Weekly Dubai real estate news digest. Issue 67

For Dubai, things are looking up 
Welcome to the sixty-seventh 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 67 |  October 12, 2014

For Dubai, things are looking up 

Property developers in the UAE are showing no signs of slowing down, whether it be development or planning bigger and better projects. Dubai, especially, is seeing an increased focus on infrastructure development as the emirate gears up for the Expo 2020. 

The Dubai Properties Group, for example, has insisted that its new project - 40 new hotels - is complete by 2017. Developers who fail to adhere to the deadline face the possibility of losing their plot. The pressure is definitely on for those in the property sector with the Expo 2020 hype building up.

At the same time, prospects are also looking up for all those involved in the industry. Fears of another property bubble have gone down with most agreeing that the market has entered a "cooling off period." According to JLL, this is a direct result of tighter government regulations and an increasing mismatch between buyer and seller expectations. The consultancy also stressed that new regulations by the government has had a significant impact on stabilising the real estate market. 

As a result of increased investor confidence, financial experts have also said that there is bound to be an increase in IPOs in the UAE. In a recent study, Ernst & Young said: "Expect a rush for fourth quarter returns" in global capital-raising markets. The amount raised as a result of IPOs has gone up 53% in the first nine months of the year to US3.5 billion. Emaar Malls has been the most significant deal of the lot, with shares jumping 21% on opening. 

Market Insight is aimed at examining the emirate's dynamic market and forecasting industry trends. The Dubai market is on a trajectory for long term growth with a "great deal of potential," according to Raza Jafar, CEO, ENSHAA PSC. "At this point in time, Dubai's property sector is still grossly underpriced in comparison to its international counterparts which means it has the capacity to still grow significantly in the long term." The emirate's increased attention to infrastructure and the sheer scale of the projects being developed surely seem to go hand in hand with his conclusions.   


Pashma Manglani


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More IPOs expected: Experts

Financial professionals expect more initial public offerings on UAE markets over the next few months, with buoyant conditions for capital markets activity extending into 2015, The National reported.

In a recent study, Ernst & Young, the international accounting firm, said: “Expect a rush for fourth quarter returns” in global capital-raising markets, adding that “investor confidence in the Middle East is returning, driven by improving economic conditions, better liquidity and higher valuations. This is being translated into more and higher IPOs.”

There have been more IPOs in the first nine months of 2014 compared to a year earlier, E&Y said, while the amount raised has surged by 53%, to US$3.5 billion. “The most significant deal has been Emaar Malls,” the firm added.

Emaar Malls debuted successfully on the DFM last week, with its shares jumping 21% on opening before easing back to close 12% ahead at AED3.25. Meanwhile, Marka was heavily oversubscribed and leapt 59% in first-day trading.


Read more on The National

Fear of property bubble wanes 

After Dubai saw its real estate sector recovering last year, experts began to worry that the sudden price hikes would lead to another property bubble.

However, now, most say that signs of overheating have started waning. 

The latest report from CBRE pegs average sales prices growth at around three per cent quarter-on-quarter in Q3, bringing the annual growth close to 23%. Advisory firm JLL also suggests that the market has cooled off, with average residential sales prices in Q3 2014 up by just one per cent quarter-on-quarter, down from six per cent in Q2.

Factors behind this cooling off include tighter government regulations and an increasing mismatch between buyer and seller expectations, the JLL report said.

New regulations by the government such as doubling the transaction fee to four per cent and capping mortgages has had a significant impact on Dubai’s real estate market, agreed Steve Morgan, CEO, Middle East at Cluttons.


Read more on Gulf Business

'Dubai sees sustainable, sensible growth'

The Dubai property market is showing signs of sensible and sustainable growth, with residential property continuing to be the most prominent sector. This was the consensus reached at a panel discussion organised by the Capital Club in collaboration with ENSHAA PSC.

According to a statement, the discussion saw panelists discussing the short to medium term situation in Dubai's property market and how there has been a shifting trend towards stability. 

ENSHAA PSC CEO Raza Jafar remarked, "There is a great deal of potential in the Dubai market, especially when you consider its position in comparison to other major international cities. Dubai's importance as a global financial hub is well established and when combined with the strength of its infrastructure and the quality of projects being delivered in its property sector, it is clear that it compares very favourably to any other international hub, such as say New York, London, Shanghai, Singapore, or Sydney. At this point in time Dubai's property sector is still grossly under priced in comparison to its international counterparts, which means it has the capacity to still grow significantly in the long term."


Read more on Zawya

Brokerages set to see greater profits

An influx of foreign capital is expected to lift volumes on the UAE’s stock markets to pre-financial crisis levels and help brokerages earn record revenues.

“Frankly, 2014 is the best year for brokerage companies since 2008 in terms of revenues,” says Mohammed Ali Yasin, the managing director at NBAD’s brokerage arm. “If traded volume continues it will be the highest on record, and that’s why we see brokerages either opening or expanding their business.”

“Markets should pick up in the coming quarter,” said Nabil Farhat, a partner at Al Fajer Securities, which trades stocks on the Abu Dhabi Securities Exchange and Dubai Financial Market. “There’s also a new addition, Emaar Malls Group, which will be the latest product to trade. It’s positive for our industry.”


Read more on The National

New luxury property portal launched

A new real estate portal has been launched in the UAE which will focus on highlighting luxury properties in the country. 

Luxury SQft (www.luxsqft.com) will feature a limited number of units from the UAE’s more affluent areas, in a bid to “maximise efficiency for agents and consumers, by excluding unsuitable options and reducing conflict listings,” it said in a statement.

The portal will also have 100 real estate agents promoting their properties and will include features such as virtual 3D tours and an option for customers to send a free SMS to their brokers featuring a specific property link.


Read more on Gulf Business

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