The property market in Dubai has undergone a substantial drop in the last few months offering excellent investment possibilities, according to the latest research.
Residential rents fell 23% in the first quarter, with Discovery Gardens posting the biggest drop, while prime office rents declined 18%, according to the analysis from CB Richard Ellis.
Both off plan and finished properties witnessed a sharp drop in sale prices over the last quarter as the number of transactions fell by 60% from the corresponding period last year.
The fall in rents was particularly steep in Nakheel’s Discovery Gardens development, where the average rent for studios and one bedroom apartments fell by 28%.
The exit of speculators from the market would see further interest from real time investors/end users and investment funds entering the market during the rest of the year with the focus on properties which are ready to occupy or expected to enter the market over the next 12 months.
‘In some of the developments prices have already bottomed out, providing excellent investment opportunities for investors,’ said analyst Matt Green.
Many projects currently due to be completed this year are likely to be further delayed and pushed back into next year, the commercial property consultant said. Developers of off plan properties have revised payment plans and in a few cases their prices in order to retain a steady flow of funds for their developments.
In the commercial sector prime office rents in Dubai fell by around 18% on the quarter. Secondary locations with Grade A office buildings, mainly in the freehold locations of Jumeirah Lakes Towers and TECOM, are experiencing a sharp decline in lease and occupancy rates, the research indicates.
The drop in demand for commercial and rental space, following the decline in an expatriate workforce, will have a significant impact on the lease and occupancy rates in all areas of Dubai throughout 2009, it predicts.
A new rental index for Dubai to be published this week is expected to a 30% fall in rents since March for Palm Jumeirah villas and other residential hotspots in Dubai such as apartments in Jumeirah Beach Residence and townhouses in the Springs will show rental falls of 8%.
Source: http://www.propertywire.com/
There is a two-bedroom apartment on the 25th floor of Jumeirah Beach Residence with an excellent view of Dubai’s property market; where it has been and where it is heading.
In February, the apartment’s British owner sold it for Dh1.5 million (US$408,000) to a compatriot, reaping a Dh680,000 profit on what he had paid for it less than two years earlier – a return equal to 44 per cent a year.
Then in mid-March, as the global economic crisis raged on, the apartment’s new owner decided to sell it for a little more than Dh1.43m to a Russian buyer, escaping with a loss of about Dh66,000. That works out equal to a loss of 42 per cent a year.
Since peaking last September, property prices in Dubai have dived, according to data from Reidin.com, a Dubai-based company that has compiled an online database of every property transaction registered with the Dubai Land Department since 1973.
An analysis by The National of the more than 24,000 transactions registered in the past two years reveals that the average property price in Dubai has tumbled about 33 per cent from its peak last September, with prices in the first quarter slipping 11 per cent since the start of this year.
But prices in the first three months of this year were still 12 per cent higher – not lower – than they were in the same quarter last year.
“That is a surprise,” says Ryan Mahoney, the managing director at the Dubai property agency Better Homes.
Mr Mahoney and other property experts predict prices will keep falling for at least the next three months before finding their footing.
In the meantime, they say, the property market is diverging. Where once investors were willing to buy from blueprints, the emphasis now is on finished properties that offer high-quality, affordability and a convenient location close to amenities such as cafes, restaurants and shopping.
As the market has shifted, Mr Mahoney says, buyers are thinking less about whether a property will earn quick profits and instead asking themselves how much they might enjoy living there.
How they answer will reshape the future of the country’s property industry. In the meantime, the continuing slump has troubling implications for the economy. Property and construction still account for about 15 per cent of the nation’s economy and represent the largest source of jobs.
Yet lenders such as the mortgage company Amlak Finance predict more defaults as job losses mount and property prices fall, a trend that will put further pressure on the country’s banks.
Some foresee a vicious circle of layoffs, expatriate departures, slower economic growth and falling property prices.
“We will see a slowdown or contraction in a number of economic sectors, most notably in real estate and construction as projects are cancelled or put on hold,” Monica Malik, an economist with EFG-Hermes, wrote in a March report that forecast a 30 per cent decline in Dubai’s population of construction workers. “The fall in population will further result in weaker demand for housing.”
The Reidin.com statistics are not perfect. Analysts note that the data is only as reliable as the human beings at the Land Department whose job it is to input data on each transaction.
And since registration of property became mandatory in November, the department’s employees have apparently been inundated with owners rushing to register deals dating back as far as 1997. In March alone, the land department registered more than 500 deals that took place before 2007.
The data also probably fail to fully capture the frenzy last year in off-plan sales, in which buyers made down-payments to developers for property still under construction.
If the value of the property fell below their purchase price, many probably walked away from their deals, never bothering to register them.
Nevertheless, the data provide what is probably the most comprehensive look yet at trends in Dubai’s property market. According to Reidin.com’s data, the property craze peaked in April last year as prices were rising at a rate of 43 per cent a year.
Prices continued to rise until September, even as the number of deals dwindled.
Then, after rising 37 per cent in the third quarter from the previous quarter to Dh1,106 a square foot (sq ft), property prices dropped, losing 15 per cent in the fourth quarter and another 11 per cent in the first quarter to an average of Dh839 a sq ft.
The numbers look even worse when adjusted for inflation. The latest official estimate of inflation, from March of last year, is 11.5 per cent. In real terms, then, property prices managed to eke out a 0.5 per cent gain over the past year.
To gain some comparison, Dubai residential prices in February dropped by 7 per cent in inflation-adjusted terms. In the US, home prices fell by almost 19 per cent.
One of the market’s vulnerabilities, property executives say, is that it is driven primarily by foreign buyers and is therefore even more susceptible than others to global economic trends.
One of Dubai’s primary sources of demand, for example, has in recent years come from increasingly affluent Indians. But in September, Indians became net sellers of Dubai property.
That is when panic seized the market, executives said, as widespread predictions of Dubai’s immunity to global economic trends proved to be wishful thinking.
Property owners rushed to sell. But would-be buyers found themselves stymied by a sudden freeze in lending as UAE banks faced a global liquidity crunch that forced the country’s two main mortgage lenders, Amlak Finance and Tamweel, to stop financing new mortgages.
Now, with global liquidity recovering and local banks slowly easing lending restrictions, analysts say buyers are tip-toeing back into the market to hunt for bargains.
They are proving pickier than in the past, agents and executives say. Properties that are still under construction are out of favour. What’s in? “Anything that’s ready,” says Anjili Samtani, an agent at Megabucks Realty in Dubai.
In part, this shift reflects the disappearance of short-term speculative buyers, the kind of investors who bought “unbuilt” properties with only a small cash down payment, without ever obtaining a home loan.
After being driven sky-high by investors eager to own property in the shadow of the world’s tallest building, prices at two properties near Burj Dubai, Old Town and The Residences, have fallen since September by more than 50 per cent.
Likewise, villas on Palm Jumeirah, some of the world’s most high-profile properties, have fallen in value by 44 per cent.
Analysts say there is also a shift among buyers to quality, a move made possible now that more and more developments have been completed.
“Investors are able to look and touch and feel something that previously they could only see in a brochure,” says Blair Hagkull, the managing director of Jones Lang LaSalle in Dubai. “The motivation of an end-user is quite different from that of a speculator. End-users focus on size and views and parking. People are starting to look at who the developer is, who the contractor is. Design issues are becoming more important.”
Some developments have therefore bucked the trend and risen in value. Affordable housing in developments such as Discovery Gardens and International City, for example, has managed to rise in value through the slump.
Properties with prime locations or outstanding amenities have performed even better. Yacht Bay, with views of Dubai Marina Yacht Club, has enjoyed a 55 per cent jump in price.
The Waterfront, one of several luxury developments by Trident International Holdings, has jumped in value by 62 per cent. “The finishing is superb,” says Ms Samtani.
The bluest of the blue-chip properties have lost little of their lustre. The most expensive property in Dubai, for example, remains the luxurious La Reve Tower, where prices remain at roughly Dh2,500 a sq ft even after falling 26 per cent since the start of the year.
But prices at La Reve are still 35 per cent higher than they were a year ago.
This differentiation, property executives say, is likely to determine which developers survive the downturn and which don’t.
“In this process of natural selection, buyers will be killing off the brands of developers that didn’t deliver on their promises,” Mr Mahoney says.
Analysts warn that there is little to keep prices from falling further during the summer slowdown in business activity. “The panic is still there,” says Sharjeel Bijdani, a banker in Dubai who owns four apartments. While transaction numbers improved in February and March, analysts say not to expect any improvement until after Ramadan.
Some also warn that easing mortgage terms could unleash a wave of pent-up selling as buyers obtain financing to pick up bargains.
When the market finally recovers, analysts say, it is likely to be much more robust. The Land Department’s statistics, for example, could help reduce volatility in prices by improving transparency, and the shift from short-term, speculative property investing to long-term purchases by people who want to live in the homes they buy will tend to make prices more stable, they say.
The market’s current malaise, therefore, is helping push Dubai’s urban development into a more mature phase. “This whole move, as painful as it is for everyone, particularly for us,” says Mr Mahoney, “is better for the city in the long term.”
Source: http://www.thenational.ae/
Residential property prices in the UK fell slightly in April putting an end to optimisim that had been created by a small rise in March.
Prices fell 0.4% and the average price of a home is now £151,861 according to the April House Price Index from Nationwide, the country’s larges building society. The price of a house is now 15% less than it was a year ago.
Nationwide had said after the March figures that too much should not be read into the small rise and now it is saying that recent measures announced in the Budget were unlikely to turn things around.
But it said that the extension of the stamp duty threashold might encourage first time buyers and this combined with falling prices should have some kind of effect on the property market.
The building society said the government could have done more to aid the availability of credit. ‘The chancellor announced several measures aimed at boosting the housing market in his Budget,’ said Fionnuala Earley, Nationwide’s chief economist.
‘The scheme for government guarantees for new, high-quality residential mortgage backed securities are welcome and may help to boost the amount of mortgage credit available. However, since the availability of credit is only part of the reason why the housing market is in the doldrums it is unlikely to lead to a swift turnaround in its fortunes,’ she explained.
‘Lenders have already indicated that the availability of credit is less of an issue than it has been, but at the same time expect that the demand for secured lending will fall further. Given the weakness of the economy and the expected further increase in unemployment this comes as no surprise,’ she added.
Earley pointed out that the effects of unemployment would have an effect the property market is very sensitive to income and, as a result, conditions in the labour market are crucial to its performance.
‘That said, the correction in house prices and improved affordability conditions provide a good grounding for the market once domestic and global economic conditions once again become more favourable,’ she concluded.
Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors said the figures were not a surprise.
Source: www.propertywire.com
Many major global property markets recorded positive price growth in 2008 but by the end of the year that had stopped or fallen in 75% of locations, according to a new report.
There were wide variations in performance around the world with Hong Kong showing the sharpest annual drop in property prices with a fall of 24.5%, the Knight Frank 2009 Wealth Report, shows.
While Bangkok saw residential prices rise by 22.5% and overall just under 50% of the locations featured managed to record positive price growth on an annual basis in 2008.
Other real estate markets saw a drastic change from boom to bust. For example, Dubai recorded annual overall growth of almost 11% but property prices fell by 19% in the last quarter of 2008.
The report, which includes new research from Knight Frank and Citi Private Bank, shows that prime property in Monaco is the most expensive in the world costing an average of €55,000 per square metre for the best properties with London and Manhattan in second and third place.
But despite house price falls almost 55% of high net worth individuals plan to increase their exposure to residential property over the next two years.
Global farmland prices started to slip last year on the back of falling commodity prices, but remain more resilient than residential or commercial property. Exchange rate fluctuations mean affordability in some countries has increased for US dollar and euro-backed buyers, despite strong price increases in local currencies.
‘Covering a period of global wealth destruction rather than creation, the report’s annual analysis of prime residential property markets and the behaviour and attitudes of the wealthy has become even more relevant,’ said Liam Bailey, head of residential research at Knight Frank.
‘Even the world’s richest people have cut their discretionary spending and most desirable prime residential property markets have now been affected by the global downturn. Although almost half the locations in Knight Frank’s Prime International Residential Index managed to show a positive overall return in 2008, price growth had either stalled or started to decline in nearly 75% of them by the end of the final quarter,’ he added.
But it is a positive sign that the rich are committed to property despite the gloom, he added.
Source: http://www.propertywire.com/
Contractors in Dubai hope that Saudi projects are more sustainable. Local companies will take the majority of the available work.
Contractors in Dubai have been spoilt over the past five years. Mega projects were launched on a monthly basis and major contract awards were made each week. There was so much work that managers even used to boast that filling order books was easy.
Those days have gone. Real estate projects have dried up. Government authorities have come to realise that if their planned developments will probably never be built, they do not need to build access roads and sewers either. Many of Dubai’s supposedly safe infrastructure projects will start to slowly fade away.
As contractors realise that Dubai just does not have the projects any more, companies are looking elsewhere for work.
Abu Dhabi is the obvious answer, and tender lists now include Dubai-based companies that until recently showed little interest in working in the UAE capital.
Doha is another option, but like Abu Dhabi, the volume of work available is limited. Both markets serve more than 1 million people each, and their populations are also growing more slowly than expected.
Saudi Arabia is different. It already has 23 million people who need more homes and the schools, hospitals and roads that come with them. Contractors hope that Saudi Arabia’s projects are more sustainable and will survive the economic downturn.
There is certainly a lot of work to be done, but will it fill the Dubai contractors’ empty order books? The answer is no. Private development in Saudi Arabia – like in the rest of the world – has slowed as banks and investors get cold feet.
But there is some good news. The government is moving ahead with a raft of projects, and although Saudi companies will take the majority of the work, there will be opportunities for Dubai-based firms. However, compared with the mega projects that were on offer in Dubai, the pickings in Saudi Arabia will be slim indeed.
Author: Colin Foreman. Gulf Bureau Chief
Dubai
The world’s most respected property professional’s organisation is to undertake a global consultation to develop an enhanced regulatory frame work for real estate.
The Royal Institution of Chartered Surveyors aims is to raise professional standards, improve confidence for clients and help secure the accurate valuations that underpin most economic activity.
It wants all members involved in the valuation of commercial and residential property and specialist areas such as rural property, plant and equipment, personal and business property along with mineral asset valuations to have their competence monitored on a continuing basis to satisfy clients, and public authorities that RICS is able to properly regulate its members in a testing environment.
It also wants to introduce an accreditation scheme for RICS valuers which will provide a recognizable ‘kitemark’ covering the method and practice of valuations and require re-accreditation every three years.
The organization said that there is an even greater public demand for measures that ensure that markets and other stakeholders can have the highest level of confidence in the competence and probity of professionals working in key sectors of the economy.
‘The value of property is the key component which underpins economic activity. It is vital that there is an effectively regulated gold standard for valuation across the globe which inspires public confidence in the profession,’ said RICS spokesman Mark Gerold.
‘The economic and social importance of all property assets can not be underestimated especially towards wealth generation in a functioning economy. The current financial turmoil highlights the need for raising standards to ensure a stabilising foundation for future economic development,’ he added.
Source: http://www.propertywire.com/
Dubai will have to deal with the thorny issue of what to do with the projects that have been put on hold.
There are now fewer projects being built than there are on hold in Dubai. This will come as no surprise to consultants, contractors or suppliers working in the emirate.
Since October last year, real estate projects have fallen like dominoes as investors have stopped buying properties and developers run out of funds.
The impact on the construction market has been profound. Some $335bn of projects are now on hold compared with $254bn that are being built. Of those that are continuing, many are progressing using extended schedules and minimal workforces.
But despite the suspensions and cancellations, some projects are still moving ahead, and most Dubai-based contractors are confident that they have enough work to see them through the rest of 2009.
The bigger problem is 2010. According to the data, there is some cause for hope. About $334bn worth of projects are still in the planning stages, and if these schemes do go ahead, contractors will have nothing to fear. The question is, will these projects go ahead?
A lot has to happen for developers to stick to their plans. On the finance side, banks must solve their credit problems, and liquidity needs to return to the market. And on the population side, the number of people in the emirate must continue to grow and tourism numbers remain strong if there is a chance of these projects remaining viable.
To make matters worse, if and when market conditions do become more favourable Dubai will have to deal with the thorny issue of what to do with all the projects that have been put on hold before it can move ahead with new schemes.
Until there is a clear strategy outlining what should be done with these abandoned construction sites, it is unlikely that Dubai’s once white-hot construction market will be able to make a convincing return to form.
Author: Colin Foreman. Gulf Bureau Chief
Dubai
Buildings in the US with a high energy star rating are attracting higher rental premiums than non green buildings of the same size, location and function, according to the latest research.
It is the first credible evidence on the economic value of the certification of green buildings in the commercial property sector, the research commissioned by the Royal Institution of Chartered Surveyors shows.
Its report, Doing Well by Doing Good, shows that buildings with energy star ratings command a premium of 3% per square foot. In addition when looking at effective rents, the true rent of a property, considering rental concessions, spread over the life of the lease, the premium is at least double at 6% and above.
The researchers also examined the impact on the selling prices of green buildings, and here the premium is even higher, in the order of 16%. This implies that upgrading the average non-’green’ building to a ‘green’ one would increase its capital value by some $5.5 million, the report says.
The results suggest that tenants and property investors are currently willing to pay more for an energy-efficient building, but not for buildings that are ’sustainable’ in a broader sense, it concludes.
‘This piece of research is an important first step in building an evidence base on the topic of the value of green buildings. Previously with only anecdotal evidence available on which to base decisions surrounding development of energy efficient buildings, it is understandable that the uptake of some measures has been frustratingly slow,’ said Simon Rubinsohn, RICS Chief Economist.
‘With more comprehensive evidence based research, such as this paper, the economic argument for having an energy efficient building will be strong. Any businesses wishing to maximise profits will have to start looking at increasing the energy efficiency of the buildings in order to remain competitive. By proving that green buildings are economically beneficial due to the savings they can make and the higher rental yields they attract, non-green buildings will eventually become an outdated model,’ he added.
The research, carried out by Piet Eichholtz and Nils Kok of Maastricht University, the Netherlands, and John Quigley of the University of California, Berkeley, United States of America, is the first of its kind to examine the financial performance of green office buildings in the US.
Source: www.propertywire.com
Residential property prices in the UK increased in March for the first time in 16 months but economists are warning that it is not yet a sign of recovery.
The monthly housing price index published by the Nationwide Building Society showed a 0.9% increase last month, the first since October 2007. The price of an average home increased above £150,000.
But economist said the figure should not be taken as a sign that the UK property market is one the road to recovery. Colin Ellis, economist at Daiwa Securities described the reading as likely to be a blip. ‘Even if these glimmers of hope continue to build, households still need access to affordable credit before a sustainable recovery can ensue,’ he explained.
‘It is still too soon to say that this will be the beginning of sustained house price rises and a reflection of a wholesale return of confidence to the market,’ she added.
Abstract from source: www.propertywire.co
Property industry analysts have already published dire figures for the Dubai property market but real estate brokers fear they are proving even worse than predicted.
Freehold property prices in Dubai have plunged by as much as 70% since March of last year, real estate agents say but expect them to bottom out in another six months.
The disclosures indicate that those involved at grass roots level have seen prices fall severely and although there are variations, the steep decline appears universal.
‘We have seen prices plummet across Dubai’s property sector by 50 to 70% to the level of 2005. We expect the plunge to continue for the next six to eight months to bring prices down to their original level five years ago,’ said Mohammed Khan, Managing Director of New World Capital, a Dubai-based real estate brokerage.
Dubai’s property prices, propelled by a swelling expatriate population, speculative investments and rising construction costs, surged by 25% in the first half of 2008 over the first half of 2007.
But because of the global downturn a drastic decline set in during the last quarter of 2008 and first quarter of this year, especially for higher priced property. The price decline has been less severe for lower cost developments but still considerable.
A drop in residential as well as commercial rents is also evident, brokers said. The slide has been more pronounced in areas of New Dubai, where rents have fallen by up to 40%.
Hafiz Sohail Ijaza, Property Consultant at Wood Bridge Real Estate, expects the property market will remain balanced in terms of supply and demand through 2009. ‘We don’t see a recovery for the off-plan property sector till 2010,’ he said.
Abstract from source www.propertywire.com
Six million property owners in the UK fear their home could end up being repossessed while millions more are anxious that they will end up in a negative equity situation this year, research shows.
A report from consumer watchdog Which? Indicates that almost two thirds of people fear either they or their partner could lose their job during the current recession and more than four in ten are anxious this could make them unable to cover their mortgage.
Meanwhile, 4.2 million people are worried that they could end up in negative equity, almost a quarter of all those who have mortgages and 73% feel the government should be doing more to help them out.
‘It’s dreadful that six million people fear losing the roof over their heads,’ said Which? personal finance campaigner Doug Taylor.
‘With people spending sleepless nights worrying about job losses and repossessions, the industry needs to demonstrate that it wants to win back the trust of the British public by fully embracing government initiatives,’ he added.
The Which? Report calls for a statutory ban on 100% mortgages after its research found that three quarters of people want them banned. It also wants robust protection against people losing their homes because of unsecured debt and for the government to force lenders to become part of the Homeowner Mortgage Support Scheme if they fail to join voluntarily.
Figures from the Council of Mortgage Lenders predict as many as 75,000 repossessions in the UK this year although this has been described by others as optimistic. According to the Financial Services Authority 2.5 million people will end up in negative equity by the end of this year.
Source: www.propertywire.com
Buyer interest in the UK’s property market is increasing across the country with London and the south of England leading the way, according to the Royal Institution of Chartered Surveyors’ (RICS) UK housing market survey.
Buyer enthusiasm which began growing in January continued to grow in February with interest in London at a high not seen for more than two years. This means that interest in the property market has now increased for four consecutive months and reflects both the drop in asking prices and continued interest rate cuts, according to RICS.
As house prices fall, those with finance are looking to pick up bargains. However, this pent up demand has not yet translated into sales. The average number of transactions per agency over the last three months is now at 9.5, a slight drop from 9.8 in November, and the lowest figure since the survey began in 1978.
The balance of surveyors reporting house price falls increased slightly in February with 78.3% more chartered surveyors indicating a fall than rise in house prices, from 76.6% in January.
Family homes remain in demand but flats are proving harder to sell in many areas as first-time buyers are struggling to gain a foothold on the property ladder. Despite depressing repossessions data, the net balance of surveyors reporting new instructions to sell remains in negative territory indicating that supply is very tight. In the current market, a lack of mortgage finance and weak economic conditions are restricting the ability of many to consider the option of entering the market.
However, surveyors remain optimistic that sales will pick up in the coming months as 11% more chartered surveyors expect sales to increase in the coming three months than in January.
Source: www.property-investor-news.com
As massive increase in complaints against property lettings agents in the last year is expected to continue as those who can’t sell put them out to rent instead.
The latest figures from Christopher Hamer, the Ombudsman for Estate Agents, shows a massive 200% annual increase in letting related complaints.
It highlights the need for the public to be acutely aware of rapid changes in the property letting industry, Hamer says in his latest report to the industry.
‘Lettings agents still only join the OEA on a voluntary basis and it is therefore satisfying to see so many firms opening up access to my scheme for their customers. Those firms will be operating in accordance with the standards laid down in the OEA’s Code of Practice,’ he added.
‘The Ombudsman’s report illustrates a dangerous phenomenon that should be of concern to anyone letting, or thinking of letting their property. As properties fail to sell, we have seen a sizeable increase in the number of new, and sometimes reluctant, landlords entering the market,’ said Ian Wilson, Managing Director of Martin & Co.
‘These are the very people who need protecting from the unscrupulous, uneducated or inexperienced letting agent who claims to be able to represent their best interests,’ there is also a corresponding increase in the number of estate agents entering the lettings arena as a way of bolstering their dwindling sales revenues and this has potentially disastrous consequences. Not only is the continual service role of the letting agent surprisingly different to the quick fix function of an estate agent, but there are also over 100 pieces of letting related legislation in which to be conversant.
Source: www.propertywire.com
European property investors involved in a major development in Dubai are asking the authorities to step in amid claims that no work has been carried out for more than two years.
They bought units in the Jumeirah Waves Business Towers project in Jumeirah Village South, a commercial development project that comprises three identical towers, and want a refund and compensation as there has been no significant work for almost two and a half years.
They also claim that they do not believe that the lack of construction work is anything to do with the global economic downturn.
The group of investors wants the government, Real Estate Regulatory Agency and master Developer of the JVS project, Nakheel, to intervene in the dispute with project developer High Rise Properties.
They warn that a protracted conflict could potentially hurt overall investor confidence in Dubai and ultimately deliver a negative impact on Dubai and the United Arab Emirates’ investment landscape.
‘It has been more than two years since our group and other investors have purchased units in the JWBT development but until now the project area is still undeveloped and the developer has remained elusive and unable to give us a reasonable time table for the development,’ said Richard Moore, group spokesman.
‘There is certainly a breakdown in transparency and accountability somewhere and we urge the concerned government authorities in Dubai, mainly RERA and Nakheel, to step in and resolve this problem before it gets out of hand and negatively affects investor confidence in Dubai,’ he added.
The property investors say they are fed up with excuses and promises. ‘It is not just the money that we have invested in this project that’s at stake here, this kind of attitude by a developer will certainly cause further damage to the reputation of Dubai’s real estate sector at a time when the industry is supposed to be consolidating its forces and building its image to limit the ill-effects of the global financial crisis,’ he continued.
Source: www.propertywire.com
Dubai’s property market has taken a beating but could emerge from the economic crisis stronger and more transparent, leading legal and financial experts have predicted.
New laws and regulations, both at Dubai government and at federal level, will emerge in the coming few months establishing more clearly the rights of property owners. In addition, the Dubai Land Department is developing one of the most sophisticated and transparent online property transaction systems.
Dubai would become a better place to live when the price of property and levels of rent fell to levels affordable for the vast bulk of the population living and working in the UAE. “While there is a slowdown in the market, there remains a substantial growth pattern across most of the region – which is something many other parts of the world will struggle to achieve. On a regional and global level, it will be those companies that carefully plan in the down market which will recover fastest and further post-recession.”
Source: http://www.arabianbusiness.com/
A new attitude of honesty is creeping into the Dubai property market as developers begin to open up publicly about the devastating effects of the real estate downturn.
Just six months ago large companies were continuing to talk up the property market and even talking about recovery in the first quarter of 2009. They would strenuously deny there were going to be job cuts, mergers or the need to cancel major projects.
Now they are responding more honestly to questions and admitting that they are facing severe problems in terms of selling current projects and funding future developments.
Leading the way is Dubai’ second largest property developer Deyaar. Last month it admitted that it would put at least a quarter of projects on hold, now it has confirmed that it may have to consider merging with another company.
It is a change from last October when Deyaar and Dubai’s Union Properties denied that they were in merger talks. ‘There is definitely more openess in terms of discussing sensitive issues,’ said one journalist in Dubai who did not wish to be named. ‘Six months ago it was all denial, now questions are answered with a degree of more honesty,’ he added.
Developers are also publicly acknowledging that prices in some areas have fallen by 50% since their peak last year.
Source: www.propertywire.com
The third largest property developer in Dubai is seeking a government bailout for its Formula 1 theme park as it cannot secure funding to finish the project.
Union Properties has stopped work on the $460 million Park due to the global financial crisis and the lack of lending.
Now it says it if it fails to receive government cash or raise cash through a bonds issue it may cancel the project.
The state of affairs where a major property company cannot raise finance to finish a project despite expecting to return to profit in the first quarter of this year is a sign of deepening problems in Dubai’s economy where lack of liquidity is stifling enterprise.
The real estate sector has been badly hit. Residential real estate prices have fallen by an average of 25% since a peak in September according to Morgan and $263 billion of projects have been cancelled or put on hold.
Last week the Dubai government announced a $20 billion sovereign bond programme to support the economy. Nasser al-Shaikh, director-general of Dubai’s department of finance said real estate companies would be among the main beneficiaries of state aid.
The developer received a licence in November 2006 to develop F1 themed parks with rides, museums, a library and restaurants. Union borrowed $680 million to build part of the park and said in June 2007 it would need more loans.
Source www.propertywire.com
Over 23,000 four and five star hotel rooms are expected to be completed in Bangkok, Singapore, Hanoi, Ho Chi Minh and Kuala Lumpur by the end of 2012, according to a new report published by CBRE Hotels.
“The nature of demand for hotels is notoriously volatile, with factors impacting demand as varied as they are unpredictable,” said Mr. Robert McIntosh, Executive Director, CBRE Hotels Asia. “Conversely, forecasting market supply is somewhat easier, despite some uncertainty in construction timeframes.”
The actual number of rooms to be added is greatest in Singapore. Although the increase in Hanoi is high in percentage terms it is not substantial in terms of the total number of rooms.
Singapore will experience the largest number of addition hotel rooms of the five cities, with nearly 10,000 four and five star rooms expected to open by the end of 2012. Assuming all projects proceed, this represents a 39 percent increase in supply over a relatively short period of time.
Hotel supply in Bangkok is expected to increase significantly, with over 6,000 four and five star hotels rooms set to enter the market by the end of 2012. This represents an increase of 26 percent bringing the total supply of four and five star hotels in the city to over 31,000 rooms.
In Vietnam, the existing supply of four and five star hotels in key cities is relatively small compared to other markets. In Hanoi, new four and five star hotel supply is expected to total nearly 3,000 rooms representing an increase of 75 percent. Whilst this appears high, the market is growing from a relatively small base of just under 4,000 rooms (Singapore and Bangkok have over 30,000 four and five star rooms each). In Ho Chi Minh City, existing supply of four and five star hotel rooms is expected to increase by 38 percent to reach a total supply of over 7,000 rooms by the end of 2012.
The addition of new supply to these cities is essential in promoting further development of the tourism industry and to ensure capacity exists to accommodate future growth of visitor arrivals. This is particularly important in Ho Chi Minh City which currently suffers from a shortage of supply.
Finally, the hotel market in Kuala Lumpur will experience a modest increase in hotel rooms to the end of 2012, with the market set to increase by just ten percent to reach 20,400 hotel rooms. While average room rates and occupancy levels are less than those in Singapore, the relatively small increase in supply is unlikely to pose a significant challenge to the market in the next couple of years but it should help boost total tourism revenues.
House prices in the UK are set to decline on average 13-15% during 2009, according to Jones Lang LaSalle’s latest Residential Market Forecast, with the greatest falls expected in London.
The forecast also predicts that prices will fall by a further 1-3% in 2010, with the bottom of the market due to be Q3 or Q4 of that year before recovering by 4-6% in 2011. During 2012 and 2013 Jones Lang LaSalle expects growth to accelerate by a further 8-10%, while peak Q3 2007 levels will not recover until the end of 2015.
James Thomas, Head of Jones Lang LaSalle’s Residential Investment team, commented: “There are however some signs that the market is improving, with the Halifax reporting that prices rose in January and with the RICS claiming that buyer enquiries are increasing. The cut in interest rates and the consequential benefit for affordability will also have played their part in improving perceived market conditions.
However we do not believe these traits will be sustained or sufficiently outweigh the increasing burden of higher unemployment, the greater financial caution by consumers, the difficulties in borrowing and the inevitable increase in housing availability.
During 2009 prime central London prices are expected to be hit sharply with declines of between 16-20%. The first half of the year will prove particularly weak as annual price falls approach 25%, however declines will start to ease towards the end of the year. Greater London witnessed among the highest falls in price across the UK during Q4 2008 (6% compared to the 5.1% average) and they will continue to decline faster during 2009, with annual falls of up to 17%. However, during 2010 house prices will start to rise again from Q3 in both prime central and greater London, and by the year end could increase by 2%.
James Thomas concluded: “We had already built in a very weak housing market in 2009 but the deeper recession this year than previously anticipated does not imply that the housing market will be overly sensitive and fall at an even faster rate. We maintain our view that the housing market’s biggest hit will have been 2008 rather than 2009, both in terms of price falls and turnover. However, we still expect 2009 to be a very poor and troublesome one for the UK housing market. On a more positive note, the three monthly trend in house price falls has already begun to ease and when this becomes a more established trend over the next few months it should signal that the bottom of the market is in sight.”
Source www.propertywire.com
Property rents in Qatar are set to plummet by up to 25% next year as a glut of new apartments come onto the market, it is claimed. Up to 9,000 new apartments are due to be completed in Qatar in 2010 and an estimated 100 tower projects are either already underway or planned to be launched during the next few years, despite the current slowdown in construction triggered by the global economic crisis due to following reasons.
Demand was easing as a result of the economic problems, but despite this all the new apartments were expected to be filled by next year.
Demand for high-end housing was still expected to remain high as the government was increasing spending on infrastructure projects and the oil and gas sector.
Now analysts expect that there will not be a downturn in rental prices until June.
