Weekly Dubai real estate news digest. Issue 46

Price growth slows down
Welcome to the forty-sixth 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 46 |  May 18, 2014

Price growth slows down

Finally, there is some respite for those looking to invest in Dubai realty as there seems to be some stability in asking values. 

Prime residential prices in Dubai rose by just 0.6% during the first three months of 2014, signalling a slowdown in growth in the emirate's booming real estate market. According to Knight Frank's latest Prime Global Cities Index for Q1, Dubai's price growth between December 2013 and March was lower than the global average and way down on the 5.4% growth seen in Q1 last year.

According to Chandrakant Whabi, CEO at Acrohouse Properties, "A 5-10% softening does seem to be there across the board in the city's freehold locations. Most of the buying activity spike released by the Expo win as well as those trying to acquire properties before the mortgage cap came into effect was over [by early 2014]. In the last two or three months, residential prices have been steady while those in commercial make gains."

In fact, Emaar Properties said that its revenue from villa sales dropped by nearly 17% in the first quarter of the year as it extracted more income from malls and hotels instead. The builder generated AED256.91 million from sales of villas in the first quarter as compared to AED308.73 million in the corresponding period in 2013, a detailed earning statement revealed.

For end-users, however, there still needs to be immediate access to sizable funds to buy property in Dubai's market. According to a new Cluttons report on first-quarter trends, the need to save up larger deposits means that the transition from the rental market to owner occupation will take longer.

The good news for home owners is that banks in the UAE are keen on helping investors, since they have collateral by way of the first property while any new arrangement helps deepen their relationship with property owners over a longer term. 

Market Insight is aimed at examining the emirate's dynamic market and forecasting industry trends. Market trends seem to be correcting themselves since it had become apparent that the market would not be able to sustain continually increasing prices. With developers announcing a range of new projects, there are plenty of opportunities for those looking to get onto the Dubai bandwagon, especially now when there is more stability than there has been for a while.  According to Whabi, "For market dynamics to have sustenance, there was a need for price growth to slow down."


Pashma Manglani


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Dubai sees greater stability in house prices

There is good news for all those looking to acquire property in Dubai - the surge in asking values led by the Expo 2020 win appears to have subsided.

It has become increasingly apparent that Dubai cannot afford to have its property market in constant overheated mode. However, anyone looking to buy now would still need to have immediate access to sizable funds. Average residential rents in Dubai remain high despite a slowing in rental value growth, according to the latest report from property firm Cluttons.

The firm's Outlook Spring 2014 report shows that the first quarter of 2014 saw a return to more moderate levels of growth after rapid levels were seen in the latter part of 2013. The firm also notes that the impact of the Federal Mortgage Cap has helped restrict growth as property registration fees have increased. 


Read more on Gulf News

More residents move into Jumeirah Village, Dubailand

In analysing the Dubai realty market, it is not just the buying or renting of property that indicates shifting trends, but rather the locations where residents are moving to can also indicate shifts in the sector.

According to MoveSouq.com, a comparison site for moving and storage companies, 15 areas in Dubai accounted for as much as 67% of all shifting in the last six months. Dubai Marina took the top spot as the most favoured destination for residents to be moving to/from, followed by Jumeirah Lakes Towers, Downtown Dubai and Jumeirah Village. 

The report found that in Marina, JLT, Discovery Gardens and Business Bay, more people were recorded moving out than moving in whereas Jumeirah Village and Dubailand appeared to be gaining popularity as locations. 


Read more on Gulf News

Projects worth AED778b underway

Construction projects worth $212 billion (AED778 billion) are under construction in the UAE with only AED93 billion worth of projects in the tendering or pre-tender phase - something that is worrisome for the sector's sustainability, says Business Monitor International in its Q2 2014 update.

"We have logged AED1.14 trillion of construction projects in our Key Projects Database across the infrastructure, residential and non-residential construction sectors. About $212 billion of this figure is related to projects currently under construction - many of which have entered or re-entered  that phase over the end of 2013 and H1 2014," BMI said.

The firm added that 2014 should bet he year in which the UAE's construction industry should return to solid growth as 2013 saw the reactivation of numerous delayed projects and the award of many new ventures.  


Read more on Emirates 24/7

Stakes raised to revive stalled projects

As an increasing number of stalled projects get back on track, authorities are putting in place stricter requirements for the developers and even the contractors involved.

"While the requirement that 20% of the project's funds by the developers has been there for some time, contractors who come on board should also furnish 'performance guarantees' to the tune of 10% of the cost," said Samir Munshi, managing director at Orion Holdings, which has recently been acquiring plots in Arjaan, on the Dubai outskirts. "These steps taken in tandem ensure that such a project will go past the finish line and in a way that benefits all stakeholders, including, of course, the buyers in it." 


Read more on Gulf News

New online tool bans rogue agents

dubizzle, the Dubai-based classified website, has announced the launch of an authentication initiative for property agents operating outside the emirate.

The website said the move would prevent rogue agents from exploiting the current strong demand for property in the UAE.

It is said that Dubai based agents must submit a valid RERA ID before they post a property ad for the first time on the portal to ensure that he or she is authorised to sell properties. However, similar security measures could not be imposed for agents operating outside the emirate as agents do not have a real estate ID to submit as proof of legal practice.

Now they will be asked to upload a copy of their employment visa or labour card that shows their sponsors name along with a trade license copy that states that the company is allowed to practice real estate brokerage activities. 


Read more on Arabian Business

Banks eager to help second-time investors 

Property owners in Dubai who are keen to acquire another property in the city needn't be too concerned about how to obtain funding. More banks are willing to go more than halfway in meeting investor requirements where they use existing properties as collateral.

Investors would be better placed if they do not have any existing obligations on their existing properties. "When you have this kind of value gains on property, banks can lend on the existing asset through a top-up loan, which could then be used by the borrower as a downpayment on a second property purchase," explained Niraj Masand, director at Banke M.E., the property services firm.


Read more on Gulf News

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