UAE Property

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Wind Tower I and II Dubai

Development in Dubai froze or stalled in many cases following the 2008 crash.  But gradually, Dubai’s property market has started to recover and stalled or partially shelved projects are returning.  Dubai’s property market has climbed steeply this year – while it did not make gains comparable to the pre 2008/9 boom years, but still represented among the sharpest gains in the property sector globally this year.

This week three of Dubai’s stalled projects were restarted: two in Jumeirah Lakes Towers and one in Business Bay.  They have been revived under the Dubai Land Department’s (DLD) Tanmia initiative.

The Director-General of the DLD, Sultan Butti bin Mijrin, told Emirates 24/7 that “we have approved two projects Wind Tower I and II under Tanmia.”  He went on to explain, “we are working with more investors on a number of projects.”

The project in Business Bay has been taken over under the Tanmia initiative by Pacific Ventures and has been renamed Burj Pacific.  Pacific Ventures has confirmed that the project will be relaunched this month.  “We recently took over one project in Business Bay,” Parvez Khan, the Chairman of Pacific Ventures confirmed to news website Emirates24/7.  “The majority of the original investors have agreed to continue with our project.  We have new contractors on site and work has commenced.’  Burj Pacific is a 21-storey residential tower, comprising 150 apartments and penthouses.  The project is due to be completed by 2015.

Mr. Khan’s company told Emirates24/7 in June that his company was planning to spend Dh50m over a two-year period to take over projects listed under the Tanmia scheme.  Tanmia – Arabic for “development’ – is the DLD’s scheme, launched in September of 2011.  It’s aimed at getting semi-government and private investors on board to get stalled or endangered projects completed.  Currently, the development is auditing over 100 projects.

Majida Ali Rashed, Senior Counsel Strategy, DLD, has said that the Tanmia initiative will continue to operate for three to four years, but warned that the process would not be easy.  “The scheme targets the government and private sector and will help them benefit from these projects, but it is not an easy task.’  Part of Tanmia’s remit to settle all pending issues and revitalize stalled real estate projects will be to audit the accounts of projects.  Property developers and investors can approach the DLD to seek inclusion of their project under Tanmia, but, as Mr. Rashed points out, “We have to look at all the legal, technical and financial aspects before allowing another investor/developer to take over the project.”

Pacific Ventures, Mr. Khan’s company, has already taken over two projects in Jumeirah Village Triangle.  These projects have also been renamed, as Pacific Residencia and Pacific Edmonton Elm.  The company is also on track to take over a project in Dubai Sports City.  Mr. Khan says that the majority of the “old’ investors in the Edmonton Elm project have decided to continue investing in the project, though ’15 per cent are defaulters… we will seek cancellation of their contracts through proper legal channels.’  The Pacific Residencia project’s building is over 40% complete and the project’s original investors have overwhelmingly decided to stay with it.

Despite the good news from Dubai’s housing market and the organizational aid from Tanmia, the future may not be entirely rosy for the Dubai property market.  A boom in building luxury apartments has meant that the residential market in Dubai is unduly weighted towards a cohort of high earners who aren’t there – there’s approximately a 15% oversupply in this area.  However, this may to some extent be made up for by the increase in value of midrange properties – up 20% in the last year, according to economist Farouk Sousa – and a “misfortune dividend’ as the chaos of the Arab Spring makes Dubai’s stability desirable.

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Pacific Edmonton Elm Development Revived by Developers in Dubai

Development in Dubai froze or stalled in many cases following the 2008 crash. But gradually, Dubai’s property market has started to recover and stalled or partially shelved projects are return.  Dubai’s property market has climbed steeply this year  while it did not make gains comparable to the pre 2008/9 boom years, but still represented among the sharpest gains in the property sector globally this year.

This week three of Dubai’s stalled projects were restarted: two in Jumeirah Lakes Towers and one in Business Bay.  They have been revived under the Dubai Land Department’s (DLD) Tanmia initiative.

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Palm Jumeirah Island Dubai UAE

Over the 16 weeks leading up to August 26, Dubai saw a bullish market driven by property. On Sunday August 12, Nakheel announced that demand was expected to remain high for properties on the island. The Dubai developer made the statement as it announced the sale of a 305,704sqft plot for Dh1,302 ($520) per square foot to an unidentified local investor.

Nakheel went on to state that the value of residential plots on the Palm – particularly on Frond N had increased by 30 per cent in the past year. ‘We have seen a very healthy demand in the first half of 2012, and this looks set to continue for the year,’ Nakheel said, quoting a spokesman.

To date, Nakheel has sold over 80 of the 105 plots on the Palm, which have a total sales value of over Dh657 million. Earlier this year, a single 5,574sqm plot was sold by Nakheel for Dh87 million.

In the same statement, Nakheel’s spokesman explained that the company believed that ‘land and properties on Palm Jumeirah are in big demand thanks to its unique design, location and ever-increasing range of amenities.’

Figures releases by the Dubai government showed that Indian citizens were the main buyers of luxury apartments and commercial space in the Burj Khalifa during the first half of 2012, spending $222 million, while Iranians came in second, spending $128 million.

Dubai has recovered from the collapse of a property bubble in 2008 that cut home prices by more than 60% from their peak. However, Dubai now functions as a safe haven for regional investors as London does in Europe, according to Graham Stock, strategist at frontier fund manager Insparo in London, who added that ‘we see Dubai real estate performing well over the medium term,’ and that ‘safe-haven’ investment was drinving up real estate prices. In turn, this is buoying up Dubai’s stock market.

Farouk Soussa, Middle East economist at Citgroup in Dubai, commented on August 9 that ‘perceptions are that the real estate market has bottomed out. If you are looking for a more long-term investment, the market in Dubai seems reasonable. A lot of people in the Middle East and Russia, Pakistan, the Asian sub-continent are looking for a safe haven.’

This ‘safe haven effect’ could be driving Dubai’s current property expansion in 201, real estate contributed approximately 13% of Dubai’s GDP, almost as high a contribution as manufacturing.

In July of this year, Nakheel announced its half-year financial results, declaring a net profit of Dh767 million, an increase of 36.5% over the Dh562 million it made in the same period last year. The company has also recently completed a restructuring exercise.

During Sunday, August 26, however, Dubai’s index slipped 0.9%, which Amer Khan, fund manager at Shuaa Asset Management, ascribed to Eid interfering with normal trading patterns. ‘We’re not back to post-Eid trading levels yet,’ Mr. Khan told Reuters. ‘Some of the names in Dubai were stretched from a technical point of view and were looking to correct it’s better that names like Emaar correct on low volumes rather than when people are back.’

The negative 14-day divergence at the recent high suggests that the market may flag temporarily, but will resume its upswing shortly, according to analysts.

In the real estate letting and purchase market at the apartment level, there has been a rally of over 5% in the second quarter compared with 6 months ago, according to Frank Knight estate agents.

Photo credits: Maja via Flickr

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The UAE seems well perched on the formidable wings of its soaring aviation industry. Markets are swiftly jetting towards the promise land of both recovery and progress. The region is close to realising its long held ambition of piloting growth independently off its naturally occurring oil reserves (UAE is the 4th largest exporter of oil in the world), and is strategically building upon its tourism industry to provide the necessary traction.

Emirates Boeing 777 Airpot Landing

Some mixed news for Emaar properties, one of Dubai’s — state owned — master developers. That is, mixed news, not in a share of good and bad news, but rather in the fact that the bad news was tinged with goodness.

The company posted a 69 per cent decline in net profits for the second quarter of this year, which is obviously not good news. However, the decline was largely put down to the equity-hit the company took for writing off its 30 per cent stake in Dubai Bank, which was taken over by the government earlier in the year. This is being reported as good for the company, because it removes a “corporate distraction” and absolves the firm of any further calls for equity injection. In short: allowing the developer to concentrate on development.

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dubai-bridge

Investment Boutique has just released its report into the Dubai real estate market entitled the Dubai State of the Market report 2010. The report is very downbeat in places, but very upbeat in its forecast of a near-complete turnaround in 2012.

For instance: the firm believes that the over-supply of residential units will hit 110,000-115,000 by the end of 2012. This is one of the largest figures that have ever been put on the scale of Dubai’s residential over-supply problem.

On the other hand the report then takes a price-bottom being reached in the latter part of this year almost as a foregone conclusion, and also assumes that the “banks will slowly loosen lending criteria as they can fully understand the effects of the downturn and forecasting future results becomes easier.”

Another assumption the report makes is that confidence will return to the market in 2012. All these assumptions are made with very little reasoning behind them. On the other hand the firm predicts more project cancellations this year, as developers focus on completing those developments that are nearest completion, in order that they can collect on-completion bullet payments.

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La-Hoya-Bay-Ras-al-Khaimah-UAE The La Hoya Bay saga continues… For those who do not know: La Hoya Bay is a luxury resort development on the United Arab Emirate of Ras al Khaimah, that started in November 2007 but has yet to be started. Let me rephrase that, ground was broken in La Hoya Bay in November 2007, but a brick has yet to be laid towards building the development proper. All we have is the foundations, a show-flat, rumours, accusations, counter-accusations, controversy and a developer in jail for bouncing a cheque.

What’s going on here? In all honesty it doesn’t seem that anyone has the full answer to that question. All we know is that the developers Khoie Group agreed to buy the land for the development from the Ras al Khaimah Investment Authority (RAKIA) in early 2007 for Dh306 million ($83m), but paid only Dh72million ($20m) up front, with post-dated cheques in 6 month instalments for the rest. Off plan sales began shortly after the DH72 million ($20m) payment was complete. Ground was broken in November 2007.

Things went great for the first few months, with investors on the Sky Scraper City forum genuinely pleased at having bought into such a great opportunity, see here with pics showing it as the first RAK development to complete piling, and (if you follow that link into the forum and forward a few pages) that construction was going at a snails pace).

buildings-in-dubai-UAE Moves by the Dubai government to inspire confidence in the once booming property market seem to have backfired.

The recession has shown that Dubai’s growth was financed by billions of pounds of debt and this burden is threatening to drag the city under the desert sands.

Several government-backed developers were at the forefront of major residential and commercial buildings in Dubai.

Shares in the largest listed Arab developer Emaar Property had 10% wiped off their price on announcement of the merger with Dubai Properties, Sama Dubai and Tatweer.

These three companies are all subsidiaries of Dubai Holdings, which has the backing of the Dubai royal family and analysts fear in the background assets are just being shuffled on paper to shore up ailing companies.

construction-in-ras-al-khamiah-RAK

Ras al Khaimah also known as RAK was the second emirate after Dubai to allow foreign property ownership . his means that even non GCC citizens can buy a freehold property and call it their own. When the first sign of trouble surfaced in Dubai last year many expats were forced to look elsewhere as landlords raised their rent. Some of these raises were massive (around $16,000 for a two-bedroom home).