Weekly Dubai real estate news digest. Issue 45

In Dubai, it's all about timing 
Welcome to the forty-fifth 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 45 |  May 11, 2014

In Dubai, it's all about timing 

The UAE property and mortgage market is booming again, with prospective buyers scrambling to secure home loans before prices rise even higher. And according to CEO of Acrohouse Properties Chandrakant Whabi, now is the best time to buy a home in Dubai - rather than waiting for a correction.  

Ambareen Musa, founder and chief executive of Souqalmal.com says the price comparison website has noticed a rise in the number of customers searching for a UAE mortgage through its site - with figures doubling in March. According to her data, the number of UAE mortgage searches on the website has gone up 35% in the first three months of the year. The vast majority of home loan searches were expats looking to buy property in Dubai - probably because prices rose by around 43% last year. Experts have predicted these prices will go on increasing, so much as 40% this year. 

While the general sentiment remains positive, the International Monetary Fund has warned again about a potential real estate bubble, cautioning Dubai to implement stronger measures to counter speculation. 

Masood Ahmed, director of the IMF's Middle East and Central Asia department, said the Fund had welcomed moves last autumn by Dubai's government and central bank to cool what could become a "speculative increase" but that more was needed.

"Our own view is that these measures are good but if you look at what's happening in the market, it's time to consider stronger measures. Particularly in terms of ways to discourage quick turnaround - what people refer to flipping of real estate in Dubai."

While more measures may be needed to stablise the market, there is a widespread feeling that the current property market resurgence is built on more secure foundations than the last boom, which burst after the financial crisis. A key reason is that the UAE Central Bank has moved to prevent borrowers from overstretching themselves by insisting they make higher minimum down payments to secure their dream home. 

Market Insight is aimed at examining the emirate's dynamic market and forecasting industry trends. There is plenty of speculation on the current state of UAE's realty market, most of which remains optimistic. However, it is apparent that certain measures need to be implemented to ensure that Dubai isn't sucked back into a property bubble. Ashok Aram, chief executive of Deutsche Bank in the MENA region, summed it up best: "Dubai's relevance is of being positive in a region with some growth and some risks. If costs move ahead too fast, that won't be good for Dubai." 


Pashma Manglani


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'It's the right time to buy a home'

Working out the right time to buy a home is never easy and even slight changes in the market can have devastating effects for buyers. 

In the UAE, buyers are concerned about the risks of oversupply, the mortgage cap slowing down demand and rising interest rates. 

However, according to the CEO of Acrohouse Properties Chandrakant Whabi, people need to distinguish between the offer price and dealing price - changes in which are dependent on the level of motivation on the part of the seller. He explains that in the last quarter of 2013, after the announcement of the Expo, the dealing and offer prices were up by 15%. In 2014, offer prices went up another 15%. He notes that buyers need to be careful to judge trends and realise that while offer prices might be up, dealing prices are stabilising and consolidating in the first quarter of 2014.

"While deciding on the right time to buy will never be easy, buying a house now looks like a better bet than waiting for a correction."


Read more on Gulf News

IMF urges measures to cool realty sector

The government needs to take stronger measures to help ease speculation in Dubai's property market, says the International Monetary Fund (IMF).

It would like to see higher fees on flipping, the name given to the quick turnaround in property sales. A run up in property prices in the past year has heightened fears about the risk of a repeat of the speculative asset bubble, which burst in 2009 in the wake of the global financial crisis. 

The IMF has, however, praised the action of authorities so far in controlling the market. It noted that it had made a recommendation to the Dubai Land Department to consider variable transaction fees. 


Read more on The National

Eco-friendly buildings on the rise

The UAE could trump up other top countries in the global rankings for "green" building spaces, says an expert, following the release of a US Green Building Council (GBC) report.

The council released its ranking for LEED (Leadership in Energy and Environmental Design) based on cumulative gross square metres of space certified to LEED in each nation as of April 2014.

Canada topped the list, followed by China, India, South Korea, Taiwan, Germany, Brazil and Singapore. The UAE ranked ninth ahead of Finland.

Chand Guria, a Dubai-based LEED Green Associate, said, "Considering the sheer amount of construction restarts the UAE could very well go up this year. The UAE is big on adopting international standards. There are many on-going building projects here that are yet to be certified."


Read more on Zawya

Rent index updated

While residents in Dubai may be complaining of rental increases, an update by the Real Estate Regulatory Agency (RERA's) index reveals only some freehold communities witnessing rate increases.

The update shows that studio and one-bed units in Remraam saw rents go up 12-14% with lease rates between AED40,000 and AED45,000 per annum. One-beds jumped by 9-11% with rents between AED50,00 and AED60,000.

Meanwhile, studios in International City went up by 14.28% with rents currently between AED30,000 and AED40,000 pa. Two beds are up 9% and are available for AED45,000 to AED60,000 pa.

Business Bay and Jumeirah Lakes Towers remained stable across for studios, one and two-bed apartments. Meanwhile, studios in Dubai Marina rose by 7% with leases starting between AED60,000 and AED75,000 pa. 


Read more on Emirates 24/7

'Market protection guaranteed by local laws' 

Sheikh Ahmed bin Saeed Al Maktoum, chairman of Dubai Civil Aviation Authority and chairman of the Emirates Group, affirmed that the measures, regulations and standards introduced by the government for property finance on the local and the federal level can protect the market against any volatilities, crises or bubbles in the property market.

"The protection of the property market is guaranteed by a number of laws and measures and the economy of Dubai is robust and the signs are reassuring and very good," said Sheikh Ahmed bin Saeed at a press conference, held on the fringe of the Arabian Travel Market. 


Read more on Emirates 24/7

Analysts bullish on prime office space

Rents for Dubai's most prestigious offices could rise by 20% this year and another 10% next year, say property experts.

Rent increases for the best offices in prime Dubai locations will be driven up from corporates and small businesses, the property agent Knight Frank predicts. Having rocketed to a high of AED4,000 per square metre during the boom years and languished at a low of just over AED1,500 in the crash, rents for the best areas of Dubai under sole ownership rose last year for the first time since the crisis, reaching AED1,950 per sq metre during the first three months of the year.

Rent hikes were the highest in Emaar Square, Downtown, Tecom C and Business Bay, all of which had double-digit increases over the past year. 


Read more on The National

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