Weekly Dubai real estate news digest. Issue 56

Caution over construction boom
Welcome to the fifty-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 56 |  July 27, 2014

Caution over construction boom

The overall Dubai Residential Price Index showed that rents rose almost 20% over the last year. Apartments saw a larger jump in rents, growing 21% while villa rents rose by just 10%, according to the latest report by CBRE.

UAE inflation reached its highest in more than five years last month as rising rents and food prices push up the cost of living. The consumer price index rose to 2.2% compared to the same period last year, up from 2% in May, according to data from the National Bureau of Statistics. 

However, rising prices hasn't had an affect on demand. Over AED113 billion worth of real estate transactions have been recorded in the first half of 2014 - a figure nearly double the amount recorded the same time last year. Dubai developer Damac Properties said that its latest project sold out in one evening, Arabian Business reported. Nearly 300 luxury apartments in Loretto, which is located in Damac's Downtown Akoya project and overlooks a private park similar to Hyde Park or Central Park, were sold during a suhoor taking place in six venues across the UAE.

Construction has continued full speed ahead as well. Sobha Developers have launched a new mixed-use development within the Mohammed Bin Rashid Al Maktoum City - located just three kilometres from Burj Khalifa. Meanwhile, leading property developer Nakheel is bringing a new, gated master planned community of 1,000 villas to Dubai, as part of its business expansion strategy.

Market Insight is aimed at examining the emirate's dynamic market and forecasting industry trends. Undoubtedly, there has been a surge in construction in the Emirates with skyrocketing rents. However, most experts agree that growth levels will be lower than 2013 with affordability becoming the driver of new trends. What overall affect this will have on stabilising the market is something that we will just need to wait and watch for. 


Pashma Manglani


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Former Arabtec CEO sells shares

The former Arabtec chief executive Hasan Ismaik has sold a small part of his shareholding in the construction company, according to data from Bloomberg. This is the first time he has sold shares since his departure in June.

He sold 3.5 million shares on Wednesday with a value of $4 million, reducing his holding to 28.77%. Arabtec's shares closed down at AED4 on Wednesday, having lost 3.85%.

Speculation over the future of Ismaik's stake has weighed heavily on the company's shares and the Dubai Financial Market. Last week, Aabar Investments was supposedly in talks to buy at least half of the 28.8% shareholding owned by Ismaik. 

Aabar released a statement, in which it disclosed only that it was in discussions about the future of its holding in the company. “As a partner committed to and supporting Arabtec, Aabar asserts that it is currently studying a number of strategic options regarding its investments in Arabtec,” Aabar said in a disclosure published on the DFM website on Sunday.

“Any talks it may have with any party regarding these investments are highly confidential until a decision is made.”


Read more on The National

Property deals double in Dubai

Over AED113 billion worth of real estate transactions have been recorded in the first half of 2014 - a figure nearly double the amount recorded the same time last year. 

The National reported that new figures from the Dubai Land Department (DLD) show that the total value of real estate transactions taking place in Dubai surged during the first six months, up 46.9% on transactions recorded during the same period the previous year.

DLD, which is responsible for recording details of all property sales, mortgage transactions and other property deals in the emirate, said that cash sales accounted for 54% of total transactions taking place over the period, with 22,096 deals taking place worth a total of AED61.5bn.

“The real estate market in Dubai is able to regenerate and offer a variety of products to attract investors. We believe that Dubai can sustain this level of attraction and build on the momentum that is developing from the increased demand,” said Sultan Butti bin Merjen, the DLD Director General.


Read more on The National

Marina top choice for investors

Dubai Marina is the most popular area among investors, according to new data released on the number of realty transactions made during the first six months of the year.

2,576 transactions were recorded over the period for AED5.87bn. It was followed by Business Bay, Al Thenaya Al Khamesa, Al Warsan 1 and Burj Khalifa.

Dubai Marina was also the neighbourhood where the most mortgages were taken out on apartments with 751 transactions worth AED1.36bn. It was followed by Business Bay and Al Thunaya 5. Al Hibiya 3 was the area with the most land sales, with 938 transactions worth AED3.09bn taking place. This district was followed by Al Barsha South 4, Al Thenaya Al Khamesa, Wadi Al Safa 5 and Jabal Ali 1.


Read more at Emirates 24/7

Office rents up 25%

Office rents in Dubai are still rising, with average prime Central Business District (CBD) rents up 3% quarter-on-quarter and 25% year-on-year, according to the Q2 2014 Dubai Market View by property advisor CBRE.

CBRE said that CBD market continues to face a diminishing availability of good quality office accommodation, specifically offices that are capable of accommodating large corporate space occupiers over contagious floors.

Occupancy rates within prime CBD offices have been rising steadily over the past 12 months with less than 16% vacancy rate compared to an average of 40% vacancy for all Dubai office stock.


Read more on Construction Week Online

Second tallest tower nears completion 

Poised to become the second tallest tower in the UAE, Marina 101 in Dubai is now 80% complete according to its developer Sheffield Holdings.

The National reported that the 425-metre tower, which will trail only the 828m Burj Khalifa, is expected to be completed early next year.

Dubai’s Princess Tower is currently the second tallest tower in the UAE, standing at 413m, ahead of 23 Marina, which is 393m.

“Visually, the tower will be a very distinctive mix-use tower in the midst of the Marina,” said project manager and engineer, Mohammad Jeilani. “We have completed a large part of the construction, with merely a few elements left. Construction is well underway, with no delays to speak of.”


Read more on The National

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