Weekly Dubai real estate news digest. Issue 9

    Cautious optimism in air  
Welcome to the 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 9 |  September 1, 2013

Cautious optimism in air  

After the financial crisis of 2008-2009, the fact that real estate prices have been on the rise has been perceived by most as a sign that the market has recovered. However, a few experts are concerned that the ever-increasing prices could lead to another fake property price bubble.

According to a recent report, residential capital values have risen by close to a third in the first six months of 2013. Yet, what others stress is that while prices have gone up significantly, they are still 31% below the market peak of 2008.

Additionally, researchers have found that more residents are now interested in purchasing a home rather than renting and hopping from one apartment to the other. For those living in the region, Dubai is perceived as a relatively "safe haven" and has been attracting attention from those looking for a permanent home rather than simply as a means for investment. 

Another factor to note is the emirate's keen efforts on the regulatory scenario, where major changes are expected to be seen by 2015. Dubai's latest decree on setting up a committee to resolve the fate of cancelled projects addresses one of the most pressing concerns investors have had. There is also the Real Estate Investor Protection Law, which has been drafted to protect investors if developers fail to complete or handover a project within a set timeframe.

While further hikes can result in a property bubble similar to what caused the last crash, there is greater awareness this time around. Even last year, the UAE Central Bank tried to introduce measures to curb speculation and it is expected to come out with a set of lending limits later this year. Another suggestion has come from the International Monetary Fund (IMF) to increase levies on real estate activity. Fees on transactions are currently set at two per cent. 

Market Insight is aimed at examining the emirate's dynamic market and forecasting industry trends. We know that it's a tricky time for investors, who are unsure of the market's stability. However, we hope that our round-up of stories and expert opinions has shed some light on what the future holds for Dubai. Be sure to catch our next issue to know more about new industry trends. 



Pashma Manglani


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More residents consider buying home 

Property experts have observed a change in attitude towards home ownership, saying the shift is driven primarily by rising rents and easier mortgage terms.

In the first six months of the year, rents went up by nearly 11.3% and now more residents are considering the option of property ownership, according to Faisal Durrani, associate, Cluttons research. 

Over the past three to four years, mortgage rates have also dropped significantly from 9% to 4.5% per year. With banks offering incentives to homeowers, there has never been a better time for people to purchase property.

Durrani explains that buyers are interested in owning properties in premium locations such as Dubai Marina, Downtown Dubai and Emirates Living. Centrally located areas like Business Bay are also seeing a "upturn in buyer interest."


Read more on Gulf News

Property prices still on the rise

After the recession, residential values went down by at least 50% but now stand nearly 37% above their market low in the second quarter of 2009.

According to Cluttons' latest report on the region's market, residential capital values have risen by close to a third in the first six months of 2013; they are still 31% below the market peak of 2008. 

The report highlights that heightened economic activity in Dubai has been supported by the recovery of the real estate sector. During the second quarter alone, villa values rose by an average of 21% while apartments recorded capital value increases of 25.1% in the second quarter - almost double the 13.4% figure of 2012. 


Read more on Property Wire

New real estate bubble threat: Expert

Dubai may be in danger of creating another artificial real estate price bubble if speculators continue to flip assets, said the CEO and founder of Dubai-based propertyfinder.ae.

According to him, if investors continue to acquire and flip assets, prices will inflate so much that the end users we are looking for will not be able to buy.

His comments follow similar concerns raised by the International Monetary Fund last month, which warned that Dubai might need to intervene in its property market to prevent another boom-and-bust cycle of the kind which brought it close to default four years ago.

The government has recently announced its decision to set up a judicial committee to oversee the liquidation of stalled property projects in the emirate.

Read more on Arabian Business

Real time realty price index launched

A real time guide to property prices has been launched in Dubai in a joint venture between Arabian Business and Better Homes.

The Dubai Property Index features live prices based on up-to-the-minute data from Better Homes with the prices (for both sales and rentals) reflecting actual transactions.

The index features areas including: Downtown Dubai, Dubai Investment Park, Dubai Marina, Jumeirah Lake Towers, Jumeirah Village circle, The Greens and the Palm Jumeirah.


Read more on Arabian Business

Dubai ups investor protection

With Dubai planning a comprehensive overhaul of the regulatory scenario, experts predict sweeping changes to be in place by 2015 that would place a greater focus on investor protection. 

One of the major issues among investors is the fate of cancelled projects and Dubai has issued a decree, setting up a committee to resolve these disputes. However, projects that have been delayed and not formally cancelled are beyond the scope of this committee.

Meanwhile, the Real Estate Investor Protection Law has been drafted to protect future investors from delayed or fraudulent investments, allowing them to get a full refund if developers fail to complete or handover a project within a certain timeframe. 

Experts also believe that contractual agreements should be regulated as part of this overhaul. A standard template for sales and purchase can be introduced, which should be mandated for all parties to use. The new template should include all the details of developers, investors and the property, as well as the penalties on both sides for breaches of their obligations. 


Read more on Gulf News

Sales skyrocket to $6b

Land and property sales have gone by 67% in a  year with $6.2 billion of transactions made till the end of July, as per data issued by the Dubai Land Department.

There has also been a similar boom in mortgages over the same period of time. 

An analysis of the data by Arabian Business showed that property sales totaled $6.26 billion between January end and the end of this July, up from $3.74 billion for the same period last year. 


Read more on Arabian Business

Man arrested over $2m property fraud

A Nigerian man has been arrested in the UAE after being on the run for 13 months for his alleged involvement in a $2 million real estate fraud.

Itumo Anthony Chidebere was apprehended after an Interpol alert was issued for his arrest in connection with defrauding a Nigerian businesswoman.

He reportedly approached the woman in June 2012, claiming to be a real estate agent and offered to help her buy a house in Dubai, according to a report by the Vanguard Newspaper in Nigeria. She paid him $2,082,139 to secure the deal.


Read more on Arabian Business

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