Decline in property prices unlikely; Dubai may see correction in profit
Saturday, October 04, 2008
Property prices in Dubai are unlikely to decline by 2010, as against predicted in the recent reports, but, there will be a correction in profits, revealed the top officials at Dubai Land Department (DLD).
Although several reports and analysts are predicting a dim future for Dubai's property sector, optimists are still of the opinion that it is just the beginning of success for Dubai.
According to CEO of RERA(Real Estate Regulatory Authority), Marwan Bin Ghalita, there will be correction in few places, but only in profit. Instead of making a profit of 20 percent, may be, several investors will make a profit of 5 percent, but they are not losing anything.
A 10 percent decline in Dubai property prices is likely towards 2010, said a recent Morgan Stanley report.
Even the investment Bank, EFG Hermes, in their report mentioned that a 20 percent decline in property prices is likely towards 2011.
However, the Director General of DLD, Sultan Bin Butti Bin Mejrin, said that despite such reports Dubai's property sector continues to remain robust.
He pointed out that similar reports had cropped up in 2007, but Dubai continued to remain a strong market, much against predictions. The DLD is still registering Dh.200bn worth transactions, and the market continues to remain healthy.
Agreeing with DLD, even Abid Junaid, Executive Director of ETA Star Properties, said that a drop in property prices is unlikely in the near future. The popularity of Dubai with investors is mainly due to the lifestyle offered, its ideal positioning in the Middle East and its tax-free structure. None of these has changed.
The DLD has so far registered 5,099 plots in Dubai, with investors of various nationalities, including UAE nationals. Indians continue to be the largest number of home owners. Economists at Standard Chartered, suggests introduction of a 50 percent capital gains tax to eradicate speculators.
The DLD last week had last week announced that a rental index, meant for new entrants to Dubai, would be announced post Eid Al Fitr. The index will work together with the new rent cap. However, it is yet to be known if the new cap will be more or less than the current five percent, but, it is believed to include a different 'mechanism'.
Social BookmarkingAlthough several reports and analysts are predicting a dim future for Dubai's property sector, optimists are still of the opinion that it is just the beginning of success for Dubai.
According to CEO of RERA(Real Estate Regulatory Authority), Marwan Bin Ghalita, there will be correction in few places, but only in profit. Instead of making a profit of 20 percent, may be, several investors will make a profit of 5 percent, but they are not losing anything.
A 10 percent decline in Dubai property prices is likely towards 2010, said a recent Morgan Stanley report.
Even the investment Bank, EFG Hermes, in their report mentioned that a 20 percent decline in property prices is likely towards 2011.
However, the Director General of DLD, Sultan Bin Butti Bin Mejrin, said that despite such reports Dubai's property sector continues to remain robust.
He pointed out that similar reports had cropped up in 2007, but Dubai continued to remain a strong market, much against predictions. The DLD is still registering Dh.200bn worth transactions, and the market continues to remain healthy.
Agreeing with DLD, even Abid Junaid, Executive Director of ETA Star Properties, said that a drop in property prices is unlikely in the near future. The popularity of Dubai with investors is mainly due to the lifestyle offered, its ideal positioning in the Middle East and its tax-free structure. None of these has changed.
The DLD has so far registered 5,099 plots in Dubai, with investors of various nationalities, including UAE nationals. Indians continue to be the largest number of home owners. Economists at Standard Chartered, suggests introduction of a 50 percent capital gains tax to eradicate speculators.
The DLD last week had last week announced that a rental index, meant for new entrants to Dubai, would be announced post Eid Al Fitr. The index will work together with the new rent cap. However, it is yet to be known if the new cap will be more or less than the current five percent, but, it is believed to include a different 'mechanism'.
Labels: Dubai Real Estate, Market Trends, Property Prices
Value of properties on Reem Island found appreciating
Monday, September 08, 2008
Property prices on Reem Island, a commercial, residential and business project, across the coast of Abu Dhabi, have more than doubled touching Dh.3000 per square foot from Dh.950 over the past couple of months.
According to Vincent Eastone, Sales Director, Sherwoods Independent Property Consultants, a rapid growth has been noticed during the past three years, not only in terms of new projects, but also in prices of properties. The current Abu Dhabi market, although interesting, is largely led by speculation. Although speculation is healthy, as it helps attract international interest and attracts investors seeking short-term gains, it is not sustainable.
There exist high chances of creating a bubble effect. For instance, what should have been a gradual increase over a three year period is seen happening in nine-months.
A market attracting short-term investors will have a risk factor involved, as to whether the investors would remain committed and continue their future payment plans or whether they would exit.
Easton also pointed out that the situation is very much the same in Dubai. For instance, when during the first six months of this year, several people were crowding during the launch of residential units by Emaar at Downtown Burj Dubai, while only 200 to 300 units were available. There is still a huge demand for major projects, and this indicates that there is still a healthy level of interest in UAE.
When compared to other international cities, Dubai is comparatively a young market, maturing gradually. Establishment of RERA has been a major step ahead, although, there is need for more structuring regulations and transparency in the market. RERA and Dubai Land Department have done good jobs till date, Easton commented.
Social BookmarkingAccording to Vincent Eastone, Sales Director, Sherwoods Independent Property Consultants, a rapid growth has been noticed during the past three years, not only in terms of new projects, but also in prices of properties. The current Abu Dhabi market, although interesting, is largely led by speculation. Although speculation is healthy, as it helps attract international interest and attracts investors seeking short-term gains, it is not sustainable.
There exist high chances of creating a bubble effect. For instance, what should have been a gradual increase over a three year period is seen happening in nine-months.
A market attracting short-term investors will have a risk factor involved, as to whether the investors would remain committed and continue their future payment plans or whether they would exit.
Easton also pointed out that the situation is very much the same in Dubai. For instance, when during the first six months of this year, several people were crowding during the launch of residential units by Emaar at Downtown Burj Dubai, while only 200 to 300 units were available. There is still a huge demand for major projects, and this indicates that there is still a healthy level of interest in UAE.
When compared to other international cities, Dubai is comparatively a young market, maturing gradually. Establishment of RERA has been a major step ahead, although, there is need for more structuring regulations and transparency in the market. RERA and Dubai Land Department have done good jobs till date, Easton commented.
Labels: Abu Dhabi, Al Reem Island, Market Trends, Property Prices
Dubai property prices likely to fall 10 percent
Wednesday, August 06, 2008
The property prices in Dubai have surged 79 percent since 2007, and, may fall 10 percent by 2010, with the supply surpassing demand in the Gulf emirate, reveals a research not by Morgan Stanley.
This correction in Dubai's realty sector could have an undulation effect on its neighbouring countries in the region, with the shares of 12 regional property firms, dropping an average of 35 percent, states the research note.
At the worst, Dubai property prices may follow the pattern experience during the late 1990s in Singapore, wherein property prices dropped 80 percent in 18 months, although it is a "low probability event", said Morgan Stanley report.
Dubai property market will see an oversupply in 2009, which will lead to a series of price declines. Although these price declines are limited to Dubai, given the level of undersupply in neighboring markets, one cannot ignore the 'contagion' effect on Middle East, North Africa property share prices, with the investor confidence levels dropping down, Morgan Stanley said.
Being home to man-made palm-shaped islands and indoor ski slope in the Desert, Dubai hit the property boom in the region in 2002, when the foreigners were invited to invest in real estate. Thereafter, the regional economic growth in Dubai was supported manifold by the rise in oil prices, which drew streams of investors into the business and trade hub.
The Standard Chartered Bank last month mentioned that Dubai was boiling with speculators inflating prices of real estate that are still under construction. It was recommended that the emirate introduce capital gain tax to deter short-term investors.
Now, as per the Morgan Stanley price index, the property prices in Dubai surged 25 percent during first half of 2008, but is higher by 79 percent as against that in the beginning of 2007. The price increases have been driven by a variety of factors including speculation, genuine demand, and escalating construction costs.
For 2009, the prices will begin feeling the pressure, once oversupply becomes evident. Hence a 10 percent decline in property prices can be expected between 2008 and 2010, reveals the Morgan Stanley note.
Few developers are in fact, trying to keep away short-term investors. The developer of the Palm Island, Nakheel, has asked buyers at Trump International Hotel, to wait for a year, before selling off their units to the secondary market.
Although, Dubai is the leader for the Gulf Property market, the minor relaxation in prices in the emirate, may however, not bear an impact on Abu Dhabi and Qatar, as the property sectors here is likely to remain undersupplied until 2012, the report concluded.
Social BookmarkingThis correction in Dubai's realty sector could have an undulation effect on its neighbouring countries in the region, with the shares of 12 regional property firms, dropping an average of 35 percent, states the research note.
At the worst, Dubai property prices may follow the pattern experience during the late 1990s in Singapore, wherein property prices dropped 80 percent in 18 months, although it is a "low probability event", said Morgan Stanley report.
Dubai property market will see an oversupply in 2009, which will lead to a series of price declines. Although these price declines are limited to Dubai, given the level of undersupply in neighboring markets, one cannot ignore the 'contagion' effect on Middle East, North Africa property share prices, with the investor confidence levels dropping down, Morgan Stanley said.
Being home to man-made palm-shaped islands and indoor ski slope in the Desert, Dubai hit the property boom in the region in 2002, when the foreigners were invited to invest in real estate. Thereafter, the regional economic growth in Dubai was supported manifold by the rise in oil prices, which drew streams of investors into the business and trade hub.
The Standard Chartered Bank last month mentioned that Dubai was boiling with speculators inflating prices of real estate that are still under construction. It was recommended that the emirate introduce capital gain tax to deter short-term investors.
Now, as per the Morgan Stanley price index, the property prices in Dubai surged 25 percent during first half of 2008, but is higher by 79 percent as against that in the beginning of 2007. The price increases have been driven by a variety of factors including speculation, genuine demand, and escalating construction costs.
For 2009, the prices will begin feeling the pressure, once oversupply becomes evident. Hence a 10 percent decline in property prices can be expected between 2008 and 2010, reveals the Morgan Stanley note.
Few developers are in fact, trying to keep away short-term investors. The developer of the Palm Island, Nakheel, has asked buyers at Trump International Hotel, to wait for a year, before selling off their units to the secondary market.
Although, Dubai is the leader for the Gulf Property market, the minor relaxation in prices in the emirate, may however, not bear an impact on Abu Dhabi and Qatar, as the property sectors here is likely to remain undersupplied until 2012, the report concluded.
Labels: Dubai Real Estate, Market Trends, Property Prices
Investors prefer buying properties than renting them
Thursday, July 31, 2008
An increasing tendency has been noticed among UAE residents to purchase properties rather than opt for rentals, as mounting rental prices are compelling them to seek an alternative housing accommodation, reveals Chris Dommet, the CEO of John Charcoal, Dubai, a leading independent mortgage advisor firm.
Dommett explains that a steady increase has been noticed in rental prices of UAE during the last few years, and purchasing a property seems to be an attractive option to expats who are seeking to build equity from the considerable financial investments that they are making back at their home countries.
Gone are the days when expatriates allowed their hard earned income to vanish in the form of rent. Now the Dubai's expat community is more aware about the local mortgage market and home lending services too, have become more accessible.
It has been considered that the most important financial advantage of purchasing a home is building equity. The option of going ahead for a fixed monthly payment on a long term is also considered a major incentive, with the rents in Dubai increasing year after year.
The large volume and variety of mortgage options in the market, and the low interest rates, have been appealing to a large number of expats, who are eager to tap the booming real estate industry in the region and also are looking forward to buy a property of their own.
Taking the price of the property, and its approximate return in consideration, majority of investors are finding the purchase option more economical, when compared to the rents they are paying.
But, despite the advantages, there are still several expatriates who are still willing to pay exorbitant rent rates, either due to lack of proper understanding of local real estate market, or due to slight hesitation in getting themselves involved in the property buying process of the supposedly daunting UAE market.
Social BookmarkingDommett explains that a steady increase has been noticed in rental prices of UAE during the last few years, and purchasing a property seems to be an attractive option to expats who are seeking to build equity from the considerable financial investments that they are making back at their home countries.
Gone are the days when expatriates allowed their hard earned income to vanish in the form of rent. Now the Dubai's expat community is more aware about the local mortgage market and home lending services too, have become more accessible.
It has been considered that the most important financial advantage of purchasing a home is building equity. The option of going ahead for a fixed monthly payment on a long term is also considered a major incentive, with the rents in Dubai increasing year after year.
The large volume and variety of mortgage options in the market, and the low interest rates, have been appealing to a large number of expats, who are eager to tap the booming real estate industry in the region and also are looking forward to buy a property of their own.
Taking the price of the property, and its approximate return in consideration, majority of investors are finding the purchase option more economical, when compared to the rents they are paying.
But, despite the advantages, there are still several expatriates who are still willing to pay exorbitant rent rates, either due to lack of proper understanding of local real estate market, or due to slight hesitation in getting themselves involved in the property buying process of the supposedly daunting UAE market.
Labels: Latest News, Market Trends, Property Prices, UAE
Residential property prices in Dubai may slow down in 2010
Monday, July 21, 2008
According to realty industry analysts, the residential property prices in Dubai are likely to continue its upward trend till 2010, until the demand-supply imbalance gets stabilized.
The Managing Director of Al Mal Capital Research, Robert McKinnon, said that the prices are likely to moderate by next year, although not substantially. With continued delays that plague the industry, one cannot expect a supply-demand balance until 2010.
Flurries of predictions have been witnessed during recent days regarding the supply-demand situation in Dubai, particularly with the major bulk of real estate units set to hit the property market.
As per the real estate price index in Dubai, an appreciation of 40.8 percent is seen in the residential sector each year. The prices in commercial property sector have risen by 42.7 percent during the same period.
Social BookmarkingThe Managing Director of Al Mal Capital Research, Robert McKinnon, said that the prices are likely to moderate by next year, although not substantially. With continued delays that plague the industry, one cannot expect a supply-demand balance until 2010.
Flurries of predictions have been witnessed during recent days regarding the supply-demand situation in Dubai, particularly with the major bulk of real estate units set to hit the property market.
As per the real estate price index in Dubai, an appreciation of 40.8 percent is seen in the residential sector each year. The prices in commercial property sector have risen by 42.7 percent during the same period.
Labels: Dubai Real Estate, Property Prices
Abu Dhabi realty prices to appreciate more than in Dubai
Tuesday, June 17, 2008
A strong growth, backed by huge demand, a growing population and liberalization of the real estate sector, is likely to keep prices strong in the Abu Dhabi real estate sector for the next seven years, reports EFG-Hermes, a regional investment bank.
The report states that the longevity and strength of the real estate phase in Abu Dhabi, is supported by shortages of all types of real estate, controlled by delivery of supply to avoid a surplus, coupled with greater economic liberalization, and creation of a unique identity.
According to the Author of the report, Sana Kapadia, "A strong government presence supports and caps on the amount of real estate that can be built on any given year to mitigate the risk of an oversupply of property."
No major additions of residential units are likely in Abu Dhabi until late 2009, and with the ever-growing demand, the residential market will remain under-supplied until the end of 2009.
It has been estimated that the average price of residential properties will increase by 20 to 25 percent, during the rest of this year, and by 15 to 20 percent in 2009.
Demand for office space, too, will remain strong, with current vacancy rates at 1 percent, and with newer businesses seeking to make their presence in Middle East, it has been predicted.
However, considerable supplies that are likely to come in during 2009, will help cool the rising rents and prices, it is said.
Meanwhile, in a survey conducted by DSL Exhibitions, an international firm, specializing in organizing conferences and exhibitions, real estate investors expect that prices of properties in Abu Dhabi are likely to appreciate more than that in Dubai and other northern emirates.
The survey was done to find out if there exist any differences in the perceptions and attitudes of real estate buyers, between choosing Dubai, Abu Dhabi or one of the Northern Emirates and to underline any apparent trends.
The survey has revealed considerable differences in the attitudes and perception of investors, who choose between the three regions - Abu Dhabi, Dubai and Northern Emirates.
The report states that the longevity and strength of the real estate phase in Abu Dhabi, is supported by shortages of all types of real estate, controlled by delivery of supply to avoid a surplus, coupled with greater economic liberalization, and creation of a unique identity.
According to the Author of the report, Sana Kapadia, "A strong government presence supports and caps on the amount of real estate that can be built on any given year to mitigate the risk of an oversupply of property."
No major additions of residential units are likely in Abu Dhabi until late 2009, and with the ever-growing demand, the residential market will remain under-supplied until the end of 2009.
It has been estimated that the average price of residential properties will increase by 20 to 25 percent, during the rest of this year, and by 15 to 20 percent in 2009.
Demand for office space, too, will remain strong, with current vacancy rates at 1 percent, and with newer businesses seeking to make their presence in Middle East, it has been predicted.
However, considerable supplies that are likely to come in during 2009, will help cool the rising rents and prices, it is said.
Meanwhile, in a survey conducted by DSL Exhibitions, an international firm, specializing in organizing conferences and exhibitions, real estate investors expect that prices of properties in Abu Dhabi are likely to appreciate more than that in Dubai and other northern emirates.
The survey was done to find out if there exist any differences in the perceptions and attitudes of real estate buyers, between choosing Dubai, Abu Dhabi or one of the Northern Emirates and to underline any apparent trends.
The survey has revealed considerable differences in the attitudes and perception of investors, who choose between the three regions - Abu Dhabi, Dubai and Northern Emirates.
Labels: Abu Dhabi, Property Prices, UAE
UAE - the most preferred choice of property investment in the region
Tuesday, April 22, 2008
Majority of foreign investors have purchased properties in the UAE than in any other Gulf States, reveals a recent survey by ArabianBusiness.com (Property Survey 2008).
About 95.5% of the respondents in the survey agreed that UAE was their popular choice of investment, being the leading market in the Gulf real estate boom.
According to the survey, majority of foreigners are purchasing properties as an investment, and are of the opinion that UAE would be the best Gulf market to yield maximum returns over the next two years.
Ever since the government opened its market for foreigners in 2002, the housing and rental prices have been on the increase, more so in recent years, due to housing shortage and high cost of construction.
The property prices in Abu Dhabi are likely to shoot up by 25% this year, according to a recent report by HSBC. In Dubai, a 15% rise is expected, as revealed by Standard Chartered Bank.
Among the 3000 respondents who participated in the survey, about 1.24% have purchased properties in Qatar, 1.04% in Bahrain, 0.52% in Saud Arabia, and 0.21% in Oman and Kuwait.
According to the survey, UAE is much ahead than Qatar, Saudi Arabia, Oman, Bahrain and Kuwait when it comes to offering best returns on buyer investments within a short-term.
For purchase of property, almost all nationalities favoured UAE over the other Gulf states. However, 10% of New Zealand nationalities had purchased properties in Bahrain, while 12.5% bought from Netherlands and Qatar.
The survey pointed out that no nationality had invested in the Kuwait realty sector, except Indians. It was also found that as majority of expatriates in the Gulf are Indians, they were the most active investors in the region, purchasing property in all the six Gulf States.
The survey pointed out that no nationality had invested in the Kuwait realty sector, except Indians. It was also found that as majority of expatriates in the Gulf are Indians, they were the most active investors in the region, purchasing property in all the six Gulf States.
Labels: Market Trends, Middle-East, Property Prices, UAE
Ajman property prices likely to soar by 30%
Tuesday, April 15, 2008
The boom witnessed in Ajman property market is primarily due to the economic growth and also due to the development taking place in its neighboring emirates Dubai and Sharjah.
Ajman has several reasonably priced residential projects that cater to the mid0-income groups. In fact, Ajman has the maximum number of medium-level developments, as majority of these are developed by players who are unable to bear the high construction cost of Dubai. To add to this, the new Escrow/Trust Account Law has brought out more stringent rules in Dubai, thereby decreasing the number of new medium-level developments there.
Analysts reveal that the price and rental structure of residential properties in Ajman are extremely moderate. Majority of developers offer affordable payment packages agreeable to mid-income standards. For instance, the price of a single bedroom apartment in Ajman’s Emirates City, is equivalent to that of a studio in Dubai. This has motivated several mid-income category buyers to re-assess their investment patterns.
In Ajman, the prices the average prices for a studio is US$600 per sqm and for a single bedroom apartment, it is US4480 per sqm.
Studies reveal that rates for residential properties in Ajman have surged by 30% in 2007. The demand for smaller units such as studios, single bedroom apartments too are surging, due to influx of expatriates from emirates of Dubai and Sharjah. They find Ajman to be a good residential and investment proposition due to its excellent connectivity to other emirates.
A similar growth rate in Ajman's property prices has been predicted by analysts for the year 2008-09 too.
Social BookmarkingAjman has several reasonably priced residential projects that cater to the mid0-income groups. In fact, Ajman has the maximum number of medium-level developments, as majority of these are developed by players who are unable to bear the high construction cost of Dubai. To add to this, the new Escrow/Trust Account Law has brought out more stringent rules in Dubai, thereby decreasing the number of new medium-level developments there.
Analysts reveal that the price and rental structure of residential properties in Ajman are extremely moderate. Majority of developers offer affordable payment packages agreeable to mid-income standards. For instance, the price of a single bedroom apartment in Ajman’s Emirates City, is equivalent to that of a studio in Dubai. This has motivated several mid-income category buyers to re-assess their investment patterns.
In Ajman, the prices the average prices for a studio is US$600 per sqm and for a single bedroom apartment, it is US4480 per sqm.
Studies reveal that rates for residential properties in Ajman have surged by 30% in 2007. The demand for smaller units such as studios, single bedroom apartments too are surging, due to influx of expatriates from emirates of Dubai and Sharjah. They find Ajman to be a good residential and investment proposition due to its excellent connectivity to other emirates.
A similar growth rate in Ajman's property prices has been predicted by analysts for the year 2008-09 too.
Labels: Ajman, Market Trends, Property Prices
Dubai realty market likely to be world's second most expensive, in 2008
Thursday, February 07, 2008
The shortage of housing supply, coupled with unprecedented increase in realty prices in 2008, will make Dubai realty market, the second most expensive in the world, only next to West End of London, reports HC Securities Brokerage.
The Egypt-based brokerage, in its Economy Watch Bulletin, reported that increasing growth rates have enabled expatriates with the means to rent houses at high rates, and the situation is quite unlikely to be resolved this year too, as the market would continue to experience shortage in supply of housing units.
The caps by Government have been unable to address the surge in inflation caused due to rapid increase in rents across the region. The HC Securities state that with the GCC rents forecast, further set to increase by 20% this year, the rents in Dubai were capped at 15% in 2006, and the rates are lowered to 5% this December.
"However, the increase in rent rates is backfiring greatly on the rate of inflation. If the main reason behind mounting inflation is skyrocketing rent rates, we note that limiting the rent prices do not seem to have solved the problem," said HC Securities.
Social BookmarkingThe Egypt-based brokerage, in its Economy Watch Bulletin, reported that increasing growth rates have enabled expatriates with the means to rent houses at high rates, and the situation is quite unlikely to be resolved this year too, as the market would continue to experience shortage in supply of housing units.
The caps by Government have been unable to address the surge in inflation caused due to rapid increase in rents across the region. The HC Securities state that with the GCC rents forecast, further set to increase by 20% this year, the rents in Dubai were capped at 15% in 2006, and the rates are lowered to 5% this December.
"However, the increase in rent rates is backfiring greatly on the rate of inflation. If the main reason behind mounting inflation is skyrocketing rent rates, we note that limiting the rent prices do not seem to have solved the problem," said HC Securities.
Labels: Dubai Real Estate, Market Trends, Property Prices
Dubai property prices unlikely to stabilize in next few years
Sunday, December 09, 2007
The real estate prices in Dubai are unlikely to stabilize during the next five years, in case the rent-cap is not lifted, and if the government does not take initiative to implement measures that could contribute in improving the supply market, say experts.
A study of the Dubai real estate sector by the Dubai Chamber of Commerce and Industry (DCCI) revealed that demand and supply of real estate will reach equilibrium only in 2023, provided, the government does not interfere or bring in new policies.
The Director of DCCI's Data Management and Business Research, Dr. Belaid Rettab, said "Equillibrium is when demand meets supply, and the prices remain stable."
Imposing rent cap, apart from delaying the process of stabilizing the market, will not be able to address price hikes too. Being supporters of liberal business, we do not prefer to have rent caps. The simplest solution to prevent price hikes is to bring in more supply to the market. The government, apart from supporting development of mortgage sectors, will also have to arrange finance facilities to developers so that they could build more, Rettab said.
The DCCI study revealed that the property prices have increased by a 10 percent cumulative annual growth rate in the medium term. The long term increase was 4 percent, which translates itself into an average price hike of seven percent, equivalent to the current rent cap imposed by Dubai government.
The DCCI study revealed that the government policies will positively influence income, population, cost, financing availability, tastes and preferences of buyers and speculation of future prices that could contribute to increase in demand.
The increase in supply will depend on the financing, production inputs cost, construction technology and expectation of future demand.
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A study of the Dubai real estate sector by the Dubai Chamber of Commerce and Industry (DCCI) revealed that demand and supply of real estate will reach equilibrium only in 2023, provided, the government does not interfere or bring in new policies.The Director of DCCI's Data Management and Business Research, Dr. Belaid Rettab, said "Equillibrium is when demand meets supply, and the prices remain stable."
Imposing rent cap, apart from delaying the process of stabilizing the market, will not be able to address price hikes too. Being supporters of liberal business, we do not prefer to have rent caps. The simplest solution to prevent price hikes is to bring in more supply to the market. The government, apart from supporting development of mortgage sectors, will also have to arrange finance facilities to developers so that they could build more, Rettab said.
The DCCI study revealed that the property prices have increased by a 10 percent cumulative annual growth rate in the medium term. The long term increase was 4 percent, which translates itself into an average price hike of seven percent, equivalent to the current rent cap imposed by Dubai government.
The DCCI study revealed that the government policies will positively influence income, population, cost, financing availability, tastes and preferences of buyers and speculation of future prices that could contribute to increase in demand.
The increase in supply will depend on the financing, production inputs cost, construction technology and expectation of future demand.
Labels: Dubai Real Estate, Market Trends, Mortgages, Property Prices
GCC Realty prices expected to continue in the current pace
Wednesday, December 05, 2007
The real estate prices in Gulf Countries will continue to remain as in the present, due to land scarcity and fluidity caused by surging oil prices and mounting speculations, revealed a special report.
A weekly report by Al-Masar Group states that the inflation in building & construction sector in Gulf, has reached fresh levels through construction of 2837 projects, mostly in UAE, Saudi Arabia, at an estimated value of $2.4trillion.
A recent study by a Dubai-based Research Company, 'Proleads', states that the King Abdullah Economic City, is the largest project, currently in progress in the region, which is worth around $120billion.
Next in line, is the 'City of Silk' in Kuwait, costing about $86billion, followed by the Dubailand in UAE, which costs around $60billion.
However, the report depicted conflicting figures and statistics, depending on the size of planned or under-construction projects. Massive projects, which include industrial islands and skyscrapers, lie behind the growth of regional construction and building sector, and huge boom in the sector, has led to better maintenance services, facilitated construction, overhauled utility management and helped a high demand for the sector.
The size of utility management market in Gulf countries, except Saudi Arabia, touched Dh.17.72bn during 2006, and is expected to grow up by 15.3 percent by 2012, stated the report.
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A weekly report by Al-Masar Group states that the inflation in building & construction sector in Gulf, has reached fresh levels through construction of 2837 projects, mostly in UAE, Saudi Arabia, at an estimated value of $2.4trillion.A recent study by a Dubai-based Research Company, 'Proleads', states that the King Abdullah Economic City, is the largest project, currently in progress in the region, which is worth around $120billion.
Next in line, is the 'City of Silk' in Kuwait, costing about $86billion, followed by the Dubailand in UAE, which costs around $60billion.
However, the report depicted conflicting figures and statistics, depending on the size of planned or under-construction projects. Massive projects, which include industrial islands and skyscrapers, lie behind the growth of regional construction and building sector, and huge boom in the sector, has led to better maintenance services, facilitated construction, overhauled utility management and helped a high demand for the sector.
The size of utility management market in Gulf countries, except Saudi Arabia, touched Dh.17.72bn during 2006, and is expected to grow up by 15.3 percent by 2012, stated the report.
Labels: Market Trends, Property Prices, Real Estate News
Despite peak construction boom, Abu Dhabi still faces housing shortage?
Tuesday, November 13, 2007
In a city, such as Abu Dhabi, which is so full of new real estate projects and in peak of construction boom, it is a startling fact to note that thousands are left struggling to find suitable properties to rent, reports Gulf News.
According to Property Consultant and Director of Global Hills, Diana Stebbins, a solution to this property hunt would finally be found during 2009, when people could buy and move into their own accommodation. However, for now, the villas are divided into four or six partitions for accommodation of bachelors and dual occupancy units.
The landlords and developers are taking full advantage of the current demand for housing, and have found this as a suitable opportunity to increase rent rates and prices.
A resident, who has been residing in Abu Dhabi for the past thirteen years, says that during the past two years, it has been shocking to note that some places have even doubled in rent rates. On the other hand, the landlords do not have much property to rent, as during the past. Even in case the property is available, it is sold out or rented within 24 or 48 hours.
The Abu Dhabi Chamber of Commerce and Industry has made it clear that the housing situation in only going to get worse, as by 2008, atleast 13,000 units would be required to keep pace with the demand.
Although, the endless campaign ads by development companies, gives a ray of hope initially that the demand may level out supply, a closer look would reveal that such properties are mostly businesses, hotels or housings meant for 'only' the upper-class who could afford to pay atleast Dh.15,000 to 20,000 a month for a "modern" single bedroom apartment.
This way, an average foreigner, moving into Abu Dhabi, hoping to live in a decent apartment and saving the extra money, is left in the lurch, as for those with an average income of Dh.12,000 a month, it is nearly impossible to save. With such a scenario, saving is the last thing that a single-income family could think of, as the money earned is being spent instantly.
Social BookmarkingAccording to Property Consultant and Director of Global Hills, Diana Stebbins, a solution to this property hunt would finally be found during 2009, when people could buy and move into their own accommodation. However, for now, the villas are divided into four or six partitions for accommodation of bachelors and dual occupancy units.
The landlords and developers are taking full advantage of the current demand for housing, and have found this as a suitable opportunity to increase rent rates and prices.
A resident, who has been residing in Abu Dhabi for the past thirteen years, says that during the past two years, it has been shocking to note that some places have even doubled in rent rates. On the other hand, the landlords do not have much property to rent, as during the past. Even in case the property is available, it is sold out or rented within 24 or 48 hours.
The Abu Dhabi Chamber of Commerce and Industry has made it clear that the housing situation in only going to get worse, as by 2008, atleast 13,000 units would be required to keep pace with the demand.
Although, the endless campaign ads by development companies, gives a ray of hope initially that the demand may level out supply, a closer look would reveal that such properties are mostly businesses, hotels or housings meant for 'only' the upper-class who could afford to pay atleast Dh.15,000 to 20,000 a month for a "modern" single bedroom apartment.
This way, an average foreigner, moving into Abu Dhabi, hoping to live in a decent apartment and saving the extra money, is left in the lurch, as for those with an average income of Dh.12,000 a month, it is nearly impossible to save. With such a scenario, saving is the last thing that a single-income family could think of, as the money earned is being spent instantly.
Labels: Abu Dhabi, Property Prices, Rentals
Drop in residential property prices not likely until 2009: EFG-Hermes
Thursday, September 27, 2007
A recent research report from EFG-Hermes, the Regional Investment Bank, states that the residential property market in Dubai continues to mature, but with the supply surpassing demand during the next one year, a drop in property prices cannot be expected until 2009.
The report points out that the delivery of completed projects this year has touch only 11,000 units, out of the 57,000 units that were being expected to come on stream. This shows that the market is witnessing a far slower pace of events, and indicates that demand continues to exceed supply. This difference in demand-supply has resulted in revised forecasts of housing unit supply for the next couple of years, with an estimated 25,000 units for 2007, 64,000 for 2008 and 68,000 for 2009.
However, the demand for property is continually on the rise, with increase in population. Assuming that the population in Dubai would touch 1.9million mark by 2010, with the current 1.4million population currently, the demand for housing would go up to 45,000 to 50,000 new units each year.
The Research Analyst at EFG-Hermes, Sana Kapadia says "Supply in residential property market will continue to be restrained this year. We expect the year 2009 to be the peak year for supply, which means that, the market may not see a decline in prices before this happens."
Kapadia went on to add that, a 10-15% rise in average prices is expected this year, while a rise of 5% to 10% is expected in 2008. Due to most supplies hitting the market in 2008, the prices will begin to drop in 2009, witnessing an approximate decline of 15% to 20% by 2011.
However, the exact difference in prices which EFG-Hermes forecasts for the year 2009, would depend on the pace at which new units come into the market and the extend of demand at that time.
As for rental prices, EFG-Hermes predicts that the rate of rental growth during the first eight months of this year, is likely to continue until early next year.
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The report points out that the delivery of completed projects this year has touch only 11,000 units, out of the 57,000 units that were being expected to come on stream. This shows that the market is witnessing a far slower pace of events, and indicates that demand continues to exceed supply. This difference in demand-supply has resulted in revised forecasts of housing unit supply for the next couple of years, with an estimated 25,000 units for 2007, 64,000 for 2008 and 68,000 for 2009.
However, the demand for property is continually on the rise, with increase in population. Assuming that the population in Dubai would touch 1.9million mark by 2010, with the current 1.4million population currently, the demand for housing would go up to 45,000 to 50,000 new units each year.
The Research Analyst at EFG-Hermes, Sana Kapadia says "Supply in residential property market will continue to be restrained this year. We expect the year 2009 to be the peak year for supply, which means that, the market may not see a decline in prices before this happens."
Kapadia went on to add that, a 10-15% rise in average prices is expected this year, while a rise of 5% to 10% is expected in 2008. Due to most supplies hitting the market in 2008, the prices will begin to drop in 2009, witnessing an approximate decline of 15% to 20% by 2011.
However, the exact difference in prices which EFG-Hermes forecasts for the year 2009, would depend on the pace at which new units come into the market and the extend of demand at that time.
As for rental prices, EFG-Hermes predicts that the rate of rental growth during the first eight months of this year, is likely to continue until early next year.
Labels: Dubai Real Estate, Market Trends, Property Prices, Residential
High land-prices considered a hindrance for low-budget housing
Saturday, September 01, 2007
The property developers in Dubai have said that unless the government facilitates cheap land, the private developers will not go ahead with construction of low-budget housing.
The Chairman of New Dubai Properties, Ahmad Al Abdullah, says that the skyrocketing land prices imply that developers are in the process of constructing commercial blocks, hotels or luxurious residential projects that yield high returns on their investment, rather than the low or middle range units.
With such an escalation in land and house prices, the ability to purchase a plot or land among individuals of various income groups gets affected and in the process the ability of the emirate to draw attention from the talent required for further development is also shattered.
Al Abdullah said "We will build affordable housing if the government provides us land at an affordable price, and directs us not to raise rent above a fixed level. For instance, Dh.40,000 to Dh.50,000 for a two bedroom apartment. In case the plot is high in value, we will only construct a project that can cover the initial amount invested by us."
Al Abdullah mentioned that 40 percent of the project value makes up the price of the land, while the rest comprises the construction cost, which has also shot up considerably.
He added that with the unavailability of cheap land in Dubai, the private developers have no option but to consider other emirates including Ajman, where the land is much cheaper.
Social BookmarkingThe Chairman of New Dubai Properties, Ahmad Al Abdullah, says that the skyrocketing land prices imply that developers are in the process of constructing commercial blocks, hotels or luxurious residential projects that yield high returns on their investment, rather than the low or middle range units.
With such an escalation in land and house prices, the ability to purchase a plot or land among individuals of various income groups gets affected and in the process the ability of the emirate to draw attention from the talent required for further development is also shattered.
Al Abdullah said "We will build affordable housing if the government provides us land at an affordable price, and directs us not to raise rent above a fixed level. For instance, Dh.40,000 to Dh.50,000 for a two bedroom apartment. In case the plot is high in value, we will only construct a project that can cover the initial amount invested by us."
Al Abdullah mentioned that 40 percent of the project value makes up the price of the land, while the rest comprises the construction cost, which has also shot up considerably.
He added that with the unavailability of cheap land in Dubai, the private developers have no option but to consider other emirates including Ajman, where the land is much cheaper.
Labels: Dubai Real Estate, housing, land, Property Prices
Mortgages, much in demand in Dubai
Saturday, August 18, 2007
With the increase in property and property prices in Dubai, the demand for mortgages is also rising simultaneoulsy. The home loan and finance service providers have a major role to play in the current Dubai realty sector.
Although, obtaining finance was a littly tricky in the past, the market has improved considerably in recent times.
Banks wish to give mortgages, but are not prepared to accept high risks. When a credit history or credit scoring system is absent, banks have had to find their ways to obtain loans for their clients, through evaluation of risk against the property value, while also assessing the individual's monthly income and visa status.
More number of international companies are now making their presence in the local market, and the competition is getting tougher, which is only good for buyers. In the opinion of some investors, when compared to developed markets such as US and UK, where the interest rates on mortgages are very low with four to five percent, the finance options in Dubai are more expensive. The reality is that at about 8-9 percent, the rates are at a moderate level in comparison to less developed countries, where people pay even up to sixteen percent as interest. For instance, in India, an investor is expected to pay atleast 12 percent as interest rate, which points towards Dubai as a better option.
The lenders in a competitive market have no option but to compete on price, and hence cut down the rates, unlike the Central bank, which has a definite role in handling the interest rates.
While considering a purchase over a time period of fifteen to twenty years, even a slight difference in the borrowing rate, could make a huge difference to the buyer. Unlike in other countries that have a credit reference agency, which tracks the credit history of its residents before processing a loan application, the transient nature in Dubai has brought about some troubles with lending and financing. In Dubai, people come and go all the time and the lenders are at a loss to gain information on the credit history of the borrowers. This has increased the risk involved in lending.
However, the establishment of Emcredit, the first independent credit bureau in the UAE, is an exciting news for the market. This encourages more lenders to the market and helps them in making more informed decisions. However, for a system such as Emcredit, to be successful, there should be great collaboration from all lending companies and banks.
The increasing numbers of finance service providers, is changing the realty market in Dubai, easing out the task of owning a home. As the market keeps developing by the day, more banks are coming forward to lend with stiffer competition, and the interest rates are expected to drop down. As for a couple of years from now, there is a need for placing more financing options before the public, so as to make the purchase of a home more reasonable.
Although, obtaining finance was a littly tricky in the past, the market has improved considerably in recent times.
Banks wish to give mortgages, but are not prepared to accept high risks. When a credit history or credit scoring system is absent, banks have had to find their ways to obtain loans for their clients, through evaluation of risk against the property value, while also assessing the individual's monthly income and visa status.
More number of international companies are now making their presence in the local market, and the competition is getting tougher, which is only good for buyers. In the opinion of some investors, when compared to developed markets such as US and UK, where the interest rates on mortgages are very low with four to five percent, the finance options in Dubai are more expensive. The reality is that at about 8-9 percent, the rates are at a moderate level in comparison to less developed countries, where people pay even up to sixteen percent as interest. For instance, in India, an investor is expected to pay atleast 12 percent as interest rate, which points towards Dubai as a better option.
The lenders in a competitive market have no option but to compete on price, and hence cut down the rates, unlike the Central bank, which has a definite role in handling the interest rates.
While considering a purchase over a time period of fifteen to twenty years, even a slight difference in the borrowing rate, could make a huge difference to the buyer. Unlike in other countries that have a credit reference agency, which tracks the credit history of its residents before processing a loan application, the transient nature in Dubai has brought about some troubles with lending and financing. In Dubai, people come and go all the time and the lenders are at a loss to gain information on the credit history of the borrowers. This has increased the risk involved in lending.
However, the establishment of Emcredit, the first independent credit bureau in the UAE, is an exciting news for the market. This encourages more lenders to the market and helps them in making more informed decisions. However, for a system such as Emcredit, to be successful, there should be great collaboration from all lending companies and banks.
The increasing numbers of finance service providers, is changing the realty market in Dubai, easing out the task of owning a home. As the market keeps developing by the day, more banks are coming forward to lend with stiffer competition, and the interest rates are expected to drop down. As for a couple of years from now, there is a need for placing more financing options before the public, so as to make the purchase of a home more reasonable.
Labels: Dubai Real Estate, Mortgages, Property Prices
Prices of commercial and residential space in Burj Dubai to soar high
Thursday, July 26, 2007
The prices of residential and commercial space in the world's tallest tower, Burj Dubai, are touching new heights, with current rates estimated between Dh.4000 to Dh.8000.
The Chief Executive of Coldwell Banker, Hisham El Far said "The residential space in the tower is being sold for Dh.4000 to Dh.6000 per square foot, while the commercial space is being sold for Dh.5000 to Dh.8000 per square foot. The prices have gone up by nearly 25 percent during the last few months, and are sure to increase further, with Burj reaching greater heights."
The company has entered into two deals worth Dh.45 million, and is being approached by many investors looking to invest in Burj Dubai.
El Far mentioned that it is difficult to disclose an average rate, as the prices are yet to be finalized and they tend to increase with the increase in the number of floors.
However, El Far is of the opinion that leasing the property would prove beneficial to the developer, than selling it, as there are chances of better returns from the property over the years.
Meanwhile, Emaar Properties, in their statement, said that the prices of apartments would vary depending on the level in which the apartment is based, and its finishes. They mentioned that so far, the investor responses to their homes are strong, and that they are in the process of streamlining further sale queries to accommodate this.
However, according to Dubai Land Department, there is not yet a single deal in Burj Dubai that has been registered with them. The Department mentioned that they undertake registration deals only when the building is completely finished, and that, currently all deals are only internally registered with the developer, Emaar Properties.
But, the department plans to tie-up with the company to implement the primary registration system, and the company will then have to register their sales when agreements between the parties are being done.
Social BookmarkingThe Chief Executive of Coldwell Banker, Hisham El Far said "The residential space in the tower is being sold for Dh.4000 to Dh.6000 per square foot, while the commercial space is being sold for Dh.5000 to Dh.8000 per square foot. The prices have gone up by nearly 25 percent during the last few months, and are sure to increase further, with Burj reaching greater heights."
The company has entered into two deals worth Dh.45 million, and is being approached by many investors looking to invest in Burj Dubai.
El Far mentioned that it is difficult to disclose an average rate, as the prices are yet to be finalized and they tend to increase with the increase in the number of floors.
However, El Far is of the opinion that leasing the property would prove beneficial to the developer, than selling it, as there are chances of better returns from the property over the years.
Meanwhile, Emaar Properties, in their statement, said that the prices of apartments would vary depending on the level in which the apartment is based, and its finishes. They mentioned that so far, the investor responses to their homes are strong, and that they are in the process of streamlining further sale queries to accommodate this.
However, according to Dubai Land Department, there is not yet a single deal in Burj Dubai that has been registered with them. The Department mentioned that they undertake registration deals only when the building is completely finished, and that, currently all deals are only internally registered with the developer, Emaar Properties.
But, the department plans to tie-up with the company to implement the primary registration system, and the company will then have to register their sales when agreements between the parties are being done.
Labels: Burj Dubai, Dubai Real Estate, Latest News, Property Prices
Rent rates soar high with 292,000 new entrants to Dubai each year
Saturday, July 21, 2007
According to officials, the house rents in Dubai will continue to escalate in the coming years due to the influx of about 292,000 new entrants (residents and employees) each year.
Despite the market showing signs of softening during the recent past, the issuance of more than 800 residence and work visas everyday will continue to push the demand upwards.
Investors, landlords and developers could consider this to be a good news, but it is not so for thousands of tenants who are struggling to make ends meet, making life in Dubai, dearer.
According to JAJ Consulting, Shahid Umerani, told Dubai Quality Group that the prices of a few apartments in UAE have already been settled in 2007 with a downward adjustment of close to ten percent. But, with Dubai, continuing to remain a topmost business destination, and the inflation remaining high, coupled with low interest rates and increase in mortgage business, a strong outlook for positive growth is still expected in the long term.
This, in turn, will have an impact on companies, with employees demanding salary hike. Sensing this scenario, Abu Dhabi announced a new housing scheme for bachelors with a capacity of 110,000 people, indicating a shift in future demographics.
However the panel hopes that the rent rates would come down in the near future, as it is almost getting out of reach for majority of the residents.
Social BookmarkingDespite the market showing signs of softening during the recent past, the issuance of more than 800 residence and work visas everyday will continue to push the demand upwards.
Investors, landlords and developers could consider this to be a good news, but it is not so for thousands of tenants who are struggling to make ends meet, making life in Dubai, dearer.
According to JAJ Consulting, Shahid Umerani, told Dubai Quality Group that the prices of a few apartments in UAE have already been settled in 2007 with a downward adjustment of close to ten percent. But, with Dubai, continuing to remain a topmost business destination, and the inflation remaining high, coupled with low interest rates and increase in mortgage business, a strong outlook for positive growth is still expected in the long term.
This, in turn, will have an impact on companies, with employees demanding salary hike. Sensing this scenario, Abu Dhabi announced a new housing scheme for bachelors with a capacity of 110,000 people, indicating a shift in future demographics.
However the panel hopes that the rent rates would come down in the near future, as it is almost getting out of reach for majority of the residents.
Labels: Latest News, Property Prices, Rentals
'Abu Dhabi homes are under-priced', says HSBC Global report
Saturday, June 30, 2007
Despite the 53 percent higher Gross Domestic Product (GDP) per capita in Abu Dhabi, the average residential property prices are almost ten percent cheaper, says new research.
The HSBC Global Research in its report mentioned that "if we take Dubai as a proxy and follow the regression trend, the current GDP per capita level, the pricing of the houses in Abu Dhabi stands at Dh.14,808 ($4,035) per Square meter, rather than Dh.11,230 ($3,060) says the new HSBC Global Research report."
Residential prices in Dubai and Abu Dhabi stand at Dh.12,371 and Dh.11,230 per square meter, respectively.
In case Abu Dhabi readily opens up the property sector to the same level as Dubai, the residential property prices are likely to shoot up, says the report.
Buyers from foreign countries are permitted to purchase 99 year leases, while the investment in properties is limited to specific areas in the capital.
According to HSBC, the market rigidities and the regulations are actually curbing the potential demand, and hence the prices.
Despite the population being highly skewed towards expatriates, the foreign property ownership is comparatively restricted. There is less incentive for the expatriates to win the residency status and the settlement is impractical.
Just as in other cities, foreign workers are not eligible for permanent residency or for citizenship. The report states that "Limited accessibility to mortgage lending, coupled with high mortgage rates that are as high as seven to eight percent, are actually blocking price appreciation." Moreover, the mortgage penetration rates are the lowest in the UAE. Penetration in Abu Dhabi is even lower as more than ninety five percent of home financing takes place in Dubai.
Due to such low penetration rates, growth rates are high, and the mortgage lending in the UAE is growing by almost eighty percent during 2006.
Social BookmarkingThe HSBC Global Research in its report mentioned that "if we take Dubai as a proxy and follow the regression trend, the current GDP per capita level, the pricing of the houses in Abu Dhabi stands at Dh.14,808 ($4,035) per Square meter, rather than Dh.11,230 ($3,060) says the new HSBC Global Research report."
Residential prices in Dubai and Abu Dhabi stand at Dh.12,371 and Dh.11,230 per square meter, respectively.
In case Abu Dhabi readily opens up the property sector to the same level as Dubai, the residential property prices are likely to shoot up, says the report.
Buyers from foreign countries are permitted to purchase 99 year leases, while the investment in properties is limited to specific areas in the capital.
According to HSBC, the market rigidities and the regulations are actually curbing the potential demand, and hence the prices.
Despite the population being highly skewed towards expatriates, the foreign property ownership is comparatively restricted. There is less incentive for the expatriates to win the residency status and the settlement is impractical.
Just as in other cities, foreign workers are not eligible for permanent residency or for citizenship. The report states that "Limited accessibility to mortgage lending, coupled with high mortgage rates that are as high as seven to eight percent, are actually blocking price appreciation." Moreover, the mortgage penetration rates are the lowest in the UAE. Penetration in Abu Dhabi is even lower as more than ninety five percent of home financing takes place in Dubai.
Due to such low penetration rates, growth rates are high, and the mortgage lending in the UAE is growing by almost eighty percent during 2006.
Labels: Abu Dhabi, Mortgages, Property Prices, Real Estate News