NEWS BRIEF 15 - Asteco

DUBAI | ABU DHABI | AL AIN | SHARJAH | JORDAN

© Asteco Property Management, 2017 asteco.com | asteco.com/report_library IN THE MIDDLE EAST FOR OVER 30 YEARS

ASSET MANAGEMENT SALES LEASING

VALUATION & ADVISORY SALES MANAGEMENT OWNER ASSOCIATION

RESEARCH DEPARTMENT

NEWS BRIEF 15 SUNDAY, 9 APRIL 2017


© Asteco Property Management, 2017 asteco.com | asteco.com/report_library

IN THE MIDDLE EAST FOR 30 YEARS



REAL ESTATE NEWS UAE/ GCC

DELAYED GCC PAYMENTS DISCOURAGE CONSULTANCY FIRMS

HILL INTERNATIONAL CHIEF EXPECTS FURTHER SHRINKAGE IN MIDDLE EAST

OPERATIONS IN 2017

MANY OPTIONS FOR REMORTGAGING A PROPERTY IN UAE

DRAKE & SCULL LOOKS TO FINALISE DH600M CAPITAL RAISE THIS MONTH, SAYS CHIEF

EXECUTIVE

‘UBERFY’ THE REAL ESTATE EXPERIENCE

MANAGING RESERVE FUNDS IN JOINTLY OWNED PROPERTIES

BARRIERS TO HOME OWNERSHIP IN THE UAE

LOOKING UP: 1 IN 5 SUPER-TALL COMPLETED BUILDINGS FOUND IN DUBAI

AVIATION AND TOURISM INDUSTRY SET TO BE A DRIVING FORCE FOR THE MIDDLE

EAST ECONOMY

DUBAI

MONEY SPENT IN DUBAI BY OVERSEAS PROPERTY INVESTORS DECLINES 40%

LONG SUMMER FOR DUBAI PROPERTY BEFORE ANY PICKUP

CRACKED, SINKING AND ABANDONED, DUBAI VILLAS TO BE LEVELLED FOR NEW

HOUSING

BURJ KHALIFA APARTMENTS LOSE A QUARTER OF THEIR VALUE IN 12 MONTHS

DUBAI TO EFFECT MAXIMUM TRANSPARENCY IN PROPERTY MARKET

NEW FIVE-STAR HOTEL TO OPEN IN BUR DUBAI

MONTHLY CHEQUES AND SOFTENING RENTS AID DUBAI RESIDENTS

NAKHEEL AWARDS DH136M CONTRACT FOR DRAGON CITY HOTEL

DUBAI’S DEVELOPERS CONTINUE WITH GO-SLOW APPROACH

BUSINESSES CHASE VALUE IN DUBAI’S OFFICE PROPERTIES

SALEH ABDULLAH LOOTAH: BE UNIQUE TO SURVIVE

UNDERSTANDING THE SHIFT IN REAL ESTATE DEMAND

HOME INVESTORS ZERO IN ON DUBAI’S NEXT MEGA-MALL LOCATIONS



IN THE MIDDLE EAST FOR OVER 30

YEARS



REAL ESTATE NEWS

CLOCK TICKS TO FIND BUYER FOR DUBAI’S COSTLIEST PENTHOUSE AT DH200M

DUBAI REAL ESTATE TRANSACTIONS JUMP 45% TO DH77B IN FIRST QUARTER OF 2017

DUBAI LAND LAUNCHES "KNOW YOUR RIGHTS AS A REAL ESTATE INVESTOR IN DUBAI"

DUBAI LANDLORDS ARE LOWERING RENTS, EXTENDING LEASES TO KEEP TENANTS

DUBAI MOVES TOWARDS NEW RENTAL LAW

DUBAI REAL ESTATE MARKET ON COURSE TO STABILISE DURING 2017

ABU DHABI

WHY YOUR RENT’S TOO HIGH, AND WHAT TO DO ABOUT IT

ABU DHABI DEVELOPER BLOOM PROPERTIES STARTS LEASING APARTMENTS AT AL

BATEEN PROJECT

NORTHERN EMIRATES

SHARJAH HOLDING LAUNCHES THIRD NEIGHBOURHOOD AT AL ZAHIA

RAK PROPERTY SECTOR VALUED AT DH4.95B IN 2015

INTERNATIONAL

JUMEIRAH LOOKS TO INDIA FOR HOTEL EXPANSION

GLOBAL HOUSING RENT COMPARISON: WHAT $40,000 A YEAR GETS YOU IN TOP

CITIES AROUND THE WORLD




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JUMEIRAH LOOKS TO INDIA FOR HOTEL

EXPANSION Thursday, April 6, 2017

Dubai’s Jumeirah Group, which operates luxury properties including the Burj Al Arab, is in talks to open hotels in

various locations in India, its next key market for expansion.

"We are in discussions with a number of owners and developers about opportunities right across India, including

Mumbai, Goa, Bengaluru and New Delhi," said Linda Lewis, Jumeirah Group’s vice president of global sales for the

Middle East and Asia Pacific.

"India is an important market for Jumeirah and one we’re increasingly focusing on now that our Asia Pacific

pipeline is firmly established. Jumeirah has ambitions to grow its portfolio and establishing a presence in India

seems a natural next-step for expansion."

Jumeirah already has one property under development in Mumbai, but progress on that has been slower than

expected.

It signed an agreement in November 2012 to operate the planned 470-room hotel. At the time of the

announcement, it said that the property was slated to open this year.

Jumeirah said that the property was "still in development" but it did not have an opening date.

The company at that point also said it was looking for other opportunities to open hotels in India.

Global hotel operators are eager to expand in India because of the country’s growing wealth and burgeoning

travel market amid a population of more than 1.2 billion. India has relatively few luxury branded hotel rooms per

capita.

A lot of the leading hotel chains have been expanding at "a fairly rapid pace" in India, said Abhijeet Umathe, the

associate director of hospitality and leisure advisory at Knight Frank India.

There had been "a bit of a pipeline shortfall in the last two to three years because of economic constraints",

however.

Jumeirah had perhaps been held back in terms of advancing its development plans in India by their "positioning"

at the luxury end of the market, he said.

"In the cities in India where Jumeirah wants to be present, the real estate costs are extremely high, so if you have

to build over a very large average build size per room, the return is not there for the owner."

Most of the expansion in India’s hotel market is taking place at the mid to upscale segments of the market, but

not at the very top end of luxury, Mr Umathe added.

Jumeirah, which operates hotels in locations including London, Istanbul, Frankfurt, and the Maldives, as well as

several properties in the UAE, regards India as a important feeder market.

On Sunday, it announced that it had opened a representative sales offices in India to target the luxury travel

market for its existing hotels.




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Source: The National

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DELAYED GCC PAYMENTS DISCOURAGE

CONSULTANCY FIRMS Thursday, April 6, 2017

Growth in the consultancy market in the GCC is slowing dramatically as multinational firms have been deterred by

late payment issues.

A study by Source Global Research (Source) found that the consultancy market grew 6 per cent in 2016, which is a

decline from the 15 per cent growth recorded in 2014.

The study said that the market had grown in size to US$2.8 billion. That compared with $2.5bn in 2014. About

$900 million of this was spent by public sector clients, but the slowdown in work for governments was even more

pronounced, with growth dropping to 5.6 per cent last year, compared with 19.4 per cent in 2014.

It said that the recent slump in oil prices had affected public sector budgets.

Edward Haigh, a director of Source Global Research, said: "Six per cent growth meant that 2016 was the year in

which the GCC – the consulting world’s star performer for so many years – stopped standing out."

Complaints from consultancy firms about late payments is also on the rise the study said, with firms reporting

that conditions in Saudi Arabia and Qatar have become "markedly worse" over the past 12 months.

Demand for consultancy services in the UAE grew by 6.6 per cent, reaching $815m last year. However, there was a

significant difference noted between Abu Dhabi and Dubai. The former market was characterised by cautious

clients and slow decision-making, according to Source, whereas the latter was described as a regional bright spot.

Saudi Arabia remained the region’s biggest market, spending $1.31bn on consultants last year, while Qatar spent

$342m.

The financial services sector was the most active market for consultants across the GCC.

The report noted that the introduction of value-added tax (VAT) next year could drive demand for consultants in

the UAE.

The report also argued that the cancellation or postponement of many projects was also creating challenges for

companies that are trying to plan their own resources.

"You can’t help wondering if there’s a year of extraordinary growth dangling somewhere out there in the future of

the GCC consulting market," Mr Haigh added.

"Combine Saudi Arabia’s National Transformation Programme with a recovering oil price, pressure building in

Qatar as 2022 nears, and the Dubai World Expo in 2020, and you start to create a perfect storm of demand for

consulting services. Unfortunately for consultants, that year will not be 2017."

Chuck Harrington, the chief executive of Parsons – a US-based engineering consultancy, which earned about 20

per cent of its global revenue of US$3.2bn in 2015 (the most recent year for which figures are available) from the

Middle East – said that late payments "continue to be a major problem for companies doing business here".




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"The overall issue of delayed payments in the GCC region has gotten more severe in the past few years; we are

seeing our receivables – that is, approved invoices – go significantly beyond the contractual terms and conditions

that we’ve signed up for," said Mr Harrington. "Depending on the project, late payments can reach two to three

times of the contractually mandated terms."

Mr Harrington added that there were " some hopeful signs in Saudi Arabia, such as the government bond

issuance last year, which eased the liquidity crunch in the kingdom".


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WHY YOUR RENT’S TOO HIGH, AND WHAT

TO DO ABOUT IT Thursday, April 6, 2017

As the rental housing market continues to dip tenants are in a strong position to call the shots but they have to

know what the current rates are for their home area.

The hot gossip over the garden wall in the capital these days seems to be how much rent the neighbours are

paying.

Rents fell in almost every neighbourhood of Abu Dhabi last year, by as much as 25 per cent for a high-end, one-

bedroom flat on the Corniche. The market shows no sign of picking up. Property company Core Savills said that

this year’s drop in values would be close to 2016 levels, with prime and mid-prime villa values anticipated to fall by

at least 15 per cent, and apartment prices by seven per cent.

Increasingly, tenants are finding the neighbours who just moved in next door are paying substantially less rent

than they are. With the new Tawtheeq bill adding strain to their finances, when the time comes to renew the

lease, tenants are prepared to push hard for a drop in rent.

But how to go about this process with delicate diplomacy?

Scottish resident David Crook has seen this question appear several times lately on the Facebook group that he

runs, Tenants in Abu Dhabi (TOADS).

As a senior property manager with Abu Dhabi National Properties, he is an expert in this field, as one of his jobs is

to negotiate between landlords and tenants.

"We see so many rent reduction requests coming in on a daily basis," he says. "My advice to tenants is not to be

too greedy, but also be aware that there are very few occasions now where landlords are justified in proposing to

increase rents. Landlords will try, understandably, to get away with holding ground as much as they can, but there

is a tipping point."

Just before the two-month notice period is up, Mr Crook advises tenants to scour property websites such as

propertyfinder.ae, or property managers’ lists of available units in their area, to arm themselves with evidence of

current market rates.

"Its essential to do your homework," he says. "Tenants can then say to their landlord ‘Here is some proof of what’s

happening in the market, so I’m looking for a reduction’. We advise landlords that it’s always better to retain a

tenant at a slightly reduced rent than to have an empty property.

If your lease is with a property management company, then they will be the ones to negotiate with, says Mr

Crook. "You’d have to write to that company and explain ‘I’m happy to renew, but I’m looking for X, Y, Z’. The

company will then either take that decision themselves, or go back to the landlord to seek their approval."

Australian resident Judith Summers had to do some hard bartering through a property management company to

achieve an 8 per cent drop in rent for the three-bedroom flat she shares with her husband in Al Muneera. The

couple, whose rent had increased year-on-year since they moved in 2012, went to the negotiating table with an

annual rent of Dh195,000.




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"At first, they announced the rent would be increased to Dh200,000," says Ms Summers. "We offered Dh175,000,

and in the end, we agreed on Dh185,000. I love living in Al Muneera and our lives are centred in this part of Abu

Dhabi, so we really didn’t want to have to move. But we would have done so if they hadn’t agreed to a decrease –

my husband was adamant about that."

Moving to a new property costs "at least Dh10,000", says Mr Crook, and there’s the burden of time and stress, too.


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GLOBAL HOUSING RENT COMPARISON:

WHAT $40,000 A YEAR GETS YOU IN TOP

CITIES AROUND THE WORLD Wednesday, April 5, 2017

The National had a look at what US$40,000 (Dh146,916) a year would get you in terms of renting an flat in major

cities.

Zurich in Switzerland came out as the city in which you could end up in the smallest flat – with a 807-square-foot

historic flat close to the Zurcher Bahnhofstrasse taking up your annual budget.

In London, your money could get you a 850 sq ft flat in a secondary prime area such as Bayswater, Earls Court,

Hampstead Heath, Notting Hill, Marylebone, Regent’s Park, Pimlico, South Kensington or St John’s Wood.

In the United States, a budget of $3,333 a month would get you a one-bedroom flat in Manhattan or prime areas

in San Francisco.

In Paris, you could rent a 1,000 sq ft flat on the Rue Du Pont Aux Choux in the city’s Third Arrondissement.

In Dubai, Abu Dhabi and Doha, Dh146,916 could get you a two-bedroom flat.

In Abu Dhabi, you could get a two-bedroom flat of up to 1,400 sq ft in the Raha Beach neighbourhood or a two or

three bedroom flat on Reem Island – although it would also pay for a much larger flat or villa in cheaper locations

such as Khalifa City A.

At the other end of the scale, Cape Town was where $40,000 a year would get you the most for your money,

renting a 3,000 sq ft house in areas such as Bakoven, Bantry Bay, Camps Bay, Clifton, Fresnaye, Green Point,

Mouille Point, Hout Bay, Waterfront, and City Bowl.

So, why is it that, despite their small population sizes, GCC cities are relatively expensive to rent?

Analysts pointed to the fact that cities in the region typically have a large number of expatriates who are often in

receipt of generous housing allowances, which pushes up the prices of the most desirable properties.

"In terms of the rental costs, my view would be that as a proportion of population, the expat and corporate

relocation market would be larger in Dubai, Abu Dhabi and Doha than in cities such as New York and London,"

said Kate Everett Allen, a partner in international residential research at Knight Frank.

However, analysts also said that this sort of snapshot of properties available in various world cities was not a

definitive study, and property rents within each city vary greatly depending on location and condition of each

property as well as the amenities available.

Secondly, the type of housing stock also makes a difference to the size of flats available within each price band.

This means our budget may well rent a much smaller flat in Zurich than other major world cities because the city’s

housing stock is typically older and smaller.




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Currency fluctuations may also play a part, with the value of sterling down nearly 20 per cent against the US dollar

since the Brexit vote and the Swiss franc holding strong against most other currencies.

Arlene Jimenea, a senior research analyst at CBRE Middle East, said there was a variety of properties on offer

within the same price bands.

"For roughly Dh147,000, tenants could get a two-bedroom flat in central locations in Abu Dhabi, including newly

completed developments in investment zones [eg: Reem Island and Al Raha Beach]," she said.

However, residents willing to go out to locations such as Khalifa City or Mohammed Bin Zayed City, could get a

three-bedroom flat for the same amount.

"In Doha, residents willing to pay $40,000 a year could likely get a two-bedroom flat in prime locations such as the

Pearl Qatar, West Bay and Diplomatic Areas," she said.

"But for the same price, housing options expand to include relatively larger units in communities on the periphery

of the city."


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MONEY SPENT IN DUBAI BY OVERSEAS

PROPERTY INVESTORS DECLINES 40%

Wednesday, April 5, 2017

The amount of money spent by overseas investors in Dubai last year plummeted by more than 40 per cent

compared with a year earlier as currency fluctuations hit Indian and British investors, prompting developers to

slow housing completions.

According to property broker Core Savills, the total amount of money invested in property by investors from

outside the Arab region fell to Dh44 billion last year from Dh74.6bn in 2015. It found that the total number of non-

Arab, non-GCC investors into Dubai fell 35 per cent to 22,834 in 2016 from 35,162 in 2015.

Core Savills analysed Dubai Land Department data to show that the total amount of money spent by Indian

investors on Dubai property fell 42 per cent last year to just Dh12bn from Dh20.8bn in 2015. The broker said that

the total number of Indian investors buying property in Dubai fell 28 per cent to 6,263 in 2016 from 8,756 in 2015.

At the same time the total amount of money spent by British purchasers on Dubai property fell 46.7 per cent to

Dh5.8bn in 2016 from Dh10.9bn in 2015. The total number of British home purchasers in Dubai fell 31 per cent to

3,372 in 2016 from 4,889 in 2015.

And the total amount of money spent by Saudi Arabian investors on Dubai property last year fell 15.7 per cent to

Dh8bn from Dh9.5bn, even though the number of investors stayed roughly static.

"Looking at real estate investment in Dubai in 2016, we witnessed a year-on-year contraction in the total number

of investors — notably amplified by non-regional buyers," said David Godchaux, the chief executive of Core

Savills.

"A strong dollar continues to affect the traditional buyer nationalities such as Indians, British and Pakistanis as

their currencies have devalued significantly over the last year. We also saw receding regional demand from GCC

investors."

Overall Core Savills estimated that total residential sales in Dubai last year fell 32.9 per cent to Dh91bn in 2016

from Dh135.7bn in 2015, while the total number of investors fell 24.9 per cent to 42,018 in 2016 from 55,955 in

2015.

The broker said that weak demand in the market was prompting property developers to slow down construction

and complete fewer homes than they had predicted.

Core Savills estimated that developers handed over just 3,100 completed homes in the first three months of 2017.

The broker said it anticipated that only another 15,000 units would be brought to market throughout the rest of

the year – roughly half the anticipated amount.

Property consultancy Cavendish Maxwell has said that 2,500 new homes were completed during the first quarter

of the year, but 35,000 are forecast to be due over the remainder of this year. Senior consultant Manika Dhama




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said that developers are likely to delay many of these handovers to prevent too much stock coming on to the

market.

"While some projects are delayed as a result of financing issues and extraneous factors, the majority of delays

over the last 12-18 months stem from a conscious staggered delivery schedule being set by developers.

"This acts as a supply control mechanism to align handovers with demand and project sales potential and to avoid

flooding the market with units that cannot be absorbed," said Ms Dhama.

Already there have been signs that handovers are affecting prices, especially in villa communities as more smaller,

affordable houses are launched.

The company’s house price index shows the average selling price for a villa or town house dropped to Dh2.2m at

the end of March from Dh3.5m at the end of 2016. This is because more villas are being launched in communities

such as Dubailand with starting prices of Dh1m.

On a like-for-like basis, average prices for completed units dropped by 1 per cent year-on-year.


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ABU DHABI PROPERTY OWNERS WRONGLY

BILLED FOR MUNICIPALITY FEES

Tuesday, April 4, 2017

Property owners are being wrongly billed for tens of thousands of dirhams in taxes from which they are exempt –

and threatened with having utilities cut off if they do not pay.

It is the latest problem for the new municipality fee system, introduced in January.

Expatriate tenants must pay the municipality 3 per cent of their annual rent or loan repayments. The fee is

collected through monthly power and water bills from Abu Dhabi Distribution Company, backdated to February

last year.

But some homeowners who are exempt from the fee have been billed for 11 months to cover last year, and

monthly payments this year. The utilities company has given them 14 days to pay or have their power and water

switched off.

"Each month I’m billed close to Dh3,500 and they billed me Dh38,000 for 2016," said the owner of a villa in Al Reef,

valued at Dh1.7 million.

"I approached the municipality and ADDC. They told me it was not correct and it would be resolved soon.

"It’s been more than three months and I’m still waiting. I have to leave next week as I lost my job, and I can’t rent

out my property because I have no clearance letter from ADDC."

ADDC acknowledged he was exempt but then sent him two notices threatening to cut off his power unless he

paid.

Another homeowner, who received a bill for Dh48,000, said: "We’ve been suffering big time due to some big

debate between the developer Manazel and ADDC and Abu Dhabi Municipality."

A third property owner rents out his villa but cannot obtain a Tawtheeq housing certificate, which is required to

connect the power supply and enrol children at school, because ADDC says he owes backdated fees.

"I may lose my tenant if I can’t provide him Tawtheeq," he said. "I shuttled between the municipality and ADDC

offices but nothing has been resolved yet, even though they promised to solve the issue soon."

The municipality fee system has been dogged by complaints and confusion, partly because of the complexity of

the exemptions.

Homeowners and Emiratis, whether owners or tenants, are not required to pay the fee. Nor are government

employees whose rent is paid by the department or agency for which they work.

Abu Dhabi Municipality has acknowledged the problems and said it was coordinating with a company hired to

develop the data for the new system.


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HILL INTERNATIONAL CHIEF EXPECTS

FURTHER SHRINKAGE IN MIDDLE EAST

OPERATIONS IN 2017 Sunday, April 2, 2017

The head of the US project management company Hill International has said it expects its business in the Middle

East to decline further this year and is prepared to take appropriate cost-cutting measures.

Speaking on an investors’ call after revealing a net loss of US$18.8 million for 2016, compared with a net profit of

$6.9m a year earlier, the company’s chief executive, David Richter, said that although he believed the economic

decline in the region’s construction industry caused by lower oil prices had reached its low point, the company

was expecting "our business in the Middle East to shrink this year".

"We are planning for that and reacting to it," he said.

The company, which is in the midst of selling a construction claims group advising on legal disputes to

Bridgepoint Development Capital for $147m to strengthen its balance sheet, reported a 5.7 per cent drop in full-

year revenue, to $520.8m, and a 7.2 per cent decline in consulting fees to $434.1m. About 47.2 per cent of this

came from Middle East operations – a drop from 52.6 per cent in the prior year.

The company revealed a net loss of $4.3m from continuing operations in the final quarter of the year, compared

with a profit of $2.1m a year earlier. This was because its consulting fee revenue dropped by 18.1 per cent to

$100.6m.

Mr Richter said revenue from its Middle East operations fell by 34.1 per cent during the three-month period, down

by $22.8m, partly because of contract cancellations.

The company also incurred a bad debt loss of $6m during the final quarter of the year, bringing the total bad debt

expense for 2016 up to $17.9m, up from $9m a year earlier.

"Obviously, a lot of these receivables – in fact the majority of them – relate to clients in the Middle East and the

economic situation. It’s why we still have shrinkage in our business, revenue-wise, in the Middle East, and we

expect another one again this year," Mr Richter said.

"Low oil prices have caused a lot of difficulties with a lot of our clients – both public and private. In their

construction activity, it has affected their cash flow and cash availability and it has made the situation more

difficult for us."

Mr Richter said that for firms in the construction industry, "this is a difficult time to have a major presence in the

Middle East" but he added that the firm was continuing to win new work, which he expects to filter through to

growth in its regional business once more in 2018.

The company expects the sale of the construction claims group to be completed by the end of this month and

that the consulting fee revenue for its continuing project management operations will be between 2 and 8 per

cent lower in 2017.




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Hill International employs 4,300 staff in 100 countries. It has 15 offices in the Middle East and North Africa region.


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ABU DHABI DEVELOPER BLOOM

PROPERTIES STARTS LEASING APARTMENTS

AT AL BATEEN PROJECT Saturday, April 8, 2017

Bloom Properties has begun leasing new residential apartments at Bloom Residences, a 225-apartment project

that is part of Bloom Marina in Abu Dhabi’s Al Bateen area.

The company said that the units available for lease are in two new buildings next to the Edition hotel, which is set

to complete in the final quarter of this year.

The units range from 90 square metres for a one-bedroom apartment to 265 sq m for a four-bed unit, and in

rental cost from Dh80,000 to Dh230,000 per year.

The Edition hotel is a boutique brand created by the US-based developer Ian Schrager that has properties in

London, New York, Miami and the Chinese city of Sanya. It is to have 200 rooms and 57 serviced apartments.

The wider Marina Bloom development is to have a total built-up area of 150,000 sq m when complete, including

3,000 sq m of waterfront retail, health clubs, cafes and restaurants, and parking for 850 cars.

Sameh Muhtadi, the chief executive of Bloom Properties’ parent firm, Bloom Holding, said: "We expect to see

strong demand from potential tenants."

According to the property consultancy CBRE, apartment rents fell by 7 per cent across Abu Dhabi last year, though

the rate of decline slowed in the final quarter of the year. It said that rising living costs meant that smaller units in

more affordable communities performed better than luxury properties.

The company’s UAE head of research, Matthew Green, said: "The current shortage of affordable product has

certainly helped to insulate rentals in locations such as Al Reef Downtown and other similar developments off-

island."


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SHARJAH HOLDING LAUNCHES THIRD

NEIGHBOURHOOD AT AL ZAHIA Saturday, April 8, 2017

Sharjah Holding has launched the third neighbourhood at its Al Zahia community in the emirate.

The company, a joint venture between Majid Al Futtaim Properties and the government of Sharjah, said that the Al

Lilac neighbourhood will consist of 120 homes – town houses, three-bed courtyard villas and larger four- and five-

bed villas.

Al Zahia is a gated community aimed mainly at middle-class homeowners. Al Lilac follows on from the launch of Al

Jouri, which already has 50 units completed and 200 more in the handover process. The second neighbourhood,

Al Najris, is 85 per cent sold and is under construction.

In total, about 2,270 homes are planned for Al Zahia in seven neighbourhoods. The development is also to house

six themed parks, leisure facilities and a super-regional mall. It is due for completion by 2022.

Walid Al Hashimi, the chief executive of Sharjah Holding, said: "Al Zahia’s continued growth is a testament to

Sharjah Holding’s promise to deliver quality homes while building a brand that has become synonymous with

family living in Sharjah."


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LONG SUMMER FOR DUBAI PROPERTY

BEFORE ANY PICKUP Friday, April 7, 2017

Absent a major financial catastrophe like a Wall Street crash, expect Dubai property to bottom out over the

summer and begin a cautious recovery later in the autumn. And this despite a slight rise in local mortgage rates,

courtesy of US Federal Reserve Bank’s rate hike.

This week, developers assembled for the 13th edition of the International Property Show at the Dubai World

Trade Centre exhibition halls, hoping this would be a lucky number.

Only two Dubai developers took part, Azizi and Dubai Properties. Their stands were busy but this was a hard sales

pitch to a few disinterested clients. Their luck was out.

Azizi’s apartments in Al Furjan next to the new metro line looked fully priced.

Talk of "price appreciation" was hard to swallow after a report from property consultant Cluttons this week

reported Dubai prices are down 7.8 per cent year-on-year, though this slowed in Q1.

So why be confident about the future now?

Business cycles do have a habit of repeating themselves. I started writing about property as the recession of the

early ‘80s was coming to an end. Then I correctly predicted that property prices would continue to rise even after

Black Monday in 1987, when money left shares and went into property.

I was also not far off predicting Britain’s property crash of the early 1990s in the venerable Building Market

Report. It was not difficult. My father was a small property developer and I spotted the cyclical nature of the

business at an early age when he nearly went bankrupt in 1974 to 1975. In mature markets the cycle is about

three years from top to bottom, give or take six months, and a possible sideways drift at either the top or bottom

or both.

Dubai was clearly an immature market in the 2000s. It started without a legal system in place and the boom

ended in late 2008 with a bust in uncontrolled off-plan sales and the global financial crisis, an unfortunate double

whammy. It is nothing like that today. The market started to recover from the summer of 2011 when the Dubai

World debt rescheduling was signed off, and showed indications of beginning to overheat in late 2013. But

instead of letting the market turn into a bubble like 2007 to 2008, the government wisely doubled transaction fees

and upped mortgage criteria. By the summer of 2014, house prices were falling.

Three years later and they are still edging down, although the biggest effect was in the first 12 months or so, as

usually happens in property market cycles. Given that local business remains in a downsizing phase after previous

low oil prices and a strong dollar, this summer is not likely to mark a pickup phase for local real estate.

More probably it will mark a bottom in prices, as the cyclical model would predict.

The reason for being somewhat sure that a recovery will follow this autumn, absent other shocks to the global

financial system, is that the catalysts to make it happen are already in place: namely a doubling of oil prices over

the past year, and a weaker US dollar since the innaugration of Donald Trump as the president.




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Oil prices are north of US$50 a barrel now and higher prices are likely on the horizon. The price of oil also moves

in cycles, and the upcycle is very clearly established. Supply shortages created by the huge cuts to exploration and

development spending herald higher prices to come. What effect does this have on Dubai, a very small oil

producer? Well, it’s the commercial capital of the world’s biggest oil region. The impact on Abu Dhabi is even more

obvious.

When I wrote this column an old friend, who is head of an oil exploration company, was flying from Singapore,

relocating to work in the UAE for a second time to prepare for his firm’s expansion as the cycle dictates. Then

there are my young friends doing very well in a local IT business.

They have been waiting for the bottom of the Dubai property market to buy their first home. The last time I met

them they were getting ready to buy later this year.

On the other hand, it may be a long, hot summer for Dubai developers and estate agents with more people

leaving the city than arriving this year. The night is always darkest just before the dawn.

Peter Cooper has been a financial journalist in the Gulf for two decades.


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MANY OPTIONS FOR REMORTGAGING A

PROPERTY IN UAE Friday, April 7, 2017

I bought an apartment in Dubai Marina a few years ago but looking at my paperwork it seems I am paying a

higher interest rate on my mortgage than those I see advertised. Do Dubai banks allow people to remortgage

and, if so, is this an option without paying a great deal of money? CD, Dubai

It is certainly possible to remortgage, to change lender, provided there is sufficient equity in the property. For an

expat, the maximum loan to value on a property valued at up to Dh5 million is 75 per cent, although Emiratis can

borrow up to 80 per cent. The first step is to approach the current lender, point out that the rate being paid is

uncompetitive and ask for a reduction. As it is good business practice to retain good customers, you may get a

reduction, especially as rates have fallen in the past few years, and I have known this to happen in a number of

cases. If you decide to remortgage, note that the lender can charge a fee for repaying the mortgage early. The

Central Bank has officially limited the redemption penalty that any lender can charge and this supersedes any

existing mortgage contracts. The penalty can be no more than 1 per cent of the loan amount, or Dh10,000,

whichever is lower. There are other costs when remortgaging including the lender’s arrangement fee, of 0.5 per

cent to 1 per cent and a valuation fee to the amount of Dh2,500. It is important to confirm all the charges up front

to ensure it is worthwhile changing lender.

Keren Bobker is an independent financial adviser and senior partner with Holborn Assets in Dubai, with over 20

years’ experience.


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CRACKED, SINKING AND ABANDONED,

DUBAI VILLAS TO BE LEVELLED FOR NEW

HOUSING Friday, April 7, 2017

About 56 houses in Jebel Ali will be knocked down, said developer Nakheel, with many having fallen into disrepair

since their completion in 2003.

Families moved into the properties at Garden View Villas 14 years ago but many quickly moved out after cracks

appeared in walls and questions were raised about the build quality.

As recently as last year, families continue to be removed from villas with what Nakheel called issues of "structural

settlement".

The development is significant as it was among the first in Dubai to offer title deeds to expat buyers, shortly after

laws changed to allow foreigners to own property in the early 2000s.

Originally, three- and four-bedroom homes in the 208-villa development went on the market for about Dh1.5

million

Nakheel this week said demolition will begin this month and that reconstruction would "begin in due course".

Residents said they are tired of living in what feels like a "war zone".

Jan Webber has been in the neighbourhood since 2012 but last year she was told her family must leave their villa

because of what Nakheel this week described as "structural settlement".

The house hit with cracks and subsidence — the gradual caving in or sinking of an area of land — the family was

forced to move at their own cost, in excess of Dh13,000, to a property nearby.

They had been living next door to a derelict villa, kept awake at night by doors banging in the wind and by young

people making trouble. She and her husband got up in the night and wired the doors shut.

"We got fed up with the vermin of the villa next door, the banging doors, the kids going in and trashing it … it was

embarrassing when visitors came," she said.

The family had to delay their summer holiday and spend money on having the new villa cleaned, decorated and

re-landscaped. They initially returned to sleep in the old villa as there was no air conditioning in the new home

when they moved in last July.

On Mrs Webber’s street alone, half the villas are derelict

"It’s a shame as when we first moved in it was lovely. It was safe and quiet. I feel that it’s been forgotten," she said.

"I was trying for two-and-a-half years to get a villa here and now nobody wants them. It’s very sad. Some lovely

people live here."

Yasar Khan, a resident since last June, said living around the dilapidated villas is far from ideal.




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"The abandoned villas frighten the small kids," he said.

"My daughter and her friends say some houses are haunted. Other than that, it’s a safety and security threat and

an absolute eyesore to one of the most beautiful areas in town."

Pia Ault has been in Garden View Villas for five years.

"So many residents are moving out. The rent is high and service is terrible," she said. "They can’t get new people

to come in.

"They offered our neighbour two free months when they moved in January but they still couldn’t afford the

monthly rent, so moved to Jebel Ali Village."

She said there is much to be done, including security gates, better landscaping, and doing something with the

empty villas.

"Make it look like a finished neighbourhood, not a construction zone," she said.

Another resident, who asked not to be named, said she no longer allows her two children to play in the street.

"Every time my son plays football, the ball goes into the derelict area and it’s very dangerous, so I just don’t allow

them to play there any more. Kids are curious and they want explore so it’s very hard to stop them going into

these areas unless you’re with them the whole time."

She said in the three years she has been there, much has changed.

"I didn’t imagine that three years later it would still be like this. The security is poor, more people are leaving, and

it’s still very expensive. We pay Dh165k plus another Dh8,000 to be here and this is our view."


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DRAKE & SCULL LOOKS TO FINALISE

DH600M CAPITAL RAISE THIS MONTH, SAYS

CHIEF EXECUTIVE Thursday, April 6, 2017

Dubai-based contractor Drake & Scull International aims to finalise by the end of this month a capital-raising

exercise that will result in Dh600 million invested into the business.

Wael Allan, the company’s chief executive, told The National that alongside a binding offer from Tabarak

Investment to inject Dh500m into the business, it plans to raise a further Dh100m from shareholders through a

rights issue that will take place as part of a capital restructuring.

"This offer is subject to approval by [the regulator] Esca, and also subject to shareholder approval," said Mr Allan.

"We are expecting Esca’s response very soon and we are scheduling our annual general meeting for some time in

April. So hopefully we will have an outcome by the end of this month."

Drake & Scull last week filed audited accounts showing a Dh732.9m loss for 2016 and a negative cash balance of

Dh305m.

Mr Allan said that with the Dh300m it is set to receive from its former joint venture partner Omniyat for its stake

in the One Palm Jumeirah project, the business will have about Dh900m to plug its deficit and restart some stalled

projects, which will in turn generate additional cash.

"Looking at our 2017 cash flow and beyond, we should be cash-neutral hopefully this year and start moving into

cash-positive in the subsequent years," Mr Allan said.

The company also hopes to bring in more cash through the sale of other assets, such as some land holdings and

business units that have been deemed non-core, such as its Indian operations.

A restructuring of its management team is also currently under way.

Mr Allan, who was appointed last October, said that he was confident of being able to achieve a turnaround based

primarily on its core competence of winning major MEP (mechanical, electrical and plumbing) projects across the

Gulf.

"Many people have said ‘Why did you go to Drake & Scull? It’s got a lot of problems’. Honestly, it’s a very exciting

company to work for, has great entrepreneurial spirit and a great history. As an MEP provider, I truly believe it is

No 1 in the region. If I count MEP contractors who could do Dh500m jobs, I could probably count them on one

hand." He said that its panel of banks were being "extremely supportive", and the investment by Tabarak

Investment was a sign of the strength of the company’s brand.

Aymen Soufi, an analyst with the Tunisian equity research company Alpha Mena, said that the company also

needs to turn around its declining profit margins. Accounts filed last week showed that Drake & Scull remained

unprofitable even at a gross margin level, with contract costs outweighing revenues by Dh364m.




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"In fact, since its IPO, Drake & Scull has been suffering from a declining gross margin which resulted in a negative

gross profit for the past two years," said Mr Soufi.

He also said that most of its funding is of a short-term nature. Its audited accounts show that it is in breach of

banking covenants, and a conditional waiver regarding its bank debt has expired. This means that more than 91

per cent of its current debt is short term.

"You just can’t fund long term projects with short-term debts," said Mr Soufi.

Drake & Scull’s share price has fallen 8.5 per cent in the past three months to 46 fils on the DFM.


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BURJ KHALIFA APARTMENTS LOSE A

QUARTER OF THEIR VALUE IN 12 MONTHS Sunday, April 2, 2017

Sale prices and rental costs for the most expensive homes in Dubai were significantly lower in the first three

months of this year compared with 2016 as companies hired top-level staff at a slower rate.

Prices for apartments in Dubai’s Burj Khalifa have dropped by about a quarter on the secondary market over the

past 12 months, highlighting the weakening demand for luxury property, according to a new report by the

property consultancy Cluttons.

The company says that prices for units in Emaar Properties’ flagship tower dropped by 6.9 per cent between the

beginning of the year and the end of March, which it said was indicative of a much broader aversion to luxury

homes.

In the first quarter, prices for Hattan Villas at The Lakes have dropped by 13.5 per cent year-on-year and the

Hattan Villas at Arabian Ranches have dropped by 12.6 per cent. Apartment prices on the Palm Jumeirah have

fallen by 11 per cent.

The company said that the market softness stems from a lack of demand as a result of underlying affordability

issues and continued uncertainty over the health of the global economy.

"The rate of creation of senior-level executive positions has fallen and this is reflected in the lower level of

enquiries and budgets we are recording," said Faisal Durrani, Cluttons’ head of research.

"The redundancy programmes in the city’s finance and banking sector and oil and gas sector have all but run their

course, but the weak global outlook is putting other key sectors under pressure, including the hospitality and

aviation sectors, both of which are long-standing and historic cornerstones of economic growth. "

Overall, however, the firm said that the rate of price declines was slowing. Prices fell by 0.9 per cent during the

first quarter of this year, bringing the year-on-year decline to 7.8 per cent – a slight improvement on the 8.8 per

cent falls the firm reported during the 2016 calendar year.

It suggests that the market will bottom out by the end of the year, although it said there are a number of factors

that are likely to keep up the downward pressure on prices for now, including changing demands for high-level

staff, the introduction of value added tax and concerns over increasing supply, which is affecting rents.

For instance, completions of the Mira town houses and villas at Emaar Properties’ Reem Community are affecting

the more mature Arabian Ranches community next door.

About 1,200 units have been handed over at Mira over the past six months. These are generally renting for

Dh120,000 to Dh140,000 a year, compared with typical rents of Dh170,000 to Dh220,000 at Arabian Ranches.

Cluttons said that tenants were "aware of the burgeoning rental supply levels and are taking advantage of

conditions by seeking out the best perceived value for money".

Rival property broker CBRE also reported on Sunday that house prices and rents in Dubai both fell by about 1 per

cent during the first three months of the year.




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CBRE reported that a rush from Dubai developers to build thousands of new apartments before the start of Expo

2020 was pushing up the number of new homes due to be delivered in 2017 and 2018 to "well above" the five-

year average of 15,000. It said it expected these numbers to continue to rise in the short to medium term as new

master plans come on stream.

CBRE said fierce competition to sell off-plan apartments meant developers were building smaller units so that

they could offer cheaper deals and offering attractive payment plans where buyers were only required to pay

most of the costs after the property was built.

"Amid a flurry of off-plan launches the competition to attract investors is also rising, meaning developers are

having to become more creative in order to sustain desired levels of sales velocity," said Simon Townsend, a

director at CBRE.


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DUBAI TO EFFECT MAXIMUM

TRANSPARENCY IN PROPERTY MARKET Saturday, April 8, 2017

The rules and systems in Dubai’s property market are about to go through a complete overhaul.

While the most striking of the upcoming changes will be a brand new Rental Law governing individual real estate

categories, Dubai is in the final stretch of classifying all of its properties and buildings in the older parts of the city.

That means nearly all of Deira has been put through the scanner to see how far they are in compliance with the

various types of requirements.

It would mean that instead of an entire area or neighbourhood in Dubai being assigned a uniform rating, the new

classification would allow it to be broken down into ratings for individual properties and buildings within that

area. For landlords, it means future challenges to ensure their rental premises meet minimum accepted

standards, while for tenants it would mean greater transparency on what they are paying for. (This extends to all

types of rental assets in those areas. The new classification programme applies only to the established districts of

Dubai because the recently developed areas already conform to the more recent building norms.)

“This could mean rental sub-indexes for each area in future depending on how the properties are maintained or

built,” said Marwan Bin Ghalita, the Real Estate Regulatory Agency (Rera) head, at a media event early last week.

“Dubai’s property market is seeking maximum transparency for all stakeholders.”

It is in line with recent move to create a star rating system for estate agents in the emirate, each of whom have to

be licensed and assigned “gold”, “silver” and “bronze” ratings. A potential investor can check out how an agent has

fared in a particular year in terms of transacted properties during a year from the Dubai Land Department’s

database. And then take a decision on whom he wants to deal with. The space for fly-by-night brokers to dupe

investors has been tightened up considerably.

Last year, the government entity also made pre-approval stringent for overseas properties to be marketed or sold

in Dubai.

And there will be the new Rental Law, something that marks a major departure from the current norms. It will

mean individually crafted rules and obligations for four distinct property categories — residential, commercial,

malls, and those used for educational and health care functions. This way Dubai is moving away from one set of

rules seeing to the needs of all real estate types.

“Lease agreements are not only different for distinct asset classes, there is also considerable variation in intra-

asset classes,” said Sameer Lakhani, Managing Director of Global Capital Partners. “This could take into account

the lease duration, fitouts, grace periods, escalation clauses, etc. “This is especially true in industrial and

commercial contracts.”

Whatever version the final law will take — and it is currently before the legislative committee — it will recast the

equation between landlords and tenants. And it has to be said that going forward the rights of both parties in

contractual agreements will be balanced.




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“The current law has served its purpose and assisted in Dubai’s growth over the past years.” Said Shahram Safai,

Partner at the law firm of Afridi & Angell. “However, the current law is a one-size-fits-all solution. As Dubai grows

and becomes more complex, such a general law is no longer feasible.

“Shopping centre leases have very different considerations to a residential studio lease. The law also needs to

treat them differently in order to be fair to both tenants and landlords. This will assist in attracting more

sophisticated landlords and tenants who will be more interested in purchasing or renting.”

A unified rental contract is already in place

While Dubai works on giving the finishing touches to its new Rental Law, one crucial piece is already in effect. A

new unified rental contract went into effect last month, and among other things clearly stipulates what all parties

in the agreement should be required to do. And, from a tenant’s perspective, there are provisions for penalties if

landlords fail to deliver on their promise ... or in the terms of the contract.

“If institutional investors like Reits (real estate investment trusts) are to become more active, they will need to

know that the path to dispute resolution is straightforward and effective,” said Sameer Lakhani of Global Capital

Partners. “While incorporating all the complexities is difficult, the new rental template goes a long way towards

making the process more transparent.”

The Dubai Land Department is also working on regulations that would make it worthwhile for overseas Reits to

invest in Dubai property.

Source: Gulf News

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NEW FIVE-STAR HOTEL TO OPEN IN BUR

DUBAI Friday, April 7, 2017

A new five star hotel being built Bur Dubai will open in October 2011, it was revealed this week.

Sol Melia, the Spanish company behind the AED200m project, announced at the Arabian Travel Market that the

hotel would open on 12th October, to coincide with national day in Spain.

Andre Gerondeau, executive vice president of the hotel division at Sol Melia, said he hoped the hotel was the first

of many in the GCC.

"This is the first step towards realising our expansion plans for the region. We are currently negotiating with

potentil partners in Qatar, Saudi Arabia and Jordan and we hope to make further announcements in the near

future," he said.

Gerondeau added that the hotel would focus on guests coming to Dubai from Spain, a trend which has become

popular in the last few years, amounting to 30,000 in 2010.

He said this is set to increase as Emirates opened its first daily flight to Madrid last summer while Iberia operates

four weekly flights to Dubai. Meanwhile, Emirates flights to Buenos Aires and Rio de Janiero would bring in

tourists from South America.

"We believe that our traditional Spanish hospitality can offer a new dimension to customers in the region,"

Gerondeau said.

Source: Gulf News

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MONTHLY CHEQUES AND SOFTENING

RENTS AID DUBAI RESIDENTS Wednesday, April 5, 2017

Rather than pay up employee housing allowances in one go, many companies in Dubai are spreading it out in

monthly installments.

For tenants, it has become another useful tool in their negotiations with landlords to bring down rental payments,

according to a first quarter update on the property market from Cavendish Maxwell.

“The number of landlords offering flexibility to pay annual rent through multiple cheques has increased,” said

Sofia Underabi, Head of Residential Valuation at the firm. “In recent months, tenants have been able to negotiate

terms downwards on renewal.”

Rental declines

The rental declines are starting to show up in small units as well, which would be another boost for tenants

having to cut corners to meet expenses. When rents in Dubai first started to come under pressure, it was limited

to high-end apartments and villas in the city.

Now, declines are “more pronounced among studios in DIFC, International City clusters and Dubailand as well as

four-bedroom villas in Victory Heights,” the report says.

Even in Abu Dhabi, rentals were starting to see softening for smaller units, such as two-bedrooms at Al Raha

Beach and four-bedroom villas in Al Raha Gardens.

Larger units, meanwhile, are “facing occupancy pressure from weakened demand as job insecurity continues in

the emirate, especially for senior level executives,” said Manika Dhama, Senior Consultant.

According to the firm, about 1,200 units were completed in the first three units at Abu Dhabi’s real estate

investment zones.

Of these, 83 per cent were apartments, mostly in the Saraya, Corniche area.

If all goes according to plan, a further 7,800 units are scheduled for delivery during the rest of the year,

concentrated within Abu Dhabi City and on Al Reem Island.

In Dubai, the firm estimates about 2,500 homes to have been delivered in the first three months, broadly in line

with market projections of 3,000 plus units. But everyone will be keeping their eyes peeled on the job situation in

the country. Losses at key organisations dampened rental demand – both at the individual basis and those

engaged by major employers for staff accommodation.

More pressure is likely from further changes in the UAE’s corporate landscape.

“Continued downward pressure on housing demand is expected to continue in Abu Dhabi due to job uncertainty

resulting from high-profile mergers of government-backed entities,” said Underabi.

“These could also result in a readjustment of employee benefit packages such as housing allowances, thus

softening demand and resulting in further price declines.”




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Off-plan muscles out secondary sales activity

• Off-plan sales easily accounted for the majority of transactions in Q1-2017. International City and Dubai Marina

led as the main locations where secondary sales held sway, while off-plan apartment sales were led by

Downtown, Dubai Creek Harbour, Dubailand and Dubai South. For villas, the majority of transferred sales were

completed in Emirates Living and Reem, according to Cavenidish Maxwell.

* In Q1-17, the average price for a villa sold in Dubai was Dh2.2 million, mostly in areas such as Reem and

Dubailand. In comparison, the average during Q1-14 was Dh3 million plus.

* Average apartment prices transacted during Q1-17 were in the region of Dh1 million to Dh1.5 million.

Source: Gulf News

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NAKHEEL AWARDS DH136M CONTRACT

FOR DRAGON CITY HOTEL Wednesday, April 5, 2017

The Dh136 million build contract for the second hotel at Nakheel’s Dragon City development has been won by Al

Ghurair Contracting and Engineering Works. The overall project has a value of Dh176 million, which will see

construction of a 304-room Premier Inn property. This is one of the 16 hotels in Nakheel’s Dh3 billion hospitality

portfolio.

Premier Inn Dragon City is one of two Nakheel hotels being managed by the UK headquartered Premier Inn. The

first, a 372-room hotel at Ibn Battuta Mall, opened October last. The Dragon City hotel is part of a new master

plan that intends to transform the location into a “giant retail, residential and recreational complex of more than

11 million square feet”, says a Nakheel statement. The hotel, scheduled for delivery in 2019, will span 178,000

square feet in built-up area and over eight floors.

The Dragon City mixed-use complex comprises four million square feet of retail space, a twin-tower residential

component (with 1,120 apartments) and two hotels with 516 rooms between them. It is currently best known for

Dragon Mart — the world’s largest Chinese trading hub outside of China. The two malls pull in 40 million visitors a

year.

Dragon City’s retail expansion includes a 375,000 square foot showroom facility, currently under construction.

Nakheel’s expansion of its hospitality offerings will add 5,300 rooms (including serviced apartments) in Dubai. Two

are operational. Last month, the developer awarded a construction contract for a second hotel at Ibn Battuta

Mall. Others are at various stages of construction.

Source: Gulf News

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DUBAI’S DEVELOPERS CONTINUE WITH GO-

SLOW APPROACH Wednesday, April 5, 2017

Dubai’s developers are in no apparent hurry to rush through with their projects — only 3,100 homes were

completed in the first quarter of this year. This is a minuscule 15 per cent of the anticipated supply for 2017,

according to the latest report from Core Savills.

And if the pace continues only 15,000 units are likely to get completed this year, which would be a “50 per cent

shortfall from the announced number by the developers”, the consultancy adds. “This has in fact helped

developers to address oversupply concerns by aligning demand and delivering products at realistic prices, aiding

absorption.”

But for Dubai’s residents living in rented premises, the developers’ go-slow approach is of no use. If fewer homes

are delivered through this year, it means less chances of fresh supply making a deep dent into rentals. (In fact,

some of the rental slides locations such as Dubai Marina and International City faced last year had to do with

more supply entering, both within those clusters and within their vicinity.)

According to Dubai Land Department forecasts, just over 80 projects are due for completion in the emirate this

year, cutting across all property types. As against that more than 400 new projects were greenlit in the first three

months.




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Competitive

Core Savills reports that most of the new home handovers are taking place in communities at Dubailand and with

apartments at Dubai Silicon Oasis. In fact, the low to mid-market category accounted for 42 per cent of total

delivered stock in the first quarter of 2017. End users and investors are gravitating towards these more

competitively priced options. “Apartments in Dubailand and Jumeirah Village have witnessed stable sales prices as

low to mid-income occupiers are willing to trade connectivity for newer, better build, and value-for-money

products in these fringe areas,” said David Godchaux, CEO of Core Savills. “Off-plan sales are increasingly

regaining a foothold, particularly products from reputed developers — although having a detrimental effect on

secondary market sales, notably in prime apartment districts.

“While owners of existing properties try to sell their units, master-developers offer products positioned at

attractive entry points to a similar target pool, particularly investors. With a wider product base, developers can

exercise a higher level of price control on the submarket and largely have an upper hand over individual

landlords.”




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Overall transaction levels

The battle between off-plan launches and secondary market transactions will get more intense — and bitter —

going forward. Recent launches even at the most established locations have seen their developers offer prices 15-

20 per cent lower than the average there. This is quite apparent at the Downtown, where “increased demand in

the off-plan market caused a spike in overall transaction levels with a 112 per cent higher off-plan activity year-on-

year,” the report adds. “However, sales prices continue to contract (3.5 per cent drop year-on-year) as developers

are able to maintain a higher level of price control on the off-plan market.”

In comparison, sellers in the secondary market can only match those prices by selling at a discount ... if they are

lucky. If they are not, they will find it difficult to recoup their investments, especially those who bought in during

the peak years.

But Dubai Marina seems to be bucking trends. While recording the highest gain in off-plan transactions, sales

prices on the new launches were in fact marginally higher than the area average due to the “premium lifestyle

offerings and build quality,” Core Savills reports. “This led many buyers to lock in early-bird incentives,

resulting in a sentimental boost for the overall district with average sales prices stabilising and starting to show

early signs of recovery.”

Factbox: Across Dubai’s freehold clusters, rents remain under pressure

For single landlords with rented properties in Dubai’s freehold zones, it is a time to be generous. Or they will lose

out.

“The contraction in housing allowances at the mid to high-level positions has reflected on the rental performance

with many tenants negotiating with landlords during renewals and new lettings,” says the Core Savills report.

“Landlords who are slow to adjust to these conditions are losing tenants and facing further yield compressions,

mechanically caused by ongoing vacancy levels.”

The Views had the highest rental correction of 7 per cent, while it was down 5 per cent year-on-year at The

Greens. “These sub-markets were already at a premium and are now adjusting to the market conditions,” the

report adds. “Some tenants have moved to Dubai Marina as the district becomes more affordable.”

Even the affordable Discovery Gardens cluster had to face rental pressures, taking a 7 per cent hit. And tenants

are making a switch to nearby areas such as Al Furjan and Jumeirah Village, which “currently offer better products

for a similar or marginal rental premium”.

Source: Gulf News

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BUSINESSES CHASE VALUE IN DUBAI’S

OFFICE PROPERTIES Wednesday, April 5, 2017

The offices at JLT (Jumeirah Lake Towers) are proving a top draw for price-conscious businesses seeking a

permanent address, while Business Bay continues to build up a profile as the go-to prime commercial destination.

The situation in Dubai’s office market space is also being helped by the limited new capacities being created, and

even then only from master-developers in established locations.

All of which is coming in handy to nurse a property category that saw a 50 per cent decline in sales activity since

the peak in 2013, states the latest Reidin-GCP report. Local developers have responded by slicing up the floor

plates to offer smaller office space, and businesses seem to be finding it to their liking.

“In 2010, if 23 per cent of office sales were below 1,000 square feet, in 2016 this has nearly doubled,” said Sameer

Lakhani, Managing Director of Global Capital Partners. “This clearly shows that there has been a greater

preference for smaller plate sizes, which is in consonance with SME (small-to-medium enterprise) formation.




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Flexibility

“The argument for larger plates has been in the ecosystem for a while now and this has been something that JLT

also catered to with One JLT as well as their upcoming Burj 2020 tower. Business Bay clearly has more flexibility as

it has more to build out.

“But in both cases there has been a preference for “bespoke” office buildings, and this is now being addressed in

upcoming areas such as Majan, Meydan, Arjan and DWC (Dubai World Central.”

Office sales values dropped 13 per cent between June 2014 and Feb 2016 in Dubai, while that for residential

properties was an average 17 per cent.

The last year and a half has seen Dubai — and Abu Dhabi — office lease rates and demand come under pressure,

and extremely so during the second-half of 2016 for sectors reliant on oil and gas and allied services. Also

affected were older areas in the city, as well as office properties/buildings that are showing their age.

But for office landlords/investors in Dubai, the last four years continue to offer a net plus. Across Dubai,

commercial rents are still up 24 per cent between 2012-16, while for Deira — the city’s traditional commercial hub

— it was a plus 19 per cent. For the JLT cluster, the gains in these four years translates into 49 per cent.

“JLT seems to be the clear winner — there are a number of reasons for this which include its free zone jurisdiction,

the changing business environment geographically as well as better infrastructure,” said Lakhani. “It is likely that

older areas will gradually see an erosion of rents as newer office districts come to fruition.”

But the DIFC cluster still remains the priciest office location, commanding an average of Dh196 per square foot,

while Tecom’s would be Dh160.

Trend

“It will always be the case that free zone rents will be higher than non free zone jurisdictions,” said Lakhani. “This

is because there is clearly a premium that is paid for certain category of licences. Outside of the DIFC, this is most

seen with the burgeoning eCommerce sector.”

Apart from their being fewer new office launches, of the projects underway, the completion rate in each of the

last two years was below 50 per cent, and “similar to the trend witnessed in the residential space,” states the

Reidin-GCP report. “But in 2014, the realised supply exceeded what was estimated by analysts, indicating yet

again the flaw in estimates that did not account for the backlog of projects coming to completion. This is a trend

that is expected to continue.”

This year, expectations are for new office handovers to add 750,000 square feet and another 450,000 in the next.

“These supply figures will likely be lower given the historical trend; however, we expect realisation rates to ratchet

higher in 2019 and 2020 as an increasing number of projects come to completion,” the report adds.

Factbox: Market correction gives time for office market to settle down

* Much of the oversupply that was there in Dubai’s office market has been taken up. And the situation is also

changing with respect to a flood of multiple strata titles in office properties. “There has been demand for single

strata buildings, this will likely be supplied and will pave the way for commercial Reits (real estate investment

trusts) to set up in the next few years,” said Sameer Lakhani of Global Capital Partners.

* Apart from Business Bay and the Tecom-promoted zones, an office location for the future is Dubai South, which

will have a dedicated office cluster. There will be office blocks in parts of Dubailand, and these too will develop

over time.




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Source: Gulf News

Back to Index




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‘UBERFY’ THE REAL ESTATE EXPERIENCE

Wednesday, April 5, 2017

When one thinks of real estate management, it conjures up images of complex layers of transactions, from

leasing and rent cycles to resident and tenant services, complaint handling, facilities management (FM),

maintenance and much more. Managing properties effectively requires synergy between the various stakeholders

— from property owners and FM providers to property management companies, suppliers involved in servicing

the real estate as well as the customers using the property. Only through a seamless integration of managing the

physical aspects of a property, optimising the financial health of the asset and delivering its service components

can real estate operators and owners hope to achieve continued customer satisfaction and optimised bottom

lines.

Technology to the rescue

While there are several proprietary and generic technology solutions that can be customised to client needs, a key

challenge is to simplify the labyrinthine real estate processes, while remaining configurable and scalable. This is

where Yardi Systems comes in. Established in Santa Barbara, California, in 1984, Yardi has been focused on

investment and property management technology solutions for real estate for more than three decades,

spanning both commercial and residential spaces.

In simple terms, Yardi is an enterprise resource planning (ERP) system for real estate. “We help our clients collect

rent,” explains Kevin Yardi, vice-president of global solutions and son of Anant Yardi, the founder and president of

Yardi Systems, on the sidelines of the recent Yardi Advanced Solutions Conference at the Grosvenor House Hotel

in Dubai.

Expanding on Yardi’s functionalities, he adds, “Our backbone is an accounting platform. Typically, buildings have

expenses, and then there is revenue from the buildings. So our platform is an accounting system that helps our

clients understand the expenses and the rent and whether the building is financially sound.”

While the comprehensive solution encompasses the entire spectrum of real estate transactions, it consists of

three key components. The backbone of Yardi’s signature Voyager solution is the accounting platform that helps

property operators and owners manage their leasing and billing cycles effectively. A dedicated module for

facilities management further facilitates maintenance, both break and fix, as well as preventive.

The Yardi suite also includes the Café product range, which in essence is a web portal, a consumer-facing

interface, that allows clients, operators and real estate companies to customise and market their properties

better by creating a brand for their properties. It allows users to upload pictures and offer a walk-through to

detailed specification updates. The functionality also extends all the way down to downloadable apps for mobiles

with a dedicated interface for the different stakeholders such as vendors, maintenance technicians, tenants or

owners.

Explaining the objective behind these role-based apps, Kevin Yardi says, “We want to simplify, streamline and

facilitate real estate transactions, whether it is buying a building, managing a building, leasing a property, making

sure that it is maintained, [and taking care of] the accounting, budgeting and forecasting. We want to in a sense

‘uberfy’ those; we want to help our clients manage those transactions. We have different tools available for

different users and so the user experience that we expose to a prospect looking for space is tailored to them, the

user experience that we expose to an owner or an investor is geared towards them and so on.”

USPs




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So what can property operators and owners hope to gain from the Yardi property management solution?

“It’s quite a broad spectrum, from core accounting systems and FM systems all the way to modern websites and

self-service mechanisms, to make it easier for tenants, residents, owners and operators to manage their

properties,” says Neal Gemassmer, vice-president, international.

The solution features, strengths and benefits can broadly be divided as:

* Focus on real estate. Yardi’s core strength lies in its dedicated focus on the real estate sector for 35 years, versus

other software companies creating generic ERP or accounting software targeting several industries. Years of

experience in real estate across geographical territories and market segments have given Yardi a keen

understanding of the changing needs of clients, as well as the varied regulatory requirements of the real estate

industry in different parts of the world.

* Flexible and scalable. Yardi solutions are flexible, scalable and configurable to real estate variables such as a

client’s expansion plans, tax implications, changing real estate rules, etc.

* Suitability. The solution is suitable for a wide range of clients, from small to large real estate firms to individual

owners and operators of single homes and entire communities and office buildings, to big retail operators,

property management companies and investors.

* End-to-end solution. Yardi is a comprehensive stack for end-to-end real estate management, ranging from back-

end billing and maintenance to the front-end marketing and resident management. Operators can service all their

real estate needs at one window.

* Resident management portal and app. Managing residents or tenants and providing them with an enriched

experience and access to services is a key differentiator, impacting why one would choose a particular property

over another. A key USP of Yardi’s solution is the seamless and comprehensive access to services that it offers

residents and tenants, whether registering air-conditioning complaints or checking on post-dated cheque due

dates.

* Real estate in the cloud. Kevin Yardi says provisioning their software through the cloud helps Yardi to become

an extension of a client’s IT infrastructure, while being secure, scalable and cost-effective. This leaves clients free

to focus on building and managing assets, instead of worrying about adding mobility capabilities or server or

storage capacity or managing software upgrades.

Start-up mentality

While Yardi is a privately held company, it has enjoyed significant success owing to its start-up mentality and

agility, says Kevin Yardi. Gemassmer adds that a multinational culture, while being a family-run business, along

with innovation and an entrepreneurial vision, are other reasons for the continued growth of the company, which

employs more than 5,000 people.

Yardi has enjoyed an annual growth rate of 50 per cent, with a significant portfolio across the UAE, Saudi Arabia,

Oman, Bahrain, Kuwait, Egypt, Turkey and Qatar. Kevin and Neal feel educational and awareness initiatives, word-

of-mouth marketing and an ability to service and support the expansion of their existing clients are the reasons

for the company’s growing success in the region.

Yardi’s client base ranges from property consultancy firms such as JLL and Better Homes, to several individual

owners of multiple properties and individual retail owners such as Dolma Mall and Deerfield, extending to some

of the largest operators and owners of retail in the region, such as Majid Al Futtaim, Emaar and now Arabian

Centres in Saudi Arabia.




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The company says it will continue its aggressive regional growth plan, while operators can expect to benefit from

Yardi’s foray into the internet of things (IoT) and energy-saving solutions.

Source: Gulf News

Back to Index




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MANAGING RESERVE FUNDS IN JOINTLY

OWNED PROPERTIES Wednesday, April 5, 2017

The Real Estate Regulatory Authority (Rera) sets specific guidelines and legislation concerning the management of

jointly owned property in Dubai. Defined by the Direction for Association Constitution issued in accordance with

Law No 27 of 2007 as “the whole or part of a building or land, divided into units intended for separate ownership”,

jointly owned properties include apartments, villas and whole communities sharing common areas. The building

or land is typically managed by a firm appointed by the owners’ association (OA) to administer and operate the

day-to-day tasks of maintenance, security, cleaning, finance and the like. Rera requires the OA or the OA manager

to set budgets and establish two separate funds – the general fund and the reserve fund, both contributed to by

the owners through a service charge.

The general fund is intended to cover routine maintenance service costs and other day-to-day expenditure of a

recurrent nature. The reserve fund “shall comprise expenditure of a capital or non-recurrent nature and other

expenditure that should reasonably be met from capital”, according to the 2007 law. This includes the

replacement of wasting assets — fire suppression equipment, facades, AC units, lifts, etc, all of which will reach

the end of their useful life and require replacement within the lifespan of the building, and probably within your

term of ownership.

Reserve fund study

One of Rera’s requirements for service charge budget approval is a formal reserve fund study. In order to work

out how much money needs to be saved to pay for building assets as they expire in the future, surveyors will

gather all relevant data on a property through a two-tier approach and assess the current condition of each asset.

They will complete a comprehensive examination of factors, including the asset type, its location and exposure,

how well it was fitted, how well it has been maintained and how these factors have affected the remaining useful

life of the asset. This will then identify the year in which the asset should be replaced. This forecast of life

expectancy allows the surveyor to formulate a financial table, taking into account the current replacement cost

and expected future cost, the effect of inflation and how this is offset by account interest. The objective is to

reveal a forecast of expenditure over a time horizon of around 60 years and to show this as a 10- or 20-year

window. Forecasts over such long periods will prove to be inaccurate if they are not updated every three years to

account for changes in maintenance practice, inflation and account expenditure.

Consultants carrying out the study must hold the “Property Observer” trade licence, signalling that they have

sufficient experience in building construction and condition to understand the basics of the built environment

being considered. It should not be assumed that all firms with the licence can undertake a reserve fund study. It

should be carried out by competent consultants with sufficient local experience, in accordance with international

standards of practice and tailored to suit the proclivities of Dubai.

Underfunded reserves

One key trend that we have found when carrying out a comparison on what level the reserve fund should be

versus what is currently being invested, is that there is a considerable deficit. It is not difficult to imagine why this

may be, for example, non-payment of service charges, incorrect use of funds for general items or payments for

correction of latent building defects caused by sub-standard contractors. However, in our experience, the main




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reason for the deficit is due to the service charge being set too low in the first place, often due to assigning

historic rates from other (non-comparable) buildings. This may set an attractively low service charge for potential

owners, but it clearly does not represent the building’s current costs or reflect good practice.

This short-sighted economy can have disastrous consequences for a building in the future. If funds are not

available to replace key building assets such as chillers, water tanks or fire pumps in the future, owners may face

a “special levy” in the form of a large lump sum to pay. If this cannot be paid by some owners and if the building

around your property is falling apart, this will have an extremely detrimental effect on property value.

Ensuring correct level of reserves

For owners in jointly owned property, check with your OA that a proper reserve fund study is in place. This should

be carried out by a competent consultant, in accordance with Rera requirements. It should be updated at least

every three years to account for changes in inflation and to reflect the maintenance standards of the facilities

management team. This can have a huge effect on the lifespan of a building’s assets. It is then up to the manager

to ensure that reserve contributions meet the plan or a programme of gradual increase is in place. The best way

to keep the reserve fund costs as low and as accurate as possible is to carry out the design stage, as a life-cycle

costing exercise, where the whole cost of a specification is revealed.

The writer

Craig Ross is head of project and building consultancy at Cavendish Maxwell.

Source: Gulf News

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SALEH ABDULLAH LOOTAH: BE UNIQUE TO

SURVIVE Wednesday, April 5, 2017

Dubai-based Lootah Real Estate Development (LRED) is confidently riding out a lull in the property market, having

released its unique portfolio of high-end villa and apartment projects — Shamal Terraces and Shamal Residences

— in Jumeirah Village Circle (JVC). LRED is also expanding Ewan Residences in Dubai Investments Park, a

pioneering mixed-use gated community that was launched in 2006, making it a front runner in the market at that

time.

Work has also started for the 135-apartment Waves building also in JVC, which will be ready for delivery in the

second half of next year.

In an interview with PW, Saleh Abdulla Lootah, executive director of LRED, speaks about the resilience of the

Dubai real estate market and the need for novel concepts.

Is Dubai the main focus of your projects?

Our reputation in the UAE and the region goes back several decades, especially in real estate, construction,

logistics, community and retail development, foodstuff and education. We want to keep that corporate tradition

and integrity high. While our real estate projects are focused on Dubai and we have already delivered more than

1,000 units, the Lootah Group has active businesses in Saudi Arabia and the other Gulf countries. Dubai’s real

estate sector has gone through boom and bust phases. But now the market is more mature, having cleaned up

the previous mess and the consumer is more knowledgeable and sophisticated.

So what does the consumer want?

The consumer is looking for developers who can be trusted, have a track record and have distinct projects. This is

what we want to achieve. If you cannot create something unique, you will not be able to survive. Before we launch

a project, there are months of planning that go into it, followed by getting the mandatory permissions. And

although we have a strong relationship with banks, we try to use our own financial resources. We don’t want to be

too heavily dependent on bank finance.

Does the overall global situation affect you?

We see it as an opportunity. You can get some good deals in terms of land pricing. Dubai has always been a

unique destination. It is difficult to imitate the kind of infrastructure, tourism facilities and the ecosystems in place

here. As a mega city, we will continue to be attractive and have an advantage. There is no doubt parts of the

global economy have slowed down, but we can wait. As long as the market picks up, Dubai will be resilient. I think

the market is healthy. Being steady is healthy for Dubai.

What trends do you see?

People look for a nice lifestyle when investing in property. The best amenities have to be provided and the

location has to be unique.




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We look at the product design and match it to the expectations of our end users. We aim for perfection and we

design keeping in mind the end user. We have in-house designers and a panel of experts and consultants who

have a track record and have worked on similar projects. We use their expertise whenever needed.

Have you limited the offering of Shamal Residences to studios and lofts only?

We believe this kind of product was missing in the market. These are very high-end studios and one bedroom

apartments from 500 sq ft at Dh1,700 per square foot. These are priced on the higher side and suited for singles

or the newly married who are looking for quality homes. We have successfully closed the sale of the first phase of

Shamal Residences. We had 259 units (204 studio and 55 loft apartments) ranging from 500 sq ft to 850 sq ft in

the two buildings of the Residences, and all have been sold out.

What about your other offering, the Shamal Terraces?

The two phases of Shamal Terraces have 28 villas. And the third phase comprises 20 villas of three to four

bedrooms. Only a few ready-to-move-in villas are available for buyers on a first-come-first-served basis. The

majority of buyers are end users, mostly European and some UAE nationals, while the investors are from Pakistan

and India.

Tell us about the payment plans

The typical payment plan is 10 per cent upon booking, 10 per cent after three months, 10 per cent after the next

three months, 20 per cent upon 50 per cent completion of construction, and 50 per cent upon completion of

construction. Up to 80 per cent financing is available for UAE nationals.

Any update about Ewan Residences in Dubai Investments Park?

Ten years back, we created the highly successful Ewan gated community. The Ewan Residences have 79 buildings

with up to 12 apartments in each block. The apartment blocks have been designed in a unique manner to make

them affordable to small, medium and large companies in Dubai. It is a secure, gated community with beautifully

landscaped gardens, a state-of-the-art recreation centre, swimming pools, a jogging track and community facilities

that include play areas for children throughout the complex.

What is your latest project?

LRED’s next project is The Waves in Jumeirah Village Circle. It is a classically designed building with 135

apartments. The groundbreaking has been done after initial approvals from the relevant authorities. The project

will be ready for delivery in the second half of next year.

Source: Gulf News

Back to Index




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UNDERSTANDING THE SHIFT IN REAL

ESTATE DEMAND Wednesday, April 5, 2017

There are always perceptions of oversupply and undersupply in the Dubai real estate market, which is largely

determined by where we are in economic and industry cycles. As the market undergoes structural changes to

accommodate shifts in demand, market segments will exhibit different levels of either oversupply or undersupply.

For example, the luxury segment in Dubai is currently showing signs of oversupply, while the same cannot be said

for the affordable segments. This is because there has been a shift in buyer demand, both from both owner-

occupiers and investors, towards the more affordable segments. This reflects a natural consequence of economic

growth, market maturation and overall development as the middle and lower-middle socioeconomic classes start

to expand as a proportion of the overall population.

A growing economy

This expansion is to be expected as the economy grows, and, as we know with any growing economy, imbalances

are frequent and take time to be eliminated. Taking the long-term view, the existing oversupply in the market is

likely to be absorbed well before 2020. It is estimated that there will be at least another 100,000 units added to

the market in the next 10 years. On the face of it, that number hardly seems sufficient. From a macro level, Dubai

needs people to support an economy that is estimated to grow more than four per cent this year, but will

increase exponentially as the end of the decade draws near. The reason for this growth trajectory is the

commitment and determination to deliver on initiatives such as the World Expo 2020.

The Expo alone is expected to generate an additional 270,000 jobs and drive demand for housing and commercial

facilities that by and large don’t currently exist. It is estimated that the number of people living in the emirate will

grow to around 3.4 million by 2020 from around 2.7 million today.

Beyond oil

While the price of oil is a big economic issue for the region, Dubai has managed to develop a level of

diversification that has allowed it to weather the current fragility of the oil industry. With oil representing only

about four per cent of Dubai’s GDP, the effect of the decline in oil prices has not been as drastic as some may

think. Dubai’s economy is being driven by fundamentals such as tourism and trade and the focus of spending will

be on new projects to grow these all-important, revenue-generating economic segments and further

diversification.

Dubai attracted 14.9 million visitors last year, continuing an uninterrupted growth trend since 2010. The emirate

is well on track to attract more than 20 million visitors in 2020.

Human capital

It has been estimated that 277,000 extra jobs will be generated to ensure the estimated 20 million visitors to the

Expo see Dubai in its most favourable light. This is expected to generate significant demand for real estate assets.

Dubai also has an advantage over many Western economies in that looking forward there is a requirement for

intellectual and human capital.




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Attracting this critical resource will support economic growth, providing additional impetus for the realty industry

to enjoy the predictable surge in demand for accommodation and commercial space of all types, from labour

accommodation and offices to warehouses, apartments and executive villas.

Affordable housing

The structural shift towards more affordable housing will not only serve to accommodate the expected rapid

population growth associated with the 2020 Expo, but also serve as an important factor in the development of the

Dubai economy overall. Every emerging economy needs to develop a strong middle class as its expansion is

critical to sustainable growth. In addition, for Dubai to compete effectively on a regional and global basis, it needs

to ensure that the cost of doing business in the emirate does not position it as an outlier when entrepreneurs or

corporations are considering alternatives for their operations.

Lucrative payment plans

There are investment opportunities that had not been seen previously, while developers are also offering

lucrative payment plans, which is unprecedented in the market. Whether it’s an affordable studio or a luxury villa,

there is an investment opportunity in every segment of the market.

Why buy property this year?

1. The market is offering best value for some time. A slew of affordable properties have been launched over the

past two years and there will be more launched this year. This structural shift in the market has been a boon for

first-home buyers, as affordability, or a lack thereof, as a reason to continue to rent is disappearing fast. Whether

it’s an affordable studio or a luxury villa, there are great-value opportunities in every segment of the market,

supported by the most affordable payment plans seen in years.

2. The value of your property will be increasing as the US dollar continues to strengthen this year. The US Federal

Reserve is committed to normalising interest rates this year, which is good news for investors who are holding

assets denominated in or pegged to the US dollar.

3. Dubai’s economy is being driven by fundamentals such as tourism and trade. Hosting the World Expo will

provide additional impetus for the industry to enjoy continued growth and the predictable surge in demand for

accommodation and commercial space of all types, and this will have a significant effect on property values.

4. Owning property will allow you to achieve your financial security goals by building an asset base that will serve

you and your family well into the future.

But the most compelling reason Dubai’s property market is such a tempting investment opportunity is the

financial return. With a superior investment yield and return on investment, Dubai is hard to beat over the next

five years. Properties in the burgeoning affordable segment continue to provide gross rental returns of eight per

cent and even up to ten per cent. With the recent market price correction and the slew of financial incentives that

have been introduced, these yields and returns can be achieved with comparatively minimal capital outlay. And

the good news is both rental yields and property values are expected to increase as the Expo draws near.

The writer

Mohanad Alwadiya is the CEO of Harbor Real Estate and a senior advisor and instructor at the Dubai Real Estate

Institute.

Source: Gulf News

Back to Index




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BARRIERS TO HOME OWNERSHIP IN THE

UAE Wednesday, April 5, 2017

Eight in ten people in the UAE want to buy a home in the next five years, according to Beyond the Bricks, a global

report released last month by HSBC. The report, which assessed the views of more than 9,000 people in nine

countries and more than 1,000 respondents in the UAE, points to certain barriers that need to be addressed to

encourage more people to purchase homes in the UAE and not elsewhere.

The report, which focuses on non-homeowners, indicates that the respondents are interested in buying their first

homes “anywhere, not just in the UAE”, says Kunal Malani, HSBC Middle East’s head of customer value

management, retail banking and wealth management.

Developers therefore need to cater to the needs of first-time homebuyers, who account for a sizeable chunk of

the UAE market. According to the report, the UAE has a much bigger proportion of first-time homebuyers than

the global average, with around 82 per cent of non-homeowners looking to purchase their own homes in the next

five years. “This is higher than the global average, where 73 per cent of non-owners intend to buy property in the

same period,” says Matt Colebrook, HSBC’s regional head of retail banking and wealth management.

The report also shows significant barriers to home ownership, including insufficient salary, which was highlighted

by 62 per cent of respondents.

Expensive down payments was also cited in the survey, affecting 42 per cent of respondents.

Barrier 1: Finding the right house

One of the first obstacles for the budget-conscious is to find the right property to live in. Craig Plumb, head of

research at JLL Middle East and North Africa, says there is currently a big shift in buying patterns in the UAE. “Until

five years ago the market was investor dominated,” he says. “Today, people are looking to be owner-occupiers

intending to live in an apartment. Increasing mortgage transactions indicate that the market is shifting from

speculators.”

Data from the Dubai Land Department shows that mortgage transactions are increasing. Malani says, “We are

seeing a shift to home ownership and witnessing a higher number of mortgages. Actually, the number of

mortgages has doubled in five years.”

When buying a home to live in, there are several factors to consider. Affordability particularly stands out. Over the

years, developers have been solving this hurdle by creating smaller, cheaper homes, which may not be favourable

to tenants currently occupying larger units.

“The size of homes is getting smaller,” says Plumb. “Traditionally, UAE apartments have been quite large, which

means the ticket price is large. Affordable homes are addressing the issue by delivering smaller units.”

Solution: While the units are getting smaller, planning efficiency has gone up, both in terms of home layout and

community facilities. A homebuyer may benefit from weighing the amenities and checking how efficiently the

space has been used.




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“Developers today are also building amenities,” says Malani. “The communities are more complete with

residential and retail facilities, along with schools and mosques. The space that you have is better managed.”

Barrier 2: Monthly payments

The research shows that despite low salary growth, home ownership is a desirable goal. Citing external data,

Beyond the Bricks says that while average property prices in the UAE fell by 5.4 per cent last year, salaries in real

terms are expected to grow by only 0.5 per cent this year. About 62 per cent of non-owners in the UAE highlight

the need for a higher salary as a stumbling block to home ownership. Exacerbating this challenge, the research

shows that people admit to not planning carefully, with 82 per cent of non-owners in the UAE who want to buy

their own homes saying they only have an approximate or no budget at all.

Solution: Being realistic may be an answer. Malani says, “While we do appreciate that the market conditions today

are challenging, there are clearly areas where people can make improvements. By getting a full view of your

finances and remaining committed to a budget, you can go a long way towards reducing existing and future pain

points.”

A good rule of thumb is to set aside what you intend to spend on rent or buying a property. “Dubai is still

relatively expensive to buy,” says Plumb. “Most people want to spend 30 per cent of their income on a home. In

Dubai this can be as high as 35-40 per cent for renting or buying [a house].”

Barrier 3: Deposit

Forty-two per cent of home aspirants said that saving for a deposit is part of the problem. Among millennials

(those born between 1981 and 1988) who intend to buy their own homes, 45 per cent said that they have not yet

saved enough for a deposit, which, for first-time buyers, may be up to 25 per cent of the cost of a property worth

Dh5 million.

Solution: Malani maintains there is much that can done. For example, one can move in with a relative to save for a

deposit, although only six per cent of millennials surveyed intend to do so. This would also reduce the need to

depend on other sources, such as parents. Malani says half of millennial homeowners have asked support from

their parents for funding — the highest globally according to the survey. In the UK, only 35 per cent of millennial

homeowners relied on their parents, while it is 32 per cent in the US.

Cutting down on lifestyle spend is the other piece of advice. The research shows that the millennial non-owners

intending to buy are willing to make sacrifices, with 45 per cent saying that they would spend less on discretionary

expenses.

Barrier 4: Waiting too long

Real estate markets are cyclical in nature. Much of the work of timing a purchase involves research on the right

property and the right time to buy or get a mortgage. But Malani explains the decision is “less about timing the

market, but more about finding a home — to find that corner villa unit, with a little corner space, or just a better

view. They are thinking long term.”

Solution: The right time to buy is often when you are ready. As prices go, Plumb maintains that the market has

bottomed out. “Sales prices have fallen about 13 per cent from a peak in mid-2014,” he says. “There has been zero

change in prices in the last quarter, which means that we are probably at the bottom of the cycle. This is the first

time that this has happened in 18 months.

“With prices having declined over the past 18 months, this year will continue to be a buyer’s market in Dubai. Our

research shows that sales prices are now bottoming out, although transaction volumes remain low. We believe

the market is close to the bottom of its cycle, with some increases possible in the second half of 2017, as the




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market recovers again over the next few years. Given these conditions, now is a good time for those interested in

buying property in Dubai.”

Waiting too long may be counterproductive. “We are expecting the next movement to be upward — it won’t be

dramatic — in the second half of the year,” says Plumb.

Barrier 5: Pricing the finance

This is akin to a buyer’s remorse when bills pile up and new homeowners feel overwhelmed by the size of their

commitment. According to the Beyond the Bricks survey, among all homeowners who have purchased property in

the last two years, around 67 per cent spent more than they had initially budgeted. The most common reasons

for this were broker fees (64 per cent), legal fees (62 per cent) and renovation costs (57 per cent).

When the payments are complete, Malani says, “You have still only bought the house. But first-time owners are

buying a home. They want to renovate or fix the kitchen... They are not budgeting for it.”

Solution: It is important to plan and anticipate expenses, such as broker’s fees, transfer costs and renovation

expenses. “We always advise people to budget about 35 per cent of the [property’s] value to cover the deposit

and the closing cost when looking to buy a home, so that they can accommodate any unexpected costs and fees,”

says Malani.

Source: Gulf News

Back to Index




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HOME INVESTORS ZERO IN ON DUBAI’S

NEXT MEGA-MALL LOCATIONS Tuesday, April 4, 2017

Investors looking to acquire properties near Dubai’s next generation of mega-malls can have their pick. At MBR

(Mohammad Bin Rashid) City, with the launch of full-scale construction for the Meydan One Mall, they will be able

to access units at about the Dh1,100-a-square-foot-and-over range.

That compares with the Dh2,000 per square foot average at the Downtown and near The Dubai Mall and the

Dh1,600 psf average for an apartment at Dubai Creek Harbour, where Emaar has launched The Tower — the

world’s next tallest structure — and is to unveil a full-scale retail destination to serve the 6 square kilometre

location. (There is also the Deira Islands Mall, but the towers surrounding it will only offer apartments on lease.)

“MBR City could be a longer term beneficiary from any amenity that is being built within and which could add

value for an investor,” said Latif Habib, CEO of Fortune 5, which is handling the sales of the homes at Cassia, part

of The Fields development from G&Co. (The four-bedroom units are being offered for Dh3.2 million. The Fields

itself is part of District 11 at MBR City. G&CO is also the name behind the Millennium Estates, also part of MBR

City.) If investors still need convincing, buyers are being offered a Dh460,000 rental guarantee over two years at

Cassia units. “Even if the rentals in the adjoining areas are Dh180,000-Dh190,000, we remain reasonably confident

of achieving our guarantees,” Habib said.

“The district already features a residential component in the form of the Meydan built homes for Emirates airline

staff. With its own retail elements and plazas as well as three highway exit/entry routes, the expectation is that

District 11 will tap investor interest.”

Other developers are also zeroing in on the wider MBR City. Recently, Azizi Developers announced it had picked

up 190 plots there, while the Sobha Group recently confirmed that 70 per cent of phases 1 and 2 at Sobha

Hartland have been sold. It comprises of G+8-storey buildings. (Phase 3 of the project will be launched shortly.)

Source: Gulf News

Back to Index




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CLOCK TICKS TO FIND BUYER FOR DUBAI’S

COSTLIEST PENTHOUSE AT DH200M Tuesday, April 4, 2017

There are multiple offers for a Dh200 million penthouse at Al Habtoor City on Shaikh Zayed Road, and which

could turn out to be the costliest apartment going in Dubai. A decision on the eventual buyer could be taken

shortly for the unit that takes up three levels at the G+73-storey Noora Tower in AHC.

“We are calling in letters of intent for the penthouse, which will be 30,000 square feet,” said Umar Bin Farooq, CEO

of One Broker Group, the estate agent which has the exclusive sales and marketing rights for the tower.

“The tower will be completed by December, but the intention is to confirm the buyer well before so that he can

provide inputs on how his property should be.

“Despite the multiple interest, we will not engage in an auction process to finalise the buyer. We don’t want a

bidding war. Instead it will be done through internal vetting in collaboration with the AHC master-developer, the

Al Habtoor Group.”

Noora Tower is part of a mixed-use development that enjoys prime access to the Dubai Water Canal and features

prestige hotel brands such as W and St. Regis. The entire area already occupies a heightened degree of

prominence, brought on by the convergence of the Canal and its location off Shaikh Zayed Road. Two further

high-rises are in development, but these are not freehold.

Meanwhile, another penthouse is aiming to set the record for the priciest apartment around, this one by Omniyat

Properties’ at its One Palm Jumeirah project. Again, the developer has fielded multiple enquiries and to date has

not officially confirmed that a buyer has been identified.

As for AHC’s Noora Tower, there will be a further three penthouses, but considerably less expensive, at Dh60

million apiece.

For the record, the costliest properties in Dubai’s freehold clusters have been a couple of villas that have tilted the

scales at well over Dh200 million. These were at Emirates Hills and at the Palm. There was another Palm property

that sold for Dh180 million plus in recent years.

Demand for super-luxury properties remains understated at the moment, with much of the action shifting to mid-

market and lower. Dubai’s developers had also changed tack in response, feeding the buyer demand for optimally

priced properties of smaller dimensions and with comparable price tags.

“But right at the top end of the marketplace, there are always investors who want to pick up trophy assets,”

Farooq said. “They may take their time … but they are very much there.”

Source: Gulf News

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RAK PROPERTY SECTOR VALUED AT

DH4.95B IN 2015 Tuesday, April 4, 2017

Ras Al Khaimah’s real estate sector reached a value of Dh4.95 billion in 2015, up from Dh3.4 billion in 2011, a total

percentage growth of 45 per cent, according to a study by Ras Al Khaimah Chamber of Commerce.

Annual growth in the sector reached 15 per cent per year between 2011 and 2015.

The real estate sector ranked third after the industrial and tourism sectors in its contribution to Ras Al Khaimah’s

total capital formation in 2015, accounting for 13.3 per cent (Dh1.21 billion).

Source: Gulf News

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LOOKING UP: 1 IN 5 SUPER-TALL

COMPLETED BUILDINGS FOUND IN DUBAI Tuesday, April 4, 2017

Dubai is known for its skyscrapers, many of which had become a platform for daredevils arrested after grabbing

their 15 minutes of fame through hair-raising acts.

Now, a listing shows the city hosts 19 “supertall” buildings out of the top 100 skyscrapers in the world. Yet it is en

route to bagging the 20th too, but the final height of its next super-tall skyscraper remains a guessing game for

construction gurus.

A listing of The Skyscraper Center of the Council on Tall Buildings and Urban Habitat (CTBUH) cites Dubai as the

city that hosts nearly 20 per cent of the world's tallest completed buildings.

An infographic published by building information provider Emporis shows Burj Khalifa, which stands at 828

metres, still at the undisputed top spot for the last seven years.

But the race is on for the world's tallest man-made structure.




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Several other buildings — including the under-construction 1-km Kingdom Tower in Jeddah, Saudi Arabia as well

as another super-tall building which broke ground in Dubai last week, called The Tower at Dubai Creek Harbour —

are vying to dislodge Burj Khalifa’s stature.

The final height of this upcoming Dubai skyscraper was not revealed.

But the developer — a joint venture involving Emaar Properties and Dubai Holding — confirmed that it has set its

sights on nothing less than the tallest of the lot.

Emaar Properties built Burj Khalifa, which was inaugurated in January 2010.

Cayan Tower

Dubai has a total of 2,419 buildings — 1,446 existing and 311 under construction — based on an Emporis listing.

In 2008, developer Nakheel unveiled plans to build the world's tallest tower next to Dubai’s Ibn Battuta mall in

Jebel Ali — at a dizzying height of over one kilometre — but that plan had been shelved...for now.

Another listing shows that in 2016, 128 supertall buildings were completed — the most of all time.

Saudi to build world’s tallest tower

Last year was also the tallest year ever — with a total height of 30,301 meters achieved in 128 building

completions.

There are 1,168 buildings that stands at 200 metres or higher at the end of last year, according to Emporis.




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Vostok Tower, which stands at 374 metres and completed last year, became the tallest building in Europe in 2016,

based on CTBUH data.

For the ninth year running, China had the most 200-meter-plus completions with 84, representing 67 per cent of

the global 2016 total, and marking a 24 per cent jump over its previous record of 68 in 2015.

The United States took second place with seven completions, and South Korea followed closely with six.

Meanwhile, Indonesia came in fourth with five completions, while the Philippines and Qatar trailed with four.

Source: Gulf News

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DUBAI REAL ESTATE TRANSACTIONS JUMP

45% TO DH77B IN FIRST QUARTER OF 2017 Tuesday, April 4, 2017

Real estate transactions has jumped to Dh77 billion in about 20,000 real estate transactions in the first quarter of

2017, a 45 per cent spike in value compared to the first quarter of last year 2016, according to a senior official.

Sultan Butti bin Mejren, Director General of Dubai Land Department, announced the increase during a media

gathering as part of the ‘Ask the Leader’ initiative organised by the Dubai International Government Achievements

Exhibition 2017.

On the second day of the exhibition, DLD received visitors and media representatives.

Bin Mejren said that based on the Land Department's data, the increase indicates that the real estate market in

Dubai is preparing for a new phase of growth momentum and strong results achieved during the first quarter of

this year was not surprising but was as expected.

He said Dubai’s real estate market is currently witnessing a sustainable growth path.

He added that the total value of real estate investments reached more than Dh40 billion through 15,501

investment transactions.

His Excellency Sultan Butti bin Mejren, hosted the meeting alongside Engineer Marwan bin Ghalita, CEO of the

Real Estate Regulatory Authority (RERA). They also launched the ‘Know Your Rights as a Real Estate Investor in

Dubai’ guide in cooperation with Al Tamimi & Company.

Guide

The launch of the ‘Know Your Rights as a Real Estate Investor in Dubai’ guide was attended by the Director

General of DLD and Husam Hourani, Managing Partner of Al Tamimi & Co., who provided more details about the

guide and its aim to highlight the investor rights guaranteed by the Emirate’s laws and regulations.

Commenting on the new guide, His Bin Mejren said: "Through its various departments, DLD is keen to cooperate

with all concerned parties in the public and private sectors to spread awareness and a safe real estate culture

among citizens, residents and visitors by informing them of their rights and duties.

“This book will certainly help to inform investors about their rights, and is also a tool for promoting a safe and

stable investment environment for investors seeking opportunities in Dubai – a haven for world-class

investments.”

Husam Hourani, Managing Partner at Al Tamimi & Company, said: “We are delighted to be partnering with DLD in

this exciting initiative. The guide provides those interested in investing in Dubai’s real estate sector with

comprehensive information to ensure they have all of the information they need to make well-informed decisions

and protect their investments.”

DLD is participating under the theme ‘Dubai Land…Innovative Achievements…Global Leadership’ and will be part

of the following three events this year: Dubai International Government Achievements Exhibition (DIGAE),

International Property Show (IPS), and Future Cities Show.




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Source: Gulf News

Back to Index




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DUBAI LAND LAUNCHES "KNOW YOUR

RIGHTS AS A REAL ESTATE INVESTOR IN

DUBAI" Monday, April 3, 2017

The Dubai Land Department revealed the results of real estate transactions during the first quarter of 2017. His

Excellency Sultan Butti bin Mejren, Director General of Dubai Land Department announced the value of real

estate transactions that reached AED 77 billion through 20 thousand real estate transactions.

Dubai Land Department (DLD) hosted a media gathering as part of the ‘Ask the Leader’ initiative organised by the

Dubai International Government Achievements Exhibition 2017. On the second day of the exhibition, DLD

received a wide range of visitors interested in the real estate sector, as well as a group of media representatives.

Bin Mejren confirmed to reporters that according to the Land Department's data analysis there is an increase in

the value of transactions by 45% compared to the first quarter of last year 2016. This indicates that the real estate

market in Dubai is preparing for a new phase of momentum and the rise and strong results achieved during the

first quarter of this year was not surprising but expected, especially with the sustainable growth that the real

estate market is currently witnessing. He added that the total value of real estate investments reached more than

AED 40 billion through 15501 investment transactions.

His Excellency Sultan Butti bin Mejren, hosted the meeting with the media and public alongside His Excellency

Engineer Marwan bin Ghalita, CEO of the Real Estate Regulatory Authority (RERA) and answered all questions and

inquiries. Bin Mejren also launched the ‘Know Your Rights as a Real Estate Investor in Dubai’ guide in cooperation

with Al Tamimi & Company.

Press Conference

Visitors at the Dubai International Government Achievements Exhibition 2017 were invited to a press conference

announcing the launch of the ‘Know Your Rights as a Real Estate Investor in Dubai’ guide, which is being issued in

cooperation between DLD and Al Tamimi & Co. The event was attended by the Director General of DLD and

Husam Hourani, Managing Partner of Al Tamimi & Co., who participated to provide more details about the guide

and its aim to highlight the investor rights guaranteed by the Emirate’s laws and regulations.

Commenting on the new guide, His Bin Mejren said: "Through its various departments, DLD is keen to cooperate

with all concerned parties in the public and private sectors to spread awareness and a safe real estate culture

among citizens, residents and visitors by informing them of their rights and duties. This book will certainly help to

inform investors about their rights, and is also a tool for promoting a safe and stable investment environment for

investors seeking opportunities in Dubai – a haven for world-class investments.”

Husam Hourani, Managing Partner at Al Tamimi & Company, said: “We are delighted to be partnering with DLD in

this exciting initiative. The guide provides those interested in investing in Dubai’s real estate sector with

comprehensive information to ensure they have all of the information they need to make well-informed decisions

and protect their investments.”




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DLD is participating under the theme ‘Dubai Land…Innovative Achievements…Global Leadership’ and will be part

of the following three events this year: Dubai International Government Achievements Exhibition (DIGAE),

International Property Show (IPS), and Future Cities Show.

Source: DLD Press Release

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DUBAI LANDLORDS ARE LOWERING RENTS,

EXTENDING LEASES TO KEEP TENANTS Tuesday, April 4, 2017

Dennis has been jobless for about three months now and is increasingly worried about drying up his savings to

pay the household bills – especially the rent for his one-bedroom flat at an upscale neighbourhood.

When the lease expired last March, the Dubai-based expatriate asked his landlord to let him renew his tenancy

for only three months, instead of the standard one year. This is so he didn’t have to fork out Dh105,000 for the

rent while no income is coming in, and he’s still unsure whether he should stick around for another year if he can’t

find new employment.

It was a relief that the landlord agreed, otherwise, he will have to go through the hassle of moving out. With the

extension, he only spent less than Dh30,000. "Hopefully, I could find a job in the next three months,” he said.

According to property analysts, owners of residential flats and villas in Dubai are generally being more flexible

than they have been for a long time. They’re not just increasing lease instalments, they’re also extending contracts

and lowering rents, in a bid to keep their units occupied amid a sluggish market.

“With rental rates still falling almost universally, landlords are becoming noticeably more flexible, with tenants

able to negotiate rentals down from quoting rates,” said CBRE, a commercial property and real estate services

adviser.

“Landlords in Dubai are becoming more flexible as they try to keep their units occupied and prop up the income

generated. [They’re] increasing the number of instalments or cheques and adapting other lease terms to suit the

tenants’ needs, like overall rent reductions or contract extensions for three to six months instead of the standard

one-year contract,” Jesse Downs, managing director at Phidar Advisory added.

“These changes are fairly typical of a downtown in Dubai. Once the market recovers, the flexibility will gradually

wane.”

The residential rental market continued to post modest declines in 2017, with rates falling by an average of 1 per

cent during the first three months of the year compared to the previous quarter, according to CBRE.

During the property boom, landlords were wielding control over rental negotiations and tenants always had to set

aside a huge lump sum to rent a house in Dubai. It was always mandatory to pay the full rent one year in advance,

and many tenants who were in a financial bind had to borrow money from the bank. And every year, residents

would see their accommodation expenditures rise.

The current slowdown has been due to limited demand and high inventory in the rental market. “As a number of

units in the pipeline are gradually making their way into the market, renters are generally happy. The market is

supplying more bargains and some landlords are willing to negotiate,” said Bayut.com, a real estate portal, in its

latest report.

“The changes in values have been more pronounced in areas in or close to the city centre, as a newer lot of

quality structures keep pulling tenants and buyers out to the city’s suburbs.”




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The situation looks set to continue for the rest of the year, as more supply is expected to come on stream in the

run-up to Dubai’s hosting of the World Expo in 2020. According to CBRE’s report, future supply levels continue to

rise as developers make a concerted push in the build up to the much-anticipated event.

“Consequently, this is driving annual deliveries well above the five-year average, with expectations that these

numbers will continue to rise in the short to medium term, as new master plans come on stream,” said Mat

Green, head of research and consultancy for UAE at CBRE Middle East.

Downs said it is “highly unlikely” that the market will recover in 2017. “The still relatively strong US dollar hinders

real estate specifically and the low to moderate oil price tempers regional liquidity and economic growth,” she

said.

“Additionally, one of the biggest challenges is the supply mismatch - demand growth is in the middle income

bracket, but most of the new homes completed were built for mid-high to high income households.”

Source: Gulf News

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DUBAI MOVES TOWARDS NEW RENTAL

LAW Monday, April 3, 2017

Dubai’s Land Department is working on a new rental law that will give separate weightage to commercial real

estate such as offices, malls, health and educational property, apart from residential. The law, which is in front of

the legislative committee, will replace the current one-size-fits-all rental regulation, top officials said.

That could pave the way for each property asset class to have its own rental index and contractual obligations

between negotiating parties. If the law passes, it would signal another major step up for Dubai’s property market

in terms of having a more equitable relationship between tenant and landlord. Currently, the Dubai Rental Index,

dominated by residential property, is updated annually.

It was just last month that the Land Department announced a “unified lease form” on all rental contracts in the

emirate. And if subsequently there are omissions on the part of any one involved in the deal, then penalties come

into effect.

“We wanted a new rental law that covers all types of property assets and not just draw on the provisions within a

single, unified law,” said Marwan Bin Ghalita, who heads the Real Estate Regulatory Agency, which comes under

the Land Department’s aegis.

There will also be changes to another existing regulatory regime currently in place. The laws governing

homeowners associations will be “clarified” to bring in more transparency, officials said. With more freehold

projects getting greenlighted, the Land Department wants to clearly define the rights of developers and property

owners.

The first quarter recorded decent gains for Dubai’s property market — 427 projects were approved involving 213

developers. The total transactions, involving rentals as well, touched Dh77 billion plus.

“These numbers are promising and go against the negative mentions that were being made about Dubai property

market’s prospects,” said Sultan Butti Bin Mejren, Director-General of the Land Department. “It has the makings of

being a good year. And it’s not just on the investment side we are seeing gains.

“Our building reclassification programme (which covers all of the older buildings in the city) is 69 per cent

complete; it has covered 144,000 plots and 314,000 properties.” (According to officials, 80 projects are likely to see

completion this year, the bulk of them launched in 2014-15.)

Meanwhile, the Land Department is working on another major regulatory initiative — putting in place a robust

foundation for real estate investment trusts (REIT). Currently, there is only the Emirates REIT that is active in the

market, which pools together institutional funds into single or multiple properties for yield generation.

“Our focus is to get in more overseas funds involved … and Reits would be a good vehicle through which they can

operate,” said Bin Ghalita. “Until now, there was too much emphasis on individual investors, and if the market

takes a bit of an uncertainty, they pull out.

“With institutional investors, the strategy is more long term, through the ups and downs of a market cycle. We will

need more of these investors.”




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(The Land Department has sounded out the DIFC Authority whereby some of the funds operating within its

jurisdiction could take local exposures in the realty market.) Emirates REIT started its life by investing exclusively

in commercial realty and then, recently, set up a second one to pick up income-generating residential properties

in Dubai and Ras Al Khaimah.

“In 2006, the Land Department oversaw 16 laws … over the years we have expanded the regulatory arm,” said Bin

Ghalita. “And more of our services are being pushed online. For instance, an overseas investor can have a ready

set of data on likely yields depending on the location from our smart map app.

“If they want to pick an estate agent, they can choose between those classified under gold, silver or bronze. Data

on how many an agent was involved in and all such relevant details are there. It’s up to the investor to make

informed decisions when investing in Dubai. The transparency has already been built in.”

Source: Gulf News

Back to Index




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DUBAI REAL ESTATE MARKET ON COURSE

TO STABILISE DURING 2017 Monday, April 3, 2017

A slowing rate of decline across all sectors of the Dubai real estate market suggests increasing stability and the

expectation of the market ‘bottoming out’ before the end of 2017, according to leading international real estate

consultancy, Cluttons.

Cluttons’ Dubai Spring 2017 Property Market Outlook reports that despite the persistence of market corrections

in Q1 2017, average residential prices have moderated by 0.9% with the annual rate of decline slowing from -8.8%

at the close of 2016 to -7.8% at the end of March.

Increasing supply, changing demand for executive positions in the employment market and increasing rent

moderation are all expected to continue to impact the residential market during 2017. In the Dubai office market,

the planned introduction of VAT on January 1st 2018 is already causing a nervousness amongst existing tenants,

the Cluttons report finds.

Residential Market

As referenced, values across Dubai’s freehold residential areas slid by 8.8% in 2016, largely in line with Cluttons’

original forecast for the year of -10%. This signals the market’s weakest annual performance in five years, and sits

28.7% below the Q3 2008 market peak.




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Commenting on the residential market, Faisal Durrani, Head of Research at Cluttons said, “While local economic

drivers may appear robust, regional and global economic uncertainty has undoubtedly curtailed domestic growth.

Despite this, the off-plan residential sales market has remained resilient and in fact accounted for 53% of all deals

in 2016, suggesting that investor confidence remains strong.

Clearly this has been aided by some exceptionally favourable payment plans that stretch beyond handover,

negating the need for financing from the get-go, in addition to attractive gross rental yields.”

“Despite the emerging focus on the residential investment market, tenant demand remains mute and has

undoubtedly eased over the last 12 months.




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This contributed to the 9.9% drop in average rents last year. The rate of creation of senior level executive

positions has fallen and this is reflected in the lower level of enquiries and budgets we are recording.

The redundancy programmes in the city’s finance & banking sector and oil & gas sector have all but run their

course, but the weak global outlook is putting other key sectors under pressure, including the hospitality and

aviation sectors, both of which are long standing and historic cornerstones of economic growth. The rapid and

sudden strengthening of the US dollar over the last 9 months has added to the challenges faced by the property

market.”

Part of this overall market weakness lies at the top. 12 of the 32 submarkets monitored by Cluttons registered

price declines during Q1, with the Burj Khalifa tower (-6.9%) leading the price falls. Over the last 12-months, the

Burj Khalifa has registered a 25% correction in values, making it the weakest performer across the city.

Hattan Villas at The Lakes (-13.5%), Hattan Villas at Arabian Ranches (-12.6%), villas on the Palm Jumeirah (-12.3%)

and apartments on the Palm Jumeirah (-11%) rounded off the list of the five weakest performing markets over the

last 12 months, the Cluttons report finds.




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Murray Strang, Head of Cluttons Dubai, noted, “Aside from the ultra-luxury of the Burj Khalifa tower, the lifestyle

and destination living appeal of Downtown Dubai has in a way insulated the market’s performance from the fall

out of global geopolitical events. Bahwan Tower for example, which is located within the Burj Khalifa community,

launched in November 2016 and is a prime example of sustained demand, as a strong sales performance

continues ahead of a Q4 2017 completion”.

Cluttons latest report also finds that a limited number of vacant plots remain within the Mohammed Bin Rashid

loop, suggesting that the resilience in values is likely to persist as new opportunities to purchase in this submarket

start to diminish. In fact, there was a 47% drop in the number of units launched in Downtown Dubai during 2016,

with just 1,431 new homes released, compared to 2,104 unit launches in 2015.

Strang added, “While the short-term prospects appear relatively subdued, our view is that the rental market’s

fortunes remain tied to the looming 2020 World Expo. At this stage, the mega event is one of the primary upside

risks to our outlook. We know from experience that the lag between the take up of office space and the

subsequent impact on the residential rental market is usually six to nine months. Construction contracts worth

AED 11 billion, linked to the Expo, are expected to be announced throughout the course of 2017, driving up the

rate of job creation and tenant demand in its wake, but this is not expected for another two to three quarters at

least.”

Durrani highlighted, “However before the ‘Expo effect’ ripples through the market, we expect that rents will

continue moderating during 2017, with an average decline of 5% to 7% likely over the course of the next six

months.

A key factor in the rental market’s fortunes will be its ability to absorb the strengthening stream of buy-to-let

homes, which has already upset the delicate supply-demand equation.

Any impact on the sales market will likely follow, however for now we anticipate capital values will moderate by a

further 5% on average before there is the potential for a more stable picture to emerge towards the end of 2017.”

Office Market

Cluttons’ report stresses the combination of VAT uncertainty and market pressures being faced by the city’s office

market, which has remained relatively unscathed by the deteriorating global economic conditions.




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The Cluttons Dubai Spring 2017 Property Market Outlook reports that rents across most of the 24 submarkets

monitored remained relatively steady throughout 2016, following strong growth in the preceding 12 to 18

months. However, global economic anxiety and a subsequent scaling back or delaying of short term expansion

projects, particularly amongst international corporate occupiers, has begun to impact on the resilience of rents.

Strang added, “Furthermore, uncertainty stemming from the proposed introduction of a Value-Added-Tax (VAT) is

causing some nervousness in the market.

For many international occupiers, it is likely that this is something they will be able to take in their stride, given

that they are used to taxation regimes in their own home markets; however, for international occupiers from the

UK, or Europe, the prospect of a 5% tax on rental payments, combined with a rise in operational costs fuelled by

the strength of the US dollar, may dampen take up activity in the short to medium term.

It remains unclear at this stage whether firms operating within free-zones will be exempt from any potential VAT

charges, however it is our expectation that any new tax will be applied across the board to limit an exponential

rise in requirements for free-zone office space.”

In general, however, Cluttons claims the overall slowdown in activity levels has resulted in headline rents dipping

back marginally.

Strang concluded, “High demand areas such as TECOM’s Internet City and Media City, in addition to core locations

within the DIFC remain well let, with stable rents. A limited supply pipeline in both markets is clearly supporting

the stability in rents. Equally, demand from occupiers to secure a presence in these key areas is reflected in the

fact that the DIFC’s new eight storey Gate Village 11 Building, The Exchange, has been reportedly pre-leased, with

completion not expected until late 2017, or early 2018”.

Source: Emirates Business 24/7

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AVIATION AND TOURISM INDUSTRY SET TO

BE A DRIVING FORCE FOR THE MIDDLE

EAST ECONOMY Tuesday, April 4, 2017

The aviation and tourism industry in the Middle East is set to be a driving force for the region’s economy,

according to the 6th Arab Aviation Summit’s white paper report released today.

The region is expected to deliver a 5 percent growth, and connect an extra 258 million passengers to and from its

airports by 2035. As such, the market size has the potential to reach 414 million passengers over the next two

decades.

Due to its unique geographical location, and the advantages brought forth by world-class upgrades to airport

infrastructure, the predicted growth for the Middle East region will continue to boost the regional economy,

leading to an increase in job opportunities across a multitude of sectors, and a further increase in indirect

employment in local markets.

According to the International Air Transport Association, IATA, 2016 witnessed over 3.8 billion travellers taking to

the skies, a figure which is forecast to reach 4 billion in 2017. The association projected that this figure has the

potential to reach 7.2 billion by 2035, a statement which confirms the vitality of the aviation industry.

The report urged industry leaders to view the Middle East region as a single market of 350 million potential

travellers, rather than segregated economies stymied by cumbersome regulations. It states that a protectionist

approach to the industry will only stall growth and further hinder the sector’s ability to capture and service the

under-served segments.

Estimates in the report show that the number of aircraft operating in 2017 will rise by 1,000, bringing the total to

29,000 aircraft operating around the world. Furthermore, it added that there will be, on average, 73 flights

departing every minute throughout the year.

The airports’ infrastructure expansion projects announced recently are expected to address these growth

demands where airport investments of US$32.7 billion in the UAE alone, and airport development projects in

other Middle East markets will be among the top factors that will considerably push regional investments. It is

also expected to generate direct employment opportunities accounting for more than 3.2 million jobs by 2025.

Source: Emirates Business 24/7

Back to Index




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With over 30 years of Middle East experience,

Asteco’s Valuation & Advisory services team

brings together a group of the Gulf’s leading

Real Estate experts.

Asteco’s network of offices in Abu Dhabi, Al Ain, Dubai,

Northern Emirates, Jordan and the Kingdom of Saudi

Arabia not only provides a deep understanding of the local

markets but also enables us to undertake large

instructions where we can quickly apply resources to meet

Clients requirements.

Our breadth of experience across all the main property

sectors is underpinned by our Sales, Leasing and

Investment teams transacting in the market and a wealth

of research that supports our decision making.

John Allen - BSc, MRICS

Director - Valuation & Advisory

+971 4 403 7777

[email protected]

Jenny Weidling - BA (Hons)

Manager – Research and Advisory

+971 4 403 7789

[email protected]

VALUATION & ADVISORY

Our professional Advisory services are conducted by

suitably qualified personnel all of whom have had

extensive Real Estate experience within the Middle

East and internationally.

Our valuations are carried out in accordance with the

Royal Institution of Chartered Surveyors (RICS) and

International Valuation Standards (IVS) and are

undertaken by appropriately qualified Valuers with

extensive local experience.

The Professional Services Asteco conducts throughout

the region include:

• Consultancy and Advisory services

• Market research

• Valuation services

SALES

Asteco has established a large regional property Sales

Division with representatives based in UAE, Saudi

Arabia and Jordan. Our Sales teams have extensive

experience in the negotiation and sale of a variety of

assets.

LEASING

Asteco has been instrumental in the leasing of many

high-profile developments across the GCC.

ASSET MANAGEMENT

Asteco provides comprehensive Asset Management

services to all property Owners, whether a single unit

(IPM) or a regional mixed use portfolio. Our focus is

on maximising value for our Clients.

OWNER ASSOCIATION

Asteco has the experience, systems, procedures and

manuals in place to provide streamlined

comprehensive Association Management and

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mixed-use communities throughout the GCC Region.

SALES MANAGEMENT

Our Sales Management services are comprehensive

and encompass everything required for the successful

completion and handover of units to individual unit

Owners.

NEWS BRIEF 15 - Asteco

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Transcript of NEWS BRIEF 15 - Asteco