News Brief 51

ASSET MANAGEMENT SALES LEASING VALUATION & ADVISORY SALES MANAGEMENT OWNER ASSOCIATION

NEWS BRIEF 51

SUNDAY, 17 DECEMBER 2017

RESEARCH DEPARTMENT

ASSET MANAGEMENT SALES LEASING VALUATION & ADVISORY SALES MANAGEMENT OWNER ASSOCIATION

REAL ESTATE NEWS

UAE / GCC ADDING VALUE TO YOUR HOME STANDS THE TEST OF TIME US RATE HIKES WILL LEAVE SOME PAIN FOR UAE MORTGAGE TAKERS TRENDS IN OFFICE REALTY GETTING YOUR HOME READY FOR THE NEW YEAR HOW RETAIL WILL LOOK IN 2030 CROWDFUNDING REAL ESTATE: A NEW REALITY BOOMING? REAL ESTATE MARKETING IN THE DIGITAL AGE HOUSING AND RETAIL: FINDING THE RIGHT MIX MAKING AI WORK IN REAL ESTATE WHAT’S AILING THE OFFICE SEGMENT? EGYPT REVIVES DREAM OF NEW DESERT CAPITAL EXCLUSIVE: GFH PLANS TO DEVELOP ‘ONE OF THE KEY LAND BANKS IN THE REGION’ WHY ANIMAL SPIRITS ARE BLINDING REAL ESTATE INVESTORS GOLD MINES AND LAND MINES IN THE PROPERTY MARKET DUBAI GEMINI LAUNCHES CONSTRUCTION OF SYMPHONY MEGA DEALS LIGHT UP THE PALM THIS YEAR DUBAI’S SECONDARY MARKET PROPERTY SALES DON’T TELL FULL STORY DUBAI’S PALM SWAYS TO THE BRANDED LIFESTYLE BEAT SAUDI ARABIA’S BIGGEST DEVELOPER GOES FOR TALL IN DUBAI BULGARI TAKES A JEWELLER’S APPROACH TO BUILDING HOTELS DUBAI RENTAL DECLINES PICK UP IN OCTOBER: ANALYST DUBAI’S RENTAL DECLINES WILL BE LIMITED TO A NARROW RANGE THE GATE AVENUE AT DIFC REMAINS ON TRACK DIFC AIMS TO LEASE 90% OF UNITS AT DH1BN GATE AVENUE BEFORE COMPLETION, OFFICIAL SAYS HOW DO WE SELL OUR SPRINGS VILLA IF WE LIVE IN THE UK?

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REAL ESTATE NEWS

SAUDI DEVELOPER DAR AL ARKAN EXPANDS FOOTPRINT WITH US$218M DUBAI TOWER LIGHT SHOW TO TAKE CENTRE STAGE AT DOWNTOWN DUBAI’S NEW YEAR EXTRAVAGANZA 2017: THE YEAR OF THE SKYSCRAPER EMAAR SET TO DISTRIBUTE DH4 BILLION DIVIDEND DEVELOPERS GO ALL OUT TO WOO PROPERTY BUYERS DUBAI PRIME HOME RENTS MAY FALL FURTHER ABU DHABI ABU DHABI’S HOME RENTS WILL REMAIN UNDER INTENSE PRESSURE ABU DHABI RENTAL CORRECTION TO CONTINUE INTO 2018 INCENTIVES GALORE IN ABU DHABI PROPERTY ABU DHABI TENANTS SPOILT FOR CHOICE NORTHERN EMIRATES SEWA MULLS BOT PROJECT FOR HAMRIYAH POWER PLANT INTERNATIONAL COLONY BETS ON BREXIT BOOST FOR DUBLIN WITH $1.2B PROJECT SOUTHEAST ASIAN BUILDERS TO REAP GAINS FROM $323B SPREE INDIA'S BUILDERS HOPE FOR AN IMPROVEMENT NEXT YEAR EXPAT INDIANS TURN SNUB HOUSING MARKET AT HOME LONDON PROPERTY MARKET LIKELY TO CONTINUE PRICE DROP IN 2018

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ADDING VALUE TO YOUR HOME STANDS THE TEST OF TIME Saturday, December 16, 2017 To be sure, any discussion relating to smart home technology inevitably encroaches on the issue of home owners associations and by extension that of facilities management. There has been substantial commentary on the hyper- competitive nature of this industry, and how this has led to poor management services being offered. This ultimately boomerangs into poor upkeep of the asset and therefore lower re sale values. Unsurprisingly, this has already started becoming visible in the data; investors who have overlooked this critical aspect in the first boom-bust cycle of Dubai’s freehold have started to pay the price in terms of their resale values. Herein lies a clarion call: much like the real estate industry in the rest of the world, investors and end users in Dubai will have to make investment decisions based on the pro-activeness of the “association board” if they are to enjoy above market returns over time. It is not at all surprising that in the one-way markets that Dubai experienced in the first cycle of 2002-08, as well as the subsequent decline in asset values, the role of facilities management and that of home owners associations was systemically ignored. Evidence suggests that in the evolution of most real estate markets, this was the typical experience. In point of fact, the role of home owners associations (historically considered to be a “premium service”) was relegated to the backwaters of decision making. And thus was always outsourced using the extended enterprise model. The output, typically, was a degradation of the asset. The poor upkeep of the building led to lower resale values, and over time (measured over a decade and above), the predominant distinguishing factor between upper and lower quartile resale values was not views or locations, but rather the role of owners associations. In an article for “Harvard Business Review”, the authors concluded that 63 per cent of the price differential could be accounted for by the level of budgets and the role of the Board over a 15-year time frame. In Dubai, the role of the home owners association has been a recent development. Already, however, what has been witnessed is a clear distinction in prices. Even in upscale areas like Dubai Marina, there have been instances (more so towards the southern part of the area), where the differential between the upper quartile and lower quartile prices have been an astonishing Dh300 per square foot. While this looks surprising, anecdotal evidence abounds where tenants and investors have been complaining about the upkeep of certain assets as developers have cut corners, that have only shown up visibly over a passage of time. Across Dubai, the min-max levels are actually increasing, suggesting greater degrees of variable quality in post handover building management. What investors and end users need to keep in mind is that a proactive home owners association is part of capital expenditure. It adds value to the asset only over the longer term. In Dubai’s market, where the bulk of the investors historically have been based abroad, the emphasis thus far has been to keep costs low, thereby maximising yield. This has come at the cost of the upkeep of the asset. What we have seen in our experience (this stands the evidence of time internationally as well) is that “high yielding” buildings subsequently trade at discounts to the market. Moreover, in times where the market is focused on quality more than price (the current environment of Dubai), even the yields start to fall, as tenants have better options to choose from. This implies that there is no free lunch available to the long term investor. It is up to the investor and the end-user to exert pressure on to their building managers if they are to preserve the value of their asset. Happily, we are starting to seeing this factor enforcing itself more and more in the local real estate market. For overseas investors, as well as domestic residents, the role of technology in the upkeep of assets is moving to the forefront of decision-making. This will force developers to engage with their stakeholders and instill a culture of a proactive homeowners associations, one where longer term thinking prevails. This is a slow moving trend in the industry; what is obvious is that this trend is finally underway. Source: Gulf News Back to Index

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US RATE HIKES WILL LEAVE SOME PAIN FOR UAE MORTGAGE TAKERS Friday, December 15, 2017 Is the US Federal Reserve out to spoil the UAE property market’s mortgage party? The latest rate hike, up by 0.25 per cent, and the ones to follow in short order will be leaving UAE mortgage takers with much higher instalment costs than what they had signed up for. Here’s a typical example; assume an end-user made a 30 per cent down payment (Dh450,000) on a Dh1.5 million apartment and takes out a mortgage of Dh1.05 million for 25 years. When the monthly repayments mirror the 0.25 per cent hike, the buyer will have to pay Dh171,000 extra in interest payments over the lifetime of the mortgage. And if the Fed takes the rate hike to 1 per cent in the coming months, the EMI (equated monthly instalments) on this Dh1.05 million mortgage will jack up to Dh5,682 a month from Dh5,111 (before the 0.25 per cent hike effected on December 13, according to estimates from GCP-Reidin. The rates hikes do come at a crucial time for the mortgage marketplace in the UAE. All through the year, there has been a gradual increase in the number of end-users buying property financed through homes loans. The latest data records that this year, 97 per cent of apartment deals were effected through mortgages (as against a mere 19 per cent in 2010). As for villas, mortgages are there in 58 per cent of the deals and up from 48 per cent in 2010. According to Sameer Lakhani, Managing Director of Global Capital Partners, the burden of the US rate increases needn’t be felt by all those with mortgage exposures in the UAE. “Mortgages are on fixed rates for between one and three years and thereafter switch to a floating mechanism,” said Lakhani. “So, the impact of rate rises in the US will be felt with a lag in the mortgage market, especially on the recent mortgage deals. Also, it is important to remember that mortgage rates still remain at historically low levels, and this structural adjustment in interest rates is unlikely to subdue demand in the short term.” Interestingly enough, according to the GCP-Reidin report, the take-up of mortgages have been higher in the luxury space than in the mid-market. For instance, mortgage-backed purchases involving properties on the Palm are up “three-fold” in the last seven years. City-wide, mortgages are now a part of 61 per cent of property transactions as of November 2017 numbers. The fact that developers are reducing the upfront payments on recent off-plan sales and backending the rest — at handover time or well after — means demand for mortgages will be there. But will the higher payments force some rethink from prospective buyers? Especially with other cost burdens on the horizon in the form of VAT charges on a host products and services. (There is, however, no VAT specifically on mortgage payments.) In a statement, Emilio Pera, Partner and Head of Financial Services at KPMG Lower Gulf. said: “The interest rate increase will naturally translate to higher borrowing costs and affect rate-sensitive sectors such as automobiles and real estate. With the implementation of VAT, it will be interesting to see how borrowers react to simultaneously rising costs. “We believe that local banks, which use their standard variables rates to price a new transaction, would have factored in some of the impact of the rate hike, which was widely expected.” Sure, the latest 0.25 per cent was indeed factored in by banks and mortgage takers. But what of the Fed’s forward guidance of a possible further three hikes in 2018? Can it cut into the mortgage momentum the UAE realty market has

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seen this year? From a bank’s perspective, they “will need to carefully consider the impact when advancing credit to local borrowers given the policy changes planned for the next year,” said Pera.

As of now, mortgage rates in the UAE typically vary between 2.5 and 5 per cent per annum. This, of course, depends on the structure of the mortgage — whether it is a fixed rate or variable rate or a combination of both. What a 1% hike in US Fed rates could entail for UAE mortgage takers Assumptions * Property value — Dh1.5 million * Loan period — 25 years * Down payment — 30% * Interest rate: 3.24% * Rate hike: 1% Other fees: * Land Department fee: Dh60,540 * Registration fees: Dh4,000 * Mortgage registration: Dh2,635 * Brokerage fees: Dh30,000 Breakdown before rate hike: * Total expenses that include registration fees and the like: Dh100,175 * Down payment: Dh450,000 * Loan value: Dh1.0 million * Monthly instalments: Dh5,111 (Dh3,500 being the principal and Dh1,611 the interest) After rate hike of 1% * Monthly instalment: Dh5,682 (Dh3,500 being the principal and Dh1,757 being the interest) Source: Gulf News Back to Index

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TRENDS IN OFFICE REALTY Wednesday, December 13, 2017 This year the flight to quality continued with single-owned buildings with good amenities and effective management experiencing high demand. New grade A, dual-licensing development, Dubai Design District or d3, has performed well and absorbed demand with over 90 per cent leased with year-on-year rental increases since its launch in 2015. The first phase of One Central in World Trade Centre is now fully leased. A variety of enquiries continue with steady and strong demand from global corporate tenants. Industries that remain more active are media, technology and health care, with a lot of new requirements coming from the US. Overall prices as well as transaction volumes witnessed a decrease during the second and third quarters, but not in all locations. Jumeirah Lakes Towers, Al Barsha Heights, Dubai Silicon Oasis and Dubai Investments Park witnessed the highest quarter-on-quarter drop in rentals as new deliveries with low entry points lowered the market average. Dubai Marina, Downtown Dubai and Shaikh Zayed Road have witnessed declines of 5-10 per cent since last year, while rents in DIFC, Dubai Internet City and Knowledge Village remained relatively unchanged, if not rising in some buildings. Looking forward, the unchanged rents in DIFC, Internet City and Knowledge Village are likely to soften as further supply is added in the next one to two years. Major projects in the pipeline and completing soon include DIFC’s Gate Building 11, the expansion of One Central at the Dubai World Trade Centre and HSBC’s new headquarters in Downtown. Further out, rents are expected to remain fairly flat as more supply continues to come online with ICD’s Brookfield One Brookfield Place, Tecom’s Innovation Hub and Al Wasl commercial tower located next Al Mazaya Centre on Shaikh Zayed Road. Source: Gulf News Back to Index

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GETTING YOUR HOME READY FOR THE NEW YEAR Wednesday, December 13, 2017 Staying abreast of the ever-changing trends in home improvement and real estate can help consumers make the best choices with regards to buying and decorating their homes. A recent survey released by home and lifestyle channel HGTV on the growing trends of home investments in the GCC, reveals that nearly 48 per cent of residents are looking to improve their homes next year. The survey also highlighted another interesting trend: it found more women in the UAE picking up the tool box and carrying out do-it-yourself home improvements themselves and women actually found such activities relaxing. Set the tone Good design can have a positive influence on how we live. Modern accessories and the range of decorating freedom available in the markets can put homeowners in a tough spot deciding the right theme for their homes with 66 per cent of homeowners looking for inspirations and tips to redecorate. Here are a few ideas to keep in mind while styling homes. Stay in trend: Take cue from your personal choice and combine it with the latest trends. Although trends tend to change, at some point it repeats itself in a different form, such as the Victorian style-chair made of acryl material that made a comeback recently. Most inspiration ideas come from primitive elements, such as pets, fashion brands or origins. From themes ranging from Scandinavian, Bohemian to contemporary and much more, a room should be a multifunctional space reflecting the homeowner’s style. Colour combination: Keep a neutral base in living rooms. Neutral accents offer the greatest decorating flexibility, allowing homeowners to easily switch accessories to adopt seasonal trends. Introduce trending colours to neutral rooms with accessories. Add cushions and rugs with colourful pattern or detail to add some interest. Peach, blush, mint and pale yellow will add a different perspective to your space without seeming too extravagant. Incorporating faded textured throws, textiles and accessories is a good place to start. Bring the outdoors in: A colourful floral arrangement or indoor plants will not only add an organic element to the space, but a vibrant hue as well. Create an arrangement of fresh flowers as a table-top décor. Fill empty corners with large plants in colourful pots to add a touch of elegance and a little bit of whimsy. Remodelling kitchens In most cases, building a bespoke kitchen happens only once or twice in a lifetime. However, as per the survey, about 45 per cent of residents are willing to redecorate their kitchens. For avid cooks, hosts and busy families, a kitchen is the centre of daily lives — a common place where aesthetics and function play an important role. Take your kitchen to a different level with these ideas for boosting style and functionality. Cabinets: Consider revamping kitchen cabinets or investing in some new kitchen worktops to refresh the style. With a variety of colour and material options you can find the look you are dreaming of, while ensuring that your new kitchen will stand the test of time. Understandably, this is the most common question cabinet buyers have when working on a full kitchen renovation with the goal of staying on budget. Choose high-quality material cabinets that can have an impact on the kitchen’s longevity and performance. Solid painted cabinets continue to be a winner. For a more relaxed approach, opt for “floating shelves” as a storage space. Lighting: Create a well-planned kitchen lighting scheme that sets the mood for cooking, entertaining and eating. Cleverly positioned lighting in the kitchen can enhance the desired space, while concealing other areas. Choose a “task lighting” for a brighter, well-lit worktop space and opt for dim-lit mood lighting, such as hanging lamps, for dining areas in the kitchen.

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Layout and material: Rethink your floor plan before settling for a theme. Dismiss swinging door cabinets and drawers or large kitchen appliances to make more space. A sophisticated colour scheme of creamy white and pastels along with natural materials is ideal. Replace tired worktop surfaces with durable materials, such as granite; natural materials guarantee quality, durability and value. The expert touch Around 74 per cent of homeowners are turning to professionals to carry out home enhancement tasks. This decision has several merits, including the budget and the amount of time it takes to complete the home décor from scratch. One can bring a specialist on board if the process involves sophisticated interior fit-outs like wooden decorations, intricate carvings and ceiling designs. Many home furnishing stores in the UAE have an in-house team of interior designers who can guide customers through the process at no extra cost. Source: Gulf News Back to Index

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HOW RETAIL WILL LOOK IN 2030 Wednesday, December 13, 2017 Automation, customisation and big data are some of the trends expected to change the retail industry and the way consumers shop in the future. CBRE’s The Future of Retail | 2030 takes a look at the retail landscape in 2030 by examining 40 “futurist” insights and perspectives on how the world of retail will look different in the future, fuelled by changes in people’s lifestyles, urban environments, retail operations, logistics and other trends impacting the industry. The insights will encourage thinking about the many possible situations facing retailers and investors, and by identifying these challenges, how the retail industry can prepare for the future, according to CBRE. “The future of retail is going to change more than we could ever imagine,” says Andrew Phipps, head of UK and Europe, Middle East and Africa retail research at CBRE. “We have taken the time to think about what will change and what it will mean for consumers and the retail industry as a whole. Physical real estate remains important as a sales channel and increasingly as a communicator of the brand and a demonstrator of experience.” Insights from the report Robotics and automation — Retailers will increasingly invest in new technology and automation and robotics will change the number of jobs available in the retail sector by 2030. Processes will replace some of the human interface in the retail environment. The power of prediction — As the Internet of Things becomes the new normal, the advanced integration of trillions of connected sensors will provide deeper insights into the buying patterns of consumers, enabling retailers to anticipate consumer requirements before they can themselves, allowing the supply chain to become far more refined and efficient. This will allow customers to achieve full transparency about what they’re buying and help retailers to fulfil orders more effectively. Buying what you want, where and how you want, is the norm — Advances in smart device technology will allow consumers to literally buy what they see, anywhere, any time. Simple, real–time image-capture analysis makes everything ‘shoppable’ from any source. Customer experiences are specific not generic — Knowing a customer’s buying habits, leisure interests, style and colour preferences means that retailers can present a uniquely personalised experience. Personalisation will be the key differentiator in retailing of the future. Personal ownership of cars has dramatically reduced — The first step on the journey to autonomous vehicles is releasing ourselves from the shackles of the ownership cycle. Personal ownership is the exception rather than the norm. These new vehicles are produced by co-creative partnerships between technology companies and car manufacturers. Stores will become showrooms and brand ambassadors — Physical stores of the future will focus on delivering brand experiences. Shopping has become an immersive, sensory, brand engagement, because, despite the speed and ease of access to online merchandise, the shopper in 2030 still has the desire to visit a physical store. Pure play (online only) is no longer an important part of retail — Retailers recognise the integral and critical role the physical store has to play. Major pure play retailers will become key owners of physical store real estate. Competition for people’s disposable income increases — Consumers have a desire for new experiences; retailers will embrace this making the consumer experience more engaging and educational. Creating a connection with the consumer will be integral to ensuring future success. “With a dynamic young population and one of the highest global per capita internet penetration levels, the UAE is taking a lead, driving e-commerce in the region,” says Anthony Spary, director of investor leasing at CBRE Middle East, commenting on the Middle East market, particularly the UAE. “These are exciting times as we continue to see unprecedented growth for e-commerce, changing the way retailers do their business. A slowdown in brick and mortar retail may encourage traditional players to build their online capabilities to attract and retain their customers.” Source: Gulf News Back to Index

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CROWDFUNDING REAL ESTATE: A NEW REALITY BOOMING? Wednesday, December 13, 2017 Everyone remembers that day in school when friends pitched in to buy equipment for a sports competition. We’ve all done it. A jointly owned asset to bring wealth and glory to the community. Sourcing physical assets jointly, co-owning them with others and distributing rewards are fundamental human behaviours. These fundamentals underpin real estate investment trusts (REITs), which are a blind pool of wealth that jointly own and manage real property assets and redistribute rental receipts and sales proceeds. REITs usually operate multiple large assets. We are talking entire buildings or communities. REIT managers also charge a fee to manage the fund and its assets. Similarly, online REITs use online platforms and digital technology to enable wider access to REITs and quicker dissemination of REIT information. This allows mass participation and broader wealth distribution. Then comes innovation. The Smart Dubai initiative has enabled blockchain at the Dubai Land Department. The Dubai International Financial Centre (DIFC) and Abu Dhabi Global Market (ADGM) have low-cost special purpose vehicle (SPV) regimes. Lower costs could justify even a single-unit REIT. A registered, regulated entity that could own just one studio apartment let’s say. This leads us nicely to crowdfunding of hard assets. The crowd — you, me, friends, family and neighbours — can pool money to buy physical real property assets. This is very common in banking, where it’s called syndicated finance and used heavily for large national infrastructure projects. The smart crowd of bankers and high-net-worth individuals were privy to these deals for practical reasons. The ticket size to crowdfund a $1-billion airport is not exactly for everyone. However, a three-bedroom apartment in Mumbai, Manchester or Dubai Marina jointly owned by a hundred individuals sounds realistic. It also helps diversify risks for investors. At the unit level, this can have a huge positive impact on the real estate market. It opens demand for real estate at even Dh5,000 in savings. The crowd is activated: fresh, much-needed demand for developers and investors. Even individuals earning less than Dh50,000 per month can now own slices of a wide real estate portfolio, helping minimise risks. Instead of one person buying a Dh500,000 apartment, what if we each contribute Dh5,000 each? And we each hold one share in a DIFC- or ADGM-registered SPV entity? So we each own 1 per cent beneficial ownership of a real property asset, e.g. an apartment. Smart Crowd, a DIFC FinTech Hive-incubated start-up, is planning to do just that. It recently won the Gitex Accenture FinTech competition and also took home the winner’s prize of Dh100,000 at the Sharjah Entrepreneurs Festival. Smart Crowd is a crowdfunding platform, very different from an online REIT. The company believes it can enable anyone with Dh5,000 in savings to enter the Dubai property ladder. Its platform is awaiting final regulatory approval from the Dubai Financial Services Authority (DFSA), which will open fresh untapped demand for Dubai’s property markets. Siddiq Farid, co-founder, says, “For far too long the average person has not had an opportunity to access the real estate asset class in a meaningful way. We want to change that by allowing them to access it and sustain the investment through cyclicality of the market.” It’s truly an amazing time to be in property technology. These innovations will have a net positive impact on unlocking real estate wealth. Source: Gulf News Back to Index

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REAL ESTATE MARKETING IN THE DIGITAL AGE Wednesday, December 13, 2017 When it comes to Dubai real estate — where over 220 different nationalities are invested — the world is your stage. “With digital platforms and geo-targeting, your reach goes far beyond the UAE,” concurs Mansi Saxena, director of marketing, Gulf Sotheby’s International Realty, highlighting the impact of digital technology on the industry. Indeed, with online tools, smartphone apps and social networks at your disposal, real estate marketing today is vastly different to what it was a couple of decades back. While Marketing 101 fundamentals may have weathered the digital storm, Marketing 2.0 now calls for the use of newfangled methods and platforms. We reached out to a few industry veterans for their tips and tricks on navigating the modern real estate marketing landscape. In the past, real estate marketing used to be a one-way communication. But the technological revolution created by apps and social media has enabled marketers to correspond directly with their clients. This has allowed for better relationships to be formed and has helped in the delivery of personalised marketing messages that improve customer experience. In turn, this has helped reduce costs and increase revenue. Now marketers can provide consistent and exceptional experiences to clients through multiple channels. We have invested heavily in creating online tools and apps based on cutting-edge Oracle technology. Our website itself is an Oracle app, and we have developed several proprietary apps, which have enabled streamlined experiences for real estate agents, tenants and the landlords. Do • You must be data driven. Always test, measure, tweak and repeat to get the best and most accurate results. • Agencies need to define different client personas in order to pitch the ideal product or service, as well as to better map the customer experience journey. • It is imperative to stay up to date with the latest trends and technologies, and always keep your finger on the pulse in the real estate industry. • You should always be customer centric and all your activities should revolve around the clients. • Remember, innovation is a process and it is something we learn as we grow and experiment. Avoid • Creating marketing campaigns based on the assumption that clients know the product, the company and the challenges the team goes through. • Buying advanced technology without making sure that there is a need for it, or not having in-house talent to manage it. • Using a variety of marketing channels without proper integration tools that collect the results from these platforms and collate the data in one place. • Hiring people who have the tech know-how but lack a strong marketing background. • Replicating marketing activities similar to those used by competitors without understanding why they have taken these actions. Smartphone apps and social media platforms have drastically transformed real estate marketing. We are a technology- first company and our business model reflects exactly that. We heavily focus our marketing efforts online, where we use proprietary technology to attract buyers and sellers.

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We also use the power of social media to not only feature our value proposition to buyers and sellers, but also to promote the sellers’ property. A good example would be a video blog recently posted by one of this region’s most recognisable YouTubers, Mo Vlogs, explaining our process and featuring one of our sellers’ gorgeous villa. So far, it has gotten us over 840,000 views! Do • Go where others are not going. • Try different channels, then decide which one works the best. • Make sure you have enough data to support your decision. • Focus on your company’s core message. • Keep it simple. Avoid • Don’t stick to conventional channels. • Don’t over-complicate your message. • Don’t be afraid of failure. Failure often offers the best lessons. Kalpesh Sampat, managing partner, and Mansi Saxena, director of marketing, Gulf Sotheby’s International Realty Best practises from other industries are being adopted by marketing gurus in real estate. Consumer insight and identification of need-gaps for homebuyers is crucial to designing and marketing a product. Millennials, expats and young families as a target segment have huge potential; the marketing strategy should keeping in mind their preferences, which is mostly digital. Do • Social media should be used as a content dissemination tool first and as a sales tool second. The target segment likes to read up and take an informed decision. If your site provides useful information about a host of topics, it becomes a trusted source. Then if there’s a sales-related post — a project launch or community sales — the target audience is more likely to buy from you. • Follow brand guidelines across artworks; create a calendar and frames for the kind of message you want to disseminate — is it fun or news, about a community or a project? Consistency ensures that your target recognises your brand’s message and the schedule ensures that they expect it on a certain day. • With modern tools such as virtual reality, 360-degree videos or live stream, homes can be brought to the customer’s device, even in 4K. Use these tools. And if you are using print, integrate it with digital using QR codes. • Check credentials and the track record of developers before recommending their projects. In the long term, you get far more repeat business from customers who make a lot of money in the investments you recommended, than by doing a one-time deal and exposing the customer to a loss. • Give customers top service. As Warren Buffer has pointed out, companies need to remember only three words to be successful: delight the customer. Avoid • If the look and feel of your online presence is compromised, the artworks are sub-standard or the picture quality is bad, your message will be lost. So if it doesn’t look good, don’t bother putting it on social channels. • If you don’t maintain your website, revenue loss happens. • Don’t miss out on simple things such as the use of the right colours, appropriate currency conversions or the language of the region. • Do not mislead customers. Such tactics are counterproductive in the long run.

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• Do not try to sell to the client. Try to understand what they need, then find the most suitable options for them. But never push or be aggressive; it is self-defeating.

• Do not bombard customers with emails, SMS or WhatsApp messages. It is not effective and will probably end with your communication being marked spam. Source: Gulf News Back to Index

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HOUSING AND RETAIL: FINDING THE RIGHT MIX Tuesday, December 05, 2017 The link between residential and commercial space has been a recurring theme in real estate developments across the UAE. Creating the right mix has been a key challenge for developers, especially when integrating retail with residential schemes. Retail has certainly emerged as a vital component of any development and in many cases has helped increase the marketability of a building or community. Dubai real estate developers are accordingly getting more precise in targeting specific buyer segments and tenants, aiming to cultivate a self-sustaining community with a vibrant retail centre at its core. “With the Dubai residential market becoming more competitive, developers have recognised the need to differentiate their projects from others,” says Craig Plumb, head of research at JLL Middle East and North Africa. “Including a range of support services is a long-established means of doing this; while this is not a new trend by any means, its use is definitely increasing. Also, the trend for these units to be leased rather than sold is rising.” Sanjay Chimnani, managing director of Raine & Horne Dubai, notes that most developers are retaining retail components for long-term lease. “The retail units are doing well in the market, based on the supply of the units and the occupancy of the building,” says Chimnani. “There is good demand for these across Dubai and developers look for the right mix of tenants that will enhance the value of their building, as well as those businesses that would be good long- term tenants.” By leasing the retail component of a development, the developer keeps reasonable control of the services offered to the community. “Some developers have sold their retails to individual owners; these developers are not over selective as to whom they sell to but they are very particular with concept approvals in order ensure the retails add value to the community and in line with municipality standards,” says Sandrine Loureiro, operations manager of Rocky Real Estate. Retail strategy Getting retail units occupied is just one part of the challenge; driving footfall into these shops is another important task that keeps developers busy. Some devise longer hours, while others go for a much broader mix of offerings. “Longer hours are important; this would mean extra sales that define a successful retail precinct,” says Chimnani. “The master developer has to identify, plan and tap the right retail mix to keep their retailer’s cash register ringing throughout the day, especially after the sun goes down. The evening is the hardest time to keep businesses open, and that’s when people have time to shop. Therefore, it will take a healthy dose of imagination and hard work to achieve the mix of stores, coordinated hours and create an environment where people are enticed to go out after dark. An excellent example of this is JBR’s retail precinct, and another good one is that of Downtown Dubai.” Saeed Al Qatami, CEO of Deyaar, points out that sales strategies differ from developer to developer and matures over a period based on the availability of retail in the vicinity. “Deyaar has evolved and, as a strategy, currently does not offer the retail units for sale,” says Al Qatami. “Retail units are leased out to selective tenants that set up shop in the development. A good mix of retail tenants acts as a crowd-puller and enhances the visibility of the project, thereby adding value to the development.” To maximise returns, creative solutions must be balanced with economic feasibility. “As such, design strategy should be shaped with multiple audiences in mind, with the value measured using a triple bottomline approach that considers economic, social and environmental factors,” says Al Qatami. Comfort component Residents and homeowners often view the retail units as a value-added feature of the property and, hence, are more likely to pay higher rates. “Residents value the convenience, variety and ease of going downstairs for items they need, versus having to leave the building for these same items,” says Al Qatami. “Retail complements the overall development and acts as a community centre, providing people space and opportunity to socialise at the same time.

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“Additionally, many retail tenants become destinations themselves due to unique concepts, which add value to the building, keeping it presentable and aesthetically appealing, and also affect their business. In both ways, adding retail units in a development definitely benefits the property.” Right mix Striking a balance between well-known brands and local favourites takes flexibility, insight and big thinking, says Al Qatami. “High-street retail and local markets have become increasingly popular because they offer a unique array of retailers and a richer, more authentic urban living experience,” he says. “Finding the right retail mix and offering a varied selection is vital in a competitive market. “In addition to diverse retail offerings, developers can look for other revenue streams, including sponsorships and community service pop-ups, that increase dwell time and, more importantly, invest in the community’s social fabric. Developers need partners that can help them reduce the risk of their investments and offer customers, retailers and consumers, new and unique experiences.” Farhad Azizi, CEO of Azizi Developments, says gauging the needs of residents is essential because arriving at the right combination of retail units that complement the lifestyle of residents and addresses their needs is of utmost importance for developers. “Residents may want a quick service restaurant, a grocery store, a salon or all of these close to where they live,” he says. “Azizi Riviera is one such project where we are striving to provide residents all they need and want without leaving the complex. Apart from a mega integrated retail district, there are stores on the ground level of buildings as well. The neighbourhood of a property and the lifestyle it promotes form a big part of any property’s appeal.” Value for investors Arthur & Hardman, the development arm of Reign Holdings, targets to deliver 1,000 hotel apartment units in Dubai’s Jumeirah Village Circle (JVC) over the next few years to cater to the growing demand ahead of the Expo 2020. Samir Salya, chairman of Reign Holdings, says retail will be an integral part of such mixed-use developments. However, having the right retail concept to match the development is just as important. “Most of our developments are Italian-themed hotel apartments, where our retail outlets shall be occupied by Italian restaurants and a range of luxury outlets,” says Salya. “We are very picky when it comes to deciding who will occupy or buy our retail outlets as the retail areas define the external look and image of the building. We would want to allow businesses that will be a value addition and requirement of our guests at the hotel. Moreover, since the theme of our project is boutique Italian suites designed by the famous Italian designer Giovanni, we prefer Italian cafes, restaurants or luxury spas and beauty clinics.” Arthur & Hardman’s projects are all serviced apartments, so the developer has emphasised on having coffee shops and restaurants that allow residents to host meetings and guests. “Many of our residents live in studio and one-bedroom apartments where it is hard to entertain guests; hence, the large lobbies and coffee shops provide an excellent space for hosting guests,” says Salya. “We require retail stores to follow our Italian theme and our hotel operator’s requirement.” Location Vijay Doshi, managing director of Vincitore Real Estate Development, says the location of a project and the existing retail mix within a community and its vicinity are important factors to consider when choosing the types of retail outlets required in a project. “At Vincitore, we choose retail units based on the target customer — nationality, income, family size, etc,” says Doshi. “Our project, Vincitore Boulevard, is situated opposite the world-famous Dubai Miracle Garden, which we anticipate would attract over 2 million visitors a year. Hence, we would select brands that will aptly serve these customers in addition to premium branded stores that will add a luxe vibe to the boulevard walk.” Thriving sector “The UAE’s retail sector is expected to exceed $71 billion [Dh260.74 billion] by 2021,” says Doshi, noting that factors such as a rise in the number of tourists and the expansion of sales events, promotions and shopping festivals will all support its growth.

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“Our view is that the future of UAE retail will gravitate towards service-oriented consumption and, hence, we are targeting developing leisure play areas, restaurants, cafes, branded saloons, pet shops and be a part of this thriving trend,” says Doshi. “Moreover, since Vincitore Real Estate is a branded realty company, we have framed our guidelines for the lease of retail units, and all retail shops will follow our guidelines and service mid and high-level income segments.” As competition for prime retail space becomes more intense, developers have now become more selective with tenants, often conducting due diligence to ascertain each candidate’s track record and business plan. “This trend is essential because the retail units within a project do not just facilitate the same building residents, but also help to enhance the development of the particular area,” says Adnan Al Hamly, CEO of Ghreiwati Property Development, noting how a well-known furniture outlet within Ghreiwati’s Murano Residences has helped generate business and footfall not just for the mixed-use property, but also for the Al Furjan area. “We are fortunate to have the developments on the Al Asayel Boulevard, which attracts big names from all the retail sectors. It also gives us an opportunity to choose the retailers for our buildings to ensure that the residents of our buildings are guaranteed [quality] service by reliable names.” Source: Gulf News Back to Index

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MAKING AI WORK IN REAL ESTATE Wednesday, December 13, 2017 Artificial intelligence (AI) is simply the level of intelligence displayed by machines. While mostly associated with science fiction and futuristic technology, AI is actually a lot more ubiquitous nowadays than one might expect. Some of the AI applications that are already out in the public include those in self-driving vehicles, search engines such as Google, financial services, health care and even in art and video games. Now, the obvious question is, how is AI useful in real estate? In particular, in Dubai’s real estate landscape are there initiatives to embrace the technology and make it more meaningful to landlords, homeowners and realtors? According to Dr Johan Himberg, inventor, author and one of Europe’s leading data scientists, Dubai actually plays a very important role in the development of AI, not just in real estate. “Dubai has made one of the world’s boldest commitments to AI, now we need to ensure those interested in this technology are equipped to see through the hype and deploy it wisely,” says Dr Himberg, who has visited Dubai to help government and business leaders implement AI. “Dubai’s real estate is already world famous, so it’s great to be invited to demonstrate how AI can further this success story.” Reaktor Dr Himberg has nearly 20 years of experience working with data, analytics, machine learning and AI for the Finnish government and international brands with Reaktor, a global technology firm from Finland, which recently expanded operations in Dubai. With Reaktor, Dr Himberg wanted to see how AI could help real estate investors, agents and residents better predict house and rent prices. Presenting at the Dubai Real Estate Institute’s (DREI) best practice event on innovation, Dr Himberg, who is the chief data scientist at Reaktor, provided real-life examples he launched in Finland that helped industry professionals see how AI can work for them and their customers. Using data amassed from rental and purchase transactions across in Finland, Dr Himberg said Reaktor was able to apply AI to determine realistic house and rental price predictions across the city. The result was a simple, easy-to-use, navigational online map of Finland, showing pop-ups of past and future residential rental and purchase price trends. “We’re pretty much a hierarchy-less organisation at Reaktor, made up of highly experienced technology professionals, all given the freedom to follow their curiosity — this allows us innovate in a very agile way,” says Dr Himberg. “We built the AI-based house and rental price predictor for Finland from scratch in just a few months; now that we’ve proven it works we could potentially launch something similar in Dubai very quickly.” DREI’s collaboration with Dr Himberg is in line with the government’s commitment to explore new ideas and solutions to various industry challenges, according to Mahmoud Al Burai, CEO of DREI. “We need to be open to different ways of thinking, which is why it’s important to give people with Dr Himberg’s calibre of expertise a platform to share their idealism” says Al Burai. “I’m really encouraged that innovative companies like Reaktor are choosing Dubai as a place to do business and seeing growth opportunities in our real estate industry.” How it works After showcasing how Reaktor’s price prediction AI tool worked for those looking to buy, rent and invest in property, Dr Himberg went on to reveal how it developed into a service for those looking to sell their homes themselves. Using a web tool created for a Finnish real estate firm, a private seller can get a realistic selling price by inputting a few basic details about their home, such as its zip code, condition, build date and the number of rooms and floors. This immediately gives an estimated sale price based on similar property transactions, also comparing it to prices in more expensive and cheaper neighbourhoods. This gives home sellers a better chance of making a sale, as well as giving real estate agents a compelling new service to sell to a market that would otherwise have gone it alone. “There’s a lot of excitement about AI, largely driven by fears it will take our jobs, or evolve into something we can’t control,” said DR Himberg. “AI has been around a long time; we’ve had machine for nearly 60 years and we still have

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jobs. Technology has replaced jobs for generations and we’ve adapted, when elevator operators became redundant I’m pretty sure they found other jobs.

“AI is great at doing a simple job it’s told to do, but not great at modifying its behaviour. If AI were human it would be best described as savant — extraordinary at solving complicated mathematical problems, but would struggle with simple everyday tasks like holding meaningful conversation. AI has its limits but it’s current detection and prediction capabilities are already good enough to make us rethink how we run our businesses and cities. The business of prediction, created by combining data with powerful computing, offers compelling benefits for many sectors — real estate included.” The real estate industry’s reputation as being slow to innovate presents a real challenge, although Dubai is committed to fast track the process, says Al Burai. “Globally, real estate has been one of the slowest industries to innovate, but there’s no reason why Dubai can’t buck that trend,” he says. “When we launched the first Gulf Real Estate Awards in Dubai, we researched over 300 industry professionals on where they saw the biggest growth opportunities — innovation was number one. Interestingly, of all the Gulf countries, the UAE was the only one not to cite innovation as a top three challenge. We’ve just launched the second edition of the Gulf Real Estate Awards, so we’re confident we’ll be celebrating some genuine innovations in real estate that will make the region more attractive to foreign investors.” Source: Gulf News Back to Index

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WHAT’S AILING THE OFFICE SEGMENT? Wednesday, December 13, 2017 The impact of low oil prices and the subsequent bearing this has had on the macroeconomic environment across the GCC, has been felt across every vertical of Dubai’s property market, but most sharply in the office sector, which has proven to be the most challenging asset class over the past year. Sales prices and rental rates continued to stagnate in the third quarter due to limited demand in a generally oversupplied market, particularly for strata-titled office units. The lack of transaction activity and reluctance of landlords to lower rates in certain areas resulted in a largely flat market. Although stable rates generally mean the bottom of a real estate cycle, we don’t believe this to be the case for the office sector and anticipate further, more pronounced declines. Office sales rates fell 6 per cent year-on-year, while rental rates also suffered a drop of a more subdued 2 per cent during the same period. Both office rental rates and sales prices will continue to come under pressure as new developments are handed over with demand expected to remain low. Tenants and buyers will continue to expect attractive rates, incentives and flexible payment terms. As difficult as the market currently is — there has been evidence of corporates moving away from older stock with demand and take-up of grade A office space in business hubs such as Dubai Internet City, Dubai International Financial Centre (DIFC) and Downtown Dubai — this has to be tempered by the fact this only constitutes a fraction of the overall stock. From a sales perspective, quarter-on-quarter results remained flat across Barsha Heights, Business Bay, DIFC, Dubai Silicon Oasis and Jumeirah Lakes Towers (JLT). Year-on-year the figures were less forgiving with Business Bay recording a decline of 13 per cent, while DIFC and JLT witnessed drops of 11 per cent and Barsha Heights at 8 per cent. The only area remaining flat, according to our statistics, was Dubai Silicon Oasis. Rental rates have also seen no changes quarter-on-quarter, with all areas remaining the same. Business Bay once again notched the largest decline year-on-year at 10 per cent. The most favourable rental rates were found in Dubai Silicon Oasis and Barsha Heights, where the price per square foot per year varied from Dh50–Dh80 and Dh50-Dh120 respectively. Other factors that are impacting the commercial market have been the rise in the number and size of the real estate funds/real estate investment trusts (REITs) in Dubai and the wider region. These have generated attractive yields for investors with low entry and exit costs, greater levels of liquidity and the ability to diversify investment across asset types. Industry experts believe that there remains room for growth and expect a rise in specialised REITs focusing on specific asset classes. This could potentially lead to a greater pool of proactive landlords offering incentives to secure higher occupancy rates to deliver investor returns. The value-added tax (VAT) is another area expected to impact the commercial market. Our understanding is commercial property is likely to attract VAT, which is expected to be introduced next month, and although this will likely dampen investor interest in the short to medium term, it may open the possibility of a potential increase in tenant demand for the accounting, auditing and tax advisory sector. That said, with over 4 million sq ft of office supply delivered last year, a further 1.75 million delivered in the first three quarters this year and 0.6 million sq ft expected to be delivered in the fourth quarter, we expect the office market to remain subdued into 2018. Source: Gulf News Back to Index

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EGYPT REVIVES DREAM OF NEW DESERT CAPITAL Sunday, December 10, 2017 In Egypt’s eastern desert, roads are being carved across vast expanses of sand where the government is building a new administrative capital, a long-cherished project that has failed in the past. The city will be complete with luxury hotels, upscale residential districts, a modern airport and a 345-metre tower, touted as Africa’s tallest. The work is being carried out about 45 kilometres east of Cairo, between roads connecting the metropolis to the canal city of Suez and the Red Sea resort town of Ain Sokhna. Workers are building a district to house a new presidential palace, parliament, 32 ministries and foreign embassies. The project, seen as expensive and not a priority for Egyptians, has been hard to sell, especially given past failures. President Abdul Fattah Al Sissi in 2015 announced the project to build a new capital, expected to cost some $45 billion (Dh165 billion) and to be completed by 2022, according to the authorities. The cost has angered many in a country with a crisis-hit economy. The first phase of construction was officially launched in October, with the new capital aiming to expand to 170 square kilometres and house more than six million people. For the authorities, the project is a necessity due to Cairo’s gradual decay and congestion. With its 18 million inhabitants and constant traffic gridlock, Greater Cairo is expected to see its population bulge to 40 million by 2050, according to official figures. Foreign investment in Egyptian securities rises to $19b Cairo: Foreign investment in Egyptian securities hit $19 billion (Dh69 billion) as of December 6 since the flotation of the pound currency in November 2016, Finance Minister Amr Al Garhy said. Egypt floated the pound as part of a $12 billion International Monetary Fund loan aimed at reviving its economy which has struggled since a 2011 uprising. The central bank since November 2016 has raised key interest rates by 700 basis points, generating appetite for Egypt’s debt. Source: Gulf News Back to Index

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EXCLUSIVE: GFH PLANS TO DEVELOP ‘ONE OF THE KEY LAND BANKS IN THE REGION’ Saturday, December 09, 2017 GFH Financial Group, the Bahraini Sharia-compliant investment house, is drawing up a development strategy for a 25 million square metre land bank with a US$1.2 billion value, across the GCC, India and Africa that it acquired in August, its chief executive said. “We are currently negotiating with several parties and hope that over the coming 12 to 18 months we will be able to decide the direction we wish to take and choose the right partner for it within this period,” Hisham Al Rayes, chief executive of GFH said. “This is one of the key land banks in the region, and we are exploring plans to list it, or make strategic partnerships with international parties to have access to those lands.” An appropriate partner, or partners, would be a “real estate developer that needs attractive valuations on land banks to be able to gain strong entry into key markets,” Mr Al Rayes said. The talks at present are with international companies, he added, but GCC developers with plans to expand outside the region may also be interested. “We are looking to create partnerships and maybe exit at a certain point in time, which we expect would achieve huge returns for our shareholders in the medium term.” The land bank is the result of three funds GFH managed before the 2008 financial crash that failed to return 100 per cent of profits to their clients. “Those three funds were strategic land banks that had huge growth potential pre-2008, but [experienced] a shift in growth prospects due to the economic crisis,” Mr Al Rayes explained. “So, we took the strategic decision for GFH to acquire the land and aggregate it together to create one of the largest land banks in the region.” He cited Mohamed Alabbar, the founder of UAE-based developer Emaar Properties, which last month listed its subsidiary Emaar Development on the Dubai index, as having said one of the key advantages a developer can have is a sizeable land bank. “So we took those scattered land banks and aggregated them under one umbrella to create huge value for real estate companies,” Mr Al Rayes said. Firming up a strategy for the land bank is likely to take at least a year because of the challenge in finding one partner interested in developing across all the countries it covers. “It’s a huge portfolio and we may end up breaking it up,” he said. “Real estate developers are mainly localised. It’s rare that you find a local developer with operations worldwide, because it has to do with local knowledge and so on.” GFH registered a net profit of $25.09m for the third quarter of 2017 compared to a loss of $7.58m for the same period in 2016, and expects a similar performance for the final quarter and into 2018, the chief executive said. The investment bank, whose shares are listed in Bahrain, Kuwait and Dubai, is aiming for approval from Saudi Arabia in the first half of next year to cross-list on the Tadawul stock exchange. “Saudi Arabia is starting with pilot companies cross-listing as it becomes more sophisticated and competitive,” said Mr Al Rayes. “We satisfy the criteria since we are already in three markets and are familiar with such arrangements. However, there is huge competition for this pilot and I hope we manage to be one of the chosen companies.” Source: The National Back to Index

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2017: THE YEAR OF THE SKYSCRAPER Thursday, December 14, 2017 More skyscrapers were built in 2017 than during any other year in history, according to a report released by the Council of Tall Buildings and Urban Habitat (CTBUH). A total of 144 buildings measuring 656 feet or taller were completed in the world this year, up on 2016's record by more than 13 per cent, CNN quoted the report as saying. China dominated the list accounting for more than half of this year's global total, with 77 of the structures located in 36 different cities, the Chicago-based CTBUH said in the report. Of them, the southern metropolis of Shenzhen was responsible for the highest number of new skyscrapers. Topping the CTBUH's list for the second consecutive year, the city saw the completion of 12 such buildings in 2017 - more than the entire US. Shenzhen is also home to this year's biggest new skyscraper, the 1,966-foot Ping An Finance Centre, now the fourth-tallest building in the world. The city of Nanning in Guangxi province was ranked second, having completed seven new tall structures, while Chengdu was tied with Indonesia's capital, Jakarta, at fifth. The Chinese cities of Changsha and Wuhan were joined by New York, Toronto, South Korea's Busan and the North Korean capital, Pyongyang, with four each. But while the global trend is headed skyward, the market for high-rises is changing, according to Shawn Ursini, editor of the CTBUH's Skyscraper Center database. "Residential is taking up an increasingly big share of buildings measuring at least 200 metres in height," he told CNN. "If you go back to the latter end of the 20th century, you could almost assume that any building of that magnitude would be an office building," he added. Of this year's 10 tallest new structures, five have provisions for residential use, including Dubai's 1,394-foot Marina 101. A total of 23 countries were represented in the list, with places like Sri Lanka and Kenya completing buildings over 200 metres tall for the first time. Source: Khaleej Times Back to Index

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WHY ANIMAL SPIRITS ARE BLINDING REAL ESTATE INVESTORS Tuesday, December 12, 2017 Sentiment driven by media has an important effect on asset prices and raises questions over how behavioural factors interrelate in economic environments. There has been a plethora of research suggesting that expectation and fundamentals have a complex relationship where a negative shock can be systematically over-estimated turning bulls into bears. In the United States, according to a white paper published by the Ohio State University, during the last boom-bust cycle, there was indeed an intertwined relationship between both the amount and type of media coverage and public perceptions regarding the housing market. It also states that the public perception of the housing market is influenced more by bad news when compared to the influence of good news. A potential reason for this could be attributed to the excess attention when economic conditions are poor. There is typically a lag effect between "animal spirits" as reflected in the media and the "smart money" around inflection points that is the greatest indicator of the ineffectiveness of the media's impact on the predictive role of asset prices. In the United States, there was still a litany of research and articles published in 2011, well after the market had recovered and the direction of prices were on its way upwards. We have seen this trend transpire in Dubai over the last cycle as well. An analysis from July to October 2014 reveals that majority of the themes of articles were buyout with a general notion that prices would increase further, thereby underlining the notion that media reports and the zeitgeist is often guilty of the "herd mentality" that they themselves warn investors against. During the same time, prices were plateauing and only once prices turned negative did the media change their stance from optimism to pessimism. This reiterates that point that investors need to analyse the fundamentals, compared to following the media to define their position, and that the "zeitgeist" as reflected by media reports has been lagging market activity, especially during inflection points. Once again in 2017, we are witnessing the same trend as investor sentiment continues to dampen by news headlines and research. However, a closer dissection of the data and fundamentals suggest that the price cycle is currently in an inflection point, giving investors an opportunity to enter the market and capitalise on future gains. Transactional activity has increased on a year-on-year basis, both on a level of volume and value. In addition, price action across communities is scattered, where in the last year there have been green shoots in certain mid-income areas such as Jumeirah Village Circle and International Media Production Zone, but in other locations such as Downtown, prices continue to edge lower. Decisions driven by 'animal spirits' and the media usually cause the investor to get trapped in herd mentality, consequently blinding them from seeing the inflection point in the market. For investors to better gauge market conditions and inflection points, a deeper analysis is needed to assess the real value of the asset. Whether investors decide to enter the market or sit on the sidelines waiting, they must be cognizant of the fact that a recovery is typically slow and steady and shouldn't expect double digit returns soon. Source: Khaleej Times Back to Index

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GOLD MINES AND LAND MINES IN THE PROPERTY MARKET Sunday, December 10, 2017 I am often asked by investors to articulate my "philosophy" of real estate investing. Tough question. My ideal deal is one where it is possible to buy brick and mortar assets at 60-70 per cent of replacement cost. This usually occurs in the aftermath of a banking crisis or economic shock. This was the case in Florida homes in 2009 or Spanish office space in 2010. Another strategy is to "buy, fix and sell". This was my rationale for East Kent homes as a proxy for King's Cross, the biggest retail and office development complex in Britain since Canary Wharf and the Docklands in the Thatcher era. Now that towns like Ashford and Folkestone are linked to Kings Cross St Pancreas by high-speed link, rents will rise, bank mortgages will rise, commuter traffic and capital values will rise in East Kent. I believe the private and public property markets are rarely perfectly correlated, offering exceptional, if rare, opportunities for arbitrage in debt instruments or securitised property. Anybody who does not have a diversified portfolio of real estate investment trusts (Reits) is denying themselves the potential to make money in some of the world's hottest real estate sectors and themes, easily accessed via an interactive brokers or e-trade electronic brokerage account. For instance, I had profiled Prologis as the ideal New York Reit to benefit from the industrial boom. Prologis was up 28 per cent in 2017. As I assure my parents, both avid property investors, if you think Wharton is expensive, try ignorance! The US desperately needs to build at least 50 million sqft of extra industrial space every year, thanks to the Amazonisation of the world. Even the US Air Force is leasing its vast spaces in Nevada to build mega one million sqft distribution and logistics centres. This is a 20 per cent per annum growth opportunity for at least the next three years. Timing and the right entry price are everything in real estate investing, as is real-time market intelligence. I avoid brokers and mortgage bankers like the plague, just as I do Third World guys who offer to sell me a BMW 7 series for Dh50,000, quick, quick Sahib! As a partner in Asas Capital, I am proud to have raised the equity capital for a 630-room Park Regis four-star hotel that will provide some of the Gulf's most intelligent (they trusted me and their trust is sacred) investors a 15 per cent cash dividend in US dollars and a potential 200 per cent return on initial capital on the project's eventual flotation or trade sale. Saudi Arabia wants five million extra Umra pilgrims by 2020 but Makkah has barely 12,000 branded four-star hotel rooms. This was the macro opportunity of a lifetime and my partners at Asas Capital began work on this project in 2014, when oil was $114 and religious tourism assets dirt-cheap. I absolutely abhor speculative real estate investments or "buy to let" in markets where a developer can arbitrarily raise service fees at will even when rents fall 20-30 per cent. So a Dh2.5 million, 1,000 sqft one-bedroom flat rents in the Burj Khalifa for Dh120,000 but service fees are Dh72,000. A two per cent net rental yield makes no sense as if I wanted a bank deposit, I would get one. Demographics and the credit cycle play a crucial role in property investing. So the exodus of executives due to job losses in banking, property, aviation, construction, retail etc. makes luxury a non no for us in Dubai. The only villas that are selling now are owner occupiers in the Dh2-to-3 million range villas in the Dh5 million-plus range will have to take a 40 per cent hit to capital. There is a glut of luxury apartments, high end office spare (a Mazaya building sold for Dh400 a square foot, just above construction cost. That is where I see eventual market equilibrium). Investors in British schools, especially if inspired by Dh120,000 a year pseudo-British public schools, will hemorrhage cash as companies slash education subsidies. Note the many high end schools who violate KHDA rules against discounts by offering "founder fees" or two sibling for one package. When hotel RevPARs fall by double digits, I have only one piece of advice for investors - get out! I expect the current trend of falling rents to accelerate in 2018 and even 2019. If rents fall by another 20 per cent, many segments of the property micro markets become affordable again, a huge ballast for Dubai's trade/services economy. Source: Khaleej Times Back to Index

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GEMINI LAUNCHES CONSTRUCTION OF SYMPHONY Wednesday, December 13, 2017 Gemini Property Developers has started construction of its 29-storey Symphony tower in Business Bay. This is the second of a series of high-end residential projects planned by developer, after the Splendor in Sobha Hartland. Symphony project has a built-up area of 361,974 square feet and apartments ranging from 430 square feet to 2,900 square feet. The tower will have 455 apartments and is expected to be handed over after May 2020. Source: Gulf News Back to Index

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M EGA DEALS LIGHT UP THE PALM THIS YEAR Wednesday, December 13, 2017 A penthouse deal for Dh102 million, another for Dh84.2 million and a third for Dh67 million — with these kind of transactions Palm sure has been hitting the sweet spots this year, according to Luxhabitat states. These came at a time when investor demand within Dubai’s broader property market was principally for mid-market offerings or those deemed as “affordable luxury” and backed up by quite favourable payment terms. (The penthouse sold for Dh102 million is part of Omniyat’s Palm The One project.) So, why is it that the Palm has seen a “resurgence” of interest, and particularly since the third quarter? One reason could be that there is far more of off-plan investment opportunities available on the island than in the last two years. There was Seven Tides which launched Se7en Residences The Palm, a 14-storey twin-tower complex that would add a substantial 1,066 units. Units start at Dh752,000 for studios and Dh1.03 million for the one-beds. Such projects, including those by Azizi, meant they are creating slightly more affordable pricing options on the island. For instance, Knight Frank lists a villa on Frond M for Dh37m and another on Frond) for Dh11 million. And demand up the value chain will always be there irrespective of the market situation. According to Joey Elaty, Luxhabitat’s Senior Advisor for Palm Jumeirah, “What buyers are snapping up are well-priced garden and signature villas, plots if there are any left, and well-positioned custom-built villas. (The project) XXI Carat is a great option for a new development in the area. “The Palm is going through a resurgence of interest … and reasons include the fully developed master plan and the fact that seafront living is available only here. There has been strong demand for plots considering just about all are snapped up. Some properties have actually gone up in value in the past year on the Palm.” (This year, Luxhabitat’s costliest Palm transaction was a penthouse, at Dh18 million.) “Right now, there are many good options for off-plan on the Palm, including many projects of different styles and finishes,” said Elaty. “With the introduction of Nakheel’s towers (Palm360 and Palm Beach Residences), it would give buyers a new choice to the mix.” Source: Gulf News Back to Index

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DUBAI’S SECONDARY MARKET PROPERTY SALES DON’T TELL FULL STORY Wednesday, December 13, 2017 There is so much to be gained from economy history … it is indeed a shame so little is taught to budding economists, journalists and analysts. History may not repeat itself but it is a brilliant way of highlighting issues modern day economists have, foolishly, brushed to one side. As we look at analogous events to the development of the Dubai real estate market, one of the examples that keeps cropping up is that of Berlin. Although considered to be a Tier 1 city in terms of development, it faced two sets of challenges over the last 50 years that made it an outlier of Europe. It is these that need to be scrutinised to understand some of the dynamics of the Dubai property market. Berlin, in particular, and Germany as a whole have historically suffered from low home ownership rates. Whilst this could be explained easily in the immediate years after the war, the 41 per cent has persisted, indicating that despite developed mortgage markets and high levels of immigration, home ownership has remained flat at lower levels, especially when compared to rest of Europe. This rate of ownership meant that even as housing stock rose at substantial levels in the 1950-60s, there was no active end-user increase in ownership rates. Apart from the government sector, most of the financing was done by private banks and institutional holdings. And even though rents remained broadly flat during the decade, money flows into the sector experienced a surge, even as house prices rose by moderate levels (less than 4 per cent per annum during this period). The second experience has been that despite the fall of the Berlin Wall, and the increase in economic growth rates since, house prices have broadly remained flat. And in certain cases have declined, a phenomena that was apparent well before the global housing crisis in 2008. In point of fact, the housing crisis left Berlin largely unaffected; in certain areas prices actually rose between 2008-10. This indicates that housing markets have at times unhinged themselves from underlying economic growth rates. Despite a huge build up of housing stock, pries in Berlin continued to rise, albeit at rates that were in the low single- digits. What was critical in the data even then was that price indices were constructed not only through secondary market performance but imputed using primary mortgage activity data to arrive at a holistic view. Curiously, this discipline has not been adopted by industry watchers in Dubai. Instead there has been this artificial distinction between primary and secondary market activity, leading to distortions in price signals due to poorly constructed methodology of indices. Accounting for off-plan data is the only logical conclusion where more than half of the market activity is dominated by that sector. Just as it made sense in Germany when there was a massive rebuilding effort post the war. Information that is not statistically accurate then serves as a model for the market’s micro-structure efficiency. This has been noticed by sophisticated investors, but for the most part it continues to be ignored by analysts and the media. The second and perhaps the more critical lesson is that evidence from Berlin suggests that a weak economy is not necessarily associated with a falling housing market. Just as a healthy economy is not necessarily associated with a thriving one. This is especially true if the subsets of the economy that drive asset markets are different from those that drive consumer sentiment. Given low home ownership rates in Berlin, even though economic growth rates were low between 1955-65, house prices rose even as there were rent control programmes in place in most areas. This suggests new money flows from investors were actually generating lower yields. Similarly, even as the global housing market crisis swept through in 2008-10, Germany — and Berlin — housing prices moved in the opposite direction. This implies that local forces of demographics, money flows, and government policy often affect house price dynamics more strongly than do external economic and geopolitical factors over time.

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Unfortunately, this lesson often gets lost in the razzmatazz of instant and often misleading news. Equally, it is a lesson that needs to be well heeded by the patient investor.

Source: Gulf News Back to Index

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DUBAI’S PALM SWAYS TO THE BRANDED LIFESTYLE BEAT Wednesday, December 13, 2017 At the Palm, there is no such thing as running out of options to top up on that super-luxury living. Even for ones that come with the signature of a “branded” experience. The Royal Atlantis has released a further 20 plus residences for sale, and taking the tally up to now to about 50. In all, the development — connected to the Atlantis hotel via its lobby and a sky pool — will have 231 apartments. The new releases, with the entry set at Dh6.99 million, come at a time when investor interest for the Palm is going through a strong revival this year. In fact, across Dubai, the appetite for prime has been on an upswing. The numbers show as much. “In the first nine months, prime transactions (those defined as Dh10 million and anything above) in Dubai were registered at Dh2.27 billion, up 9 per cent from the same period a year earlier,” said Maria Morris, Partner — Head of Residential, Knight Frank M. E. “In prime areas where new supply of quality stock had been limited, such as Palm Jumeirah and Emirates Hills, we have seen price growth return over the short term. “For the Palm specifically, we have seen a resurgence in interest for prime properties. A lot of its is because there is new inventory coming there. And for a long time that was not there and most transactions were happening in the secondary market.” As such, there is a lot of new and branded developments taking up spots on the island. Nakheel has announced a tie-in with Raffles, the upscale hospitality brand, to manage its Palm360 twin-towers. (One tower will feature the Raffles residences, but no details have been announced when they are going on sale.) According to Morris, “It’s as if the Palm is almost taking on a new identity with all that’s been happening there in terms of continued development. There are going to be far more restaurants and cafés to add to the lifestyle. Some of the best restaurants in Dubai are to be located there. There will be its own mall (Nakheel Mall), its own cinema. Residents won’t ever need to leave.” Of the first set of Royal Atlantis released, Knight Frank has seen quite a bit of take-up. The strategy will be to keep releasing additional units in batches until the completion in the third or fourth quarter of 2019. Of the current releases, the garden suites carry a Dh37.5 million tag and there’s a penthouse “currently” at Dh47 million. As is the case with such rarefied developments in Dubai, buyer interest has been pretty cosmopolitan, with “over 50 nationalities” expressing such a sentiment. Kerzner International is the operator of Atlantis The Palm and the One & Only properties in Dubai. It will be operating the Royal Atlantis as well. “For the future releases, we want to make sure it’s very much demand led,” Morris said. “We wanted to ensure that throughout the sales period we have a really a consistent sales flow and a mix of units. We didn’t want be in a situation where we release all the two-beds in one go and not be able to release a penthouse.” * Between the hotel, the residences and the connected beach, the Atlantis project spans 17 hectares. The residences are spread over 36 floors. (The hotel stretches to 46 storeys and feature 795 rooms). * The 231 apartments making up the Royal Atlantis have over 80 different layout variations. * The sky pool connecting the Royal Atlantis residential block with the hotel is 90 metres long and placed 95 metres off the ground. * The resort component of the Royal Atlantis Resort & Residences will cost around $1.4 billion to build. Source: Gulf News Back to Index

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SAUDI ARABIA’S BIGGEST DEVELOPER GOES FOR TALL IN DUBAI Tuesday, December 12, 2017 Saudi Arabia’s biggest developer has launched a Dh800 million tower project in Dubai … for Saudi buyers. And it’s even got an Italian connection. Dar Al Arkan, which has a market capitalisation of 10.8 billion Saudi riyals, is building the tower right on the edge of the Water Canal in Business Bay (and opposite the W hotel off Shaikh Zayed Road). The 34-storey project bears quite an outside-of-the-box name — “I Love Florence” — and the connection comes having the Roberto Cavalli brand do up all of the interiors. The plot was bought just two months ago and represents Dar Al Arkan’s first project outside of Saudi Arabia. More projects could be taken up in Dubai and elsewhere in the region, according to a senior official. All these elements should be enough to get Saudi buyers lining up. “We chose the location because Saudis love to live on the water,” said Ziad El Char, CEO. “We chose room formats that are quite sizeable and with big balconies — not the tiny ones you see here. “And the elevators will open directly onto the owner’s apartments — and with the Roberto Cavalli interiors, Saudi buyers will have enough reasons to buy.” The apartments carry an average price of Dh2 million and the project should be ready by June of 2021. El Char, who was earlier working in Dubai, said it was last year that Dar Al Arkan decided to make headway into a market outside of Saudi Arabia. To this end, a development office to handle all of the international operations was set up in Dubai and followed by the buying of the Business Bay plot. But with the Saudi crackdown on corruption and with so much happening in the kingdom, was this a good time to be launching new projects? “No matter whatever is happening, the best place to save is property,” said El Char. “Dar Al Arkan has been at it for over 23 years and we have built up a base of 38,000 customers. What we are doing now is just presenting to them a new product outside of the kingdom.” This year, the developer has four projects at an advanced stage of development in Saudi Arabia, three in Riyadh and one in Madina. “The way it works there is to have the projects either complete or nearing completion to start selling. Because a lot of deals happen on mortgages, it is a necessity to do it this way. “Banks typically take 60 days to process the approval paperwork. The sales process is quite different to Dubai’s.” (All through this year, Dubai’s developers have been in a rush to launch and sell. The deals and payment plans have been getting sweeter as far as buyers are concerned. Anything to lock in a sale is the developer’s mindset.) Dar Al Arkan’s asset base, especially as land bank, is valued at 25 billion riyals. Apart from the stray exposure in a mall or commercial property, the predominant share is vested in residential. Outside of the Saudi government, it holds the biggest land bank in Makkah and Madinah. Source: Gulf News Back to Index

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BULGARI TAKES A JEWELLER’S APPROACH TO BUILDING HOTELS Tuesday, December 12, 2017 Even when it comes to deciding where to build the next hotel, Jean-Christophe Babin brings in a jeweller’s perspective. And that’s certainly not of out place when you are the CEO of Bulgari, one of the most desired names in jewellery. “There are plans to take the Bulgari hotel to five new cities, including New York and Beverly Hills,” said Babin. “But I still haven’t decided where the locations need to be. “Choosing a location for a boutique hotel is very much like crafting jewellery. You do so after you find the gems — the very unique rough diamonds or rough sapphires. Once you find them, only then you will start setting the jewellery. “In New York and Los Angeles, we haven’t found the “rough diamonds” — the perfect location where we think our hotel should be. “A rough diamond location for me is not just about offering scope for a consistent size or requirements, but a location that is quite unexpected for what it offers … and what it doesn’t.” These days, Babin and Bulgari are as likely to put finishing touches to a bespoke hotel or resort experience as they would a fine piece of bauble or an intricately designed leather accessory. The CEO was in Dubai for the opening of the region’s first Bulgari-branded hotel, on Jumeirah Bay island, and which also features a constellation of super-premium apartment buildings. Is there a chance then that Bulgari might consider creating just the residences elsewhere in the city? Babin gave the thumbs down to any such thought. “Look, the way I see it, the core benefits we are offering relates to hospitality. The core must be the hotel, its bespoke services and what we could offer as gastronomic experiences. “Only if the real estate allows it and it makes sense, then why not have the residences. But the hotel needs to come first. And in most locations, we don’t have the residences. “In Dubai, the location we have is unique — it allowed us to be in a downtown location and “tropicalise” it for a resort- type experience. We need to find something comparable in New York or Los Angeles. “This (the Dubai project) sets the base. We are not in any urgency to add more hotels. But we have to develop something comparable.” (Bulgari, part of the luxury-focused LVMH Group. now operates five hotels and with two more to join next year and in 2020. These apart, it has five other city possibilities in mind.) So, is hospitality pulling its weight in the Bulgari portfolio? “Its weight when compared to the total company remains marginal,” said Babin. “A very good hotel — depending on the city, and depending on the number of keys — can score between 30 million euros (Dh130 million) to 60 million euros. “And even if you have 10 (hotels), it’s only 300 million euros to 600 million. Our overall company is worth much, much more than that. As hotels came late to the portfolio, it will remain somehow marginal. But it will be successful because we will only have a few. “We also take our time to try and really deliver something new in each and every location and that hasn’t been delivered before. Even now, hospitality is already profitable.” Babin said it is difficult to think of Bulgari adding something new after hospitality. “The markets we are playing in are pretty niche or fragmented — that’s how we can grow marketshare. It would be foolish to venture into others when we can accomplish so much in what we already do.” Jewellery can never go out of style

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Buying jewellery will remain a “visceral choice for mankind, whatever be the times”, says Bulgari’s CEO.

“The style, the design, in the case of Bulgari they remain very strong,” said Jean-Christophe Babin. “That’s how you have a chance to grow.” This year has turned out to be a good one for luxury labels and an improving global economy means more cash in hand among likely shoppers to splurge on those must-haves. Babin clearly likes most of what he is seeing in terms of consumer sentiments. Even in the case of China, he insists not to put too much store in the negative news. “China has been very much driving the show over the last 10 years ... and even this year. Whether it is growing at 7- or 8 per cent, eventually it doesn’t matter. “Discretionary money for millions of Chinese is being added significantly. The fundamentals of the economy look as good for the next five years.” Source: Gulf News Back to Index

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DUBAI RENTAL DECLINES PICK UP IN OCTOBER: ANALYST Monday, December 11, 2017 The cost of renting apartments and villas around Dubai fell at a much faster rate in recent months, a property analyst has said. According to a review by Phidar Advisory, accommodation costs across properties in the emirate posted the biggest quarterly decline in October since the slowdown started in the middle of 2014. The decline continued to hit many communities, including popular areas like Downtown Dubai, where rents dropped by 5.2 per cent at the end of October. “Rent declines are escalating, largely driven by the combination of weak job growth, new supply handovers and reduced housing budgets,” Jesse Downs, managing director of Phidar Advisory, told Gulf News. “Wider corporate restructurings and salary adjustments have reduced housing budgets, which exacerbates rent declines and will lead to a reshuffling of pricing.” The analysis coincided with the trend shown in the Reidin Residential Rental Price Index, which fell from 92 in August 2017 to 90.4 in October 2017. In its most recent report, Core Savills also highlighted that rents for flats in Dubai registered more declines than villa properties. “The core submarkets of Dubai Marina and the Palm Jumeirah were the weakest performers, with rents dropping by 10 per cent year-on-year. Occupiers across these areas either negotiated lower rents or chose to move to cheaper comparable units.” Rents for apartments had dropped by only 0.9 per cent in August, according to Phidar, but the pace picked up to 2.6 per cent in September and 3.8 per cent in October. For townhouses and villas, rents fell by 1.1 per cent in August to 2.7 per cent in October. “It has been escalating. In fact, for apartments, October’s data shows the biggest quarterly drop since the market started to decline in mid-2014,” said Downs. Despite the rental declines in many areas, including those in the city centre, tenants who are constantly on the lookout for ways to save money on accommodation costs continue to move farther away. “The new housing, often in outlying areas, is drawing relocation from key existing communities, which is driving up vacancies in some of the traditionally most popular areas,” said Downs. However, there are still some landlords out there who are hesitating about lowering their asking prices. Downs said this is leading to “long void periods and lost income.” “In many cases, it’s more rational to reduce the rent and fill the unit. Landlords often think their units in popular areas are immune, but nothing is fully immune now.” “Rents across the city are interconnected. From studios to villas, central locations to the suburbs, everything is interrelated, to some degree. Eventually, rents will adjust downward in all areas and the market will reach a new equilibrium. Sometimes it takes a few months, or more, to find the equilibrium, “she said. Source: Gulf News Back to Index

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DUBAI’S RENTAL DECLINES WILL BE LIMITED TO A NARROW RANGE Sunday, December 10, 2017 Rents on homes are on the decline in Dubai, but the drops will continue to be gradual and within a smaller range. Tenants are unlikely to get the sharp cuts on their rental payments many had been hoping for in 2018. Even if they were to move to a new location, the savings will continue to be within a certain range. “As the next cycle of lease renewals inspire re-locations, particularly among tenants whose rents are yet to reflect the softening market, we expect rents to continue softening,” according to a new forecast on Dubai’s rental market brought out by Core Savills, the consultancy. “Although widespread, the magnitude of these drops is expected to remain limited.” This is underscored by official data. In its latest update to the Dubai Rental Index, the rents across key locations are given as a wider range compared to previous years. So for instance, a particular location will now offer one-bedroom apartments for Dh60,000 as against Dh65,000 or Dh70,000 earlier. But the top end of the range continues to show lease rates of Dh80,000 and more. Because of the sizeable gap, tenants and landlords will have to find some common ground in setting rents. And it will be up to individual landlords to decide how low they want to go to accommodate tenant demands. Much then depends on how the economy is doing. Any sharp upturn in private sector activity will immediately have an impact on rents. According to David Godchaux, CEO of Core Savills, “Given that Dubai continues to be largely reliant on expatriate tenant demand, the speed with which the city traverses its rental cycle is not surprising. As the UAE sees private sector- led growth, Dubai’s rental cycle is likely to decelerate and lengthen.” In terms of specific categories, the prime residential rental market has “some more room to contract”, while newer products in the upper and mid-prime segment dilute demand. (On the yield side, however, with property “values also softening considerably, some products in this segment still hold yields values”, the report adds.) But in the office space, the action in terms of demand is all in the prime space. “Dubai’s prime office market has been outperforming consistently due to limited Grade A supply and unmet underlying demand from large international occupiers wanting to set-up/expand their regional operations,” the report says. “However, the pace of upward movement in prime rents is expected to moderate as the upcoming stock gradually self- adjusts with new prime stock anticipated to exceed new Grade B supply for the first time in the last 10 years. This is expected to create a healthy balance between supply and demand as more options become available for large corporates to choose from.” The secondary office market continues to be lag due to “strong headwinds” faced from a large amount of existing and upcoming stock. But there have been marginal improvements in demand. “As demand for Grade B and C office space starts increasing again, we still expect a significant lag in absorption for the existing vacant stock,” Core Savills notes. “For this reason, we are very cautious about any chance of an upward movement in secondary market rents in the next 12-18 months.” Source: Gulf News Back to Index

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THE GATE AVENUE AT DIFC REMAINS ON TRACK Wednesday, December 13, 2017 The first phase of the Gate Avenue at DIFC remains on track for an opening in the first half of next year. The upscale retail and leisure lies right at the heart of Dubai International Financial Centre (DIFC). As of now, a “significant number” of retail units have been handed over to tenants for design and fitout work has started at some. The concrete structure is now 95 per cent complete with 40,000 cubic meters of concrete poured to date, and blockwork installation is 80 per cent complete. “DIFC’s 2024 Strategy envisions a thriving community of 50,000 professionals based in the Centre, and Gate Avenue at DIFC is a milestone in this journey as well as a new landmark at the heart of Dubai,” said Nabil AlKindi, Chief Real Estate Officer at DIFC Authority. It will span 660,000 square feet of built-up area and 880 metres in total length, Gate Avenue at DIFC will link the podium levels of all buildings located in DIFC. Source: Gulf News Back to Index

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DIFC AIMS TO LEASE 90% OF UNITS AT DH1BN GATE AVENUE BEFORE COMPLETION, OFFICIAL SAYS Wednesday, December 13, 2017 Dubai International Financial Centre (DIFC), the emirate's financial free zone, aims to lease 90 per cent of units at its Dh1 billion (US$272 million) Gate Avenue retail development before it opens in 2018, to avoid creating a “ghost town”, the official leading the project said. DIFC is offering incentives and collaborating with tenants to meet their needs in a slow retail market, according to Nabil Al Kindi, chief real estate officer at DIFC. “The leasing started a long time ago and our aim is to have a good percentage – almost 90 per cent – leased before we open, otherwise it will be a ghost town,” he said. He declined to provide figures for what percentage of units had been leased to date. Property owners in Dubai's retail sector are struggling to fill vacant outlets and are more willing to negotiate rents with existing tents amid increasing supply, according to a third quarter real estate report from broker JLL. Super-regional and regional malls have recorded drops ranging between 3 per cent to 5 per cent in headline rents on a quarterly basis, it added. The large volume of potential new supply will keep retail rents under pressure over the next 12 months, the broker said. Under DIFC's original masterplan, Gate Avenue was expected to contain 224 retail units but Mr Al Kindi said some tenants are taking two to three units and knocking walls through to create bigger spaces. As a result, he is targeting 185 units with an average unit size of 2,000 square feet. The main structure of the development is 95 per cent complete and will be finished in April 2018, Mr Al Kindi added. After that, occupiers will commence the fit-out of their units. DIFC is targeting a mix of local and international retailers and food & beverage operators. He declined to reveal the pricing range for units but said it was “competitive”. “I don’t think we are overpricing. We want to work with tenants and we have a very low turnover rate in the main DIFC, which we want to [replicate].” Spanning 660,000 square feet of built-up area and 880 metres in length, Gate Avenue will link the podium levels of all buildings in DIFC, from the Gate Building to the Central Park Towers. On completion, the development will comprise a mix of dining, boutique, retail and entertainment options, as well as a mosque. It is part of broader plans to expand DIFC and prepare for more companies to enter the free zone in the years ahead. Under its DIFC 2024 Strategy, the free zone aims to double the number of registered financial firms to 1,000 by 2024 from 362 in 2014. The joint venture between Investment Corporation of Dubai, the emirate's sovereign wealth fund, and Brookfield Property Partners, the real estate unit of Toronto-based Brookfield Asset, is building a $1 billion development within the DIFC district to cater to the future plans. Source: The National Back to Index

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HOW DO WE SELL OUR SPRINGS VILLA IF WE LIVE IN THE UK? Wednesday, December 13, 2017 We are two retired British citizens in our 70s living in the UK, who jointly own a small Springs community property in Dubai. We wish to sell, as have been unable to get our usual three-year renewable UAE residency visa. To sell, my partner does not want to come over to Dubai from Britain. Our questions are: 1. How many real estate companies can we appoint on Form A to offer our jointly owned property for sale? We are considering appointing two to three different agents, so does that mean filling out three separate forms. 2. What Land Department fee is involved to lodge the seller-broker Form A, which I understand is lodged by the appointed and licensed broker? 3. On the question of Power of Attorney (PoA), ifthe other joint owner, due to age /ill health, does not wish to travel to Dubai, can I be appointed PoA to represent her in the sale, maybe via attestation with the London UAE embassy witnessing her signature. We already have a joint non-resident bank account in Dubai, which after the sale is finalised, we would like to convert to my name only. 4. Can I then appoint, on behalf of us, a member of the successful brokerage staff, to represent us jointly in the property sale at the Land Department? We did just this for another property sale a few years ago, which made the whole process very simple and straightforward. What guidance can you give us? MR, UK In the past, the Real Estate Regulatory Agency (Rera) tried to limit sellers to instruct up to three different agents to sell a property. The reality now, however, is that Rera allows market forces to dictate the number, so in fact it is entirely up to you how many brokerage firms you decide to employ. As a broker myself, I suggest giving a sole mandate to one company on an exclusive basis. This way you will be able to create a business relationship and work together with your agent for the common goal of selling your villa and at a price that you are happy with. Giving exclusivity will also motivate the broker and allow him/her to collaborate with other agents, again insuring a quicker a sale. It is a fallacy that the more agents involved in marketing your property, the quicker you will sell it. Statistics state that less is definitely more and puts you also in greater control of the situation. Whatever you decide, you will have to fill out a form A for each company you employ. Most companies charge a sales fee commission of 2 per cent; this will be mentioned on the Form A. The brokerage firm will also have to obtain a permit from the Land Department (Trakheesi) to be able to market or advertise your property. This fee is payable by the agency and is not your responsibility to discharge. With reference to the PoA, you can indeed be appointed as one by the other joint owner. The PoA document must be prepared in the UK by a notary public, then passed through the British Foreign and Commonwealth Office in a maximum of up to five working days to receive their Apostille Stamp of approval. After that, it will have to be attested by the UAE embassy in London and finally sent over to Dubai. The document will then have to be attested at the Ministry of Foreign Affairs here in Dubai, then legally translated into Arabic. Once this is done, you can sign all necessary forms to effect the marketing and future sale. Please note that anyone related to real estate, and who is receiving commission, cannot be your PoA if you choose to have a separate person acting for both of you. This can still be done but it cannot be your broker. I suggest a lawyer or a licensed conveyancer are the optimum choice. Source: The National Back to Index

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SAUDI DEVELOPER DAR AL ARKAN EXPANDS FOOTPRINT WITH US$218M DUBAI TOWER Tuesday, December 12, 2017 Dar Al Arkan, Saudi Arabia’s largest listed real estate developer, launched a Dh800 million (US$218m ) residential tower in the UAE , marking its first foray outside the kingdom. “Our solid track record in delivering 15,000 residential units and 500,000 square metres of commercial space in Saudi Arabia will support our global expansion, which aims to present further diversification to our existing investors, as well as attracting international investors to our investment portfolio,” Yousef Bin Abdullah Al Shelash, chairman of Dar Al Arkan, said in a statement on Tuesday . The 34-storey ‘I Love Florence Tower’ is located in Downtown Dubai close to the fast-growing Business Bay and Dubai Canal district. The project is being built in partnership with fashion designer Roberto Cavalli, who is designing the interiors, and is intended to resemble buildings in the Italian city of Florence. The waterfront tower is expected to be completed by mid- 2021, according to the company statement. In November, Dar Al Arkan announced 86.3 per cent profit hike for the third quarter of 2017 to 209.6 million Saudi riyals (US$55.8m) from 112.5m reported for the same quarter of the last year. The third quarter profit recovery contrasts with a 79 per cent drop in net income to 12.1m riyals for the first three months of 2017, attributed to the recent introduction of the “white land tax” on undeveloped land in the kingdom, intended to penalise those that hoard land indefinitely. Source: The National Back to Index

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LIGHT SHOW TO TAKE CENTRE STAGE AT DOWNTOWN DUBAI’S NEW YEAR EXTRAVAGANZA Sunday, December 10, 2017 Dubai’s biggest New Year’s Eve celebration will take on a different tune from previous years, marking the start of the year with a light show. Burj Khalifa developer Emaar Properties said that the 'Light Up 2018' show will use Downtown Dubai’s building facades as the backdrop for the light show. Emaar said that the area will “come alive to the celebrations that will have several surprises in store this year”. It also said in a Twitter message that it was time to "say goodbye to the old & hello to the new". Emaar did not say whether that meant the famous fireworks show would be scaled back or take place at all, but said: “The celebration last year was seamless and welcomed millions of visitors globally. This year, we have a very exciting concept, Light Up 2018, that will delight the world. We will provide more details towards the event.” Downtown Dubai's annual fireworks display has drawn in the biggest crowds in recent years. In 2015, two hours before the display, a major fire swept through the Address Downtown hotel. It was unrelated to the fireworks and later found to be an electrical fault, though the speed at which the blaze spread placed the focus on building cladding and helped bring about new fire safety regulations. Among the other major fireworks displays is Dubai Festival City Mall. The mall said that the free entertainment will begin at 7pm on December 31, followed by fireworks at 9pm, 10pm, 11pm and midnight. Source: The National Back to Index

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EMAAR SET TO DISTRIBUTE DH4 BILLION DIVIDEND Tuesday, December 12, 2017 Emaar Properties announced on Tuesday that it would distribute Dh4 billion of special dividend to shareholders from the proceeds of the recent Emaar Development IPO that successfully raised $1.3 billion. Emaar's board of directors, which met on Tuesday, decided to pay Dh3 billion to shareholders in January 2018 and Dh1 billion in April 2018. "The board considered the funding and cash requirements of the company in light of the ongoing development of large projects and approved the proposal to distribute special dividends of Dh4 billion to shareholders," the developer said in a statement. The board will hold a general assembly meeting on January 14 to approve the proposal. Emaar Development IPO, the largest since the Emaar Malls IPO that raised $1.58 billion in 2014, is listed on the Dubai Financial Market. Emaar Development has sold 80 per cent of its units under development as of September 30, with an average gross profit margin of 41 per cent for units sold, and an associated sales backlog of Dh41 billion. Over the next five years, Emaar Development plans to launch approximately 50,400 units with an average annual unit sales target of 10,000 units and a targeted overall gross profit margin of 40 per cent. Source: Khaleej Times Back to Index

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DEVELOPERS GO ALL OUT TO WOO PROPERTY BUYERS Tuesday, December 05, 2017 Investors and end-users in Dubai have never had it better. Developers in Dubai are going all out to woo buyers by offering unique payment plans. They are even acting as proxy lenders by offering interest-free finance options to buyers. With a slew of attractive payment plans in the market vying for buyers' attention, new developers are launching unique schemes to garner interest. City Properties, the new kid on the block, has tailormade three finance options for buyers in its debut real estate venture - Al Haseen Residences in Dubai Industrial Park adjacent to Dubai South. The first standard option is for the cash/mortgage buyers where one pays 30 per cent of the property value till handover and the balance after. In the second plan, a buyer pays 40 per cent using flexible options until handover. At the time of handover, the buyer can pay 60 per cent of the property value in 120 interest-free monthly payments over 10 years. There is no bank involved. For instance, if you are buying a studio worth Dh400,000, you initially pay Dh160,000 until handover (40 per cent). The balance Dh240,000 can be paid in 120 cheques of Dh2,000 each over 10 years. The third option is targeted at investors. After paying the initial 40 per cent of the property's value until handover, the investor hands over the unit's property management rights to the developer for 10 years. "We will ensure that your installments are being paid. At the end of 10 years, you will only have paid 40 per cent and own the unit. We guarantee to pay the balance 60 per cent, inclusive of service charges. The investor also has the flexibility to sell or repossess the unit," explains Gaurav Verma, CEO of City Properties. The promoters behind City Properties, which was launched in 2016, have over 20 years' experience in property management in Dubai and handle over 90 buildings and 5,500+ properties in the city. The average sales price at Al Haseen Residences is Dh1,000 per sqft, with the service charge pegged at around Dh8 to Dh10 per sq ft. A studio is priced from Dh400,000, one-bed from Dh600,000 to Dh800,000 and two-bed from Dh850,000 to Dh1.1 million, informs Tauseef Khan, chairman and founder of City Properties. Construction on the Dh70 million project commenced in June 2017 and will be completed by Q1 2019. "We have sold 50 per cent of 138 units. The buyer profile is a mix of end-users and investors. We have GCC buyers, Emiratis and a lot of South Asians. We also have a few buyers from the Philippines holding senior positions in the government," says Verma. The developer claims it intends to bring quality back into the affordable housing market. "The quality of apartments has deteriorated. Some developers even include parking in the liveable area to boost sales. We don't intend to cut corners," contends Khan. A studio in Al Haseen Residences ranges from 400 to 520 sqft, one-bed from 680 to 850 sqft and two-bed from 950 to 1,000+ sqft. Each unit comes with a covered parking spot. The development is completely self-funded and located 10 minutes away from Al Maktoum International Airport. The developer has nine more projects in the pipeline - all adjacent to Dubai South - and more plots in Meydan City. Its second project will be announced in January. Ruling out fears of oversupply in south Dubai, the CEO says: "We are very bullish about demand for housing in south Dubai closer to the new airport. We foresee a shortage of supply. Al Maktoum International Airport, Dubai Parks and Resorts and Dubai Wholesale City will be responsible for creating a huge number of jobs. That rules out an oversupply situation. Housing needs to develop a lot quicker in that area." Source: Khaleej Times Back to Index

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DUBAI PRIME HOME RENTS MAY FALL FURTHER Tuesday, December 12, 2017 Rents in the Dubai prime residential rental market have some more room to contract as demand for prime residential decreases from ultra high net worth individual and C-suite occupiers, says Core Savills, a real estate consultancy. New stock in the upper and mid-prime residential segment are also diluting demand. However, with capital values also softening considerably, some products in this segment still hold stable yield values. With relatively slower falls in rents in mainstream locations over the last few quarters, the prime segment is expected to be sluggish in moving towards the bottom. Gross yields continue to be upwards of eight per cent for apartments across most mainstream sub-markets in Dubai, however, some degree of yield compression is expected through further rental decrease. "As the next cycles of lease renewals inspire relocations, particularly among tenants whose rents are yet to reflect the softening market, we expect rents to continue softening. Although widespread, the magnitude of these drops is expected to remain limited," says David Godchaux, CEO of Core Savills. Meanwhile, Dubai's residential market has completed an entire cycle in the last 10 years and is currently in the midst of its second cycle. After seeing a quick recovery over 2011-2014, rents in Dubai declined again between 2015 to 2017. According to a report issued by Core Savills, Dubai was able to see a swift recovery in rents due to significant fiscal stimulus from the government which kickstarted growth and fuelled job creation, thus driving up demand for rental property. After reaching a peak in 2014, rents declined again, mirroring the decrease in oil prices. "Given that Dubai continues to be a fast-growing economy, largely reliant on expatriate tenant demand, that has historically been responsive to Dubai's economic fluctuations, the speed with which the city traversed its rental cycle is not surprising. As the UAE sees further economic diversification and private sector-led growth, Dubai's rental cycle is likely to decelerate and lengthen," observes Godchaux. Office rents Dubai's prime office market has been outperforming the overall real estate landscape over the last few years due to limited grade A supply and unmet demand from large international occupiers wanting to set up or expand their regional operations. However, the pace of upward movement in prime rents is expected to moderate as the upcoming stock gradually self-adjusts, with new prime stock anticipated to exceed new grade B supply for the first time in the last 10 years. This is expected to create a healthy balance between supply and demand as more options become available for large corporates to choose from - many have been resorting to purpose-built premises due to limited options available in recent times. The secondary office market continues to lag due to strong headwinds faced from the large amount of existing and upcoming stock, despite marginal improvements in demand. "As macro-economic indicators start improving and demand for grade B and C office space starts increasing again, we still expect a significant lag in absorption for the existing vacant stock. We are very cautious about any chance of a recovery in secondary market rents in the next 12 to 18 months," Godchaux adds. Source: Khaleej Times Back to Index

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ABU DHABI’S HOME RENTS WILL REMAIN UNDER INTENSE PRESSURE Tuesday, December 12, 2017 The pressure on rents will continue to be intense across Abu Dhabi city, with next year likely to see them drop by a further 5-7 per cent. This year, residential rents are down by 10-12 per cent and more than the forecasted 8 per cent, says Cluttons in its latest update. The reason for the continued tightening of rents stems from many factors. The obvious one is the weakened demand brought on by job losses in key sectors. Plus, recently completed buy-to-let properties is pulling in quite a bit of buyer interest. Then, there is the question of new and steady supply becoming available. “The sheer volume of rental stock means tenants are spoilt for choice, which is driving void periods and vacancy rates up,” the report notes. “We are aware of a number of prominent buildings where vacancy rates are as high as a third in some cases.” But where landlords have “demonstrated sensitivity to market conditions, absorption rates still remain healthy”. (Even in the freehold offplan space, this is in evidence, with Aldar recording significant take-up for its mid-market Water’s Edge apartments on Yas Island.) More developers will have to learn to play it smart, even pick up tabs from what their counterparts in Dubai did when faced with such a situation in 2016. “Developers may be forced to turn to the lettings market to generate incomes from unsold stock,” Cluttons states. But there could be a downside to this for the wider market - this will likely “further depress any chances of a rebound in rental value growth”. Among key locations, Al Reef Downtown had a 17 per cent drop in rents over the last 12 month, with two-bed leases down by as much as Dh25,000. And one-beds are Dh15,000 down from levels in Q3-16. “With household finances under pressure due to a reduction in housing allowances, the removal of various subsidies and the impending introduction of VAT in January 2018, tenants are focused on value for money,” said Edward Carnegy, Head of Cluttons Abu Dhabi in a statement. No respite for Abu Dhabi’s office rentals either With less demand from key business and government enterprises, office rentals in Abu Dhabi could tread even lower. Existing tenants are making full use of the market situation. “With increasing vacancy across the market, the majority of landlords are seeking to retain existing tenants where possible, typically agreeing improved terms at renewal,” said Edward Carnegy, Head of Cluttons Abu Dhabi. Rent-free periods and easing of payment terms are becoming standard features. Some landlords are willing to go further, even offering to fit out the interiors for those tenants seeking relocations. “We are seeing fairly significant churn from public sector and related entities, with at least 50,000 square metre requirements currently in the market.” Cluttons states that top-tier office buildings have had rent drops, with the Aldar HQ building seeing a 2.8 per cent softening and International Tower by 3 per cent. Prime office rents could end the year down 5 to 10 per cent from last year and likely to do a repeat in 2018. Source: Gulf News Back to Index

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ABU DHABI RENTAL CORRECTION TO CONTINUE INTO 2018 Tuesday, December 12, 2017 Abu Dhabi residential and office rents will continue to slide into 2018 as prolonged economic headwinds take their toll, according to real estate consultancy Cluttons. Higher investment levels in the capital, though, are likely to boost the market in the medium term. “Given the range of complex factors hindering the market’s ability to turn around, rents are now expected to end the year 10-12 per cent lower than the end of 2016,” said Faisal Durrani, head of research at Cluttons. The consultancy had previously forecast an 8-10 per cent fall in rents for 2017. “2018 is likely to see rents slipping further in the region of 5-7 per cent unless there is a notable rebounding in economic growth.” Residential rents and sale prices in the capital have been impacted by reductions in housing allowances, the removal of various subsidies, and the impending introduction of value-added tax in January, Cluttons said in its Winter 2017/18 Abu Dhabi Property Market Outlook. Consequently, demand has been driven by households relocating to make savings and take advantage of incentives being offered by landlords, including multiple rent cheques and a willingness to pay agency fees. Residential rents declined by 11.8 per cent year-on-year during the third quarter, Cluttons data showed. However the quarter-on-quarter rate of decline slowed to 1.8 per cent from 3.6 per cent in the second quarter. Residential sales prices dropped 4.1 per cent year-on-year in the third quarter, and are down by 0.4 per cent compared with the second quarter of the year. “Weaker economic growth has taken a toll on the hydrocarbon sector in particular, which has been a key driver of demand in the residential and commercial markets in the emirate historically,” said Mr Durrani. However, he said “some positives” had emerged that may help to boost economic growth and lift the real estate market, most notably, state oil giant Abu Dhabi National Oil Company (Adnoc)’s decision to invest US$109 billion in its gas downstream growth strategy over the next five years. “This will likely filter through to the UAE capital’s real estate market in the form of fresh demand for residential and commercial property." Abu Dhabi's economy is forecast to grow 3.2 per cent in 2018, compared with 0.3 per cent in 2017, according to the IMF, thanks to a rise in oil revenues and higher infrastructure spending. “However, in the short term we anticipate that both tenants and buyers will continue to err on the side of caution,” Mr Durrani said. Office rents in the capital are expected to end the year 5-10 per cent lower than at the end of 2016, Cluttons forecast. Even top-tier Grade A buildings saw rents weaken in the third quarter. The Aldar HQ building saw rents fall 2.8 per cent during the quarter, with rents in International Tower declining by ,3 per cent. But the prime office sector, which has declined by just 5.4 per cent in the past five years, is still performing better than the secondary market, in which rents plummeted 39.3 per cent over the same period. Overall, office rents are expected to remain under pressure across Abu Dhabi during 2018, Mr Durrani said. “The key to unlocking the current stalemate will be a turnaround in oil price growth and perhaps an easing of the cost containment measures introduced by the government in the wake of the oil price collapse in 2014,” he said. Source: The National Back to Index

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INCEN TIVES GALORE IN ABU DHABI PROPERTY Tuesday, December 12, 2017 Prolonged economic headwinds have meant that Abu Dhabi's real estate market has continued to stagnate during 2017, with the majority of sale and lease activity driven by affordability and incentives being offered by landlords and developers, according to real estate consultants Cluttons. Faisal Durrani, head of research at Cluttons, said: "The nervousness we have been reporting on for almost three years is well entrenched in the market at present. Weaker economic growth has taken a toll on the hydrocarbon sector in particular, which has been a key driver of demand in the residential and commercial markets in the emirate historically. "Saying that, we are seeing some positives emerge that may help to boost economic growth, including the recent announcement by Adnoc to invest $109 billion in its gas downstream growth strategy over the next five years. This will likely filter through to the UAE capital's real estate market in the form of fresh demand for residential and commercial property. However, in the short term, we anticipate that both tenants and buyers will continue to err on the side of caution." The rental market has been relatively more buoyant than the sales market, with higher levels of activity compared to this time last year. A lot of demand stems from households relocating to make savings and to take advantage of incentives being offered by landlords. These include the accepting of rental payments through multiple cheques, as well as a growing number of landlords who are willing to pay agency fees, which is often up to five per cent of the annual agreed rent. Edward Carnegy, head of Cluttons Abu Dhabi, said: "With household finances under pressure due to a reduction in housing allowances, the removal of various subsidies and the impending introduction of VAT in January 2018, tenants are focused on value for money, as well as quality." Cluttons says the rate of decline in rents across the city's residential investment areas slowed to -1.8 per cent in Q3, from -3.6 per cent in Q2. The annual rate of change has slipped to -11.8 per cent. In the sales market, Cluttons indicates that residential capital values across investment areas declined by 0.4 per cent in the three months to the end of September, leaving them just shy of Dh1,150 psf, a level not seen since early 2014. Overall, house prices are now 4.1 per cent below where they were at the same time last year.Carnegy added: "Due to the sustained drop in demand, we have seen developers respond by offering attractive payment plans, as well as bringing residential developments through that are far more affordable than what we have seen previously. Water's Edge by Aldar, for instance, has been a runaway success, with the Yas Island scheme netting the developer some Dh800 million through off-plan sales of all units." Cluttons previously forecasted rents to end 2017 eight per cent to 10 per cent down on 2016 across Abu Dhabi's freehold residential investment areas. "Given the range of complex factors hindering the market's ability to turn around, rents are now expected to end the year 10 per cent to 12 per cent lower than the end of 2016. 2018 is likely to see rents slipping further in the region of five per cent to seven per cent, unless there is a notable rebounding in economic growth, which would have to be underpinned by a turnaround in oil prices, which appears unlikely at this stage," explained Durrani. Source: Khaleej Times Back to Index

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ABU DHABI TENANTS SPOILT FOR CHOICE Sunday, December 10, 2017 The Abu Dhabi housing market has seen a spike in relocations this year. This has been a result of both residents downsizing accommodation as well as leveraging the slide in rents to relocate to a larger home in a better community. However, rents in the city centre have been largely immune to the drop in rents and residents are mostly shifting to the mainland. "For those seeking mid-market residential products in the capital, most rental options are to be found on the Abu Dhabi mainland, away from the city centre and the main places of commerce. This includes locations such as Mohammed Bin Zayed City and Khalifa City, which feature an array of more affordable residential units, typically in the form of standalone low to mid-rise residential apartment buildings, as well as some larger family homes and small residential compounds. On average, a two-bed apartment in MBZ and Khalifa City would start from around Dh50,000/unit/year as compared to Dh85,000/unit/year for a similar sized unit within the city centre," says Arlene Jimenea, senior research analyst, CBRE Middle East. Traditionally, some of the cheaper areas to rent in Abu Dhabi are Markaziya, Tourist Club, Mussafah, Muroor and Mamoura while Saadiyat Island, Khalidiya and Khalifa Park command higher rents. There is a location premium attached with living in the city centre, with residents benefiting from ease of access to the main office areas, places of education, retail and other leisure facilities. "For those seeking a more integrated community and lower rents, master-planned developments such as Al Reef and Hydra Village have emerged as affordable off-island locations for villas and townhouses, with Al Reef also boasting apartments. These developments are widely seen as conducive for small families seeking a community environment at rates not widely available in more central locations. Some units also benefit from private gardens and swimming pools, which has heightened the appeal, despite the longer commuting distance to the city centre," observes CBRE's Jimenea. Meanwhile, locations such as Saadiyat Island, Al Raha Beach and Eastern Mangroves are popular among those seeking luxury apartment offerings. Upscale residential properties also abound along the Corniche. According to CBRE, annual rents for two-bed apartments here can go as high as Dh200,000/unit/year although average rentals are now closer to Dh150,000/unit/year. Occupier demand levels have remained weak, and more and more tenants are considering downsizing and to move to more affordable locations. "More people appear to be moving to cheaper communities such as Reem Island and Al Reef which are proving to be the most popular. The decline in rents seen in 2017 is driving the trend where tenants are happier to relocate to save money on rents. Reem is much more affordable now than ever before, as is Al Reef, with three-bedroom villa rents dropping from Dh145,000 to around Dh120,000," says Sohail Raja, head of Abu Dhabi at Cavendish Maxwell. "More people are moving to Reem Island as these units are newer and new supply is driving rents downwards. Therefore, people can get more for their money with parking, pools and gyms," says Ben Crompton, managing partner, Crompton Partners. Rent reductions have been prominent within Al Reef and Reem Island due to the huge number of vacant units because of redundancies across oil, gas and banking sectors, suggest market experts. "With employers also tightening their salary packages, employee housing allowances have been the cause for occupancy pressure in many larger units," informs Raja. There has been widespread downsizing of accommodation to lower living costs. However, there are also residents taking advantage of falling rents to relocate and get preferential leasing terms. "Apartment residents seeking larger family-orientated spaces at relatively affordable prices now have the option of moving to townhouses in communities such as Al Reef and Khalifa Park area at the same price. However, other factors are also important to consider, including the ease of access to public transportation, places of work and schools," Jimenea points out.

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The top end of the Abu Dhabi housing market has experienced the sharpest rent declines. CBRE estimates that upscale properties along the Corniche, Al Raha Beach and Saadiyat Island have witnessed average rental deflation of 10 to 15 per cent over the past year. "The most resilient community is Saadiyat Island, mainly because it is viewed as a luxury location to reside in. It doesn't cater to lower priced units and the type of tenants that reside on the island work for large organisations, where the rent is typically subsidised and generous housing allowances are offered," explains Raja. Source: Khaleej Times Back to Index

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SEWA MULLS BOT PROJECT FOR HAMRIYAH POWER PLANT Tuesday, December 12, 2017 Sharjah Electricity and Water Authority (SEWA) is evaluating details of an independent power project (IPP) for Hamriyah power station to be developed under a Build-Operate-Transfer (BOT) contract. Sharjah’s utility authority started a bid process towards the end of 2015, for a project to expand and convert Hamriyah power plant from an open-cycle plant to a combined-cycle facility. According to Middle East Economic Digest (MEED), SEWA has been discussion with a group including Sumitomo and GE about the possibility developing an IPP in order to meet the Sharjah emirate’s growing power requirements. According to a report this week in UAE newspaper The National, SEWA expects phase one of the Hamriyah power plant to be ready in 2019, followed by phase two in 2020 and phase three in 2021. The Hamriyah power plant is Sharjah’s largest power generation and water desalination plant and could have a future capacity of 2500 MW of electricity and 140 million gallons of water per day. The planned three-phase expansion project will increase electricity production capacity from 500 Megawatts (MW) to 1,500 MW. According to MEED, an IPP agreement for Hamriyah power plant would supersede the terms of the engineering, procurement and construction (EPC) bid. Hamriyah power plant currently uses GE Energy’s gas turbine technology to produce electricity and the expansion project will convert the plant to a combined-cycle process, adding two new turbines. Combined-cycle power plants use both a gas and a steam turbines together to produce up to 50 percent more electricity from the same fuel. The waste heat from gas turbines is routed to steam turbines, which generate additional power. SEWA signed a gas sales agreement with Sharjah National Oil Corporation (SNOC) in May this year, guaranteeing the supply of natural gas to three SEWA power stations, including Hamriyah power plant. SNOC, in a joint venture with Uniper, will import liquefied natural gas (LNG) into the Port of Hamriyah, commencing supply in 2019. Some of the gas will flow from the Hamriyah port receiving jetty directly into the Hamriyah station. Meanwhile, Sharjah has been pumping natural gas 25 kilometres from the new Zora gas field to the Hamriyah power station since early 2016, via an onshore gas processing plant at Hamriyah Free Zone. Sharjah’s focus on public-private partnerships is consistent with renewed interest in Public Private Partnerships (PPPs) in the region, due to lower oil prices. Sharjah Electricity and Water Authority awarded its first BOT contract in July for the development of a new desalination plant in Kalba. Source: Sharjah Update Back to Index

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COLONY BETS ON BREXIT BOOST FOR DUBLIN WITH $1.2B PROJECT Friday, December 15, 2017 A Colony North Star Inc venture will develop a Dublin real estate project valued at €1 billion (Dh4.3 billion, $1.2 billion) as it seeks to take advantage of increased demand for Irish office space after the Brexit vote. The New York-based real estate investor, whose chairman is billionaire Tom Barrack, will develop four office buildings at Spencer Place in the city’s docklands, Managing Director Stefan Jaeger said in an interview. The venture with Irish developer Johnny Ronan will also develop a hotel, stores and homes on the plot, with the first properties due for completion in 2020. “Even if you have very minor Brexit moves of 500 or 1,000 people from individual banks, that has a huge impact in Dublin because there currently is a shortage of space,” Jaeger said. “Dublin will be a major beneficiary and this development is in a prime position to take advantage of that.” Demand from technology, public sector and financial firms has led to a lack of empty properties in the Irish capital, where construction came to a halt after the country’s property bubble burst. Dublin’s docklands district has an office vacancy rate of less than 1 per cent, Jaeger said. That compares with 4.7 per cent for the city centre, according to broker Jones Lang LaSalle Inc. JPMorgan Chase & Co acquired an office building on the opposite side of the river from Spencer Place earlier this year and Facebook Inc and Alphabet Inc’s Google have also been expanding in the district. Other occupiers in the area include the nation’s central bank and Citigroup Inc. “We can also deliver housing in the second phase” of the project “which is very attractive for any Brexit occupier that might think about moving” because the city also has a shortage of homes, Jaeger said. Source: Gulf News Back to Index

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SOUTHEAST ASIAN BUILDERS TO REAP GAINS FROM $323B SPREE Sunday, December 10, 2017 Kuala Lumpur/Singapore/Manila/Bangkok/ Jakarta: Tech is so 2017. With at least $323 billion (Dh1.2 trillion) in infrastructure spending in the pipeline in Southeast Asia and potentially more expected over the next few years, 2018 could well shape up as the year of builders’ stocks from Indonesia to the Philippines that have been the laggards in a broader market rally this year. Governments are boosting spending on everything from airports to high-speed rails and ports to increase connectivity and boost economic growth in what promises to be a boon for the region’s construction companies. In one of the more ambitious programs in the region, Philippine President Rodrigo Duterte has earmarked an unprecedented $180 billion for infrastructure to keep driving one of the world’s best-performing economies over coming years. Malaysia and Thailand are also ramping up allocations to public works ahead of general elections in 2018. “Infrastructure has been under invested whether it’s clear water, clean air, energy, roads, ports, railways, education, health care — so there are tons of opportunities,” said Ashish Goyal, head of emerging markets equities at NN Investment Partners (S) Ltd., which manages $288 billion in assets. The firm owns stakes in Indonesian construction stocks, he said, adding that investors should watch for the pace of execution in the various countries. UBS Group AG expects “changes in government policy and delivery on infrastructure” to be among the region’s biggest themes for 2018 as growth in global trade fades, analysts including Ian Gisbourne wrote in a report dated Nov. 28. Construction stocks on the MSCI Asean Index have risen an average of about 7.4 per cent this year in dollar terms, about one-third the gain of the overall gauge, which is set for its best performance in seven years. Technology shares have provided the biggest boost to the Southeast Asian index this year as global demand for electronics returned. Construction stocks Some builders are already rallying in anticipation of the rewards they will reap from the spike in infrastructure outlays. Indonesian cement supplier PT Indocement Tunggal Prakarsa soared as much as 54 per cent earlier this year as investors expect it to benefit from a surge in demand as the nation builds toll roads, ports and power plants. Manila- based EEI Corp has surged 73 per cent, leading a rally in Philippine construction stocks, as it begins work on the nation’s $1.6 billion, 44 kilometre mass-railway project. Infrastructure development and more Chinese investments into the Philippines could support stocks with net asset value of the nation’s developers expanding by as much as 12 per cent over the next three years, writes Goldman Sachs Group Inc. analysts including Paul Lian in a report dated Dec. 7. Companies that provide services for construction projects, such as improving management efficiency or sustainability, may also capitalise on the spending boom on public works, Felix Lam, a portfolio manager at BNP Paribas SA’s asset management arm, said by phone. Even so, the Southeast Asian market as a whole might continue to underperform, compared to “its larger, more liquid and faster growing North Asia and India counterparts,” Goldman Sachs Group Inc analysts including Timothy Moe wrote in a November report. And Credit Suisse Group AG has maintained its underweight rating on the region for 2018. Still, Morgan Stanley sees investor attention back on the Asean region as markets are expected to give returns of as much as 10 per cent next year, more than three times what’s seen for emerging markets. Source: Gulf News Back to Index

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INDIA'S BUILDERS HOPE FOR AN IMPROVEMENT NEXT YEAR Saturday, December 16, 2017 Property developers in India are hoping for a pick up in business in 2018, following a tightening of the regulatory environment and the continued impact of demonetisation, which made this year challenging for the sector. A long-awaited real estate regulation act (Rera) came into effect in May, aimed at bringing much-needed accountability and transparency to the sector. “If anything, 2017 will be remembered in history as one of the most challenging years for developers as they survived GST [India's new goods and services tax], demonetisation and Rera,” says Amit Wadhwani, the director of Sai Estate Consultants, a real estate broking firm in Mumbai. Demonetisation, a move in which he Indian government suddenly banned the two highest-value banknotes, sapped a lot of the liquidity in the Indian economy, negatively impacting the property sector. The primary aim of demonetisation was to reduce the amount of black money in the Indian economy, of which the real estate sector had been a major beneficiary, along with the legal cash flows it was accustomed to receiving. The past few years have been difficult for India's real estate sector, but this year was particularly tough, data reveals. The number of residential units sold in India's top eight cities, which include New Delhi, Mumbai, and Chennai, declined by 11 per cent in the first half of this year compared to the same period a year earlier, according to Knight Frank. Residential launches dropped by 41 per cent. Meanwhile, Rera “has completely changed the landscape of the real estate sector”, says Rohit Poddar, the managing director of Poddar Housing and Development. The act is applicable to residential and commercial developments. Under the act, projects and real estate agents have to be registered. Developers can face punishment of imprisonment of up to three years and brokers can be jailed for up to one year for violation of the rules. The rules also dictate that developers are responsible for paying the interest on bank loans in the instance of construction delays. In addition, 70 per cent of the money collected from customers has to be deposited in a separate bank account. The act helps to protect homebuyers from unscrupulous developers and it will ultimately boost consumer confidence, experts say. But it has caused some upheaval in the sector. “This led to a cleaning up and weeding out of fly by night operators whose sole objective was to prey on hapless home buyers,” says Rohit Gera, the managing director of Gera Developments, a residential and commercial property developer based in Pune. Then, India's launch of its new goods and services tax (GST) in July, which is a uniform tax regime which replaces a myriad has also had implications for the sector. “The introduction of GST will further streamline the supply chain of developers and bring many small-time contractors and vendors into the GST net.” He is upbeat on the outlook for the new year. “As Rera settles down and the economy recovers from the impacts of demonetisation and GST one can expect better days for the real estate sector in 2018,” says Mr Gera. Builders were forced to take stock this year, as they had to ensure that they shaped up to the new rules, while potential buyers sat on the fence, waiting to see how demonetisation would impact prices. The Indian authorities have also moved to crack down on “benami” property transactions – which refers to property or land being bought in someone else’s name or under a fictitious identity, often to hide black money and stay under the radar of the taxman.

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At the beginning of November, the government launched an amended, much stricter act on benami transactions – including a punishment of imprisonment up to seven years and fines of 25 per cent of the property’s value, and moves to investigate benami properties. “New residential projects dried up as developers’ focus shifted towards becoming compliant to the new order,” says Shishir Baijal, the chairman and managing director of Knight Frank India. “Similarly a slowdown hit home sales as buyers turned wary. Even the festive season failed to bring any cheer to the sector.” Reputable developers believe that the policy reforms and upheaval may be having a short-term negative impact but they say that ultimately the changes could benefit the sector, as the industry makes the transition to becoming more structured. “The Indian real estate market is agitating for a better tomorrow,” says Sushil Raheja, the chief executive of Raheja Homes, a Mumbai-based developer. “All the hiccups and hassle shall now be converted into profits and actions. Policies and regulations implemented in 2017 will change the game for the entire market. This process is about pain and gain - the regulations implemented are stringent but were the need of the hour.” Adarsh Jatia, the managing director of Provenance Land, a luxury developer, says: “GST, along with other significant reforms such as demonetisation and Rera, will strengthen the real estate sector and the country's economy and we expect a positive momentum in 2018.” Affordable housing is another area that has come into sharp focus this year, with the government actively trying to boost the drive towards its ambitious aim of "housing for all" by 2022. “The government’s push on affordable housing was quite visible and this initiative has the ability to turn around the sector and can cater to the mid-income strata of the society, where actually the huge demand of housing lies,” says Neeraj Sharma, a director at Grant Thornton in India. Some builders say that further changes to the segment are on their wishlist for the new year. “The real estate industry has been demanding a single window clearance scheme for affordable housing projects," says Mr Poddar. “In a business format of affordable housing where all developers operate on wafer-thin margin, the delay in approval is a major block. We really hope that a single window solution is provided with top priority.” And there are some reasons for the industry to be cheerful. “Not just foreign investors but even domestic players are raising funds to invest in the sector,” says Mr Baijal. “The next 12 to 18 months are likely to be the 'under observation' period for the real estate sector. Industry stakeholders should spend the period in reorienting businesses in line with the new order. We are also hopeful that India’s strong economic fundamentals still puts it among the fastest growing economies in the world.” As developers look forward to a better fortunes in 2018, it seems unlikely that they will easily forget this year. “2017 will go down in the history of Indian real estate as the year that changed the sector forever,” says Mr Gera. “Never in the history of Indian real estate have so many major events taken place within such a short period of time.” Source: The National Back to Index

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EXPAT INDIANS TURN SNUB HOUSING MARKET AT HOME Saturday, December 16, 2017 There has been a sharp decline in investment by non-resident Indians (NRIs) into India's real estate sector amid a broader slowdown in the market and factors including demonetisation, according to a property consultancy. NRI investments into residential property in India are expected to decline to US$5.25 billion in 2017 compared to about $7.5bn in 2012, according to Anarock Property Consultants. Investment into India's real estate market is driven by NRIs from the UAE, the US, and Saudi Arabia, it adds. “When the residential market began to slow down in 2015, the NRI investment fervour into this asset class began to cool off a bit,” says Anuj Puri, the chairman of Anarock. In addition, reforms and policy changes have further impacted demand from NRIs. These include demonetisation, real estate regulation act (Rera) and GST (goods and services tax), with “the combined effect of these being a decrease in NRIs’ investment in the sector”, says Mr Puri The stagnation in the residential market means that wealthy NRI investors have turned their focus to commercial real estate, according to Anarock. “There has been a fairly consistent rise in demand for commercial spaces like grade A offices and IT parks and this is likely to continue until the Indian residential sector gets firmly into revival mode,” says Mr Puri. “Stagnant property price movement is not the best incentive for return on investment-oriented NRI investors, whose focus will remain on commercial properties for about six to eight quarters.” Affordable housing, meanwhile, has become “poster boy” for India's property industry, as the government targets achieving housing for all by 2022, and this has impacted the interest of NRIs in this segment of the market. “Not surprisingly, investment inquiries from the NRI community about the best projects in this category of housing are beginning to pour in,” says Mr Puri. “It is only a matter of time before the residential asset class catches up with commercial properties on the NRI property investment radar. And from here onward, the resurgence will be policy-driven and very sustainable, as opposed to the knee-jerk spurts of speculative activity seen in previous years.” Source: The National Back to Index

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LONDON PROPERTY MARKET LIKELY TO CONTINUE PRICE DROP IN 2018 Monday, December 11, 2017 London’s property market is in for another rough ride next year, according to a leading UK property website. Home values in the British capital are likely to fall another 2 percent in 2018 after a 1.8 percent decline this year, Rightmove said on Monday. In December alone, prices dropped 3.7 percent in London and by 2.6 percent nationally. The month usually sees a big seasonal slump. “Economic and political uncertainty tend to weigh more heavily on the capital,” said Miles Shipside, Rightmove director. Next year UK property “will continue the 2017 trend by being a real mixed bag of different price pressures both up and down, but the net result is that we forecast another year of a slowing in the pace of price rises.” House-price growth nationally will cool further to 1 percent next year, the weakest since 2011, Rightmove predicts. That’s a consequence of the sluggish economy and a squeeze on consumers in the wake of the Brexit vote, with separate reports Monday showing few signs of optimism regarding the outlook on either front. The British Chambers of Commerce on Monday downgraded its three-year outlook for the economy, cutting growth expectations to 1.5 percent in 2017, 1.1 percent in 2018, and 1.3% percent in 2019. Meanwhile, Visa said its UK consumer spending index fell for a third month in November -- a 0.9 percent annual drop that leaves shoppers on track for their weakest year since 2012. Stretched buyer affordability, tighter lending criteria and increased stamp duty for second-home owners are all having an impact, Shipside said. The Bank of England has signalled that interest rates may rise further next year after the first hike in a decade last month. London’s readjustment will also weigh on the national average, as part of a broader slowdown in higher-end markets. Nevertheless, some parts of London will do better than others, Rightmove said. The lower and middle sectors of the market will continue to outperform, with first-time buyer properties having the most price resilience, the report said. At the upper end of the market, prices are likely to drop 4 percent next year compared to 3.7 percent in 2017, according to the report. In last month’s budget, Chancellor of the Exchequer Philip Hammond abolished stamp duty for first-time buyers on homes up to £300,000 pounds (Dh1.48m). The move also applied to the initial £300,000 of the purchase prices of first homes up to the value of £500,000. That’s good news for first-time buyers, Rightmove said, though it will ultimately boost prices as demand increases and buyers’ negotiating power diminishes. Nationally, prices will continue to be supported by the perpetual shortage of property for sale. Source: The National Back to Index

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