Dubai’s property companies may face significant refinancing risks as the emirate’s real estate market is likely remain under pressure until at least 2012 to 2013, according to Fitch Ratings.

The property industry ‘is likely to see a period of stagnant growth at best and a double dip contraction at worst,’ said Bashar al-Natoor, director at Fitch’s Europe Middle East Africa corporates team.

It is a blow to real estate investors who have been looking for signs of recovery since property prices have fallen by 55% since their peak in the middle of 2008. Some analysts expect property prices to fall another 20 to 40%. Developers such as Union Properties PJSC are trying to sell assets to pay debts and complete projects.

Without a major improvement in market conditions, sizeable disposals, equity raising or significant government support, ‘it is unlikely that developers will deleverage quickly enough to repay the upcoming 2011/2012 maturities from internal resources,’ al-Natoor added.

The credit outlook for Dubai’s real estate remains negative as the availability and the cost of debt is likely to deteriorate, prompting investors to demand higher risk premiums, al-Natoor confirmed.

Dubai’s real estate and construction industries will continue to weaken on increased customer delinquencies, tighter liquidity and the reliance on short-term maturities, according to the report.

‘Oversupply, limited mortgage availability and rising interest rates will also pose significant constraints for real estate companies and buyers,’ it concludes. Dubai rents are expected to decline over the next 12 to 18 months as developers try to prevent tenant defaults, Fitch added.

Meanwhile the latest figures show that sales prices are level. The price of apartments, villas and commercial properties remained stable in second quarter of the year compared to the previous three months with minimal reductions in villas across just two areas of the city, according to a new report from Astecto Property Management.

The Asteco Q2 2010 Report said that no change was recorded in the sales price of apartments and offices, with flats in Dubai International Financial Centre (DIFC) and on Palm Jumeirah still commanding the highest prices.

‘The market is at a stage where pricing can vary from unit to unit in any particular property. We have noticed some overseas clients, who bought property on Palm Jumeirah, are prepared to sell at a much lower price per square foot as the exchange rate is more favourable without them incurring any discount,’ said Elaine Jones, chief executive officer of Asteco Property Management.

Villas are roughly the same as the first quarter of the year in all areas except The Meadows and The Springs, where prices declined 5 and 6% respectively mainly due to the large number of units available in the area, their age and the fact that owners who initially bought into this development at low launch prices, are in the position to reduce their asking price without making a loss, the report also pointed out.

Palm Jumeirah villas remain the most expensive at AED1,800 per square foot due to its iconic water front development, with the Green Community at the opposite end of the scale with villas selling for AED700 per square foot.

Source: www.propertywire.com

Limitless, the property arm of struggling state conglomerate Dubai World which was set up to expand overseas business, is backing out of a plan to build hundreds of luxury homes in Malaysia as it looks to shore up its finances. Cash strapped Limitless is selling off its stake in a partnership with Malaysia’s Bandar Raya Developments to develop waterfront land in the southern city of Nusajaya in what is also a blow for the region as foreign investment declines.

Limitless, which was set up in 2006 to focus mainly on overseas development and is now under the management if its sister company Nakheel, hopes to sell its 60% share for $23.8 million.

The project has been part of an ambitious plan to cash in on growing demand in south east Asia for property. Limitless formed joint ventures with developers in Vietnam, Malaysia and Indonesia. Among them were the $220 million Halong Star mixed use development in Vietnam and the $1.7 billion Rasuna Epicentrum in Jakarta.

Asked what would happen now in the region a company spokeswoman said; ‘We continue to review our business activity to reflect market conditions’. She added that the Limitless office in Singapore is still open.

Work has started on overseas projects in Saudi Arabia, Jordan and Vietnam but others in Russia, India and Pakistan have been either stalled or slowed. Plans for a waterfront development in Karachi have been cancelled and a housing project with India’s largest developer DLF near Bangalore has also stalled.

The move comes as Nakheel, the developer behind Dubai’s iconic palm shaped man made islands, is hoping to sign a debt restructuring deal at a meeting with financial creditors on Wednesday as it restructures $10.5 billion of debt. Dubai World owes financial and trade creditors total of $23.5 billion. Nakheel has already started paying trade creditors 40% of the amount owing as part of a wide ranging offer announced in March.

Meanwhile Dubai Properties, part of the business empire of the emirate’s ruler, plans to hold an auction for three beach side plots of land next month as Dubai struggles under a weight of sovereign and corporate debt.

Dubai Properties, part of Dubai Holding, said in an advertisement that the auction would take place on August 29 for the lease of three beach club plots at Jumeirah Beach Residence Community.

Credit rating agency Moody’s last week downgraded Dubai Holding’s loss making main operating arm, Dubai Holding Commercial Operations Group (DHCOG), to B2 in its highly speculative category of ratings, taking account of weakness in Dubai’s real estate market and uncertainty over the company’s debt restructuring.

Source: http://www.propertywire.com/news/middle-east/dubai-overseas-property-sale-201007124300.html

new global property price index suggests that the real estate market in Dubai is recovering with average prices rising 1.6% in the first quarter of the year.

The latest Knight Frank Global House Price Index shows that the emirate’s real estate sector, which has seen prices tumble more than 50% during the global economic downturn, seems to have turned a corner.

There is further good news for the real estate sector with reports suggesting that fewer units are expected to come to the market this year. There had been fears that property prices could fall again if there was a flood of new properties released for sale later in 2010 and 2011.

The latest report though from Harbor Real Estate suggest there will be 50,000 units, down from its previous estimate of 60,000. The Dubai Land Department is even more optimistic. It had predicted that there would be around 43,880 units released in 2010 but it now expects that there will be a 40% fewer.

Knight Frank said that residential property prices in Dubai were 2.4% up on the figures for the third quarter of 2009 but were still 8.2% down on the year.

It puts Dubai in 38th position on its index which compares 47 property markets around the world, an improvement since the third quarter of 2009 when the emirate was the worst real estate market on the index.

Ukraine and the three Baltic states continue to occupy the bottom rankings with declines of more than 30% year on year. The top performers remain the Asian economies of China, Hong Kong and Singapore, all recording annual growth in excess of 24%.

The index also revealed that prices in the first quarter of 2010 increased in 53% of the locations monitored, with the Asia Pacific region seeing the strongest growth with prices increasing, on average, by 17.8%.

Annual price inflation for all global housing markets moved into positive territory for the first time since the last quarter of 2008, recording 1.6% growth in the year to March 2010, Knight Frank added.

‘A recovery in the global housing market is undoubtedly under way. Even the markets in some of the worst performing markets such as the Baltic States and Ukraine are starting to experience some respite, with prices falling at a slower rate than previously,’ said Liam Bailey, head of residential research at Knight Frank.

Source: http://www.propertycommunity.com/

The annual property and construction industry ladies’ ski challenge has taken place for a fourth year on the pistes of Les Gets in France.
Due to its success this year, the event is planned to run again in 2011. The five-day challenge is now in its fourth year and over 40 competitors took part.
“It has been a success – recession withstanding – and gives women in the property and construction industry the opportunity to network and discuss business whilst improving their skiing,” said Chapman Consulting director Sarah Chapman.
Women of the property and construction industries competed for prizes including Best Technique, Most Improved Skier and Bravest Descent of a Black Run.
Companies represented at the challenge included Team Prosail, Paragon Management, Costalita Apartments, Robert Bird Group, Structuretone, sq-m2, Chapman Consulting and the Royal Borough of Kensington & Chelsea.

Source:http://www.nce.co.uk/5214261.article

The competition is open to all women skiers across the industry who enjoy informal networking, and is organised by Robert Bird Group consultant Lynn Keenan.

Next year’s trip commences on Jan 16 2011 and options on places will be agreed as soon as possible. For further details call 020 7592 8000.

Demand is likely to be the main driver of real estate performance across all sectors in Dubai in 2010, according to the latest analysis.

The Dubai office market is becoming increasingly favourable for tenants as it is witnessing a significant demand-supply mismatch along with falling rentals and increased vacancies, says a new report from consultants Jones Lang LaSalle.

While demand levels are increasing, as both existing and new tenants seek to consolidate and take advantage of better quality space becoming available on more competitive terms, there is not likely to be enough demand to meet the high level of new supply entering the market in 2010,’ says the Dubai Real Estate Market Overview January 2010.

Average vacancies across the City are therefore likely to increase from their current level of around 33% during 2010. One reason is that much of this space is contained in non-core locations that international and regional tenants will not consider. So a two tier market is therefore likely to emerge, the report points out.

Vacancies in single ownership buildings in the most sought after Central Business District locations are currently less than 10%, resulting in selective shortages in meeting certain tenant requirements.

‘The tenant is becoming the ultimate winner as the office market is going through a significant adjustment with more vacancies and cheaper rents on offer. This scenario is encouraging for businesses as it offers multiple options for expansion and relocation as Dubai becomes more competitive office location both locally and regionally,’ said Blair Hagkull, Managing Director of Jones Lang LaSalle Mena.
‘Attractive deals can be found throughout the city’s prime and peripheral areas as rental rates and capital values are hovering at pre-2007 levels,’ he added.

The report also indicates that average prices and rentals in the Dubai residential sector are expected to show more stability in 2010 as the rate of decline has slowed in the past few months. But, while conditions may stabilise in some locations and sectors, the overall market is likely to see a continued decline in average prices and rentals in 2010. The performance of different locations will be more driven by local demand and supply issues.

‘Prices seem to have stabilised over recent months, despite the existing over-supply situation. Stabilisation of transactional volumes is another positive indicator of investor confidence but the lack of housing finance remains a major challenge in Dubai. An improved lending scenario is one of the key factors for a sustainable recovery as the value of mortgages as a percentage of total sales value has dropped significantly during 2009,’ explained Hagkull.

‘With an additional 24,000 units expected to be completed in 2010 and 25,000 units in 2011, there may be an emerging opportunity for both investors and financers in the Dubai residential market as it has already seen a significant level of pricing adjustment in 2009,’ he added.

Rental adjustments were comparatively less in the Dubai retail market than the office or residential sectors but the market is still moving in favour of tenants in 2010. Average rentals have declined by around 29% from the fourth quarter of 2008 to the same period in 2009 and by 13% from the third quarter and the fourth quarter of 2009 on the back of a 15 to 20% decline in retail sales in 2009, the report also reveals.

Several planned projects have experienced delays, which in turn has affected the future supply pipeline. This lower level of future supply relative to planned completions in the office and residential sectors, is providing the retail market with something of a breathing space,’ it adds.

‘This is an interesting time as the dynamics of the Dubai retail market continues to swing in favour of tenants due to falling rents and increased vacancies in some centres. In spite of the cut back in future supply levels, we expect to see an increase in shorter leases, break clauses and rent free periods as we go through this tectonic shift in the market. There will be more and more incentives for tenants due to the shift in power from landlords to tenants. We are also seeing the emergence of a two-tier retail market as occupancy rates in super regional and regional malls remain above 90% as opposed to older shopping centres,’ said Hagkull.

http://www.propertywire.com/

What Burj Khalifa will have impact on other properties Business in Dubai, it cannot be fore-casted now but we haope it will have…! Brief News of inauguration of Burj Khalifa is as following:

“Engineers in Dubai have overcome a range of technical and logistical challenges to meet the opening deadline, which is over a year later than originally planned. The tower was inaugurated by His Highness Sheikh Mohammed Bin Rashid Al Maktoum and coincides with this fourth anniversary of becoming Ruler of Dubai.
The tower became the world’s tallest man-made structure, bypassing 508m Taipei 101, just 1,325 days after excavation work started in January 2004.
In total 330,000m3 of concrete, 39,000t of reinforced steel, 103,000m2 of glass and 15,500m2 of embossed stainless steel have been used in the building which to date has taken 22M man hours to build.
Developer is Emaar, architect is Skidmore Owings & Merrill and contractor is a joint venture of Samsung, Arabtec and Besix. Consultant Hyder acted as the developer’s engineer.
“The building represents engineering application at its finest and Hyder Consulting is very proud to add this project to its heritage of world class construction feats on one of the world’s most prestigious developments,” said Hyder Consulting regional managing director Wael Allan.

Source:http://www.nce.co.uk/5212402.article”

There has been a rise in demand for residential units in the area known as ‘New Dubai’ during the second half of 2009, according to a new report from Asteco, a property services company.

Apartment and villa sales prices across Dubai decreased by an average 15 per cent and 13 per cent respectively, representing a significant slowdown in negative growth compared to the quarter-on-quarter decline from Q4 2008 to Q1 2009, the report said.

However, Palm Jumeirah, which along with the Dubai Marina forms the area known as ‘New Dubai’, has reported a surge in sales prices during the second half of the year, the report claims.

It was found that villa prices rose by 20 per cent and apartment prices have risen seven per cent. With more properties being handed over, owners are reluctant to sell at a reduced cost and are therefore leasing their units, Asteco claim.

This has led to apartment and villa rental rates on the Palm dropping by 12 per cent and 25 per cent respecively.

“The last few months have also seen distressed sellers being flushed out the market, with remaining owners now refusing to drop below a certain price level,” said Vincent Easton, sales director at Engel and Volkers estate agency in Dubai.

“Increasing numbers of peo-ple are prepared to commute to Abu Dhabi from Jumeirah Lake Towers and Discovery Gardens,” Easton told 7DAYS.

Andrew Chambers, Asteco’s managing director, said the “demand has mostly been for one- and two-bedroom apart-ments and for three- and four-bedroom townhouses” in the ‘New Dubai’ areas.

Source: http://www.zawya.com/

The United Arab Emirates is leading the way in development in the Gulf region with almost $930 billion worth of projects currently underway, according to a new report.

A study from the Kuwait National Bank says that this amounts to 45% of all projects planned in the Gulf area which amounts to some $2.1 trillion.

The report shows the extent of the boom in development in the region. The value of property construction is four times higher than had been estimated in June 2005 and represents an annual growth rate of nearly 50%.

‘The UAE accounts for by far the biggest share of project activity, totalling around $929 billion and affirming its position as the leading GCC country in attracting capital investment. Some 81% of the UAE projects are in the construction sector,’ the report says.

The report shows that the construction sector dominates in every GCC country while the total value of projects in the UAE is far higher than anywhere else. Although Saudi Arabia has a much larger base of non-construction related projects, some $224 billion which is 28% more than in the UAE. ‘This probably reflects the larger size of the Saudi economy in absolute terms, necessitating a greater degree of industrial diversification,’ the report says.

Also the higher value of non-construction related projects in Saudi Arabia stems largely from the petrochemical, power and utilities sectors. At a combined $127 billion, the value of the Kingdom’s projects in those sectors is about 35% larger than in the UAE.

The overwhelming balance of non-construction-related projects in other GCC countries comes in the oil and gas, power and utilities sectors, with the latter reflecting the region’s growing domestic power needs, the report adds.

Source: http://www.propertywire.com/

Dubai property prices and rents recovered slightly in June, signaling that the worst for the sector may be over, Deutsche Bank said in a report on Monday.

The average house price for apartments and villas rose 6.5 percent month-on-month in June to AED1,285 ($349.9) per square foot, while rents rose 1.1 percent over the same period following a 10 percent fall, Deutsche Bank said in its proprietary price index, which covers 13 locations in Dubai.

“Although monthly data should be viewed with caution given the limited number of transactions, recent numbers tend to confirm the stabilization in the market we saw in May,” said Nabil Ahmed, head of research at Deutsche Bank in Dubai in comments published by newswire Dow Jones.

“This might not be the bottom yet, but the worst increasingly looks behind us,” he said.

The global financial crisis has taken its toll on the UAE’s once-booming property sector with the slump so far wiping an estimated 50 percent off Dubai prices since their peak in August 2008, Deutsche said earlier this month.

“We believe the stabilisation in prices was mainly driven by easing pressure from distress sales and potential remaining sellers now being unwilling to sell at current prices, off 50% from peaks on average,” Deutsche Bank said.

“Our industry contacts confirm that prices have tended to stabilise, even increased in some areas, but the level of transactions/ demand remains very low,” it said.

Deutsche said it still expects property prices to bottom out at the end of the year after falling a further 15-20 percent.

“We continue to see risks of further weakness on the combination of expatriates’ exodus during the summer and new supply flowing into the market in the second half of 2009. However, the worst regarding property prices increasingly looks behind us,” Deutsche added.

The latest report on the Dubai market comes just days after one senior analyst described it as one of the “riskiest” property markets of the post war era.

Saud Masud, analyst at Swiss investment UBS, said problems of over-supply and population shrinkage with thousands of jobless expatriates expected to return home when the schools break up next week, would mean continued pressure on house prices.

“In my view Dubai’s property risk profile appears to be one of the highest in the post war era and while one may debate the potential support factor from Abu Dhabi the fundamental oversupply and population dynamics risks are very much there,” he told Arabian Business.

Source: http://www.arabianbusiness.com/

What is the current situation of properties in Dubai and its surrounding states, you can imagine from the following news:

A new property regulatory authority has been introduced in Ras Al Khaimah giving a new layer of protection to real estate investors in the emirate.

The Ras Al Khaimah Investment Authority (RAKIA) Real Estate Regulatory Agency will oversee the implementation of escrow accounts law fro all freehold development projects, officials said.

Several property developers have already registered their projects with RAKIA RERA, which is similar to the Real Estate Regulatory Authority operating in Dubai, and the new watchdog will now monitor developments with a collective value of AED6 billion.

Developers can only register when their project’s concept design has been approved, which will then allow them to open an escrow account and start selling properties. RAKIA RERA will also oversee the construction by sending out a team of engineers to inspect projects.

‘The escrow account has been implemented to prevent mishandling of construction funds and ensure that investors’ money is spent according to the master plan of the project,’ said Yahia Kambris, general manager.

‘The establishment of the new real estate watchdog is an important step in our efforts to safeguard and protect the interest of investors and reinforce the reputation of Ras Al Khaimah as an attractive and practical investment destination in the region,’ he added.

Among the developers that have registered with RAKIA RERA include Select Group, the developer of Pacific; Manazil Real Estate, which is developing Marbella Bay; Pure Real Estate, developer of Blue Mirage; Stallion Properties, which is developing Santorini; and e-myproperty, developer of Bab Al Badr.

Yes Properties, developer of The Quay, is also currently completing the registration process and will soon open an escrow account.

Several banks, including Badr Al Islami-Mashreq, Bank of Baroda, Commercial Bank of Dubai, Abu Dhabi Commercial Bank and Dubai Islamic Bank, have also signed an agreement with RERA to offer escrow accounts.

Source: www.propertywire.com

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/

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

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

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

Work on Dh2.56 trillion ($698 billion) worth of civil construction projects in the UAE is still progressing full steam ahead, despite the current economic climate, research shows.

Of an industry worth around $1.4 trillion, this means nearly half of all civil construction projects in the UAE are still underway.

“That’s about 50 per cent of the projects are still proceeding. It’s very good news and exactly the kind of information that will bring confidence back to the market place,” said Nicholas Maclean, managing director, CB Richard Ellis.

A total of 1,289 UAE projects were recently assessed in a report by research house, Proleads.

These projects include buildings, infrastructure such as roads, railways, bridges and ports, educational and healthcare facilities, sport facilities and hotels.

However, it is becoming increasingly clear that the financial downturn is taking its toll on more than 50 per cent of all civil construction projects in the areas of real estate, leisure and entertainment are on hold, according to Proleads.

Around $582 billion of civil construction projects are now on hold, the research entity said.

This represents 52.8 per cent of the total civil construction portfolio in the country.

“The UAE may no longer be the land of milk and honey but it is still in a far better position than most,” Emil Rademeyer, director of Proleads Global.

“To put it into perspective, the $698 billion of continuing work we are reporting is almost equivalent to the latest stimulus package proposed for the US,” Rademeyer added.

While numerous real estate projects had been scheduled for completion in early 2009, the rate at which projects are being completed has slowed, according to Proleads.

Up until recently, the UAE construction industry was swamped with projects, as it tried to keep up with the booming property sector, which was driving up both prices and rental rates.
We were reading from Newspapers and watching TV that property prices in Dubai are coming down and construction works are halting but what GULF NEWS say about it:

In the last months, however, the property scene in the UAE has changed, most visible in Dubai. Property prices in all sectors, including residential, commercial and retail are falling amid job cuts, especially in the real estate and construction industries. While projects delays are common in all markets, even in good times, it is the rate at which UAE projects are put on hold that will determine when the upswing will start.

The report recognises “potential trouble” if the rate at which projects go on hold increases, but sees the construction industry here as being resilient in terms of cash flow levels.

“It is this resilience that will eventually see UAE construction through to better times. The US economy took the world into recession and it will ultimately lead the global economy out of recession,” the report said.

Source: http://archive.gulfnews.com/