Monday, July 16, 2012

Dubai realty market protects investor confidence with new impending law


The real estate sector in Dubai, currently ranked as the most transparent market in the Middle East North Africa (MENA) region, is in for a further boost, with the enforcement of an impending law, aimed at protecting investors, said a global financial and professional services company, specializing in real estate.


The new law permits investors to cancel their contracts and get back their money, if the developers violate the terms and conditions. This is likely to boost investor confidence, says Jones Lang LaSalle (JLL) in its review on the real estate market in Dubai. This will further, pressurize the developers to complete their projects.

As per the new law, there will be increased transparency in the market, and with better regulation of real estate market, investors can cancel their contract if the real estate handover is delayed for more than a year. In fact, the new law permits investors to have the option to demand compensation in the event of defects in the property when it is delivered.

With constant demand for quality, there is improved investor confidence, given, the well-located, income producing assets, said JLL in its report. Majority of transactions have been recorded during first half of the year.

Residential

The overall residential market too, is witnessing a positive trend, with villa market outperforming the apartment sector in second quarter of 2012, the report said.

Prime residential buildings in prime locations have shown better performance, while the secondary locations are continuing to suffer decline in rental and pricing, it said.  Nearly 3000 additional residential units have been added to the Dubai market, making a total of 344,000 units of total residential stock.

Among the notable projects handed over this quarter are The Villa Phase 3 in Dubailand, two towers in Dubai Marina, three buildings in Dubai Silicon Oasis, and a complex comprising 26 buildings in International City, the report said.

Office sector

As for the office sector, there has been limited office supply during the first half of the year. The asking rents for prime office space remain flat during the second quarter, while secondary rentals have softened. Occupier consolidation is the main focus in line with global trends. Larger companies have continued to show interest in upgrading premises, with improved flexibility in their leases.

Retail

There is sustained demand for retail space in the best performing super-regional malls, including the Mall of Emirates and Dubai Mall, which has resulted in increased rentals, JLL said. With the retail market getting increasingly two-tier and older, the less popular malls are witnessing weakened demand from retailers and consumers, with mall owners having to consider new marketing techniques and product positioning.

Hotel

The hotel sector has seen recovery in 2011, which continued further over the first half of 2012, with occupancy levels improving to 83 percent from 79 percent during the same period last year. The growth has been mainly supported by a strong tourism sector, with increased number of visitors, said the JLL report.

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