Weekly Dubai real estate news digest. Issue 73

23.11.2014
It's all about supply & demand
Welcome to the seventy-third 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 73 |  November 23, 2014

It's all about supply & demand

The Dubai market is undergoing transformation, that much is evident. While the market went through periods of ups and downs over the years, it is clearly on a different trajectory now - one where the market is controlled by the natural free market forces of supply and demand.

“Rent control, along with laws protecting tenants against eviction, involves partial expropriation of property rights. It limits the owner’s rights to use and to profit from the use of his property.” Those were the words of economists Milton Friedman and George Stigler, written nearly 70 years ago. However, the words hold true even today in a free market. Arabian Business reported that Dubai should consider following Abu Dhabi in abolishing the rent cap in the city rather than keeping prices artificially low.

Clearly, developers are paying attention to market forces as there has been increased focus on the middle-class segment when it comes to housing. Dubai's known for its luxury properties and while these developments certainly earn developers far more money, tenants living in the UAE have begun to make their voice heard - they aren't looking for more luxury properties. Instead, many tenants have been looking towards the other, more affordable emirates in the north. 

At the same time, developers now also have the opportunity to restart projects that were halted during the recession because there is an increased demand from investors. Recently, the Dubai Land Department announced that it would be reviving 43 stalled projects worth over AED10 billion as part of its Tanmia initiative. 

Market Insight is aimed at examining the emirate's dynamic market and forecasting industry trends. With this shifting trend in Dubai's real estate market, it's hard to predict how the sector will adapt. One thing's for sure, developers are now taking a keen interest in setting up more affordable housing to prevent tenants from leaving the emirate. At the same time, there's a possibility that the emirate will look at dropping the rental cap, following suite of Abu Dhabi. 

Sincerely,

Pashma Manglani

Editor


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Emirate restarts 43 projects worth over AED10b

At least 43 stalled projects worth over AED10 billion have been revived by the Dubai Land Department (DLD) through two of its real estate project revival initiatives, a senior DLD has revealed.

“We have facilitated takeover of 39 projects valued at AED10 billion by various developers under our Tanmia initiative,” Duaa Issam Dablan, senior deputy director, Dubai Land Department, said addressing a real estate seminar last month. The DLD, through Tanmia initiative, provided funding for four projects, she disclosed. 

“We arranged funding for another four projects under our programme,” Dablan said, bringing the total to 43. Forty-five projects have been registered under the scheme.

 

Read more on Emirates 24/7

'Dubai should remove rent cap'

“Rent control, along with laws protecting tenants against eviction, involves partial expropriation of property rights. It limits the owner’s rights to use and to profit from the use of his property.”

That's the foreword to a paper by economists Milton Friedman and George Stigler, written just under 70 years ago. The market they were referring to — the post-war US — may be far removed from 21st century Dubai, but the complaint about the imposition of a rent cap is the same. In a free market, supply and demand should determine the cost of rent, and keeping prices artificially low serves no-one, Arabian Business reported. 

Dubai’s cap — which limited rent rises to 7% every year — was introduced in 2007, in a bid to protect tenants as the housing market shot out of control. However, it puts off potential investors who are rightly concerned that the returns on their investment are being kept artificially low. With fewer investors in the market that, in turn, discourages developers from building more houses.

 

Read more on Arabian Business

Lagoon project to be ready by 2015

The first of the several apartments in the long overdue Dubai Lagoon project by Schon Properties may finally be handed over to investors late next year, a company representative has told XPRESS.

“The first zone of the project is anticipated to be delivered by November 2015 followed by others. The whole project could be complete by 2017,” said Yeasin Syedur Rahman, customer service manager of Schon Properties.

“A lot of positive development has happened this year. The investment agreement is signed, a new contract awarded to carry out the construction work and work at the actual site is already in progress, especially in Zone 1 where the buildings are almost complete except for the interiors,” added Rahman. 

 

Read more on Gulf News

Former Emaar chief takes reins at green developer

The Emaar International chief, who left the company in August, is now the head of a young Dubai-based developer, The National reported.

Fred Durie, who joined Emaar in 2001 and was the chief executive of Emaar International, is the chief executive at Nshama, which expects to be set up as a developer of smart-integrated communities.

Durie was instrumental in managing developments in Dubai and internationally, according to an Emaar spokesman.

Nshama plans to develop an energy and water-efficient community, its “flagship project” in Dubai, Mr Durie said after he joined in September. The community will be developed under a joint venture with the Mohammed bin Rashid Al Maktoum Foundation (MBRF).

 

Read more on The National 

Real estate show sees growth in demand

Organisers of the International Real Estate and Investment Show (IREIS) are ready to re-start the event, which was stopped after the recession.
 
The sixth edition of the show is set to kick off on Thursday at the Abu Dhabi National Exhibition Centre (Adnec) with 80 exhibitors from 20 countries showcasing residential units for lease and sale in their respective countries.

“The real estate market was affected by the financial crisis, but now the market is prospering and ready for this event. Plus, prices are reasonable and have not yet hiked up like they did in 2008 and 2009,” said Antoine Georges, managing director of Dome Exhibitions Company, the event organiser. Speaking to Gulf News, Georges said the residential market has been picking up slowly but steadily.


Read more on Gulf News

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