Weekly Dubai real estate news digest. Issue 65

Subtle changes in rental trends
Welcome to the sixty-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 65 |  September 28, 2014

Subtle changes in rental trends

After ten quarters of constant positive growth, residential rents suffered a marginal dip during the third quarter this year, falling by around 1%. While this may not seem significant on its own, it has become apparent that there are changes taking place in the rental market with buyers becoming increasingly more price-aware.

The slow down in growth has been attributed to an increase in residential stock, something that is set to continue increasing as the emirate gears up for Expo 2020. In fact, around 19,000 new homes are scheduled to enter the market next year. Mid-tier developers are working on completing multiple projects simultaneously in locations such as Sports City and which could add to the residential stock in bulk by 2017 and thereafter. Newer clusters are also getting created, such as Silicon Park in Silicon Oasis. 

Research shows that locations such as the International Media Production Zone, TECOM and Downtown Dubai may have seen a 3% trim in rental demands. Other clusters such as Jumeirah Lakes Towers and Dubailand Residences recorded dips of around 2%.

Mat Green, head of research and consultancy, CBRE Middle East, says: "The slowdown reflects a general movement towards stabilisation in the market, along with the slowing of growth in sales values and lower transaction volumes. We expect this trend to continue into the final quarter."

Market Insight is aimed at examining the emirate's dynamic market and forecasting industry trends. With the market moving towards increased stability, it has begun to attract even more investor attention. The emirate remains one of the most affordable metropolitan cities in the world despite the fact that rents skyrocketed over the past year. Paul Preston, head of IP Global, Middle East, noted: "More and more people are starting to see property investment as one of the highest performing asset classes within their investment portfolios."


Pashma Manglani


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Business Bay among top global urban hotspots 

While prices in locations such as Burj Khalifa District or Downtown may be at the upper limits of what the market can sustain, Business Bay can still offer scope for investors, according to a Gulf News report.

The Business Bay area has been listed among the top 10 global urban hotspots to watch out for by Knight Frank, the specialist consultancy. Residential towers in the area range between AED1,500-AED1,700 a square foot.

“All of the premium addresses such as the Executive Towers, Churchill Towers and Windsor Manor are having peak occupancy levels,” said Niraj Masand, partner at the property services firm Banke M.E. “There’s a lot of new build happening that could tie in with investor interest.”

Among the other global picks are Williamsburg in New York, Paris’ 16th arrondissement, Cape Town CBD in South Africa and London’s Victoria Park.


Read more on Gulf News

Rental surge coming to an end

The tipping point may have been reached in how fast residential rentals can go up in Dubai, according to a Gulf News report.
Around 19,000 new homes are scheduled to enter the market next year, a figure that is already quite significant and will definitely contribute towards stablising rental hikes. 

A sizable portion of the new supply (29%) [are] expected at the Dubailand master-development, according to the latest update from the consultancy CBRE. Rents in Dubai had seen increases of “close to 50% during the past two years”, the report added.

Based on its transaction data for the third quarter, locations such as International Media Production Zone, Tecom C and Downtown Dubai may have seen a 3% trim in rental demands. Other clusters such as Business Bay, Jumeirah Lakes Towers and Dubailand Residences recorded rent dips of around 2%.


Read more on Gulf News

Dubai skyscrapers can still aim high

Even with the sharp spikes they experienced at the tail end of last year and in January, average values in Dubai’s high-rises have a lot to climb before they can take on the likes of Hong Kong or Tokyo, according to a Gulf News report. 

Dubai was ranked 18th in the latest Skyscraper Index compiled by the consultancy Knight Frank. Its high-rises had an average prime capital value of $620 a square foot compared with the Hong Kong’s $6,330 a square foot. Second placed Tokyo had capital values a sharp 50% lower than in Hong Kong, at $4,180. (These are based on asking values for the top floors of a high-rise.)

Based on current estimates, among the costliest high-rise abodes would be in Burj Khalifa (around AED4,000 per square foot), the Cayan (AED2,400 per square foot), Index Tower (AED2,400 per square foot) and 23 Marina (AED1,700 plus per square foot). In Abu Dhabi, Sky Tower looms over the rest with an estimated AED1,630 a square foot, according to Global Capital Partners’ data.


Read more on Gulf News

Property more popular than gold for investors

Property is now a more popular investment class than gold among UAE investors, according to a new survey published.

The survey, released by IP Global and YouGov, polled 1,000 UAE residents to determine the property investment sentiment across the UAE.  It revealed that property makes up 53% of UAE residents’ investment portfolios, compared with 43% holding the traditional ‘safe haven’ asset of gold.

Paul Preston, director and head of IP Global in the Middle East, told Arabian Business: “As gold is typically considered a ‘safe haven’ asset when currency markets are volatile, this likely indicates that UAE residents currently have sufficient confidence in the currency markets to invest in property and to diversify their investment portfolios.”


Read more on Arabian Business

Multibillion dirham projects unveiled during Cityscape 

Property developers in Dubai have unveiled projects worth billions of dirhams on the opening day of Cityscape Global despite a slowdown in the city’s real estate sector, The National reported. 

One of the most important announcements was Dubai Holding's statement that it would start construction work on the first phase of what will be the world's biggest shopping mall by next March. 

At the same time the Dubai-listed property company Deyaar unveiled ambitious plans to build 27 new buildings close to the Expo site. Deyaar said that the 5.5 million sq ft development of about 2,000 apartments and serviced apartments would be aimed at mid-income families and would sell for prices up to AED1,000 per sq ft. 

Meanwhile Nakheel announced that it would be restarting work on 1,400 luxury apartments and villas at its Jumeirah Heights Fronds at the north end of Jumeirah Islands.

Dubai-based building supplies group Danube Group announced its second foray into the development market with plans for a block of 300 apartments to be known as Glitz.The Dubai developer Omniyat plans to build two apartment blocks in Maritime City and Business Bay area as it seeks to return to residential development.


Read more on The National

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