Monthly Archives: September 2012

Dubai Property Market Price Boost

On the eve of Cityscape Global, the major exhibition for the Dubai property market, a Q3 report has been released which supports the sentiment that prices are increasing across the Emirate.

Real Estate experts Cluttons state that apartment prices have increased by 4.9% across the first nine months of 2012 and the company predicts that the trend is set to continue into the new year.

The numbers were supported by news in the report that rental values had also increased, by as much as 6.8% across the board.

There has been a growing confidence in the Dubai property market throughout 2012 and this is expected to peak at Cityscape Global taking place from 2-4 October at the Dubai International Convention and Exhibition Centre.

Many of the leading Dubai developers are expected to announce progress on projects across the Middle East with a big focus on the serviced apartment sector. In line with this, DAMAC Properties, one of the leading luxury developers in the region, has announced it will have 4,000 units under development or management by the end of next year.

The first serviced hotel apartment project to be run under the luxury DAMAC Suites & Spa management arm will be Burjside Boulevard which overlooks the Burj Area and Dubai Mall. The project is expected to complete mid-2013.

Emaar Properties also recently announced its own serviced apartment offering in the same region – The BLVD which will start construction shortly and be ready my mid-2015.

As projects move again and the completion of many projects are set before the end of the year, Cluttons believes that as many as 24,000 units could hit the market in the next few months, tempering somewhat the strong increases that has been experienced in the first three quarters of this year.

According to Dubai government published figures, foreign investors buying real estate were responsible for acquisitions of AED 28.3 billion (USD $7.7 billion) in the first half of 2012, up 36% from the same period last year, giving a strong indication of improved business confidence in the Emirate from global investors.

Dubai Hotel Rates Jump Nearly 60%

Revenue Per Room, or RevPar, in hotels in Dubai has jumped 59.9% in August as international confidence in the emirate continued.

Revenue climbed to US$109.29 as international visitors returned in strong numbers due to the temperature drop and a post-Ramadan resurgence.

The average daily rate (ADR) of a room during August also increased strongly, up 23.7% to US$184.23 according to data just out by STR Global.

“The holy month of Ramadan ended earlier this August compared to August 2011, and performance metrics were positively impacted because of it, showing a 19.6 percent RevPar increase across the Middle East,” Elizabeth Randall Winkle, Managing Director of STR Global told Khaleej Times.

Dubai’s tourism remains a very stronger driver of growth for the Emirate, with 577 hotels in Dubai creating a total number of rooms and serviced apartments at 75,171 according to Dubai Tourism and Commerce Marketing. The STR report states that occupancy in the hotels was running at 82.3 %, the highest in the region.

Occupancy and RevPar rates are expected to remain strong for the rest of the year as the peak exhibition season gets underway, driving international business with tourists coming or pre-Christmas shopping when the weather is at its best.

As reported on this site on 17 September, the serviced apartments sector is set for strong growth in the coming years as Emaar announced its latest project in Downtown Dubai. The BLVD is already reporting strong uptake with the first tranche of properties sold out on the opening day again reflect the interest that remains in the Dubai property market.

With Cityscape underway next week, we expect the serviced hotel apartments sector to take centre stage as a number of the big name developers are expected to announce their managed properties at the show. With many projects coming on line in the early to mid part of next year, there is going to be strong competition for this growing sector.

With the investment opportunities and revenue generation a serviced hotel apartment can generate, especially through high-end, luxury managed properties in prime locations, it’s hardly surprising that there remains huge interest in this sector.

Dubai Property Market on the move

As you take a drive around Dubai, as I did this weekend, it is very noticeable that projects are again on the move. It reminded me of 2008 when a new tower seemed to appear almost overnight.

In Dubai Marina the new metro service is moving at a good pace with the stations now visible, while the Jumeirah Beach Residence beach front has been closed off in preparation of the new hotel and Mall to be built.

Driving along Sheikh Zayed Road there was further evidence of momentum in the Dubai property market with low rise office and retail space appearing and a trip to Dubai Mall highlighted the building work there with the walkway from the metro nearly complete as well as many of the towers in the Business Bay area very close to completion.

As the Dubai property market moves again, a study suggests that interest is returning to the projects which were on hold or previously cancelled. Real estate firm Cluttons reported an increase in demand for “feasibility activity and due diligence being undertaken by developers and investors in projects currently on hold, with the numbers under close scrutiny once more,” it said in a statement.

Jonathan Fothergill, director of UAE valuations at Cluttons told Arabian Business: “Clients are requesting everything from considering the feasibility of the refurbishment of a residential apartment building in Deira to looking at the feasibility of substantially expanding or refurbishing an existing shopping mall.”

Confidence breeds confidence and the physical signs that developers are again moving at pace in the Dubai property market will not only lift the mood in real estate, but in companies across Dubai in general.

Mike Sefton, property consultant at Knight Knox International, stated: “People are starting to have more confidence in the stability of the market.”

The real estate market is so closely tied to consumer sentiment in Dubai that the physical signs of movement will have much more impact that the words we have heard in the past few months. Now we can see it is back and that means we must move quick to benefit from the current prices.

Emaar launches serviced apartments in Downtown Dubai

Just a few days after we put the spotlight on the investment opportunities in the hotel apartments sector in Dubai, Emaar Properties has launched its offering.

‘The Address The BLVD’ is described as a five-star premium hotel and serviced residences featuring 200 hotel rooms and 542 serviced apartments. ‘The Address the BLVD’ will overlook the Dubai fountain, Burj Khalifa and The Dubai Mall.

The hotel is expected to be completed in early to mid 2015 the developer announced, with sales of the studio, one, two and three-bedroom serviced residences launching on 22 September.

The 63-storey hotel will be 340 metres high and will become the second tallest building in the area.

Speaking at the launch, Arif Amiri, Chief Executive of Emaar Retail, said: “The launching of this project is underlining the positive growth of Dubai’s property sector and the robust gains recorded by the city’s tourism and hospitality sectors.”

The announcement falls a couple of weeks before the region’s largest property and real estate exhibition of the year, Cityscape Global, which takes place from 2-4 October 2012 at the Dubai International Exhibition and Conference Centre.

It is expected that other developers will confirm their serviced/hotel apartments products at the show, with many towers already well under construction in the Burj Area and likely to handover their serviced apartment offering to the market early in 2013.

This means that the five-star luxury serviced apartment offering will have been on the market in the same area for more than two years before ‘The Address The BLVD’ will handover to clients.

There is certainly a gap in the Dubai market for serviced apartments with Dubai Tourism stating there were just 200 properties offering this product in the Emirate.

Serviced apartments allow investors to either live in the property themselves, or pass it onto a management company who will rent it out as part of a pooled programme. Owners can choose to live in the property for certain times of the year and rent it out for the remainder making the sector a flexible and lucrative option for investors.

Dubai Property Market Proves a big draw with International Hotel Chains

Dubai International airport has just released its figures for July which shows a 6% increase on last year and the first time monthly traffic has passed five million travelers. The airport remains on target to hit 56.5 million visitors this year and they hope, 98 million by 2020.

With those kind of figures banded around, it is hardly surprising that the International Hotel chains are expanding heavily in the Dubai property market and the Middle East in general.

There are 577 in Dubai at the last count in Q1 of 2012 according to Dubai Tourism and Marketing Commerce (DTCM), but that number is heavily weighted towards the high-end luxury market.

Where the big boys are looking to expand is in the mid to low-end hotels. The cheap and cheerful; allowing visitors from all over the world to experience Dubai without paying through the roof – average Dubai room rates are close to AED 1,000 per night.

The InterContinential Hotels Group (IHG) recently announced that the InterContinental Dubai Marina would open by the end of 2013, but it was what Taras Ettl, Vice President, Development, Middle East and Africa, IHG told Gulf News about its mid-scale properties which caught our eye: “Holiday Inn and Holiday Inn Express are growing at pace, with 50% of our development pipeline across India, Middle East and Africa now made up of these two brands.”

Dubai is certainly in need of more mid-range hotel options, especially in Burj Area and Dubai Marina, where many of the tourist attractions are located, so it is a positive sign that this section of the tourism market is set to be well catered for in the coming years.

In another report this week, Jones Lang LaSalle Hotels said that opportunity and private equity funds completed US$ 519 million of select-service hotel purchases this year through July. That’s an increase of 19% year-on-year, again highlighting the strong moves investors are making in the hotel and tourism industry.

It is also an area where developers in the Dubai property market are turning their attention in a big way in the coming years. While the majority of real estate clients don’t have the cash to set up, manage and operate an independent hotel chain, a hotel or serviced apartment in a managed tower is certainly an attractive way of getting into this lucrative market.

Dubai currently has just 200 serviced apartments, suggesting this is also an undersupplied opportunity, but there are many more coming online. DAMAC Properties only recently reported that Burjside Boulevard, a luxury hotel apartment tower over looking Dubai Mall in the Burj Area, will complete in Q1 of 2013. The company added that they are targeting 4,000 ‘key’s’ under the management of its new arm, ‘DAMAC Suites & Spa’ which will manage its serviced apartments division.

The huge benefit here falls not just to speculators, but to the many people who own a property in Dubai but stay in it just a couple of months each year. For the remainder owners can benefit from a rental pool scheme whereby their property is rented out and managed by DAMAC Suites & Spa.

The opportunity to get into and benefit from the hotel industry has never been easier in Dubai and will certainly catch the eye of many investors. With the capital growth adding to the rental returns we expect quite a few people to switch their portfolio to be more heavily weighted to this sector, rather than the money markets which are sitting relatively stagnant.

Cityscape Global Directer Walter Molman on this year's show

In Depth – We Speak with Cityscape Global Director, Wouter Molman

With just a couple of weeks to go until Cityscape Global opens its doors at Dubai International Convention and Exhibition Centre www.dubaipropertyinvest.com spoke with the shows Director, Wouter Molman in detail about the changes to this year’s show, what we can expect and how the industry has changed in the past few years.

How has Cityscape Global evolved over the past three years since the downturn in the market?

On the exhibition side, over the past three years Cityscape Global has gradually been attracting an increasing amount of international exhibitors looking to tap into the Gulf region for potential investors. This year, nearly 50% of the exhibition space will be occupied by international exhibitors, with pavilions from countries including Turkey, Russia, Egypt, Iraq, Qatar, UK and India.

This transition toward being a more global real estate event is following the repositioning strategy two years ago. Cityscape Dubai was rebranded to Cityscape Global to recognize international appeal of the event, and we are now really seeing the results.

This repositioning has allowed Cityscape to constantly keep abreast of the changing international real estate market and launch new initiatives alongside the show ensuring the event keeps the ‘fresh’ feel. 2012 has seen the introduction of the Country of Honour where Turkey have been positioned to emphasise their growing dominance in  the real estate market due to the recent reciprocity law attracting keen attention from international investors. This new initiative allows Cityscape Global to evolve with the market highlighting new regions of grown and interest to our event participants.

Having said that, confidence in the local real estate market is also increasing, and this is reflected by the amount of UAE based developers participating at this year’s show looking to showcase their most recent real estate project updates and launches – watch this space.

As a result, the Cityscape Global exhibition has grown by over 50% this year, which is a testament to the strength of the Cityscape brand as well as the growing confidence in Dubai as a leading business hub for emerging markets globally.

There have also been some significant developments over the past three years for the Cityscape Global conferences. Cityscape Global will host three dedicated conferences that reflect the changing dynamics of the current global real estate market.

The Global Real Estate Summit, Retail City, and the World Architecture Congress will spotlight the latest news, analysis and insight on the world’s foremost real estate markets, involving the most influential and respected leaders in the industry.

All of the big players in the UAE market, DAMAC Properties, Emaar and Nakheel have remained big supporters of the show. What role do they play in the industry and how important is it to support them while also expanding globally?

UAE developers, both big and small players alike will continuously play a crucial role in the development of Cityscape Global and of course their participation in the show is always highly valued.

Within the local real estate sector, it is important that the big names continue to propel the industry forward, as they set the benchmark and are essentially the measuring barometer of how well the industry is performing. 

While Cityscape Global is become more popular with international exhibitors, it will still always remain a ‘Dubai’ show and is the ideal platform for local players to drive growth in real estate investment and development both in emerging markets within the Middle East and globally. In that sense, supporting local players whilst also expanding globally go hand in hand, with the local developers benefiting from this further widespread awareness generated from the international investors looking to the event as a ‘shop window’ for international real estate investment opportunities.

How would you explain the importance of exhibitions at a time when more business is going online. How do you stay relevant?

While online commerce continues to gain traction, the face-to-face element of events will ensure it will always continue to have a unique benefit over any other means of conducting business.  Having said that, Cityscape Global embraces the online and digital age and we have incorporated several online campaigns in our communications strategies with exhibitors and visitors including business matching services, and native mobile applications.

We look to integrate these new technologies that become available with Cityscape events to further enhance our participant’s experiences, promoting further business interaction before the start of the event, and long after the doors close.

2012 will see the launch of the new Cityscape Global business matching service myCityscape, connecting exhibitors to pre-registered visitors allowing them to network and arrange their time during the event in a much more effective and efficient manner, by pre-scheduling meetings online with potential clients and investors.

To support this initiative, we have also introduced a mobile application allowing the audience to download a specific Cityscape app to their phone. The app lets users connect with each other during the show, keeping constant contact for organising and rescheduling meetings whilst in the exhibition halls. Directly linked to the business matching service, the app ensures participants take full advantage of the business opportunities on offer at Cityscape Global 2012.

What key developments are needed at UAE Government level to ensure the Dubai property market remains strong?

There has been a lot of talk about introducing a long term property visa, and this certainly wouldn’t harm investor confidence in the Dubai property market, however there have been some mixed views on how strong the impact of such a regulation (once implemented) will be.

The market is also now awaiting a new set of regulations to be implemented by the Dubai Land Department, which will protect investors from delays and unilateral changes to the real estate projects they have invested in, allowing them to get their money back when developers violate the terms and conditions. This will further improve transparency and investor confidence in the Dubai real estate market.

Can you share some statistics on how the market is currently?

According to the Jones Lang LaSalle’s Dubai Real Estate Market Overview Q2 2012, the signs are that Dubai’s real estate sector is set for double digit growth in the next three years, due to a constant stream of fresh project handovers across the commercial, residential and hospitality sectors.

In the residential sector, 6,000 units were completed in the first six months of 2012, bringing the total number of residential units in Dubai to 344,000.  A further 24,000 residential units are expected to be delivered for the remainder of 2012, while another 15,000 units should be ready for handover in 2013 and 2014, presenting a supply increase of 11 per cent from the current amount of stock.

Office space in Dubai is also expected to increase by 24 per cent by the end of 2013, reaching 7.2 million square metres. The emirate is likely to add an extra 1.1 million sq m to the current 6.1 million sq m, though it must be mentioned there is currently 2.2 million sq m of office space currently on hold.

Meanwhile, the hospitality sector in Dubai continues to show no signs of slowing down, with the opening of Millennium Plaza on Sheikh Zayed Road, the Rixos The Palm, and the Melia Bur Dubai in the first half of this year adding a further 850 hotel rooms to Dubai’s booming tourism industry, amounting to a total of 54,300 rooms. Another 11,300 rooms are expected to be injected by the end of 2014, up 20 per cent from the current amount of rooms.

Residential, hospitality and retail sectors all are generally expected to have bottomed out, with villas and apartments showing a double digit growth on 2008 levels. Over the first half of 2012, the Dubai Land Department reported just under 19,000 land transactions totalling US$ 1.7 billion, up 21 percent on the same period last year.

Cityscape Global takes place from 2 – 4 October 2012 at Dubai International Convention and Exhibition Centre.

Dubai Property Invest will be at Cityscape all three days bringing the latest news and updated from the developers

Family enjoying serviced apartments in Dubai

Dubai Hotel Rates on the rise

Dubai hotel room rates continued to rise in July despite a fall off of occupancy during the summer and Ramadan.

According to the latest HotStats survey of full service hotels by TRI Hospitality Consulting the average room rate in Dubai and Abu Dhabi increased by 6.4 per cent to US$188.51 in July 2012, compared to the same period in June.

However, occupancy levels in Dubai fell 11 percent to 70 percent during the same period the report stated.

Dubai Statistics Centre has also recently reported that nearly four million guests stayed in Dubai hotels in the first six months of this year.

There are currently 577 hotels in with the total number of rooms and serviced apartments at 75,171 according to Dubai Tourism and Commerce Marketing (DTCM).

The hotel industry in Dubai is worth US$10.9 billion according to DTCM and is a driver in attracting international tourists and businesses to the Emirate.

Individual investors who traditionally have turned to the Dubai property market have been looking to tap into the hotel sector for a while, but the price point and heavy competition from international chains has made this impossible for all but the very wealthy.

Despite the large number of luxury hotels in Dubai, there are just 200 serviced apartment buildings. This is one area, however, where investors can purchase an apartment within the complex and either rent it themselves or hand it to a management company who will rent it as part of a pool.

Many of Dubai’s tourists come from the GCC where the number of family members is quite high relative to the international average. These families are often looking for more of a homely feel when travelling, instead of paying through the roof for three or four hotel rooms.

The number of serviced apartments is set to grow in the coming years as demand for five-star luxury within a private space increases. DAMAC Properties is already looking to diversify into this area and have stated that they will have 4,000 rooms under development for management by its DAMAC Suites & Spa arm by the end of next year.

Its first serviced apartment building, Burjside Boulevard, will handover in Q1 2013.

As more tourists flock to Dubai – Dubai International airport welcomed nearly 28 million passengers in the first six months of 2012 – demand for hotel accommodation, and the opportunities to invest in this sector will only increase.

Where next for rents in Dubai's Office space?

Dubai Office Prices bottomed out?

As the Dubai residential property market continues its resurgence, what of the commercial space?

The average asking rents for prime office buildings in Dubai has remained unchanged over the past year, according to the latest Jones Lang LaSalle report.

In fact, prices have been flat since the end of 2010, with space in Dubai International Financial Centre (DIFC) attracting prices of AED 2,370 per sq m, down from a Q4 2009 peak of just under AED 4,500 per sq m.

Prices elsewhere in Dubai saw more modest falls with prime rent in the central business district (Excluding DIFC) at AED 1,615 per sq m, compared to AED 2,500 in 2009, with citywide rent elsewhere attracting slightly lower prices.

With a further 1.4 million sq m of office space due to come online in 2013, the trend for rental prices in the commercial sector looks set to remain for another 12 months at least, even as more international companies relocated to Dubai as the economy strengthens. Expect office space in secondary locations to continue to fall in the short term.

However the macro perspective for office space in the Dubai property market shows signs of opportunity. As residential prices continue to improve, due to a growing population (50% of the UAE population is under 20) and positive sentiment, companies will need to expand their workforce, and with it their office space in the coming years.

The UAE is the most confident country in the Middle East according to a recent Nielsen survey and the World Bank rated UAE 2nd in a list Arab countries for ‘Doing Business in 2012’ due to the friendly business policies, government supported initiatives and simple registration procedures.

The Dubai economy is also targeting growth of 4.5% in 2012 according to Dubai Supreme Fiscal Committee – 50% higher than 2011 and up from 2.5% in 2012.

Having said that, supply is outstripping demand for the commercial sector at the present time and a delicate global economic outlook, especially in Europe, will continue to impact on the short to medium-term expansion plans of international companies.

It is going to take a concerted effort to attract new business into Dubai, highlighting the tax-free benefits, ease of doing business and ideal geographical location to entice overseas companies. The emirates pitch to host the World Expo 2020 on the eve of the countries 50th anniversary will certainly reignite the global focus on Dubai and drive new investment.

Dubai Property Market Surge – Rents Up, Mortgage Rates Down

As the Dubai property market heads towards the final quarter of 2012, market conditions are well positioned for strong and continued growth into the new year and beyond.

Rental prices in premium areas of Dubai, such as Dubai Marina and the Burj Area, are experiencing increases as much as 10 – 15% a year.

Supply in the market is also reducing as the Arab Spring, high oil prices and a recovery in the economy has resulted in more people moving to the UAE.

At the start of the year dubizzle.com had more than 100,000 units available, according to ArabianMoney.net.

At the time of writing that number has dropped to 61,046 residential units for either purchase or rent. While this is not a scientific test of the market, it is a fair indicator that demand is growing across the Dubai property market.

Admittedly, more projects are coming online in the coming months as construction continues at pace, but the government aims to create 950,000 new jobs by 2020, attracting more people to the country and filling the new apartments.

In addition to the supply increasing, mortgages rates in the UAE are at their lowest for many years. The banks are putting liquidity back into the market and you can find a mortgage at 3.99% today – much below the 6.75% and above back in 2008.

The six-month Eibor (Emirates Interbank Offer Rate) has also fallen from 1.714 per cent at the start of the year to 1.485 per cent at the end of August, leading many to think that mortgage rates could fall even further by the end of the year.

Market conditions are well placed for a continued recovery in the Dubai property market and I for one will be spending the weekend scouring through the property sections and dubizzle.com to keep hunting out that dream place in the sun!

KSA rents rise 15% in six months

The Dubai property market is experiencing a strong resurgence this year and the trend is also reflected across much of the GCC, especially in the Kingdom of Saudi Arabia.

Property Consultants CBRE has just released a report which shows rental rates of apartments in the Kingdom jumping as much as 15% in the first half of 2012.

The largest rises were in Riyadh and Jeddah as a youthful population increasingly looks to move into high-rise apartments, instead of the more traditional villa living.

This was reflected in the increase of villa prices which grew 10% during the same period, the report stated.
Population in KSA grew by 2.8 percent last year to exceed 28 million people, but strong oil revenues ensure that GDP surged a massive 25% to US$ 20,344 according to Arabian Business.

With such a boom in population and spending power there is no surprise that apartment prices are rising rapidly. There is also a lot of development taking place across KSA, especially in the hugely desirable coastal areas overlooking the Red Sea.

Supporting the country’s growth is a strong government-backed infrastructure programme to develop improved road networks which will provide easier access to new residential areas, particularly in the more central areas targeted by land price speculators, the report added.

KSA is certainly experience a boom in its real estate market and there is clearly a culture change taking place with apartments growing in popularity, especially those in premium locations.

While crude oil prices hover around US$ 100 per barrel, the Kingdom of Saudi Arabia will be in a very strong position to continue its growth plans a create exceptional investment opportunities for nationals and overseas investors.

The KSA property market is worth watching very closely in the coming months and into early next year.