NEWS BRIEF 22 - Asteco Property Management · The Dubai-based company on Sunday launched its...

DUBAI | ABU DHABI | AL AIN | SHARJAH | JORDAN

© Asteco Property Management, 2016 asteco.com | astecoreports.com IN THE MIDDLE EAST FOR 30 YEARS

ASSET MANAGEMENT SALES LEASING

VALUATION & ADVISORY SALES MANAGEMENT OWNER ASSOCIATION

RESEARCH DEPARTMENT

NEWS BRIEF 22 SUNDAY 29 MAY 2016


© Asteco Property Management, 2016 asteco.com | astecoreports.com

IN THE MIDDLE EAST FOR 30 YEARS



REAL ESTATE NEWS UAE

WHAT GIVES YOU UP TO 20% RENTAL INCOME IN UAE… CLICK TO KNOW

BUY A DUBAI, ABU DHABI APARTMENT NOW OR WAIT A WHILE TO MAKE MORE

MONEY?

DUBAI

MARASI BUSINESS BAY: WATER HOMES, FLOATING HOTELS IN DUBAI

DUBAI EXPO IMPACT: DEVELOPER ROLLS OUT DH2BN ROADMAP

OFFICIALLY, YOU CAN RENT A STUDIO IN DUBAI FOR DH25,000 A YEAR

SAVE 33% OF YOUR SALARY ON RENT; LEASE 1BR @ DH33,000

LIVE UNDER WATER IN DUBAI: RENT A HOME @ DH25,000 PER DAY

DUBAI DEVELOPER TARGETS MILLENNIALS

NEW RULES, NEW LOOK FOR DUBAI GROCERY STORES

DUBAI MUNICIPALITY AWARDS CONFERENCE CENTRE CONTRACT

CHELSEA LOSES GLAMOUR FOR WEALTHY TENANTS AS FITZROVIA AND MAYFAIR

SOAR

WATER HOMES AND FLOATING RESTAURANTS: DUBAI PROPERTIES LAUNCHES DH1BN

MARASI BUSINESS BAY

DUBAI LANDLORDS FIGHT TO KEEP HOLD OF TENANTS BUT SAVVY BUYERS SNAP UP

BARGAINS

DUBAI OFFICE RENTS FACE SUMMER OF DECLINE

MEMBERSHIP AT BURJ AL ARAB’S NEW BEACH RESORT – YOURS FOR DH100,000 A

YEAR

PROPERTY CYCLES SIGNAL THAT DUBAI HAS A BRIGHT FUTURE

OVER BUDGET AND BEHIND SCHEDULE IN CONSTRUCTION

ABU DHABI

RENTS FALL IN ABU DHABI AS CONFIDENCE REMAINS SHAKY

GCC | INTERNATIONAL

ARABIAN CONSTRUCTION TO BUILD THREE-TOWER EMAAR RESIDENCES PROJECT AT JEDDAH GATE






MARASI BUSINESS BAY: WATER HOMES,

FLOATING HOTELS IN DUBAI

Tuesday, 24 May, 2016

Dubai Properties Group (DPG), the real estate arm of Dubai Holding, on Tuesday launched Dh1 billion Marasi

Business Bay on the stretch of the Dubai Water Canal that will house water homes, floating restaurants and beach

club, and a 1,250 berth marina.

Mohammad Abdulla Al Gergawi, Chairman, Dubai Holding, said: “The new project will strengthen the historic

relationship between Dubai and its creek through the addition a new dimension to the residential, tourism and

leisure offerings along the Dubai Creek.”

He added: “Our objective is to create innovative and unique developments, that accentuates the essence of

Dubai’s culture and heritage, and presents what the future Dubai looks like; a city that enriches the lives of its

residents and visitors alike through unparalleled lifestyle experiences, adding value for investors and Dubai's

economic diversification.”

“Located along the Dubai Water Canal, this waterfront destination embraces the longest water-side promenades,

comprising a space rich with green spaces. Our goal is to build a way of life. Our approach to the real estate

landscape has gone far beyond the construction of towers and buildings, to encompass innovation and creativity;

a symbol of the civilization of Dubai and the UAE and an essential instrument contributing to the happiness of the

people as envisioned by His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime

Minister of the UAE and Ruler of Dubai.”

The development, which will have a 12 kilometre promenade, will have three themed areas - The Yacht Club, The

Park and The Pier. The waterfront will have a five palm tree-lined marinas with 1,250 berths, alongside boutique

shopping, leisure and entertainment facilities.

Water homes

The only residential unit in the project will be two and three-bedroom water homes in the Yacht Club area.

Though no specific price of these homes were given, they are targeted at the luxury segment buyers. The

minimum size of a two-bed water home would be 1,500 square feet.

Private developers in the emirate have already announced plans for floating homes in The World island in Dubai

and RAK Properties launching Maldives-style water villa.

Marasi Business Bay will have 250,000 square metres of open space, over 100 shops and outlets, covering an area

of 16,000 square metres, while The Park will be cover a 60,000 square metre area.

“Marasi Business Bay will be developed in two phases, and work has already started on the promenade,” Fadel Al

Ali, Chief Executive Officer, Dubai Holding, said, while addressing the media at the launch event.

The first phase of the promenade is expected to be completed by September 2016 followed by The Park and The

Yacht Club.

“The entire project will be completed in a span of five to seven years,” he said, adding it will be self-financed.






Fadel Al Ali, Chief Executive Officer, Dubai Holding, said: “Dubai Properties Group enjoys a long standing

experience of creating unique and global destinations. We have an extensive experience spanning more than ten

years in the field of planning, developing and managing a diversified portfolio of famous destinations and projects

that respond strategically to the needs of the diverse city of Dubai and the requirements of its residents.”

Al Ali added, “Marasi Business Bay is yet another strategic project of Dubai Holding, set to mark a first in the city’s

urban fabric with unique mixed-use landmarks. The project is being developed with the aim of boosting the

tourism industry in Dubai, and will reinforce the emirate's position as a global tourism destination, in line with the

UAE Vision 2021.”

Source: Emirates 24/7

Back to Index






DUBAI EXPO IMPACT: DEVELOPER ROLLS

OUT DH2BN ROADMAP

Monday, 23 May, 2016

As Dubai begins its preparation to host Expo 2020, the Shaikhani Group of Companies has unveiled its 2025

development plan that aims to roll out at least four new projects in the coming year and more thereafter.

The Dubai-based company on Sunday launched its Dh220-million Gardenia Residency 1 in Jumeirah Village Circle,

with investors being offered a post-completion payment plan of up to 10 years by banks.

Work has started on the project, comprising 133 serviced apartments, and is expected to be completed in June

2018.

“The investors in the project will have to pay 50 per cent during the construction phase and can avail of 10 to 15

year payment plan from banks,” company Managing Director Mahmood Shaikhani told Emirates 24|7.

The company is in talks with three banks - Mashreq, Noor Bank and Commercial Bank of Dubai for home

financing.

Shaikhani Group of Companies, which has just commenced handover of Dh338 million Frankfurt Sports Tower I in

Dubai Sports City, will be launching four new projects in Jumeirah Village Circle.

“Two of the three projects in JVC will be the next two phases of Gardenia Residency and one will be a high-rise

tower. The fourth project will come up in Arjan in Dubailand,” Shaikhani said.

The new projects are planned to be completed and handed over by 2020.

The total investment in the new projects will stand at Dh2 billion, which is in addition to the Dh1.5 billion worth of

existing projects, spread in Dubai Sports City (DSC) and Dubai Silicon Oasis (DSO).

“We will deliver three residential towers in DSC and Cambridge Business Centre in DSO in the coming months and

will use the funds from these projects to finance our new projects,” he revealed.

In March 2016, Dubai announced winners of the three theme pavilions of Expo 2020. The Opportunity Pavilion is

being designed by Bjarke Ingels Group; the Mobility Pavilion by Foster + Partners and the Sustainability Pavilion by

Grimshaw Architects.


Back to Index






OFFICIALLY, YOU CAN RENT A STUDIO IN

DUBAI FOR DH25,000 A YEAR

Tuesday, 24 May, 2016

The official Dubai rent index reveals the cheapest studio units to be available in Dubai Investment Park (DIP) and

Dubai Outsource Zone.

The index, issued by Real Estate Regulatory Agency, the regulatory arm of Dubai Land Department, puts rentals in

the above two communities at Dh25,000 to Dh30,000 per year, which comes to Dh2,083 to Dh2,500 per month.

In Warsan Fourth (International City), rentals for a studio unit ranges between Dh30,000 and Dh35,000 a year,

while in Queue Point (Dubailand) leases start from Dh30,000 to Dh40,000 per year.

Renters can lease a studio unit in Dubai Silicon Oasis from Dh35,000 to Dh45,000 per year, while rents in

International Media Production Zone (IMPZ) is in the range of Dh30,000 to Dh45,000 a year.

Annual rentals for studio units in Wadi Al Safa 3 (Dubailand) fall between Dh40,000 to Dh45,000 a year. In Ritaj

project in DIP, the rentals start from Dh30,000 going up to Dh50,000 a year.

Last week, Dubai Land Department Technical Affairs Department Director Mohamad Khodr Al Dah told Emirates

24|7 that they were planning an overhaul of the rent index, which would include a Star rating for every building

which would be a deciding factor on future rent increase.

Simply said, owners of old buildings will not be able to increase rents at par with new buildings.

This website, however, reported in August 2015 that the index is being updated once a year.

Rent Law

In order to control arbitrary rental hikes, the Dubai government has already issued Decree No. 43 of 2013

concerning the percentages of maximum property rent increase that are to be allowed upon renewal of tenancy

contracts. The rent increase slabs are as follows:

* No rent increase if the rent of the property unit is less than 10 per cent of the average rent of a similar property

in the same residential area.

* If the rent value is between 11 and 20 per cent less than the average rent of a similar property, the maximum

rent increase shall be equal to 5 per cent of the rent value.

* If the rental value of a unit is between 21 and 30 per cent less than the average rent of a similar unit, the

maximum rent increase shall be equal to 10 per cent of the rental value.

* If the rental value of a property is between 31 and 40 per cent less than the average rental of a similar property,

the maximum rent increase shall be equal to 15 per cent of the rental value.

* If the rental value of a property unit is less than 40 per cent or more of the average rent of a similar unit, the

maximum rent increase applicable is of 20 per cent.






The decree also informs that the average similar rental value of the property will be determined by the rent index.


Back to Index






SAVE 33% OF YOUR SALARY ON RENT;

LEASE 1BR @ DH33,000

Sunday, 22 May, 2016

UAE residents can save at least 33 per cent of their salary on rent by living in Northern Emirates, according to a

report by Dubizzle, a classified website.

“With the highest price for a one-bedroom apartment rental in Ajman priced at an average of Dh39,000 per

annum (pa) and Dh41,000 pa in Sharjah, these prices are non-existent in Dubai and are a significantly lighter blow

to the wallet at 33 per cent cheaper than a one-bedroom apartment in International City, Dubai, and 200 per cent

cheaper than in prime districts such as Downtown Dubai,” said Ann Boothello, Senior Property Marketing

Manager, Dubizzle.

In Sharjah, rental prices for one-bedroom apartments declined by 3.95 per cent in the first quarter 2016

compared to the same period last year.

Lease rates in Al Qasba fell from Dh46,000 pa to Dh40,000 pa, while Al Nahda dipped from Dh40,000 pa to

Dh38,000 pa.

Ajman rentals declined by 1.85 per cent despite Al Nakhil area rising by 10 per cent and three per cent for one-

bedroom and two-bedroom apartments, respectively. Rents in Al Hamriya area also rose by 8 per cent for one-

bedroom units and a whopping 21 per cent for two-bedroom apartments.

Although rental prices increased by 10 per cent in Al Nakhil, the area is still more of an economical option than

others with one-bedroom units priced at Dh33,000 pa, the report said.

“Although our data showed a significant decline in prices in certain districts in Sharjah, and Ajman, the overall

decline is mild as these Northern Emirates still remain a viable option for UAE property seekers and offer more

economical options for those UAE residents on smaller income brackets,” said Boothello.

In February 2016, Asteco, a property consultancy, said new supply of housing units in Sharjah coupled with a

lower inflow of residents from Dubai will put downward rental pressure on lower quality apartment towers.

“Rental demand is expected to be stagnant in Sharjah as a reduction in prices in neighbouring Dubai will lead to a

lower than usual inflow of new residents, which may be worsened by reduced government spending and

potential job cuts,” it said in its fourth quarter report, as it expected over 1,000 units to be added to the market.


Back to Index






WHAT GIVES YOU UP TO 20% RENTAL

INCOME IN UAE… CLICK TO KNOW

Saturday, 07 May, 2016

Residential rental yields in Dubai are among the world’s highest, but a new investment category can fetch

investors up to 20 per cent.

The new asset class, according to Cluttons, a property consultancy, is worker accommodation.

“The variety of investment options available in Dubai range from low-end, high-yielding residential units in

peripheral schemes such as International City and Discovery Gardens, to more sophisticated investment options

in the office market, where yields can range from 6.5 per cent to 9 per cent. We are also witnessing the

emergence of worker accommodation as an increasingly popular asset class, which can offer yields of between 10

per cent and 20 per cent,” said Faisal Durrani, Head of Research, Cluttons.

The Global Property Guide, a website that compiles and analyses property price performance of the world's big

economies, has said Dubai offers rental income on average of 7.1 per cent, which is one of the highest in the

world. In comparison, gross rental yields in Hong Kong are 2.82 per cent, India 2.22 per cent and Singapore 2.83

per cent, London between 2.72 per cent and 3.20 per cent.

A number of developers have been projecting rental yields of between 6 per cent and 10 per cent to attract

investors/buyers.

The high rental yield and capital appreciation are among the factors attracting global High Net Worth Individuals

to the UAE, with the consultancy’s “2016 Middle East Private Capital Survey Part 2” showing Dubai, Abu Dhabi and

Sharjah to have emerged as the most popular investment destinations for the regional wealthy.

The survey has found 63 per cent of GCC HNWIs planning to invest in real estate during 2016. Of those surveyed,

27 per cent named Dubai as their top three destinations within the GCC, while 21 per cent chose Abu Dhabi and 8

per cent Sharjah.

In April 2016, a new report by Standard and Poor’s Ratings Services said that lifting of sanctions on Russia and

Iran, oil price recovery and a weakened US dollar will strongly benefit the recovery of the property market.

“We still believe that the lifting of geopolitical restrictions, such the sanctions on Russia and Iran, could strongly

benefit the recovery of the UAE property market. This would open new investment flows into the regions' real

estate markets and partly compensate for the softening demand from other countries,” the ratings agency said.

“A rebound in oil prices as well as weakening US dollar would also likely reverse the negative trend,” it added,

quoting industry experts that real estate prices have declined by 10 to 13 per cent on average in 2015.

“The strong US dollar has made UAE real estate more expensive for international investors holding non-US-dollar

liquidities, and weaker tourist sentiment has affected retailers and their landlords,” S&P said.


Back to Index






LIVE UNDER WATER IN DUBAI: RENT A

HOME @ DH25,000 PER DAY

Sunday, 01 May, 2016

Though half of the owners of the 100 floating seahorses (floating homes) in The Heart of Europe (THOE) project

on The World islands will be keeping them for their own use, the rest are available for rent.

But it will not be cheap if you don’t book it during the soft launch in October 2016, you could save 150 per cent on

rent.

The lease rate during the soft launch will be Dh10,000 a day, but will eventually rise to Dh25,000 a day.

“The soft launch of the floating seahorse on the heart-shape St Petersburg isle will be this October and we will be

offering it for rent for Dh10,000 a day. Eventually, the rate will go up to Dh25,000 a day,” Kleindienst Group

Chairman Josef Kleindienst told Emirates 24|7.

Each of the floating seahorses will have their own butler as well.

“We will have 131 butlers as we have 131 seahorses,” he added.

The floating home is a marine style retreat (a boat without propulsion) and will have three levels: one underwater,

one at sea level and an upper deck.

The master bedroom and bathroom will be totally submerged underwater, while the sea level accommodation

will have floor to ceiling windows, a fully-fitted kitchen with a dining area and an open plan living area.

The upper deck will feature an informal bed, a mini bar, a kitchenette and a glass-bottomed jacuzzi. The deck

could be converted into a winter bedroom, which can be enclosed with retractable drapes.

THOE comprises six islands: Sweden, Germany, Main Europe, Switzerland, St Petersburg and Monaco. It will have

snow and rain-filled streets and a heart-shape island.

“St Petersburg Island has now been re-designed into the shape of a heart, taking inspiration from The Maldives

and some of the world's finest holiday resorts,” Kleindienst had told Emirates 24|7.


Back to Index






DUBAI DEVELOPER TARGETS MILLENNIALS

Thursday, 26 May, 2016

Myra Properties, a real estate developer, on Wednesday unveiled its new residential project in Jumeirah Village

Circle, targeting first-time buyers in Dubai with smaller-sized apartments.

Prices will start at Dh382,000 for a 406 square feet studio apartment in Crystal Residence, with rental yields as

high as 13 per cent, company Deputy Chief Executive Officer Akash Kanjwani told Emirates 24|7.

“A smaller apartment gives you better rental return. A studio in JVC could be rented out between Dh45,000 and

Dh50,000 a year and at the price point we offer the rental return could be 13 per cent,” he said.

The reason cited for the higher rental yield is that the building will have split air-conditioning, which will put the

onus of payment of the air-conditioning charges on the tenant since it will be included in the Dewa bill.

Global Property Guide, a website that compiles and analyzes property price performance of the world's big

economies, does state that gross rental yields in Dubai are among the highest in the world, with smaller

apartments offering rental income of 7.21 per cent.

# Apartment sizes

Talking about apartment sizes, Kanjwani said “smaller” units are a norm in international markets, citing Hong

Kong having 750-square feet three-bedroom apartments.

“We know what are the sizes in international markets... you have to cooperate if you want spacious apartments.

Yes, we have them in our project, but it comes with a price,” he added.

The project, which will be completed in April 2018, will house 225 dwellings of which 142 are studio units while the

rest range between one- to three-bedroom apartments.

# Target Generation Y

The developer is expecting a large number of people from the Millennial Generation to become unit owners

alongside existing residents of the UAE.

“The Millennials are the ones who are the first home owners and an increasing number are moving to Dubai. As

Dubai Expo 2020 come near, it will create a lot of jobs, with these young people looking to move into their own

homes as rents would be high,” he added.

Besides, a large number of UAE residents are looking to buy apartments, with Myra official expecting 40 per cent

of the unit buyers will be renters who want to be owners.

# Payment plan

As majority of developers have started offering flexible payment plans, Myra Properties will also be offering two

payment options to investors.

The first will be a construction-linked payment plan, which includes paying 50 per cent ahead of handover with

the investors seeking home loan from banks for the remaining 50 per cent over the duration of 10 to 12 years.






Under the second option, the investor has to pay 10 per cent on booking, 15 per cent in six months and the

remaining amount in 50 instalments, spread across January 2017 to February 2021.

“One of the problems we faced with Botanica, our first project in JVC, was not everyone was able to get bank

finance. So, in order to give them long-term payment plan, we have decided to start selling at the time of

construction, thus giving buyers the payment flexibility,” Kanjwani revealed.

Crystal Residence is located in District 11 of JVC, a master community developed by Nakheel. The development is

at the crossroads of Al Khail Road, Hessa Street and Mohammed Bin Zayed Road and opposite the Circle Mall.


Back to Index






NEW RULES, NEW LOOK FOR DUBAI

GROCERY STORES

Saturday, 28 May, 2016

The Department of Economic Development (DED) in Dubai has introduced new criteria standards for licensing

groceries in the emirate, with the aim of establishing a uniform identity for such stores and make them look

consistent from inside and outside in line with international standards.

Although the new standards will be effective from the second half of 2016, groceries currently operating in Dubai

will have time till the second half of 2018 to ensure full compliance with those standards.

DED is introducing the new standards as part of its efforts to improve the quality of services available to the

public in Dubai, particularly in the retail sector, thereby reinforcing the emirate’s position as a preferred shopping

destination, regionally and internationally.

The new criteria cover various basic and operational requirements, including: unification of logo and business

identity; colour scheme; signage; exterior finish; interior (fixtures and display units); storage area, as well as

fittings and lighting.

The operational requirements should comply with the standards of the Health & General Safety Department of

Dubai Municipality with regard to the design of the store, product display and classification, training, storage,

health and personal hygiene, smoking, and prohibited pets.

"Through these new standards, DED is seeking to make a quantum leap in Dubai’s renowned shopping

experience, and also enabling groceries to reflect the growth attained by the city in terms of infrastructure and

service quality. “The new concept stems from the emirate's policy of enhancing competitiveness within various

business sectors, and meeting the needs of the local community as well as visitors,” said Omar Bushahab, CEO of

the Business Registration & Licensing (BRL) sector in DED.

Bushahab said there are more than 2,800 groceries in Dubai as per estimates from 2015 and the number is

increasing, adding that the diversity of nationalities and the advanced infrastructure in Dubai present a significant

opportunity for grocery stores to improve their services. DED continues to promote development across all vital

business sectors to enhance investor confidence and competitiveness in each of these sectors.

The standards now being introduced for groceries, mark the first phase of DED’s development strategy and the

next phase will see such uniform standards being extended to other important sectors, based on opinion polls

and studies conducted by DED periodically, added Bushahab.

Walid Abdul Malik, Head of Business Licensing in DED, said: “The BRL team held meetings with 140 grocery store

owners in Dubai, which were chosen according to areas in Dubai and nationalities of the owners of groceries

bearing in mind covering the largest possible segment of people across Dubai.

“We briefed these storeowners on the new criteria, including those relating to displays and internal as well as

external appearance, and the importance of these standards in the sustainability of their business as well as that

of business in Dubai






“The grocery owners can start aligning their stores with the new standards from today onwards, and the

Department of Economic Development will facilitate closure of such shops if the owners wish to start the

improvement process of their groceries.

“However, they have two years to complete the necessary changes and ensure full compliance with the new

standards. We expect 20% of the grocery stores to comply with the new standards by the end of 2016, and the

remaining 80% to complete the transition by 2018,” Abdul Malik explained.


Back to Index






ARABIAN CONSTRUCTION TO BUILD

THREE-TOWER EMAAR RESIDENCES

PROJECT AT JEDDAH GATE

Sunday, May 22, 2016

Emaar Middle East, the Saudi Arabian development arm of Emaar Properties, has appointed Arabian Construction

Company (ACC) to build three residential towers at its Jeddah Gate project.

TheEmaar Residences towers will contain a total of 283 apartments, including a number of penthouses. The one

to four-bedroom units range in size from 70 to 300 square metres, and each tower will have dedicated drop-off

zones, lobbies, a 24-hour reception and concierge service. There are also pool areas, fitness centres, a ladies’ spa,

children’s day care area and a multipurpose hall.

Emaar Residences is the third residential project the developer has launched at Jeddah Gate – a 413,000 sq m

master-planned community that also contains retail and leisure space around a central development known as

Emaar Square. Sales for Emaar Residences began last November, and drilling work at the site is already under

way. ACC has worked on a number of Emaar projects, and the contractor has recently been awarded a deal to

build the 63-storey Boulevard Point project by the developer in Downtown Dubai.

It has also just received an International Safety Award from the British Safety Council for its work on Emaar’s

Fountain Views and Sky Views projects, where it has achieved 10 million man hours on both projects without a

serious accident.

ACC is a pan-Arabian contractor whose GCC headquarters are in Abu Dhabi. It is already working on Jeddah Gate,

where it is building Emaar Square commercial district under a Dh174 million contract that began two years ago. It

is expected to be handed over later this year.

A spokesman for Emaar Middle East said: “We are bringing the same world-class standards that Emaar is

renowned for with ‘Emaar Residences’. ACC has strong competencies in developing large-scale projects as per

schedule."

This month, JLL reported that Jeddah’s residential market underwent a slowdown during the first three months of

this year, with sale prices dropping by 5.4 per cent and rents by 2.5 per cent.

The drop in sales was blamed on weak demand following rules introduced by the Saudi Arabian Monetary Agency

in November 2014, which stated that banks could only lend buyers a maximum of 70 per cent of a home’s value.

This was relaxed at the end of January to 85 per cent, meaning the amount homebuyers need for a deposit has

effectively halved to 15 per cent of a property’s value, from 30 per cent.

Source: The National

Back to Index






DUBAI MUNICIPALITY AWARDS

CONFERENCE CENTRE CONTRACT

Sunday, May 22, 2016

Dubai Municipality has awarded a contract to build a new conference centre and arena at a cost of Dh1.8 billion.

Hussain Lootah, the director general of Dubai Municipality, said that the conference centre was one of the most

important tourism projects set to be carried out in the emirate in the run-up up towards hosting the World Expo

2020.

The convention centre will sit on a 592,000 square foot site in Al Jaddaf, facing Dubai Festival City.

The municipality did not state to whom it has awarded the contract to build the complex, nor did it give a date for

when the project will be completed.

It will contain the 10,000-cap¬acity Sheikh Rashid Hall conference venue, which will be a 190,000 sq ft indoor

arena with a height of 98ft. It will contain theatre-style seating and will be built by the creek for international

conferences, seminars, music concerts and shows.

The hall can be divided into three levels and will have cinema screens and high-tech videoconferencing facilities.

Five sub-halls – each of which are 10,500 sq ft, can hold up to 1,000 people. The site will also contain three towers

(two hotels and one office) that will link dir¬ectly to the conference centre via a covered, air-conditioned

concourse building containing shops and restaurants.

The three adjoining towers will house a 33-storey, three-star hotel, a 48-floor four-star hotel and a 36-floor office

block. The complex will also house 700,000 sq ft of basement parking, capable of accommodating 1,800 cars.

Mr Lootah said that the facility would give Dubai the opportunity to host major world events, adding that the

Creekside location lent itself to both business and tourism events. Oliver Plunkett, the managing director of the

engineering consultancy Buro Happold, said that Dubai is in the process of building several important facil¬ities

that are helping to posi¬tion it as a global hub.

“Dubai has lots of components of a world-class city, but it doesn’t yet have anything like that," he said.

He said that Dubai had established itself as a regional base for exhibitions and trade shows, but added that in

other parts of the world, convention centres often operate in cities that leverage potential attendees for

conferences and shows from neighbouring towns and cities.


Back to Index






RENTS FALL IN ABU DHABI AS CONFIDENCE

REMAINS SHAKY

Monday, May 23, 2016

Renters in Abu Dhabi are continuing to downsize to more affordable apartments as lower oil prices cast a shadow

over the emirate’s economy, according to the property consultancy Asteco.

Julia Knibbs, the company’s UAE associate director of research and consultancy, said that renters are not only

seeking moves to more affordable areas, but also to more affordable units within existing communities.

“If you take some of the prime developments on the Corniche, the units that have the highest vacancies would be

the special units like the big, three-bedroom, four-bedroom and the extra large two bedrooms," she said. “These

are seeing less demand. It’s not that people are leaving the country, but they are a bit more budget-conscious."

Asteco’s new first-quarter pro¬perty report for Abu Dhabi shows that apartment rents across the city fell by 2 per

cent quarter-on-quarter, with the most pronounced declines occurring on Reem Island as more new stock came

on to the market.

Apartment rents in Shams Abu Dhabi dropped by 6 per cent quarter-on-quarter, ranging from Dh95,000 to

Dh120,000 for a one-bed unit, or Dh130,000 to Dh170,000 per year for a two-bed. Rents also fell by 5 per cent in

the Khalidiya/Al Bateen area and 3 per cent on the Corniche. There was virtually no decline in rents at the lower

end of the market. Villa rents remained stable, with units at the higher end of the market increasing slightly owing

to a lack of quality stock.

Ms Knibbs said that the market for selling homes remained subdued. “Very few transactions are happening at the

moment," she said. “People are still waiting to see what will happen. People don’t want to take the step of buying

right now, but there are also not many sellers."

The most marked decline in asking prices during the quarter was again at Reem. Prices fell by 6 per cent at The

Gate and Marina Square, and by 5 per cent at Sun & Sky Towers.

Ms Knibbs said she did not expect further deterioration in prices because supply remains limited. Just 1,500 new

units were launched during the first three months of the year, and these are not likely to be delivered for another

three years.

“The UPC [Urban Planning Council] has a plan for the city and there’s only so much that gets approved. It’s not as

deregulated as Dubai, where new projects are launched all of the time without any proper agreement about

whether it makes sense or not. There’s more faith, because supply is controlled."

She also pointed to the recent statement from ratings agency Moody’s, which stated that it expects Abu Dhabi’s

government to slow the pace of spending cuts in its 2016 budget to sustain growth.

“If that happens, it’s a very positive thing for Abu Dhabi because there is so much related to market sentiment. If

there are no further cuts, maybe that is going to improve confidence, lead to more spending and maybe people

being a bit less cautious about buying property."






Last week, Mathias Angonin, a sovereign analyst at Moody’s said it expected that “in 2016 there will be a lower

decrease in spending that the 20 per cent achieved in 2015". “We expect Abu Dhabi government’s fiscal

consolidation effort to slow because of the need to balance the two objectives of supporting growth and curbing

the budget deficit," he said.


Back to Index






CHELSEA LOSES GLAMOUR FOR WEALTHY

TENANTS AS FITZROVIA AND MAYFAIR

SOAR

Monday, May 23, 2016

There are winners and losers in London’s prime central location (PCL) rental market, according to a new report

today from LCP, a UK prime residential investment adviser, with once-uber trendy Chelsea losing its allure while

ultra-high end Mayfair has soared.

But landlords may have to work harder to retain the top-end buck as supply grows and concerns grow over

Britain’s upcoming EU referendum.

On Friday, Britain’s chancellor of the exchequer, or finance minister, said British house prices would fall 10 per

cent to 18 per cent if the country voted for a Brexit.

“If we leave the European Union there will be an immediate economic shock that will hit financial markets," Mr

Osborne said.

Naomi Heaton, the chief executive of LCP, said on Monday: “In light of the current market conditions, landlords

may need to be more flexible to accommodate the higher negotiating power of applicants and to prevent void

periods which may erode any increase in rent ultimately achieved.

“For as long as this cycle lasts, landlords also may need to be more open to remedial and upgrade works between

tenancies."

By area, Marylebone, Fitzrovia and Mayfair have fared best, achieving an average increase in rent of 10.6 per cent

for one bed flats and 12.8 per cent for 2 bed flats over the past six months.

In contrast, Chelsea and Earl’s Court, traditionally the playgrounds of hip fashion divas and wealthy playboys, have

fared the worst, with a 9.7 per cent drop in rents for one-bed flats and a 14.4 per cent drop for two-bed flats.

Positive rental increases for newly refurbished properties, “new-lets", have been seen each quarter since January

2015, averaging 5.5 per cent overall.

However, the market is beginning to subdue in the face of global economic uncertainty and Brexit. This quarter,

new lets have achieved just a 0.3 per cent rental increase.

“Re-lets" [older properties being let to new tenants] have been hardest hit, reflecting a 1.2 per cent rental fall this

quarter, LCP says.

This is a result of increasing stock on the lettings market, up 26.7 per cent over last quarter, according to Lonres, a

high-end residential property researcher. Renewals for existing tenants, however, have reversed the trend with

rental increases averaging 3.3 per cent over the preceding quarter.






“The overall suppression in rents reflects a market dynamic which was conspicuous during the credit crunch, as

tenants capitalise on economic uncertainty to leverage up their bargaining power. This has been compounded by

companies cutting their relocation budgets in the face of global instability and, in some cases, delaying relocations

in the run up the EU referendum" said Ms Heaton.

“A slowdown in the re-let market has been compensated by continued positive renewal increases by tenants in

situ.

“With landlords often able to achieve contractual rental increases, above that which can be achieved in the open

market, average rental growth of 3.3 per cent in the last quarter has been seen in contrast to the softer market

elsewhere."

Still, corporate belt-tightening means that small one and two-bedroom properties are reinforcing their position as

the hardest working sector of the market. Appetite for these mainstream rental properties remains strong, with

void periods down to just 23 days on average.

For tenants with the flexibility to move, now is the optimum time to secure the best deal, before rents, in all

probability, harden post-referendum. Landlords may also seek to recoup the increased tax burden they will suffer

due to increased entry costs with the Additional Rate Stamp Duty and the reduction in mortgage interest relief.

Landlords can, therefore, expect an improved picture next year as the market rallies and rents increase to

counter the tax and Brexit headwinds" concludes Ms Heaton.


Back to Index






WATER HOMES AND FLOATING

RESTAURANTS: DUBAI PROPERTIES

LAUNCHES DH1BN MARASI BUSINESS BAY

Tuesday, May 24, 2016

Dubai Properties Group has launched a Dh1 billion project along the banks of the Dubai Canal in Business Bay.

The scheme will include five new marinas, up to 200 "water homes" and more than 100 shops, beach clubs and

floating restaurants.

Work on Marasi Business Bay has already started, with a contractor building a six metre-wide stretch of

promenade along the 12-kilometre route that will house three areas known as The Yacht Club, The Park and The

Pier.

Initial work on the promenade is due to be completed in September. It will then be widened to 15 metres to allow

for the addition of retail units and restaurants. It will be based along a stretch of the existing Business Bay canal

between Al Khail Road and Sheikh Zayed Road.

In total, the scheme’s five marinas will have a capacity to house 1,250 boats and will also feature floating

restaurants, where individuals can hire a chef and take their own restaurant on to the water.

Fadel Al Ali, the chief executive of Dubai Properties’ parent company, Dubai Holding, said the project would be

developed over a five to seven-year period and will have between 150 and 200 water homes, which are not

floating homes but will be permanently secured to the canal basin. These have been designed by U+A Architects

and will be two and three-bedroom homes, with a minimum size of 1,500 square feet.

Mr Al Ali declined to say how much these units would sell for, but said they would be at the high end of the

market.

He said the entire project would be self-financed by Dubai Properties, which currently has Dh5bn worth of

projects under construction and a further Dh10bn in ventures in the pipeline. He expected these to be developed

over the next seven years.

Dubai Properties’ current portfolio includes 35,000 homes. About 15,000 of these have been sold, and another

15,000 are in its rental portfolio, with the remaining 5,000 being specialist units such as workers’ accommodation.

Naaman Atallah, the chief executive of Dubai Properties’ development arm, said Marasi Business Bay will have

250,000 sq metres of parks and open spaces.

A bridge will also connect the site to Dubai Properties’ Bay Square development.

Mr Atallah said the project was "unique because it’s not a seafront destination – it’s downtown".

"It creates something that has not been done before in this region. You can just walk down from your office, jump

on your boat, get on the canal and hop from place-to-place," he said.






"This canal has played a key role in the history of Dubai, and by extending it, has afforded us the opportunity to

take leisure and the enjoyment of life to new dimensions."

Other developments currently taking place along the banks of the soon-to-be extended Dubai Canal include the

Dh11bn Habtoor City complex and Damac’s Dh7.7bn six-tower Aykon City scheme, which launched in February

this year.

The canal is being built in three concurrent phases and will add 3km of waterway between Business Bay and the

Arabian Sea, crossing from the borders of Al Safa Park, over Satwa Road and Jumeirah Beach Road. The project is

expected to be completed next year.


Back to Index






DUBAI LANDLORDS FIGHT TO KEEP HOLD

OF TENANTS BUT SAVVY BUYERS SNAP UP

BARGAINS


Leasing activity in Dubai’s residential market tailed off towards the end of the first quarter as landlords proved

more willing to negotiate on rents to keep existing tenants in place, according to a report from Asteco Property

Consultants.

Although apartment rent declines were “limited" over the quarter, with affordable areas remaining flat and mid-

market communities reporting declines of just 2 per cent, certain submarkets performed considerably worse than

others.

At Jumeirah Lakes Towers, for instance, rents declined by 6 per cent quarter-on-quarter and 12 per cent year-on-

year by the end of March.

Typical rents in the area now stand at between Dh65,000 and Dh90,000 for a one-bed apartment and Dh75,000 to

Dh125,000 for a two-bed.

“While the community is attractive overall, the quality of most residential towers are below the tenant’s

expectations considering the high rental levels," the report said.

Asteco said that luxury apartments have proven hardest to let and remain vacant for longest, despite significant

year-on-year rental declines.

Rents for Palm Jumeirah and Dubai Marina apartments are both 8 per cent lower.

Villa rents, meanwhile, have stabilised as the pipeline of recent completions has slowed.

“People are being more budget-conscious," said Julia Knibbs, the UAE associate director of research and

consultancy at Asteco.

“They may be more worried about their jobs, so are looking to be more cautious in terms of their rents.

“Either they renew at a lower rate, look for something smaller or in a slightly less fancy area.

“Landlords are realising how important it is to retain tenants rather than risk having a vacant unit and then later

having to reduce the rent anyway."

Meanwhile, sale prices for apartments remain 5 per cent lower year-on-year, with luxury units experiencing the

steepest declines – Jumeirah Beach Residences properties are 18 per cent cheaper than in the first quarter of last

year, while Palm Jumeirah homes have fallen in value by 11 per cent and Dubai Marina by 10 per cent.

However, the pace of price declines has slowed and in many areas was flat during the quarter.

Ms Knibbs said that sale prices seem to have bottomed out.






“There might still be some small declines going forward, but we have noticed that lots of bulk investors and cash

buyers are in the market looking for opportunities at the moment.

“They could find them, because sellers are willing to negotiate.

“We’ve had a couple of big transactions concluding at really good rates for buyers.

“It’s an indication that people that know about the market and are not risk-averse are seeing an opportunity. Low

prices have unlocked demand."

This month, the Dubai portal propertyfinder.ae stated that buyer interest via its site was at a two-year high,

having increased by 28 per cent since January.

The ratio of users searching its site for properties to buy, as opposed to rent, increased to 32 per cent earlier this

month – up from 25 per cent in January.

The research firm Valustrat has also said there has been no significant change in property values in 26 areas

monitored by the firm for the past seven months, and JLL’s head of research, Craig Plumb, has indicated that he

expects sale prices to return to growth by the end of this year.

Ms Knibb said: “I don’t think that rates are going to increase, but there might be a pickup in transaction volumes

over the year, which will eventually lead to growth."


Back to Index






DUBAI OFFICE RENTS FACE SUMMER OF

DECLINE


Dubai’s office market faces a “challenging" outlook, with further rental declines likely to come over the summer

months after a period of relative stability, says the property consultant Cluttons.

The company said that although rents held in some of Dubai’s prime free zones, such as DIFC and Dubai Media

City, during the first three months of this year, headline rents in non-free zone areas and for strata-owned space

continued to fall.

Cluttons said that for the remainder of the year, rent falls “of up to 10 per cent on average cannot be ruled out

this year".

Faisal Durrani, its head of research, said: “The current weakness in some sub-markets of Dubai’s office market is

expected to persist, with further rental declines likely as we move into the summer months".

Cluttons said that following recent redundancies in banking and finance, a small amount of office space has

started to trickle back on to the market. This is moving the supply-demand imbalance further out of kilter and

landlords have generally been slow to react to market conditions.

It said there was “a growing minority" of landlords who are reacting to conditions, citing landlords in Business Bay

and JLT who have been offering rent-free periods and, in a few extreme cases, rent reductions of up to 20 per

cent, as well as contributions towards utility bills and fit-out costs.

“Following a period of relative stability, we are increasingly noting instances of negotiated rent reductions,

materialising at the same time as a growing number of lease incentives offered by landlords," said Mr Durrani.

Outside Dubai’s free zones, average rents for Grade A space dropped by 8 per cent quarter-on-quarter to Dh230

per square foot. Grade B space also declined 8 per cent in value to Dh110 per sq ft. Certain sub-markets such as

JLT and Business Bay recorded more significant rental declines – initial rents in both markets dropped by 14 per

cent during the quarter.

Over the long term, Cluttons said that it expects free zones to remain the focus of occupier activity.

Murray Strang, Cluttons’ head of investment, said: “It is our view that free zones can help to transform Dubai into

a global commercial hub, with the possibility of Dubai becoming a citywide free zone in the future; a move which

would help drive the evolution of the office market."

Asteco’s latest Dubai report says that Dubai’s office market has never fully recovered from the global financial

crisis, with rents still 70 per cent below peak rates achieved in the third quarter of 2008 and sale prices remaining

55 per cent lower.

In terms of sales, it said transaction volumes for office sales were 50 per cent lower year-on-year, which it argued

was “possibly an indication of lower purchaser demand and sellers unwilling to reduce prices".







Back to Index






BUY A DUBAI, ABU DHABI APARTMENT

NOW OR WAIT A WHILE TO MAKE MORE

MONEY?

Wednesday, May 25, 2016

I moved to Bahrain six months ago and am thinking of buying a property in the UAE for investment purposes that

generates a decent yield with good capital appreciation. I was reading about Abu Dhabi, especially when it comes

to rents which, I believe, are higher than Dubai. What are the best places in Dubai or Abu Dhabi that fit my

criteria? I want to invest about Dh600,000 to Dh800,000 into a studio and/or a one-bedroom. I will also need

mortgage financing, so do you recommend certain mortgage companies? What is the average yield I will receive

(net of taxes, maintenance) and is it better to go with big names? Finally, given that prices have been softening

over the past 18 months, when should I buy? MM, Bahrain

Investing in property can be lucrative, but if the timing is out, you can sometimes be left out of pocket when

determining when to sell. Here are some options to consider:

Dubai

The best places for ready properties to buy would be International Media Production Zone (IMPZ), Sports City and

Jumeirah Village Circle (JVC).

In these areas you will be able to buy a studio or one-bedroom apartment. The average sale price per square foot

(combined average) for apartments is Dh886 for IMPZ, Dh905 for Sports City and Dh923 for JVC.

For off-plan, the Nshama Town Square development, especially the Zahra Breeze apartments, offer great value.

One bedrooms range from Dh575,000 to Dh670,000 and two bedrooms from Dh800,000 to Dh900,000. There is a

50/50 payment plan or finance is available through Noor Bank, which allows 50 per cent to be paid over 10 years

post-completion.

The other off-plan option would be Glamz Residence by Danube, located in Al Furjan. These fully furnished studio

apartments start at about Dh470,000 with a payment plan as follows: 10 per cent on booking (deposit), 15 per

cent after two months then 1 per cent per month for 75 months. Completion is set for 30 months’ time, which

would mean paying 53 per cent between booking and completion, with the remaining 47 per cent payable in 47

monthly instalments.

Abu Dhabi

In the capital, value stability combined with rental growth has resulted in net yields improving over the past six

months, particularly in developments where service charges have declined. For example, within Gate Towers in Al

Reem service charges have dropped by Dh4 to Dh5 per square foot.

Abu Dhabi apartment rental yields are up to 9.2 per cent.






Average apartment sale prices have posted an encouraging 5.3 per cent month-on-month increase in February

this year, along with overall yields averaging 6.75 per cent.

Abu Dhabi studio apartments stood out in terms of both the growth and the yield. And yields for one and two-bed

apartment categories were recorded at 7.7 per cent and 6.9 per cent respectively; sale prices for the two

categories returned increases of 1.9 per cent and 2.8 per cent.

The top areas in terms of apartment sales are: Al Reem Island, Al Muneera at Al Raha Beach, where one beds have

an average yield of 7.6 per cent, and Al Zeina, where one beds have an average yield of 7.5 per cent.

The paperwork

When purchasing a secondary market-ready property, use a mortgage brokerage. A broker has industry

knowledge and is aware of all the differing rates and which bank is lending on which project. Broker firms also

have “buying power", ensuring you get the best possible terms and conditions.

The average rental yields vary as the cost of the property and service charges have to be compared with rental

income. The areas mentioned in Dubai attract yields of 7 to 8 per cent and 8 to 9 per cent in Abu Dhabi.

When buying off-plan, concentrate on developers with a good track record of delivery.

Lastly, the right time to buy is always now, as property that is held long term will always give a good return. But

prices will start to firm up towards the latter half of this year, so perhaps wait until after Ramadan before

proceeding.


Back to Index






MEMBERSHIP AT BURJ AL ARAB’S NEW

BEACH RESORT – YOURS FOR DH100,000 A

YEAR

Wednesday, May 25, 2016

The Burj Al Arab, Dubai’s landmark luxury hotel, is to open one of the most exclusive – and expensive – beach

resorts in the world.

For an annual fee of a mere Dh100,000, members of the leisure club on the Terrace, the new resort extension

built into the Gulf, will be able to enjoy unlimited access to two swimming pools, private cabanas with butler

service, restaurants and bars.

They will also get a complimentary night at the hotel’s Royal suite, Rolls-Royce chauffeur, a helicopter tour of

Dubai and a 24-carat gold plated membership card.

For those seeking family value, membership for a couple and two children under 16 seems a comparative bargain

at Dh125,000.

Membership is also guaranteed to be exclusive. Numbers will be strictly limited on the football-pitch sized

Terrace, but hotel guests will, of course, be allowed to use the facilities gratis.

Antony McHale, the general manager of the Burj Al Arab, which is part of the Jumeirah hotels and leisure group,

said: “As the world’s most luxurious hotel, Burj Al Arab continuously evolves and reinvents our guest experience

through state-of-the-art facilities. The Terrace is the ultimate destination for indulgence, socialising and relaxing

and is another initiative in our endeavour to delight our guests."

The Terrace is an innovative design in marine engineering. Designed and built in Finland, it was then shipped in

eight pieces to the Arabian Gulf and lowered on to piling sunk into the seabed.

Mr McHale said: “The Terrace is our most ambitious project … It’s a global first in hotel construction."

Stefan Leser, the chief executive of Jumeirah Group, said: “The Burj Al Arab Terrace is a new Dubai landmark and

a symbol of innovation and engineering excellence."

The 32 cabanas can accommodate up to four guests each, offering a dedicated butler service, a dining, beverage

and bar menu, spa menu, fully stocked minibars, fresh fruits, espresso machines and Bang & Olufsen TVs. Eight

exclusive “royal cabanas" also include a private bathroom, shower area and veranda.


Back to Index






PROPERTY CYCLES SIGNAL THAT DUBAI

HAS A BRIGHT FUTURE

Friday, May 27, 2016

A combination of supply and demand dynamics, the oil price and the outlook for the global economy will

determine whether Dubai housing prices have another boom by the Expo 2020.

But I remain very optimistic that this will happen. Why?

First a glance back at where we have come from in the housing market. In brief, a 60 per cent price crash in 2009-

10 was followed by a strong recovery almost to previous highs, then in late 2013 a doubling of transaction fees

and mortgage restrictions dished the market again.

My own home is 24 per cent off the last peak price, judging by the unsolicited cash offer I had last week.

It is arguable whether this most recent decline in prices started at the end of 2013 or a few months later, when

pending transactions worked through the system. Still, there is no argument that we are more than two years into

a price correction. Will it go any lower?

Facing a long, hot summer with Ramadan on the horizon, talk about higher interest rates and a depressed oil and

gas sector, the immediate prospects are not great.

A block of apartments I have been watching closely on the Palm Jumeirah had one actual transaction this month,

albeit 10 per cent off the amount others in the same block were still optimistically hoping to achieve. It is the

motivated seller who moves markets.

However, property market cycles are typically three years long and the biggest falls happen in the first year. We

therefore would appear to be closer to the end than the beginning of this correction.

At this stage you would expect supply to be quite high. The property website propertyfinder.ae has just noted an

uptick in interest by its browsers in homes for sale as opposed to rentals.

That could be significant. Then again, I checked out how many homes are listed for sale or rent in Dubai on this

website and the total was 68,500, not so far away from the figure above 100,000 I recall from the depths of the

global financial crisis of 2009-10.

This figure frightened me at the time. But actually the most remarkable thing was how quickly it fell in the

subsequent recovery and the effect that had on Dubai house prices. Of course, this statistical source is a far from

an accurate guide and has a lot of multiple listings, although it does at least tell you something quantifiable and

directional.

Could this autumn represent the bottom of the current correction with the lowest house prices of this cycle?

I can’t really see the Democrat establishment hiking US interest rates before a presidential election that they

would very much like to win. But global stock markets do look perilously positioned for a repeat of the autumn of

2007 or 2008, and this probably will not make Dubai residents surfing propertyfinder.ae sufficiently confident to

rush out and buy, even if they have a safe job.






Yet buying a home is quite a long-term investment for most people and you should be thinking beyond the end of

the year. It is basically a matter of having confidence in the future of Dubai and as commercial capital of the oil-

rich Middle East, and that means oil prices.

BNP Paribas has estimated that annual global investment in oil and gas has slumped to US$400 billion this year

from $700bn in 2014, and that means a supply squeeze of 5 million barrels per day by 2020 and oil prices that are

higher than ever before. In short, the Saudi Arabian plan will work, just a bit later than advertised.

In addition, many investment managers anticipate that an imminent US stock market event will be followed by a

revival of quantitative easing. It might be worth remembering how oil prices slumped recently when QE stopped

and how they recovered strongly in the previous global financial crisis when QE started. Will it be any different

this time?

At the same time, Dubai is not putting the brakes on expansion in key sectors that will provide the city with the

infrastructure to profit from this oil price boom. Emirates will get a new A380 each month for the next three years.

There is a hotel and hospital building boom. Dubai Expo 2020 is not a date that can be postponed for

infrastructure like a new Metro line.

So just how long will it take for Dubai property buyers to really feel confident again? Maybe not nearly as long as

the summer gloom might suggest.


Back to Index






OVER BUDGET AND BEHIND SCHEDULE IN

CONSTRUCTION

Saturday, May 28, 2016

One of the region’s big construction conferences rolled around last week, where the great and the good of the

industry get together to swap gossip and tips about forthcoming projects.

They are generally convivial affairs. “We meet, we chat, we talk about doing joint ventures, and then we all leave

and go after each other’s work," was the rather frank assessment of one company boss of how these things

usually go down.

They can sometimes be quite frustrating events to cover, too – especially when the inevitable question comes

around as to why so many projects in the region run hopelessly behind schedule, and hugely over-budget. A 2014

PwC survey of industry chiefs found that 95 per cent said their projects were delayed, with 45 per cent saying they

were more than six months behind schedule. Some 71 per cent said projects were also over budget.

The Middle East is by no means the only region in the world where projects run late and over costs, but it tends to

happen more often here. Clients usually blame contractors for delays and, as recently witnessed in Doha when

Qatar Rail removed a consortium led by Samsung C&T from the project to build Doha Metro’s major stations, can

simply kick them off a project and sometimes keep hold of performance bonds equating to up to 10 per cent of a

project’s value.

Contractors, meanwhile, point out that they are often hampered by a client’s desire for a project to be delivered

as quickly as possible. They can be appointed for a construction programme, say, of three years, and then have to

wait months while architects and engineers frantically finish designs. Or they start work using unfinished designs,

then later have to deal with changes and variations within a fixed-price contract knowing that once a project is

handed over a further battle awaits over payments.

The answers offered to the industry’s problems are often as well-worn as the arguments themselves. More

partnering is needed, they say. All parties agree they should work together more closely.

Contractors call for the adoption of globally-accepted contract forms, such as Fidic, which guarantee them basic

rights (such as mediation if things go wrong). Government clients, whose power would weaken if these were

adopted, have historically been less keen.

Sometimes, contractors are their own worst enemies. Margins in the industry have always been notoriously low,

and in markets as tough as they are currently, there always appears to be at least one firm ready to undercut

competitors and work for unfeasible rates – sometimes in the hope of being able to eke out extra profit at a later

date if projects run behind schedule by demanding increased payments to catch up.

Formal public-private partnerships (PPPs) have also been touted as a method for overcoming the industry’s

adversarial culture. If a government client decides to outsource the entire process of building and maintaining a

major asset – be that an airport, a road or a large building – a contractor has no one to argue with over designs

and delivery than its own, self-appointed consortium and funders. And if they are responsible for running said

asset for 30 years, they are more likely to make sure it is built to last, PPP supporters argue.






Yet PPP has detractors, too, who point out that it can be a much more costly way of getting things built.

A UK government treasury report in 2011 found PPP to be a much more expensive method for commissioning

assets than traditional procurement routes, and several UK contractors have come under criticism from the

country’s public accounts committee for selling on long-term contracts to run hospitals and other assets just a few

years after building them for a healthy profit.

If, as seems likely, PPP is rolled out and grows in popularity in an era of more constrained government budgets,

do not expect disputes between clients and contractors (or debates on how to solve them) to end.

At the very least, it will be one more thing to trade stories about when the next set of conferences rolls around.


Back to Index






With 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, Qatar, 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]

Julia Knibbs MSc

Associate Director – Research and Consultancy

+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, Qatar 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

Consultancy Services to residential, commercial and

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 22 - Asteco Property Management · The Dubai-based company on Sunday launched its...

Documents

Transcript of NEWS BRIEF 22 - Asteco Property Management · The Dubai-based company on Sunday launched its...