Monthly Archives: November 2012

Dubai’s Bold Move Forward

Dubai has stepped back into the limelight in the past couple of days, reaffirm its unwavering vision for the future.

In the past 72 hours His Highness Sheikh Mohammad Bin Rashid Al Maktoum, Vice President and Prime Minister and Ruler of Dubai, has approved two major development projects which, it is hoped, will drive Dubai onto the next level.

While we saw a hint of Dubai starting to get back on its feet and talk more confidently about the improving fiscal situation and desire to build again at Cityscape last month, the last week has blown that out of the water and shown just how far Dubai is willing to go.

Firstly, there was the Mohammad Bin Rashid (MBR) City which will contain up to 100 new hotels and house the world’s largest mall. The mall alone could cost in the region of AED 10 billion according to industry experts.

Then, just a couple of days later this was followed up by the announcement of a new entertainment hub costing another AED 10 billion in Jebel Ali which will be home to five distinct theme parks. The first phase will be Dubai Adventure Studios, originally announced in December 2011, and is expected to be completed as soon as 2014.

Too much, too soon?

We must say that, while we remain some of the most optimistic people involved in the Dubai Property Market, this does all sound very ambitious, even for Dubai. Has the market really recovered so much that tens of billions of investment is justifiable? Where will the market come from as Europe, America and even parts of the Far East struggle to shake of the remnants of the Global Financial Crisis? Is the GCC market big enough to drive enough demand?

Well, while even we get a little nervous around should big aspirations and dreams, a few reports came out which actually support increased growth and demand in Dubai.

The UAE is ranked first in the Arab world and 18th globally as the best place to be born in 2013, it is the 26th ‘best country for doing business, it enjoys the world’s easiest tax structure and Dubai is experiencing its fastest rate of growth since 2007. Four reports in one week all signifying the UAE’s place on the world map.

The leaders of the UAE have remained steadfast in their vision to make Dubai and the UAE one of the best places on earth. The global crisis was just a curve in the road on that mission and it seems the country is leading its way back to greatness. We hope this strength of character proves well placed and the announcements from the past week come to fruition.

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’s Economic Recovery Drives Forward

Senior officials within the Dubai government are reaffirming the emirates growth estimates with renewed forecasts outstripping projections made prior to the downturn in 2008.

The government says nominal growth domestic product will hit AED490 billion (US$133 billion) by 2015, up from AED367 billion in 2011, with Dubai averaging real growth of 4.5 – 5% a year through 2015.

In 2007, Sheikh Mohammed bin Rashid Al Maktoum targeted a GDP of US$108 billion for 2015.

“Dubai’s economy is well diversified and resilient to external as well as domestic shocks,” said Sami al-Qamzi, director general of Dubai’s department of economic development. “We think that growth will be more sustainable, albeit at a more moderate pace than in previous years.”

Given the Dubai property  market is so closely tied to the overall economy, a further recovery in the real estate sector would allow Dubai to return to its pre-2008 strategy of raising cash through land sales.

The economy minister, Sultan al-Mansoori, says the UAE is also introducing laws to boost investor confidence and better provide for its nationals. The country is also working finalise a companies’ law, which will open up some sectors to 100% foreign ownership.

There appears to more bullish tone from the Dubai government with the traditional revenue streams from trade, tourism and transportation have now been followed by the signs of recovery in real estate and construction.

Confidence has grown since the Arab Spring restored Dubai’s status as a regional haven, prompting a tourism revival with arrivals up another 10% in the first half of 2012.

While the recovery remains relatively slow, it is also returning at a stronger and more stable pace, allowing companies to built their operations for the medium to long term wit a renewed confidence.

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

A Numbers Game – All Signs Show 2012 as the Year of the Dubai Recovery

‘Cautious Optimism’, seem to be the watch words for developing nations when it comes to the economic recovery. But taking a look at some of the numbers coming out of the UAE right now, you would be forgiven for thinking that the recovery is a distant memory and the country is moving on in strides.

It was always felt that such an immature market will fall fastest and also recover fastest. But take a look at these numbers and in less than five years since the downturn, it appears that Dubai is powering out the other side …

  • AED 499 billion – Value of UAE’s non-oil foreign trade in H1 2012
  • AED 9.79 billion – revenue generated by Dubai’s hotels
  • AED 44.6 billion – budget allocated by the Federal Government for 2013
  • AED 1.41 trillion – UAE’s nominal GDP expected this year

For a country with a population of less than eight million people, these are remarkable numbers.

All the signs show that Dubai and the UAE are well set for a period of sustained growth – tourism is up, trade, aviation and retail sectors are all reporting strong figures and the Dubai property market is also experiencing its largest growth period in five years.

Dubai’s hotels and serviced apartments reported a 10 per cent increase in the number of guests with more than five million visitors to the Emirate in the first six months of the year. This saw an increase in revenue of 22 percent.

“The recovery of the economy if continuing despite the uncertain global economic environment,” said the report of the International Monetary Fund (IMF) in its report of the UAE. “For 2012 oil production is projected to be flat, whereas non-oil growth is expected to strengthen further to 3.5 percent.”

We have talked in this blog before about confidence driving the market; especially in a market such as Dubai where sentiment has a direct impact on pricing given the immaturity of the market. “Investor sentiment is back – big time in the country and we could feel that,” Rohit Walia, CEO of Alpen Capital and Executive Vice-President of Sarasin Alpen, a Swiss private bank, told Gulf News.

As companies start to close out the end of 2012 and look into the crystal ball for strategic insights which will stand them out from the crowd in 2013, board meetings are more upbeat with a focus on growing staff and investing again. This will have a massive effect on the property market. There has been a niggling doubt that Dubai simply has too many apartments to meet any demand, but with recruitment up, confidence up and revenues up, Dubai’s market is set for another growth spurt.

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-based Bank Reiterates Strength of Dubai Property Market

The Dubai Property market is continuing to grow in line with the wider economic recovery in the Emirate, according to a report out from Citi.

Stronger visitor numbers, and strength in the retail markets is filtering through to the real estate sector says the report, with stronger trade and higher oil prices a key factor in the growth.

The report goes on to say that Dubai has actually benefited from what it calls a ‘misfortune dividend’ where investors have turned to safe havens in a response to the Arab Spring.

Citi’s chief economist Farouk Sousa quoted figures from Cluttons which showed that mid-range properties have increased in value by 20% over the last year.

“This is below the 30%-40% annual gain in property prices during the pre-2009 boom but, according to CBRE, represents one of the sharpest gains in the property sector anywhere globally this year,” he said.

The banks have a critical role to play in the continued resurgence of the markets by providing liquidity to not only end-users, but also contractors and developers.

City says that the increased investment in property in Dubai is allowing real estate companies begin to strengthen their balance sheets and improve credit ratings to be able to refinance loans.

Sousa also added that the recovery has been experienced mainly in prime locations, but that there was still an overhang of supply in both residential and commercial markets.

“Our own estimates suggest that the current stock of housing exceeds demand by some 50,000 units (15% of total supply),” he said.

While current stock may well outstrip the demand in the market in developing areas, these developments will quickly be filled by the growth in the population and the strong increase of expatriates coming to Dubai in the wake of the prolonged European and American economic crisis.

Are you receiving a warmer welcome from your banks? Is nit easier to get mortgages now than a year ago? 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 Prosperity Has Direct Impact on Dubai Property Market

The UAE has just been listed as the most prosperous nation in the Middle East and North Africa (MENA) in a report that looks at social and economic well-being.

The 2012 Legatum Institute Prosperity Index placed the UAE 29th in the world, out of a total of 142 countries which were assessed. The next country from the MENA in the rankings was Kuwait in 38th followed by KSA in 52nd.

As the UAE continues to grow in the eyes of the international community, more attention will be drawn back to the Dubai property market which has proved an integral component of the emirates perception around the world. As the market grows, the more favourably Dubai is seen by the global community, and vice-versa.

For a country with a current population of just eight million it is a great achievement to grow in the league tables so dramatically and in such a short period of time.

The economy of the country was the most favourable with a ranking of 17th in the world. Given this, HSBC’s Senior Economist Simon Williams told Gulf News that the UAE still has a way to go: “Given that the UAE has one of the wealthiest GDP’s per capita in the world, this tells you how far the UAE has to go to close the gap between potential and reality.”

Pretty stark words, but a reflection that while Dubai and the UAE has achieved a great deal in its 40 year existence it is not sitting on its laurels and there is still a way to go to realise the opportunities which are abound.

As the economies of the east and the west come closer together, Dubai as a regional hub and influential trading stop off will have ever more international influence.

All of this drives what is still a relatively immature property market and will continue to attract more overseas investment.

The report also shed light on to the UAE’s entrepreneurship opportunities, ranking the country in 30th place, 41st for governance, 37th for education, 32nd in health services and 42nd in social capital which looks at the family and society support.

On a more macro perspective the countries in the MENA region improved their performance in the Entrepreneurship and Opportunity sub-index over the last three years, with the second largest improvement behind Asia.

The report concluded by stating that the improvements: “are partly due to a decrease in start-up costs [which] have decreased throughout the [MENA] region.”

Do reports matter? Where can the UAE realistically hope to be on the chart in five 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