Positive prospects for property. Weekly Dubai real estate news digest. Issue 89

15.03.2015
Positive prospects for property 
Welcome to the eighty-ninth 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 89 |  March 15, 2015

Positive prospects for property 


Dubai's property market has definitely slowed down when compared to the rapid growth seen in 2013. However, instead of being a matter for concern, most analysts agree that this is a positive sign. 

The slowdown in Dubai's real estate market gives the market time to absorb the existing supply pipeline, while alleviating concerns about the housing market potentially overheating, said Moody's Investors Service. "A less volatile market is beneficial for all stakeholders and will help developers plan their future pipelines in line with real demand while at the same time acting to dis-incentivise speculators from 'flipping' off-plan units in order to generate a quick gain."

With the market clearly maturing from focus on growth that resulted in the 2008 crash, Dubai Municipality is now looking into introducing an affordable housing quota for all new residential development. The measure is a regulatory step initiated by most developed countries, forcing builders to set aside a proportion of new building units (20-45%) as affordable homes for people who would, otherwise, be priced out of the market.

Investments that are pouring into the city are also more spread out when compared to earlier, which is a good sign for the market. Research carried out by the International Property Show 2015 found that each location is being valued on the basis of its own supply and demand fundamentals. This is a healthy sign for the industry because investments are being pumped into lesser known parts of the emirate as well. 


Market Insight is aimed at examining the emirate's dynamic market and forecasting industry trends. On one hand, Dubai is seeing a slowdown in growth. On the other, the emirate continues to attract investor attention and developers are pushing ahead with mega developments. The city is in a period of flux and it will be interesting to see the new image it sets for itself once it settles down. 
 
Sincerely,

Pashma Manglani

Editor


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Dubai mulls quota for affordable housing

Dubai Municipality’s quota plan for new developments could be a boon to middle-income residents according to a Khaleej Times report.

A proposal by the Dubai Municipality to introduce mandatory affordable housing quotas for all new residential developments will be a watershed in Dubai’s booming real estate sector, while catapulting it into the next stage of its evolution as a mature market.

Affordable housing quotas, a regulatory step initiated by most developed economies, typically force builders to set aside a proportion of new building units, say 20 to 45%, as affordable homes for people who are otherwise priced out of the market.

 

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Business Bay among world's hotspots

Business Bay has been rated among the top five residential hotspots in the world by the Knight Frank Wealth Report 2015.

The master development finds a place among the elite locations following work starting on the AED7.34 billion Dubai Water Canal, Emirates24/7 reported. 

"Work has started on building a channel connecting the sea to the existing lake and this will allow access for superyachts and sailing boats to the bay," the UK-based consultancy said in the report.

 

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Newer areas draw in investors

Investments are spread out across the city, reaching lesser known parts of Dubai, according to research carried out by the International Property Show 2015.

Organizers of the show said this indicates fragmentation of the realty market in Dubai, with each location being valued on the basis of its own supply and demand fundamentals.

Josine Heijmans, exhibition director, Strategic Marketing & Exhibitions, said that investments are being pumped into new lesser known parts of the city, which is a healthy sign for the industry.

 

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'Slow-down not worrying'

The slowdown in Dubai’s real estate market shouldn’t be a worry for long-term investors, according to a top global ratings agency.

Moody’s Investors Service states the slowdown is, in fact, “positive in the long run” and alleviates the “potential overheating”, though prices could fall 10 to 15% in 2015.

“We believe that the slowdown in Dubai's real estate market is positive in the long run, as it gives the market time to absorb the existing supply pipeline, while also alleviating our concerns about the housing market potentially overheating,” the agency said.

 

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Palm prices double of Arabian Ranches

Average sale prices of luxury villas on Dubai’s Palm Jumeirah are now twice as costlier than Arabian Ranches, says a new report released on Sunday.

In an analysis based on registered transactions with Dubai Land Department in 2014, Luxhabitat, a Dubai-based real estate brokerage firm, said average prices touched AED2,975 per square feet (psf) for Palm villas with total value of transactions reaching AED1.35 billion. The report put average prices of Arabian Ranches villas at AED1,391 psf, with total value at over AED558m.


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Limited Trump villas rolled out

With prices starting at AED6.5 million, Dubai property developer Damac has started marketing a limited selection of Trump mansions, The National reported.

Trump PRVT Mansions are a small estate of villas within a private, gated island community located on the developers' 42 million square feet Akoya scheme off Umm Sequim Road in Dubailand.

Damac did not say how many villas would be included in the estate. It said that villas would all come with a private pool and deck, balconies, gardens and floor to ceiling windows.


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