Monthly Archives: October 2012

Top Five Reasons for Dubai Property Market Resurgence

Top Five reasons for the Dubai Property Market recovery

As the Dubai Property Market continues to go from strength to strength, we take a look at the top five reasons why Real Estate in the UAE is seeing a powerful resurgence.

Following the correction in prices back in 2008, the market has slowly improved with 2012 seeing the most impressive growth – around 10-12% in some of the more desirable areas according to recent reports.

There remains a great deal of growth still to come as infrastructure is completed and the influx of foreign investment and foreign workers drives the market.

1.    Increased Liquidity

The Dubai economy remains on a strong recovery path with Gross Domestic Product projected to grow by 4.5% in 2012. This performance is being driven by the strong growth of key sectors such as tourism, commerce, retail, hospitality and logistics.

Banks are now providing funding again – not just for investors in the form of mortgages as low as 3.99% – but also to contractors and developers.

As developers receive funding as well as deposits and further payments on projects they will be able to continue building at pace. Liquidity is the key driver of the Dubai Property market and the banks need to continue to make funding available at all levels to ensure that the current recovery remains on track, at a steady pace.

2.    Comprehensive infrastructure investment

The Dubai Government is again investing heavily in an infrastructure programme, with Dubai World Central spending US$ 4.6 billion on infrastructure alone and terminal two of Jebel Ali Port passed halfway and set for completion next year.

As road networks, schools, hospitals and shopping malls also complete in the new areas of Dubai, investment in the real estate projects will continue to come in. There are many good prices to be achieved in the less developed areas of Dubai which are certain to grow in the coming years as the infrastructure network is finished.

3.    New Job Creation

Nearly one million new jobs are expected to be created before the end of 2020 according to the Dubai Government. As Dubai continues to grow and generate new opportunities, the demand for quality housing will remain. Jones Lang La Salle predicts that around 50,000 additional residential units are expected to be delivered by 2014.

With Europe and America still feeling the effects of a global recession, many ex-pats are looking to Dubai as a place to extend their career opportunities.

According to Hasnain Qazi, Middle East Business Manager at Huxley Associates, “Dubai has evolved into a lifestyle destination of choice for people all over the world looking for a safe, secure, vibrant, cosmopolitan city to live in, providing tax free income and a high standard of living. This is quite a contrast to many other countries in the world where economic and social conditions are not as rosy.”

 4.    Transparency and regulation

The Real Estate Regulatory Agency (RERA) is launching a new service fees index in this month which aims at regulating service fees, reducing disputes about service charges and increasing transparency in the market.

Following the release of the draft investor protection law in Q2, the Dubai Land Department has released a draft Code of Corporate Governance for Developers. The Code defines the responsibilities of developers and requires them to disclose to investors complete information about their properties, including alternatives in case of potential delays. The Code’s ultimate goal is ensuring more transparency and better regulation of the real estate market.

Further regulations ensure that all lease contracts are registered through a government database and all transactions with the Land Department go through a centralised listing site for available property, all of which prompted DAMAC Properties to recently call Dubai’s property market as one of the most regulated in the world.

“DAMAC Properties welcomes recent moves by the Dubai government to tighten regulation in the property market which we believe will sort out the wheat from the chaff,” said Niall McLoughlin, Senior Vice President, DAMAC Properties. “As the market in Dubai recovers strongly, it is important to have clear legislation which will instill confidence in overseas investors in particular.”

5.    Confidence

Investors believe in the Dubai Property market again. Government, banks and developers have worked hard over the past few years to bring back the belief in the growth potential of the market. Cityscape Global this year was a case in point with companies talking confidently about the prospects for the future and bringing back projects which had previously been shelved.

All markets, both financial and real estate are driven by consumer confidence and a return to the belief that Dubai is a thriving international hub will see clients returning in big numbers.

What do you think of our top five list? What have we missed? We would love to hear your thoughts on this and any other news on Dubai Property Invest. And don’t forget to also join us on Twitter @dxbpropinvest

UAE Property Market Grows in Confidence, thanks to more stringent regulation

Regulation, clear structures and international promotion are driving the resurgence of confidence in the Dubai Property Market, according to industry experts.

DAMAC Properties Senior Vice President, Niall McLoughlin says this morning that: “as the Dubai market recovers strongly it is important to have clear legislation which will instill confidence in overseas investors in particular.”

The Dubai Land Department, through its regulatory arm the Real Estate Regulatory Agency (RERA), has recently introduced a number of processes and legislation designed to inject confidence and trust back in to the Dubai Property market.

These include specific Escrow accounts for individual projects, providing residency to overseas buyers of property worth more than AED one million, ensuring that all lease contracts are registered through a government database and all transactions go through a centralized listing site for available property.

In an interview with Gulf News today, the chairman and CEO of Falconcity, Salem Al Mousa Al Mousa said that local and international investors are returning to the market because of firm foundations of the UAE economy and leadership across financial, banking, legal, real estate development and infrastructure levels.

His comments come in the week the World Bank released its ‘Ease of Doing Business’ Report‘, which has seen the UAE move from 33rd to 26th globally. Its Global competitiveness report added that the country was also the 12th easiest country to register property.

The World Bank report is a very well respected resource and senior analysis believe an improvement in the rankings can directly affect Foreign Direct Investment (FDI), helping to grow economies.

“Real competitive economies drive economic prosperity to its people,” said Abdullah Lootah, Secretary General of Emirates Competitive Council. “Federal and local government entities in the UAE have been exerting a great amount of effort to enhance processes and boost productivity and efficacy for the purpose of offering better service to the public.”

As the economy improves, infrastructure reaches completion in certain areas and tighter legislation is brought in, the real estate landscape in Dubai will continue to improve. Confidence is the vital factor in the success of any economy in the world. As the first investors return, more will follow, bringing liquidity back and increasing the pace of growth.

Is the Dubai property market being over-talked? Is confidence too high? Is now the best time to invest in the past four years? We would love to hear your thoughts on this and any other news on Dubai Property Invest. And don’t forget to also join us on Twitter @dxbpropinvest

Dubai Land Department Completing 150 deals a Day

The Dubai Land Department has announced the total value of property transactions in the first nine months of this year hit US$ 22.6 billion.

The emirate has experienced an impressive 27,452 transactions in the first three quarters of the year, which equates to 150 deals a day, or 20 per hour.

Sultan Butti Bin Mejrin, Director General of the Dubai Land Department said that first time investors had returned to the market to benefit from the price corrections experienced over the past couple of years.

“The property transactions have become more mature and the investors are now much more aware. The market offers multiple-choices and Dubai property sector showed high flexibility in dealing with investors’ requirements and trends during the first nine months,” he told Arabian Business.

The Burj Area was reported to be the most traded area for the number of transactions over the period, peaking at 3,305 sale transactions. Other areas experiencing high turnover included Al Barsha South and Al Safa.

Transactions include all sales, mortgages, ijarah, mortgage portfolios, deferred sales and other transactions.

Liquidity is returning to the Dubai property market as investors look to capitalize on the great offers made available due to the downturn and many are moving their money from more traditional vehicles such as bonds at stocks in western markets.

More than US$22.6 billion injected into the market in nine months alone, developers will have cash reserves in abundance to be able to complete on many more projects and drive the market forward. Expect to see a good number of properties reaching completion in the early part of next year as the current investment drives projects through to handover.

How has the increased liquidity affected you? Are you currently investing? Which areas are pricking your interest? We would love to hear your thoughts on this and any other news on Dubai Property Invest. And don’t forget to also join us on Twitter @dxbpropinvest

Is there a two-tier Dubai Property Market?

Prime locations throughout Dubai, including Downtown Dubai, Palm Jumeirah and Dubai Marina are driving the rental markets with growth around five percent in Q3 alone, says CB Richard Ellis.

The latest report from the global real estate firm shows that demand in key areas remains strong, but that there is still good value in other locations throughout the Emirate.

This is a further proof point that Dubai is seeing a two-tier property market with areas which have completed infrastructure and facilities seeing strong growth and areas still under development experiencing high vacancy rates.
The report stated that rents were now “fixed on an upward path in the majority of sub-markets”.

Data for the year to date also continues to show a sharp incline in activity with the value of all residential transactions at AED 10.3 billion, compared to just AED 6.9 billion for the same period in 2011.

You only need to take a drive around the city to see cranes moving again, traffic delays and a generally more confident air. Recruitment is currently strong, we are entering the peak tourism period and new off-plan developments are reporting strong uptake in early purchases.

Indeed, the growth in the market has generated stories of the return of the speculator. While most developers are trying to play down the return to a boom and bust real estate economy and focus more on ‘steady and consistent growth’, there are certainly international investors coming back into the market in a big way, as they see the turning point in the market.

The increased liquidity in the market in general is going to allow developers and government contractors to move quickly in areas still under development and this is where we see the greatest opportunity to the investor.

In areas such as Jumeirah Lakes Towers and Arabian Ranches where roads and shops are currently under construction, prices remain highly competitive. An investment now will create the greatest opportunity for capital growth as projects complete and an increase in population fills the vacant apartments.

It is good to be talking positively about the Dubai property market again and while we have to keep a check on over-talking the market into an unrealistic position, there are clearly signs of revival.

While traditional powerhouses in Europe, America, and even China to some extent, struggles to break free from global austerity measures brought in to deal with the downturn, Dubai is much more nimble  and able to recover much quicker. International investors seem to recognize that and are moving fast to place their money here.

Are you getting back into the market, or is it too much too soon? We would love to hear your thoughts on this and any other news on Dubai Property Invest. And don’t forget to also join us on Twitter @dxbpropinvest

Dubai Property Market outperforms Singapore, London and Hong Kong

The Dubai property market has been performing strongly during the first half of the year, with prime rents increasing 3.3% during the first half of 2012.

The latest report from the one of the world’s largest privately owned property companies, Knight Frank, says that Dubai is ninth in the Prime Global Rental Index, which was released this weekend.

The emirate outperformed the likes of Singapore, Geneva, London and Hong Kong over the same period the report added.

In a further sign that the luxury rental market is picking up pace, the index also shows that rents had risen by two percent in the second quarter of 2012 alone.

The global report showed that the top performing city was Nairobi in Kenya where rents had shot up more than 17 percent in the first half of the year and five percent in Q2.

While the numbers only reflect the first half of the year, it is a further sign which shows that the Dubai property market is not only growing again, but it is outstripping many more established cities around the world.

Knight Frank adds that a surge in foreign investment into the world’s developing markets will ensure that the likes of Dubai continue to perform strongly in the medium term.

Another signal in the report which could hint at Dubai’s continued growth is at the bottom of the list. Manama, the capital of Bahrain has seen prices drop back 18 percent in the last year although that rate slowed off significantly in Q2 (down just 0.2 percent).

The protests in other Middle East countries could be encouraging regional investors to move their money to the safe haven of Dubai.

As Dubai’s property market continues to receive reassurance from all quarters are you now looking to get back in to the real estate sector? How has your portfolio performed over the past year? Are the more positive signs in the market being reflected in reality?

We would love to hear your thoughts on this and any other news on Dubai Property Invest. And don’t forget to also join us on Twitter @dxbpropinvest

Business Bay Booming – No Land Plots Left

The first two phases of the master development in the Business Bay area of Dubai have all been taken, according to the master developer.

Khalid Al Malik, the Group Chief Executive Officer of DPG has told press this morning that there are no plots left in the 5.9 million square metre area in the Burj Area of Dubai.

“We don’t have land to sell in Business Bay. We ran out of land in phase one and phase two … so all these indicate there is massive attention and demand on Business Bay,” he said. “Demand is very high. We are struggling in terms of inventory as we don’t have it whether residential or retail.”

Nearly one hundred projects have been announced in the Business Bay area with many now open and roads and infrastructure come on line. Overlooking the prime real estate of the Burj Area, Business Bay is hoping to become the news Central Business District (CBD) of the Emirate.

A host of office space, retail locations and residences are under construction in the area which will link the Burj Area to Ras al Khor and the developments planned for the Meydan district and the Lagoons.

Mr. Al Malik’s comments come as real estate firm Cluttons reports an increase in investment activity for office space during the third quarter of 2012.

Office space has been the one area of the Dubai property market which has yet to see significant growth in 2012, compared to residential and retail space, however the company said it has seen a “surprising number of transactions” during the summer months with revenue reaching US$ 545 million.

Cluttons added that commercial property rents had stabilized in the first six months of the year thanks to “a modest level of positive sentiment”.

An increase in take up of office space will support the occupancy levels in Business Bay and help to add vibrancy to the area in the coming months.

Is your business looking to relocate to Dubai? Do you see signs of revival in the business sector? We always appreciate your emails and comments.

Don’t forget to also join us on Twitter @dxbpropinvest

What now for the Dubai Property Market?

After all of the hype has receded following a bustling Cityscape Global exhibition filled with announcements and project launches, where is the Dubai property market heading?

Many developers used the platform to launch, or in some cases re-launch projects which had been stalled over the past four years or so. Time will tell if these can move at pre-2008 pace to be completed on time and in budget. Meydan, Sobha Group and Falcon City of Wonders were among many who all stepped forward with their master developments, which will start construction next year.

Serviced apartments also proved to be a big draw during the show, with both Emaar and DAMAC Properties showcasing their latest offerings in this sector. The general feeling from the show was positive, with a more sensible ‘cautious optimism’ displayed by senior executives throughout the exhibition.

While the developers were taking all of the limelight there was also some key new regulation announced which will have a positive impact on the Dubai property market. Dubai Land Department revealed plans for a real estate arbitration centre to resolve property disputes.

The Dubai Real Estate Arbitration Centre will work to impartially resolve property disputes and will hire internationally recognized real estate arbitrators. The draft law has been sent for approval and once enshrined in the legal framework; the new policies will provide further confidence and trust in the system.

The Dubai property market is set nicely for resurgence through the final quarter of the year and following the announcements of projects the focus will flip back to delivery as contractors are appointed and they start to break ground. The industry certainly appears united towards the same goals at the moment and if this can drive a strong real estate market, it will have benefits for the growth of Dubai in general.

What was your memorable moment from this year’s Cityscape Global? What projects caught your eye and what is your view on the market in general? We would love to read your thoughts and comments below.

Don’t forget to also join us on Twitter @dxbpropinvest

Cityscape Global – Day Two Highlights

It was another busy day in the halls of Dubai World Trade Centre yesterday as the serious business of Cityscape Global 2012 was conducted.

After all of the media hype and rush to get announcements out and steal the limelight on the opening day, things settled down as the high level meetings got underway.

Much of the attention turned to the Cityscape conference, where international executives discussed the latest strategies and development programmes in their respective countries.

One that caught the eye was the Iraqi Minister of Construction and Housing, Mohammed Darraji, who told delegates that the country needs to build 150,000 homes a year to satisfy current demand. It is only managing to develop around 60,000 through its own resources and is currently in conversations with a number of the leading UAE developers to encourage them to begin development in Iraq.

He added that according to a study by McKinsey and Co, the construction and infrastructure projects in Iraq would reach US$ 10.4 billion in 2013 alone. He added that Iraq also has the highest annual construction output in the region with an annual growth rate of 15 percent.

In the halls and corridors there was a lot of talk about the return of the speculator. With Emaar announcing it had sold out the The BLVD on its opening day launch, a number of senior executives were wondering if many of them were speculators looking to make a fast return. However they also added that speculators were part of any maturing property market: “Speculators in the market make it work,” Nick Maclean from CBRE told Gulf Business.

So, today will be the final chance to check out the latest projects, speak with the senior executives on the stands and see what is coming up in the Dubai property market over the next twelve months. We will be continuing to bring you the latest news and pictures from around the show on our twitter feed: @dxbpropinvest.

Cityscape Global 2012 is open

Cityscape Global 2012 – Day One Review

There was a bustling, vibrant atmosphere on the opening day of Cityscape Global, the largest real estate exhibition in the Middle East, which opened at Dubai World Trade Centre yesterday.

The packed halls and serious business meetings across the stands was visual proof that the Dubai property market is seeing steady growth and there are keen investors ready to inject cash into the right projects at the right time.

It was Sheikh Maktoum bin Mohammed bin Rashid Al Maktoum, Deputy Ruler of Dubai, who officially inaugurated the 11th edition of Cityscape with an expected crowd of visitors ready to head into the halls. And they weren’t disappointed.

Major announcements across the day included a number of new projects, including two from the Meydan Group, developer of the Meydan Racecourse. Hadaeq Sheikh Mohammed Bin Rashid is a new 190,000m2 housing scheme in Nad Al Sheba which will feature canals and lagoons, incorporating English, French and Japanese landscaping. The company also re-launched its stalled 72-storey Meydan Tower in Sheikh Zayed Road which will contain homes, offices, shops and hotels.

The focus was also, as expected, on serviced hotel apartments with leading developers drumming up strong support for this relatively new investment vehicle.

DAMAC Properties, the Middle East’s leading luxury developer, announced it would have 4,000 units under development or management by the end of next year at that its first serviced apartment project, Burjside Boulevard would complete mid-2013. The company boldly stated it was taking a leadership role in bringing hotel apartments to the fore in Dubai.

On a lighter note there were a few projects announced which reminded us of the heady days back in 2007/8.

The Taj Arabia project, which was first announced more than five years ago is now set to be become a reality according to the developers of the 3.8 million sqm Falcon City of Wonders. The ‘city’ is also looking bring many other replicas from around the world, including The Eiffel Tower and the Leaning Tower of Pisa.

While there was some of the glitz and glamour of old, it was much more subdued and there was much more a feeling of serious, long-term strategy to provide investors with a sustained growth rather than a fast buck.

More is expected today and you can keep up to date with all of the news from the show here and on Twitter @dxbpropinvest

 

Dubai Property Market Continues Upward Trend

Less than 24 hours before the opening of Cityscape Global in Dubai, the much anticipated Jones Lang LaSalle Q3 reports for the Dubai and Abu Dhabi property markets have been released. And they support recent research which supports Dubai’s continued growth.

The main headline to come from the Dubai report is that apartment sales have increased four percent year-on-year and is now just eighteen percent lower than the market peak in the third quarter of 2008.

It also states that rents are up seven percent year-on-year as of August 2012, with apartment rents up five per cent compared to August last year.

The report goes on to state that the REIDIN Residential Sale Indices show the overall residential market has seen average prices increasing 14 percent year-on-year.

While it is really important to not get blown away by positive numbers and news of strong growth, this latest report is another fillip to a market which is witnessing a sustained revival.

With all eyes on serviced hotel apartments at Cityscape Global the report also contains good news for this sector. Occupancy levels are up to 77 percent from 74 percent in the same period last year. This also means Average Daily Rates (ADR) is up too – an eight percent increase to take prices to US$ 224. This stat though is beaten by the RevPar rate which is up 13 percent over the same period in 2011, reaching US$ 172 for the year to August 2012.

As developers continue to push the hotel serviced apartments opportunities to us, this number support the pitch that this is the place to invest your property portfolio funds in the coming months and years.

It must be said here that the Abu Dhabi report by Jones Lang LaSalle is less bright, but there are shoots of growth to be found. The impression is that the Abu Dhabi market has reached, or is at least very close to reaching, its bottom prices, with any declines in small percentage figures.

On a brighter note, the results of the Abu Dhabi Economic Outlook report for 2012-2016 by the Department of Economic Development have been released. The report forecasts that Abu Dhabi’s real GDP will grow by 3.9% during 2012, before expanding more rapidly (by 5.7% pa) between 2013 – 2016, with the non-oil sector being the major contributor to this future growth.

The Abu Dhabi hotel sector is also seeing an upturn with more than 1.3 million guests visiting the capital during the first seven months of 2012, representing a seven percent increase over the same period in 2011.

All in all this is a good boost ahead of three packed days of business and announcements at Cityscape Global. We will be there throughout the exhibition with news and reviews of the Dubai property market.

Please leave us your thoughts and comments on the current state of the industry, what your predictions are for the rest of the year and all things Cityscape. We look forward to hearing from you.