Thursday, August 29, 2013

Latest fund repatriation limits may hamper Dubai property market

With new limits being set for the extent of funds that high net-worth Indian investors can repatriate abroad per year, may hamper the real estate market in Dubai. It may prove to be particularly troublesome for developers with forthcoming installments due from Indian buyers in India.

This new regulatory limit permits a domestic Indian investor to invest only up to $75,000 (Dh.275,478) per annum, in comparison to $200,000 earlier. While this is likely to keep away prospective Indian investors from acquiring new properties abroad, it also implies that keeping up the instalments on completed transactions may prove to be a burden.

Damac and Emaar, the two leading developers in Dubai, were marketing their recently launched developments extensively in India. In particular, the sprawling upscale ‘Akoya’ by Damac, the golf-themed project, was extensively air-played on airports and media platforms in India.

Damac Properties has so far not commented on whether it would consider re-scheduling any payments due from India-based investors, in the wake of revised limits on fund outflows.

However, the Property Sales Manager at SPF Realty, which counts India-based investors among its client base, said that the developers in Dubai are re-working their installment programmes, as the current weakened state of Indian economy seems to be a temporary phase, and there are high prospects for the Indian government to pull back such temporary laws.

Although, the status of property market needs to be waited and watched, it is also said that Dubai property market is going through a steady up-growth as it is. Meanwhile, investment advisors too, are of the opinion that UAE property market can take the India move in its stride.

Speaking on this issue, Kalani Lal, CEO of KBC – Aldini Capital at DIFC, said that majority of the investors are either UAE or GCC residents or Middle East buyers. As for fund repatriation limits, Kalani said that the RBI has reduced remittance limit to overseas account to $75,000 (earlier $200,000) on annual basis, and this has been done to preserve forex reserves.

Such restrictions are unlikely to leave a major impact as historically the amount remitted by resident Indian individuals to overseas accounts have been very little.

Monday, August 26, 2013

Will weakening Indian Rupee affect Dubai real estate market?

According to experts, the weakening Indian rupee will affect several Indian investors in the Dubai realty market.

A UAE-based economist, Dr. Mohammad Al Asoomi, said that he does not expect investors to take their money back to India, at least in the short term. The Indian investment in Dubai realty market will see a decline, but, it may not impact an opportunity-rick market like Dubai in a major way.

He further said that Indian are the top investors in Dubai’s realty market and it is likely to continue that way. The Indian capital will not go back to India to take advantage of the currency’s depreciation.

In the short-term, investors will not take risk and direct their investments to India, as the rupee could regain its value soon, but, the long-term scenario cannot be predicted, he said.

However, Al Asoomi said that Dubai, being an international real estate market, new investors would fill the void created by Indians, if they take their money home.

Meanwhile, the Head of Business Materials Group in Dubai, Mahendra Patel, said that Rupee will affect Indian investment in Dubai real estate market. Indians will now be more hesitant to invest, as they will face lot of obstacles, with the Indian government having placed tough restrictions to control money transfer from India. Therefore, investment in Dubai or any other market for that matter, would prove too costly.

Although Dubai is the most favourable destination for Indian investments, there will be changes as return of this business will not cover rupee value depreciation in the short-term, he added.

The Vice-Chairman at Sobha Real Estate, Ajay Rajendran, on the other hand, said that any change in the Dubai market will be very limited. With some investors getting more cautious now, there will only be marginal drop in property buyers. But, not all investors are based in India. They come from various destinations.

On the whole, not all believe that rupee decline will slow-down Indian transactions in Dubai realty market. The Head of Dubai Property Society (DPS), Ahmad Thani Al Matroushi, said that Indians will invest more in Dubai real estate market, in any case, as they have lesser alternatives in the Gulf region.

Further, there is always the added advantage for Dubai, as it is a tax-free market, and the investors will be still compensated well from the currency’s depreciation. Dubai realty market is a lucrative one with stability, diversity and high-return on investment, he pointed out.

Foreign investors contributed to 32 percent of total investments in Dubai, with 73 percent growth in comparison to same period last year, as per statistics by Dubail Land Department. The real estate market in the emirate drew Dh.53bn worth investments during first half of 2013, marking 49 percent year-on-year increase.

As per estimates by Land Department, Indian investors contributed to bulk of foreign investments in Dubai real estate market, with Indian transactions being worth Dh.8bn during first half of 2013, followed by investors from UK and Pakistan.

Monday, August 19, 2013

Will Indians continue to be topmost real estate investors in Dubai in future?

Indians planning to purchase international real estate at attractive valuations are now facing the hitch, despite attractive valuations in Dubai, UAE and other Gulf cities.

The Wealth Report 2012 by the leading global property consultancy, Knight Frank, revealed that value of prime luxury properties in Mumbai are nearly double the prices in Dubai. Besides, cost of purchase in the case of a newly built residential property in Dubai, is much lower than in India, where the residents will have to shell out registration fee, VAT etc.

The Dubai Land Department revealed that Indians purchased more than Dh.8bn worth properties already during first half of this year, in comparison to Dh.9bn which they invested in the whole of 2012. Over the years, Indians have topped the list of expat real estate investors in Dubai.

However in an effort to support the falling Rupee value, the Reserve Bank of India (RBI) recently cut the limit of remittances made by resident individuals from $200,000 to $75,000 per financial year under the Liberalised Remittance Scheme (LRS). The notice also said that residents cannot use money from LRS to acquire immovable property outside India directly or indirectly.

These new restrictions by RBI pertaining to Indians investing in international real estate under the LRS have been introduced in an effort to stabilize the rupee. This move will have medium to long-term implications. Individuals, who were planning to purchase international real estate at attractive valuations and planning for their kids education and housing abroad, will have to change their plans now, said Om Ahuja, Chief Executive Officer – Residential Services, JLL.

Moreover, at present, there are several options in the international real estate market that offer attractive rental yield and valuations, making the proposition of investing in property abroad a potentially lucrative one.
Although cash transactions by Indians may dampen, a few local banks in UAE have begun giving mortgages to non-UAE residents although loan-to-asset values have been capped at 50 percent of property value. This may help boost sales to certain extent, but, it needs to be watched as to how many non-residents will resort to such home financing.

Monday, August 12, 2013

Discovery Garden units record 88 percent growth in sale transactions

Dubai's Discovery Gardens, which was among the most affordable communities in the emirate, has recorded 88 percent growth in sale transactions during the first six months of 2013, in comparison to same period last year.

There has been 18 percent rise in average prices, touching Dh.692.8 per square foot, in comparison to Dh.587 per square foot data, as shared by Reidin.com.

During the first half of the year, 400 apartments have been sold as against just 213 units sold during the same period last year, marking 88 percent growth. These figures are as per data registered with the Dubai Land Department.

At present, the prices of studios are in the range Dh.430,000 to Dh.500,000, while single bedrooms are being sold for Dh.600,000 to Dh.750,000. Following the real estate crisis in 2008, studios and single bedroom apartments are being sold for Dh.250,000 and Dh.350,000 respectively.

Due to its proximity to Ibn Battuta Metro Station, rentals have grown considerably and investors are able to gain six to eight percent return on their investments in Discovery Garden units.

Further, Nakheel, the master developer, has also announced plans to build a retail community centre in Discovery Gardens. There are several swimming pools within the community now, and other features such as access control systems and CCTVs to offer safety to residents.

Spanning more than 26 million square feet, Discovery Gardens offer 291 buildings comprising more than 26,000 residential units. The development comprises six themed communities drawing inspiration from garden living and includes Contemporary, Mediterranean, Cactus courtyard gardens, Mesoamerican and Mogul.

Leading Property Consultant, Knight Frank, in their latest report said that real estate prices in Dubai have grown 18.3 percent over the past one year, and the emirate has been maintaining its position among the top five best performing real estate markets in the world.

Tuesday, August 06, 2013

Dubai to re-fund investors in officially cancelled property projects

Dubai will liquidate several cancelled real estate projects and use the funds to repay investors who lost billions of dollars in the real estate market of the emirate, say latest reports.

As per the latest decree by the Ruler of Dubai, Sheikh Mohammed bin Rashid Al-Maktoum, a special legal committee would be formed to settle disputes pertaining to projects that have been officially cancelled by RERA.

The crash of the property market in Dubai during 2009-10, had more than halved the real estate prices in the emirate, compelling developers to scrap off hundreds of projects. While few developers shut down, others left without keeping their customers informed.

Several individuals and corporations had purchased properties and handed over the money, while the projects were still in their initial design stages, and they never saw the light of those projects till date, and they were not able to recover their money too.

Nearly 217 property projects were cancelled in Dubai during 2009-11, as per the data compiled by RERA last year. These included a Tiger-Woods branded golf course and a kilometre tall tower to be built by Nakheel.

Dubai has now almost recovered from the crisis, and prices of properties have begun to rebound, but, the legacy of unpaid debts and unsettled contracts may come in the way of recovery. The new committee will examine the financial status of the developers and analyze deposits in the case of cancelled projects.  The committee will then take the necessary actions and issue decisions that guarantee the right of those who have purchased properties falling into this category.

The new committee will supersede all courts in Dubai, including those in Dubai International Financial Centre. Several state-funded mega projects such as the Palm Deira by Nakheel, Palm Jebel Ali and the World, were sold to investors and later stalled. They will not be however, handled by the new committee, as they have not been officially scrapped, and are merely delayed indefinitely.