Developments on track. Weekly Dubai real estate news digest. Issue 91

29.03.2015
Developments on track
Welcome to the ninety-first issue of Market Insight, your weekly guide to what's happening in the Dubai real estate market.
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MARKET INSIGHT. Weekly guide to Dubai's property scene
Issue 91 |  March 29, 2015

Developments on track


An opera house, a planetarium, 13 new parks, an Aladdin-themed city - Dubai has some major projects in development currently. While a complete list is expected soon from the Dubai Municipality, it's apparent that there are quite a few in number. The emirate has taken things to the next level as it gears up to host the Expo 2020 and construction is moving full steam ahead. Two new attractions - Desert Safari and Dubai Frame - are expected to be completed and opened this year.

Developers have also announced that most of their projects are on schedule. Union Properties will be starting work on the AED1.1 billion The Vertex project by early next year. It is also working on an AED430 million residential project to build four new buildings in Motor City. 

In the midst of all this new development, there is also growing awareness of the gaps in the market. "It has become extremely challenging for 'single-income families' with one or two children and in certain occupations to come upon an affordable two-bedroom apartment in Dubai," according to analysis by ValuStrat Consulting, an advisory firm. 

There is also a greater understanding that in order to address this problem, government-backed incentives have to be offered to developers to encourage them to explore the affordable housing market. These incentives can be monetary but also in offering public land at below-market prices. 

Market Insight is aimed at examining the emirate's dynamic market and forecasting industry trends. Despite growth slowing down in Dubai, construction is booming. Analysts agree that the emirate is not going to witness any significant price correction as demand remains strong. "People are continuously being attracted to the emirate," says Sobha Group Vice-Chairman Ajay Rajendran. "So why should someone say there is a 'big' correction around the corner if your apartments and villas are being occupied by users?"

Sincerely,

Pashma Manglani

Editor


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Developer rules out big market correction

A 'significant' price correction in Dubai’s real estate market has been dismissed this year by a senior executive of Sobha Group.

"Dubai is not going to see any significant price correction though the real estate market has been moving sideways in the past few months," company Vice-Chairman Ajay Rajendran told Emirates 24|7 in an exclusive interview.

“People are continuously being attracted to the emirate. Though people may come with a six-month to one-year time horizon, they tend to extend their stay when they see what the city offers - the conveniences, comfort, security and opportunities. So why should someone say there is a ‘big’ correction around the corner if your apartments and villas are being occupied by users."

 

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Motor City projects near completion

Union Properties will start work on the AED1.1 billion The Vertex project by early next year, a company spokesperson told Emirates 24|7.

“The enabling works contract will be awarded by November and we will break ground early next year,” the official said.

Separately, the developer is also planning to commence work on a new AED430 million residential project, comprising four buildings with 200 residential units, also in MotorCity.

 

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Rentals remain stuck on a high

At AED80,000, families are hard-pressed to find even a two-bedroom apartment in Dubai and the affordable housing shortage has become a real problem in the city, a Gulf News article reported.

“It has become extremely challenging for “single-income families” with one or two children” and in certain occupations such as teaching or nursing to come upon an “affordable” two-bedroom apartment in Dubai, according to analysis by ValuStrat Consulting, an advisory firm.

 

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Incentives needed to encourage affordable housing options

The need for affordable housing is apparent, but an action plan has to be set out in order to encourage developers to jump on ship, according to a recent Gulf News article.

Public land targeted for development could be sold to affordable housing developers at a below-market price (in exchange for binding affordability commitments), or offered for government co-development, with the private partner as the co-developer in what is known as public-private partnerships.

Governments could also offer private developers who can access private undeveloped land financial and non-financial incentives to build middle-income housing (as partial or whole projects). 


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Rent raised for charity

Al Noor Special Needs Centre is set to be given AED2 million a year in rent collected from the eight-storey Beit Al Noor Endowment residential building, The National reported.

The Emaar Foundation worked with Awqaf and Minors Affairs Foundation (Amaf) to build the AED25 million, 42-apartment building in Al Warqa. The annual rental income will go towards funding the centre and its training programmes for people with special needs.

 

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