Weekly Dubai real estate news digest. Issue 69

Surge in market participants
Welcome to the sixty-ninth 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 69 |  October 26, 2014

Surge in market participants

With Dubai's real estate sector bouncing back and the World Expo 2020 just around the corner, there has been a huge surge in new entrants on the property sector scene.

A wave of major new development and infrastructure projects ahead of the Expo 2020 is set to position the emirate as a compelling destination for investors. This includes major road & transport work that is currently ongoing in addition to record-breaking towers that are being built across the city. 

With this being the case, new developers are entering the market, ready to launch even more projects. One new real estate development company that has been set up involves an alliance between the Sharaf Investment Group and Al Ali Real Estate - Dubai General Properties. The unit will be taking up a mixed-use project in Dubai Maritime City with construction expected to be completed in three years. 
Meanwhile, Christie's International Real Estate also officially launched in Dubai this past week, coinciding with the auction house's October art and watch offerings.

With all the new development, sales prices are following suit of rental prices in Dubai, dropping 1% in the third quarter. Experts predict a further dip in prices as newer projects emerge in the market - a natural adjustment to ongoing new supply. 

Market Insight is aimed at examining the emirate's dynamic market and forecasting industry trends. The UAE's efforts towards building up its infrastructure hasn't gone unnoticed. 
At a recent panel discussion, experts agreed that the UAE can fend off global competitors to become the world's premier business capital. "The foundations of the UAE becoming a business capital of the world have been in place for almost 40 years now. Geographically, we are positioned perfectly as a business hub for Africa and the rest of the Middle East and with improved banking regulations and legal frameworks, the UAE can become the business capital in the next 10 to 20 years." 


Pashma Manglani


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Race on for plots around Expo site

Developers are moving head-first to acquire large-sized plots in the less developed freehold areas of Dubai before land values start to firm up again, Gulf News reported.

The locations in and around Dubai World Central are likely to see heightened activity, syncing with the general build-up of the Expo 2020 venue. The Sheikh Mohammad Bin Zayed Road corridor would be the other to see action as developers try to get a lock on plots at current rates.

“Values for undeveloped plots have been holding pretty steady in the last two quarters, with the Mohammad Bin Zayed corridor seeing plot prices of AED120-Dh140 a square foot, and touching AED150 closer to the Expo vicinity,” said Sailesh Israni, managing director at Sun and Sand Developers, which has just launched a new project at Silicon Oasis offering 2,500 square feet apartment units at AED2.2 million. “At Silicon Oasis, land values are now around AED180 a square foot, and there’s a premium attached for plot sizes of 50,000/60,000 square feet to 100,000 square feet.


Read more on Gulf News

There's no stopping launches

While prices in the Dubai market may have come down, there's no stopping developers and their plans for new projects.

In September alone, regional and international developers unveiled 27 projects worth AED40 billion, Emirates 24/7 reported. Listed on the Dubai Financial Market, Union Properties is looking to launch a AED430 million residential project, comprising 200 units, in MotorCity.

Meanwhile, the developer of 432-metre-high Marina 101 in Dubai Marina, Sheffield Holding Limited is planning to invest nearly AED1.3 billion in two serviced apartment projects in the emirate. 

Radiant Star Group of Companies, a real estate development company, will be unveiling two projects in Jumeirah Village Circle before year-end, company Managing Director Abid Junaid told the website. The first project in Jumeirah Village Circle will be an AED450 million three-tower development housing 400 apartments, while the second one is a 13 townhouse project worth AEDh35 million.


Read more on Emirates 24/7

New homes pull in sales values

Apartment sales values in Dubai followed suit of rentals, dropping 1% during the third quarter, Gulf News reported.

“Sales prices may soften further in the fourth quarter of 2014 as new supply enters the market”, according to a report released by Asteco. The current soft cycle in property values would thus force potential buyers to consider getting in now or whether to hold off until there is a marked dip in asking prices."

With rents also softening in key freehold clusters in the city, it is the first time since 2012 that both sales and leasing values hit a lower note, according to Asteco, adding this is “a result of a natural adjustment to ongoing new supply entering the market”.


Read more on Gulf News

Rents big concern for expats: Survey 

Nearly two-thirds of UAE-based expats see rent fluctuations as fundamentally affecting their financial well-being far more than their peers in the region and around the world, according to the findings of a global expat survey from HSBC.

According to The National, these concerns may be eased with news of rents falling in Dubai.

HSBC’s Expat Explorer survey for 2014, published on Wednesday, found that as many as 44% of expatriates living and working in the Middle East said that fluctuations in rental prices pose a risk to their financial well-being, compared with a global average of just 19%. This trend is most pronounced in the UAE, with 58% of survey respondents saying that rental price fluctuations are a threat to their financial wealth.

“The United Arab Emirates emerges as one of the costlier expat destinations, with more than half saying that they would choose to leave because it is too expensive (60%) or for retirement (23%),” according to HSBC.


Read more on The National

GCC faces housing shortage as population rises 

Rising population growth together with a lack of urban areas may lead to a shortfall of more than a million housing units in the GCC by the end of 2018, a new report from the management consultants Strategy& has warned.

According to The National, the total population of the GCC has increased by more than 67% from 2000 to last year. “The relatively young demographic structure of the region is creating a surge in demand that could lead to a shortage in excess of one million units by 2018,” said Strategy& partner Samer Bohsali

Strategy&, formerly known as Booz & Company, noted, however, that only about 48% of UAE households own their own homes, compared with 94% in Singapore and 65 per cent in the US. “Rather than focusing simply on bricks and mortar, GCC housing policies should aim to build vibrant communities, create jobs, enhance social welfare and ensure a healthy environment,” said Ramy Sfeir, a Strategy& partner.

Read more on The National

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