Dubai realty gets Chinese boost

12 Feb 2018

UAE real estate, particularly that of Dubai, is steadily gaining interest among savvy Chinese investors. This extends to the brick-and-mortar assets, contracting industry as well as construction finance.

The Chinese were the fourth most active real estate investors in Dubai in the first half of 2017, according to consultancy Knight Frank.

A recent Knight Frank report rated the UAE as having the third highest potential among 67 countries to make use of China’s ‘Belt and Road Initiative’. It identified the UAE as the ‘Hub of the Belt’.

Chinese contractors have a big presence among the top 5 contractors in the UAE. They also provide construction finance. The China State Construction and Engineering Corporation ranks as the second biggest contractor in the UAE with projects worth of almost $3 million. It has 16 ongoing projects.

Knight Frank estimates that of the total contract value of future projects in the UAE (both projects in the design and execution phase from 2018-20), Chinese firms account for 6 per cent of total value of contracts. In Dubai, this is slightly higher at 7 per cent and from 2019 to 2020, it is expected to increase from 7 to 9 per cent.

“There are an increasing number of Chinese buyers, however, it’s important to note that we’re not going from a low figure of Chinese investors to a high one. There has always been considerable Chinese investment in Dubai real estate, it’s just that at the moment, we’re seeing more coming in than in recent times. If you walk in to any of the major developers’ sales centres, you will see a large amount of Chinese buyers looking to make a purchase,” says Lewis Allsopp, CEO, Allsopp & Allsopp.

“In the past two decades, more than 8,200 real estate transactions have been completed by Chinese buyers and roughly one quarter of those transactions took place in the past two years alone, bringing in more than Dh3 billion,” explains Jason Hyes, founder and CEO, LuxuryProperty.com.

PH Real Estate estimates that it has seen a 10 to 15 per cent increase in the number of Chinese buyers approaching it.

“Chinese buyers accounted for about 3 per cent of all sales in Dubai in 2017. They are taking a lot of construction projects and bringing in a lot of financing. They are bringing in a lot of their own people as well for these projects. As those people tend to get familiar with Dubai, they will want to buy homes for themselves. That trend is bound to grow,” forecasts Craig Plumb, head of research, JLL Mena.

Identifying China as a sizeable target market, most Dubai developers have tie-ups with Chinese brokerages in mainland China and they spend a lot on marketing on roadshows and exhibitions in China.

“The larger developers in tune with the needs of their Chinese clients. Most developers now have either a Mandarin-speaking department or at least have a marketing strategy geared towards attracting new Chinese buyers,” reckons Myles Bush, CEO, PH Real Estate.

“Emaar, for example, has launched a Chinese website to market its properties and is offering special incentives to investors for Chinese New Year. The government has also launched its own initiatives to promote Dubai properties to the Chinese market. Last year, the Dubai Land Department entered into an agreement with the marketing company behind one of China’s leading property portals to promote Dubai property in China,” Hayes points out.

There are Chinese agents stationed in Dubai as well. “We work closely with a few Chinese agents, one of whom had 20 clients fly in from China last week and who between them bought 13 properties in one week,” says Allsopp.

With Dubai being one of the few global cities where investors can enjoy 8 to 10 per cent on their real estate returns, the Chinese are likely to continue to inwardly invest into the market.

“Chinese buyers are smart investors and they are very aware that it’s a buyers market. The majority of Chinese clients we deal with are looking for high-performing rental returns rather than trophy assets. An example of this over the past week was when my team brought in a commercial floor for sale in DIFC that is currently returning a 9.5 per cent yield; within one day of advertising, seven Chinese buyers called us for more information,” observes Bush.

“Chinese buyers are savvy and know what they want. In the majority of cases, they are investors and cash rich. They are looking in affordable projects, good deals, up-and-coming areas, top locations, etc. Generally, they are looking to tick the boxes of most investors, something that is popular, will provide a good return, should see good capital appreciation and offer a good exit strategy if needed,” concludes Allsopp.

Secondary, off-plan property sales in Dubai continue at a good clip

13 Feb 2018

Contrary to the notion that sales in Dubai have slowed down in January at a noteable rate, a breakdown and analysis of total number of transactions in the secondary and off-plan market shows otherwise.

Ready villas/townhouses
According to Property Monitor data, the number of transactions in the secondary market has remained consistent between October 2017 to January 2018. For villas/townhouses in the secondary market, the total number of transactions between October to December ranged from 167 to 182 transactions per month, whereas in January, 164 transactions were recorded.

For villas/townhouses in the secondary market, the top three areas generating sales volume in October 2017 were Emirates Living with 37 transactions, Arabian Ranches with 27 and Reem (Mira) with 17. Emirates Living witnessed an increase to 50 secondary market transfers while Arabian Ranches remained relatively constant with 25 transactions in January. Between November 2017 and January 2018, Emirates Living and Arabian Ranches remained the top two generating sales volume areas in the secondary market.

In January 2018, the average sales price according to the Property Monitor Index for a villa/townhouse in Emirates Living was Dh2,387,083 for a three-bedroom, Dh3,164,500 for a four-bedroom and Dh6,785,714 for a five-bedroom. While in Arabian Ranches, the average sales price for a villa/townhouse was Dh3,212,986 for a three-bedroom, Dh3,475,000 for a four-bedroom and Dh4,293,648 for a five-bedroom.

Between November 2017 and January 2018, Town Square overtook Reem (Mira) as the top area in sales volume due to its attractive middle-range price point. In January 2018, the average sales price for a villa/townhouse in Town Square was Dh1,612,083 for a three-bedroom and Dh1,913,750 for a four-bedroom.

Secondary market – apartments
Apartments in the secondary market were transacting at a much higher rate with the total number of transactions between October to December ranged from 782 to 851 transactions per month, whereas in January, 706 transactions were recorded.

For apartments, the top three areas generating sales volume in January 2018 were Dubai Marina with 134 transactions, Dubai Sports City with 103 and International City with 92. From October to January, Dubai Marina and International City remained among the top three areas with relatively consistent numbers of transactions.

In January 2018, the average sales price according to the Property Monitor Index for an apartment in Dubai Marina was Dh1,309,216 for a studio, Dh1,243,892 for a one-bedroom and Dh1,931,498 for a two-bedroom.

In Dubai Sports City, the average sales price for an apartment was Dh614,464 for a studio, Dh801,172 for a one-bedroom and Dh1,252,020 for a two-bedroom.

Interestingly, Dubai Sports City almost doubled its sales volume from 54 transfers in October to 103 transfers in January due to an influx of new supply. One of the handovers towards the end of 2017 was Elite Sports Residence 10, which generated 50 secondary transferred sales in January 2018.

Off-plan market
In the off-plan market, there was a slight decrease in the total sales volume for villas/townhouses between October 2017 and January 2018. However, the sales volume for apartments are in line with and consistent with that of 2017. Between October and January, the sales volume for apartments in the off-plan market have ranged from 1,650 to 1,850, except for December which had 2,169 transactions.

The top three areas generating off-plan sales volume for apartments in January 2018 were Meydan One with 227 off-plan transactions, Business Bay with 186 and Jumeirah Village Circle with 168. All 227 off-plan transactions for Meydan One are in Azizi Riviera, with the first phase scheduled for completion in Q1 of 2019.

In January 2018, the average sales price according to the Property Monitor Index for an apartment in Azizi Riviera is Dh519,267 for a studio, Dh855,329 for a one-bedroom and Dh1,396,306 for a two-bedroom.

Similar to Azizi Riviera, the average sales price for an apartment in Jumeirah Village Circle is Dh622,354 for a studio, Dh823,098 for a one-bedroom and Dh1,459,577 for a two-bedroom.

Priced slightly higher, the average sales price for an apartment in Business Bay is Dh1,176,036 for a studio, Dh1,339,818 for a one-bedroom and Dh1,595,294 for a two-bedroom.

Wacky Jenga-style resort that cost £1 BILLION to build set to open its doors in Dubai

20 Feb 2018

  • Work on the Royal Atlantis Resort & Residences started more than four years ago
  • The resort complex will feature a mix of living areas, with apartments starting at a whopping £1.4million
  • There will also be 795 guest rooms with on-site amenities including spas, gyms and fine dining restaurants

Catering to the super-rich, a £1 billion resort complex is set to open its doors on the shores of the Arabian Sea in Dubai.
Work on the Royal Atlantis Resort & Residences started more than four years ago and it is expected to welcome guests in late 2019.
Renderings of the finished design show it looking almost like a game of Jenga, with giant blocks of apartments precariously stacked 43-storeys high.

Work on the Royal Atlantis Resort & Residences started more than four years ago and it set to welcome guests in late 2019

The resort complex will feature a mix of living areas, with apartments starting at a whopping £1.4million

The resort complex will feature a mix of contemporary-styled living areas, with apartments starting at a whopping £1.4million.

But if your bank account doesn’t quite cater to this, perhaps you can just visit the exclusive Royal Atlantis as a guest.

As well as the 231 residences, many of which are decked out with private pools and terraces, there will be 795 luxury guest rooms and suites.

On-site amenities will include a 24-hour concierge, spas, gyms, fine dining restaurants and a private beach club.

There will also be around 90 swimming pools dotted around, so visitors can keep their cool in the desert heat.

The Royal Atlantis Residences’ director, Mr Issam Galadari, said: ‘Taking resort living to new luxury heights, The Royal Atlantis Resort & Residences responds to a calling from a highly discerning, affluent, international demographic seeking a new class of offering, currently not available elsewhere in Dubai’

On-site amenities will include a 24-hour concierge, so you can get cocktails delivered to your private pool

The Royal Atlantis, which is located next to the famed Atlantis resort on Dubai’s man-made palm-shaped island, was masterminded as part of the emirate’s drive to build up tourism revenue.

Commenting on the project, Royal Atlantis’ global sales agent, Maria Morris, said: ‘Our international clientele is outwardly seeking this next level of luxury in the prime market in Dubai, and The Royal Atlantis Residences delivers on all these requirements.

‘Now is the optimum time for property buyers to purchase in Dubai. Stabilizing property prices, infrastructure developments such as the expansion of the Dubai Metro, excellent investment opportunities and a buoyant economy are proving to be a dynamic combination.’

The Royal Atlantis, which is located next to the famed Atlantis resort on Dubai’s man-made palm-shaped island, was masterminded as part of the emirate’s drive to build up tourism revenue

The Royal Atlantis Residences will have views of the Arabian Sea or across the waters of The Palm towards the Dubai city skyline

The Royal Atlantis Residences’ director, Mr Issam Galadari, echoed Morris’ words, adding: ‘Taking resort living to new luxury heights, The Royal Atlantis Resort & Residences responds to a calling from a highly discerning, affluent, international demographic seeking a new class of offering, currently not available elsewhere in Dubai.

‘The high-net-worth global citizen is ready for the new dawn of residential experience. The development will become the new landmark of Dubai and will support the “Dubai Plan 2021” in positioning the city as one of the best places to live in the world.’

The Royal Atlantis Residences will have views of the Arabian Sea or across the waters of The Palm towards the Dubai city skyline.

Dubai, part of the United Arab Emirates, has positioned itself as a destination for over-the-top luxury and opulence.

Tourism is a major source of revenue for the emirate, which is preparing to host the World Expo in 2020.

Dubai, part of the United Arab Emirates, has positioned itself as a destination for over-the-top luxury and opulence. Tourism is a major source of revenue for the emirate, which is preparing to host the World Expo in 2020

 

 

When property prices are no more in square feet

20 Feb 2018

A new trend is becoming evident in the Dubai property market. Investors are placing more emphasis on the entry price of properties as opposed to the price per square foot. For instance, units that were previously advertised below Dh1,000 per sqft are being promoted as below Dh500,000 for studios or Dh1 million for one-beds to encourage takeup.

“Yes, the entry price is becoming important for investors as a key psychological factor in a market increasingly driven by price and competing marketing announcements from a few developers engaged in a race to bottom. Price per square foot is becoming relatively less important because it requires deeper market understanding. Sadly, this is encouraging more of the lower quality stock to be built and marketed at very low price points, where the size and quality are sometimes compromised to achieve that low entry point,” says David Godchaux, CEO of Core Savills, a consultancy.

Developers are also using this strategy to attract end-users to consider purchasing properties that are coming in at a certain price point.

“There is a huge demand from the end-user for affordable housing, whether it is already complete or still under construction. By advertising at under Dh500,000 or Dh1 million, it is appealing to the end-user to show what you can get for under a certain milestone in price,” remarks Lewis Allsopp, CEO of Allsopp & Allsopp.

Some developers use this strategy to hide the fact that their units are relatively smaller in size or that they have a very limited number of units available at that price point.

“Quoting a total price rather than price per square foot is a mere marketing strategy targeting first-time home buyers with one figure, giving a clearer picture on affordability without the need to have to calculate the size multiplied by price per square foot. Savvy investors, however, look beyond the total price or price per square foot. They look for great locations, reasonable unit size, practical layouts, decent quality, fair payment plans, affordable down payments, easy mortgage payments, well-connected infrastructure, good amenities/facilities, the developer’s track record, and, of course, the potential total returns on the investment,” informs Haider Tuaima, head of real estate research at ValuStrat.

This marketing strategy is mostly being used for smaller ticket sizes and targeted at first-time home buyers who were previously unable to afford a property in Dubai due to higher prices per unit. When it comes to mid to upscale properties, investors are still driven by the price per sqft, insist market observers.

“The main reason is that the investor is looking at the final price as his tenant is going to pay him as per 1-bedroom, 2-bedroom, etc., in a specific location. There is no incentive for the buyer to buy a big unit and pay more but get a similar rent. This trend has advanced since 2012, when the market started moving towards more compact units with smart floor plans from some key developers, which allow the unit to be efficient with minimum space lost in corridors and other wasted areas,” observes Sanjay Chimnani, managing director, Raine & Horne Dubai.

Short-term investors are also attracted to the entry price point rather than the cost per sqft. Such marketing strategies are also mostly offered in outer areas.

“Short-term investors are drawn to the outer areas, and yields combined with entry price points are the key factors considered. Indeed, there may be a few good deals to be made, but today’s high return is not always a good indicator of tomorrow’s yields – on the back of the very important supply expected to be handed over in the next 3 years at low price points. In outer areas, this short-term strategy may result in a few disappointed buyers, finding themselves locked between falling rents and decreasing capital values, making their investment illiquid in the mid term,” warns Godchaux.

Meanwhile, long-term investors are more careful, selecting developers with a strong reputation and track record, especially when buying off-plan. Location is also one of the most important factors for these investors, as long-term capital value is more likely to be retained in central areas.
“Investors are intelligent and savvy people. They are not going to purchase something at a low yield or something with little chance of capital appreciation or something with a questionable exit strategy just because it is advertised at being under a certain price point,” explains Allsopp.

Discerning investors in Dubai consider location, occupancy in the area, price, size, net yields and payment plans before making a purchase.

“Investors are becoming more conscious of the full life-cycle of their investment [rather than just counting on the short-term capital appreciation followed by the exit]. Hence, they are more interested in the quality of construction, amenities, connectivity, service charges, rental potential and exit options,” says Ivana Gazivoda Vucinic, head of consulting and valuations and advisory operations, Chestertons Mena.

Meanwhile, sellers are adapting to the new market reality. “This is evident through the constant downward correction in prices to meet the current demand and investors’ price sensitivity,” adds Vucinic.

Dubai’s real estate slump to last until 2020 – S&P

20 Feb 2018

DUBAI, Feb 20 (Reuters) – Dubai real estate prices could decline by 10 to 15 percent over the next two years, hit by new supply, geopolitical risks and the introduction of value added-tax in the United Arab Emirates, S&P Global Ratings’ analysts said on Tuesday.

The grim prediction came after Dubai residential prices fell by 5 to 10 percent in 2017, and the weak property market has also begun to hurt earnings of the emirate’s top property developers.

“We believe this correction will continue at least for this year and next, before prices stabilise in 2020 at the earliest,” said Sapna Jagtiani, S&P’s credit analyst for corporate and real estate ratings.

Rents in both residential and retail markets will also remain under pressure, and hotels will be forced to accept lower average daily room rates to maintain occupancy levels, S&P said.

Property prices are down 16-19 percent from their peaks of over three years ago, National Bank of Kuwait said in a report this month.

Jagtiani told reporters that Dubai’s Expo 2020 could benefit the property market due to the potential increase in economic activity on the back of the expected arrival of 25 million visitors and new residents.

However, she cautioned the property sector ran the risk of “overbuild,” the effects of which would be felt beyond 2020.

Property consultancy Jones Lang LaSalle’s 2017 report suggested the planned residential supply in Dubai would grow by 9 percent in 2018 and 7 percent in 2019.

Emaar Properties reported a 16 percent slide in fourth-quarter net profit on Feb. 14, as costs weighted on Dubai’s largest listed developer.

It followed results from fellow developer DAMAC Properties that showed a nearly 47 percent plunge in net profit for the quarter.

Jagtiani said geopolitical risks, such as the standoff between Qatar and some of its powerful Gulf neighbours, would weigh on sentiment, even though Qatari investors were not among the top 10 property investors in Dubai.

Qatar, a tiny but rich Gulf Arab state, has been isolated over the past seven months by trade and travel sanctions imposed by Saudi Arabia, the United Arab Emirates, Bahrain and Egypt over accusations – denied by Doha – that it supports terrorism and regional rival Iran.

Jagtiani said the real estate downturn would not be as severe as that experienced in 2009 due to prudence among lenders and tighter regulation of the property market.

House prices in Dubai in 2009-2010 plunged more than 50 percent from their peaks, pushing Dubai close to a debt default.

Dubai property market ‘continues to show growth’, says Damac’s Sajwani

14 Feb 2018

Dubai’s property market continues to show signs of growth with increasing demand returning to the market, according to Damac Properties chairman.

The luxury developer reported a net profit of $762 million in its yearly profits announced earlier today (a drop of 25% on last year), which was based on sales worth $2 billion (AED7.5bn) during the year.

Hussain Sajwani, chairman of Damac Properties, said the company’s yearly figures showed there was a “returning demand” in the property market in the emirate, adding that the company’s outlook was positive in the medium to long term.

“Dubai’s property market continues to show growth as increasing demand returns to the market, and this is reflected in our booked sales,” said Sajwani.

“Our medium to long term outlook remains positive, with continued local demand as well and stronger interest by international investors. Our major projects in Dubai including Damac Hills, Akoya Oxygen and Aykon City continue to appeal to expats and international investors alike, while our diverse product portfolio continues to attract a wide variety of buyers for our off-plan and ready properties,” he added.

Damac delivered 20,236 units as of December 31 2017, which it described as “a milestone for the company and the industry as a whole.”

Construction continues on over 6,500 villas, apartments at Akoya Oxygen, along with its golf course, and community infrastructure. The community’s amenities, including wellbeing facilities, retail outlets, as well as hospitality, food and beverage elements, are in various stages of planning and progress.

What oil price reverse means for Dubai property

19 Feb 2018

As we close the books on Q4 of 2017 and reflect on the most recent quarter, it’s clear that major political events to the west, and OPEC oil controls limiting production, have put pressure on and spooked the UAE market.

Why is it the market continued to weaken in 2017? The macroeconomics largely come down to world affairs and basic supply and demand.

The UAE’s economic growth will accelerate to 4.4 per cent in 2018 as global growth is expected to pick up steam from 2017, driven by rebound in investment, manufacturing and trade, as reported by the International Monetary Fund (IMF).

Raising its outlook for the global economy, the IMF said in its latest World Economic Outlook that growth is expected to rise to 3.6 per cent in 2018, with: “buoyant financial markets and a long-awaited cyclical recovery in manufacturing and trade under way.

Stronger activity and expectations of more robust global demand, coupled with agreed restrictions on oil supply, have helped commodity prices recover from their troughs in early 2016.”

For the seven oil-exporting countries in the Middle East, the UAE’s real GDP growth forecast, which was cut to 1.5 per cent in 2017 is seen accelerating to 4.4 per cent in 2018, at the fastest pace in the region as expected by the IMF.

The UAE economy has been resilient to the impact of the slump in oil prices as it has benefited from a relatively diversified economy, excellent infrastructure, political stability and ample foreign assets, according to the Institute of International Finance.

The introduction of VAT five percent has further diversified revenues. The move is expected to bring higher inflation, at least temporarily. The short-term impact will be offset by the long-term benefit VAT will bring to the regional economies.

There is an urgent requirement to diversify government revenues. VAT is a measure that will allow more stability, given that the outlook for crude prices remains volatile.

Although oil plays a major role in the availability of credit from banks and many buyers in Dubai real estate are from countries solely dependent on oil, the impact is not that significant. From a buyers perspective, this is a good time to buy real estate in Dubai, because of lower prices and steady yield, and once the oil price starts to rebound this will only further a positive impact on the real estate price.

Dubai property price declines set to continue until 2020

20 Feb 2018

A three-year downturn in Dubai’s property market will likely continue until at least 2020, Standard & Poor’s said Tuesday, citing low oil prices, the introduction of VAT and a Gulf diplomatic crisis.

A glut of housing units and weak demand were also key reasons for the decline, the credit ratings agency said in a report.

The emirate’s real estate sector has been on the slide since 2014, when crude oil prices crashed, dealing a harsh blow to many Gulf investors.

Home prices dropped more than 15 percent between then and mid-2017.The downward trajectory continued through to the end of last year, the S&P report said, with prices of residential units falling a further five to ten percent.

It said the introduction of a value added tax and a prolonged crisis between Qatar and its Gulf neighbours, including the United Arab Emirates, had also put pressure on real estate prices.

S&P called the downturn a “correction” but said the sector may start to bounce back when Dubai hosts a six-month World’s Fair in 2020.

“We believe this correction will continue at least for this year and next, before prices stabilise in 2020 at the earliest,” it said, adding that rents will likely follow the same trend.

Dubai’s Expo 2020 is expected to attract up to 300,000 visitors a day when it opens in October 2020.

Experts have predicted it will also create around 300,000 new jobs and attract new residents in the emirate city, which currently has a population of three million.

Dubai is slated to spend some $7 billion (5.7 billion euros) on infrastructure projects and $2.9 billion on the expansion of the metro route to the exhibition between now and event’s inauguration.

The property sector and related activities form around 13 percent of Dubai’s gross domestic product, which was $108 billion at the end of 2017.

Between December 2015 and June 2017, overseas investors put up as much as $41 billion to purchase property in the emirate, said the Dubai Land Department in August.

Off-plan sales dominate Abu Dhabi housing market

8 Feb 2018

Off-plan sales are driving the Abu Dhabi housing market as the emirate continues to feel the effects of diminished government spending and sluggish economic growth, according to a new report from international property company Chestertons MENA.

According to the report, off-plan sales activity remained high in Q4, with developers rolling out a number of incentives to attract buyers. The secondary housing market, however, saw a 2 percent decline in apartment sales prices and a 1 percent decline in villa prices, with GCC and Arab nationals dominating both markets.

“Throughout 2017, we saw the effects of a number of economic factors, including low oil prices, reduced government spending, increased stock in the secondary market, a rising cost-of-living and redundancies,” said Ivana Gazivoda Vucinic, head of consulting and research at Chesterstons MENA.

On average, apartment sale prices fell by 2 percent during Q4, with certain areas experiencing a more pronounced decline, such as Reem Island (5 percent), which Chestertons said is a reflection of waning demand.

Saadiyat Island, on the other hand, registered the steepest increase – 5 percent – in apartment sales prices for a second consecutive quarter, partly fuelled by the inauguration of the Louvre Abu Dhabi. On average, prices increased rom AED 1,362 per square-foot to AED 1,430 per square foot on the island, while Reem Island prices fell from AED 1,362 per square foot to AED 1,242 per square foot.

Additionally, average villa sales prices fell by 1 percent in Q4, with the Al Raha Beach Area falling more than 4 percent from AED 1,348 per square foot to AED 1,282 per square foot.

Abu Dhabi’s rental market demonstrated similar trends, with an overall decline in rental prices of 2 percent and 1 percent for apartments and villas, respectively, echoing results from the previous quarter.

“Shrinking company housing allowances and excess rental supply exerted downward pressure on rental prices in the emirate,” Vucinic added. “Vacancies in some locations, such as Al Raha Beach, surged over the quarter as residents downsized their accommodation or moved to more affordable communities.”

Downsizing, however, was positive news for investors, with rents for one-bedroom apartments in Al Khalidiya rising by 7 percent.

In the villa market, Al Reef and Reem Island emerged as preferred locations. In Al Reef, for example, a typical three-bedroom villa could be rented for AED 120,000 a year, with preferential leasing terms for some residents.

In overall terms, the mix of high-performing areas changed in Q4, with Saadiyat Island being the best performing area in the apartment segment and Khalifa City showing positive trends in the villa segment. Mohammed bin Zayed City registered the highest increase in villa rents at almost 2 percent, bucking the wider market trend.

“There is a likelihood of positive economic sentiment emerging from ADNOC’s recent announcement to invest $109 billion in growth strategies,” Vucinic noted. “This plan could be the turning point for Abu Dhabi’s real estate sector as it could generate new jobs and therefore renewed demand for residential property.”

Middle East real estate tycoon warns of a rocky 2019 — but says region is ripe for investment

8 Feb 2018

  • A mogul of Middle East real estate development, Emaar Properties Chairman Mohamed Alabbar, said that the region has plenty of development opportunities despite geopolitical tensions.
  • “If I was to look at the region as a whole I’m still positive,” he told CNBC at the Milken Institute MENA Summit in Abu Dhabi on Wednesday.
  • However, he cautioned investors to remain prudent in the longer term.

A mogul of Middle East real estate development, Emaar Properties Chairman Mohamed Alabbar, said that the region has plenty of development opportunities despite geopolitical tensions and difficulties doing business.

“If I was to look at the region as a whole I’m still positive,” he told CNBC at the Milken Institute MENA Summit in Abu Dhabi on Wednesday. However, he cautioned investors to remain prudent in the longer term.

“I’m just careful about what is 2019. I’m just worried that we’ve been having a good time for too long. So I just hope that 2019 goes well … So make sure your balance sheet and debt level is at reasonable levels, so if there’s a shake-up you can handle it,” he said.

Emaar Properties is a real estate development company based in the United Arab Emirates (UAE) which is responsible for developments throughout the country and the wider Middle East, and beyond.

Founded in 1997, Emaar Properties has been responsible for much of the development of Dubai, including the iconic Burj Khalifa, the world’s tallest building. It has also developed shopping malls and residential property, hotels and entertainment venues.

The real estate firm also has developments further afield such as in India and Pakistan.

Speaking to CNBC, Alabbar summarized the outlook for the company.

“My view is that Morocco is doing well for us, I would say Egypt is doing extremely well; Saudi Arabia with all the restructuring going on, it’s going to be a fabulous opportunity. In the UAE, we still expect to grow 20 percent on an annual basis,” he said, noting that the company’s growth in India was recovering and Pakistan was doing “reasonably well” for the firm.

Alabbar said the company had achieved around $5 billion of sales in 2017 and close to $1.8 billion of net profit before depreciation, with the company growing around 20 to 25 percent on an annual basis.

“Trust me, the margins, the opportunities and the growth I’ve been having in the Middle East over the last 20 years — even if you make a mistake, it’s so worth it,” he said, although he noted doing business in the wider Middle East had its challenges.

“Of course if I’m doing business in the UAE, it’s comfortable, it’s safe. But if I have to go to Cairo (in Egypt) I have to know the government, I have to know the mayor of Cairo, the mayor of Alexandria. But that’s what we do, that’s what we’re paid for, that’s what we have to do to grow our business,” he said.

The Middle East is certainly not a region for the faint-hearted. There is ongoing geopolitical turbulence caused by the continuing conflict in Yemen, uncertainty in Syria and Iraq about the possible resurgence of terrorist group Islamic State and internal disputes within the Gulf Cooperation Council (with Qatar being sidelined by Saudi Arabia, Bahrain, the UAE and Egypt), not to mention perceived proxy wars between Saudi Arabia and Iran.

Couple these issues with economic instability, prompted by the lower oil price, and there’s a combustive mix for most businesses. Alabbar said it was nothing new, however, and that the region was ripe for real estate development and infrastructure investment.

“I think that what the Middle East is going through is, unfortunately, not new … But the truth is that the opportunities exist — there are millions of people who have to go to school, they have to shop, they have to find jobs and open new factories, there’s tourism, so therefore that will contribute to economic growth in the whole region.”

Asked about Emaar Properties’ balance sheet, Alabbar said there had been difficult times.

“2007, 2008 and 2009 was very painful and I try not to forget the lesson. And I deal with bankers with a lot of respect but when they come and tell me ‘your balance sheet is not very efficient’ I know that I’m doing a good job. So I like to keep my debt at a very reasonable level. Then again, we have to do business, we have to be aggressive but at the same time we have to keep our eye on the cycle.”

World’s next tallest hotel set to open in Dubai

10 Feb 2018

Dubai: Shaikh Zayed Road will continue to host the “world’s tallest hotel”, with the opening this week of the Gevora built by the Al Attar Group.
The 75-floor structure stands at a height of 356 metres (1,167.98 feet) and has 528 rooms. It is located right near the DIFC cluster and with the Emirates Towers as neighbours.

Gevora and the Al Attar Group hope to take over the world’s tallest hotel mantle from the JW Marriott Marquis Hotel just down Shaikh Zayed Road, which soars to 1,165 feet. The property opened in 2012 and has 1,608 rooms.

Dubai has two other entrants in the tallest hotel stakes, in Rose Rayhann, which stands tall at 1,093 feetk and the Burj Al Arab, at 1,053 feet.
The Al Attar Group has multiple high-rise interests along Shaikh Zayed Road.

Most of the other hotels in the tall rankings are dominated by Chinese developers and their flagship hotel projects.

Gevora’s opening on February 12 will allow for a better balance to be struck between Dubai and China in hosting these eye-catching landmarks.
The Al Attar Group has multiple high-rise interests along Shaikh Zayed Road; in fact it was among the handful of developers who moved in with projects just as the location on either side was coming into prominence in the early 2000’s.

Shaikh Zayed Road shot into prime time prominence with the Emirates Towers, which opened in April of 2000. Prior to that there were just the towers on the opposite side of the Road and near the Crowne Plaza.

Then the freehold boom started in Dubai in earnest and the Burj Khalifa and the many signature towers within the DIFC cluster came into being. And later on there was Business Bay and its line-up of Executive Towers.

Now that the Gevora is all set to open its doors, what next for Dubai’s Shaikh Zayed Road? Is there space left for new builds on what is already an area with the highest concentration of high-rises?

There could well be new possibilities taking shape, with the Dh5 billion Emirates Towers Business Park as a possible destination. And further down the Road, there will be two “super-tall” structures forming part of “Uptown Dubai”, which will be built by the Jumeirah Lake Towers developer DMCC.

Time for Dubai realty investors to get back into luxury

10 Feb 2018

Despite the popular global assumption that the majority of Dubai’s real estate stock and transaction volumes are concentrated in the prime/luxury end of the market, this sector represents just a small portion of the residential market. In fact, only 3 per cent of all residential transactions in 2017 were concluded within this segment.

This may come as a surprise given Dubai’s image as an expensive metropolis with a robust luxury property market. But it is less paradoxical when one considers the large amount of stock that has transacted in the mid- and affordable segments over the past 12 months, overshadowing the prime market that just a few years ago was firmly in the limelight.

In any anomaly one may find opportunity. however, as the market continues to be flooded with new stock in the lower end, the prime/ultra-prime segment may provide better prospects for investors in the coming few years.

Prime and ultra-prime property prices in Dubai are now among the lowest of any comparable global hub. This stance is further intensified by the varied level of price softening witnessed over the last three years across all segments of the market. Prime properties in Dubai are approximately 40 per cent less expensive than Singapore and 50 per cent less than Moscow and Paris.

Dubai’s ultra-prime market is also relatively inexpensive compared to the likes of Shanghai and Tokyo, with average prices almost 60-70 per cent lower, and presents excellent value against prices per square metre in London and New York.

The long-term investment potential in Dubai’s prime segment is reinforced by a nominal tax regime and notably low real estate investment costs. These costs — associated with buying, holding and selling property — can detract significantly from an investment and essentially erode the attractiveness of an asset.

Cities such as Hong Kong carry investment costs of approximately 32 per cent, while costs in Singapore and Tokyo are nearly 20 per cent, representing an additional charge equivalent to almost a quarter of the value just to buy, sell or hold property. With notably low buying and selling fees, and almost no holding charges, investment costs in Dubai amount to just 8 per cent — comparable to Shanghai and Mumbai.

Although these costs are often overlooked by investors, they have a significant impact on any comparison of prospective investment yields in different cities across the world.

The trickle-down effects of continued low oil prices, a strong US dollar and continued geopolitical turbulence have collectively cast a significant dent in the absorption levels in prime stock. However, the upcoming supply pipeline is modest in this sector, with most new stock concentrated in the low-to-mid market segment — an upsurge created on the back of projected demand from Expo 2020.

Given Dubai’s position as a global tourist destination and regional economic hub within five hours flying time of around one third of the world’s population, strong underlying demand for prime and ultra-prime properties is expected to be sustained in the long run.

As the market expands and continues to mature, gaining depth and liquidity in line with population growth, it is likely that demographic pressures will continue to mould the cityscape in a way that accentuates the pull of core areas. These “city centres”, shaped by demographics just as much as by master planning, will also see natural price appreciation driven both by desirability and spatial limitations.

Prime and ultra-prime segments will be the direct beneficiaries of this in terms of price appreciation and stability, although it will also likely trigger further yield compression, positioning Dubai on a par with other global hubs.

At the other end of the spectrum, in most outer areas that are being flooded by lower-priced projects and are free of land constraints, even optimistic demographic growth will be insufficient to drive notable midterm price appreciation, creating a widening gap with prime and ultra-prime prices in central areas.

Dubai residential property prices ‘under pressure’

10 Feb 2018

Dubai’s residential property market shows few signs of bouncing back quickly from a now three-year downturn. Having stabilized in 2016, prices saw renewed declines last year as housing supply far outpaced demand, said a leading property firm Asteco.

The prices of apartments and villas fell by 7.8 per cent y/y and 5.6 per cent y/y respectively in the fourth quarter of 2017, the fastest drop for several quarters. Prices are down 16-19 per cent from their peaks of over three years ago, stated Asteco in its report.

These trends are confirmed by other data sources. Reidin, another real estate property tracker, shows villa and apartment prices down 1.9 per cent y/y and 3.5 y/y respectively in Q4.

Latest data on Phidar Advisory’s Dubai 9/5 House price Index also points to softness in Dubai’s residential real estate market.

Alongside lower prices, rents have also been falling. According to Asteco, rents were down 11.1 per cent y/y for apartments and 9.6 per cent y/y for villas in Q4, with accelerated declines from earlier in the year.

Similar to sales prices, rents are down 19-20 per cent from their previous peaks. This may even understate market pressures, with some of the adjustment coming from non-price factors such as better payment terms or rent-free periods. With rents falling faster than sales prices, yields on property investment have become more compressed.

Dubai’s property market has been on a rollercoaster ride for more than a decade. Residential prices fell by around half in the years following the 2008-09 financial crisis, but rebounded from 2013, helped by the return of confidence linked to the swift rise in oil prices back above $100 per barrel.

Indeed, the market was likely driven by speculative buyers hoping to cash in on Dubai’s economic recovery. The emirate’s award as host of the Expo 2020 event in 4Q13 also saw a spike in the number of buyers entering the real estate market. This pushed apartment prices up by a staggering 60 per cent y/y that quarter, with villa prices up 35 per cent y/y.

To prevent a repeat of the boom-bust cycle in property prices that had plagued Dubai’s economy before, the authorities tightened regulations.

They doubled the land registration fee to 4 per cent and introduced tighter loan-to-value ratios to help mitigate risks to banks’ balance sheets, rein in speculative activity and gear the market more towards end-buyers. This had an almost immediate impact, said the report.

Growth in apartment prices slowed from 41 per cent y/y in 1H14 to 19 per cent y/y in 2H14, while villa prices slowed from 20 per cent y/y to 8 per cent y/y during the same period, it stated.

Growth in supply has been a key factor in recent price weakness – and a legacy of the long lead times in bringing large real estate projects to market.

According to Jones Lang LaSalle (JLL), a property consultant, growth in housing supply slowed slightly from 3.9 per cent y/y in 2016 to 2.9 per cent y/y in 2017. With population growth possibly in the range of 1-2 per cent y/y, occupancy rates continued to remain low, adding further downward pressure on prices.

Meanwhile, demand remained lackluster as the impact of more stringent loan-to-value rules was compounded by the effects of higher interest rates, higher fuel costs, and modest wage and job growth, all of which reduced consumer purchasing power.

Transaction levels in 2017 were low compared to earlier years, averaging Dh3.5 billion per month, down 6.5 per cent from 2016. But they were helped by a shift towards the more affordable housing segment, mainly as a result of a rise in the incidence of cash-strapped and risk averse buyers.

JLL pointed out that the property market downturn has not been exclusive to Dubai, or to the residential sector.

Prices of apartments and villas in Abu Dhabi fell by a steeper 8 per cent y/y and 7.9 per cent y/y respectively, on average, in the fourth quarter of 2017 with the market appearing to suffer from the same issue of oversupply.

Prices and rents in the commercial property sector are also falling. Meanwhile, other GCC countries are witnessing their own property market corrections.

One key factor in recent market weakness – rising supply – is expected to grow over coming quarters: JLL expect supply growth to pick up to 9 per cent this year.

The near completion of a number of residential developments, including New Dubai Gate in the Jumeirah Lake Towers district, The Pad in Business Bay, Eagle Heights in Sports City and Serenia Residences on Palm Jumeirah, will likely add 17,000 new apartments to the market in early 2018, stated the report.

Although project launches are expected to ease off in the 2H18, the projected supply increase in 2019, at 8 per cent, is nearly as large, it added.

Dubai Land Department and Aqari Global to promote real estate in US

10 Feb 2018

The Dubai Land Department (DLD), the emirate’s property legislator, entered into a strategic cooperation and partnership agreement with Aqari Global Ltd ‘Century 21 United Arab Emirates to promote Dubai real estate in the United States.

“We pay close attention to the US market, especially as US investors are among the top foreign nationalities to invest in Dubai’s real estate market each year,” said Sultan Butti bin Mejren, director general of the DLD. “The US is full of investors looking for exceptional investment destinations around the world, and Dubai is certainly capable of answering this demand with the city’s diverse investment opportunities.”

The agreement will help promote Dubai real estate, provide specialized services to help attract investment and support the DLD by participating in exhibitions and overseas real estate promotion workshops in the US.

US investors have made 2,298 investment transactions valued at over Dh4 billion in the past three years, according to Majida Ali Rashid, assistant director general of DLD and head of the Real Estate Investment and promotion Center, the investment arm of the DLD.

“This agreement is aligned with our strategy of strengthening cooperation between a select group of real estate promotion trustees in different countries to attract new investors from around the world to Dubai. We are confident that our agreement with Aqari Global Ltd ‘Century 21’ will help us achieve that goal,” she said.

Aqari Global Ltd ‘Century 21’ is a real estate agency with more than 7,500 offices in 80 countries.

Dubai’s new-generation residences: live, work and play spaces

7 Feb 2018

Live, work and play spaces designed to appeal to millennials are changing the way homeowners in Dubai look at property. Developers are delivering a lifestyle with retail, club areas and recreation built in, and house-hunters are more likely to consider the whole package than the individual house.
Having the lifestyle you desire right on your doorstep is crucial to this segment. David Godchaux, CEO of Core-Savills, tells PW, “The growing interest for bona fide mixed-use developments and adoption of the live-work-play philosophy by millennials, is leading communities to blur the edges between these spaces.

“Jumeirah Lakes Towers [JLT] and Dubai Marina, with Dubai Internet City and Dubai Media City, can be very good examples of combined office, residential and food and beverage areas and they are also home to many start-ups and small and medium enterprises primarily driven by millennial employees. This demographic doesn’t want to commute and wants to be centrally located, even at the cost of smaller living spaces.”
The search for the perfect lifestyle becomes an important driver in decision-making. Alya Mahdy, executive director — commercial at Jumeirah Golf Estates, tells PW, “Similar to the trend in other buyer age groups, [millennials] have very specific choices when it comes to buying a home, and are more attracted to modern amenities that complement their lifestyle, the latest architecture and technology, and accessibility to their favourite spots in Dubai.”

Lewis Allsopp, CEO of Allsopp & Allsopp, says that certain age categories have specific preferences for tower or villa accommodation. “Buyers in their 20s prefer the tower-style living as the typical tower-style communities lend themselves to busy and active lifestyles with a huge amount to do on the doorstep,” he tells PW, noting that a typical expat millennial buyer in the UAE is born in the 1980s and roughly 27-35 years old.

Low-rise
A number of low-rise developments have emerged in the UAE in a trend that is said to be in direct response to demand from this demographic. Developers are happy to cater to this requirement. “We are seeing this trend of community living and low-rise developments gaining traction from this demographic. Developers are responding to this trend, particularly in the affordable market segment, partially also because low-rise construction is cost-effective,” says Godchaux.

Examples in the affordable segment include Remraam and the upcoming Town Square by Nshama. In the prime segment, City Walk and the upcoming Bluewaters are among those catering to the trend for destination living. The GCC millennial is particularly interested in the live-work-play spaces. And there are many communities offering G+1 G+2 G+3 apartments.

“They are targeted for savvy investors and the newer second-generation regional demographic who prefer a more European low-rise, pedestrianised development potentially due to the influence of travel and higher education in the West,” says Godchaux. “This is even evident in the rising level of high street retail and food and beverage such as Al Seef, La Mer, Box Park and Outlet Village, among others.”

Villas come into the picture for growing families. Allsopp says, “As millennials gets into their 30s, we are noticing an increasing number are looking towards villa communities as they start to think about raising a family.”

Godchaux agrees that as the family size starts increasing, villas come back into the picture. “Villas, on the other hand, are predominantly for families who prefer privacy, larger gardens and family spaces, nearness to schools and are open to commute to economic clusters,” he says.

Affordability
Affordability is crucial to the millennial story. In many parts of the world, millennials cannot afford to buy property. “Globally, the millennial buyer segment is limited as many face the issue of affordability, while also being averse to putting their roots down in one place, thus preferring the agility of renting,” says Godchaux.

In the UAE and the wider GCC, the millennial buyer is somewhat more empowered. Godchaux explains, “Among regional millennial buyers, we see a marginally stronger inclination to homeownership and a slightly higher share of contributions from the bank of mum and dad to facilitate acquisitions when compared globally.”

Allsopp says that many expats come to work in Dubai as millennials and are eager to get on the property ladder. “Our data shows that 35.9 per cent of our buyers are millennials,” he says. “I would expect that this would be higher if it wasn’t for the high obstacles to entry into the market, namely the size of the deposit and the fees involved.”

He argues that millennials here are quite different from their counterparts in, say, the UK. “It’s quite different to what we are seeing in the UK and I think that is for a number of reasons,” says Allsopp. “To start with, the cost of living is high in the UK, as it is in Dubai. What is different in the UK though is that the average wage is lower, it’s taxed, then there are similar costs to here in terms of rent, car, fuel, food, among other things.

“The millennials in the UK are not in the same financial position as those in Dubai. Added to that, there a numerous studies reporting that the average millennial in the UK is not as concerned with purchasing property or looking long term; they are all about the here and now and spending their income on life and experiences, rather than saving and looking to purchase a property. I think the millennials in Dubai are different, not just because of the difference in earnings, but because of the mentality of a person that moves away from family and friends to make something with their life.”
Mahdy says that the lower interest rates are also a factor attracting buyers. “Due to lower profit rates on home finance, more millennials are buying property than they were previously,” she says.

Developers, for their part, are creating attractive payment plans. “Flexibility in payment plans and ease in acquiring finance for the initial down payment remain key for the mid-income millennials,” says Godchaux.

There is a big push for more affordable housing, while buyers are also looking at the off-plan market, according to Allsopp. “They are attractive properties in great communities and they make a great purchase,” Allsopp says.

Rent a lifestyle
Still, more millennials tend to be active in the rental market. Godchaux says, “They are predominantly dominant in the rental market and relatively limited in the sales market. The shoppers for affordable and mid-income homes are young couples and families wanting to climb up the housing ladder to ownership.”

Godchaux says that some of the lifestyle elements available in some communities are accessible to renters. “Places like Dubai Marina and JLT will remain a preferred option by expat millennials due to the lifestyle, amenities and central location, although predominantly in the rental market.”

Dubai Real Estate Not As Crazy For Crypto As People Think

7 Feb 2018

Dubai is famous for being the mecca of luxury real estate in the Middle East. It was the first market to sell a new development property in Bitcoin.

The Aston Plaza and Residences in Dubai Science Park is the development that made headlines for accepting payment in Bitcoin. The project isn’t even completed yet. Lord knows what one Bitcoin will be worth in the summer of 2019 when buyers get to move in. The world’s biggest cryptocurrency is already down 45% this year alone.

The 50 units that were priced in Bitcoin are nearly all sold out.

Star Business Centre, a part of the Dubai-based Samana Group, has started accepting digital currency as rental payments for their offices downtown.

Dubai launched its first cryptocurrency in October called emCash, making the United Arab Emirates the first country to officially sanction a cryptocurrency. Samana Group will use that coin, along with Bitcoin, as a form of payment.

new-construction

The Aston Plaza and Residences in Dubai: 50 units priced in bitcoin. They’re “nearly sold out,” brokers for the property say.

The Royal Atlantis’ Crescent, located on the manmade Palm Jumeirah, is also accepting bitcoin.

These are big, profile properties in a showy and glam global city. But the Bitcoin market for housing there is not expanding. And the market is not all that interested in seeing it expand.

Many brokers have stopped accepting digital currencies after the UAE’s central bank issued a warning on them in October. Bank president Mubarak Rashed Khamis Al Mansoori said bitcoin is used for money laundering and terrorist finance.

Sameer Lakhani, Managing Director at Global Capital Partners, said in a Gulf News article published Thursday morning in Dubai that “The UAE Central Bank has joined others in warning about the speculative nature of Bitcoin. Since then, clearly there have been increasing calls to regulate it and it is increasingly likely that this will happen.”

nakheel

A Nakheel Properties sign advertises land for sale on Dubai World’s Palm Jumeirah island in Dubai. Payment in bitcoin accepted.

Despite a handful of companies advertising their wares in crypto, a recent industry survey shows 97% of Dubai real estate investors would not buy, sell, or rent a property in crypto. That’s near unanimity.

The survey was conducted this week by Dubai real estate portal Bayut.com.

A slight majority, 52%, said they are not interested in knowing the Bitcoin price on a piece of real estate. Some 79% of Bayut’s survey respondents said investing in crypto as a stand-alone security was a poor investment, though the results may be slightly skewed as only around 20% of the survey respondents considered themselves real estate investors. Half of the respondents were renters, making it unclear as to whether they considered themselves part of any investor class.

UAE is set to launch a Shariah law compliant cryptocurrency called OneGram in June .

Jumeirah Village Circle tops Dubai rental yields

29 Jan 2018

Rental yields in Dubai and Abu Dhabi continue to offer investors globally competitive returns despite flattening prices, says a new report from Propertyfinder.

Jumeirah Village Circle, Discovery Gardens and International City are the three areas of Dubai offering the highest returns for apartments, with average yields of 9.20 percent (per square foot), 8.96 percent and 8.59 percent respectively in October last year – around 0.5 percent down on April returns recorded in April.

For villas, The Springs (6.04 percent), Jumeirah Village Circle (5.41 percent) and Dubai Land (7.26 percent) were the highest-yielding areas in Dubai, with the former and the latter actually enjoying small rises in yields over the April figures.

The Springs return is particularly encouraging considering that sales prices have declined by six percent over 2017.

In Abu Dhabi, Al Reef (8.53 percent) for apartments and Hydra Village (7.52 percent) for villas represented the best places for investors.

Yields tend to matter most to investors as it is about income rather than capital growth. When compared to other major cities around the world. London, for instance, offers investors rental yields of around 3.4 percent per square foot, while Tokyo’s returns are just 2.7 percent.

“Typically, smaller properties produce better rental yields than larger ones,” says Lukman Hajje, Chief Commercial Officer of Propertyfinder Group. “Apartments are better than villas, and studios are better than larger apartments, for example.”

“But also consider location. Newer, emerging communities offer better rental yields than more established communities. Newer cities offer higher rental yields than established cities,” he adds.

Revealed: Dubai’s most popular areas for places to rent

7 Feb 2018

Dubai Marina and Jumeirah Lake Towers are the areas getting the most interest from property seekers looking for apartments to rent, while Arabian Ranches and the Springs are the most sought after areas for potential villa buyers, according to new statistics from Propetyfinder Group.

In a bid to understand consumer preferences, Propertfinder collected data on the top 10 areas getting the most leads from property seekers in the emirate.

According to Propertyfinder, total leaders are up 29 percent year-on-year, with interest expressed via SMS text having more than doubled in the last six months.

Most popular Dubai apartments for rentaca

Apartments-to-Rent-Dubai

The statistics show that the most leads from those seeking apartments to rent were in Dubai Marina (14.26 percent of leads), Jumeirah Lake Towers (6.10 percent), Downtown Dubai (5.6 percent) and Business Bay (5.08 percent).

For those seeking apartments to buy, the most sought after areas were Dubai Marina (15.42 percent), Jumeirah Village Circle (9.58 percent), Downtown Dubai (8.07 percent) and Jumeirah Lake Towers (7.42 percent).

Most popular Dubai apartments for rent

Dubai-Villas-to-Rent

For villas, the most sought after areas for those looking to rent property were The Springs (11.34 percent), Arabian Ranches (9.98 percent), Mirdif (9.66 percent) and Al Barsha (6.66 percent).

For those looking for to buy villas, the most looked at areas were Arabian Ranches (12.81 percent), The Springs (8.12 percent), Reem (7.34 percent) and Jumeirah Park (5.89 percent).

Most popular areas for Dubai apartments to buy

Dubai-Apartments-for-Sale

Notably, Dubai Land apartments – the cheapest to rent in Dubai – saw a rapid increase in leads since November 2016, as the area moved into a record-breaking year for handovers.

Dubai’s most expensive area to rent, Downtown Dubai, held steady for leads in 2016 but saw year-on-year increases of 47 percent and 39 percent in September and October, respectively.

Most popular area for villas to buy

Dubai-Villas-for-Sale

 

 

Dubai to target key Asian, European cities in real estate push

20 Feb 2018

Dubai Land Department (DLD) has revealed that its promotion plan for 2018 will again include major shows in Shanghai, Mumbai, Moscow and London.

The promotion plan for the Real Estate Investment Management and Promotion Centre, the department’s investment arm, will see the Dubai Property Show returning to the four key cities.

Majida Ali Rashid, assistant director general and head of the Real Estate Investment Management and Promotion Centre, revealed that DLD received a total of 10,000 visitors at the Shanghai, Mumbai, Moscow and London editions of the Dubai Property Show last year, with the majority being investors interested in Dubai’s real estate market.

She said the value of bookings and sales made at these exhibitions reached nearly AED3 billion.

The 2018 plan will also include a range of real estate roadshows and workshops which will visit Africa, America, Asia, East Asia, Europe, and the Middle East. DLD added that it will also participate in a series of real estate investment conferences and exhibitions both locally and internationally this year.

Sultan Butti bin Mejren, director general of DLD, said: “We promise everyone a schedule of activities and events that contribute to enhancing transparency in this sector and strengthening Dubai’s position in line with our vision to establish the Emirate as the world’s premier destination for innovation, trust and happiness.”

Bin Mejren added: “Our local and regional partnerships have achieved several positive outcomes as they have allowed us to interact directly with investors looking for ideal investment options. Dubai has earned a bright reputation among the world’s real estate investors and buyers, and we believe it is our duty to provide them with a clear picture of our city and where our real estate sector is headed.

“The competition between developers is healthy and friendly, and the Dubai real estate market continues its sustainable growth and maturity.”

Chinese economic influence in the UAE growing, says JLL

7 Feb 2018

China’s influence in the UAE is growing as the contractors from the Far Eastern country become increasingly active in local construction projects and the number of Chinese visitors continues to increase, according to consultants JLL.

According to JLL, the UAE plays a crucial role in China’s proposed “new Silk Roads”, including a maritime route from China through South Asia to Africa and Europe and an overland route through Central Asia to Iran, the Middle East and Europe.

“This is part of the ‘one belt, one road [initiative] with the purpose of expanding its economic influence across Central Asia, the Middle East, Africa and also Europe,” JLL senior vice president Marko Vucinic said on Wednesday.

“The main goal is to invest in infrastructure [along these routes]. Dubai is a key city in this strategy, and gateway to stable markets, especially in Africa.

“China sees the UAE as one of [its] major trading partners,” he added, noting that currently about 60 percent of Chinese exports to regional markets are channeled through the UAE.

Vucinic pointed to a number of significant Chinese investments in the UAE – such as in Abu Dhabi Industrial Park and Dubai Food Park – as signs of growing Chinese economic involvement in the country.

“One of the most visible ways that China is having an impact on the UAE is through the large presence of Chinese contractors in the country,” Vucinic added. “China is also providing construction financing, which is impacting the overall market.”

Notably, a Chinese company, the China State Construction and Engineering Corporation, is the second most significant contractor in the UAE by value ($2.94 billion) with 16 projects under execution.

Additionally, Vucinic said China has become the fourth most significant source market for visitors coming to Dubai, behind only India, Saudi Arabia and the UK.

“There was a 49 percent increase, year-on-year, in the third quarter of 2017 [in Dubai]” he said. “We’re seeing a similar trend in other emirates. In Abu Dhabi, China is among the top two source markets, and we this spreading across the Middle East as a whole.”

Andre Langston, JLL Hotels and Hospitality executive VP, said that Chinese brands are increasingly present in the UAE, and Chinese malls – such as DragonMart – are increasingly looking to expand their presence in the UAE and elsewhere in the region, a trend he believes will pick up pace in the next few years.

“The Chinese will build and finance the shopping mall, and you’ll see a lot of [Chinese] brands coming into the market,” he said. “China will have a major impact on the retail industry [in the UAE].”

Dubai on track to become maritime leisure hub

4 Feb 2018

Dubai is now among the world’s top ten maritime capitals, and fifth in the world in terms of competiveness and attractiveness, according to the Norway-based Menon Economics.

According to Menon, the large influx of waterfront projects underway and new, recreation-friendly policy initiatives mean that Dubai is well on track to fulfill Menon’s prediction that is will be one of the world’s most important maritime destinations by 2022.

“Integrating and streamlining Dubai’s maritime leisure products will have positive implications for sea-goers in Dubai, visitors and residents alike,” said Amer Ali, the executive director of the Dubai Maritime City Authority.

“It builds on our already existing achievements of raising the attractiveness and competitiveness of Dubai as a world-class marine destination.

“With the support of our partners, we are confident that we will realise the objectives of ‘Sea Dubai’ of developing state-of-the-art facilities, clear policy structures and generating new job prospects in the maritime leisure industry,” he added.

Among the ongoing waterfront projects currently in the works is the Dubai Harbour project, which will include a 1,400-berth marina and will increase Dubai’s capacity for handling yachts by almost 50 percent from the emirate’s current capacity of 3,000 berths.

Additionally, the project will add the capacity to handle larger yachts of up to 85 metres in length.

Dubai on course for 2020 target of 20m visitors

7 Feb 2018

Dubai accelerated its growth rate of visitors to the emirate, and moved closer towards its goal of welcoming 20 million visitors per year by 2020.

The number of overnight visitors in 2017 reached 15.79 million in 2017, a growth of 6.2 percent on the previous year, and higher than the previous year’s 5 percent growth rate.

India retained its top spot in terms of country-by-country visitors, with 2.1 million tourists in 2017, which was a 15 percent increase in year-on-year numbers.

Dubai Tourism said the numbers were boosted by its collaboration with Bollywood superstar Shah Rukh Khan in the #BeMyGuest campaign.

Despite an overall 7 percent drop in numbers, Saudi Arabia provided the next highest number of visitors, with 1.53 million tourists last year.

Visitors from the UK were next on the list, with 1.27 million travellers, an increase of 2 percent.

The number arriving from China was up 41 percent (764,000), while the returning Russian tourists – boosted by the strength of the rouble – saw a 121 percent increase in visitors (530,000) on 2016. Dubai Tourism said the introduction visa-on-arrival facilities for visitors from China and Russia also increased the respective numbers.

“Our strong 6.2 per cent growth in 2017 has allowed us to ramp up the pace towards meeting our 2020 targets, and today Dubai’s travel and tourism sector is not only well positioned to offer a superlative destination experience across its eight core strategic propositions, but also geared to accelerate its appeal to the diverse and evolving needs of our global travellers,” said Helal Saeed Almarri, director general, Dubai Tourism.

Most visited city
As well as having a target for 2020, Almarri said Dubai also aims to become the most visited city in the world.

“With Dubai firmly consolidating its position as the fourth most visited city globally, we remain confident that our performance, backed by the continued strength of our partnerships across government and private sector stakeholders, will enable us to successfully attain our goals of becoming the #1 most visited city as well as being the most recommended with the highest number of repeat Dubai loyalists,” Almarri said.

Dubai’s Danube says $233m homes sold during 2017

29 Jan 2018

Danube Properties, a Dubai-based property developer, has revealed that it sold new homes worth AED820 million ($233 million) in 2017.

This translates to a daily average sale of AED3.10 million and reflects the developer’s ability to sell homes despite tough market conditions, the developer said in a statement.

The company, which started journey with the launch of its first project,

Dreamz, in June 2014, has launched nine residential projects with 3,150 residential units with a combined development value exceeding AED2.84 billion, it said, adding that every property it has in its pipeline is sold.

“The year 2017 has been very significant for Danube Properties as we started delivering our promises – the dream homes to our clients – in this landmark year when we sold AED820 million worth of properties,” said Atif Rahman, director and partner of Danube Properties.

“In 2017, we launched two new projects – Resortz and Bayz – together having 875 apartments with a combined development value exceeding AED750 million, all sold out.”

He added: “So far, we have sold out almost all of the projects that we launched since the announcement of our first project in June 2014. We have delivered 302 residential units in Glitz Residences I and II at Dubai Studio City in 2017, while 529 more units are being readied for handover in the next few weeks.

“We also awarded five construction-related contracts with a combined value exceeding AED392 million in 2017 – a year we started delivering homes.”

$820m Sharjah project sees strong demand for homes

29 Jan 2018

Alef Group has announced that 750 residential units in the first and second phases of its flagship project Al Mamsha in Sharjah have been sold out.

The AED3 billion ($820 million) Al Mamsha project was launched in September 2017 as the emirate’s first fully walkable community.

It has seen strong demand across the range of units offered, including studios, one-, two- and three-bedroom units, as well as duplexes, said Sheikh Khalid bin Sultan Al Qasimi, chairman of Alef Group.

Al Mamsha is spread over a total area of about 3 million square feet, and the project will have a built-up area of 9.3 million square feet in addition to ground retail areas totalling to around 500,000 square feet.

Al Mamsha’s Zone 1 will comprise a total of 33 mixed-use buildings that combine retail and residential spaces connected with sidewalks and walkways.

Cars will only be parked on the basement levels, with visitors and residents using vertical transportation means such as elevators and escalators to get access to retail or residential floors.

In addition, residents at Al Mamsha will enjoy free access to dedicated cluster swimming pools, health club and gym, walkways, nursery, family entertainment centre, a dedicated kids’ zone, and retail spine.

Al Mamsha will offer studios, 1 bed, 2 beds and 3 beds apartments in addition to a selection of duplexes and penthouses and will feature a range of cafes and restaurants, and entertainment zones to host art galleries, Friday market, and outdoor events.

Sheikh Khalid said that the big sales secured to-date corroborate the success of the idea of establishing a mixed-use community offering a lifestyle that integrates modern living, retail and leisure into a vibrant urban environment.

UAE’s Azizi to deliver Dubai Healthcare City project ahead of schedule

29 Jan 2018

UAE-based Azizi Developments has announced Azizi Aliyah Residences, one of its first major sell out projects in Dubai Healthcare City, will be delivered ahead of schedule.

Launched in October 2016, Azizi Aliyah Residences, which achieved a 100 percent record sales in a single day, will be delivered in the second quarter of this year, the developer said.

It added that the AED 470million project will offer a total of 346 fully serviced residences with 191 studios, 135 one-bedroom apartments and 20 two-bedroom apartments along with upscale retail space of 16,000 sq ft.

Mirwais Azizi, chairman, Azizi Group said: “During the launch in October 2016, we anticipated a high demand, but the 100 percent pre-launch sales success story, surpassed all expectations. Fast-forward 2018, we are thrilled to announce that we are slated to deliver Azizi Aliyah Residences ahead of schedule this Q2.”

Azizi Developments said last week that its AED780 million Mina by Azizi project on the Palm Jumeirah has also progressed ahead of schedule and is expected to be delivered by Q2.

The company is also working on other projects in Meydan, Dubai Healthcare City, Palm Jumeirah, Al Furjan and Jebel Ali.

Revealed: This Dubai community offers highest rental yield for apartments

29 Jan 2018

Dubai: Despite reports of falling rents, property remains a great investment in Dubai, and those looking to make the most money are better off investing in a unit outside the city centre, or in a newly developed community.

A new analysis of rents and landlord incomes across the emirate found that Jumeirah Village Triangle (JVT) offers the highest return on investment in Dubai, with rental yields for apartments in the area averaging 9.2 per cent per square foot as of October 2017.

That is so much higher than what investors would get if they were to park their money in a property in London, where landlords typically earn 3.4 per cent of the money invested or in Tokyo and Sydney, where rental yields average 2.7 per cent and 4 per cent, respectively.

Rental yield for apartments in JVT remains high despite a steep decline in rents of approximately 12 per cent, according to Propertyfinder Group.

Rental yield is an important consideration that would-be property owners take into account when deciding whether or not a flat or villa is worth the investment. It is the money made every year as a percentage of the property cost.

Overall, rental yields across Dubai are staying relatively consistent, and they held steady in the second and third quarter of 2017, with no more than a percentage point change in most areas.

Besides JVT, there are other areas in Dubai that also offer high rental yields, and these are Discovery Gardens (8.96 per cent), International City (8.59 per cent), Dubai Investment Park (8.73 per cent) and Dubai Sports City (8.29 per cent).

Rounding up the top ten places that offer the highest returns are Dubai Silicon Oasis (8.18 per cent), Dubai Land (8.33 per cent), International Media Production Zone (8.05 per cent), Jumeirah Village Circle (8 per cent) and Motor City (7.75 per cent).

Premium locations like Palm Jumeirah, Downtown Dubai and Dubai International Financial Centre (DIFC) offer the lowest yields for landlords at 4.99 per cent, 5.5 per cent and 5.68 per cent, respectively.

According to Lukman Hajje, chief commercial officer of Propertyfinder Group, rental yields are determined by a number of factors.

“Typically, smaller properties produce better rental yields than larger ones,” he said. “Apartments are better than villas, and studios are better than larger apartments, for example.”

“But also consider location. Newer, emerging communities offer better rental yields than more established communities. Newer cities offer higher rental yields than established cities,” he said.

No VAT on realty transactions in designated zones in UAE

30 Jan 2018

Sale and lease of both commercial and residential properties in designated zones will be outside the scope of VAT, according to the latest clarification issued by the Federal Tax Authority (FTA) at a meeting with a group of tax consultants in the UAE.

“Sale or lease of any real estate property – commercial or residential – will be considered as outside the scope of VAT. Hence, there will be no VAT applicable on sale or lease of commercial or residential real estate properties in designated zones. Furthermore, the payment of five per cent VAT on purchase of commercial property in non-designated zones can be made directly by the buyer to FTA and the commercial property will get legally transferred to the buyer’s name once he has made VAT payment to FTA,” said Mayank Sawhney, director, MaxGrowth Consulting.

Earlier this month, the FTA announced 20 designated zones across the UAE with seven in Dubai; three each in Abu Dhabi and Ras Al Khaimah; two each in Sharjah, Fujairah and Umm Al Quwain and one in Ajman.

Those designated zones are Jebel Ali Free Zone, Dubai Airport Free Zone, Dubai Aviation City, Dubai Textile City and Dubai Cars and Automotive Zone in Dubai; Abu Dhabi Airport Free Zone, Khalifa Industrial Zone and Free Trade Zone of Khalifa Port in Abu Dhabi; Hamriyah Free Zone and Sharjah Airport International Free Zone in Sharjah; Ajman Free Zone in Ajman; Umm Al Quwain Free Trade Zone in Umm Al Quwain; RAK Free Trade Zone, RAK Maritime City Free Zone and RAK Airport Free Zone in Ras Al Khaimah; and Fujairah Free Zone and Fujairah Oil Industry Zone in Fujairah.

In addition, the FTA clarified that the if owners’ associations are operating independently from the developer or property management companies, they are required to register for VAT, Sawhney said, adding that currently most of the owners associations have not yet registered.

Most of the home owners’ associations are governed by the Real Estate Regulatory Authority, he said.

Anurag Chaturvedi, senior director, Horwath MAK, said home owners’ associations enter into agreement with third parties to provide maintenance services and charge tenants. Therefore, services provided by home owners associations are considered to be taxable supply and are subject to standard rate.

Chaturvedi also noted that if an individual is registered for VAT for income in his personal capacity such as commercial rents, and he cannot use his own Tax Registration Number (TRN) for business purposes. Similarly, business TRN cannot be used for personal purposes.

With regard to the first VAT return filing, Sawhney explained that the extension was not granted to all the companies but small and medium enterprises.

“All small and medium-scale companies have got an extension for first VAT return filing and under the current staggered mechanism, the first return filing period for such SMEs is either three months ending on March 31, 2018, four months ending on April 30, 2018 or five months ending on May 31, 2018, and quarterly thereafter. For large groups, the tax period is still monthly and they have to file first VAT return for the month ending January 31, 2018,” Sawhney said.

The FTA also clarified that branches of foreign companies which are not making taxable supplies in the UAE will be eligible to claim input tax credit or refund of the VAT that they pay on expenses they incur in the UAE, subject to the fulfillment of certain conditions and criterion, Sawhney added.

He noted that the payment of tax at the moment can only be made to the FTA either through e-dirham card – which only has a nominal charge of something like Dh3 per transaction – or through corporate debit and credit cards, in which case the banks will be charging a fee of two per cent or more of the transaction value plus VAT on such fee.

Emerging communities offer Dubai’s best rental yield

29 Jan 2018

Despite the continued decline in property sales prices across most Dubai communities, rental yields are still attractive for investors.

Jumeirah Village Triangle (JVT) claims the highest rental yield for apartments in Dubai at 9.2 per cent, in spite of seeing one of the steepest declines in asking prices – down about 12 per cent, says the Propertyfinder Group.

This is followed by Discovery Gardens at 8.96 per cent, International City at 8.59 per cent, Dubai Investment Park at 8.73 per cent and Dubai Sports City at 8.29 per cent.

This compares to a rental yield of 3.4 per cent in London, 2.7 per cent in Tokyo and 4 per cent in Sydney.

“Dubai offers better rental yields due to the purchase cost per square foot of the property being considerably less as compared to other major cities around the world. This, in addition to the fact that many buildings are still relatively new, therefore the cost of maintaining them and/or the service charges are not so high, all contribute to higher rental yields,” explains Mario Volpi, chief sales officer, Kensington Real Estate.

Among villa communities, The Springs commands a market-leading 6 per cent rental yield, despite seeing a 6 per cent decline in asking prices, says Propertyfinder. Other communities offering good yields are Jumeirah Village Circle, JVT, The Lakes and Arabian Ranches.

“Typically, smaller properties produce better rental yields than larger ones,” he says. “Apartments are better than villas, and studios are better than larger apartments, for example,” says Lukman Hajje, chief commercial officer of Propertyfinder Group.

“The yield is better for an apartment due to its relative size. Apartments are also comparatively more popular as they are seen as more transient than villas. For the same reason about relative size, a studio offers great rental yields but only in areas where the cost of the apartment is seen as affordable. I’m referring to the actual purchase price rather than the cost per square foot,” adds Volpi.

Villas tend to attract more end-users and hence operate at lower yields than apartments. “Also, with villas, the property component is land and building. While the building portion would depreciate over 20 to 30 years, the land value stays intact. This also contributes to lower yields. Studios are typically an investor-driven asset type with tenants coming from the low to mid-income segment. Until these tenants have significant alternatives to become property buyers themselves, the yields for smaller residential units will remain high,” observes Manika Dhama, senior consultant in the strategic consulting and research department at Cavendish Maxwell.

Market observers also suggest that newer, emerging communities offer better rental yields than more established communities. Newer cities also offer higher rental yields than established cities, according to Propertyfinder.

“If investors are chasing rental yields, they should consider units in more affordable areas with good transport/infrastructure and close to amenities. They should be wary of the cost of maintenance/service charges, check the age of the building, what are the expenses, how is the management of the building run, what future expenditures are in the pipeline, etc.? All these extra costs will affect the rental yield going forward,” suggests Volpi.

“Investors should focus on the occupancy and associated operating expenses of the property. Also, if the property purchase is a pureplay investment, then who the investor assigns to manage the project also becomes an important factor,” cautions Dhama.

Revealed: the only property sector showing growth in the UAE

22 Jan 2018

Villas in Sharjah have continued to buck the wider trend of retreating rents in the emirate’s residential rental market, according to a new report by consultancy Cluttons.

Villas recorded an increase of 1.7 percent, taking the overall residential rate of growth to 0.4 percent during the last quarter of 2017, the report said.

Cluttons’ Sharjah Property Market Snapshot for Spring 2018, showed that over the last two years, Sharjah’s villa market has grown in both profile and popularity as the real estate market repositions itself with new and affordable options.

This trend is helping retain the emirate’s appeal and attractiveness amongst those households that have been priced out of Dubai, or are seeking a more family oriented lifestyle, the report noted.

Suzanne Eveleigh, Cluttons’ head of Sharjah, said: “Communities such as Al Zahia have been a runaway success and with most major new shopping mall developments in Sharjah anchoring these new lifestyle destinations, the future of community living in the emirate appears relatively buoyant, especially when compared to many other property segments in the UAE.”

In contrast to the villa market, apartment rents in Sharjah registered a steep decline of 13.6 percent in rents.

Cluttons’ research shows that Abu Shagara topped the list of weakest performers, with rents retreating by an average of 15.1 percent during 2017.

According to the report, Sharjah’s residential rental market is set to face pressures from rising stock, which is helping to cement the tenant’s market that took hold three years ago.

“Many landlords are reluctant to adjust advertised rents downwards due to concerns about alienating existing tenants. However, with tenants increasingly seeking out new and energy efficient buildings, reflecting household financial pressures stemming from the 1 January introduction of VAT, rising utility bills as subsidies continue to be phased out and rising inflation levels, we feel landlords will need to be flexible with rents and the payment plans, particularly in older buildings, to sustain demand,” added Eveleigh.

Faisal Durrani, head of research at Cluttons said: “With sudden turnaround in economic growth, or residential demand unlikely to increase during 2018, Cluttons expect rents will continue to moderate, with apartments likely to see corrections of 5-7 percent next year, while villa rents are expected to experience growth of between 1-2 percent.

“This makes Sharjah’s villa market the only property segment in the UAE to see sustained positive growth.”

Dubai’s 2018 freehold action starts on the waterfront

22 Jan 2018

Dubai: It’s the waterfront for Dubai’s first off-plan launches of the year.

Emaar went for such a location with a twin-tower release its “Beachfront” development, and now L-I-V Developers has launched sales at its first tower project, which are on the Dubai Marina waterfront.

And it seems that investors are willing to come on board. Emaar issued a statement that it generated sales interest of Dh1 billion from selling out the 375 units on offer. And a top official at L-I-V confirmed that its pre-launch sales at its Dh400 million project had generated a “significant amount of bookings” and that full details will be announced shortly.

Both projects had tags at the upper end of the pricing spectrum, with Emaar’s reportedly at around Dh2,000 a square foot, according to market observers. L-I-V’s was at Dh1,500 a square foot.

Clearly, Dubai’s developers and its property buyers are picking up on the same sentiments that was on show right through 2017. And VAT has not dented sentiments in the residential off-plan space. At least based on what has been on show so far.

“We have been focused on the project details and not whether we should have launched sales before VAT came into effect,” said Ishan Khwaja, Director of L-I-V Developers. “The project is more than 20 per cent complete and we wanted to ensure that it is completed by Q2-19 and well before the Expo event.

“Most projects that are being launched today and hoping to benefit from an Expo upturn will only be completed in 2021-22.
“Our pricing is based on the fact that all of the apartments will either have a water view or a sea view. The prime plot became a natural fit.”

L-I-V Developers has been around in the market for some time, primarily through acquiring plots and developing Dh20 million plus villas at Emirates Hills. The Dubai Marina plot was bought in 2015 and construction started in Q3-16. (The company also had some development interests in the US, principally in New York, Los Angeles and Orange County.) Khwaja said the company has built up a land bank for further launches, and that the choice will always be for “prime investment locations”. The second project could be by the middle of this year.

More options are coming up across the length and breadth of Dubai’s waterfront locations — Meraas has multiple island options such as Bluewaters and Nikki Beach, the Palm with its Raffles-branded twin-tower on the Palm, Dubai Properties with 1/JBR, and Emaar with the Beachfront and its other twin-tower project — for an Address hotel — at Jumeirah Beach Walk.

And that’s only along the Jumeirah coastline. Further down and in and around the Dubai Creek Canal, developers are lining up their latest high-end living options.

The real estate action by Dubai’s waterside is going to flow for some time to come.

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