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 => Making headway in realty sector
 => Making headway in realty sector Dubai's real estate continues to make a compelling case for investors. Since September last year, Dubai has gone through a phase of fired-up growth in property values, led by highly speculative buying that was created around the aura of the city winning the rights for the World Expo 2020. Between November and late January, asking prices being demanded shot up by 20-30%.
Moreover, the emirate has seen its real estate market stabilising. "Property prices have grown steadily since 2009 but the increase in regulation by Dubai Land Department has led to a more stable growth pattern," said Hussain Sajwani, chairman, Damac Group. "Dubai still remains one of the most affordable metropolitan cities anywhere in the world."
Property prices may still be high, but buyers are increasingly becoming more value conscious, a sentiment that the market has begun to respond to. The shift towards value buying is reflected in the latest transactional data for the city's freehold clusters - Silicon Oasis, Sports City and Jumeirah Village. A Knight Frank report revealed that properties with a price tag of AED10 million and more saw a relatively modest increase of 6.3% in asking values while mainstream locations saw gains of 24% during the second quarter.
Clearly shifting towards being a buyer's market, there has also been an increase in supply with developers announcing new projects everyday. Omniyat plans to build two new towers in Maritime City and Business Bay in addition to its luxury flats on the Palm. Additionally, freehold status will now be granted to some flats sold in Mirdif, giving buyers additional options. Market Insight is aimed at examining the emirate's dynamic market and forecasting industry trends. There has been a clear evolution in the way the Dubai real estate market is moving forward. There is now greater focus on investor needs and buyer requirements rather than developers having the upper hand. There have also been added measures to help bring about stability in a fast-growing market. It is an interesting time for property in Dubai and we can only expect greater improvements to come as we move forward towards the Expo 2020.
Sincerely, Pashma Manglani Editor
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 => Positive Market Tidings
 => Positive Market Tidings
Dubai’s real estate market is flourishing, with a number development projects under way, setting the stage for positive investment and stable growth.
Dubai is working vigorously to attract visitors to the city to reach the 20 million visitor mark by 2020. One of the mega projects launched by Meraas Holdings is three theme parks, which will be located near the Dubai Expo site. A Bollywood, a Hollywood and a Lego land inspired park will be the new highpoint of Dubai’s entertainment scene and will cater to adults and children alike.
At the same time, a number of housing projects are under way that promise to meet the residential demand of the city and provide a unique living experience by 2016. The project locations clearly demonstrate that Dubai Marina and Downtown Dubai followed by Jumeirah Village are the most popular localities for investment. Emaar Properties is developing BLVD Heights, a two tower complex in Downtown Dubai, which will offer affordable apartments. Similarly, Park Investments is building 93 four-bedroom villas in Jumeriah Village Circle.
While, BLVD Heights and Jumeriah Village Circle offers affordable living, Marina 101 in Dubai Marina is selling luxury apartments and penthouses on the top levels. Tebyan property developers is also offering a tower crystal themed residential complex in partnership with Swarovski.
Developers in order draw buyers to invest in the different projects have introduced a variety of schemes, where the focus has been shifted from cash ready investors to end-user buyers. They are offering stretched payments, which has been a smart move to attract serious buyers who are operating on a constrained budgets. Emaar Properties is offering an Emaar Preferred Access programme, while Park Investments is recommending a two part payment scheme and interest free installments.
On the other hand, the government through its Real Estate Regulatory Agency has introduced new regulations that safeguard the interests of all parties involved in the real estate business and encourage a positive and stable market environment. Brokerage activities are now being monitored and rampant speculation is being curbed to allow steady growth of the market.
Market Insight is aimed at examining the emirate's dynamic market and forecasting industry trends. It is evident that the Dubai real estate market and the government is now gearing itself for the Expo 2020 and the visitor and influx that is expected in the coming years. Developers are introducing mega projects in popular localities but proceeding with caution and introducing long-term payment schedules that not only guarantee serious investors but also motivate developers to complete the projects in a timely manner. Keeping in light the development trends and Colliers International report, investing in Dubai’s real estate market is a better investment in the long term than stocks and has seen a growth of 20% a year. Hence, Dubai market promises good returns and a positive growing environment.
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 => A stabilising effect
 => A stabilising effect While Dubai may be back on track with its development, there is no doubt that the emirate has taken a different approach to growth this time around.
Prior to the recession, master developers funded their large-scale projects by relying on small-scale developers and investors with limited experience and track record. This resulted in much of the property 'flipping,' attributed as being the main cause of the market crash. However, now, major projects are being announced as part of landowner-developer deals - thus ensuring credibility. Deepak Jain, regional director, head of strategic consulting, JLL MENA, stresses that this change in attitude on the part of developers (focusing on partnerships rather than just selling) is a marked difference from the time before the recession.
Experts across the board had raised concerns about unsustainable prices once the market began picking up in 2013. However, measures put in place by the authorities have had a cooling down effect on the market, reducing growth in sale and rental values, as per JLL's recent Dubai Q2 Market Report.
In fact, there has been a decline in rents in freehold communities across the emirate. Downtown Dubai has seen a decrease of between 6-7% in rents, with studios now available for about AED65,000-AED75,000 per annum (pa). Meanwhile, International City, Discovery Gardens and Remraam have also seen a fall in rents of about 7-12%.
When it comes to villas, research from property consultancy Phidar Advisory shows that while prices for single-family homes rose steadily over the first half of the year, provisional figures for the six weeks to August 15 showed that they fell 4%. "The Dubai residential price correction now under way is a sign of early detection relative to the last cycle," said Jesse Downs, Phidar Advisory managing director. "[We] predict prices will decline in the second half of 2014, but this should be considered a price correction in respond to exuberant speculation building over the past two years."
Market Insight is aimed at examining the emirate's dynamic market and forecasting industry trends. It is clear the confidence has been restored in Dubai's property sector, what with Emaar Properties announcing its initial public offering of its malls unit for October (the largest share sale in the UAE). It is also apparent that unlike before the financial downturn, developers are taking a closer look at how to meet the needs of the market rather than focusing all their attention on making a quick sale. With rents falling, the sector appears to be undergoing a stabilising phase, bound to help the market grow in a more sustainable fashion.
Sincerely, Pashma Manglani Editor
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 => Gearing up for the future
 => Gearing up for the future Development has been moving full steam ahead in the UAE, despite a slowing down of property prices. Dubai's developers don't plan on slowing down, keeping their eyes focused on the Expo 2020 and market demand.
Investor interest remains high. In fact, developers of villa projects in Dubailand say their units sold out in a matter of weeks. Damac Properties said the first release of houses in Akoya Oxygen, a master development in Dubailand have been sold out. The five-bedroom houses were priced at AED2.5 million. Meanwhile, Dubai Properties also said its newly-launched Naseem townhouses have moved off the shelf.
The emirate's progress over the last year hasn't gone unnoticed. Gulf News said, "Dubai’s economic recovery has been so marked that Nakheel, the government-owned property developer, has announced that it will repay its entire outstanding AED7.9 billion bank debt almost four years ahead of schedule."
With the property market's success, many new players have jumped on the bandwagon. Tecom Investments, which runs 11 business parks in Dubai including Dubai Media City and Dubai Knowledge Village, is the latest of companies to get involved in real estate. The company announced that it would be developing 440 new off-plan homes close to its DuBiotech business park in the Al Barsha South area.
Market Insight is aimed at examining the emirate's dynamic market and forecasting industry trends. Ever since Dubai won the bid to host Expo 2020, developers have been pushing forward with new developments to cater to the needs of all those who will visit the emirate during the exhibition. Spurred by the demand created by the event, Dubai has pulled itself out of its recession and seen its real estate sector booming once again. With the innovative approaches to new development, there's little doubt that the Emirates is set to stay on top for a long time to come.
Sincerely, Pashma Manglani Editor
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 => Staying on track
 => Staying on track Developers in the UAE have been busy, announcing an array of projects that include apartment towers, villas and even town houses. In fact, Dubai has over 700 projects worth US$123 billion in various stages of planning and construction.
Most real estate experts agree that the property market appears to be reaching a more stable point with a rapid growth in demand. According to EC Harris' 2014 International Focus on the UAE report, the country is increasing its social infrastructure spend and there is accelerated momentum across industry sectors. "The market is finally showing real signs of recovery and prospective growth suggesting that the construction market will remain strong this year," said Christopher Seymour, Partner and Head of Property and Social Infrastructure at EC Harris.
The government's efforts to curb speculation has been attributed as the main reason for the sense of stability that has settled in. "The UAE has taken measures to discourage speculative demand which is a very healthy and positive sign for the industry," said Matthew White, director, Sales and Leasing, Chestertons MENA. Meanwhile, real estate firm Knight Frank also pointed out that a slowing down of the growth rate in the sector is a result of higher transfer fees and mortgage caps. On the luxury home front, prices increased by just 6.3% year-on-year in the second quarter of 2014 as compared to 24% in the mainstream market.
It is also apparent that the UAE remains a key spot for regional investment with Arab investors taking a keen interest in Dubai property. The Dubai Land Department reported that a total of 17,289 real estate transactions worth AED37.5 billion were carried out in the first half of this year. Jordanians topped the list of Arab investors, making 640 transactions worth AED1,347 billion while Lebanese nationals came second with realty deals of AED1.235 billion.
Market Insight is aimed at examining the emirate's dynamic market and forecasting industry trends. While concerns remain that the sector is moving too fast (back towards a crash), most experts agree that there has been a change of attitude on the part of developers as well as the government. With stricter measures being enforced, they remain optimistic that the market will make its way to recovery, achieving its goals before the Expo 2020.
Sincerely, Pashma Manglani Editor
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 => Sector continues to perform well
 => Sector continues to perform well With the UAE's continuing economic growth, the country's real estate sector has received a massive boost over the past year. There has been an increasing interest from investors looking to purchase property in the Middle East.
In fact, according to figures from the Dubai Land Department, GCC nationals invested up to AED19 billion in the emirate's property sector. Emiratis accounted for the lion's share of this figure with their investment totaling AED12.5 billion.
“UAE investors made 2,513 transactions worth a total of Dhs12.5 billion in the first six months of the current year and in doing so, were placed at the GCC top spot well above all other investors in Dubai’s real estate market,” said Sultan Butti Bin Mejren director general of DLD. The Dubai Financial Market general index saw an increase of 1.6% on Monday, closing at 4,819.86 points.
Leading developers in the UAE have also reported gains during the second quarter of the year. Damac, for example, said it recorded US$819 million in off-plan sales. Last week, Emaar reported that it experienced a 41% profit increase since 2013.
As per a recent IMF (International Monetary Fund) report, UAE's economic growth is expected to be at 4.8% in 2014 and about 4.5% in the coming year due to the series of mega projects announced over the past 18 months in addition to the Expo 2020 win.
Market Insight is aimed at examining the emirate's dynamic market and forecasting industry trends. Things have been looking up when it comes to real estate in Dubai. The slight dip in shares (as a result of leadership changes in Arabtec) has started to pick up with renewed investor interest. Overall, most experts also agree that the emirate's market is more resilient this time around, expressing a positive outlook on Dubai's future. As CEO of Standard Chartered Bank Mohsin Nathani put it: "We are seeing a more robust market this time." Sincerely, Pashma Manglani Editor
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 => Dubai realty market in flux
 => Dubai realty market in flux It's been a busy month for the real estate market in the UAE. New projects, increasing rents and added investor interest have all contributed towards creating a buzz in the sector.
Profit-taking was particularly heavy in the UAE with Dubai's index falling 2.4%. Emaar Properties sank 3.9% after reporting strong second-quarter earnings that failed to deliver a positive surprise. Trading volumes in Dubai have been modest since the market reopened at the end of last week after the long Eid break. However, stocks have been picking up. “This was a good set of results. Emaar showed its traditional strengths – it’s good at retail, good at hospitality, and its core profitability was strong,” said Loic Pelichet, who covers Emaar for NBK Capital.
Residential rents in Dubai saw a 0.16% month-on-month hike in June, according to data issued by Reidin.com. This clearly shows a slowing down of growth, something that has been a cause for concern for industry players. In fact, the realty market is expected to peak in 2015, according to Masood Al Awar, CEO of Tasweek Real Estate Development & Marketing. "We do a lot of analytics and we do a lot of market research. We know that every eight or seven years, there are some disturbances in the market and nothing can climb so rapidly."
Meanwhile, when it comes to new projects in the market, UAE developer Tiger Properties has announced the launch of its latest construction project in Dubai, Al Manara Tower. The residential complex is being built in Jumeirah Village Circle at a cost of AED200 million. The conglomerate Danube has also announced a presence in the sector, launching a real estate arm. One of its first projects include an AED500 million development - Dreamz - which will feature 175 townhouses within the Al Furjan community. Market Insight is aimed at examining the emirate's dynamic market and forecasting industry trends. It has become quite apparent that investors today have increasing demands from developers and these are being addressed in the newer projects under construction. "With the restored investor confidence in the real estate market, competition between developers is fiercer than ever and the emphasis on excellent design couldn't be higher," says Rod Stewart, property managing director of Atkins. How this will affect the direction of new projects is something we all just have to wait and see. Sincerely, Pashma Manglani Editor
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 => Busy time for UAE market
 => Busy time for UAE market With developer Damac preparing a Dubai listing and Emaar's retail unit's massive IPO, the fourth quarter of this year is shaping up to be a busy period for local markets.
However, a bearish sentiment is building as investors raise concerns over high valuations currently offered by UAE equities. Fund managers plan to reduce their exposure to UAE markets, according to the latest Reuters survey of 15 leading investment managers. Only 7% intend to increase equity allocations there and 47% intend to decrease them as compared to ratios of 27% and 33% a month ago. The ratio of managers bullish towards the UAE is at its lowest point since last September.
Buyers in the market have also become more aware of increasing costs, taking a stand against growth in the luxury sector. Consultancy Knight Frank found that growth has slowed down when it comes to high-end homes. Market sources also affirm that new supply will reduce the scope for sharp mark-ups in prime properties.
“While there will always be investors interested only in trophy purchases in Dubai, the rest of the market is being driven by long-term buyers and end-users,” said the head of a brokerage firm. “Where they had few choices earlier — and those already had steep premiums attached to them — they now have the flexibility to choose from a wide selection of new projects and multiple property formats.”
While the market is undoubtedly going through a transitional period, Dubai remains a safe haven for people across the region looking to invest in property or to set up home. Industrial property especially seems to be in high demand. There also seems to be now slowing down when it comes to new projects. Nakheel recently announced its new community of 1,000 villas while Royal Estates is involved in a project that will create 2,000 homes at Dubai Investments.
Market Insight is aimed at examining the emirate's dynamic market and forecasting industry trends. With the many changes in store for the UAE's stock market, we are bound to see numbers bounce back to their original bullish track once things have settled down. With the Expo 2020 in the city's future, UAE developers are pushing forward full steam ahead with new projects that are bound to increase supply in the emirate. Most experts agree that with this, growth will continue to slow down - providing buyers with some relief from the ever-increasing prices. To follow-up on changes in property prices, be sure to read our coming issues. Sincerely, Pashma Manglani Editor
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 => Caution over construction boom
 => Caution over construction boom The overall Dubai Residential Price Index showed that rents rose almost 20% over the last year. Apartments saw a larger jump in rents, growing 21% while villa rents rose by just 10%, according to the latest report by CBRE.
UAE inflation reached its highest in more than five years last month as rising rents and food prices push up the cost of living. The consumer price index rose to 2.2% compared to the same period last year, up from 2% in May, according to data from the National Bureau of Statistics.
However, rising prices hasn't had an affect on demand. Over AED113 billion worth of real estate transactions have been recorded in the first half of 2014 - a figure nearly double the amount recorded the same time last year. Dubai developer Damac Properties said that its latest project sold out in one evening, Arabian Business reported. Nearly 300 luxury apartments in Loretto, which is located in Damac's Downtown Akoya project and overlooks a private park similar to Hyde Park or Central Park, were sold during a suhoor taking place in six venues across the UAE.
Construction has continued full speed ahead as well. Sobha Developers have launched a new mixed-use development within the Mohammed Bin Rashid Al Maktoum City - located just three kilometres from Burj Khalifa. Meanwhile, leading property developer Nakheel is bringing a new, gated master planned community of 1,000 villas to Dubai, as part of its business expansion strategy.
Market Insight is aimed at examining the emirate's dynamic market and forecasting industry trends. Undoubtedly, there has been a surge in construction in the Emirates with skyrocketing rents. However, most experts agree that growth levels will be lower than 2013 with affordability becoming the driver of new trends. What overall affect this will have on stabilising the market is something that we will just need to wait and watch for. Sincerely, Pashma Manglani Editor
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 => Growth spurt despite warnings
 => Growth spurt despite warnings With several high-profile developments underway, the UAE's property market witnessed at least a 30% rise in apartment rental prices in the past year based on data from Dubai-based intelligence firm Reidin.com.
The Mall of the World development is the latest of all these changes - a $6.8 billion project that will see the world's largest mall constructed with more than 743,000 sqm of leasable area. "We are confident of our economy's strength, optimistic about our country's vision and we continue to broaden our vision," said Sheikh Mohammed bin Rashid Al Maktoum, UAE Vice President and Prime Minister and Ruler of Dubai.
Concerns grew over the past month when Dubai's leading builder Arabtec saw shares plummet in June following the resignation of its CEO. However, in the past week, the emirate's stocks rose to the highest level in over five weeks. The benchmark DFM General Index jumped 1.9% to 4,858.29 on Tuesday - the strongest level since June 8. Arabtec, the UAE's biggest publicly traded builder, added 1.9% to AED4.95, taking a rally this month to 90% and making it the best performer on the MSCI Emerging Markets Index.
With concerns mounting, the International Monetary Fund had encouraged Dubai to add new measures to control the property market. However, the Dubai Land Department has said that there are no plans to increase property registration fees. Sultan Butti Bin Mejren, director general, said the market is stable and appears very healthy. According to him, this is because of the recovery of real demand for the various types of units by investors and tenants. He explains that all parties are working with a clear vision based on long-term objectives and in accordance with the laws.
Market Insight is aimed at examining the emirate's dynamic market and forecasting industry trends. An impressive resurgence by Arabtec lifted Dubai's index three weeks after a selloff ended the bourse's longest rally since 2005. Developers across the emirate also continue to announce new projects, including an AED2.3 billion mixed-use project in Dubai Investment Park. While experts continue to call for added measures in the market, there has been no official comment as to what action will be taken to further protect the realty market but we are sure to hear more about new regulations in the coming months. Sincerely, Pashma Manglani Editor
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 => Dubai development extravaganza
 => Dubai development extravaganza Despite a rocky few months for Dubai's stock market, the emirate has upped its game, bouncing back in the limelight with its announcement of - yet again - the world's largest shopping mall.
The Mall of the World will occupy 8 million square feet, approximately one-and-a-half times the size of Dubai Mall. Dubai Holding, the investment vehicle of the emirate's ruler, will need AED25 billion to build the entertainment district that will include the mall.
While the plans have caused some analysts to warn that Dubai risks overbuilding again (as it did a decade ago), chief executive Ahmad Bin Bayat believes there is a demand for such projects. "The way things are growing, I think we are barely coping with the demand...tourism is growing in Dubai." The whole project will be built over 10 years and Bayat explained that the funds will be raised gradually over that period.
However, this isn't the only mega project Dubai has in store. Last month, Los Angeles-based company Reef Worlds (best known for designing sets for movies like Pirates of the Caribbean) announced it was developing the world's largest sustainable underwater tourism site in Dubai. It will transform the artificial island complex - The World - into an underwater tourism attraction modeled after the Lost City of Atlantis.
Moreover, a proposal to build a new smart city in the UAE is also in works, which will see Italian company Stile Italiano Real Estate Industry collaborate with local partners to construct the $25b-30b project. Titled Renaissance City, it will be built over 300 hectares and will have residences, offices, a school, shopping mall, medical centre, library and the UAE's first opera house among other amenities.
Emaar has also launched many new residential projects this year. According to ratings agency Moody's, while Emaar's hospitality and retail assets provide a cushion against market volatility, more developers are launching similar projects and thereby running a risk of overcapacity. "There is a risk that the company embarks on a significant multi-year capital spending plan in the current market up-cycle to not only launch new developments but also expand its hospitality and retail assets at a time when competitors are increasingly becoming active in these sectors," said Rehan Akbar, Moody's analyst and author of a new report.
Market Insight is aimed at examining the emirate's dynamic market and forecasting industry trends. Undoubtedly, amidst all the new launches, there has been a growing cause for concern that Dubai is heading towards another unsustainable property bubble, something the International Monetary Fund has warned against repeatedly. However, sustained fiscal consolidation and brightening growth prospects have been strengthening Dubai's resilience to external shocks as the emirate gears up for an economic upswing, the IMF said in a recent report. The robust growth for Dubai in the coming years will be driven by big real estate projects and spending ahead of the Expo 2020. Ending on a positive note, the IMF seems upbeat about Dubai's ability to finance its debts. As for where the market is heading right now, only time will tell so be sure to follow up on all the latest in our next issue. Sincerely, Pashma Manglani Editor
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 => Huge market changes predicted
 => Huge market changes predicted Investors in Dubai's real estate market and stock market have been enjoying huge returns since 2013 when the emirate bounced back from its financial slump.
Last year, the Dubai Financial Market General Index grew a dizzying 88.3%, but this figure has fallen in recent months as investors run for cover following large losses at construction giant Arabtec. Now, doubts are starting to creep back in. With residential prices leaping 51% in 2013, many fear the market is overheating.
However, despite the current panic, the underlying property market in the UAE remains in good health, says Warren Philliskirk, associate director at Mortgage International Business in Dubai.
Speculators have been driven out by new rules aimed at preventing speculation, such as the UAE Central Bank's recent demand that buyers put down bigger deposits and the Dubai Land Department double transaction fees from 2%-4%. "Now most buyers are end-users, people who plan to live in the property themselves, rather than looking to make a quick profit. This should make the market much less volatile," says Philliskirk.
According to him, we're looking at a steady growth of 5% a year and the slower growth should help avoid a repeat of the 2008 crash. However, he notes that a market correction is not completely impossible either and that while there might be a bit of a bumpy ride in the short-term, the market will correct itself within a decade.
The Dubai Financial Market suffered a mini-crash after weeks of problems with construction giant Arabtec's stocks. Shares in the stock exchange , leaving them down 25% from their May peak. To address questions, Arabtec finally held a press conference on Wednesday, assuring investors that there will be no change with the projects. "We terminated a few contracts but there is no change," said Khadem Al Qubaisi, chairman. "The projects will continue and we will replace people with construction professionals... Construction is the backbone of this company."
Market Insight is aimed at examining the emirate's dynamic market and forecasting industry trends. The real estate market has been going through a shaky period what with Arabtec's falling shares and an oversupply of property. Analysts agree that while the next few months may be rocky, the market will eventually correct itself - avoiding a repeat of the 2008 crash. In fact, according to Peter Cooper, editor, Arabianmoney.net, one should expect a 20-30% correction in Dubai's future. "The outlook for the real estate sector in the UAE and Dubai is positive and this is mainly due to the strong economic growth experienced since 2012," adds Ziad El Chaar, managing director, DAMAC Propeerties. Sincerely, Pashma Manglani Editor
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 => Concerns at all-time high
 => Concerns at all-time high The Dubai Financial Market has been caught in a roller coaster of changes over the past few weeks. Recent news of firings at Arabtec, the UAE's largest listed builder, spurred a new round of panic. Shares in the stock exchange fell 6.7% to 4,009.01, leaving them down 25% from their May peak. It was the end of a long bull market.
Arabtec, the Dubai company that built the Burj Khalifa, has a stake high-profile projects worldwide, and has lost more than AED16 billion in market value in the past few weeks. The construction giant is thought to have fired its chief operating officer, chief information officer among other senior staffers since the resignation last week of Hasan Ismaik, its chief executive.
However, most analysts were reluctant to comment on whether this slump is permanent. "There was ridiculous exaggeration of the value of Arabtec on the upside, and we have no reason to think there won't be a ridiculous exaggeration on the downside," said Loic Pelichet of NBK Capital.
In the past year, Dubai's economy has picked up steam and is expected to grow by about 5% this year, according to the IMF. The realty sector has also rebounded strongly since early 2013. Analysts at London-based Capital Economics said the recent stock market selloff wasn't necessarily an echo of Dubai's previous crisis. "We would be wary of drawing too many parallels with the situation back then," they said. Authorities in Dubai have moved to curb speculation in the local property market, raising transaction fees and introducing mortgage caps.
Demand still seems rampant as well, especially in the off-plan market. The Danube Group's first venture into real estate development, a cluster of 171 town houses in the Al Furjan community being built for AED500 million, was sold out on the first day itself. Also, while prices of Dubai's prime residential property grew by just 1% quarter-on-quarter in the first three months of 2014, it is not the end of the bull run, according to global consultancy Knight Frank. In its latest report, it noted that Dubai's residential prices will resume on an upward path in the second half of this year.
Market Insight is aimed at examining the emirate's dynamic market and forecasting industry trends. While concerns have been mounting amidst Arabtec's falling shares, most experts agree that it is difficult to predict what this means for the sector in general. Most also point out that there is now a need for new disclosure rules as the Arabtec rout dragged the Dubai Financial Market into bear territory. It definitely appears that transparency is key, moving forward, and it seems like the UAE is on its way there with being the most transparent market in the region. Sincerely, Pashma Manglani Editor
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 => Taking a stand against flipping
 => Taking a stand against flipping Property flipping - or the buying and selling of real estate to make a quick profit - has largely been blamed as the cause of the market crashing in 2008.
Earlier in May, the International Monetary Fund urged Dubai to put in place stronger measures to counter property speculation. Shortly after, the UAE Central Bank warned that low residential yields in Dubai and Abu Dhabi could be indicating overheating in the real estate sector. Now, the government has announced its thoughts on introducing more measures to curb speculation. In a recent tweet, the government's media office said it was weighing the introduction of extra fees on off-plan sales and placing new restrictions on such sales. If it goes ahead, the move would be the latest in a series of measures brought in by the Dubai Land Department over the past year to calm the emirate's spiralling property prices.
Damac chief Ziad El Chaar recently commented that speculation without demand is not sustainable. "We, like some other developers want a 20% deposit plus 4% for the transaction fee, another 20% over six months and then the balance with the last payment on construction, though this varies on villas and apartments. But no speculator would pay 40% in the first six months, the sums just would not add to profit up for them."
He called for a government levy on "flipping" and asked authorities to encourage a new class of mortgaged resident property owners in the Emirates. "The loan-to-value rate for off plan is 50% compared to 25% for a ready to move property, and that is not good. The banks should reduce the loan-to-value rate but include a 'flippers' penalty charge or early repayment fee to prevent speculators using a mortgage to gain the finance to move a property on quickly."
However, other experts note that while it's a definite push in the right direction, instituting these changes won't be as easy. "We welcome the news that the government is looking to do something about this," said Craig Plumb, head of research at JLL's Dubai office. "However, the devil will be in the detail. I'm sure it would be possible to do something like this, but at the moment, I'm not entirely sure how it would do it."
Market Insight is aimed at examining the emirate's dynamic market and forecasting industry trends. As predicted last week, we will be hearing more about new measures to counter speculation in Dubai as there is definitely greater awareness of the problem sector-wide. The emirate continues to outperform other major cities and house prices have risen 31.57% during the year to Q1 2014. Demand appears to still be on the rise and is fuelling new developments. With all that is happening, it's bound to be a year of many exciting changes in the real estate market and be sure to follow the journey with us! Sincerely, Pashma Manglani Editor
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 => Dubai realty needs stability
 => Dubai realty needs stability While asking prices for the purchase of freehold homes have cooled down since last year, rentals still seem to be skyrocketing. However, such increases in prices can cause an imbalance in the economy and experts across the Emirates have been stressing the importance of taking preventive steps.
Current asking values for ready property are now back to what they were late last year and just before the Expo 2020 win premium took hold of them. "Between August to December last year, property values were up 10-12% and in January, there was a sudden 10-15% hike in what owners were demanding (for completed freehold homes)," said Chandrakant Whabi, CEO of Acrohouse Properties.
Clearly, buyers are showing an innate resistance to what they perceive as too high a premium. Mortgage caps have also affected demand patterns since potential buyers are now expected to put up a mandatory 25% to buy property.
However, by the looks of things, bringing stability in rental growth rates could take more time.
"Rental values will only cool off when supply needs are being met, particularly in the mid-income category where rents have shot up the highest (34% on a year-to-year basis versus 23% on a city-wide basis)," says Sameer Lakhani, managing director, Global Capital Partners.
The problem lies in the impact continuous growth could have on the market. In fact, the UAE Central Bank has issued its strongest warning to date about the property market overheating.
The market rebounded last year as the economy turned a corner amid increased government spending on infrastructure and a revival of trade and tourism. In the past year, bankers including Tirad Al Mahmoud, chief executive of Abu Dhabi Islamic Bank, have raised concerns that rising property prices will increase business costs and make the UAE less competitive.
The Central Bank says the surge in prices is being fuelled largely by cash investors, unlike in the run-up to the 2008 financial crisis, when banks who provided credit for purchases were exposed to a market crash. It said that "analyses of banking data support the hypothesis that the current market recovery is mostly driven by equity buyers and/or reliance on external funding sources." Market Insight is aimed at examining the emirate's dynamic market and forecasting industry trends. While there has been increased concern from all those operating in the sector, it has become quite apparent that Dubai's growth this time around is different than the 2008 crash. However, it is also clear that more measures need to be implemented to prevent the market from overheating and we are bound to see more announcements come through this year. For all those concerned as to what the future might hold, be sure to follow our weekly updates to get a rundown of the latest.
Sincerely, Pashma Manglani Editor
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 => Dubai market remains bullish
 => Dubai market remains bullish The property sector in Dubai continues to outperform other markets in the region with a resurgence of off-plan sales, as developers woo buyers with attractive and easy payment options.
In a rapidly rising housing market, buying off-plan actually enables investors and home buyers to buy property at a lower price as opposed to the post construction phase, says Robin Teh, country manager, Director Valuations and Advisory at Chesterton Mena.
Leading developers have been at the forefront of new launches in prime locations. Aldar Properties announced that it is mulling up to 20 new development projects. Meanwhile, Meraas Holdings' Jumeirah Gardens project, the biggest in terms of value, is estimated at $89.5 billion and is due for completion in 2021, followed by Dubai Holding's Dubai Land development, valued at $61 billion with a completion date set in 2020.
The ongoing $16.7 billion Dubai World Central development that will be completed in 2030 comes next, followed by Limitless' Downtown Jebel Ali project, estimated at $14.6 billion set for completion in 2020.
Other landmark projects include the ongoing Business Bay project, currently valued at $11.2 billion, which is expected to be fully completed within two years. Mohammed bin Rashid City, which is being developed jointly by Dubai Holding, Emaar and Meydan Sobha, is valued at a cost of $11 billion and will be ready by 2023. Emaar's Downtown Dubai development project is just another example with a budget of $10.9 billion and expected to be ready for completion by 2020.
Lower off-plan prices, economic stability and better liquidity in the market are key factors driving the resurgence of the market, Robin said in a report. The sheer volume of projects in development "clearly reflects the positive sentiment in the investment scenario of the economy which is expected to continue in medium term." Market Insight is aimed at examining the emirate's dynamic market and forecasting industry trends. While growth and development continue on a positive trend, Dubai home prices slowed in the first quarter after financial authorities took steps to cool the market. With banks increasing exposure to the UAE's booming real estate industry, it's clear that the general view is that this time things will be different. Sincerely, Pashma Manglani Editor
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 => 'It will be different this time'
 => 'It will be different this time'
There's no doubt that real estate plays a central role in developing the UAE's economy. The question is whether market players have learnt their lesson from last time or are we just heading down the same route?
According to Nick Maclean, managing director, CBRE Middle East, "Lessons have been learnt from the crisis. I believe it's going to be different this time."
Speaking to The National, he says, "We're in a very interesting position. Last year, demand and prices soared, especially in residential, between 25 and 30% ahead. This year, it's been much less buoyant. The trajectory of the increase is down and the number of transactions is down. I see it as a pause for thought in reaction to the prices of last year."
Government actions - including the new mortgage regulations and the introduction of the stamp duty on transactions - act as a brake on overheating the market. However, owners and consumers have also got more savvy in their approach to property purchase and rentals.
Some industry sources hope that the current transactional lull will not endure for long. "Notwithstanding the decline, there are sufficient signs to indicate the market reaching its peak - market prices have remained robust," said Simon Townsend, business development manager at real estate consultancy DTZ. "There does not seem to be a marked decline in investor interest as enquiries remain strong."
He agrees that investor caution remains and with good due diligence, there is always an increase in transaction times. "It is potentially too soon to judge the meaning of the current reduction in transactions; a true position of the market and its strength (or otherwise) will be clearer towards the final quarter of the year." Market Insight is aimed at examining the emirate's dynamic market and forecasting industry trends. Opinions differ on what this "calming down" period in Dubai's realty market means but for most industry experts, it's apparent that the market has learnt its lessons and more efforts are being directed towards curbing another bubble. Sincerely, Pashma Manglani Editor
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 => Moving forward with caution
 => Moving forward with caution There's no denying the growth spurt that Dubai is caught in.
New real estate projects are coming up, whether prices weaken through a market correction or not. Developer margins are high, over 50% and project pre-sales - 30-50% - is enough to fund the completion of an entire development, says Standard & Poor's (S&P).
However, property companies are taking a more conservative approach this time around. "They are typically launching new developments on a pre-sold basis so they would only launch once they have sold enough to fund the construction work and that is not difficult when you have margins of 50% plus," says Tommy Trask, director, Corporate Ratings, S&P.
Developers are also making sure that a buyer is committed to an at least 30% payment before he can think of selling. "We have provisions in the SPA that restrict sales until two installments are paid," says Rahail Aslam, CEO of Select Group. "In addition, there are Oquood registration fees of 4% - this is another safeguard for developers to ensure they are principally dealing with end-users and long-term investors." Earlier this week, Damac Chairman Hussain Sajwani also voiced the strong opinion that developers are doing their part in cooling growth down to more manageable levels.
In order to meet the vast demand, competition among UAE banks is heating up, resulting in lower interest rates, discounts and special offers. Despite the lowering mortgage rates, most transactions seem to be carried out in cash as the Central Bank data shows that the country's mortgage sector has remained stagnant over 18 months.
"We foresee an acceleration of real estate lending as developers launch new projects and more local and expat customers seek to enter the mortgage market," S&P analysts wrote in a recent report. Market Insight is aimed at examining the emirate's dynamic market and forecasting industry trends. While there definitely seems to be an uptake in development and investment, there also seems to be an air of caution from the part of all parties involved. Developers have learnt to shy away from investors looking to flip property to make quick money while mortgage restrictions ensure that buyers have the funds needed to make an investment. Trump was also seen remarking that while he may not have thought the same a few years ago, he now believes in the city's upside potential. "The numbers have a long way to go before they catch the number of years ago...today they have tremendous control, checks and balances and people doing them are putting in their own checks and balances. I think Dubai has tremendous upside." Sincerely, Pashma Manglani Editor
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 => Price growth slows down
 => Price growth slows down Finally, there is some respite for those looking to invest in Dubai realty as there seems to be some stability in asking values.
Prime residential prices in Dubai rose by just 0.6% during the first three months of 2014, signalling a slowdown in growth in the emirate's booming real estate market. According to Knight Frank's latest Prime Global Cities Index for Q1, Dubai's price growth between December 2013 and March was lower than the global average and way down on the 5.4% growth seen in Q1 last year.
According to Chandrakant Whabi, CEO at Acrohouse Properties, "A 5-10% softening does seem to be there across the board in the city's freehold locations. Most of the buying activity spike released by the Expo win as well as those trying to acquire properties before the mortgage cap came into effect was over [by early 2014]. In the last two or three months, residential prices have been steady while those in commercial make gains."
In fact, Emaar Properties said that its revenue from villa sales dropped by nearly 17% in the first quarter of the year as it extracted more income from malls and hotels instead. The builder generated AED256.91 million from sales of villas in the first quarter as compared to AED308.73 million in the corresponding period in 2013, a detailed earning statement revealed.
For end-users, however, there still needs to be immediate access to sizable funds to buy property in Dubai's market. According to a new Cluttons report on first-quarter trends, the need to save up larger deposits means that the transition from the rental market to owner occupation will take longer.
The good news for home owners is that banks in the UAE are keen on helping investors, since they have collateral by way of the first property while any new arrangement helps deepen their relationship with property owners over a longer term. Market Insight is aimed at examining the emirate's dynamic market and forecasting industry trends. Market trends seem to be correcting themselves since it had become apparent that the market would not be able to sustain continually increasing prices. With developers announcing a range of new projects, there are plenty of opportunities for those looking to get onto the Dubai bandwagon, especially now when there is more stability than there has been for a while. According to Whabi, "For market dynamics to have sustenance, there was a need for price growth to slow down."
Sincerely, Pashma Manglani Editor
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 => In Dubai, it's all about timing
 => In Dubai, it's all about timing The UAE property and mortgage market is booming again, with prospective buyers scrambling to secure home loans before prices rise even higher. And according to CEO of Acrohouse Properties Chandrakant Whabi, now is the best time to buy a home in Dubai - rather than waiting for a correction.
Ambareen Musa, founder and chief executive of Souqalmal.com says the price comparison website has noticed a rise in the number of customers searching for a UAE mortgage through its site - with figures doubling in March. According to her data, the number of UAE mortgage searches on the website has gone up 35% in the first three months of the year. The vast majority of home loan searches were expats looking to buy property in Dubai - probably because prices rose by around 43% last year. Experts have predicted these prices will go on increasing, so much as 40% this year.
While the general sentiment remains positive, the International Monetary Fund has warned again about a potential real estate bubble, cautioning Dubai to implement stronger measures to counter speculation.
Masood Ahmed, director of the IMF's Middle East and Central Asia department, said the Fund had welcomed moves last autumn by Dubai's government and central bank to cool what could become a "speculative increase" but that more was needed.
"Our own view is that these measures are good but if you look at what's happening in the market, it's time to consider stronger measures. Particularly in terms of ways to discourage quick turnaround - what people refer to flipping of real estate in Dubai."
While more measures may be needed to stablise the market, there is a widespread feeling that the current property market resurgence is built on more secure foundations than the last boom, which burst after the financial crisis. A key reason is that the UAE Central Bank has moved to prevent borrowers from overstretching themselves by insisting they make higher minimum down payments to secure their dream home.
Market Insight is aimed at examining the emirate's dynamic market and forecasting industry trends. There is plenty of speculation on the current state of UAE's realty market, most of which remains optimistic. However, it is apparent that certain measures need to be implemented to ensure that Dubai isn't sucked back into a property bubble. Ashok Aram, chief executive of Deutsche Bank in the MENA region, summed it up best: "Dubai's relevance is of being positive in a region with some growth and some risks. If costs move ahead too fast, that won't be good for Dubai." Sincerely, Pashma Manglani Editor