Weekly Dubai real estate news digest. Issue 75

Branching out as per demand 
Welcome to the seventy-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 75 |  December 7, 2014

Branching out as per demand 

Dubai's growth has been fuelled largely by its focus on luxury developments. The city's entire image is based on the opulence found in some areas of Dubai. However, as the market matures, developers are starting to pay attention to the demand of end users - tenants in Dubai. 

Firstly, the market has clearly slowed down, both in terms of price and transactional activity. Developers are taking notice and now offering greater incentives and longer payment plans to entice new buyers to commit to their projects. Until now, what has largely been ignored is the "pattern of buyer behaviour in secondary markets," says Sameer Lakhani, managing director, Global Capital Partners. 

"When a granular analysis is done, what emerges is community concentration, with JLT and Dubai Marina emerging as the top spots for mortgages among apartment buyers. Sports City and Jumeirah Village Circle recorded the highest percentage increase in this segment on a year-on-year basis, while Emirates Living and Arabian Ranches were the preferred destination for villa buyers." According to him, this indicates a slowdown in transactional activity among cash and speculative buyers. 

In addition to this, developers are recognising that Dubai is growing rapidly and needs to meet increasing demand on the property front. However, when it comes to new projects, experts agree that the market is shifting towards a more "organic and demand-driven one," catering to all segments of the population, including those demanding more affordable options.

Market Insight is aimed at examining the emirate's dynamic market and forecasting industry trends. While Dubai is gearing up to launch a series of mega-projects ahead of the Expo 2020, there is clearly a focus, on the part of developers, to introduce more affordable options as well. It will be interesting to see how the mix of the two balance each other out and help bring about a more stable market. 


Pashma Manglani


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Finance chief confident about mega-projects

Dubai’s finance chief believes the emirate can pay for the mega-projects planned over the next five years despite the falling oil price. 

Speaking exclusively to The National, Abdulrahman Al Saleh, director general of the Dubai Department of Finance, said: “The capital markets have shown full faith in Dubai’s business model and as you have seen, both equity and long term debt is easily accessible to Dubai entities. In addition we have seen the private sector is very keen to participate in the future growth plans of Dubai."

“We are fairly confident that all these projects will be commercially viable and will be able to raise both equity and debt to manage healthy financial ratios,” he added.


Read more on The National 

Focus now on buyer needs

There have been two main underlying themes in the residential real estate space that have dominated headlines this year — the flurry of off-plan projects and the slowdown in price and transactional activity (40% on a year-on-year basis).

According to Sameer Lakhani, managing director, Global Capital Partners, what has been ignored is the pattern of buyer behaviour in the secondary markets. That is to say that even as overall activity declined significantly, there has been a continued steady uptick in mortgage activity (an increase of 18% this year).

More tellingly, this increase has been predominant in the two-bedroom space in the apartment sector (37% of all apartment mortgages this year has been in this category, with three-bedrooms following closely with 21%. Then came the three- and four-bedroom villa space (cumulatively accounting for more than 65 % of all villa mortgages).


Read more on Gulf News

Developers eye more affordable housing

The Dubai property market is increasingly leaning towards affordable accommodations, an expert at Ggico Properties recently highlighted.

Speaking in an exclusive interview with Khaleej Times, Andrew Chambers, CEO of Ggico Properties, said: “The market today is leaning more towards affordable housing because that is where the greatest demand is. Dubai is getting an estimated 100,000 people a year, and it is probably looking at a growth rate of about five per cent. Now that is fantastic anywhere in the world for a city the size of Dubai. If you are getting 100,000 people a year, you probably need at least 50,000 new dwellings a year; and these are the ones that are now geared towards the affordable housing segment."

Chambers said that he believed that the property market in the UAE has become a lot more “organic and demand driven”. Asked if there was a bubble in the property market, he answered with a resounding no. “What we are witnessing now is a boom that is not going to bust,” he said.


Read more on Khaleej Times 

'Downtown will still stay popular'

The chairman of Emaar Properties, Dubai’s largest developer, has ruled out any adverse impact of new mega development on Downtown Dubai, which houses Burj Khalifa and Dubai Mall, Emirates 24/7 reported. 

“Cities grow… we have done Downtown Dubai and now we will participate in its growth. (We will) make sure that we look after Downtown Dubai and do something special as the city grows,” Emaar Properties Chairman Mohamed Alabbar told ‘Emirates24|7’ ruling out the possibility of any adverse impact on tourism and business in its Downtown Dubai district.

“It is such a privilege. The city of London is still the city of London… it’s growing. People develop bigger and better (projects) so I am happy that we are part of it,” he emphasized.


Read more on Emirates 24/7

Apartment rents up by 20%

The cost of living in Dubai is showing no signs of let-up, with the average villa and apartment rents going up nearly 18% in the last 12 months, according to a Gulf News report. 

According to the October 2014 results of the Dubai Rental Price Index by Reidin.com, apartment rental prices registered the highest increase, at 20.2% year-on-year.

Villa rental prices, on the other hand, posted a 6.6% year-on-year increase. 
A month-on-month comparison of rents, however, shows that rates have not moved much between September and October.  Apartment rents increased by only 0.43% on a monthly basis in October 2014. The corresponding increase for villa rents was 0.29%.

Read more on Gulf News 

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