News Brief 53

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NEWS BRIEF 53

SUNDAY, 31 DECEMBER 2017

RESEARCH DEPARTMENT

ASSET MANAGEMENT SALES LEASING VALUATION & ADVISORY SALES MANAGEMENT OWNER ASSOCIATION

REAL ESTATE NEWS

UAE / GCC WHY IT MAKES SENSE TO INVEST IN A DESIGN-LED HOME IN 2018 EY: HOTELS IN MENA TO CONTINUE SEEING SOFTER PERFORMANCE ROOM RATES DECLINE IN MIDEAST HOTELS HOW VAT WILL IMPACT FREEZONE COMPANIES UAE COMPANIES SHOULD STRIVE FOR EFFECTIVENESS NOT JUST EFFICIENCY IN 2018 UAE REAL ESTATE TO CONTINUE DOWNWARD ADJUSTMENTS IN 2018 PROPERTY YEAR IN REVIEW: TENANT’S MARKET AND OFF-PLAN TREND TO STAY INTO 2018 IS THERE A FORMAL WAY FOR A LANDLORD TO WITHDRAW AN EVICTION NOTICE? SAUDI ARABIA'S JADWA REIT ACQUIRES TWO PROPERTIES IN MAKKAH TOURISM YEAR IN REVIEW: DUBAI STILL ON TRACK TO ATTRACT 20 MILLION VISITORS BY 2020 WHY IT'S TIME TO SWAP YOUR RENT CHEQUES FOR A MORTGAGE 5 REAL ESTATE TRENDS TO WATCH OUT FOR IN 2018 VAT IN OMAN POSTPONED UNTIL 2019 BAHRAIN ANNOUNCES EXCISE TAX ON CIGARETTES, ENERGY DRINKS FROM DECEMBER 30 DUBAI CONCERNS ABOUT EXCESS HOME SUPPLY IN DUBAI IS MISPLACED A YEAR WHEN OFF-PLAN TRUMPED EVERYTHING ELSE PHASE 1 OF DUBAI’S BUILDING CLASSIFICATION IS DONE NO SPIKE IN SIGHT FOR DUBAI PROPERTY PRICES IN 2018 RISING IN DUBAI: NEW IMAGES EMERGE OF WORLD'S NEXT TALLEST STRUCTURE DEIRA’S HISTORIC GOLD SOUQ SET TO GET A NEW SPARKLE ARABTEC UNIT WINS DH1BN CONTRACT FOR DUBAI RESIDENTIAL COMMUNITY ENBD REIT BUYS RETAIL CENTRE FOR DH210M IN DUBAI

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REAL ESTATE NEWS

UNION PROPERTIES TO IPO UNIT IN SECOND HALF OF 2018 DANUBE ADJUSTS PROJECT LAUNCH TO TEST VAT WATERS AL MAZAYA UNDERLINES IMPORTANCE OF INVESTMENT IN DUBAI'S MEDIUM HOUSING SECTOR DUBAI SECONDARY MARKET ACTIVITY UP DESPITE FALLING RENTAL YIELDS IT'S NOW OR NEVER FOR PROPERTY BUYERS IN DUBAI ABU DHABI ABU DHABI HOTEL GUESTS UP 16% IN NOVEMBER ABU DHABI BUILDING COMPLETIONS UP 3.6% IN Q3 NORTHERN EMIRATES IHG OPENS FIRST MIDDLE EAST INTERCONTINENTAL RESORT IN FUJAIRAH BUY A BUILDING IN SHARJAH FOR PRICE OF A DUBAI VILLA FIRST SHOPPING MALL OPENS IN AL MADAM SHARJAH’S ACHIEVEMENTS SET STAGE FOR FURTHER ECONOMIC GROWTH

INTERNATIONAL BONDS STRUCTURED AROUND US HOME LOANS ARE HOT PROPERTY CHINESE COURT AUCTIONS SKYSCRAPER FOR $84M MALDIVES PROMISES HIGH RETURNS TO FOREIGN INVESTORS HOLIDAY SHOPPERS BREAK SPENDING RECORDS, SALES UP 4.9% INDIAN DEVELOPER HDFC'S $1BN FUND, BACKED BY ABU DHABI REACHES FINANCIAL CLOSE INDIA TO BECOME WORLD'S FIFTH LARGEST ECONOMY NEW HOME SALES IN U.S. HIT 10-YEAR HIGH IN NOVEMBER

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WHY IT MAKES SENSE TO INVEST IN A DESIGN-LED HOME IN 2018 Wednesday, December 27, 2017 Does über-chic living with smart layouts, Silk Road-inspired interiors and a view of the Burj Khalifa with acres of lush gardens sound tempting? Then the sheer joy of apartment living at Dubai-based design-led boutique residential developer Ellington’s Wilton Terraces II is sure to appeal. The community was launched recently on the back of huge demand for homes at its earlier twin tower project, Wilton Terraces I. Ellington Wilton Terraces Featuring two 12-storeyed towers, Wilton Terraces II is located in Mohammed Bin Rashid Al Maktoum City The apartments at this newly launched 12-storey twin towers are practical and modern family homes that beckon with free-flowing spaces and large windows, letting natural sunlight flood all the rooms. A typical residence at Wilton Terraces II features a family living and dining area, bedrooms designed for high functionality, an efficiently designed kitchen and spacious bathrooms with floor-to-ceiling mirrors, offering a refined, contemporary space that any family will be delighted to call home. Located in Mohammad Bin Rashid Al Maktoum City, off Al Khail Road, and just three kilometres away from Burj Khalifa and Downtown Dubai, Wilton Terraces II features 283 one- and two-bedroom residences ranging from 806 to 838 sq ft for one bedroom and from 1222 to 1235 sq ft for two. Every apartment overlooks landscaped gardens and calming water bodies. Ellington Wilton Terraces The neutral palette of the bedroom creates a warm and stylish atmosphere, perfect for a relaxed lifestyle When it comes to interiors, understated elegance runs as a theme throughout the project, complemented by rich textures and bold patterns inspired by the Silk Road period. Designed with both young urban professionals and families in mind, the development integrates modern and classic design elements and creative space-saving solutions to develop the perfect setting that meets a family’s requirements as well as aesthetics. “Expats in Dubai are aware of new trends in interior design and finishing standards,” says Laura Bielecki, Senior Manager – Interior Design at Ellington. “Our interiors for Wilton Terraces II are inspired by the trends in condos and towers in New York City, Los Angeles, Miami and London. Finding a contractor for small refurbishments in an apartment can be strenuous and expensive, so it’s great for owners to have a turnkey product that’s ready to move in with zero snags and full customer satisfaction.” Contemporary, simple and clean lines, warm textures and clever furnishings dominate the design narrative of this development. Each apartment takes full advantage of natural light and uses neutral colour tones such as beige, white and grey, making every space appear open and airy. Fitted with separate laundry cabinets, built-in wardrobes and storage units for the bathrooms, Ellington knows how to maximise every square foot of an apartment. Ellington Wilton Terraces With large mirrors and quality fixtures and fittings, every bathroom is designed to function as a haven for indulgence. “Space saving starts with an efficient floor plan,” explains Laura. “By minimising corridors and

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planning a unit based on an occupant’s storage and living needs, we created a great plan that can make up for small square footage.”

The lean kitchen layout at the Wilton Terraces II allows you to move freely and reach all areas of the room while cooking with ease. Furthermore, custom cabinets, a wide workspace and polished countertops, along with a state- of-the-art refrigerator and smart fixtures will make your time in the kitchen less chaotic. Ellington Wilton Terraces Designed for high functionality, kitchens at Wilton Terraces II come with all modern elements and quality fixtures Designed by the architecture and design firm Perkins+Wills, Ellington has taken an approach to finishes that provides a more tactile and cozy environment, points out Laura: “Wood-look porcelain floor tiles provide a warm and inviting palette, while being practical and low maintenance. We have used quartz for countertops and kitchen backsplashes, which are durable, warm in colour and easy to clean. All cabinets are laminated and of matte lacquer providing a unique palette for your home.” The furniture of public areas, including the lobby, at Wilton Terraces II is also design-led, juxtaposing wood, fabric and leather upholstery with integrated power points for multipurpose use. “Toss cushions, accent carpets and multipurpose tables create a warm and inviting décor,” says Laura. “Our strategy is to make the public spaces an extension of your home. You will find here a library, and a few puzzles, games and magazines for you to use. Our lobbies by extension are not simply meant to walk through but rather to live in.” The towers of Wilton Terraces II are interconnected by a single podium at the base, creating a unique exterior while enhancing community living. Other special features in this development are a luxurious recreational area, a swimming pool, children’s pool and plenty of greenery with a dedicated BBQ zone. Source: Gulf News Back to Index

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EY: HOTELS IN MENA TO CONTINUE SEEING SOFTER PERFORMANCE Tuesday, December 26, 2017 Hotels in the Middle East and North Africa (Mena) are expected to continue seeing softer performance over the coming months, though a few cities are likely to see improvements due to annual exhibitions and events. This is according to the latest report from global consultancy EY, which said internationally-branded four- and five-star hotels in the Middle East saw mixed fortunes in October in terms of occupancy rates and average room rates. Hotels in Abu Dhabi, for example, saw higher occupancy and an increase in average room rates, while those in Dubai saw a dip in occupancy. According to the EY report, Abu Dhabi’s hospitality market saw an increase in occupancy by 8.9 per cent, coupled with an increase in room rates to $128 in October 2017 from $125 in the same month in 2016. This resulted in an increase in revenues per available room (RevPAR — an industry benchmark for performance) by 14 per cent year- on-year. EY attributed the increase in occupancy during the month to events such as the Abu Dhabi cruise season, which runs from October to May, and the World Skills competition. Meanwhile in Dubai, hotels saw a slight decrease in occupancy by 2.4 per cent year-on-year, as well as a 6 per cent decline in room rates. The increased number of hotels in Dubai has made for a competitive market space, EY said, leading hotels to look at maintaining their occupancy levels by reducing their room rates. Elsewhere in the Middle East, Saudi Arabia witnessed an increase in occupancy in cities such as Makkah, Riyadh and Madinah when compared to the previous year. Occupancy increased by 13.9 per cent in Makkah, 5.9 per cent in Riyadh and 1.8 per cent in Madinah, but faced a 2.6 per cent decrease in Jeddah. Doha’s hospitality market witnessed the lowest performance across all performance indicators in the Middle East in October 2017, when compared to the same period last year, EY said in its report, with occupancy rates down 11 percentage points at internationally-branded four- and five-star hotels. Source: Gulf News Back to Index

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ROOM RATES DECLINE IN MIDEAST HOTELS Friday, December 22, 2017 Hotels in the Middle East reported negative performance during November 2017, as occupancy rates dropped along with average room rates, according to figures from STR, a data provider. Occupancy rates reached 69.6 per cent, falling 1.8 per cent compared to November 2016, as room rates slid 4.6 per cent to $171. This dragged the revenue per available room down 6.3 per cent to $119, the report said. STR analysts pointed that consistent declined in revenue per room over the past two years correlates with the drop in oil prices, which has resulted in reduced corporate business for hotels. “Qatar, Bahrain, and Saudi Arabia have experienced the steepest performance decreases in 2017, and all have been significantly affected by reduced corporate business,” STR said. Meanwhile, in Africa, hotels recorded stronger demand, particularly in North Africa. Occupancy rates in November 2017 jumped 8.7 per cent year-on-year to reach 64.3 per cent, and average daily rates inched up 0.9 per cent to $107. This helped revenue per available room to climb 9.7 per cent to $69. “Northern Africa drove demand and occupancy growth for the region, with increases of 26 per cent and 25.2 per cent respectively. Egypt helped that performance with continued high occupancy growth (up 39 per cent),” STR’s report said. Average room rates were lower, however, in North Africa (down 4 per cent year-on-year), partly due to decreases in Morocco (down 8.5 per cent) and in Tunisia (down 2 per cent). Source: Gulf News Back to Index

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HOW VAT WILL IMPACT FREEZONE COMPANIES Wednesday, December 27, 2017 The executive regulations make clear how freezones, designated zones, and mainland areas will be treated under value-added tax (VAT). Based on the conditions set out in the executive regulations, published recently by the Federal Tax Authority (FTA), only those UAE freezones with fenced areas, security measures and customs controls in place to monitor the entry and exit of individuals and movement of goods, will be treated as a designated zone, according to tax expert Amit Chib, managing partner of Haynes Path, a management consultancy. “Based on this criterion, freezones offering services, and/or without physical controls for goods will be treated similar to any other UAE mainland company,” Chib said. Chib added that it was “interesting to note that the purchase of goods by a UAE mainland company from a designated zone company will be treated as an import,” while sales to a designated zone company by a UAE mainland supplier will not be treated as an export and will be taxable. “For services, there is no special VAT treatment for designated zones, they will be treated like any other UAE mainland company,” he said. All transactions by companies inside designated zones, including importing, storing, and selling goods to countries outside the UAE, will not be covered by the UAE’s VAT law. Source: Gulf News Back to Index

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UAE COMPANIES SHOULD STRIVE FOR EFFECTIVENESS NOT JUST EFFICIENCY IN 2018 Thursday, December 28, 2017 Effectiveness will replace efficiency as the main strategic goal of UAE companies in 2018. At least, it will for the successful companies. 2017 was the year of efficiency, as companies learnt to do what they used to do with less. Less money, less time, fewer people. Efficiency cut costs and slowed down profit deterioration. As important a step as that was, it was a stepping stone to the important strategic goal of effectiveness. In simple terms, efficiency is getting things done whereas effectiveness is getting the right things done. After all, there’s no point finding cheaper ways to reach a goal if it is the wrong goal. Effectiveness looks at where new revenue, and profit, are going to come from as, opposed to efficiency’s focus on costs. There is nothing wrong with working to achieve efficiency first, as it gives the company time to understand the new external environment. But there comes a time when cutting costs no longer works. In the end, sustainable profit growth is driven by increases in revenue, not decreases in cost. So how do companies become effective? What does it even mean? It means evolving, even transforming if necessary, so as to adapt to the new realities of the economy. Executives might ask what can they do to generate revenues in a challenging economy? A simple example, just to make a point, is this: take advantage of all the efficiency initiatives. Cost cutting means downsizing, so moving companies will thrive. But what else can happen? Property management companies might provide a discounted rent during the time a client is unemployed. Think of it this way: what is in the best interest of a property company, to charge high rents which might spur the newly unemployed to quickly pick up and leave, or to provide price and term flexibility to allow the newly unemployed a chance to search for new employment and become a long term client? This idea is not exclusive to rent, it matters in many other areas, such as education. Parents naturally prefer that their children complete their school terms if not their school year in the same school. Why can’t schools offer some sort of flexibility that could be mutually beneficial? One possible idea would be to offer the option of pro-rata or monthly payments. The point here is not that companies simply cave in to clients. It is for companies to understand that the economy in which they operate is an eco-system and that maximising profit or cash flow in the short term can lead to disastrous outcomes in the long term. What would a landlord prefer, to maximise cash flow and profit via high rent paid in advance for a few months before the tenant leaves and the unit remains empty, or to perhaps spread the cash flow across the year and lower the rent to a level that is fair to both sides? The same goes for schools. If people leave the country with a bad experience, the result will be that slowly but surely the reputation of the UAE will change from a great expatriate destination to live and work into something more negative. Nobody wins. Effectiveness is not simply helping clients manage their cash flow. Effective companies also look at an altered landscape and transform themselves into relevant, viable, sustainable commercial businesses. GDP growth has been falling since 2011 according to the World Bank, from 6.4 per cent year-on-year growth to 3 per cent in 2016. Human nature being what it is, when GDP growth was extremely high, executives forecast a continuation of that growth. But growth of gross fixed capital formation, after a contraction in 2013, exceeded GDP growth in 2014-

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2015 before finally sinking to a growth rate of 2.3 per cent in 2016. This is one economy-wide indicator that companies are scaling back on investment, a sign of better efficiency. But this still does not explain how companies will become effective. Effectiveness comes from transforming a company’s goods and services in innovative ways to tackle the realities of today’s client demands and preferences. On a strategic level, it also includes getting the company to its target business and operating model before its competitors. For example, in hospitality, one might expect that the mix of five star facilities versus four and three star facilities will balance out in favour of more affordable options. In travel we might see a tilt towards budget airlines, or even budget flights of high-end airlines. Banks will have to learn to provide innovative products to higher risk segments of the economy. Asset management firms might need to rebalance from an overwhelming public markets suite of products to the foundations of the economy, namely seed and venture capital. In sum, effectiveness in a challenging economy is a pivot from a preponderance of low volume, high margin products and services into high volume, low margin business is the underlying transformation theme for companies. Source: The National Back to Index

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UAE REAL ESTATE TO CONTINUE DOWNWARD ADJUSTMENTS IN 2018 Wednesday, December 27, 2017 David Godchaux, chief executive of Core Savills, discusses what's in store for the property market in 2018 What were the notable residential launches in 2017? A2017 was a busy year with several project launches in Dubai: Bluewaters, La Mer, Vida Za’abeel and Downtown, as well as towers on the Dubai Creek, Emaar’s Dubai Hills and Belgravia. Several residential deliveries took place in Abu Dhabi, including Al Jazeera Tower on the Corniche and the C34 residential tower in Saraya. What is your outlook for the residential sector in 2018? We expect the market to weather similar challenges as it did this year, with further downward adjustments in rents resulting in yield compression across a number of areas. Although rents are likely to continue decreasing as the next cycles of lease renewals lead to further relocations, the rate of decline is expected to decelerate over 2018. Sales price movements are more complex, with a few areas sustaining flat levels and others continuing their downward trend. What trends will characterise the residential sector? The residential as well as retail sector are seeing a trend of community living and low-to-mid-rise developments gaining traction. Developers are responding to this demand, particularly in the affordable segment with cost- effective low-rise construction favoured – take Remraam and the upcoming Nshama Townsquare schemes. The same trend of low rise is also seen in the One Central office development in Dubai World Trade Centre district and the Dubai International Financial Centre. How will the office sector perform next year? The prime office market has been outperforming the overall real estate landscape over the last few years. However, the pace of upward movement is expected to moderate as upcoming stock adjusts with new prime stock anticipated to exceed Grade B supply for the first time in 10 years. The secondary office market continues to lag due to the large amount of existing and upcoming stock. Which projects will alter the office market? Emirates Towers Business Park in Dubai is likely to be one of the most critical developments to the office market as it will add over 6 million square feet of mixed-use stock. The Dh5 billion district will further strengthen the area as a global financial hub and absorb some of the underlying demand for the core DIFC district. The ICD Brookfield Place scheme is set to be completed in 2018. What are the three main market risks for 2018? Developers’ margins may shrink to below viable levels as they compete on sales prices instead of adjusting supply volumes. This is particularly dangerous in the affordable segment. Yield compression is expected across residential markets, though the reasons for this differ widely segment-by-segment and will create a misleading impression of stability.

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Office market investment commoditisation is under way, with Reits becoming more popular – not a risk but a driver of competition.

Source: The National Back to Index

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PROPERTY YEAR IN REVIEW: TENANT’S MARKET AND OFF-PLAN TREND TO STAY INTO 2018 Wednesday, December 27, 2017 Many analysts predicted the UAE’s real estate market would bottom out by the middle of 2017, but this has not proven to be the case. Market updates for the third quarter – the most recent available – from consultancies such as JLL, CBRE, Core Savills and others, have shown a continued slide in sales and rental rates in the residential market in particular, while commercial markets were flat or witnessed small declines. The country’s hospitality market, meanwhile, also suffered another disappointing year. The industry faced numerous headwinds in 2017, including low oil prices, a fight for affordability by budget- conscious residents and widespread corporate consolidation, which led to shrinking office requirements and forced landlords to offer lower rentals and increased incentives, creating a ‘tenant’s market’. In the residential sector, average apartment rents in Abu Dhabi plummeted 13 per cent year-on-year in the quarter and 6.2 per cent in Dubai, although villa rents were more stable, with drops of 1 per cent and 2.1 per cent respectively, according to JLL. Average office rents remained flat in Abu Dhabi year-on-year in the third quarter, and dropped by 1.6 per cent in Dubai. Average daily rates (ADRs) in Abu Dhabi fell 8 per cent year-on-year in the quarter and in Dubai by 4 per cent, as hoteliers slashed prices to lure visitors. “2017 was a year of uncertainty and lacked market direction,” said David Godchaux, chief executive of Core Savills (interview, below). Residential and office rents are expected to slip further in 2018 as prolonged economic headwinds take their toll. “Given the range of complex factors hindering the market’s ability to turn around, rents in Abu Dhabi are expected to end the year 10-12 per cent lower than at the end of 2016,” said Faisal Durrani, head of research at Cluttons. It had initially forecast an 8-10 per cent fall in rents for 2017. Nevertheless, 2017 was also a busy year, with notable project launches and sales milestones achieved, pointing to stronger industry sentiment in 2018. Several mixed-use schemes were launched, heralding a tentative return of the Dubai ‘mega-project’ that crumbled during the recession. These included ‘District 2020’, the legacy masterplan for Dubai Expo 2020, Dubai Properties’ Marsa Al Arab project, Union Properties’ Motor City masterplan, and Arada Development’s Aljada, which set a new Sharjah record for number of homes sold in one day. In both Dubai and Abu Dhabi, developers reported strong sales at the annual Cityscape conference, including Aldar, which sold out the second phase of its Water’s Edge scheme, and Azizi Developments, which sold out the first phase of its Riviera project in Meydan. The total value of transactions of existing residential properties (excluding land) in Dubai in 2017 was up 28 per cent year-on-year, JLL noted, and off-plan sales accounted for the bulk. “The most notable event with regards residential sales in 2017 was the amount of off-plan sales,” said Lynnette Abad, partner and head of the Property Monitor database at Cavendish Maxwell. She said 67.7 per cent of the year’s sales were off-plan as of December 12.

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There was also a dominant proportion of ‘affordable’ properties. ‘Mid-market’ was the only price category of the Dubai residential market for which online searches on marketplace Dubizzle.com rose this year, indicating strong demand for cheaper housing. “The most significant changes in the structure of the market during 2017 have been the growth of off-plan sales and a continued focus on the affordable or mid-income sector amid flat market conditions and increasing supply,” said Craig Plumb, head of research at JLL Mena. This is likely to remain a key feature of the 2018 UAE real estate market, while appealing off-plan projects with attractive sales prices and payment plans have “transformed the residential market” over 2017, reviving market sentiment and opening new options for first-time home buyers, Ms Abad said. However, the danger of a potential over-supply on the back of sales achieved through attractive payment terms is increasing. “Although attractive to investors, it could result in a future ‘real estate bubble’,” JLL’s market update warned. On the investment side, 2017 was a year of consolidation for many – take the public listings of real estate entities Emaar Developments and Emirates NBD REIT. “This was also a year of joint venture activity across large masterplans leveraging off the increasing strength and reputation of some of the region’s largest developers,” said Simon Townsend, head of valuation, advisory and consulting at CBRE Middle East. Figures from CBRE put future residential supply at upwards of 92,000 units between the end of 2017 and 2020, around 87 per cent of which will be apartments and 40 per cent of which is expected to be delivered in 2018. The market is set to remain soft into 2018. Source: The National Back to Index

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IS THERE A FORMAL WAY FOR A LANDLORD TO WITHDRAW AN EVICTION NOTICE? Wednesday, December 27, 2017 I have a property in the Springs community in Dubai. In July 2017, we got a new tenant whose contract ends in July 2018. We sent him a 12-month eviction notice in August as we planned to use the property for self occupation. Now our situation has altered, as our stay in Dubai is not certain. We gave an option of extension to our current tenant but he wishes to move out. Can we then look for a new tenant (with the same or decreased rent) or would we run into legal tangles with the Real Estate Regulatory Agency if he were to look for compensation since the laws seem to largely favour tenants? It actually puts landlords like us at a considerable disadvantage. Is there any formal process to withdraw a given vacating notice? MO, Dubai Firstly (as you have already done), you will need to give your current tenant the option to renew. As he has already stated he wishes to vacate, you need to get this decision in writing from him that despite the fact you gave the 12- month notice to vacate, for reason of personal use, your circumstances have now changed and you will not require him to vacate. Make sure you get in writing that his decision not to renew the contract is his choice and nothing to do with the original notification to vacate by August 2018. This guarantees that you should not have any issues in the future, should he also change his mind about any compensation when you do indeed find another tenant. You need to confirm his exact date of vacating, presumably it will be before the end of July next year. Given the fact that you need to find another tenant, you will need your present tenant to help by allowing access to the property in advance of his departure. This way you stand a chance of finding a tenant before he leaves avoiding any void periods. I have a query that I can’t seem to get a straight answer on. Our rental contract is pretty standard and states that large maintenance works are the responsibility of the landlord, however anything up to Dh1,000 is the responsibility of the tenant. My landlord is claiming that this is in relation to each individual maintenance issue - of which there have been many. So basically if 10 different things go wrong in the property each costing Dh900, is my liability Dh9,000? When I signed the contract I assumed that my total liability would be Dh1,000 over the course of the contract. DF, Dubai The straight answer to your question is that there is not one specific set in stone way, but I can confirm what the normal practice is. Maintenance or remedial works to a property can happen at any time and these are taken into consideration normally on a case-by-case basis. So in this case, your landlord is correct. Under normal situations, as soon as something needs to be taken care of, that is the time that the tenant and landlord agree to what is to be done and who is responsible for what. Paying Dh1,000 for any minor maintenance issues is (in my opinion) quite high as Dh500 is more in line with what the majority of tenants agree to pay. At this level the amount shared out, whether minor or major, is on a single maintenance issue at a time not cumulative. I suggest you meet up with your landlord and re-adjust the maintenance liability figures to reflect the norm. Source: The National Back to Index

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SAUDI ARABIA'S JADWA REIT ACQUIRES TWO PROPERTIES IN MAKKAH Monday, December 25, 2017 Saudi Arabia's Jadwa REIT Al Haramain has acquired two properties, doubling its portfolio as the sharia-compliant real estate investment fund looks to build the number of properties under management in the holy cities of Makkah and Madinah The real estate trust fund, managed by the investment management and advisory firm Jadwa Investment, bought the properties for a combined value of 148 million riyals (Dh144.9m), the fund said in a statement on Saudi stock exchange (Tadawul) where it is listed. “The acquisitions are a continuation of Jadwa REIT Al Haramain’s strategy to create value to its unit-holders by expanding its real estate portfolio into value add assets that benefits from the strong fundamentals of the two holy cities,” according to the statement. A number of real estate companies and investment houses have set up real estate investment trusts (reits) in the kingdom in the last few years as financial regulators have allowed them to traded publically. The investment vehicles, which trade on a bourse like a share, invest in income yielding properties and distribute dividends to reit- holders. Jadwa REIT bought a hospitality property close to the Grand Mosque in Makkah, primarily used for Haj and Umrah pilgrims for 125m riyals, , which will be financed through an existing Islamic debt facility, it said without giving details. The property is leased for eight million riyals and carries an initial acquisition yield of 6.6 per cent. The lease term on the asset, which the fund has purchased from a “related party”, will end in August 2021. The fund has also acquired a retail property, also in close proximity to the Grand Mosque, for 23m riyals, which offers an initial acquisition yield of 6.7 per cent, according to the statement. The new acquisitions are expected to increase the investment vehicle’s funds from operations by 11 per cent in 2018, compared to the pre-acquisition estimates and it will be “positively” reflected on future dividends distributions. The REIT Al Haramain, which was launched through an initial public offering in April this year with an initial size of 660m riyals, has also acquired Tharawat Alandlusia Hotel and Tharwat Altaqwa Hotel during the same month. Saudi Arabia’s Al Rajhi Capital is among the latest investment management companies to launch the IPO of its Al Rajhi REIT Fund. The public offering for 42.67 million units of the fund, priced at 10 riyal each, will open between January 1 to January 14, according to an Al Rajhi bourse filing. Musharaka REIT Fund, which raised US$95.1m was the biggest IPO on Tadawul in the third quarter of this year, while Al Maather REIT Fund, valued at $49.7m was the other real estate investment vehicle to go public during the quarter, according to an EY report. Source: The National Back to Index

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TOURISM YEAR IN REVIEW: DUBAI STILL ON TRACK TO ATTRACT 20 MILLION VISITORS BY 2020 Thursday, December 28, 2017 Issam Kazim, chief executive of Dubai Corporation for Tourism and Commerce Marking (DCTCM) talks about prospects for the industry and the department’s efforts to woo more tourists to the emirate. How does DTCM plan to boost visitors to 20 million by 2020? The emirate has made steady progress towards achieving the Tourism Vision of 20 million visitors per year by 2020, doubling the number welcomed in 2012. All sectors of government are working together to help us achieve this; positive changes in visa regulations for countries such as Russia and China, and the World Economic Forum ranking the UAE as the second-safest country in the world, all add to our appeal as a leading global tourism destination. Mega-developments set to dominate the 2020 skyline include Bluewaters Island, featuring Ain Dubai (Dubai Eye), Du and Dubai Creek Harbour with its observation tower, set to become the tallest building in the world. Cruise tourism is also playing a significant role in positioning Dubai as a must-visit destination, adding yet another attractive element to the city’s proposition. We had a very successful season in 2016-17, with over 625,000 cruise tourists visiting the city, via a total of 157 ship calls. This reflects an increase of 15 per cent and 18 per cent, respectively, when compared to the previous season, and we look forward to another successful season this year, building towards our target of receiving one million cruise passengers in 2020. The expanded connectivity provided by Dubai Airports and airlines such as Emirates and flydubai also means that Dubai is easily accessible from all corners of the globe. Globally, we are seeing travellers opt for multi-destination holidays, and Dubai as an aviation hub is in an ideal position to act as a launch pad into the wider Middle Eastern, South Asian and South American destinations. One of Dubai’s core focuses has been on positioning the city as the world’s leading family destination, which is representative in the fact that families and couples now make up more than half of all travellers visiting the city. Tailored events, attractions and experiences such as Dubai Parks and Resorts, IMG Worlds of Adventure and the newly-launched Dubai Safari Park have all been implemented to enhance Dubai’s global appeal among families and experience seekers. Another focus for us is highlighting the heritage and culture that is unique to the city, through Dubai Historic District project, which is currently underway and aims to enhance the visitor experience in Dubai’s oldest neighbourhoods of Al Fahidi, Shindagha, Bur Dubai and Deira. More modern landmarks such as the recently opened Dubai Opera and Etihad Museum, are also helping establish Dubai as a cultural hub. Which geographies will contribute to this growth? Our marketing strategy for Dubai also ensures we attract visitors from across the globe and that there is no over- reliance on a single market. This ensures flexibility, and protection from macro-economic conditions that could have an impact on visitor numbers from a particular market.

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Traditional core markets spanning the GCC, UK and Germany are continuing to grow, and they deliver over 40 per cent of tourism traffic to Dubai.

India is now Dubai’s top source market; in the first quarter of 2017, it became the first-ever market to record nearly 580,000 visitors in any one quarter, with a massive 23 per cent growth in arrivals between January and March. In March 2017, the UAE Cabinet also approved a decision to grant visas on arrival to Indian passport holders with either a valid US visa or a green card, which further boosted visitor numbers; from January to September almost 1.5 million Indian tourists visited Dubai, a year-on-year increase of 20 per cent. Also, in mid- September, it was confirmed that Indian citizens with UK or EU residencies would be granted a visa on arrival, something we are confident will contribute to further growth in the number of Indian visitors to Dubai. Russia and China are two of our fastest-growing source markets. January’s easing of visa regulations, allowing visitors from both these countries to apply for visas on arrival, has had extremely positive impact on tourist numbers throughout 2017. We have seen year-on-year increases of 43 per cent for Chinese tourists and an unprecedented 95 per cent for Russian tourists visiting the city. There are several markets that we have identified as having high growth potential, including a number of emerging markets, and our goal is to tap into these. Growth markets we are targeting include countries such as Nigeria, South Africa, Malaysia and Indonesia. We will also continue to work in partnership with the General Directorate of Residency and Foreigners Affairs to update visa regulations for our source markets, to ensure Dubai continues to grow as a global tourism destination of choice in markets around the world. What kind of hotels are needed to cater to the 20 million visitors? The quality and high standards of Dubai’s hotels are a defining characteristic of the city’s tourism offering, and destination’s overall attractiveness to visitors from around the world. All leading international hotel chains have a strong presence in Dubai, and are adapting to cater to the diverse profiles of travellers to the city. Dubai currently has more than 106,000 rooms across its expanding hotel and hotel apartment inventory. This increase has been planned to ensure that Dubai’s hotels can accommodate the influx of visitors and group travellers to Dubai, especially, in the lead up to and during Expo 2020. This increase in hotel rooms also directly contributes to Dubai’s ongoing strategy to diversify the industry and to ensure there are a range of options available at different price points. The new mid-market and luxury hospitality offerings will appeal to all visitor segments and budgets.

Source: The National Back to Index

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WHY IT'S TIME TO SWAP YOUR RENT CHEQUES FOR A MORTGAGE Tuesday, December 26, 2017 Prices have continued to fall for the past six months and have been falling consistently now for almost three-and- a-half years, since peaking in mid-2014. In most parts of the UAE, property prices are now at early-2013 levels. Price drops have been slow and gradual, with low, single-digit percentage points per quarter across most communities and segments. Rents held better than sale prices in the early parts of the decline but the reverse has been true for the past 12 to 18 months. Certainly over the past six months, rents are falling faster than sale prices. Significant volumes of new and generally affordable stock continues to be handed over at a steady pace, though often at a slower pace than quoted. And there's a lot more in the pipeline. A sluggish oil sector has reduced employment and demand for rental accommodation across the region. This is felt most in Abu Dhabi but has a knock-on effect on the rest of the country. Dubai is far better diversified and far less reliant on the petrodollar, but population growth and rental demand is not keeping pace with new project handovers and the new supply is causing downward pressure on rents. Despite regional and international political dramas, the fallout with Qatar and a Trump presidency, UAE business sentiment is quite good and improving. The local economy is humming along. Small to medium businesses are investing and taking on more staff, particularly in the tech sector. Construction and tourism continue to be strong. GCC governments traditionally reliant upon oil revenues have reassessed spending and taken big steps towards diversification. But this will take time. They are less buoyant than they've been historically. Yet, driving around Dubai, anyone can see that infrastructure investment continues at breakneck speed. Transactions are taking place. Lots in fact. But off-plan sales once again account for the bulk. This is a concern. But why are people buying off-plan in a falling market? There are several reasons: 1. The mortgage cap imposed by the UAE Central Bank which stipulates that expatriates must pay a minimum of 25 per cent deposit, plus up to seven per cent in transaction costs for completed property on their first purchase below Dh5 million, 35 per cent deposit plus costs (above Dh5 million) and 40 per cent deposit plus costs for any additional purchase. Many commentators have argued this cap has achieved specifically what it was intended to achieve: a cooling in prices and diversion away from the secondary market toward the primary market. 2. Increased competition among developers and a high volume of new project launches has resulted in aggressive low deposit and post-handover payment schemes designed to incentivise buyers. This includes subprime buyers who cannot afford to buy in the secondary market due to the much larger deposits required. 3. Popular sentiment that prices are at or very close to the bottom of the cycle and will increase in the lead-up to Expo 2020. There has been an increase in product offerings in affordable communities in the sub-Dh1 million, sub-Dh1,000 per square foot segment. Projects handed over in 2017 or earlier were largely funded by front-ended payment schemes where the consumer generally paid more than 50 per cent during construction. But off-plan sales that have taken place in 2016 and 2017 have been a very different story. Deposits are low while commissions remain high. Agents can earn three to four per cent on an off-plan buyers' 10 per cent deposit.

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While far better regulation now exists to ensure that progress payments are linked to construction milestones and that buyer funds are held securely in escrow, a few of these too good to be true payment plans may prove to be just that. Yet in other parts of the market, well-located villas in some of Dubai's most sought-after established communities are now within reach of the common man. Few global cities offer the opportunity to buy a well-built four- bedroom free-standing villa in prime location on a decent sized block with a pool for under $1.2 million. Try doing that in London, Sydney, New York, Paris, or Geneva. Good luck. But you can in Dubai. Long-term residents are taking advantage, snapping up good deals, planting roots and swapping their rent cheques for a mortgage. Source: Khaleej Times Back to Index

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5 REAL ESTATE TRENDS TO WATCH OUT FOR IN 2018 Monday, December 25, 2017 Making predictions of trends that will shape the coming year requires a leap of faith, but if you are willing to look, it may provide some meaningful insights that will help navigate your decisions and thought process. Infrastructure boom Unlike, the world financial crisis, a closer examination of the fundamentals at play suggest that 'this time is different'. The recent disclosure of the budget attests to the strong monetary policies in place from the Dubai government. There was a 20 per cent rise of expenditure in 2018 compared to an average rise of eight per cent in the last five years. The sharpest incline was in infrastructure spending, driven predominantly by construction projects related to the Expo 2020 (more than a 40 per cent increase). As Dubai continues to inject money into the system, we can expect to see a positive multiplier effect across different sectors of the economy, especially in real estate and financial services. The suburban effect As developers continue to roll out projects in the outskirts, pushing city boundaries even further, the suburban effect continues at a rapid pace. The low price points and flexible payment plans give an opportunity for end- users to enter the market, consequently allowing them to gravitate towards being a home owner. In the case of the investor, it provides an opportunity for them to capitalise on developing areas as the infrastructure builds itself out. In either case, it is the testament to the population's need for a more balanced housing market that is more affordable. It is also indicative of the overall surge in demand for housing that is latent in the demand curve and has been systemically underestimated by the analyst community. The two most popular off-plan destinations in 2017 measured by a year-on-year increase has been in the affordable segment: Dubai South and Jumeirah Village Circle. Price movement A key question that continues to dominate the zeitgeist in investor discussions is whether prices have bottomed out or will they continue to fall in 2018. In 2017, city-wide prices fell 2.5 per cent, compared to 15.1 per cent in the year before. The decrease of rate in change is a sign of a stabilisation of prices across the board. In point of fact, a price analysis reveals that in 2017, there has been green shoots across several communities, with the largest increase in the Palm Jumeirah villa space (8.2 per cent). However, investors and end-users should be cognizant that price recovery, unlike a price falls, are gradual and steady in real estate assets. Therefore, they should not be expecting double digit returns in the last two bull cycles. Yield compression As witnessed in 2017, there has been a city-wide yield compression from nine per cent to seven per cent, which we opine will likely continue. This change might be nerve-wrecking to the average Dubai investor who is used to supernormal profits and returns. We don't expect the yield rate to increase in the coming year, however, as prices recover, there will be further compression across the board. In more developed markets such as the UK and US, yields are closer to the four to six per cent mark. As the Dubai real estate market continues to mature and the city continues to rapidly develop, we can expect yields to follow suit to international norms. The oversupply fallacy

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Another important topic that has entered the minds of investors, keeping them on the sidelines, is the fear of an oversupply. By the end of 2017, analysts estimated that 34,127 units will be delivered into the market, however of those, only 65 per cent has been completed. In 2018, analyst have predicted that 70,785 units will be delivered. However, a revised projection considering cancelled, stalled or delayed projects reveals that we expect only a 44 per cent completion rate. This implies that the fear of an oversupply is unfounded, especially given the population growth rates. Source: Khaleej Times Back to Index

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VAT IN OMAN POSTPONED UNTIL 2019 Tuesday, December 26, 2017 Value-added tax (VAT) will be implemented in Oman only in 2019, the country has announced. The sultanate's ministry of finance said the implementation of VAT has been delayed to 2019, the Times of Oman said quoting Oman TV. The application of the selective tax on certain products will start by the middle of 2018, according to a report on the national broadcaster. The products targeted for the so-called ‘sin tax’ are fizzy drinks cigarettes and energy drinks. The delay in collecting the VAT until 2019 is expected to provide the country’s businesses with more time to prepare for it, the report added. “Basically, this (delay in implementation) will give more time for the corporate sector and people to prepare for the VAT regime,” the report said, citing George Mathew, managing partner of RSM Oman. “Those companies that have not yet started the initial preparation will get more time, since it is going to be implemented in 2019,” added Mathew. Oman plans to introduce a 5 per cent VAT, along with other GCC states. Source: Khaleej Times Back to Index

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BAHRAIN ANNOUNCES EXCISE TAX ON CIGARETTES, ENERGY DRINKS FROM DECEMBER 30 Wednesday, December 27, 2017 The Ministry of Finance in Bahrain has announced selective/Excise tax on tobacco and its derivatives, energy drinks and soft drinks from December 30. The step is based on the decision taken by the Supreme Council of the leaders of the Gulf Cooperation Council at its thirty-sixth session held in Riyadh in 2015. Earlier this year, UAE's Federal Tax Authority announced Excise Tax in the country from October. On October 1, the excise tax went into effect at a rate of 100 per cent on tobacco and energy drinks that include stimulants or substances that induce mental or physical stimulation, such as caffeine, taurine, ginseng and gaurana. Soft drinks were also taxed at a rate of 50 per cent. As per the Federal Decree-Law No (7) of 2017, Excise Tax will be charged on production of excise goods in the UAE, import of excise goods in the UAE, release of excise goods from a designated zone and stockpiling of excise goods in the course of conducting business. Excise tax available in a registered designated zone will not be charged excise tax until released from the zone. Source: Khaleej Times Back to Index

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CONCERNS ABOUT EXCESS HOME SUPPLY IN DUBAI IS MISPLACED Wednesday, December 27, 2017 Concerned about an oversupply of new homes in Dubai? And what it might do to property prices and rents? You have no reason to be, says Rizwan Sajan, Chairman of Danube Group. “New home deliveries haven’t touched anywhere near 25,000-30,0000 units in the last five years,” said Sajan, who has a development portfolio of Dh3 billion plus. “This year we are probably looking at about 15,000 completed homes in Dubai. Those numbers are far from likely to cause excess supply and impact on prices.” But there are other factors that might give developers some pause on their new projects, VAT for instance. While a 5 per cent charge will not apply on residential purchases, developers might need to give some time for residents to adjust to a VAT reality. This is why Danube has not rushed out with its next launch, a “affordable luxury” project in Arjan and which it had earlier planned to launch this month. Now, the plan is for a launch towards the latter part of the first quarter of 2018. And for this one, the developer is guaranteeing a 15 per cent return for buyers. “Whatever be the sentiments, I can’t see property prices in Dubai going up in 2018,” said Sajan. “Even if rents do come down by 3-5 per cent, property investors can still make their 8 per cent and plus returns. “As for developers, a big plus for us is the dip in land prices — I think they have now come down by 15 per cent from their peaks.” In 2017, Danube had released Dh750 million worth of residential inventory into the market, of which, Sajan says, Dh100 million remains to be sold. The Danube chairman is not overly perturbed by this. “Demand is still very much there, in some form or the other, for properties in the Dh1.2 million to Dh1.5 million space,” Sajan added. “We will get back into having a new launch every three or four months as soon as the market adjusts to VAT.” The Group as such saw growth slip below double-digits for its core business of building materials. But its interiors and home accessories division recorded a 30 per cent growth, while the property development arm turned in growth slightly lower than in 2016. The overall Group numbers could have been better if collections from Saudi Arabia had not been affected. As for pricing trends in the UAE, “With VAT, building costs will go up … but I don’t think market sentiments will allow this to be reflected in the final property sales price,” said Sajan. “Thankfully, a lot of our existing projects are well advanced on the construction side.” It will be interesting to see when developers in Dubai reopen the off-plan tap in 2018. If they remain cautious and stay away during Q1-18, it would mean two consecutive quarters of weak off-plan activity. The numbers have already shown quite a dip in November and December. Outside of residential, a possible move into serviced hotel apartments beckons. The company has been giving this serious thought, reckoning that the same mid-market approach will win it favours from investors. Other developers have already gone through the same route, but primarily in the high-end space. But there are locations opening up in the city where more affordable projects with a hotel element can be built.

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“If that happens, we will manage those properties through an in-house division rather than third-parties,” said Sajan. “But our primary buyer base remains those who are currently renting and now want to make the switch to owning. I would say at least 80 per cent of our user base represent such buyers.” Source: Gulf News Back to Index

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A YEAR WHEN OFF-PLAN TRUMPED EVERYTHING ELSE Wednesday, December 27, 2017 One of the key trends of Dubai’s residential real estate market in 2017 was the rise in off-plan sales, which comprised two-thirds of all homes purchased. Even though residential transaction volumes for existing properties were flat as compared to 2016, the rise of off-plan drove the total residential transaction volumes up by 15 per cent. Based on the ValuStrat Price Index — Residential (VPI), we found that residential capital values for existing freehold properties declined 2 per cent annually, and are now 15 per cent below their 2014 peaks. However, deeper analysis of sub-markets reveals that not all areas performed equally. Our data shows that while locations such as Jumeirah Lake Towers, Dubai Marina and apartments in Jumeirah Village saw price declines of up to 9.1 per cent, while apartments in Downtown Dubai, Business Bay, Discovery Gardens, Motor City, and villas in Jumeirah Village witnessed capital appreciation of 6.3 per cent to 8.1. Interestingly, as the market approached the year-end, we found that typically high yielding, mid-affordable areas such as International City, Discovery Gardens and Motor City saw prices dip slightly, whereas prime locations continued to gain. For less than Dh500,000, buyers have a choice of grabbing a one-bedroom apartment in International City, a studio in Discovery Gardens or Production City (formerly IMPZ). At the high end of the spectrum, Dh5 million to Dh10 million buys a four-bedroom villa in Jumeirah Islands, a three-bedroom villa on Palm Jumeirah, or a six- bedroom villa in Arabian Ranches. Falling residential rents are one reason for softening capital values — as investors faced lower yields on the back of deteriorating leasing rates. Asking rents were down 10 per cent on average, as many landlords worked to maintain occupancy levels with rent reductions and easier payment plans. New-build supply On average, studio apartments in International City could rent for Dh30,000 annually, and a one-bed for Dh42,000. Dubai Marina now has average three-bedroom apartments command rents of Dh180,000, which is similar to that for a three-bed villa in Arabian Ranches, causing families to make the move further east. New-build supply was another reason for softer residential sales prices in 2017. An influx of new residential stock, some after delays of up to two years, was handed over. With many of these new homes targeted at the mid- affordable market, areas located along the E311 corridor such as International City, Dubai Silicon Oasis and Dubailand were most impacted. This year can be described as a buyer’s market, driven mainly by off-plan developers offering competitive payment plans, many of which spanned beyond promised handover dates. As to who the buyers were, our research shows there was a shift towards domestic end users rather than investors. These end users earn locally and are less impacted by international currency fluctuations. Developers have increasingly moved into home financing, offering innovative self-funded payment plans directly to their purchasers, outside of the traditional mortgage market. While such schemes have likely opened up home ownership in Dubai to a wider market, less stringent credit checks as compared to traditional bank mortgage applications, may represent some downside risk for future payment defaults. Such a scenario could possibly expose some developers who are dependent upon stage payments to fund project construction.

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Short-term downward pressures

Prime residential areas, which saw slight improvements in 2017, may continue to show resilience and sales prices could rally towards previous market peaks. Capital values for some high-yielding mid-affordable areas may experience short-term downward pressures as a result of burgeoning supply, extending the prevailing buyer’s market. Citywide rents are anticipated to see further reductions, particularly in areas with handovers of long overdue deliveries, mostly located within the E311 corridor. Projects include Living Legends (in Dubailand), The Villages (Dubai South), Hayat Townhouses (Town Square) and Mudon Villas (Dubailand). By the end of 2018 the population of Dubai is expected to reach 3.24 million, and assuming all projects are delivered on time, the number of residential units would reach 580,000 homes. Source: Gulf News Back to Index

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PHASE 1 OF DUBAI’S BUILDING CLASSIFICATION IS DONE Wednesday, December 27, 2017 Surveying more than 80,000 non-freehold plots in Dubai — the majority of them in high-density older parts of the city — was only the beginning. Now comes the hard part — making use of all the data that was collected about the plots, what sort of properties were built on them, and what they were being used for. And keep in mind this is only Phase 1 of Dubai Land Department’s ambitious Building Classification Survey. “Our databases will need to be updated with all of the new data that has come flooding in,” said Mohammad Al Dah, Director at the Land Department and who oversaw the nearly two-year survey programme. “In the process, we have added over 400,000 units to the database.” According to the official, there were quite a few surprises the survey managed to unearth. Dubai has about 150,000 plots, “give or take”. “We were quite surprised to learn that the split between freehold and non-freehold is actually 50:50,” said Al Dah. “We were thinking that freehold would dominate, even to the extent of 70:30. But that was not the case. “It was quite a struggle to collect all of the data that was needed to make this process work. But we had a matrix against which all of the data was collated and after the initial slog, things became progressively easier.” Deira, for obvious reasons, makes up the bulk of the non-freehold plots in the city currently. The survey team also took in buildings in Bur Dubai and the older neighbourhoods within Jumeirah. The Jebel Ali Industrial and Ras Al Khor Industrial were the last of the neighbourhoods to come under the classification programme. Criteria If a plot featured a built property, the Land Department team would categorise each in terms of its usage, the number of units within them, the number of floors, the number of owners to each unit, etc. Each of the plots/properties were rated based on a 64-point criteria. “From what we have collected so far, we can tabulate the age of the building and pertinent details such as the number of fire escapes it features, etc,” said Al Dah. “At some future point, we could go back to the building’s owner and say these are the upgrades he could put in. Some of the older buildings will need some sort of makeover to be in tune with the times.” The survey will also help the Land Department iron out some of the misuses in the current system. “We came across situations where there discrepancies between what a plot was built up for and the Ejari [rental] contracts that were issued against it,” said Al Dah. “With the Classification process done, at least the Phase 1, these types of activities will be curtailed. It will help generate greater transparency in local real estate.” As such, some of Dubai’s established neighbourhoods are going through massive makeover programmes or will start on the process shortly. Even in areas such as the Deira Gold Souq, which has one of the highest build densities in the city, new areas are being freed up to extend its boundaries. Similar re-zoning is also taking place in locations such as Jebel Ali and Satwa, and which will eventually see them go through quite a transformation. In Dubai’s real estate, change is the only constant. Source: Gulf News Back to Index

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NO SPIKE IN SIGHT FOR DUBAI PROPERTY PRICES IN 2018 Wednesday, December 27, 2017 One thing is for sure — Dubai’s property values are unlikely to record any sharp increases in the new year. Developers and their off-plan ambitions will ensure that prices remain grounded. “There has been no appreciation in off-plan launch prices,” said Firas Al Msaddi, CEO of fäm Properties. “And developers are still supplying the same range of products in new phases and with fresh payment plans and more attractive offers, including Dubai Land Department (fee) waivers or post-handover payment plans.” All of which makes it doubly difficult for individuals to try and sell off their properties in the secondary market and at a premium to what they bought. “It’s almost impossible to resell because they can’t compete with the developer,” said Al Msaddi. “If you bought in January and has paid 30-40 per cent and if I come to buy from you, I have to cough up the 40 per cent and a premium ... which doesn’t exist today. But if I go to any developer, I can buy in the same project and get a fresh payment plan plus be part of any sales promotions. According to him, there has been no price appreciation in the off-plan space through this year and that effectively means nothing much can happen on secondary market values as well. All of which makes it easier for anyone wanting to buy now. But for a seller (other than a developer), their only option would be to wait until the market picks up — whenever than happens — or to sell at a discount to the current market rates. Passing on the cost After an action-packed three quarters during which off-plan launches boomed, there has been some tailing off since mid-October. It could be that developers are waiting until 2018 to get back into their launch mode again. Or, as some industry sources say, developers are biding their time to gauge how UAE consumers adjust to the roll-out of VAT. (Residential sales will be zero rated, but prospective buyers, especially end-users, will need some getting used to in managing their finances.) Even developers will have some adjustments to make. In the current market situation, they cannot just pass on their VAT costs on construction to their property buyers. It will only mean losing out on buyers. “These days, the sales prices haven’t left any decent buffer for developers. The way developers make their money, they need to invest less equity, get funds from banks and the rest from off-plan sales,” said Al Msaddi. “This means off-plan sales and the time frame to actually get the downpayments becomes extremely time-sensitive. “Sometimes, it’s more important than their margins. If a developer invested 20 per cent equity, even if he makes 5 per cent, it’s still 25 per cent on equity, which is not bad if you annualise it. “But if the developer has to wait for off-plan sales and payments to come, he will have to inject equity from his own pocket. And his margin from a ROI [return on investment] standpoint will become lower and lower ... to the extent it becomes not worth selling.” Developers still have reasons to be thankful on their cost side. Land prices are no longer going recording the steep markups of two years ago. Re-zoning According to Al Msaddi, the extensive re-zoning efforts on the part of master-developers have played their part.

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“In 2014, they [investors] made so much money on land,” he added. “Land sold in 2012 for Dh190 per square foot doubled in price in one year. For instance, in Downtown, there was a doubling in proven transactions ... and these were being advertised for even more. There were plots being advertised in Downtown for Dh550 as opposed to Dh375-Dh400.” That is when master-developers intervened. “They started re-zoning and we saw a lot of that in Majan and Arjan. This created smaller plots and that killed the momentum of trading in land. And you also had for the first time freehold plots in Satwa, Nad Al Sheba and Jebel Ali coming from master-developers. “Whoever is holding land or trading now, they understand there is no reason for land prices to appreciate. Transactions have increased, but not the prices. And now, plot buyers are doing so to develop — in 95 per cent of the cases.” Source: Gulf News Back to Index

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RISING IN DUBAI: NEW IMAGES EMERGE OF WORLD'S NEXT TALLEST STRUCTURE Tuesday, December 26, 2017 Dubai’s upcoming super-tall masterpiece, The Tower, which is set to surpass the height of Burj Khalifa, is now taking shape. New photos have emerged of the ongoing construction of the future iconic observation tower, providing the public a glimpse into what goes on at the site. The aerial images, courtesy of Dubai Media Office, showed the ongoing work at the base of the tower, which broke ground only a little over a year ago. The tower is scheduled for completion in 2020. It is the centrepiece of Emaar's Dubai Creek Harbour, a waterfront development located on the banks of Dubai Creek featuring mixed-use towers. In October 2016, His Highness Shaikh Mohammad bin Rashid marked the ground-breaking of the tower, with the foundation work accomplished in a record time. As of May this year, barrette piles have been laid to depths of over 72 metres, approximately a fifth of the height of one of the five tallest towers in Dubai, to secure the structure. The barrette piles used for the foundation have been tested to a world record test load of 36,000 tonnes. The tower is envisioned to become the next global icon. The design of the structure was done by Spanish/Swiss architect and engineer Santiago Calatrava Valls. It will feature a number of observation decks that will offer stunning 360-degree views of Dubai. Among the highlights are The Pinnacle Room and VIP Observation Garden Decks that recreate the splendour of the “Hanging Gardens of Babylon,” one of the Seven Wonders of the Ancient World. What are the top 5 tallest towers in Dubai? 1. Burj Khalifa Built in 2010, the iconic Burj is the tallest in the world, as well as in Dubai with a height of 828 metres. 2. Marina 101 This residential tower was just completed this year and is approximately half the size of its predecessor with a height of 425 metres. 3. Princess Tower The Princess Tower, center, stands illuminated amongst other skyscrapers beyond motor cruisers moored at Dubai Marina. (Photo: Bloomberg) Known as the home for the extreme dream jump, the Princess tower has a height of 413 metres. 4. 23 Marina Built in 2012, this residential tower has a height of 392 metres. With views of the entire city, some residents enjoy living in the sky. 5. Elite Residence This popular apartment building 380 metres high and goes all the way to the 59th floor. Source: Gulf News Back to Index

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DEIRA’S HISTORIC GOLD SOUQ SET TO GET A NEW SPARKLE Monday, December 25, 2017 The historic Deira Gold Souq — one of the most visited locations in the city — is going through an extensive transformation. A whole new cluster of buildings, including those with residential and hospitality elements, is being built on a prime stretch of land and adjacent to the existing Gold Souq. A Dubai Government-owned master-developer is overseeing the project. “From the designs we have seen, the new buildings will add a completely different dimension to the area,” said Anil Dhanak, Managing Director of Kanz Jewellery and a board member at the Dubai Gold & Jewellery Group. “There will be about 200-plus stores for jewellery retailers and separate office facilities for wholesalers. “It was getting to a point where it was quite difficult to find new space in the old Gold Souq. And there were limits to how much renovation could be done to the older buildings there, which have been around for 20 years or more.” The new development is happening across a stretch between the public library and the outer limits of the new fish market, sources in the jewellery sources said. Until now, this was principally barren land and used as a temporary parking area. (This forms part of a wider masterplan to give a comprehensive makeover for the older parts of Deira. And offshore, Nakheel is building a full-scale destination in the form of “Deira Island”). Outside of Dubai’s top malls and its theme parks, the Deira Gold Souq remains a must-see for a sizeable number of visitors to the city. And this is so irrespective of how international gold prices are faring at any particular time. “We believe the first set of buildings could be ready in another 18 months and include the 210 outlets for retailers,” said Abdul Salam K.P., Group Executive Director at Malabar Gold & Diamonds and a board member on the Dubai Gold & Jewellery Group. “It’s still too early to talk about the leasing rates — but there is certain to be a premium given their newness and the features built into them.” The retail portion will occupy the ground floors of the new buildings, and have an average size of 300 square feet plus. But the master-developer has made a point of retaining the “atmosphere” of the original Gold Souq. “The designs suggest the new will have seamless connections to the older areas of the Gold Souq, and this will help retain the atmosphere,” said Salam. “The narrow alley ways, the high density constructions over what is essentially a mid- sized area — these are all what makes the original Gold Souq so unique.” And it was there that Dubai’s status as a the “City of Gold” was minted through the years. It has been a sought after destination among tourists wanting to pick up gold and jewellery at some of the most competitive rates anywhere. And right through the year, there would be high visitor traffic flowing through the stores, buildings and adjoining areas. It was also a part of the city that seemed disconnected from the rush of developments happening elsewhere. Not any longer. But the new buildings coming from a single developer will also alter the real estate dynamics of the older areas of the Gold Souq, according to Dhanak. “Already there are reports of “key money” (what is paid as a one-time payment to secure a store) has come down in the older areas,” said Dhanak. “And this was an area that historically had some of the highest going rates for key money anywhere in Dubai.

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“Individual landlords in the older sections could be in for a tougher time once the new construction comes up. It will be interesting to see what this might do on rental rates there. As of now, rents have not been reduced.

“Current rents for a small outlet is anywhere from Dh1 million depending on the location and its prominence.” Source: Gulf News Back to Index

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ARABTEC UNIT WINS DH1BN CONTRACT FOR DUBAI RESIDENTIAL COMMUNITY Thursday, December 28, 2017 Arabtec Holding, the UAE’s top-listed contractor, said on Thursday its wholly-owned subsidiary Arabtec Construction has won a Dh1.025 billion contract from Dubai Properties to build a residential community in the emirate. The contract for Villanova Amaranta and La Quinta involves the construction works for villas and townhouses, Arabtec said in a statement to Dubai Financial Market, where its shares are traded. Emirates Falcon Electromechanical Company, another subsidiary of Arabtec, will carry out the mechanical electrical and plumbing works for the project, it said without giving the value of the contract. “We continue to onboard [take] new projects through the ‘4- Gate Work Winning Process’, which is designed to selectively win work that has the ability to deliver successful outcomes which will continue to support the [Arabtec] Group to capitalise on the positive long-term outlook for the construction and engineering sector in our core geographic markets,” Arabtec chief executive Hamish Tyrwhitt said. The project works are expected to begin immediately with an overall duration of 28 months. Villanova is located off Emirates Road in Dubai and is a short drive away from Business Bay area. It displays influences of Mediterranean architecture with the use of columns, arches, textured facades and slanted roofs. Arabtec which has struggled to maintain profitability in the last two years amid a slowdown in construction sector has bounced back this year. The company posted its third consecutive quarterly profit for the three months ended September 30. Net profit rose to Dh18m in the third quarter of 2017 compared to a loss of Dh226m in the same period last year. The company, which is assessing further divestments and options of integrating its operating units, has won a number of deals this year. Its wholly-owned subsidiary Target Engineering Construction Company in November won a Dh950m contract to build the second phase of Emaar’s Forte residential project in Downtown Dubai. Target has already been appointed to build the first phase of the project by Emaar – the UAE’s biggest publically-traded real estate developer – through a Dh196m contract awarded in September. Source: The National Back to Index

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ENBD REIT BUYS RETAIL CENTRE FOR DH210M IN DUBAI Tuesday, December 26, 2017 ENBD REIT, the Sharia-compliant real estate investment trust managed by Emirates NBD Asset Management, on Tuesday said it acquired a retail centre in Dubai for Dh210 million as part of plans to diversify its rental income and portfolio. The REIT bought the centre in Silicon Oasis from Souq Extra, which launched the development in January, it said in a statement on Nasdaq Dubai where it is listed. Rental income from the community centre, which has a 36,000 square feet gross leasable area including 42 retails units, is guaranteed for two years. “This acquisition diversifies ENBD REIT’s asset mix into retail and will enhance the rental income return profile of the portfolio,” said Anthony Taylor, fund manager for real estate at Emirates NBD Asset Management “In just nine months, we have completed the full allocation of the capital raised at listing and fully committed our existing finance facility in line with our growth strategy to acquire assets that are 100 per cent occupied.” Reits have been gaining traction in the Saudi Arabia and the UAE, the two biggest Arabian Gulf economies, as investors hunt for safe exposure to the property market. Trading in Reits is similar to stocks and bonds on an exchange, paying out dividends from rent to investors. ENBD REIT, which was launched in March, has acquired this year Uninest student accommodation in Dubailand, South View School in Remraam Community and The Edge office building in Dubai Internet City. At the end of September, the Reit had a net asset value of US$295m. It announced in October that $105m proceeds from its IPO were fully invested and it has also fully committed its $191m Islamic finance facility. Invest AD, the Abu Dhabi investment management firm is the latest among the UAE firms to unveil plans for setting up real estate investment vehicles. The company in October said it will launch a Reit in a joint venture with Canada’s Brookfield Asset Management, targeting investment opportunities in the UAE. Brookfield, which has $250 billion of assets under management, will develop other real estate investment products in collaboration with Invest AD in addition to the Reit, which will be formed under the regulatory framework of Abu Dhabi Global Market, the capital’s financial free zone. Emirates REIT, which is managed by Equitativa Dubai, is the first such investment vehicle to be listed in the UAE on Nasdaq Dubai. Source: The National Back to Index

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UNION PROPERTIES TO IPO UNIT IN SECOND HALF OF 2018 Monday, December 25, 2017 Union Properties, the property developer that posted its worst quarterly loss in the second quarter of this year, said on Monday it plans to sell shares in its facilities management unit through an initial public offering in the second half of next year. The company will sell 100 per cent of ServeU by listing the unit on Dubai bourse and will use the proceeds from the sale to boost its investment portfolio and operations, it said in a statement to Dubai Financial Market (DFM), where its shares are traded . “2018 marks a new phase of development and growth for Union Properties,” said group chief executive Ahmed Khouri. “After the group’s extensive changes in management, structure and strategy in 2017, the company now has a unique position that will help it continue to strengthen its portfolio, diversify its revenue streams and enter new markets in the Middle East and beyond.” Union Properties, which restructured its board in May, is seeking to diversify its income streams and expand its footprint outside its home market of the UAE. It posted its biggest ever quarterly loss of Dh2.3 billion in the second quarter after a Dh2.8bn write-down of the value of its assets by its new management team. t also swung to a Dh45 million loss in the third quarter of 2017 compared with a Dh32m net profit reported in a year-earlier period. A new chairman and vice-chairman were appointed in May after an impromptu board reshuffle saw the resignation of three directors, including the chairman Khalid bin Kalban and Mr Khouri was appointed as new chief executive in July. The developer is also launching new projects to expand its portfolio of properties, focusing on income-generating assets . Earlier in the year, the company set up Union Malls to provide retail and leisure options at its developments and launched its inaugural mall in Motor City. It also established Al Etihad Hotel Management, its wholly-owned unit to develop and manage luxury hotels and furnished residences in Dubai. The company, which already has three hotels under development in its flagship master development MotorCity, plans to extend hospitality and facilities management services for around 3,000 serviced apartments and 3,500 hotel rooms and later expand the scope of business to other developments in Dubai. The developer also launched this year an investment arm, UPP Capital Investment that will focus both on direct and indirect property investments. The IPO of ServeU is one of string of much-anticipated flotations in the UAE and beyond. Abu Dhabi strategic firm Mubadala Investment Company is planning to sell shares in Emirates Global Aluminium, one of the world’s biggest aluminium producers, while state-owned Abu Dhabi National Oil Company is expected to IPO more of its subsidiaries after listing its distribution unit in Abu Dhabi this month. The regional equity markets are also eagerly awaiting the IPO of a five per cent stake of Saudi Aramco, which could fetch as much as US$100bn, making it possibly the biggest ever share float globally. The Saudi stock exchange or Tadawul is also slated to list its shares, while Kuwait and Oman are mulling selling shares in their exchanges to the public.

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Separately, Bahraini Islamic lender Ithmaar Holding said on Monday it has received approval from the UAE’s Securities and Commodities Authority to list its shares on the DFM and is only waiting for a nod from the Central

Bank of Bahrain in order to join the Dubai exchange. Source: The National Back to Index

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DANUBE ADJUSTS PROJECT LAUNCH TO TEST VAT WATERS Wednesday, December 27, 2017 Danube Properties is waiting to gauge the initial impact of value-added tax (VAT) before launching its next affordable project in Q1 of 2018. Located in Arjan next to Miracle Gardens, the project will cater to the affordable segment of the Dubai market. "Developers need to give some time for residents to adjust to a VAT reality. In the initial stage, there will be market caution. But it will not be long term. Eventually, consumers have to pay the VAT," says Rizwan Sajan, chairman of Danube Group. Danube Properties has handed over 302 homes worth Dh270 million across Glitz Residence 1 and 2 in Studio City this year. It is also preparing to hand over 354 homes in Glitz 3 and 171 Dreamz townhouses in Al Furjan in Q1 of 2018. "The townhouses in Al Furjan are ready. We have the building completion certificate and are waiting for power connection," adds Sajan. The developer, which has a Dh3 billion+ portfolio, is open to developing more townhouses if a right plot comes by. "There is demand for a townhouse between Dh1.2 million to Dh1.5 million. There is still huge demand for affordable apartments as well. Eighty per cent of people who live in rented accommodation in Dubai wish to purchase their home," observes the chief executive. Danube Properties launched projects worth Dh750 million this year, of which only Dh100 million remains to be sold. This includes Bayz, its first luxury residential project in Business Bay, which is around 85 per cent sold out. It has awarded five construction-related contracts with a combined value exceeding Dh381 million in 2017. On its new project in Arjan, Danube is guaranteeing rental returns of up to 15 per cent. "For instance, if you purchase our studio apartment for Dh450,000, you pay Dh225,000 until handover. For the remaining Dh225,000, you can easily get rental income of Dh40,000 to Dh50,000 per year. So, the returns are in fact much more than 15 per cent," reckons Sajan. The developer still takes a cautious approach to buying land plots. "I only have the Arjan plot in my land bank now. Land prices have come down by about 15 per cent," he adds. The chairman is not perturbed about oversupply worries in the Dubai property market. He claims that although around 25,000 to 30,000 units are being launched, deliveries are not keeping pace. "In the last five years, nothing more than 14,000 to 15,000 homes have been delivered to the market. Until Expo 2020, there will be a surge in demand for housing," explains Sajan. The construction boom related to Expo 2020 is beneficial for Danube's building materials business. The development of infrastructure and several hotels in the UAE is resulting in more demand for building materials. The chairman said that Danube's building materials division reported less than 10 per cent growth, driven by business in the UAE, Oman and Bahrain. Danube Home recorded 30 per cent growth. The property development division registered smaller growth compared to 2016 because the launch of the Arjan project was moved to 2018. "It has been a good year considering the subdued market we have been operating in," concludes Sajan. Source: Khaleej Times Back to Index

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AL MAZAYA UNDERLINES IMPORTANCE OF INVESTMENT IN DUBAI'S MEDIUM HOUSING SECTOR Tuesday, December 26, 2017 Al Mazaya Holding has launched a new batch of its Queue Point and Q-Line projects in Dubai Land as part of the company's end-of-year promotion campaign. Eng Ibrahim Al Soqabi, Group CEO of Al Mazaya Holding Company, said: "Since Al Mazaya's inception, the company has been keen to diversify its business portfolio in a manner that ensures the continuity and sustainability of its operations. At the same time, the company seeks to avoid and mitigate risk factors whilst ensuring efficient geographical diversification for its projects across the GCC region and Turkey, with a number of international markets in Europe and North America now being considered." "Through its Q-branded projects, Al Mazaya has succeeded in developing an integrated residential compound that provides a modern and practical lifestyle that meets the needs of various segments of society." He said: "In response to the growing demand for ready-to-move-in units, the company has launched residential apartments as part of Queue Point's third phase and Q-Line's second phase, all of which are ready for handover. The flats correspond to various segments, including end-users and investors." Al Mazaya has completed construction of over 3,600 residential units, or 82 per cent of the total 4,400 housing units, within its Dubai Land development projects. The initiative sprawls over an area of two million square feet and a total building area of more than five million square feet spread across 48 buildings. Khaled Abdullatif, Chief Executive Officer of Al Mazaya Real Estate - Free Zone, said: "Queue Point and Q-Line have become a smart choice for those seeking medium housing units, not only in Dubai, but throughout the region. They have proved to be a real estate success that meets needs of large segments of society for permanent residence in the heart of Dubai. Across the two projects, Al Mazaya boosts real investment opportunities, ratcheting the annual percentage yield up to nine per cent." The Queue Point and Q-Line projects introduce added value on account of their strategic location in Dubai Land at the intersection of Mohamed bin Zayed Road and Al Ain Road. The strategic location of the two projects is also one of the crucial factors attracting tenants seeking competitive prices. Moreover, these suit those looking for homes that spare them the trouble of commuting and driving long hours from other cities to and from work. Source: Khaleej Times Back to Index

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DUBAI SECONDARY MARKET ACTIVITY UP DESPITE FALLING RENTAL YIELDS Tuesday, December 26, 2017 Given the surge in off-plan transactional activity in 2017, the recurring theme now that has caught the zeitgeist has been that pricing power for investors in the secondary market has been lost, given the nature of post- handover payment plans. That, plus the fact that rents (and rental yields) have fallen, given the sluggish pace of job creation as well as the increasing supply in certain areas has spelt the perfect storm for secondary market investors, which in turn has led to a slow but steady price decline with lower transactional volumes. It remains astonishing how negative sentiment feeds on itself; yet in an age of instant information, how the phenomena of real analysis continues to elude the not only the average investor, but the expert as well. Transactional activity in the ready space has risen by a modest five per cent on a city wise basis, and by double digits in certain communities; this has been despite (or perhaps partly even due to) the rise in post-handover payment plans. This suggests that a number of factors are taking place beneath the surface; (1) there is some level of arbitrage going on between the primary and secondary markets as sophisticated investors come in and capitalise on price differentials and (2) the buying that is taking place in the secondary market is being done by end-users (as the data suggests, there is very little bulk buying going on in the ready space) which is part of the home ownership variable juggernaut that takes place over decades rather than a few years. Data from banks indicate unequivocally that there is a rise in mortgage demand (which for the most part is being met). Furthermore, the price points for this demand is between the Dh1 million to Dh2.5 million category, indicating a broadening of the end-user set (albeit still from a small base). This is not to suggest that off-plan has dominated the transactional space this year (accounting for nearly 70 per cent of overall freehold transactions); however what is critical here is that not only has secondary market activity risen, it has risen despite the falling rental yields. This suggests that not only are investors still perceiving value, but that on a structural basis, there is a re-rating of risk going on where Dubai's yields will trend systematically lower as it gets increasingly mature. In point of fact, market maturity by definition implies lower cash on cash yields. Index providers remain notoriously suspect in their methodology for the most part; these issues have been long highlighted, yet it appears as if little has been done, causing sophisticated investors to rely on increasingly bespoke advisors to help navigate their way through the market. The obvious question that remains unanswered is if there is so much gloom and doom among investors, then it is curious that it happens to coincide around the same time as construction activity continues to scale new heights. In an age where communication has become instantaneous, it speaks volumes that investors alike continue to fall for the latest fads (a la Bitcoin and cryptocurrency) and choose to systematically ignore the data that suggests a nuanced outlook in other markets. Instead, it appears as if painting broad brush strokes is the order of the day. The old adage of plus ça change, plus c'est la meme chose (the more it changes, the more it's the same thing) continues to echo throughout the ages and remains particularly (if not more) relevant in today's day and age. Source: Khaleej Times Back to Index

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IT'S NOW OR NEVER FOR PROPERTY BUYERS IN DUBAI Monday, December 25, 2017 While off-plan was king in the Dubai real estate market in 2017, secondary market sales are likely to take centrestage next year, say market stakeholders. Buyers are unlikely to see too much of the sales incentives and attractive payment plans that were rolled out by extra-generous developers this year. "The main trend we will see in 2018 is that the secondary market will overtake the off-plan market in terms of deals done. With more handovers coming up of affordable housing, there will be a huge buzz and demand. What a lot of buyers will be waiting for is handover so they can secure 75 per cent finance and move forward with a purchase. Off-plan will still have a big part to play in the market, but after the acceleration in 2017 of this sector, we can expect some drop off in what is announced or launched, which is a natural way for the market to go," says Lewis Allsopp, CEO, Allsopp & Allsopp. Off-plan projects now account for approximately 78 per cent of total real estate market transactions in Dubai. It will be hard to see the off-plan market perform to the same extent as it did in 2017. Developers will find it difficult to sustain the pace of launches, offers and incentives as this year. "There are some very exciting projects coming to the market. Prices have stabilised and now is the time for buyers to strike. We will see far more transactions happening in the secondary market than we did in 2017," observes Myles Bush, CEO, PH Real Estate. Supply coming up According to the Property Monitor Supply Tracker, over 40,000 residential units are expected to be completed in Dubai in 2018. With so many units expected for completion in 2018, this may put pressure on rent and sales prices, in particular the secondary market. "There are just as many good opportunities now in the secondary market as there is off-plan. Developers very rarely lower their prices to fall in line with reduced market trends while the secondary market is more driven by sentiment and emotion. Because of this, I believe there are just as many 'good deals' to be had in the secondary market," adds Bush. Affordability of property sales prices is likely to be a recurring trend in 2018. "The current momentum in sales activity is driven by a larger proportion of end-users than before, particularly first-time buyers, who are entering the market enthused by lower prices and encouraged by attractive payment plans offered by some developers. This trend is expected to continue," says Manika Dhama, senior consultant, Cavendish Maxwell. Fence-sitters are advised to make up their minds on property investment in 2018 as several value-for-money deals abound. "As we approach 2020, the government will inject money into the market in order to finish Expo- related projects [the exhibition city and the infrastructure surrounding it]. This means a lot of companies will hire personnel and buy ready properties in order to create an asset for the shareholders. We will also see a lot of demand from expatriates who have been watching prices dropping to an all-time low and putting the down payment on their dream homes. It is going to be a 'now or never' phenomenon," reckons Arash Jalili, CEO, Unique Properties. "Now is an excellent time to invest. It's still a buyers' market and buyers should only look at good value-for-money projects. However, if you are waiting for prices to drop further, you are likely to wait a very long time. In addition,

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if you are taking a two to 10-year vision, it's far better to get on to the property ladder than spending money on rent," informs Bush.

2018 could be the perfect time to get in to the property market ahead of any price increases in the run-up to the Expo. "Over the next few years, the population will increase above its current rate of approximately five per cent a year with all the jobs the Expo creates. With this will come an increase in demand and, therefore, it's reasonable to expect some upturn in the market. One of my favourite sayings with regards to real estate is 'don't wait to buy real estate, buy real estate and wait'," explains Allsopp. More rent drops? After a marginal decline in 2017, house rents are expected to fall further next year with more supply being added to the market. "Residential supply, particularly from previously delayed projects, will be handed over, mostly located within the E311 corridor which is expected to put further pressure on rents," says Haider Tuaima, head of real estate research, ValuStrat. "In 2018, rents are going to drop further, which will result in a lot of movement in the rental market. This is very healthy for the economy because the working category of the Dubai population [almost 85 per cent] will be left with more money to spend. As more money is spent in other segments of the industry [such as restaurants and retail], more businesses will be opened and that, in turn, brings more working force to Dubai. We will see an increase in the rental market by the end of 2018 as low rents will attract a lot of people from other emirates who wish to escape traffic congestion," points out Jalili. Meanwhile, tenants are also likely to benefit from being able to pay their rents with more cheques. During 2017, the number of cheques increased, with four cheques becoming the norm and in some areas six and even 12 cheques. "In December 2016, one cheques made up 40 per cent of all transactions and four cheques made up 25 per cent whereas till date in December 2017, one cheques made up 25 per cent of rental agreements and four cheques make up 48 per cent of agreements. In 2018, this trend is expected to continue, with the number of cheques increasing beyond four," forecasts Dhama. "The typical person or family that lives and works in Dubai are not millionaires and it's good to see the housing market is adjusting to account for most of the population. This is exactly what is needed in Dubai," adds Allsopp. Regulations to look out for The implementation of five per cent value added tax (VAT) is the biggest regulatory change on the anvil next year. "I don't think this will have a significant impact on the real estate market. If anything, this should give increased confidence in the market as Dubai needs to charge some form of tax to progress and keep developing as a country and five per cent VAT is still way below what people would be paying in their home countries. In terms of real estate, the purchase price and the four per cent transfer fee are not applicable for VAT. So, while there will be extra expenses, it won't have too much impact. The transfer fee increasing from two per cent to four per cent at the end of 2013 was a much more costly introduction," Allsopp concludes. Source: Khaleej Times Back to Index

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ABU DHABI HOTEL GUESTS UP 16% IN NOVEMBER Monday, December 25, 2017 Abu Dhabi welcomed 443,000 hotel guests in November, up 16 per cent from the same period a year ago. The year so far has seen the capital playing host to 4.3 million guests, marking a 9 per cent jump over the 11-month period last year, Department of Culture and Tourism — Abu Dhabi, said in a statement on Monday. It attributed the jump in November numbers to the opening of Louvre Abu Dhabi and the Formula 1 Etihad Airways Abu Dhabi Grand Prix, adding that Abu Dhabi is on track to reach a record 4.9 million guests target by the end of December. Source: Gulf News Back to Index

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ABU DHABI BUILDING COMPLETIONS UP 3.6% IN Q3 Wednesday, December 27, 2017 A total of 1,104 buildings were completed in the emirate of Abu Dhabi during Q3 2017, a growth of 3.6 per cent from 1,066 buildings during the corresponding period 2016. The number of completed developments during Q3 increased by 16.7 per cent against Q2 2017 during which 913 buildings were completed, according to the Statistics Centre Abu Dhabi (SCAD). Industry analysts anticipate significant growth in building completions next year after a number of housing and infrastructure developments were approved. Up to 595 buildings were complete in Abu Dhabi region, accounting for 54 per cent of total buildings completed emirate-wide during Q3. Up to 491 buildings were completed in Al Ain city, making up 44.5 per cent of completed buildings in the emirate, while the rest were completed in Al Dhafra region. According to SCAD figures, residential buildings totalled 951, accounting for 87 per cent of completed buildings during Q3, in addition to 33 public facilities, 49 industrial buildings and 43 facilities, classified as residential and commercial buildings together with two agricultural buildings. Mohamed bin Zayed City in Abu Dhabi ranked first in terms of completed buildings, accounting for 26.7 per cent, followed by Bani Yas (10.9 per cent), Al Shamkha (9.1 per cent), Khalifa City (7.4 per cent), while the rest of completed units were spread over the remaining areas of the capital. The rough estimate of cost per square metre reached up to Dh2,645 for buildings ranging between 300 to 599 square metres in Abu Dhabi, and up to Dh2,118 for similarly sized buildings in Al Ain, and Dh1,876 in Al Dhafrah, with average building cost per square metre emirate-wide standing at Dh2,246. Source: Khaleej Times Back to Index

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IHG OPENS FIRST MIDDLE EAST INTERCONTINENTAL RESORT IN FUJAIRAH Tuesday, December 19, 2017 IHG (InterContinental Hotels Group), will open its first resort in the Middle East in Fujairah, it announced on Tuesday. The resort will have 190 guest rooms and suites, including 44 club rooms and 38 suites. Featuring a gym, and a spa by L’Occitane, the hotel will also have two gourmet dining options including Nama, and Drift, a casual style beach bar and grill. IHG currently has 81 hotels operating across five of the company’s brands in the Middle East region. Source: Gulf News Back to Index

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BUY A BUILDING IN SHARJAH FOR PRICE OF A DUBAI VILLA Tuesday, December 26, 2017 The Sharjah government's decision to open up property investment in the emirate to expatriates from all around the world was a momentous one in 2014. There has been no looking back since, with various master developers rolling out mega projects to tap the reasonably priced real estate market. A case in point is the Dh2.4 billion Tilal City project launched in 2014 on Emirates Road close to the Al Dhaid Interchange in Sharjah. Tilal City comprises approximately 1,855 land plots and allows investors to build units for sale, lease and personal use. Arthur Mackenzy Properties Group (AMPG), a sub-developer in Tilal City, is offering lucrative investment opportunities at attractive price points. It is selling entire residential buildings in Tilal City for Dh5 million each. This is a compelling investment proposition since you can buy an entire building in Sharjah for the price of an apartment or villa in Dubai. "The master developer of Tilal City started selling plots in 2014. We recently acquired plots from them and are selling full buildings to investors. We are targeting investors who are not keen to go through the hassle of developing plots by themselves. We are giving them full buildings with expected rental returns of 10 to 12 per cent," says Shaher Mousli, CEO, Arthur Mackenzy Properties Group. Each building comprises 12 one-bedroom apartments and 12 parking spaces. The average price per square foot for these buildings is around Dh450. The developer even tailor-makes buildings by tweaking unit specifications for clients who intend to become end-users. All utilities and infrastructure are in place in Tilal City. "The master development is complete, with infrastructure, sewage system, gas pipes, electricity and fibre optics in place. An investor is not buying a building in the middle of a desert with construction all around," the CEO observes. AMPG aims to sell 100 such buildings by the end of 2018 and 400 buildings in the next three years. The buildings are expected to generate rental yield in excess of 10 per cent for investors. "Ten per cent net returns is a conservative outlook, looking at the lowest rental denominator for a one-bedroom apartment over the past seven years in Sharjah. Tilal City is a semi-government project and has no service charges as the emirate's Municipal Authority maintains the development," adds Mousli. AMPG promises to finish construction of the buildings in two years and has attractive payment plans to offer buyers. The developer is currently negotiating profit rates with an Islamic bank for mortgage buyers. The plan is likely to involve paying 35 per cent during construction and the balance amount across 10 years after handover. "For cash buyers, we have a three-year payment plan. They can make 80 per cent of the payments linked to construction milestones during two years and 20 per cent across one year after completion. Our management unit can rent out the full building and the investor can pay the final 20 per cent with the rental returns," explains the CEO. Eighty per cent of buyers in AMPG's buildings in Tilal City are UAE nationals, followed by some Pakistani and Indian investors. "People who previously purchased from Tilal Properties are approaching us to develop buildings on their plots. We want the city to come alive as soon as possible," says Mousli.

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Tilal City is also home to what is going to be Sharjah's largest retail and leisure destination - Tilal Mall. "The Tilal Mall will cater to the 50,000 residents living in the catchment area of Tilal City. There will be a lot of demand for occupancy in our buildings," reckons the CEO. Tilal Properties has signed an agreement with the Hilton group to operate a five-star DoubleTree by Hilton Sharjah Tilal Mall. The new hotel will adjoin Tilal Mall and open in 2021. In terms of connectivity, Tilal City is only two kilometres away from the Dubai border and a 28-minute drive during rush hour to Business Bay, insists the chief executive. "We offer connectivity to one of the biggest business hubs in the world in less than 20 minutes for an affordable price," Mousli adds. US portfolio Arthur Mackenzy also offers property investment opportunities in North America, with a special focus on the state of Michigan. "The ticket price for our US properties start from $50,000 to $60,000. You can buy a villa on a 5,000 sqft plot with a tenant for Dh250,000 or Dh300,000. All our properties in the US generate 10 to 14 per cent net returns," says the CEO. Buyers of these properties are expatriates from the GCC, India and Pakistan. "We have been selling US properties in the UAE since 2010. You can sign a five-year management agreement with us and collect the rental proceeds from our Dubai office." AMPG embarked on its property portfolio from Sharjah almost 20 years ago and moved into the development business in 2012. It has developed a project in Jumeirah Village Triangle in Dubai and has an ongoing one in Business Bay as well. Source: Khaleej Times Back to Index

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FIRST SHOPPING MALL OPENS IN AL MADAM Wednesday, December 27, 2017 Al Badayer Shopping Mall has been opened in the town of Al Madam on the Dubai-Hatta road, the first purpose- built air-conditioned shopping mall in Sharjah’s Central Region. Less than an hour’s drive from Sharjah city and 20 minutes drive from Mleiha, Al Madam has recently become a focus for economic development and public infrastructure projects. All 27 retail units at Al Badayer Shopping Mall have been leased, although the facility is being opened to the public in two phases. Phase two of the mall is expected to be opened in February 2018, which will be dominated by a large camping equipment, sporting goods and outdoor supplies retailer. Sharjah’s retail sector is currently enjoying a period of strong growth, with more than 4 million square feet (370,000+ sqm.) of new mall space expected to be added to the sector by the year 2020. Projects include the expansion of existing shopping malls in Sharjah city, two new mega-malls covering over 1 million sq. ft. outside the city area, plus local shopping centres in the emirate’s central and eastern regions. The Government of Sharjah is currently implementing a 25 year strategic development plan for its Central Region, which includes the towns of Al Dhaid, Mleiha and Al Madam. The plan aims to enhance the quality of life, prosperity and job opportunities for the residents of region. According to the 2015 Sharjah Census, Al Madam has 11,120 residents, accounting for 0.8 percent of the emirate’s population. Source: Sharjah Update Back to Index

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SHARJAH’S ACHIEVEMENTS SET STAGE FOR FURTHER ECONOMIC GROWTH Thursday, December 28, 2017 Improving oil prices, narrowing deficits and continued public spending are expected to support economic growth averaging 2.5 percent across the GCC next year, according to Moody’s Investors Services, while the credit agency predicts 2.7 percent real GDP growth for Sharjah in 2018. In Sharjah’s case, a wide range of achievements have helped it maintain stability in the face of regional economic uncertainties and position itself for future growth. Sharjah’s diversified economy, with no single sector comprising more than 20 percent of GDP, has helped cushion the local economy from oil price volatility. Supported by government policies aimed at fostering private-sector growth, the emirate’s diversification has helped ensure continued investment into the economy. Aviation, construction, healthcare, manufacturing, real estate, retail and distribution and tourism were stand-out sectors during the past year. 2017 saw investment across multiple sectors of Sharjah’s economy, including government-backed initiatives to encourage global firms, SMES and local startups to locate in the emirate. ‘Invest in Sharjah’, the Sharjah FDI office, expects foreign investment to exceed AED 1 billion (US$ 272m) by year-end. New free zone initiatives Launching Sharjah Research Technology and Innovation Park (SRTIP), Sharjah Media City Free Zone (Shams) and Sharjah Publishing City (SPC) in 2016, this year saw the opening of the new 40,000 square metre (430,560 sq. ft.) SPC and royal approval for the master plan for Sharjah Healthcare City. The creation of these new free zones forms part of a wider strategy to help prepare Sharjah’s economy for the fourth industrial revolution by attracting innovative, knowledge-led ventures to Sharjah. Sharjah’s largest free zone, Hamriyah Free Zone Authority, launched ‘Sharjah Food Park’, a regional hub for the Middle East and North Africa’s multi-billion dollar food industry, covering a total area of 11 million square metres (118 million square feet). In November, leading UAE halal food manufacturer Al Islami Foods opened its biggest food production facility in the Middle East in the zone. Startup and entrepreneurship initiatives A number of government organisations have initiatives to help make it easier to establish new businesses in the emirate and encourage startups, including the formation of Sheraa, the Sharjah Entrepreneurship Centre. Sharjah’s efforts to welcome startups and help foster entrepreneurship were celebrated at the first Sharjah Entrepreneurship Festival in November, the largest such event in the UAE. Among other news from the festival, the Government of Sharjah announced plans to award 10 percent of all digital transformation projects to startups and SMEs (small and medium-sized enterprises), while Sharjah-headquartered diversified holding company Crescent Enterprises announced a new $150m venture capital division. Real estate sector growth 2017 proved to be a pivotal year for Sharjah real estate as new master-planned property developments drove new investment in the sector and paved the way for future growth for years to come. Sharjah Real Estate Registration Department registered a 46 percent increase in the number of real estate sales transactions during the first six months of the year and announced a 37.2 percent increase in the value of real estate transactions

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made in the third quarter of 2017. According to global property consultancy Cluttons, rising demand pushed Sharjah villa rental prices up by 11.7 percent during the first six months of 2017.

Major real estate projects currently in development include the 14 million square foot Al Zahia Community, the 25 million square foot Tilal City, plus several new master-planned projects announced during this year. New developer ARADA announced the 5 million square foot Nasma Residences community in March and the AED 24 billion ($6.5 b) 2.2 square kilometre Aljada urban residential district in September. Meanwhile, Alef Group announced a AED 3 billion (US$ 820m) pedestrian-friendly residential development called ‘Al Mamsha‘ planned for Sharjah city’s Al Juraina area. Tourism development Sharjah’s hotel sector has continued to expand across multiple segments of the business, fueled by growth in revenues, local economic development and innovation in the tourism sector. According to Sharjah Investment and Development Authority (Shurooq), Sharjah hotel revenues have been growing at 12 percent per annum and are expected to reach AED 830 million (US$ 227m) by the end of 2019. More than US$400 million of new Sharjah hotel projects have been announced during 2017 and the emirate’s hotel pipeline now includes properties from Accor, Anantara, Hilton, Jannah Hotels and Resorts, Sheraton and Shurooq’s Sharjah Collection. This year has witnessed some of Sharjah’s biggest tourism infrastructure and mixed-use real estate developments announcements in the emirate’s history, including a 3.3 kilometre city beachfront development along Sharjah city’s Al Montazah Road; a Sharjah Waterfront Bicycling and Jogging Path that is planned to connect the neighbouring emirates of Ajman and Dubai; the 364,000 square meter Maryam Island project; the 66,302 square metre Al Khan Village Resort; and Kalba Waterfront Mall. Shurooq also announced an AED 15 million (US$ 4.1m) extension to Al Badayer Oasis desert leisure and tourism development, bringing its total investment in the project to AED 60 million (US$ 16.4m). 2017 also marked the return of Russian tourists in high numbers. The emirate’s inbound Russian tourism market was hard hit by the drop in value of the Russian currency in 2014, but the hotel sector saw a 94 percent increase in the number of Russian guests during the first half of 2017, according to Sharjah Commerce and Tourism Development Authority (SCTDA). Hotel’s registered a total of 885,000 hotel guests during the first six months of the year, with. China, India, Oman, Russia and Saudi Arabia proving to be the biggest inbound tourism markets. Sharjah International Airport expansion The biggest aviation news of the year was the government approval of a US$400 million (AED 1.46b) budget for the expansion of Sharjah International Airport in February. US engineering consultancy Parsons Overseas Limited was then appointed to manage the project, which will increase airport capacity from 8 to 18 million passengers a year. In July, Sharjah Airport Authority signed agreements with Gama Support Services, a division of global business aviation services company Gama Aviation, to build and operate a new AED 110 million (US$ 30m) purpose-built, integrated business aviation complex and provide ground handling services to business jet owners, business jets, and crew members. Gama took over the handling of all business aircraft the airport in January 2012 and opened a private terminal in 2014. Sharjah International Airport handled more than 11 million passengers during 2017, with new commercial routes being launched by Air Arabia, Air India Express, Indigo and Rossiya Airlines. Healthcare & medical projects In addition to the greenlighting of the 2.43 million sqm. (26m sq. ft.) Sharjah Healthcare City masterplan, 2017 has been a busy year for the emirate’s healthcare and medical sector. Some of this year’s highlights include: the completion of the acquisition of Al Zahra Hospital Sharjah by NMC Health, a leading UAE-based healthcare

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provider, for US$560 million (AED 2.1b) in March; plans announced by Ahalia Medical Group to build a 100-bed general hospital in Sharjah Healthcare City (also March); the opening of Aster DM Healthcare’s largest hospital in the United Arab Emirates, the new 120-bed Medcare Hospital Sharjah, in April; and the signing of an agreement between Canada and Sharjah to bring Canadian expertise to the emirate to develop a AED 1 billion (US$ 274m) speciality hospital in Sharjah focusing on paediatrics, obstetrics and gynaecology. Continued expansion of retail sector With an estimated 4 million square feet (370,000+ sqm.) of new shopping mall space in development, including both new malls and mall expansion projects, Sharjah’s retail sector remains one of its fastest growing. The past twelve months saw the majority of work completed for the AED 260 million (US$70.8m) expansion of City Centre Sharjah; the master-plan for the 2.2 million square foot Tilal Mall was completed by developer Tilal Properties; while developer Majid Al Futtaim broke ground for the construction of the 2 million square metre (21.5 million sq. ft.) City Centre Al Zahia in Sharjah. Meanwhile, new shopping mall projects were announced in conjunction with Aljada, Al Mamsha and Nasma Residences real estate developments and Kalba Eco-Tourism Project (being developed by Shurooq). Providing for Sharjah’s growing energy needs Supporting the emirate’s growing demand for electricity, a number of key initiatives were announced during 2017. In May, Sharjah Electricity and Water Authority (SEWA) signed a gas sales agreement guaranteeing the supply of natural gas for power stations in Sharjah. SEWA also signed its first Build-Operate-Transfer (BOT) contract for the development of a desalination plant in Kalba. Now the authority is planning to use a BOT model for the development of its largest power station in Hamriyah. In a major step towards leveraging renewable resources, Bee’ah, Sharjah’s environmental management company, and Masdar, Abu Dhabi’s renewable energy company, formed a joint venture that will develop the Middle East’s first waste-to-energy plant in Sharjah. Bee’ah also signed an agreement with SEWA to buy electricity generated by the plant. Sharjah on the world stage 2017 has been a busy year for global trade, investment and tourism promotion, with delegations from Sharjah attending many key international events in Asia, Europe, the Middle East and North America. In May, Sheikha Bodour bint Sultan Al Qasimi, chairperson of Sharjah Investment and Development Authority was chosen to chair the World Economic Forum‘s Regional Business Council (RBC) for the Middle East and North Africa (MENA). At home, Sharjah hosted the first Euromoney Emirates Conference in May and the third edition of the Sharjah FDI Forum in September, bringing global attention to the emirate’s economic development and investment opportunities. With 44 percent of next year’s AED 22.1 billion (US$ 6 billion) government budget being allocated to economic development, Sharjah is expected to continue investing strategically in developing key industry sectors during 2018. Source: Sharjah Update Back to Index

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BONDS STRUCTURED AROUND US HOME LOANS ARE HOT PROPERTY Wednesday, December 27, 2017 One of the best bond trades of 2018 might be one of the top from this year: betting that US homeowners won’t default on their mortgages. Money managers piled into relatively new Fannie Mae and Freddie Mac bonds known as “credit risk transfer” securities in 2017, in part because they are floating rate, a boon when the Federal Reserve is projecting three rate hikes in the coming year. Investors who bought sub-prime mortgage bonds after the housing crisis for pennies on the dollar are now getting repaid about $80 billion (Dh294 billion) of principal a year, and are looking to reinvest their funds somewhere. “It’s been an incredible year for the space,” said Dave Goodson, who heads mortgage-backed securities and related bonds at Voya Investment Management. “It’s becoming better and better established. We like that.” The riskier credit-risk transfer debt returned more than 10 per cent this year through December 1, according to Bank of America Corp. data, outpacing 7.2 per cent returns on US high-yield bonds and 5.9 per cent for investment-grade corporate securities. Next year, portions of the bonds could return 3 per cent on top of government debt, according to Morgan Stanley analysts. They call CRT bonds “the place to be” in 2018, and list parts of the securities among their top buys for the year for structured finance globally. Technical reasons Investors buying these securities are among the first to suffer losses when homeowners fail to make their payments. But with unemployment at just 4.1 per cent in November and the US economy growing at an annualised rate faster than 3 per cent, it seems reasonable to bet that prime borrowers will continue to pay their home loans, Goodson said. He prefers the securities to commercial real estate or corporate debt, which may face downturns sooner. There are also technical reasons for the bonds to perform well next year. Fannie Mae and Freddie Mac said they probably will sell around $13 billion of credit-risk transfer securities in their main programmes next year. If even a fraction of the $80 billion of sub-prime mortgage bond principal that investors are expected to get back in 2018 goes into this market, prices could rise, said Michael Canter, who oversees mortgage bonds, asset-backed securities and related debt at AllianceBernstein. “As legacy RMBS winds down, there are more investors looking for assets they can purchase to get exposure to residential credit,” Canter said. “This is the most obvious way to do that.” Fannie Mae and Freddie Mac began issuing credit risk transfer securities in 2013 as a way to offload some of their risk onto taxpayers. The two companies guarantee homeowners’ mortgage payments against default, and when the US took over the failing enterprises in 2008 during the financial crisis, their obligations explicitly became the government’s. Previously, taxpayers backing was only implicit. Here’s how it works: Fannie Mae and Freddie Mac sell CRT bonds tied to a pool of home loans that have been packaged into mortgage-backed securities they guarantee. The Fannie Mae notes are called Connecticut Avenue Securities, while Freddie Mac’s are Structured Agency Credit Risk notes.

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If the underlying loans sour, CRT holders’ principal goes toward paying back mortgage bond holders. The way the deals are put together, Fannie Mae and Freddie Mac are usually the first to take losses, then bond holders take some portion of subsequent losses, and the two companies take whatever losses remain after that. Another possible tailwind for the bonds is that Fannie Mae and Freddie Mac are separately considering changing the structure of the securities to make them more appealing to real estate investment trusts. REITs have bought about 10 per cent of the riskier mezzanine portion of CRT bonds issued by Fannie Mae this year, and as much as 23 per cent of slices of Freddie Mac offerings this year, according to data from the GSEs. Hunting for opportunities The REIT changes would shift the way they designate and document loans, which would also reduce taxes on the securities for overseas investors. That may spur demand from funds domiciled abroad. The securities’ successful year has some investors hunting for opportunities elsewhere. Gene Tannuzzo, a money manager at Columbia Threadneedle, which manages $484 billion, said that after watching the bonds rally, he’s been locking in gains on the securities and looking at opportunities in non-performing and re-performing loan market instead. “It’s too tight,” Tannuzzo said. “We felt a little more comfortable earlier on.” Investors’ faith in the product was tested earlier this year during Hurricane Harvey and Hurricane Irma. Jittery holders sparked a sell-off across the debt, though most of the bonds have since bounced back. Payments reports on the bonds in 2018 may calm investors, according to Bank of America analysts. The bank expects hurricane-related losses to total less than 0.02 per cent on the bonds because most affected homes had wind and flood insurance. “Given global warming, I think the hurricane season is a little scary for this sector,” said Tracy Chen, head of structured credit at Brandywine Global, which manages $74 billion. Even so, she says she’s expecting another robust year for the securities, assuming fixed-income assets generally remain strong. “If high-yield and emerging markets continue to tighten, I don’t see any reason CRT can’t continue to tighten as well,” Chen said. Source: Gulf News Back to Index

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CHINESE COURT AUCTIONS SKYSCRAPER FOR $84M Tuesday, December 26, 2017 A Chinese court is auctioning a skyscraper on the country’s largest e-commerce website — with a sky-high starting price of 553 million yuan ($84.2 million, Dh309.67 million). The 39-floor building in Taiyuan, northern Shanxi province, along with the land on which it sits, goes on the block on January 2 on Taobao, Alibaba’s e-commerce platform. Construction on the skyscraper began in 2006. Standing 156 metres high and with over 76,000 square metres of floor space, it was originally designed to be a hotel, state media Xinhua reported on Monday. But the project was suspended due to lack of funding after major construction work was completed in 2010, according to a statement by the Shanxi Provincial Higher People’s Court, Xinhua said. Photos of a dimly-lit underground parking lot and unfinished building interior with dusty floors piled with construction materials were posted by the court on the auction page. Almost all Chinese courts have set up accounts on Taobao’s judicial auction platform for more efficient and transparent handling of assets seized in lawsuits, according to Xinhua. Apartment buildings, cars, confiscated jewellery and mobile phones are all being auctioned by authorities on the e-commerce platform. In November, a 28-floor building was put up for auction at a starting price of 219 million yuan by a local court in northeastern Zhejiang province. But the auction was not successful as no one bid for the item. Source: Gulf News Back to Index

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MALDIVES PROMISES HIGH RETURNS TO FOREIGN INVESTORS Tuesday, December 19, 2017 Apart from the serene beaches and blue lagoons, Maldives is sending a message to the world: It’s open for business. Through presenting its multi-million projects to further develop the infrastructure, mainly the international airport, the South Asian Island country is seeking more foreign investments, declaring it as the “most competitive investment destination” in South East Asia, its economic minister said. Mohammad Saeed, Minister of Economic Development in the Republic of Maldives, said his government is not only seeking stronger economic relations with UAE — its biggest trade partner, but also trying to tell the world that it is thriving. Speaking to Gulf News in an interview on the sidelines of an investment forum in Dubai on Monday, Saeed said his country’s participation is not just for networking with business community in UAE. “But [it also wants] to convey to the world that Maldives is open for business and Maldives continues to thrive, achieving the development milestones set by President Yameen when he assumed power in 2013.” He added: “We believe that by presenting our potential projects to the international audience using Dubai as a platform, we can have a wider coverage... what exactly we are doing back home as far as investments are concerned.” To cite an example of the positive economic environment, the per capital GDP (gross domestic product) in the Maldives has almost doubled to $12,000 in a span of four years from nearly $6,000 in 2013. This comes as a result of several factors, including government plans and the arrival of foreign investments, Saeed said. The UAE is the biggest trade partner of Maldives, with nearly “40 per cent” of imports from the country in the form of petroleum and non-petroleum products, the minister said. It is estimated that Maldives imports more than $150 million of non-petroleum products from the UAE every year, including machineries, food and beverages, construction materials and other key items. The fact that the UAE is connected with the Maldives with several flights a day by Emirates and Etihad certainly helps. The two airlines offer the European tourists a “very frequent and convenient routes to visit the Maldives,” Saeed noted. Nearly 40 business leaders from the Maldives representing some of the leading companies in the South East Asian country accompanied Saeed to the forum. Investment sectors Commenting on the potential investment sectors from the UAE and the Maldives, Saeed said: “Tourism, of course, is our key attraction. [And] real estate, transportation, communication, aviation and renewable energy are [attractive businesses] in this part of the world, especially in the UAE.” He added that renewable energy is also a key emerging sector in the Maldives, and that solar energy and renewable energy can be crucial areas of investment. Further, Maldives’ several measures to attract foreign investments include high return on investments in tourism, allowing 100 per cent foreign ownerships, avoiding red tape and regulations that block people from doing effective business, according to the minister.

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Infrastructure

Currently, “the size of the portfolios that were given registration in the last four years for a span of five years are estimated at $14 billion,” he said. At the same time, the government itself is implementing a number of projects to facilitate the foreign investments pooling. They include allocating nearly $1 billion to upgrade the international airport and build a second runway capable of receiving the giant A380 aircraft. The current one is capable of receiving the 777-300 aircraft. The government of Maldives has also implemented “two state-of-the art submarine cables, with 100 per cent coverage”. “Every island is capable of using phones and internet — the most effective communication in any small island state. We currently have 1.2 million tourist arrivals a year. And we are targeting seven million tourists in another 5-7 years,” Saeed said. Maldives comprises 19 atolls with a total of 1,200 islands. So far, the Chinese tourists constitute, for the seventh consecutive year, the highest number of tourists, while the Singaporeans, as a group, are the biggest foreign investors. Source: Gulf News Back to Index

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HOLIDAY SHOPPERS BREAK SPENDING RECORDS, SALES UP 4.9% Wednesday, December 13, 2017 After another year of bankruptcies and gloomy reports of dying malls, retailers are at least ending 2017 on a high note — and their prospects are looking up for 2018. Retail sales were up 4.9 per cent this holiday season, the largest year-over-year gain since 2011, according to Mastercard’s SpendingPulse Report, which tracked sales activity across all payment types from November 1 to December 24. The report said the increase represents a “new record for dollars spent” but did not give a dollar amount. Another research firm, Customer Growth Partners, said that from the start of the holiday season to Christmas Eve, shoppers spent $598 billion (Dh2.2 trillion), up from $565 billion for the same period last year. Counting retail’s “second season” (the week from Christmas to New Year’s), total sales for the holiday shopping season is on track to reach $671 billion, firm President Craig Johnson said. Shoppers in the US were also spending big well before the Republican tax bill promising tax cuts was passed, according to reports analysing holiday spending. Economists say the healthy retail sales numbers are undergirded by strong national employment figures. The jobless rate of 4.1 per cent in November was the lowest since December 2000. That trend has given the Federal Reserve, which recently described the US economy as “rising at a solid rate,” the confidence to raise interest rates three times this year. The most recent increase December 13 lifted the benchmark interest rate a quarter point to a range of 1.25 per cent to 1.5 per cent. “People feel much more secure in their jobs, and they’re willing to spend,” Johnson said. There are indications, however, that Americans are stretching their finances for their holiday shopping splurge. Personal spending rose 0.6% in November, but the savings rate dropped to 2.9 per cent from 3.2 per cent in October. “It looks like consumers went to the bank and drew on their savings to fund this year’s holiday spending, betting those tax cuts from Washington will refill their coffers early in the New Year,” Chris Rupkey, chief financial economist at MUFG Union Bank in New York, said last week. Across categories Much of those savings were spent online this year, with online retail sales up 18.1 per cent compared with 2016. This year’s Cyber Monday was the largest online sales day in history, with Adobe, which also collects retail data, reporting $6.59 billion in sales in a single day, a 16.8 per cent increase from last year. From November 1 to November 27 alone, US shoppers spent $50 billion online. Adobe predicted that online shopping would exceed $100 billion by Christmas. Overall, sales of electronics and home appliances were up 7.5 per cent, home furniture and furnishings were up 5.1 per cent, and jewellery sales were up 5.9 per cent. Across every category, whether it was discount stores, big box or speciality department stores, everybody was doing better, or at least “less worse,” Johnson said.

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Strong sales were reported across the retail industry, with the S&P 500 Retail Index hitting a record of 1,740.74 on Tuesday. Retailers also received a bump in stock price: Wal-Mart’s shares reached an all-time high of $98.21 on

Thursday, up from $87.94 at the start of the holiday season. Nordstrom shares closed at $47.54 on Thursday, up from $39.94 on Nov. 1. Apple shares rose to $175.01 on Thursday, up from $166.89. Amazon, the largest online retailer in the US, did not report how much consumers spent on its e-commerce platform but said in a statement that it had a “record holiday shopping session.” In one week during the holiday season, more than 4 million people around the world started either the trial or paid version of Prime, Amazon’s subscription membership. Globally, more than 1 billion items were ordered from the e-commerce giant this holiday season. From Thanksgiving to Cyber Monday, shoppers bought more than 140 million items. Boost to retail industry Amazon’s stock was $1,168.36 on Thursday, up from $1,103.68 at the start of the holiday season. Pete Madden, a director at consulting firm AlixPartners, said the across-the-board 4.9 per cent growth in sales was above expectations and a much-needed boost for a retail industry that had struggled the last holiday season. “For retailers, the holiday makes or breaks their year,” Madden said. “A good holiday can carry you through quite a few months. For companies on the edge, a bad holiday is where you see the Chapter 11s.” Madden said large investments in online shopping by major retailers was probably starting to pay off — especially in the face of growing competition from Amazon. The first hint that the holiday season was going to be good for retailers was after Black Friday, Madden said. “Sometimes big sales are followed by a lull,” he said. “All indications are strong sales are continuing. Retailers should have confidence going into 2018.” Source: Gulf News Back to Index

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INDIAN DEVELOPER HDFC'S $1BN FUND, BACKED BY ABU DHABI REACHES FINANCIAL CLOSE Friday, December 22, 2017 Indian mortgage lender Housing Development Finance Corporation's (HDFC) investment advisory arm has reached financial close on its billion-dollar affordable real estate fund, which has Abu Dhabi Investment Authority (ADIA), the world's second largest sovereign wealth fund as a key backer. HDFC Capital Advisors said on Thursday that it had raised $550 million in initial closure on its second affordable housing fund, which will be combined with an earlier fund launched in 2016 to create a $1bn investment pool. The newly-created fund is set to have a development footprint of 75 million square feet across affordable and mid-income residential projects across 15 Indian cities over the period of two to three years, HDFC said in a statement. "These funds will play a significant role in progressing towards the 'Housing for All by 2022' objective of the government," said Deepak Parekh chairman at HDFC. "Affordable housing will not only act as a growth driver for the real estate industry in India but will also be a catalyst for GDP growth. The current lack of flexible, long-term capital is one of the key challenges facing developers of affordable and mid income housing in India," he added. Affordable housing remains an underserved segment within India's lucrative real estate industry. The world's second most populous state is pushing through an ambitious agenda to bridge the housing gap by building 20 million affordable homes in urban areas by 2022 as well another 10 million rural parts of the country by 2018. However, the targets remain far from realised with a mere 300,000 being built so far under the government scheme implemented in 2015. "India’s housing market presents a compelling investment opportunity driven by the country’s continued economic growth and backed by supportive government initiatives," said Khadem Al Remeithi, executive director, real estate and infrastructure department at Adia. "Our investment in HDFC’s platform aims to meet the strong demand for early-stage financing of housing projects and encourage the continued growth of the affordable and mid-income residential sector," he added. Adia, whose portfolio size remains undisclosed has made significant inroads in the Indian real estate sector this year. In October, Adia's wholly-owned subsidiary signed a $1 billion investment agreement with a India's National Investment and Infrastructure Fund to invest in energy, transportation and infrastructure-related sectors. The Abu Dhabi fund has increasingly pivoted towards the east, increasing its portfolio in China and India, from where it expects continued growth. Adia remains invested in a number of asset classes, including fixed income and equities in India. It was also reported in July to be in talks to buy 49 per cent of the Rajiv Gandhi Hyderabad International Airport, which serves the capital and IT-hub of the eastern Indian states of Andhra Pradesh and Telangana. "India’s housing market presents a compelling investment opportunity driven by the country’s continued economic growth and backed by supportive government initiatives. Our investment in HDFC’s platform aims to meet the strong demand for early-stage financing of housing projects and encourage the continued growth of the affordable and mid-income residential sector." Source: The National Back to Index

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INDIA TO BECOME WORLD'S FIFTH LARGEST ECONOMY Tuesday, December 26, 2017 India looks set to leapfrog Britain and France next year to become the world's fifth-largest economy in dollar terms, a report showed on Tuesday. The Centre for Economics and Business Research (Cebr) consultancy's 2018 World Economic League Table painted an upbeat view of the global economy, boosted by cheap energy and technology prices. India's ascent is part of a trend that will see Asian economies increasingly dominate the top 10 largest economies over the next 15 years. "Despite temporary setbacks... India's economy has still caught up with that of France and the UK and in 2018 will have overtaken them both to become the world's fifth largest economy in dollar terms," said Douglas McWilliams, Cebr deputy chairman. McWilliams said India's growth had been slowed by restrictions on high-value banknotes and a new sales tax, a view shared by economists polled by Reuters. China is likely to overtake the United States as the world's No.1 economy in 2032, Cebr said. "Because the impact of President Trump on trade has been less severe than expected, the USA will retain its global crown a year longer than we anticipated in the last report," the report said. While Britain looks set to lag behind France over the next couple of years, Cebr predicted that Brexit's effects on Britain's economy will be less than feared, allowing it to overtake France again in 2020. Russia was vulnerable to low oil prices and too reliant on the energy sector, and looked likely to fall to 17th place among the world's largest economies by 2032, from 11th now. A Reuters poll of economists in late October suggested global economic growth in 2018 looks likely to quicken slightly to 3.6 per cent from 3.5 per cent this year - with risks to that forecast lying on the upside. Source: Khaleej Times Back to Index

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NEW HOME SALES IN U.S. HIT 10-YEAR HIGH IN NOVEMBER Tuesday, December 26, 2017 According to the U.S. Department of Housing and Urban Development and the U.S. Census Bureau, sales of newly built, single-family homes in November 2017 rose 17.5 percent to a seasonally adjusted annual rate of 733,000 units from a downwardly revised October reading. This is the highest sales pace since July 2007. Year-to-date, new home sales are 9.1 percent above their level over the same period last year. "The November sales numbers are consistent with our reports of growing builder confidence, particularly big gains in traffic to new home sites," said Granger MacDonald, chairman of the National Association of Home Builders. "Builders are encouraged by the increased demand for housing and expect business to continue to improve in 2018." "Tax reform legislation should boost economic growth, setting the stage for continued strengthening of the housing market," said NAHB Chief Economist Robert Dietz. "Job market growth, expected wage increases and tight existing home inventory will also help the market move forward next year." The inventory of new homes for sale was 283,000 in November, which is a 4.6-month supply at the current sales pace. New home sales increased in all four regions. Sales rose 31.1 percent in the West, 14.9 percent in the South, 9.5 percent in the Northeast and 6.9 percent in the Midwest. Source: World Property Journal Back to Index

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With over 30 years of Middle East experience, VALUATION & ADVISORY Asteco’s Valuation & Advisory Services Our professional advisory services are conducted by suitably qualified personnel all of whom have had Team brings together a group of the Gulf’s extensive real estate experience within the Middle East and internationally. leading real estate experts.

Asteco’s network of offices in Abu Dhabi, Al Ain, Dubai, Our valuations are carried out in accordance with the Northern Emirates, Qatar, and the Kingdom of Saudi Royal Institution of Chartered Surveyors (RICS) and Arabia not only provides a deep understanding of the local International Valuation Standards (IVS) and are undertaken by appropriately qualified valuers with markets but also enables us to undertake large instructions where we can quickly apply resources to meet extensive local experience. clients requirements. The Professional Services Asteco conducts throughout Our breadth of experience across all the main property the region include: sectors is underpinned by our sales, leasing and investment teams transacting in the market and a wealth • Consultancy and Advisory Services of research that supports our decision-making. • Market Research • Valuation Services

John Allen BSc MRICS Director, Valuation & Advisory SALES +971 4 403 7777 Asteco has established a large regional property sales [email protected] division with representatives based in UAE, Saudi Arabia, Qatar and Jordan.

Our sales teams have extensive experience in the Jenny Weidling BA (Hons) negotiation and sale of a variety of assets. Manager – Research and Advisory +971 4 403 7789 LEASING [email protected] Asteco has been instrumental in the leasing of many high-profile developments across the GCC.

ASSET MANAGEMENT Asteco provides comprehensive asset management services to all property owners, whether a single unit (IPM) or a regional mixed use portfolio. Our focus is on maximising value for our Clients.

OWNER ASSOCIATION Asteco has the experience, systems, procedures and manuals in place to provide streamlined comprehensive Association Management and Consultancy Services to residential, commercial and mixed use communities throughout the GCC Region.

SALES MANAGEMENT Our Sales Management services are comprehensive and encompass everything required for the successful completion and handover of units to individual unit owners.