Saturday, October 29, 2011

Dubai’s launches new fund to focus on domestic real estate market

Dubai has launched a fund that focuses on its domestic real estate market, as the government aims to strengthen property prices, which have fallen two-thirds from their peak in 2008.

The government’s Investment Corporation of Dubai (ICD) and Brookfield Asset Management will contribute seed funding of $100mn into the $1bn capped fund.

The Chief Executive of ICD, Mohammed al-Shaibani, said that ICD is looking forward to help in recovery of Dubai property market.

The government has also received some informal commitments from investors in other parts of Gulf States.
The 8-10 year fund marks a considerable government intervention into the broader real estate market of Dubai.

Dubai had received a $20bn bail-out from the UAE and Abu Dhabi, to write-off default in 2009. Early this year, it completed the $25bn re-structuring of the troubled ‘Dubai World’ conglomerate.

The government, as a part of its re-financing efforts, pumped in $9bn into the development arm of Dubai World, Nakheel. Further, to help revive interest in the Dubai property market, the residency visas linked to property ownership were extended from six months to three years, by the UAE government.

The fund “combines strategic intervention with potential commercial opportunity,” coming amidst signs of recovery as prices stabilize in popular districts around the world, including the world’s tallest tower, Burj Khalifa.

However, oversupply continues to be a concern with the rest of the real estate market, with could lead to price declines by another 20 percent, revealed a local investment bank, Arqaam Capital. But, there are several encouraging signs, with the arrival of long-term capital into the sector, marking early signs of recovery of the market, said Bruce Flatt, Chief Executive of Brookfield.

Dubai has grown to be a safe haven during regional turmoil, as Arab revolutions have led to a situation of instability to the MENA (Middle East and North Africa). The core businesses of trade, transport, and tourism have also been growing strongly over the past several years, as the city plunged into recession in 2009.

However, the cause of concern is the impact of global slowdown on Dubai’s open economy, and its ability to re-finance the $110bn debts, with $14bn of them likely to mature in 2012.

The fund is a good start, and is a step in the right direction, which can drive confidence back to the market. Dubai, may be close to the bottom, but it will see some upside within months, commented V Shankar, Chief Executive of Standard Chartered – Europe, Middle East, Africa and America.

Monday, October 24, 2011

Emaar's new Dawahi Development to focus on value-housing projects

Emaar Properties, yesterday, launched Dawahi Development, its new wholly-owned subsidiary, and a next-generation developer of value-housing projects within full-service community developments.

Launched under guidance and support of H.H. Sheikh Mohammed bin Rashid Al Maktoum, the Vice President and Prime Minister of UAE and Ruler of Dubai, the Dawahi Development is the region’s leading developer of integrated communities ideally suited for Arab youth and their families.

Dawahi Development will develop affordable homes at attractive rates in major emerging markets across the MENA region, while also creating strong employment and business opportunities for local population.

The Chairman of Emaar, Mohamed Alabbar, revealed that the UAE’s current position as a developmental leader and Dubai's positive role both at regional and international levels has been due to the strong inspirational futuristic vision of H.H. Sheikh Mohammed.

The Dawahi Development has helped in creating a new category of homes and communities, which offer value to young families. This new category has been defined as the mid-price point housing, Alabbar said.
The value housing projects have been considered as modern, full-service communities, featuring a range of lifestyle amenities and utilities. The Dawahi Development’s communities will include healthcare centres, educational institutions, restaurants, retail outlets, community and sports centres, Mosques, and leisure options.
Emaar, in its statement, confirmed that Dawahi Development will function as a separate entity with a dedicated management team and professional staff members, focusing on value-housing projects throughout the Arab region.

Saturday, October 22, 2011

DIFC continues to maintain more than 95percent occupancy rates

The Gate District of Dubai International Financial Centre (DIFC) has managed to maintain occupancy rate of more than 95percent, while third-party developments within the free zone have leased out more than 58percent of their office space, revealed senior government officials.

The Gate District, which includes the Gate Building, Gate Precinct and Gate Village, has seen more than 95percent occupancy levels. Meanwhile, strong demand from new companies and existing clients within third party developments such as Currency House, Currency Tower, and Liberty House has touched 58percent, said Chief Executive Officer at DIFC, Abdulla Mohammed Al Awar, said.

DIFC officials revealed that during December 2010, occupancy levels has been 95percent in DIFC-owned buildings, while third-party developers leased out more than 35percent of their space

The total leasable commercial space at DIFC owned buildings has been 1.217mn square feet in June 2011, while total commercial office space within third party developers were 769,000 square feet.  Nearly two million square feet of commercial office space at DIFC is likely to be handed over by third-party developers during the next 18 to 24 months.

The centre has also announced its new pricing structure, offering tenants more than 50percent discounts with rentals starting Dh.160per square feet to maximum of Dh.280 per square feet in 2011.

According to Al Awar, the revised pricing structure which was rolled out in 2011, provides long-term visibility to clients, in terms of operating costs, by offering better rates for larger spaces and longer leasing periods.

The prime rental levels within DIFC Gate Building range between Dh.240 and Dh.330. Cluttons, the real estate consultancy, believes that vacancy rates has grown in DIFC during the third quarter, with the number of commercial buildings in free zone area being brought to the market.

According to Al Awar, the third party developments are continuing on track, with several residents and companies having moved into the completed units.

Thursday, October 20, 2011

Abu Dhabi real estate market turns highly competitive

The real estate market in Abu Dhabi has turned increasingly competitive, in terms of rental pricing and supply of quality products during the third quarter this year, said the latest Jones Lang LaSalle (JLL) report.
In its latest report, JLL MENA revealed that despite delayed deliveries of few projects, the market continued to witness additional supplies during the third quarter, with 2800 new units being delivered across the residential, office, retail, and hospitality sectors.

The trend is likely to continue into the fourth quarter this year, and more scheduled handovers are expected, the report pointed out.

Abu Dhabi real estate market will grow to be favourable to both buyers and tenants, as the number of residential units are likely to touch 246,000 towards the year 2013, from the present 193,000 units, according to experts.

Last year, abundant supplies and increased vacancies had led to rental declines of nearly 10percent for prime double bedroom units and more than 30 percent decline for lower quality units.

As for the office sector, Grade A office stock has grown by 55,000 sqm, touching nearly 2.4mn sqm during the third quarter. Further, with another 20 percent vacancies, and 150,000 sqm of additional stock yet to enter the market in the next quarter, a downward pressure is likely in Grade A and Grade B office sectors, the report said.

The Head of JLL MENA Abu Dhabi office, David Dudley, said that the government has taken measures to restrict the future supplies, as already enough new supplies have been delivered in the residential, office and retail market during the third quarter.

Given, the downward rental pressure with increased vacancies, tenants across various sectors can now upgrade to new and better quality properties without having to shell out much, he pointed out.

On the whole, improved cost competitiveness, coupled with implementation of market-friendly initiatives by the government, will trigger further demand, and make Abu Dhabi property market more competitive.

Abu Dhabi has also become a competitive market for tenants during the last quarter, given, the narrowing gap in rentals between Grade A and Grade B office sectors.

However, the government has also decided to consolidate projects and government entities, and re-prioritize investment. This may have a short-term negative impact on the market, but such moves may prove very positive for medium-term outlook of the market.

Tuesday, October 18, 2011

Americans, Russians lists topmost among majority land buyers

Americans and Russians were among the top buyers of land and apartments, according to latest data revealed by Dubai Land Department.

During the first half of this year, nearly $10bn worth of land and apartment deals have been registered, the report said.

UAE nationals topped the list of land buyers, investing almost Dh.5.599bn, while Indians were topmost apartment buyers, having spent nearly Dh.3.280bn.

Americans have purchased 66 land plots worth Dh.335mn, and 456 apartments worth Dh.615mn, while

Russians have invested Dh.279mn towards purchase of 41 plots and 791 apartments for Dh.1.291bn.

Britons are said to have purchased 239 plots for Dh.1.090bn, Pakistanis purchased 132 plots for Dh.44mn and Iranians having purchased 107 plots for Dh.521mn.

Following UAE nationals, were Indians, the top apartment buyers, having invested Dh.3.280bn for purchase of apartments. Britons were second in purchase of apartments with 1,818 units being purchased for Dh.2.396bn, followed by Pakistanis investing Dh.1.261bn for apartments, and Iranians spending Dh.2.2522bn for apartments.

The total land and apartment purchases during the first half of the year touched Dh.14.619bn and Dh.21.057bn respectively, making a total of Dh.35.68bn.

Sunday, October 16, 2011

Dubai homeowners still facing aftermath of 2008 recession

Homeowners in Dubai are still facing the impact of the 2008 property recession, with property prices still being too high for them to offload it at current market rates. This fact was revealed in the latest poll by ‘Emirates 24/7’.

The poll revealed that 81percent of respondents are of the opinion that their properties in Dubai are still in negative equity, while more than 55percent revealed that their property is worth 50percent less than their purchasing rates. Another 17percent revealed that they have incurred 30 to 35 percent losses, while 9percent said they are in 25percent negative equity.

One of the respondents to the survey said that with the losses being substantial, he is willing to wait for a couple of years for appreciation in property prices.

However, some owners have agreed that they have noticed that their home value have attained the purchase value levels, while others have seen slight appreciation.

Experts are of the opinion that the drop in prices seen after 2008 has now finally ended with stabilisation seen in real estate sector, and a slight increase in prices of properties in certain communities.

The latest property reports about Dubai real estate market reveal that the prices have remained steady for quality buildings in prime locations this year.

The selling prices and rents for villas have remained stable with only minor declines for apartment rents, while a slight decline of 3percent has been noticed in office market, according to Q3 2011 Asteco report.
Although selling prices for apartments were stable in locations such as Dubai International Financial Centre,

Palm Jumeirah and Jumeirah Beach Residence, properties in Discovery Gardens have seen a 10percent dip. However, quality buildings in well-established developments continued to hold on to their value.

Thursday, October 13, 2011

New Real Estate Investor Protection Law likely in Dubai towards year-end

Dubai is likely to implement the Real Estate Investor Protection Law towards the year-end, revealed a senior official at the Dubai Land Department (DLD) yesterday.

The Director General of DLD, Sultan bin Butti bin Mejrin, said that a consultant has been appointed for review and to finalize the law, which will be issued by the year-end.

This will be an important regulation, and therefore, it has to be checked for perfection before issuance, he pointed out.

No new details were given by bin Mejrin, by the new law is hoped to clarify several issues such as steps to be taken in case of project delays, and whether an investor can cancel a contract, if the developer fails to fulfil any contractual obligation, and more.

Once the code for corporate governance is implemented by DLD in 2013, all developers will have to reveal recourse and any available alternatives for prospective investors in cases of delay in completion of projects. The code will also ensure that the companies keep their investors informed about various other available options including swaps or refunds in case of any project delays.

The Senior Legal Advisor at DLD, Emad Eldin Farouq, said that the department plans to introduce new legislations to restore investor confidence in the market, although emphasis is laid on promoting efficient alternative dispute resolution.

Friday, October 07, 2011

DLD launches lifeline to save stalled projects

The Dubai Land Department (DLD) is ready to help property owners and investors of stalled projects who seek inclusion of the project under Tanmia initiative.

The Senior Councel Strategy, DLD, Majida Ali Rashed, revealed that investors of stalled projects can visit the DLD, and the department will look into all technical and legal aspects.

The initiative was launched in mid-September and is aimed at revitalizing the property market by focusing on the incomplete projects under all categories. Construction on certain projects have been halted for more than a year now, with foreign developers having declared bankruptcy in their home countries.

The Director General of Land Department, Sultan bin Butti bin Mijren, when sepaking about the Tanmia initiative mentioned that it would cover 100 projects next year, and the department would continue with it for at least next three to four years, although the process may not be an easy one.

The scheme is aimed at government and private sector, and will help them benefit from these projects, although that does not seem easy. All legal, technical and financial factors will have to be considered before taking over the project, Mijren said.

Nearly 225 projects are currently in progress in Dubai, to be delivered in next three years time, bin Mijren revealed.

Meanwhile, the latest Jones Lang LaSalle (JLL) report had revealed that Dubai will see compeltion of nearly 5000 units towards this year-end, with over 27,000 units left for completion next year.

In the third quarter this year, nearly 4000 units have been completed, which saw the total residential stock touch 326,000 units. Among the major projects completed in this quarter were La Riviera at Jumeirah Village, Grosvenor House Residence at Dubai Marina, and Masakin in Jumeirah Park.

DLD has been bringing in new initiatives to revive the real estate market. Launched in June last year, the Tayseer initiative initially covered 40 projects across Business Bay, Jumeirah Lake Towers and Dubai Marina, extending to more than 114 projects in the course of time.

Wednesday, October 05, 2011

Abu Dhabi property market stable in Q3 2011

The Abu Dhabi real estate market has begun to show signs of stabilization during the third quarter this year. Apartment rental rates have begun declining, touching 6percent, in comparison to 8% and 9% during the previous two quarters, according to quarterly Real Estate Monitor by Asteco.

The rental rates for villas in the third quarter have been comparatively static, although villa rentals in off-island locations like the Mohamed Bin Zayed City and Khalifa City, continued to decline by 5percent on average.

The Al Zeina project at Raha Beach comprising 952 apartments, 26 penthouses, 124 villas, and 119 townhouses was one of the major new supplies in the market. Meanwhile, the Zone A units in Reem Island at Marina Square have been completed, while the delivery dates for individual investors of Zones B, C and D are yet to be announced.

According to Elaine Jones, CEO of Asteco Property Management, the strong rental demand is largely due to the desire of the existing residents to upgrade and secure an accommodation that has better value for money.

The market is still charactrised by low sales volume, which has had an impact on prices, although the sales enquiry levels continue to grow on par with delivery of completed projects.

Aldar has announced a rent-to-own scheme, to boost sales activity in the market. The scheme is effective for properties at Al Bandar, and Al Zeina. Tenants are allowed to pay a fixed rental for two years, with 100percent rent in the first year, 90percent of second year’s rent converted into a deposit towards purchase at current sales price, with more details about the scheme still awaited.

Such rent-to-own scheme is an effective way to stimulate demand, according to Jones.

Monday, October 03, 2011

Dubai commercial market sees rise in tenant activity

The latest Q3 commercial market report  for Dubai by Cluttons, the leading real estate specialist in Dubai, indicated an improvement in tenant activity as vacancy levels in the emirate continue to increase, touching nearly 50percent.

With high levels of supply seen in new commercial area, there is an increase in number of small businesses, offering large choice and competitive rents. But, there is still limited choice for Grade A single ownership buildings meant for regional and international headquarters.

With more office buildings getting completed, more than 12mn square feet is likely to be completed in the market by the year-end. The increase in vacancy rates will continue to put downward pressure on rents in certain areas of the city.

The tenant demand is generally driven by increased affordability of rents and opportunity to move into new offices from old ones. The DIFC has seen increase in vacancy rates over the past quarter, with several commercial buildings being incorporated into the freezone area of the market.

Cluttons has seen increased activity with more businesses on the periphery re-locating their satellite offices back into the core DIFC. Cluttons has also reported the trend of tenats getting relocated to modern offices in the Central Business District area from older districts like Bur Dubai and Deira.

Moreover, the terms by landlords are more flexible and attractive. Several landlords are also taking up the responsibility to pay agency fee so that they can no longer be a liability to the tenant, with the practice being common in foreign market.

According to Cluttons, this scenario will help in taking Dubai property market to a higher level.

Saturday, October 01, 2011

Two new communities adds vibrancy to Mirdif Township

Dubai's Mirdif, which was once thought to be a distant suburb of Dubai, is now a a vibrant township.

Shurooq and Ghoroob communities are the latest addition by Dubai Properties Group (DPG) to Mirdiff’s alternative to city's living. With occupancy levels being more than 80percent in both communities, these communities have been highly successful in attracting couples, families and singles seeking affordable, quality accommodation, located within city limits.

Shorooq is a Gated Community which offers relaxed living spaces in its spacious villa residences and apartments. Apart from the 24-hour security, the quality residential units offer proximity to both schools and leisure amenities. Shorooq is the ideal community for mid-sized families seeking upmarket housing.

Ghoroob on the other hand, has prime residential aprtments for rent, offering a choice of studio, single, double and triple bedroom apartments, that are ideal for single executives and youngsters with families, offering quality affordable housing solutions.

Both the developments are only minutes away from Mirdif City Centre and Uptown Mirdif Shopping malls, and are in proximity to Rashidiya Metro Station and Dubai International Airport and major roadways. They are good option for residents who wish to commute between Dubai, Ajman and Sharjah.

The Ghoroob and Shorooq communities actually reflect DPG's commitment to deliver sustainable communities that focus on market demand for quality and affordability. The homes within Shorooq and Ghoroob communities actually reflect the commitment by these communities to offer diverse lifestyles and deliver a range of property solutions, wherein people can live, play and work.