Committee to decide on future Dubai property projects

Future real estate projects in Dubai will need to be approved by a top-level committee set up by the government, it has been announced.

The committee will oversee and decide on the launch of projects in the emirate in view of the global economic slowdown, Emirates Business reported on Tuesday.

The committee consists of Dubai-based master developers and a few private developers, Nasser Al Shaikh, director-general of the Dubai Department of Finance, told the paper."For the first time, a committee has been formed to oversee the real estate development in Dubai and help synchronise projects of various developers with the intention of securing future supply."

He stressed that no current developments would be stopped and the committee would only look at projects still to be launched.

He added that the committee would not govern private developers who can continue with their projects.

"Master developers control 70 per cent of the supply in Dubai's property market and if all these parties work together then we can strike a balance between the future demand and supply. However, we are not trying to influence or control supply in the market," he told the paper.

Dubai property market surveyed as Emaar miss Cityscape

The UAE's property market has been the worst affected in the region, a study on the sector following the onset of the financial turmoil has found, with Dubai in particular suffering the worst of the fall out with a number of projects being cancelled or put on hold in the past 12 months.

A study by research group Proleads, and commissioned by the organisers of the Cityscape exhibitions - of which the centrepiece Dubai event is to open within three weeks, with a number of sector observers waiting to see the mood amongst developers and exhibitors at the event, has examined over 3,000 projects across the GCC.

The projects covered by the study were those that were individually valued at over $10m, and despite the slowdown finds that developments within the UAE are worth an estimated $900bn, over half of the total value of all those surveyed.

'In the worldwide shake out, no region has been immune and, as a result, a strong element of realism has entered the real estate investment landscape,' said Chris Speller, Cityscape's Group Director of the study and the upcoming event.

The interest from observers has been heightened given the large number of cancelled developments, the cut-off of project funding and investor financing options, the exodus of speculative buyers and the dramatic fall in prices in many of the city's communities.

A study by Knight Frank on 2009 Q2 property prices in a number of markets found that the average in Dubai was 47% down on the same period last year, although the rate of decline had slowed from the previous quarter as the market sought its bottom.

Across the UAE as a whole, a total of 495 projects are currently underway, with 217 having been cancelled or put on hold. In the commercial, hospitality and retail sectors, 877 projects are underway, compared to 349 that have been cancelled or put on hold.

Proleads claims accuracy of 90% on its findings, which it says hold true to mid-September.

Show absence

Emaar Properties, the region's largest developer, which is set to merge with three government-owned property units within the next few months, will not be participating in Cityscape Dubai.

In a statement the developer said that it would be concentrating on its existing portfolio and the completion of the $20bn Downtown Burj Dubai project: 'With the opening of the Dubai Mall and Dubai Fountain, and Burj Dubai scheduled to open this year, Emaar's concentrated efforts are towards making the Downtown Burj Dubai community one of the best developments.

'We have taken a strategic decision not to participate in Cityscape 2009, but will evaluate our participation in Cityscape 2010 based on our objectives, strategy and announcements next year.'

According to press reports government-backed developer Nakheel will also not be participating in the event. The group is to continue to scale down its operations as parent group Dubai World moves some of the company's assets and staff to investment arm Istithmar World.

Real estate market stabilising in Dubai

The property market in Dubai is stabilising and set for a rebound in 2011, according to the latest research but there is still a concern in the industry about over supply.

A new report from international property consultants Jones Lang LaSalle shows that the volume of transactions has remained consistent in the first half of 2009 and the narrowing gap between asking and achieved prices is a further indication that the market is improving.

'The stabilisation of transactional volumes is an important indicator which reflects improved confidence among investors and the market is beginning to stabilise albeit at significantly lower levels of pricing than those seen earlier in the year,' explained Craig Plumb, head of research at Jones Lang LaSalle Mena division.

But the report also reveals that fewer than half of the property units expected to come on stream in Dubai by the middle of the year have been delivered. It had expected 22,400 units to be delivered in the first half of 2009 but less than half have done so.

'It is quite difficult to ascertain the actual number, but according to our survey less than half of the units have been delivered by midyear,' Plumb said.

In February the Real Estate Regulatory Authority in Dubai said that 31,003 and 43,880 units were set to enter the market in 2009 and 2010 respectively. However, its studies and research section had said that 20% of residential units will not enter the market on time in 2009, while 40% of residential units may be delayed in 2010.

The amount of units that complete is crucial to the emirates real estate recovery, according to Plumb. It will be the future supply of properties and employment opportunities generated in Dubai that would determine the revival time for the market.

'There are a lot of factors that affect the real estate market, but the prime ones are future supply of units and population growth and shrinkage,' he added.

He reiterated that Dubai's property market was expected to see a rebound in 2011 after stabilising in 2010.

Further consolidation among Middle East property companies to cope with economic downturn

More property companies are merging in the Middle East in a sign that the real estate market is moving forward and steadying itself to cope with the new realities created by the global economic downturn.

In the 'new' property world that will take the Gulf region forward as the real estate industry starts to recover big will be beautiful and smaller companies are likely to be less able to survive, it is believed.

Analysts also point out that at the height of the property boom in places like Dubai perhaps too many property companies were created in response to demand but now that demand has fallen away there is no room for the smaller ones.

The merger of Dubai Properties, Sama Dubai, Bawadi, Remraam and the Tiger Woods golf course will create one of the largest property entities in the Middle East, said parent company Dubai Holdings.

The strategic move comes just two months ahead of a mega merger planned between subsidiaries of Dubai Holdings and Emaar Properties that was announced in June and due to be completed in October.

'This realignment among Dubai Holding entities was widely expected ahead of the big merger between its real estate companies and Emaar properties,' said Tariq Ramadan, a property analyst and chairman of Tharaa Holding.

'I see this as a positive move. When the property sector was booming, the government has launched a number of companies, although that was not necessary. However, time has changed,' he explained.

'Right now, consolidation and merger are the way to move forward. This merger will help Dubai Holding to move ahead with the merger of its real estate assets with Emaar Properties,' he added.

According to Marios Matatheftis of Standard Chartered Bank consolidation is something that will continue. 'Growth rates are not reaching the levels of previous years so consolidation is justified,' he said.

Sama Dubai and Dubai Properties together have one of the largest land banks within the Middle East and North Africa region covering a geographical stretch from the United Arab Emirates to Morocco.

In a statement Dubai Holding said it has realigned its real estate and business park entities under two verticals as part of a restructuring programme due to the economic downturn that it announced recently.

Although it is not known what name the new merged company will have it is predicted to be branded as the Dubai Properties Group. The company also said that existing project plans will continue.

Year-on-year Dubai property price fall hits 9%

A report by property consultancy CB Richard Ellis on the Dubai real estate market confirms that the sector is unlikely to see a short term turnaround in fortunes due to a number of factors. These include redundancies in the real estate and financial sectors and the ripple effects in other industries, the fall in the influx of expatriates that had helped to fuel the property boom and the local effects on short term lets of the decline in tourism.

The completion of new supply has meant that the properties worst affected are in units that have come online in the past six to nine months, mainly in areas such as Business Bay, Jumeirah Lake Towers and, for commercial units, the Tecom areas.

In terms of lease rates for residential properties the report states that the year on year decline from Q1 2008 to Q1 2009 stands at an average of only 9%, although the downward change from Q4 2008 to Q1 2009 is much larger, an average of 23%, reflecting the enormous price gains seen in the market throughout the first nine months of 2008.

Predicting when the market will bottom out is complicated by the fact the real estate sector in Dubai as elsewhere is largely sentiment driven.

'You still have a number of investors who bought a lot of property, and are probably willing to sell some of it at a very low rate in order to recoup part of their costs,' Matt Green, Associate Director for research and consultancy at CB Richard Ellis told AME Info.

'I don't think that we'll see units going for much below the original price, but each case is a reflection of the investor rather than the market. There is such a level of negative sentiment at the moment that if some investors are wiling to go lower in terms of sale prices then everyone else does.'

The number of property transactions has also witnessed similar declines, in both off plan and ready built units. Data sourced from the Dubai Land Department shows a drop in the number of sale transactions from 1,486 in Q1 2008, to just 595 in Q1 2009, a drop of approximately 60%.

'What we're looking for in order to gauge the turn is a period of stability, both in terms of selling prices and rental figures, but it's hard to see that happening before the end of the year.'

Offplan properties have borne the brunt of the effects of the downturn, with speculative investors in particular defaulting on payments or selling units at close to original prices. While the speculators have been replaced in the market by end users and investment funds, these are adopting a 'wait-and-see' approach and concentrating on units that are either finished or scheduled for completion within the next 12 months.

'The new supply that has been planned to come online over the next couple of years is going to put severe pressure on the market, especially as demand continues to slow,' said Green.

Dubai landlords accept changing rental terms

Dubai's rental sector continues to suffer as the market performs poorly in the wake of excess property coming online, coupled with residents leaving the emirate. A recent report reveals that average rents for villas has dropped by 42% from the peak of Q3 2008 to Q2 2009.

In the same report, released by Dubai-based Landmark Advisory, average rents for apartments fell by 29% from their peak period of Q4 2008 to Q2 2009.

Year on year, rents for villa and apartment rents have declined by 19% and 12% respectively.

For those areas still finding interest in leasing property, the report argues that demand is being driven by relocations from the other emirates within the UAE such as Abu Dhabai, Sharjah and the Northern Emirates.

The report noted those relocating from Abu Dhabi are primarily focusing on property in Dubai Marina, Jumeirah Beach Residences, Palm Jumeirah and the Green Community whereas those relocating from Sharjah are seeking affordable accommodation in Mirdiff, International City and Al-Qusais.

During Q2 2009 average rents in Dubai declined 23% to Dhs129,900 while average villa rents fell 19% to Dhs220,350.

Falling prices, however, represent a double-edged sword for landlords. Not only do they suffer through declining rents, but with market conditions in the customer's favour, they can make more demands on the terms of the lease.

Shift in terms

Consequently, Dubai's market is experiencing a paradigmatic shift in the approach by landlords. Unlike the previous few years, which saw the burgeoning ex-pat population faced with stringent and inflexible measures requiring one cheque for a year's rent, the average in the second quarter of 2009 was three cheques, with some reports claiming instances of landlords accepting up to 12 cheques.

The report believes the mitigating factors are seen in the population exodus that has been seen in the emirate as those without jobs leave the country: 'While it is difficult to quantify, anecdotal evidence suggests that a significant number of expatriates have left the UAE in the first half of 2009.'

And, despite the influx of relocations from Sharjah and Abu Dhabi off-setting overall decline, the report is not optimistic.

'We expect more out-of-work- expatriates to leave the UAE by summer's end,' the report said but it stopped short of making any further predictions such is the lack of clarity over the future. 'Looking to 2010, actual rent levels will depend on multiple factors, including the real volume of unit deliveries and net demand growth.

'While relocation trends are currently propping up the leasing market, its long-run performance will be defined by Dubai's ability to achieve net job creation. This will depend on macroeconomic performance and government policies, both of which are impossible to predict.'

Support fund

Though difficult to predict, Dubai has made some moves to shore up its economy. On August 12 the ruler of Dubai Sheikh Mohammed bin Rashid Al Maktoum appointed Abdulrahman al-Saleh, the Director General of Dubai's Department of Finance, as the Chairman of the Dubai Financial Support Fund.

The fund was established in late July as an independent legal entity to manage the proceeds of the Dubai Government's $20bn sovereign bond programme, and any future issues of the state.

Three board members were also announced, Mattar Mohammed al-Tayer, chairman of the Roads and Transport Authority (RTA), Majid Saif al-Ghurair, Chairman of Shuaa Capital, and Riad Mohammed Khalfan Belhoul, legal adviser to Sheikh Mohammed.

The board's duties include assessing the loan applications from government and government-related entities, as well as selecting strategic projects to be granted financial support.

Dubai in 2050

I’ve seen the future and it’s full of skyscraper after skyscraper. But what else would you expect the future vision of Dubai to consist of? As you can see below, some bright spark has pictured the future and lo and behold the Dubai skyline is full of extremely tall, extremely contorted designed buildings.