Weekly Dubai real estate news digest. Issue 78

A year of many ups & downs 
Welcome to the seventy-eighth 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 78 |  December 28, 2014

A year of many ups & downs 

Over the past 12 months, the UAE real estate market has changed considerably. In the beginning of 2014, investor and developer sentiment was at an all-time high, with prices skyrocketing much like before Dubai's real estate crash. However, now, as we near the end of the year, the general outlook on property in Dubai has become much more measured with an increased focus on long-term stability. 

Dubai winning the bid to host Expo 2020 resulted in a flurry of activity in the real estate market with developers announcing new mega-projects everyday. Taking advantage of the positive sentiment, sellers were asking for much more than property was valued at and things looked to be heading down the same route that Dubai took in 2008.

However, by mid-March, there was a noticeable drop in transactions as a result of a growing awareness on the part of buyers. At the same time, the UAE government announced a series of regulations that were aimed at controlling the market, including a hike in transfer fee charges as well as tougher mortgage lending norms. 

Nicholas Maclean, managing director of CBRE Middle East, says it was a “market self-correction as it did not involve too overt a government intervention, which is what investors, particularly overseas buyers, want to see. The way that residential market has behaved in the last two quarters — when it was mostly stable or even a slight fall — represents stability.”

Since, developers have begun to take notice of the demands of end-users, focusing attention on affordable housing projects in addition to luxury options. At the same time, they have also worked on developing new areas, driving in investor interest in previously unknown locations. 

Market Insight is aimed at examining the emirate's dynamic market and forecasting industry trends. It's clear that Dubai has used the year 2014 wisely, to understand the importance of being cautious. In the coming year, the most important challenge the city has to face is the over 20,000 new residential projects that will be completed. Such a significant increase in supply will serve a purpose in stabilising the market further, inducing a cooling-off effect. With its new focus on stability, Dubai has the potential to take its real estate market to the next level. 


Pashma Manglani


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Buying property still trendy

When in doubt, investors are more likely to be assured by the solidity represented by a property asset.
“That’s what investors, the overseas ones in particular, tend to do when they see a lot of turmoil around,” said Ali Rashid Lootah, chairman of Nakheel, at a media interaction earlier this week.

Dubai’s developers would be in perfect harmony with Lootah’s observations. The fate of the many off-plan releases that Dubai should see in the coming months would hinge on the city’s enduring status as a preferred safe haven for the global or regional investor.


Read more on Gulf News

Dubai luxury realty tops in global market

While there has been a decline in demand for all things luxury, the city's upscale residential market still ranks high when compared globally.
According to the latest Knight Frank survey on cities with the highest rental gains in the 12 months to September last, Dubai was comfortably placed at the top with a 12.4% increase, and ahead of second-placed Tokyo which had a 9.8% gain.

Dubai’s ranking came about despite the fact that rental averages for premium properties remained flat between June to September. It is the second time in as many years that the city has retained the top spot. In Knight Frank’s analysis, ‘prime property’ corresponds to the top 5% of the housing market in each city.


Read more on Gulf News

Private financiers could lift prices

Stuttering price growth in Dubai’s property market could be reignited if the emirate’s authority would allow private parties to finance assets, according to a study released yesterday. 

“Now might be an opportune time for the Dubai Land Department to consider offering options that encourage alternative financiers to enter the market,” Hadef & Partners said in its report, The Legal State of the Dubai Property Market.

“The local banks are flush with liquidity but they are constrained by the regulations, whereas these entities won’t be,” Mohammed Ali Yasin, the managing director at NBAD Securities in Abu Dhabi told The National. “On the upside, they could re-energise the market.”


Read more on The National

'Equity fluctuations not cause for concern'

The wild gyrations of Dubai's equity markets may have been making news of recent, but many experts state that there's more to the city's economy than just this.

According to these experts, the only two indicators that matter are oil and property. The Dubai Financial Market is tiny in comparison to the oil market. So far in December, the total value of shares traded on DFM in a very busy month has been AED17 billion. 

In contrast, apart from a few shock headlines, most people outside financial circles would hardly have noticed the swings of the DFM over recent weeks. Equity markets are certainly important, and play a central role in the growing financial sector in Dubai, but they do not have the same potential to spark crisis as oil and property.


Read more on The National

Payment plans now more accessible for buyers 

Developers with new off-plan launches in Dubai are now working on reducing the burden imposed on the buyer by the upfront payments as well as on their mortgage installments, Gulf News reported.

Generous payment schedules is going to become key when looking at off-plan launches in the future.

The Danube Group is launching the Glitz — the first residential project at Studio City, a project from Tecom and located near Motor City — with a payment plan that requires up to 75% of the payments to be paid via 1% installments each month and the lowest in the market. The intention is to make it as accessible as possible for a buyer — preferably an end-user — with a monthly income of AED20,000 and more.

“Transactional levels are slowing down in Dubai, which requires developers to be extra careful with how payment plans are structured,” said Rizwan Sajan, chairman of Danube.

Read more on Gulf News

Nakheel has all eyes on development pipeline

Despite the current heavy investor appetite for real estate IPOs from Dubai companies, Nakheel will not be rushed into a public offer any time soon.

“Investors would prefer seeing the risks being spread out over many developments; plus we have to build up good-sized clusters before we can think of an IPO,” said Ali Rashid Lootah, Chairman.

“It’s our intention to build up a recurrent income of AED7.5 billion from our entire leasing portfolio within the next three years. The target for the retail gross leasable area is 10 million square foot. For 2015, the plan is to retain the growth rates we had had this year as the bare minimum.” 

Read more on Gulf News

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