Weekly Dubai real estate news digest. Issue 29

Booming ahead of the rest 
Welcome to the twenty-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 29 |  January 19, 2014

Booming ahead of the rest 

According to a new report, the region's ultra-wealthy hold more than a quarter (26%) of their wealth in real estate, more than the global average of 19%.

Real estate now accounts for around a fifth of the invested wealth of the nearly 200,000 super-rich individuals in the world, according to new analysis from international real estate advisor, Savills, in association with Wealth-X, an intelligence provider no the world's ultra wealthy. These figures are significant in their magnitude when compared to global peers. 
Private wealth is increasingly shaping the world's real estate markets and the use of private equity in major property deals worth at least $10 million has nearly trebled since 2009, says the report titled Around the World in Dollars and Cents. 

The Dubai-based classifieds website Dubizzle released its 2013 UAE Real Estate Price Trends Report, which offers an overview on the shifts in prices for rental and sale properties from January to December 2013. Established communities are experiencing a substantial price rise. JLT, for instance, has seen 41% increase in price for a 1-bedroom apartment, now being advertised for approximately AED1.2 million as opposed to AED850,000 at the start of last year. Overall, property prices and rentals have increased by up to 50% in some areas of Dubai, such as Jumeirah Village Circle, Tecom and Dubai Sports City. 

Demand is predicted to continue its upswing as well, if a local expert is to be believed. According to Samir Munshi, managing director, Orion Holdings, there is a shortage in the market currently. He asserts that residential property prices and rents will continue to rise in the coming years as demand will exceed supply. 

However, on the other hand, others argue that there is a gap widening between what sellers are demanding and how much buyers are willing to pay - at least in some areas. Mark Wellman-Riggs of the Crompton Partners Estate Agents says that sellers are holding out for prices that do not reflect bank valuations in areas like Marina. 

Market Insight is aimed at examining the emirate's dynamic market and forecasting industry trends. With optimism high and prices continuing to soar, Dubai realty is certainly outperforming other markets. The key driving factor has been investment that continues to pour in from residents as well as overseas professionals. The problem, of course, lies in the fear that speculative behaviour will trigger another bubble. However, with continued efforts by the government to curb this, there is confidence that the market will come out stronger. We continually monitor analysis reports and market news to ensure our readers are made aware of the latest happenings as and when they happen. 


Pashma Manglani


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Realty deals soar on wave of optimism

The amount of Dubai property changing hands in 2013 rose by an eye-watering 53% last year to AED236 billion, according to official figures. 

According to new data issued yesterday by the Dubai Land Department, the total amount of property of land in the city which was sold or mortgaged rose from AED154 billion in 2012 to AED236 billion last year. 

The organisation's Real Estate Sector Development Department said that the number of property transactions taking place in Dubai also rose 52% compared with the previous year to 63,652.

DLD said that the total value of sales and mortgages on pieces of land increased by nearly 50% over the period from AED111 billion in 2012 to AED166 billion last year. 

Read more on The National

Property prices by up to 50%

Property prices and rentals increased by up to 50% in some areas of Dubai last year, annual statistics released by the classifieds website Dubizzle.

Developments including Jumeirah Village Circle, Tecom and Dubai Sports City had the biggest rises in leasing and sales, but there were huge increases across the board. 

"2013 has no doubt been an eventful year in real estate here in the UAE," said Ann Boothello, property marketing specialist at Dubizzle. She said in the past 12 months there had been projects launched by developers in Dubai, property registrations fees doubled by the Dubai Land Department and new rental decrees in Dubai and Abu Dhabi.


Read more on The National

Price gains to slow down

Having claimed the crown for fastest growing house prices in the world for the first nine months of 2013, Dubai homeowners will probably see lower price gains in 2014.

This forecast is easy enough to make. Knight Frank reported Dubai house prices rising by 28.5% in the first nine months of 2013, the fastest growth in the world. That was actually a lot lower than Cluttons' estimate of 53% increase. 

Read more on The National

Demand for residential units growing 

A wider economic upturn and rapid population growth will lead to a shortage of residential units in Dubai, believes a market participant. 

"I see a serious shortage...the government is diversifying into tourism-related projects. Schools, universities, theme parks and shopping centres are coming up and so many people will be employed and they will all require accommodation,"  Samir Munshi, managing director, Orion Holdings.

"The fact of the situation is that today if a company requires 100 apartments for their staff, it is near to impossible to locate an empty building in Dubai." Munshi asserts residential property prices and rents will continue to rise in the coming years as demand will exceed supply. 

Read more on Emirates 24/7

Marina still expanding 

The Select Group - which already has eight towers, completed or otherwise, in the freehold cluster - is adding another one, succinctly names 'No. 9,' a AED500 million, 35-storey residential project. 

Unit sales were launched with base prices set at AED1.1 million, and construction is scheduled for completion in the second quarter of 2016.  As with all of Dubai's freehold locations, Dubai Marina too has seen its unit values surge. It currently has one of the highest tenancy levels, which is another huge plus for investors. 

Read more on Gulf News

Gap widens in seller-buyer expectations

Dubai's property market has been on an upturn ride in terms of value and investor demand, but the moment has come when the gap is widening between what sellers are demanding and how much prospective buyers are willing to pay. It is a phenomenon that is influencing market dynamics, even in relatively mature locations such as Dubai Marina.

"The situation is that prices have rocketed after the Expo 2020 announcement and in fact, buyers have backed off," said Mark Wellman-Riggs of the Crompton Partners Estate Agents. "This coupled with the 75% mortgage cap has slowed sales of property in Dubai Marina." According to him, sellers are holding out for prices that do not reflect bank valuations. He says, "buyers and sellers need to come together to put the spark back into the Marina market."

When talking about JBR, he said, "A like-for-like property in JBR will generally be priced at around the same price as an apartment in Dubai Marina, however there are many factors that influence these prices: views, location to shops and quality of the building."

Read more on Gulf News

Market pulls in emerging investors

The Dubai real estate market continues to attract interest from investors in emerging markets relative to investors from more mature western markets.

Data reveals that this continues to be the case in 2013 with almost all sales during the year being either to local investors or those from emerging markets in the region and beyond. The Dubai real estate sector has attracted vast investments from overseas players since it was first opened up around 10 years ago and the ability of foreign parties to purchase freehold properties remains one of the major attractions.

Data from the Dubai Land Department show a total of AED151 billion of land and completed property was transacted over the first 11 months of 2013, an increase of more than 30% compared to the same period in 2012. Indian investors were the largest foreign purchasers accounting for 27% of sales, followed by the British (17%), Saudi Arabians, Russians and Iranians. 


Read more on Gulf News

UAE home to three tallest towers

Three of the world's five tallest buildings completed in 2013 were located in the UAE, led by the JW Marriott Marquis Hotel Dubai Tower, the Council on Tall Buildings and Urban Habitat report reveals. 

The other two towers making it to the list are 328-metre Al Yaqoub Tower in Dubai and 324-metre The Landmark in Abu Dhabi.

Dubai has been in the top five cities for tall-building completion since 2008 (when it was number one, a feat it repeated in 2010). 

Read more on Emirates 24/7

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