Thursday, January 31, 2013

Dubai Marina, Downtown districts, remain top picks for buyers in 2013


Property prices in prime locations in Dubai, particularly the Downtown Dubai and the Palm Jumeirah, have grown by more than 30 percent in 2012, said Hamptons MENA.

The real estate consultancy, in its 2012 real estate report, said the average price jumped between 20 to 30 percent, Arabian Ranches was the topmost in the villa segment, and Downtown Dubai and Emirates Living, in the high-end apartment segment.

Other leading global property consultancies such as Jones Lang LaSalle and Knight Frank, have place price hike in prime villa communities at 20 percent year-on-year.

The Dubai Land Department, in its 2012 annual report, said that Dubai Marina and Burj Khalifa are the most traded areas, with the two districts totally having registered transactions of 10,554 in number, worth Dh.17bn.

The total value of property transactions in Dubai have grown 8percent, touching Dh.154bn in 2012, in comparison to Dh.143bn last year.

Hamptons said that last year, more than 7500 sales and leasing enquiries originated from Downtown Dubai and Dubai Marina, followed by Emirates Living, Jumeirah Lakes Towers, Arabian Ranches and The Palm Jumeirah.

Increasing number of small-size families showed interest in purchasing properties with average size coming down to 1320 square feet, in comparison to 1722 square feet in 2011.

Communities with solid infrastructure and those in proximity to Dubai Metro witnessed huge demand for sales and leasing, registering gains in capital and rental values. The company expects demand for apartments in Downtown Dubai and Dubai Marina to grow during the coming months.

The Head of Operations – Hamptons MENA, Niraj Masand, in a statement, said that the strong performance of residential property market in 2012 is a reflection of the sound economic fundamentals of Dubai.

Led by strong performance in tourism, retail, aviation, hospitality and trade, Dubai has established its position as the region’s leading business and tourism hub. This has borne a positive impact on the property sector too, with established communities in Dubai witnessing price hikes of up to 30 percent.

Tuesday, January 29, 2013

Abu Dhabi witnesses region’s biggest-ever real estate merger


As a first step to one of the biggest mergers of listed companies in the region, the two state-backed major property developers in Abu Dhabi, are uniting in a wider consolidation, which will result in projects and state entities being merged, so as to bring stability into the real estate market.

After about a year of talks between the top business moguls and government officials in the emirate, Aldar Properties and Sorouh Real Estate have agreed on a merger, which will create a company with $13bn in assets. This would be one of the biggest-ever mergers of listed companies in the Middle East.

Aldar is 50 percent owned by the Abu Dhabi government via channels including the emirate’s sovereign wealth fund, who built the Yas Marina Formula One Circuit in the capital.

Sorouh is a smaller, less government ownership, but, the ruling family in Abu Dhabi own major stakes in the firm through investment companies.

The two firms struggled with the bursting of a bubble in Abu Dhabi property market, and Aldar received $10bn as state aid over the past two years.

Although negotiating the merger was a difficult task, the government’s endeavours finally bore fruit. The government took the bold step to consolidate supply of new property projects, said David Dudley, Head of Abu Dhabi office for JLL.

The success of the new company, namely ‘Aldar Sorouh Properties’, will partly depend on whether it can outride the excess supply of high-end property developments.

Real estate prices in the capital have tumbled by 50 percent ever-since the global financial crisis hit a few years ago. Jones Lang LaSalle, in its January Report, said that Abu Dhabi was 18 to 24 months behind Dubai, in property cycle, and so, its market is not expected to turn up in 2013.

There is mismatch between the underlying demand and those delivered already. The merger still does not solve the immediate issues faced by the property market, particularly on the high-end supplies. But, it may help stabilize things, which will eventually take positive turn in the long-term, said Loic Pelichet, Assistant Vice President, NBK Capital.

According to analysts, the new company should stop being highly dependent on the government spending, particularly for housing projects for UAe nationals, and instead emulate profitable developers, said Emaar Properties.

Thursday, January 24, 2013

Buyers rush to buy homes to overcome new mortgage curb rules


Despite the speculation over the forthcoming amendments in mortgage rules, nationals and expats in Dubai are said to be rushing to purchase homes in the UAE property market.

A Dubai Municipality official, when speaking to the media, said that there has been a rise in sales since start of this year. Transactions worth Dh.490mn have been recorded as of 21st January 2013, in comparison to just Dh.200mn for the same day in 2012, marking a growth of 160 percent.

The Chief Economist and analyst at CNBC Arabia, Dr. Amer-Noman Ashour, said that Central Bank has clarified that banks should not expect any leeway with new regulations.

The 20 main bankers, during a recent meeting of Emirates Banks Association, had reported to the Central Bank that if new ratios were applied, only 2 to 3 percent of their clients will benefit from this, while 98 percent of the clients will not be able to pay the proposed down payment.

The loan to value ratios proposed by Central Bank are 70 percent for nationals and 50 percent for expatriates respectively. This implies that expats would be able to get a mortgage for 50 percent of the value of the property, while nationals could get a mortgage for 70 percent.

The new loan ratios are likely to be finalized by the Central Bank in six to nine months time.

Banks also discussed about funding of the second property and any subsequent property purchases.

Dr. Ashour pointed out that a ratio of 65 percent for nationals and 60 percent for expatriates for second and subsequent properties, provided they are already constructed, has been proposed.

Another suggestion submitted to the Central Bank was to take a decision considering the salary factor, rather than a decision based on Emirati or expatriate factor, and also to take other aspects into account such as nature of residence, credit and resident’s history, and other factors.

Dr. Ashour further said that there will be no off-plan selling or purchases at all, as per the new mortgage system. The unit that will be mortgaged and financed should have completed at least 60 percent construction, in order to be qualified for any banking finances.

The Regional Director and Head of Abu Dhabi office, David Dudley, said that the recovery of Abu Dhabi real estate market is to a large extent linked to the government investing in infrastructure, economic development, social development projects that general GDP growth, employment growth and provide better income, thereby driving demand for real estate and further improving Abu Dhabi’s urban offering.

The recovery of Abu Dhabi real estate markets will be directly linked to these projects generating new jobs and employment growth, and more such announcements are expected in 2013. The Abu Dhabi market cycle is at a time lag to Dubai, so the recent signs of recovery in Dubai, are certainly encouraging news for Abu Dhabi, he said.

Tuesday, January 22, 2013

Short-term finance options opened to property buyers


The private companies who own complete floors in completed buildings, have joined hands with developers, in offering easy finance options to property buyers in Dubai, showing signs of steady recovery.

A Dubai-based real estate marketing company, Modelux Properties is offering three-year payment plan for Axis Residences 2 in Dubai Silicon Oasis. The buyers will have to submit a down payment of 10 percent, with first payment on 1st February, and then 15 percent on handover. The rest 65 percent can be paid in three years.

Another finance offer from Deyaar Development is for the Oakwood Residency apartments which are already completed in the International Media Production Zone, and the offer is for as low as Dh.390,000. In this case, the buyer has to make a down-payment of 20 percent, while the rest 80 percent can be paid in easy installments within three years. The tower houses 344 single and double bedroom units, with a range of amenities including gymnasium, sauna and steam rooms for men and women, rooftop swimming pool and ample parking space.

Deyaar has announced a scheme during Cityscape 2012, whereby the buyer had to make a down-payment of 25 percent, while the rest 75 percent could be paid in installments within 15 months, for the Clayton Residency project in Business Bay.

Meanwhile, the Dubai-based master developer, Nakheel, was also offering end-user financing for units in Masakin Al Furjan, Al Furjan, Badrah, International City and Jumeirah Village. The buyers had to make 20 percent down payment, following which, they could move into their apartments and pay the rest 80 percent within a three year period.

The finance options by developers seem attractive to end-users, as just before the start of 2013, the UAE Central Bank capped mortgage credit for expats at 50 percent for the first property and 40 percent for purchase of second property and other units.

The Founder, Value Homes Real Estate Brokers, Rakesh Bohra, said that several private investors who own units in residential and office towers in Business Bay, are now offloading their inventory through easy payment options.

In fact, a private investor in a commercial tower in Business Bay is said to be offering 10 percent payment in four installments, following which, the keys are handed over to investors, and they are allowed to lease the space. The rest 60 percent can be paid in two years time, he said.

However, mortgage consultants are not coming out with long-term finance options, as for developers, that would mean changing their business pattern altogether, said Sam Wani, General Manager, Independent Finance.

Friday, January 18, 2013

Dubai Marina, Palm Jumeirah, records top 10 residential transactions


Dubai Marina and Palm Jumeirah topped the list of biggest residential real estate transactions last year, with the costliest transaction being sale of an apartment in ‘Le Reve’ in Dubai Marnia, for Dh.34.7mn. 

The information provided by Reidin.com, indicates that the apartment was purchased at the public auction by Dubai Land Department in November. Four, out of the top 10 biggest deals that took place in this ultra-luxury tower, comprises only penthouses, totalling to more than Dh.90mn.

An apartment in Ocean Heights, Dubai Marina, was sold for Dh.25.55mn, and this was the second costliest transaction, followed by an apartment in Kempinki Palm Jumeirah Residences, sold for Dh.23.41mn. 

Two villa transactions on the Palm Jumeirah, worth Dh.22mn and Dh.21.12mn have made it to the fourth and fifth place respectively.

The sixth, eighth and ninth places were Le Reve apartments, sold for Dh.20.5mn, Dh.18.5mn and Dh.18mn respectively. The seventh place was for the Kempinski Palm Jumeirah Residences unit sold for Dh.19.14mn.

Reidin.com is an exclusive partner, and primary data source for information service in the emerging markets.
The largest residential real estate transaction in the year 2011 was registered in Burj Khalifa, the world’s tallest building, with price topping Dh.28mn, in 2011. 

According to Jones Lang LaSalle report in the fourth quarter of 2012, the asking apartment sale prices last year went up by 12 percent in prime buildings within established locations year-on-year, while asking prices for villas have grown by 24 percent year-on-year.

Villa sales prices are likely to continue their upward trend in 2013, in well-established prime areas, the global real estate consultancy said. 

The latest Citibank report said that Dubai’s economic rebound and improved investor sentiment breathed life into real estate market in recent months, with volume and value of property transactions having increased since the start of the year.  

Wednesday, January 16, 2013

Emaar to launch new luxury tower in Downtown on 26th January


Dubai's largest developer, Emaar Properties, will be launching a luxury tower, The Address Residence Fountain Views in Downtown Dubai district later in the month.

The public launch of the new tower is scheduled for 26th January, as per the invite sent by the developer to its registered real estate agents. This will be the first project to be launched by Emaar this year.

The developer during the month of November 2012 announced the launch of new luxury homes and serviced residences in Downtown Dubai, and begin expansion of the Dubai Mall by building a new high-street boulevard style retail destination.

Emaar recently launched the ‘Sky Collection’, a range of three, four and five bedroom serviced residences, penthouses, and duplexes, all on the uppermost levels of The Address The BVLD hotel and serviced apartment tower. The tower, with 200 hotel rooms and 523 serviced residences, was launched in September 2012, and recorded a sell-out response from investors.

Brookfield Multiplex has begun work on the tower, located in proximity to Burj Khalifa, the world’s tallest tower.

Emaar had sold its units in The Address The BVLD, at Dh.29,000 per square metre, which is more than double the prevailing sales prices in the area.

Monday, January 14, 2013

International City most preferred by start-up firms in Dubai


Small businesses in Dubai that are in dearth of ready funds are favouring International City as preferred location for office premises, a real estate firm said.

The Managing Director of Orion Holdings, Samir Munishi, said that low rental rates and a central location are the prime attractions of International City. The mixed-use development has emerged as a top destination for start-ups and newly launched small businesses specializing in retail, trade and services.

Ever-since its establishment, International City, a theme-based cosmopolitan community has been drawing in small businesses, as rents here are way below those in other parts of Dubai. Further, the location of International City, makes it easier to serve clients across the UAE and in the wider region, Munshi said.
In 2008, International City, spread across 8 million square metres had occupancy rate of just 40 percent. Today, all residential and commercial units have near 100 percent occupancy, says the statement issued by Orion Holdings.

The Jumeirah Lake Towers Free Zone (JLT Free Zone) has been at the fore-front in attracting start-ups, with more than 4000 registered businesses.

According to Munshi, the right office location can make or break a business. Hence, it makes better sense to open an office in a location such as International City, where it is easier to obtain trade license, while also taking advantage of low office rents.

Munsi said that small businesses are vital and major contributors to economic development and job creation. International City has been instrumental in giving the much required boost to small businesses that have limited capital.

International City is divided into theme-based clusters such as France, England, China, Morocco, Italy, Greece, Russia and Spain amongst others. Clusters are so named, as each building in their respective district represents the design structure found in those countries.

From commercial point of view, investors in International City are being rewarded with Capital growth at the rate of 20 to 30 percent return on investment, particularly in Spain, England, France, Italy and Russia clusters. All basic amenities such as post office, banks and police station are already present in the area. Further, RTA Bus service links the area to Rashidiya Metro Station and also to every major business address in Dubai. It is in close proximity to Dubai International Academic City, which hosts world’s leading universities.

Apart from residential properties, analysts predict further increase in demand for commercial properties in International City, as the area has a population over 200,000 now. The growth is largely due to demand for supermarkets, coffee shops, restaurants, grocery shops, pharmacies and several need-based services.

Thursday, January 10, 2013

More than Dh 404bn worth new real estate projects in pipeline


Dubai has signed real estate projects worth over $110bn in November alone, thereby making the total preliminary/early stage projects to $199bn in UAE alone, said a Citi report.

The global bank, in its new Mena Construction Project Tracker report, said that one of the important points to be noted is that UAE projects now stand at $199bn, marking an increase of 127 percent from $88bn in October, a Citi report said.

The early stage projects in the MENA region has increased by 17percent, to $655bn since October, and UAE has surpassed Saudi Arabia in the early stage projects category. The early stage projects in Saudi Arabia are worth $172bn, it said.

During the fourth quarter of 2012, a series of mega projects were announced by Dubai government and private entities. Dubai made the biggest announcement in November, with the launch of ‘Mohammad Bin Rashid City’, which comprises a family centre for leisure and entertainment, in collaboration with Universal Studios; the largest shopping mall in the world with more than 100 hotel amenities to meet needs of visitors, namely the Mall of the World.

In the same month, Dubai also approved the development of Dh.10bn destination with five distinct theme parks based on movies, animals and fun characters that appeal to all demographics.

In October, private developers took the stage with Link Global Group announcing plans to build $1bn Taj Arabia project and Sobha Group launching Sobha City, a project that spreads across 8 million square feet of land in Meydan City, while Dubai also endorsed the Dh.1.5bn Business Bay Canal Project, and Meydan Group launched the Hadaeq Sheikh Mohammed bin Rashid and Meydan Tower.

The Citi report pointed out that this is the first time, since the first quarter of 2010 that UAE has shown growth in terms of projects planned and underway. The market has shown 6percent year-on-year growth touching $614bn, driven by recently announced Dubai mega real estate projects.

On the other hand, although the percentage of delayed and cancelled projects in UAE has decreased by 7 percent, the country still tops the list of delayed and cancelled projects worth $703bn.

Tuesday, January 08, 2013

Meadows, Palm Jumeirah, Emirates Hills to see steady price growth this year


The prime residential areas in Dubai will witness a steady and sustainable price increase in 2013, say real estate experts.

Established villa communities such as Meadows, Emirates Hills and Palm Jumeirah, will remain attractive for buyers this year, in comparison to secondary villa markets. The high-end villa developments such as those found in Meadows, Palm, and Emirates Hills, will continue to outperform the secondary villa markets.
Meanwhile, in the apartments sector, the Downtown Dubai will continue to dominate. The prices of apartments in prime locations such as Downtown Dubai, will see maximum increase this year, said Richard Paul, Associate Director at Cluttons Dubai.

On the whole, any development that meets quality specifications, design and is in a prime location will see better growth in 2013, he said.

Leading global property consultancy, Knight Frank, said that Dubai’s status of being a ‘safe haven’ for buyers in Middle East and North Africa region, has pushed the villa prices by 20 percent last year.

According to Mohanad Alwadiya, Harbour Real Estate, the prices will continue to grow in 2013. The prices of properties, particularly villas, have grown over the past 18 months. The best performing areas have been the Arabian Ranches and Villa project, wherein the price appreciation, which has increased by 25 percent in comparison to last year.

Alwadiya is of the opinion that villas in established communities will continue to show up investment opportunities.

Deepak Jain, the Head of Strategic Consulting, MENA at Jones Lang LaSalle, revealed that the prices in 2012 showed robust growth in quality areas. However, it is difficult to predict if the prices will continue to grow at the same pace or more.

Further, with several new projects being announced, the increased future supply will also increased pressure on pricing. There may be steady growth in prime locations, but the new supplies likely in future, may soften the growth.

The JLL fourth quarter report indicates that the price recovery was most evident in the villa sector, which grew 23 percent year-on-year, in comparison to apartment sector, wherein the prices grew by just 4 percent.

The Assistant Manager, Real estate department, Kuwait Financial Centre (Markaz), Ramadoss Venkateshwaran, has ruled out any “dramatic” increase in prices. In Dubai, several new projects are likely to be delivered in 2013, but, a dramatic rise in overall price levels is unlikely. However, any liquidity flow driven price rises may not be ruled out.

Friday, January 04, 2013

New mortgage law in UAE comes as a shocker for expats


The new mortgage rule in the UAE bans expatriates from borrowing more than 50% of the value of properties. According to analysts, this is likely to endanger the real estate market recovery in the UAE.
The latest circular issued by the UAE Central Bank states that maximum loan-to-value ratio has been set up for expatriates at 50% for their first homes, while UAE nationals can borrow up to 70% of the value for their first homes.
The limits also include 40% loan-to-value cap on second home of expatriates and 60% cap for nationals on second home.
If all banks are required to adhere to this rule, then this will serve as major blow on the UAE real estate market, particularly in Dubai, say analysts.
The property prices in Dubai indicated a recovery last year, with confidence having returned and the country benefitting from its status as a ‘safe haven’ amidst social unrest elsewhere in the Middle East. The real estate market in Dubai had been badly hit following the global financial crisis in 2008, with prices having dropped by more than 60% in some areas.
The Chief Executive of Colliers Middle East, John Davis, said that there will be less property transactions, as all of a sudden there is significant section of the market taken away. 
Earlier there was no loan-to-value cap and mortgage loans ranging from 75% to 90% of property value were common. The central bank circular is yet to specify a date from which this new rule is likely to get effective, but, has emphasized that all banks and financial institutions will have to comply with this notice.
According to an analyst at VTB Capital in Dubai, the restrictions could reduce transactions in Dubai by as much as 60%.  He said that as it is very damaging, and comes as shocking news to banks and expats, the central bank may offer some reprieve. 
Such a decision by the Central Bank is thought to have been taken in a bid to strengthen the financial sector of the country following the 2008 global financial distress, and the regional debt default crisis, which has jolted several local banks. Further, the new rule is thought to keep speculators at bay, who may be targeting a resurgent property market in the UAE, and Dubai in particular. 
The new rule comes amidst steady recovery in the real estate sector in the second largest Arab economy with shares of most real estate firms rising in 2012. The UAE aims to join Saudi Arabia, the largest Arab economy, in implementing a mortgage law in the real estate sector, which was severely jolted in the wake of 2008 global fiscal distress.



Wednesday, January 02, 2013

Prices of Downtown Dubai properties surge by 6 to 10 percent in Q4 2012


The real estate prices in Downtown Dubai, a development with iconic structures such as Burj Khalifa and Dubai Mall, have grown 6 to 10 percent in the fourth quarter alone this year, in comparison to the third quarter, say real estate agents.

A Residential Consultant at Better Homes, Asal Abedi, said that there is high demand for properties in Downtown district, while there is decrease in supply and properties listed for sales or rent. The area has witnessed price increase as much as 10 percent during fourth quarter this year when compared to third quarter.

Overall, the increase in real estate prices has grown by 20 to 25 percent depending on the property and location in the Downtown area.

The Managing Director of Harbour Real Estate, Mohanad Alwadiya, said that properties in the district pushed prices by six percent in the fourth quarter alone. The sale prices have gone up by three and five percent respectively in the second and third quarter, and has further grown by six percent in the fourth quarter.

On an average, the Downtown area saw an increase of 11 to 14 percent in selling prices since start of the year, he said.

The Downtown has and will always continue to draw tenants, as it is a quality development, in a strategic location, and is a family-friendly community.

According to CEO of PropSquare Real Estate, Parvees Gafur, the maximum price increase in the district has been seen in the fourth quarter, with demand having soared after the launch of The Address The Boulevard apartments.

The prices have gone up by 15 to 20 percent from start of the year till date, depending on the towers in the district and offering, he said.

The property prices have grown by 13 percent in prime locations, with the Downtown Dubai developments having appreciated by more than 20 percent year-on-year, said CB Richard Ellis, in their latest report.

The master developer of Downtown district, Emaar Properties, have announced expansion of Dubai Mall, and recently launched the “Sky Collection” in The Address The BVLD project.

Even a foreclosed property in Downtown Dubai that went under hammer at a public auction in early December this year, was sold at double its reserve price. The Reehan 1 apartment in Downtown Dubai was purchased for Dh.1.39mn (Base price: Dh.700,000).