from single bedroom units to double bedrooms, and 46 percent of those wh lived in double bedrooms last year, now live in three bedrooms.

According to YouGov Siraj Research Director, Himanshu Narang, Dubai is better-placed when it comes to availability of residential and commercial units, followed by Abu Dhabi and Sharjah. Sharjah is seen to have better value for money, surpassing Dubai and Abu Dhabi, respectively.
But, the findings indicate that migration is geared towards Dubai, particularly from Sharjah and Abu Dhabi. Among the current population in Dubai, 18percent have recently moved in from Sharjah, while other 35percent residents in Sharjah have agreed that they plan to move to Dubai.

In Abu Dhabi, despite the 15 percent drop in rents, 16percent of residents plan to move in to Dubai.

The latest report by Deutsche Bank also states that Dubai property prices continued to fall moderately in June, hurt by oversupply and low demand.

Rentals in Abu Dhabi have dropped by 15 percent during last quarter, said the report by Asteco Property Management. The Abu Dhabi market is seeing more supply entering the market. But, the fall in rents are not huge enough to bring back the flow of tenants from capital to Dubai, where the property is much cheaper.

Sunday, July 18, 2010

Dubai Marina is the hotspot to buy, rent property

The Dubai Marina has been voted the number one hotspot to buy and rent property in Dubai during the second quarter of the year, said the latest findings by a leading real estate website, propertyfinder.ae.

The second quarter enquiry results said that it accounted 20.4 percent of search terms for sales and 15.9percent rentals. The Dubai Marina properties are now viewed atleast once in every five searches, the report said.

The Palm Jumeirah and Jumeirah Lake Towers were the second hot spot with 11.8percent (purchase inquiries) and 8.1 percent (rental inquiry) during the same period.

The findings also revealed that Mirdiff is the third most popular choice for rentals outside of new Dubai, the report noted.

The current trend noticed in Dubai's property market is that buyers and renters are moving further outside of the traditional residential areas of New Dubai, particularly to locations such as Palm Jumeirah and Jumeirah Lakes Towers.

Among the other popular choices are International City and Discovery Gardens. The findings are based on about 450,000 visits to the website during Q2 2010.

In terms of search, the property hot zone locations by propertyfinder.ae are:

To buy, Q2 2010
Dubai Marina, 20.4%
Palm Jumeirah, 11.8 %
Jumeirah Lakes Towers 11.2%
Arabian Ranches, 6.5%
Jumeirah Beach Residence, 5.9%

To rent, Q2 2010
Dubai Marina,15.9%
Jumeirah Lakes Towers, 8.1%
Mirdif, 7%
Jumeirah, 6.8%
Palm Jumeirah, 6.3%

Monday, July 12, 2010

Green building survey report by Landmark Advisory revealed

Landmark Advisory, one of the leading property consultancy companies in the Middle East has revealed results of its first green building survey report.

The report took into account the attitudes of investors and stakeholders in the industry, depending on development and sale of green buildings across the UAE.

Conducted together with the Cityscape Intelligence, the survey took into account the responses from institutional stakeholders in the industry which included investors, developers, managers and analysts.

The Director of Research and Advisory at Landmark, Jesse Downs, said that the survey findings highlighted the fact that majority of those who were interviewed were aware about the green building concept, with 96% of respondents reporting an understanding of the green building concept. According to Downs, developing and awareness about the sustainable property market by way of education is the most vital step in this direction.

The candidates in the survey said that factors such as environmental friendliness, lower utility bills and better designs are the factors associated with green buildings. When questioned about the reasons for wanting to establish an office in a green building, they suggested these reasons.
Depending on the results, there is a clear distinction between building new green developments and retrofitting the existing building. When questioned about the potential implementation of the green building regulation, they agreed that they would require new buildings to achieve a minimum green standard. About 34% of respondents wanted this to be implemented immediately.

Implementing green development regulation locally is less contentious than green retrofitting regulation. This is likely due to the current state of UAE real estate market. Any green development regulation will have limited impact in the short to medium term as the development market will be extremely restricted over this period.

Sunday, July 11, 2010

Dh 711mn island at Ras Al Khaima placed for sale

An island located in the Al Hamra Village of Ras Al Khaimah has been placed on sale for Dh.711million.

The island, covering 2.37mn square feet of space, is located at the centre of the village. The buyer will have to pay 40 to 50 percent of the price upfront. The rest will have to be paid within three years in quarterly instalments, said Dr. Ayoob Al Faraj, General Manager, Al Hamra Real Estate.

The company has already received three serious bidders, but they are still open to negotiations. The island has good infrastructure and is one of the best around, Al Faraj said.

Situated along the southern end of Ras Al Khaimah, the city is surrounded by salt water lagoons, a marina and a golf course.

Wednesday, July 07, 2010

Dubai Properties announces land auctions

Leading developer Dubai Properties, an arm of Dubai Holding, has announced auction of three beach-side plots of lands next month, it has been revealed.

According to the company, the auction would take place on 29th August 2010.

The auction is being held for leasing out of three beach club plots by the company at the Jumeirah Beach Residence Community on 29th August, following a pre-qualification process.

The interested companies are required to possess atleast five years experience in the hospitality sector, and should be a registered company in the UAE.

Dubai World had recently signed deal with core creditors to restructure debt of $23.5bn (Dh.86bn).

Tuesday, July 06, 2010

High maintenance charges for Dubai homes could shun investors

Exorbitant maintenance charges in Dubai could keep away the investors, and make them think twice before purchase, say experts.

The Executive Chairman at PRDnationwide, Gary Bugden, said that service charges need to lessen, as there has been a pressure on prices. The problem is that the returns at the current service charges do not justify the investment.

Developers need to seriously look at how they are designing future projects, as projects with water features in them have high maintenance costs. In fact, the Dubai infrastructure, by itself, is expensive to maintain, he said.

Till date, developers have been in control of the project, and the owners were left at their mercy in calculating the needed maintenance cost for the project.

The General Manager of MAGme Property Solutions, Mazen Falhout, says that property buyers should have been more particular about the add-on costs involved, but, they were too busy speculating rather than factoring the hidden capital investment required over the years.

Before 2008 June, investors were not much bothered about service charges and were only speculating on the growing price. But, now, owners are made responsible for their investments. This led to few owners jeopardizing returns on investments by not adequately accounting for depreciation on electrical, mechanical and plumbing equipment.

If there was no sinking fund, owners will be required to pay the entire bill which could be substantial. Several owners now are faced with fees that cannot be just passed on to tenants, if they wish to remain competitive, Falhout said.

The sinking fund requires a fee to be paid by all unit owners on an approximate wear and tear. It is an obligatory feature to be managed by developers and home owners, wherein associations can take charge. But, with the rents falling by 40 percent last year, it may take some time to come along, said Bugden.

Friday, July 02, 2010

33,000 new homes to enter Dubai residential sector by 2011

The total number of residential units in Dubai is likely to touch 320,000 in number by end of 2011, an increase by 33,000 from the current level. However, prices may not recover completely by that time, said Jones Lang LaSalle in its latest report on the real estate market.

A total of 26,000 units are likely to be ready this year, followed by another 25,000 in 2011, making the total residential stock touch 320,000 by end of 2011, said the leading market research company.

With about 54 percent of the units are likely to be ready in 2010, and about 14,000 units are due for completion by end of second quarter, with the current residential stock in Dubai touching 287,000.

The second quarter of this year, showed an increase in residential property transactions in Dubai by 50 percent, indicating great improvement in market conditions, the report pointed out.

Although the number of residential transactions also grew by 49 percent, there is still a 35percent slump, compared to the previous year, the report said.

But, despite the recent stabilization in pricing levels, the residential market in Dubai will experience a situation of over-supply, with prices unlikely to recover prior to 2011, the report noted.

However, the mortgage sector showed signs of recovery, with more banks injecting liquidity, and the residential sector thereby showing signs of improved lending this year, the report said.

Most residential projects seem back on track, with no major additional delays seen during the second quarter of 2010. The report said that no major delays are foreseen in the residential sector for the rest of the year.