Tuesday, November 23, 2010

Surplus vacant office spaces likely to bring down rents in 2011

The surplus vacant office space in Dubai, which is likely to take years for absorption in the market, is likely to bring down rents further, says Jones Lang LaSalle (JLL), the leading global real estate consultancy, in its global real estate outlook 2011.

The prices in prime office locations have fallen 50% from their peak in 2008 and residual decline will still be recorded, the report said.

Dubai is the fastest growing office market in the world on a per capita basis, with an increase of 2.8 square feet per capita since early 2008 on A Grade quality office space, said the JLL report in October.

Meanwhile, the Landmark Advisory said that the office space in Dubai will nearly double, touching 80million square feet by early 2015, from the 41mn square feet space in early 2010.

On the other hand, Colliers International expects another 2.5mn square feet of office space to enter the market between 2010 and 2011, with total office space touching 6.4mn square meters.

However, Dubai is not the only city with rents bottoming out. Dubai is also joined by the Mexico City, Madrid, Seoul and Los Angeles during fourth quarter of 2011.

On the whole, global office vacancy rates will slowly move downwards in 2011. However, on the contrary, Asia Pacific will touch the peak of its development cycle in 2011 with a record addition of 6.8mn square meters of office space to be delivered.

Monday, November 22, 2010

Buyers can claim compensation from developers for false disclosures

Beginning 13th January 2011, the developers will have to pay compensation to purchasers if the disclosure statement provided by them is incomplete or inaccurate in a material way, stipulates the latest Strata regulation.

The latest real estate update by Clyde and Co states that failure to attach a full disclosure statement (instead of the present interim disclosure statement) from 13th January 2011, or a full disclosure statement to a contract for sale of unit, will result in issues with enforceability of the contract.

Further, Article (5) sub-clause 3 of the Direction for General Regulation Concerning Jointly owned Properties, states that developer will have warranted the information given under sub-clause (1) of article (4), and if any information found in that is inaccurate or if found so within two years from the date on which the unit is transferred from the developer, or if it is incomplete in a material way, the developer will be liable to pay compensation to consumer to whom the unit has been transferred, irrespective of whether the consumer purchased from the developer or from another consumer.

Since the introduction of Strata regulations in Dubai, earlier this year, an extensive disclosure is needed, as per the directions when selling units in Jointly Owned Property (JOP), particularly for “off plan” sales. The interim provisions, which is currently in practice, ensure that an interim disclosure statement be attached to any contract of sale of a unit within a JOP, wherein the title to the unit has not been issued by Dubai Land Department, and if the seller is a developer.

The interim disclosure statement should include extensive project details, and the unit, as prescribed in the directions. The interim disclosure provisions will expire on 13th January 2011, and thereafter, a full disclosure statement will have to be attached to any sale contract. The disclosure statement should also include a copy of the proposed JOP Declaration for the project, and an extensive project detail and the unit as mentioned in the directions.

Tuesday, November 16, 2010

Region's first Rolex Tower launched in Dubai's Financial District

The first-of-its-kind in the Middle East, and the only branded Rolex Tower in the world, has been launched in Dubai's Financial District by Seddiqi & Sons Investment, the real estate arm of Ahmed Seddiqi & Sons, leading UAE retailer.

Located at the heart of Dubai's financial district, the tower is the result of 50-year partnership between Ahmed Seddiqi & Sons and Rolex.

Designed by Skidmore, Owings and Merril, the architects behind the Burj Khalifa and London's Canary Wharf, the glass-fronted structure offers 25 storeys comprising double and triple bedroom apartments, two luxurious penthouses, 31 levels of quality commercial space, and a ground floor for retail units. The design and finish of the tower, makes it one of the iconic buildings in Dubai’s business district.


This is also Rolex's maiden endorsement in Middle East property sector, and the launch of the Rolex Tower reflects the quality and service that are the most vital considerations of Rolex brand, irrespective of whether buying a watch, finding a home, or building a business, said Ahmed Seddiqi & Sons, Vice Chairman, Abdul Hamied Seddiqi.

Middle East is the key growth destination for Rolex brand. The Rolex Tower is the first of its kind in the region, reflecting shared commitment to lifestyle encompassing precision, elegance and reliability, said Bruno Meier, the Managing Director of Rolex.

Monday, November 15, 2010

Khalifa Industrial Zone Abu Dhabi offers 100% foreign ownership

One of the largest industrial free zones in the region has been launched in Abu Dhabi, so that foreign companies will be able to establish their wholly-owned operations, it has been announced.

The Chief Executive of Abu Dhabi Port Co (ADPC), Tony Douglas, said that the Abu Dhabi government has granted the status for Khalifa Industrial Zone Abu Dhabi (KIZAD), wherein 100percent foreign ownership is allowed, and this is the first-of-its-kind in Abu Dhabi.

Located mid-way between Dubai and Abu Dhabi, KIZAD has both free zone and an international investment zone status, aimed to diversify the heavily oil-based economy of the country.

The Executive Vice President of Industrial Zones, ADPC, Khaled Salmeen said that the investment zone permits granting long-term contracts of up to 50 years, and is renewable.

However, the 100 percent ownership is not permitted to all foreign companies establishing in the zone. The management is given the authority to decide depending on what will be beneficial to the Abu Dhabi economy in the long-term, said Sultan Al Jaber, the ADPC Chairman.

The free zone status will be granted to few specific companies, industries or manufacturers, provided, their business plan clearly reflects government economic and strategic values, he said.

The first phase of KIZAD is worth Dh.26.5bn and includes the new Khalifa Port. Abu Dhabi, with its 417sqm Industrial Zone, is moving beyond a pure carbon-based economy. By the year 2030, KIZAD will contribute to nearly 15percent of non-oil based GDP of Abu Dhabi. About 60 to 80 percent of goods manufactured at KIZAD will be exported, said Salmeen.

According to Sebastien Henin, the Portfolio Manager at The National Investor bank, this is an indication of openness given to foreign investors entering Abu Dhabi for business purposes.

Saturday, November 13, 2010

Nakheel to re-commence work at Jumeirah Park, Al Furjan

The leading Dubai master developer, Nakheel, has announced re-commencement of construction work on 525 four bedroom villas in Jumeirah Park, which will be ready by second quarter of 2012.

Moreover, the Park will begin construction work on 289 three bedroom villas likely to be completed during fourth quarter of 2011, the spokesperson said.

Meanwhile, Nakheel also revealed that it is constructing about 2000 villas across its several projects. Several of these projects will be delivered in 2010 and 2011.

Nakheel also pointed out that it expects Arabtec Holding to re-commence work on Al Furjan project shortly.

Nakheel had earmarked the 1500 villas at Al Furjan site as a priority for completion. Arabtec was handed over the $953mn deal to build Al Furjan in 2008, but the work was halted in January this year, due to non-payment of arrears.

The master developer has re-commenced work on eight of its projects, including Al Furjan, Jumeirah Park, Jumeirah Village, Jumeirah Heights Clusters, Jumeirah Islands Mansions, Veneto, Badhrah, and International City.

Friday, November 12, 2010

6 percent fall in house prices in third quarter

The prices of housing in Dubai declined further by six percent during the second consecutive quarter this year, thereby further widening the gap levels from the third quarter of last year, according to report by Colliers International.

The Regional Director at Colliers', Ian Albert, said that following a period of stable prices, a shallow, but lengthening slide in overall average prices is likely.

The decline in this quarter could possible due to anticipated summer slowdown, and the continued tightness in finance. Although there have been improvements in loan-to-value ratios and interest rates to a certain extent, the banks and financial institutions continue to remain committed to a conservative lending policy, typified by greater due diligence in the lending criteria, he said.

The Dubai House Price Index by Colliers' fell by seven basis points between July and September during the second quarter, while the average prices touched Dh.951 per square foot, marking a decline from the Dh.1,015 per square foot pricing in the second quarter.

The prices of apartments fell by 7percent, villas by 5percent and townhouses by 8percent during the third quarter, the report said.

Several investors are seeking to sell their present investments, while on the other hand, there are fresh buyers seeking attractive prices. This will make Dubai a more mature market, said Sudhir Kumar, Partner at Morrison Menon, the Consultancy.

Among all transactions, apartments constituted 32percent of the transactions, villas 50percent and townhouses 18percent. The transactions indicated a 4percent drop from the second quarter.

Thursday, November 11, 2010

Sorouh to deliver 2500 new housing units by 2012

One of the leading Abu Dhabi-based real estate developers, Sorouh Real Estate, announced plans to deliver about 2500 new residential units to end users in the emirate by end of 2012, said Gurjit Singh, the Chief Operating Officer of the Company.

The deliveries will begin during the first quarter next year and will be done in phases. The handovers will begin with few apartments being delivered in the Sun Towers and the Sky Towers. Sorouh is currently focusing on delivery of its existing developments and those nearing completion and securing income from properties that generate rental revenues, Singh said.

He further pointed out that Sorouh had delivered projects such as Khalidiya Village, Sas Al Nakhi, and Al Ovoun, which will boost the rental income portfolio of the Company. Even the Golf Gardens development, adjacent to Abu Dhabi golf course is complete. The Gate Tower project too, is on schedule for completion in late 2012, he said.

According to Singh, Abu Dhabi market has seen lot of consolidation happening in all asset classes this year, and 2011 will witness more consolidation with the rental and capital values dropping so much that people will get back to the market.

Monday, November 08, 2010

Dubai Land Department to re-commence property auctions this month

The Dubai Land Department (DLD) is likely to get back to property auctions, including foreclosed properties from this month.

The Partner and Head of Real Estate, Nick Clayson, said that recent discussions with the DLD indicated the need to re-commence property auctions, including foreclosed property, with the increase in number of transactions being processed daily by the department, as the market stabilizes. The next property auction will begin in November.

Once the Dubai courts approve the property to be sold at public auction as per the Dubai Mortgage Law, the court will send the letter to

Once the Dubai courts approve the property to be sold at public auction as per the Dubai Mortgage Law, the court will send a letter to DLD, seeking to arrange for the property to be auctioned.

The department will then arrange for the auction based on the procedures and laws put forward by them. At present, the department has its own informal rules about auctions. However, a formal set of rules are likely to get effective in next few months, Clayson said.

As for reserving a price on the property, the department will arrange for a valuation of the property.

The Mortgage Law provides that in case the proceeds of the sale are insufficient to cover the debt, then the bank may claim the difference from the borrower. Also, the law permits a judge to postpone a sale by auction in case the borrower can repay the mortgage amount within a specified period or the sale of the mortgage property will cause the considerable damage to the borrower.

According to Clayson, with the market stabilizing and auctions re-commencing, the Dubai Courts will see an increase in litigation brought about by banks against borrowers in default.

Friday, November 05, 2010

UAE takes least time in the world for registration of properties: World Bank

The UAE leads the world when it comes to 'ease of registering a property', said a new World Bank report, which ranked 183 countries globally on major aspects pertaining to business regulation for domestic firms.

Last year, governments in 117 economies passed 216 regulatory reforms aimed at making it easier to begin and operate a business, strengthening transparency and property rights and improving efficiency of commercial dispute resolution and bankruptcy procedures, as per the report titled "Doing Business 2011", the eighth among the series of annual reports published by the World Bank and IFC.

Registering a property is the fundamental need for beginning and operating a business in any part of the world.

"Effective administration of land is a part of that. If formal property transfer is too costly or complicated, formal titles may go informal again," the report said.

In the UAE investor protection is high of the agenda. There is only a single procedure required to register a property in the country, in comparison with at least six procedures in other parts of the region.

Further, the time taken for registering a property in the UAE is just two days, which is the least in the world. This is, in comparison to 32.5 days the regional average, although this is again amongst the least in the world, in comparison to other regions in the world.

The time taken to register a property in other regions of the world averages higher than that in the MENA region, with registration period averaging 86.7 days in East Asia and Pacific region.

Moreover, the cost of registering property in the UAE is also very competitive, as per the report amounting to two percent of property value, in comparison with regional average of 5.7 percent.

The report also highlights that last year 11 out of 18 economies in MENA region adopted a total of 22 business regulation reforms to create opportunity for domestic entrepreneurs.

Further appreciating some of the measure taken by the UAE during the past one year, the World Bank report mentioned that the UAE has improved access to credit by establishing a legal framework for operation of private credit bureau and requiring that financial institutions share credit information.

The report said that the trade, document preparation was all streamlined, and the launch of the new Dubai Customs Comprehensive System, Mirsal 2, further reduced the time needed for trading.

Globally, Singapore leads the world in the ease of doing business for the fifth consecutive time, followed by Hong Kong SAR China, New Zealand, the United Kingdom and the US.

Among top 25 economies, 18 of them made things easier than in the past year. The UAE has been ranked 40th in the world among 183 economies, the third in the region, among 18 economies.

Thursday, November 04, 2010

Indians top list of expat investors in Dubai real estate market

Indians form majority of expatriate real estate investors in Dubai, with a total of Dh.9.3bn worth properties being purchased by Indians. Indians have contributed 19 percent to the total investment during the first eight months of 2010, reports Reidin.com.

The total real estate investment during the period is worth Dh.48.9bn. Britons come second in the list with Dh.5.6bn worth purchases, followed by Iranians with Dh.4.4bn purchases and Canadians with Dh.1.35bn worth purchases.

The overall list is, however, topped by Emiratis with investments worth Dh.10.2bn.

Real Estate Regulatory Agency (RERA) and the Dubai Land Department are the exclusive partner and primary data source for the information service provided by Reidin.com.

The Assistant Director-General of Land Department, Mohammed Sultan Thani, last month, mentioned that about 30,615 sale transactions have been registered with the department till end of August. The total number of sale transactions registered in 2009 was about 43,000, while there were only 31,613 transactions recorded in 2008.

The department has been registering 30 to 35 transactions daily, with maximum being recorded in affordable communities, including Discovery Gardens and International City.

Monday, November 01, 2010

Oversupply in Abu Dhabi residential sector to bring down rents

Project cancellations and construction delays have cut down residential supply in future by 60 percent, estimates a report by Jones Lang LaSalle (JLL), the global real estate consultancy, said.

The average rentals in apartments have fallen by 16 percent year-on-year (YOY), while in certain areas, the rents are dropping by 30 percent, JLL said in its third quarter market overview.

The report said Abu Dhabi's residential rates peaked considerably during 2008, owing to booming demand and limited supply, further contributed by the impact of the rent cap. However, the recently delivered buildings and growing vacancies in existing good quality buildings have resulted in Y-O-Y decrease of 13 to 18 percent in average rentals, the report said.

Added to this, the forthcoming oversupply in the upper segment of the market is likely to result in continued decline in average rentals. Meanwhile, the lower and mid-market segments will remain expensive, rather than being affordable, owing to shortage of supply in these segments.

The JLL report said that the current stock of 182,00 residential units will touch 251,000 by end of 2013. An additional 69,000 units will be delivered by 2013, targeting the middle, high and luxury segments.

The real estate market has seen a major decline in pricing, with average prices continuing to fall to Dh.1,100 per square feet, in third quarter, in comparison to highs of Dh.3000 during boom time.

The residential property prices in Abu Dhabi have dropped by 15 percent during first three quarters of this year, in comparison to same period last year. However, despite decreased rents, and limited transactions, and relatively stable sale prices, the residential segment in Abu Dhabi will continue to be under-supplied, the JLL report said.

Meanwhile, despite several projects being delayed, and an additional 1.5mn square meters likely to enter the market by 2013, the vacancy rate for office sector, currently stands at eight percent for the quarter, the report said.

The vacancies in office sector have remained stable in comparison to second quarter and no major supply has entered the market. Grade A rents too have remained stable, maintaining the average of Dh.2,200 per square meter per annum, as in the second quarter.