Weekly Dubai real estate news digest. Issue 43

Country-wide realty boom
Welcome to the forty-third 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 43 |  April 27, 2014

Country-wide realty boom

Statistics released by Bayut.com reveal that the UAE is becoming increasingly expensive. Property prices, which rose throughout 2013, continued their upward climb in the first quarter of 2014 and buried any speculation of a bubble. 

During Q1 2014, property prices in the UAE experienced an overall hike of 35.9% compared to Q1 2013. For residential apartments, there was an average increase of 14.35% in prices compared to the Q4 of 2013 and a significant 36.56% gain compared of Q1 of 2013. Villa prices in the UAE also witnessed an average increase of 35.24% over Q1 of 2013 and an increase of 11.27% over Q4 of 2013.

Dubai has focused its attention on attracting new investors. In fact, Deyaar Development received approval recently to allocate 25% of shares for foreign investors. The company currently allocates 49% of its shares to GCC citizens and foreign investors. 

While Dubai's growth continues rapidly, Abu Dhabi has focused on urban development. Average apartments increased by 11.5% in Abu Dhabi year-on-year compared to the 26% in Dubai, according to figures from real estate consultants Jones Lang LaSalle. "We have seen a rebound in residential activity in Abu Dhabi over the past 12 months, driven by government intervention and positive economic growth," said Mat Green, head of research and consultancy at CBRE Middle East. 

"Abu Dhabi is different in demographics, different in geography, different in outlook," said William Neill, head of the Abu Dhabi office at property consultants Cluttons. "I don't think you will see the real fast rises and drops that Dubai is prone to and gets affected by. What happened in Abu Dhabi (during the downturn) is more in line with what happened to global markets during the recession," he added.

Market Insight is aimed at examining the emirate's dynamic market and forecasting industry trends. Dubai's real estate sector has been the centre of attention for several years now, but now, it's the entire UAE's property sector that is seeing growth. Abu Dhabi is expected to focus on sustainable real estate units over the next decade or so and is reported to have at least 32,000 new housing units in 2014 only. It's yet to be seen what this country-wide boom means for Dubai's rapid growth and whether it can help prevent the kind of speculation that caused the 2008 crash. We'll be following up on these trends in the coming months to ensure our readers are up-to-date with all things real estate so be sure to stay tuned in.


Pashma Manglani



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Capital ramps up property development

Abu Dhabi will receive at least 32,000 new housing units in 2014 as the emirate plans to unveil new real estate legislations in coming months, government officials have revealed.

"The new units will raise the number of housing units in the emirate to 280,000 units by next year," said Falah Al Ahbabi, director general, Abu Dhabi Urban Planning Council (UPC). 

A study conducted by the UPC found that the number of residential units in the emirate to increase by 13% this year compared to 2013. 

Consumer demand for sustainable real estate units in Abu Dhabi is expected to grow over the next 10 to 15 years, according to Anthony Mallows, director at Masdar City.

Meanwhile, Aldar Properties launched three major new residential developments in prime areas of Abu Dhabi, including in investment zones where property can be purchased by non-UAE nationals. Off-plan sales for the three developments - Ansam, Al Hadeel and Nareel Island - will commence in May with construction scheduled to begin in 2015. The three developments have a combined gross development value of approximately AED5 billion. 


Read more on Emirates 24/7

Tenants wait for rental index to have impact

Since November, when the rental cap was done away with, tenants have been forced to dig deeper into their resources to offset subsequent hikes.

As a result, the sector has been witnessing changes in this settling period. In Dubai, a recent decree set percentage-based ranges within which landlords could raise rents, which would be tied to a rental barometer, monitored and updated by the Dubai Land Department.

Market feedback suggests that there have been instances of breaches to the rental barometer, with landlords sticking to their increased rent demands over and above the index average and asking their tenants to vacate if they cannot comply.


Read more on Gulf News

Focusing on mid-tier real estate

Al Mazaya Real Estate has set its eyes on delivering mid-rise and mid-value properties in Dubai, continuing in its vision with the launch of a second phase at its Q-Point project in Liwan, part of Dubailand.

Twelve of the mid-rise apartment buildings forming Phase 1 are being handed over, another 12 by May and 14 in the fourth quarter of the year or early next year. "What we will see going forward is that demand cycles in the local property market ofr mid-tier properties is in stable mode," said Shlash Al Hajraf, acting CEO at Al Mazya Real Estate. 


Read more on Gulf News

Construction picks up pace in Palm

Construction is picking up pace on Dubai's Palm Jumeirah with homes on the strip proving to be hot property for investors.

One four-bedroom duplex penthouse in Marina Residence 3 is on the market for AED15.7 million. It can be paid off at AED65,382 per month, based on a 25-year mortgage at 4.49% interest, said the broker Better Homes.

The property is part of a complex of six residential buildings developed by Nakheel ahead of the Palm's first two fronds.  

Read more on The National

Emaar sees 55% profit 

Emaar Properties has reported a 55% increase in net profit for the first quarter, despite posting revenues that came in below analysts' estimates. 

The Dubai-based developer reported a net profit of AED863 million compared with AED556 million for the first quarter of 2013. Profits for the quarter were 17% higher than an average of analyst estimates surveyed by Bloomberg, even though revenue came in lower than expected.

Emaar reported revenues of AED2.25 billion for the first quarter, 7% higher than the same period last year, but 18% lower than the previous quarter. Analysts had predicted revenues of about AED2.62 billion. 

Emaar Properties predicted that its profits would more than quadruple by 2018 as the emirate's economy booms and the company's overseas business expands.

Read more on The National

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