Bigger, better projects lined up
With the property market recovering, there has been a shift towards meeting investors’ expectations – going well above the standards that were set before the crash.
The strategy appears to be working quite well, seeing as property sales in the first six months of the year have gone up by 30% as compared to the same period in 2012. Mortgage rates have gone up globally, leaving buyers concerned in countries like the United States; however, in Dubai, mortgage lender Tamweel has, in fact, recorded increased profits this year, making Dhs26 million in just three months (a 40% increase from the previous year).
With an eye on the future, most property developers have big projects lined up. Two banks in the UAE have signed a Dhs900 million loan facility to fund construction of a three-tower real estate project in central Dubai. Nakheel announced that its current pipeline of development projects is worth between Dhs8-9 billion and it has an aim to deliver 1,500 units this year. On the luxury front, Dubai has announced plans for its first golf course condominium, overlooking Donald Trump-backed Trump International Golf Club. Prices will start at Dhs900,000 for a studio.
Commercially, the office space boom continues with an increased focus on the Business Bay area. Research by global real estate consultancy Jones Lang LaSalle revealed that almost 50% of upcoming office space in 2013-2015 will be in this central part of town.
To encourage further investment, Dubai real estate developers may issue bonds to fund projects as opposed to forcing them to rely on bank debt. Major property developers already have loans from international and local banks and in order to continue further expansion, there needs to be an additional source of funding – tens of billions of dollars. With the Gulf’s bond market becoming more liquid than during the last real estate boom, it has become a more feasible option for real estate firms.
Prices continue to skyrocket in key areas in Dubai, including the Palm Jumeirah and International City. However, JBR is losing its charm with renters and buyers, according to a new study. The area, which was one of the hottest places a few years ago, has apparently become unpopular, probably as a result of ongoing construction. Meanwhile, as further evidence of growing investor confidence, over 200 exhibitors have signed up for the three-day property event Cityscape Global, which will be held in October.
Market Insight is aimed at examining the emirate's dynamic market and forecasting industry trends. We hope that our round-up of stories on some of the most exciting projects that have been announced this year has been insightful. Be sure to catch our next issue to find out more about the latest real estate developments that are making waves in the city.