News Brief 14

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NEWS BRIEF 14

SUNDAY, 2 APRIL 2017

RESEARCH DEPARTMENT

ASSET MANAGEMENT SALES LEASING VALUATION & ADVISORY SALES MANAGEMENT OWNER ASSOCIATION

REAL ESTATE NEWS

UAE/ GCC

AUDITOR WARNS ON DRAKE & SCULL’S FUTURE AS CONTRACTOR BREACHES TERMS OF BANK LOANS COMMERCIAL PROPERTY SALES SUBJECT TO VAT FROM NEXT YEAR – BUT RESIDENTIAL IS EXEMPT MORE REAL ESTATE INVESTMENT TRUSTS EXPECTED IN UAE ARABTEC CHIEF SAYS A SHAKE-UP IS ON THE WAY DUBAI DEVELOPERS DOWN WITH NEW LAUNCHES THE INAUGURAL EDITION OF ‘FUTURE CITIES SHOW’ 2017 TO KICK OFF ON SUNDAY THE MODERN WORKSPACE WHAT’S YOUR PREFERRED INVESTMENT ASSET? SMES AT ANNUAL INVESTMENT MEETING IN DUBAI PITCH FOR ACCESS TO CAPITAL DUBAI MOTORCITY DEVELOPMENT TO CREATE NEW MOTORSPORT BUSINESS PARK AT DUBAI AUTODROME JAFZA RENTS FALL AS DEMAND FOR WORK SPACES DROPS OFF MARINA GATE APARTMENTS IN DUBAI DAZZLE ONCE THE DUST CLEARS EMIRATES REIT PROPERTY PORTFOLIO HOLDS STEADY EVEN AS DUBAI VALUES FALL RENT DECLINES 'NOT ENOUGH' TO MAKE DUBAI HOUSING AFFORDABLE TO EVERYONE NEW FIVE-STAR HOTEL TO OPEN IN BUR DUBAI DUBAI’S GO FOR SIZE APPROACH PAYS IN INDUSTRIAL REALTY MUTED DEMAND IN DUBAI’S OFFICE SECTOR ASK PW: TAKING THE DISPUTE OUT OF RENT DISPUTES DUBAI PROPERTY LAUNCHES NEW APARTMENT PROJECT, MUDON VIEWS, IN DUBAILAND DUBAI NON-OIL TRADE VOLUMES FIRM RTA SAYS NEW DH1.2BN DUBAI ROAD CONTRACTS WILL IMPROVE LINKS TO JEBEL ALI PORT

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REAL ESTATE NEWS

ABU DHABI ALDAR AWARDS DH500 MILLION DEVELOPMENT CONTRACT FOR MAYAN ABU DHABI INTERNATIONAL AIRPORT WELCOMES OVER 1.9M PASSENGERS IN FEBRUARY FUTURE OF INDUSTRY: ZONESCORP TO OFFER SMES WAREHOUSE LEASES IN ABU DHABI NEW AUTOMOTIVE CITY PLANNED FOR SITE WEST OF ABU DHABI NORTHERN EMIRATES SHARJAH’S NEW INDUSTRIAL CLUSTER GETS INTO SHAPE INTERNATIONAL QATAR’S UK INVESTMENT TO SURGE DESPITE BREXIT LONDON LUXURY HOMEOWNERS TURN TO AIRBNB AS SALES SLOW AYIA NAPA MARINA: LUXE HOMES AND EU CITIZENSHIP 'LONGER' THAN BURJ KHALIFA?: NEW TOWER AIMS TO BREAK RECORD GCC REALTY INVESTORS’ GLOBAL HUNTING GROUND NEW FINANCE HUB A GIFT FOR GUJARAT

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MOTORCITY DEVELOPMENT TO CREATE NEW MOTORSPORT BUSINESS PARK AT DUBAI AUTODROME

Tuesday, March 28, 2017

Work is under way on a new hub for the UAE motorsport industry as part of the commercial transformation of MotorCity and its showcase venue, Dubai Autodrome.

Developed by Union Properties and Multilink Contracting, the 6,000 square metre Motorsport Business Park, located in the centre of the 5.39 kilometre race circuit, will bring together all of the major UAE motorsport businesses and racing teams.

Due for completion in December 2017, the project will complement the recently established Grandstand Retail Plaza, which accommodates an array of shops overlooking the main straight at Dubai Autodrome, and The Ribbon Mall.

The new Motorsport Business Park will house multiple companies and teams in units of 200 and 420 square metres, and even before ground was broken on site recently the level of demand for space has made an extension likely.

Ryan Trutch, Dubai Autodrome Special Projects Manager, said: "This bespoke facility will be a game changer for the motorsports industry in Dubai as it brings the major stakeholders involved in UAE motorsports together under one big roof. It will give these businesses easy access to our circuit, whether for testing or customer experiences."

Richard Birch, Dubai Autodrome General Manager, added: "We have been overwhelmed by interest in the new project and have even contemplated a phase two for 2018.

"But first we want to concentrate on getting phase one built. We had to overcome some frustrating delays in the past eight months, but I’m very pleased to say we have finally broken ground on the project and moving forward quickly." Source: Emirates Business 24/7 Back to Index

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JAFZA RENTS FALL AS DEMAND FOR WORK SPACES DROPS OFF

Thursday, March 30, 2017

Rents in Jebel Ali Free Zone district have fallen by a fifth over the past two years as Dubai’s slowing economy is prompting mid-size firms to shelve requirements for warehouses and logistics space.

According to the property broker Knight Frank, rents for the best warehouses in Jafza have fallen from Dh44 per square foot at the peak of the market in 2014 to Dh35 per sq ft at the end of 2016 as demand for Dubai’s most sought-after industrial and logistics space has fallen.

In its latest industrial market report, the broker blames "economic headwinds such as a low oil price, a strong US dollar and global instability" for a dip in industrial rents, which are often viewed as an indicator of a city’s economic health.

"What we have seen is a falling off in demand from the sort of middle-sized general traders which used to be taking warehouses of around 70,000 sq ft," said Charles Swanson, a surveyor covering UAE industrial leasing at Knight Frank. "The big international players are still taking space and demand from small businesses is holding up but it’s the middle ground that has been hit."

Knight Frank estimates values for these medium-sized warehouses have fallen by about 20 per cent from around Dh250 per sq ft two years ago to around Dh200 per sq ft today.

The broker says that Jafza has become a victim of its own popularity. The Jebel Ali Free Zone became a major part of the emirate’s economic recovery since the end of the global financial crisis 2009.

Soaring demand pushed Jebel Ali warehouse rents up by as much as 30 per cent in 2014, beating residential and retail property asset classes and prompting a surge of development activity with thousands of square feet of new warehouses and logistics facilities mushrooming up in the southern part of the world’s largest free zone.

In 2015 Ibrahim Al Janahi, the Jafza deputy chief executive, told The National that the free-zone authority was running out of space and looking at ways to extend outwards or build upwards to pack in more tenants.

Mr Swanson said: "For the free-zone authority it’s not a big problem because they tend to lease large land plots on long leases. The problem is really being faced by the people who have bought those warehouses and we are certainly seeing a big availability of warehouses on the secondary market. Last year you might have had two pages of listings for these things but now it’s more like five."

He said the free-zone authority had also increased the charges it levies on tenants, pushing up costs for companies locating there. And as one of Dubai’s oldest free zones, many of the older warehouses in Jafza are starting to become obsolete as tough new laws place ever more stringent requirements on the sort of facilities needed to store different types of goods.

Overall, Knight Frank said, rents for class A warehouses in Dubai remained flat during 2016, while rents for poorer quality warehouses continued to fall.

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In Dubai Investments Park industrial rents have fallen 7 per cent since the peak, dipping from Dh43 per sq ft at the end of 2014 to Dh40 per sq ft at the end of 2016.

However, Knight Frank said rents for warehouses in Dubai South had remained flat for the past two years at Dh50 per sq ft.

And in Al Quoz rents for warehouses increased by 2 per cent over the same period, rising from Dh49 per sq ft at the end of 2014 to Dh50 per sq ft in 2016.

In January Cluttons reported that although class A rents for the higher quality stock were generally holding up, Class B rents had dropped by 24 per cent in Al Quoz to Dh38 per sq ft, and by 14.3 per cent in Jafza to Dh24 per sq ft.

"Aside from a natural cyclical correction that was inevitable in the industrial market, a surge in newly completed warehouse space over the last year or two has prompted a flight to quality among existing occupiers, creating a growing pool of more secondary space, which is slow to let," said Faisal Durrani, the head of research at Cluttons. "This is driving a growing gulf in rents between older stock and state-of-the-art, modern warehouse facilities." Source: The National Back to Index

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MARINA GATE APARTMENTS IN DUBAI DAZZLE ONCE THE DUST CLEARS

Thursday, March 30, 2017

Stepping out of the noise and dust of the massive construction site forming Marina Gate in Dubai Marina and into a completed and furnished one-bedroom apartment is a disconcerting experience.

Just a few minutes earlier, clad in regulation hard hats and high-vis jackets, we were slowly climbing in a cage-like construction hoist, surrounded by labourers. The next minute, we’re walking down a fully completed tiled corridor and then we’re standing inside an immaculately furnished, air-conditioned, water-facing luxury apartment, hurriedly removing our hard hats and wiping our dusty shoes on the doormat.

With the 51-storey Tower One at Marina Gate due to be completed this autumn, developer Select Group is keen to show visitors around what is one of the last major development sites fronting Dubai Marina.

The three-tower development, which is located close to Cayan Tower and the Torch, is being completed in three stages with the 64-storey Tower Two due to be finished next year and the 53-storey, currently just a hole in the ground, expected to complete in 2019.

Inside, the most striking thing about the Marina-facing apartment is the view, with the apartment designed so that residents get a full view of the boats on the water and the twinkling lights of the towers from the lounge, bedroom and bathroom.

However, anyone concerned about the transparent glass giving other Marina visitors a view from within their apartments should invest in a full set of drapes, especially before taking a bath in the free-standing tub.

Prices for a 780 to 800 square feet one-bedroom apartment in Marina Gate 1 currently stand at about Dh1.35 million.

The developer Select Group is now heav•ily marketing the 389 so-called "branded" apartments in its Marina Gate 3 development, which will be built alongside 104 hotel apartments operated by Jumeirah Living.

These apartments typically cost 10 per cent more per square foot than the flats in the first two towers. For that premium, Select Group says buyers will get nicer finishes and better appliances.

Q&A: Rahail Aslam, chief executive of Select Group:

How much have apartment prices in Marina Gate fallen since the latest slump?

Our prices haven’t fallen in the entire project. Yes, we’re aware of what is happening in the market. Yes, the market has been suffering in terms of prices, but it has not affected ours or our absorption rate or our bottom line. Last month we had a great month in Marina Gate. We plan our budget to sell 30 to 40 units a month and we usually reach about that amount.

What type of property is selling best?

In Marina Gate 1 and 2 the units that were priced at Dh2,500 or Dh2,600 per square foot but were facing the Marina were the first units to sell. We’ve got stock that was at Dh1,800 or Dh1,700 per sq ft, which are exactly the same quality and the same type of units but without the Marina view. And these sales have been during this

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difficult time when prices have fallen for some types of property and absorption rates have fallen for some projects.

Who are you selling to?

Our investor base is really wide, we sell to more than 100 nation•alities. Emiratis, Indians, Pakistanis, Brits, GCC. We had had a lot of Saudis buying, but that has slowed down now because of energy prices. Brits haven’t been a large component of our sales since we’ve had a strong dollar. We have got Scandinavians, South Americans, Egyptians – there’s still a real cross-section of buyers. Source: The National Back to Index

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AUDITOR WARNS ON DRAKE & SCULL’S FUTURE AS CONTRACTOR BREACHES TERMS OF BANK LOANS

Thursday, March 30, 2017

Drake & Scull International’s chairman Majed Al Ghurair has said the company will focus on "strengthening our capital structure and reducing our leverage level" after the contractor reported a loss of Dh732.9 million and confirmed it was in breach of banking covenants.

It finished the year with a negative cash balance of Dh329m, according to newly filed accounts.

The company’s auditor, PwC, warned that a "material uncertainty exists that may cast significant doubt on the group’s ability to continue as a going concern".

A conditional waiver with its lenders that was in place following a breach of its banking covenants has now ended because the company was unable to comply with reporting requirements, the document showed. This means that its lenders can technically recall loans on demand.

A letter to shareholders from Mr Al Ghurair stated that the company was "confident that the strength of our business model, the changes we have made to our management and the renewed focus on our clients and our operational excellence" would allow it to overcome current market conditions and deliver its backlog.

Drake & Scull is in the midst of attempting a turnaround under Wael Allan, its new chief executive who joined the company in October.

His plan involves cutting back from civil contracting outside the UAE, and exiting other markets, such as India, where it is not among the top contractors in the mechanical, engineering and plumbing sector.

Last month, the company announced plans to raise up to Dh500m through a capital-raising exercise, stating it had received undertakings from Dubai-based Tabarak Investment for a Dh500m investment.

It is also attempting to generate cash through the sale of non-core assets. Last week, it sold its 50 per cent share of the luxury One Palm Jumeirah to its joint-venture partner, Omniyat, for Dh308m.

Allen Sandeep, head of research at Egyptian investment bank Naeem Holding, said that a recapitalisation, in a similar style to the one currently underway at Arabtec Holding, was necessary.

"But the problem here would be the price. It is trading at less than 50 per cent of its par value. Now, if they are going to privately place Dh500m worth of shares, how much is that Dh500m going to represent in terms of the valuation? We don’t know yet."

Drake & Scull’s shares finished trading unchanged yesterday at 44.6 fils per share.

The company’s accounts show that it has written off the entire value of an investment in an associate, which is understood to be its portion of the Lamar Towers project on Jeddah’s corniche, where it was the main contractor.

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It has also written Dh29.5m off the value of its civil contracting business, Gulf Technical Construction Company, via a goodwill impairment. It was valued at Dh110.7m, while the entire amount of goodwill on the company’s books was currently Dh815m – a significant portion of its net equity position of Dh1.25bn.

"For me, the concern to some extent is that they still have more than Dh800m of goodwill," said Nishit Lakhotia, an analyst with Bahrain-based Securities & Investment Company.

"They listed in the UAE, mostly bought their related entities across the region and now they are impairing goodwill, which is a concern."

He believes the company has acted in a similar manner to Arabtec by carrying out a significant amount of provisioning in the final quarter of last year, with a view to presenting a cleaner balance sheet in future.

"Both of these firms have significant backlogs, so that is definitely a positive. The only issue is how much money they can make out of these projects, and how they survive the current strain in their balance sheets and tight liquidity." Source: The National Back to Index

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EMIRATES REIT PROPERTY PORTFOLIO HOLDS STEADY EVEN AS DUBAI VALUES FALL

Wednesday, March 29, 2017

The value of the Emirates Reit property portfolio remained at US$753 million at the end of February, despite widespread declines in values on the Dubai property market.

In a monthly update Emirates Reit, the UAE’s first listed real estate investment trust, announced that the portfolio’s value remained the same as a month earlier and had increased 1.5 per cent since the end of October when it was valued at $742m.

Emirates Reit said that the value of its portfolio of eight commercial buildings and schools in Dubai is updated at least every six months by valuers Asteco and CBRE.

The Reit said that the net asset value of the fund was $484m at the end of February, down from $493m at the end of January, but that was before the company paid out an interim dividend of 4 US cents per share.

Last month Emirates Reit reported a 22 per cent fall in profit for 2016 to $47.8m compared with $61.5m a year earlier, mainly because gains in the value of its property portfolio were not as high in 2015.

Overall, the company recorded a 22 per cent increase in total income from its property portfolio to $50.7m versus $41.5m in 2015, with rental income up by 23 per cent to $45.3m.

According to Cluttons, rents fell in 15 out of the 23 Dubai office submarkets during the second half of 2016 and only increased in the DIFC and Dubai Design District.

However, the property slump appears to be doing little to deter new Reits from entering the market.

Last month Emirates Reit’s fund manager Equitativa said it was gearing up to launch the UAE’s first residential Reit and had plans to set up more Reits based around hotels, logistics and sporting assets.

And last week Emirates NBD Asset Management floated the UAE’s second listed Reit on Nasdaq Dubai, saying that it expected many more to follow suit across the region.

ENBD Reit said it also expected to face increasing competition from new Reits based in Saudi Arabia, which are allowed to invest up to 25 per cent of their total asset value outside the kingdom.

Yesterday, Jadwa Investment Company announced plans to list a third Saudi Reit.

Jadwa Reit Alharamain Fund said it expected to raise 660 million riyals (Dh646.3m) from retail investors before listing its units on the Saudi exchange by mid-April. Source: The National Back to Index

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COMMERCIAL PROPERTY SALES SUBJECT TO VAT FROM NEXT YEAR – BUT RESIDENTIAL IS EXEMPT

Tuesday, March 28, 2017

Property experts have welcomed news from the Ministry of Finance that sales and leases of commercial property will be subject to VAT from January, but residential property will not.

In a briefing session for advisers last week at Festival City, civil servants said that offices, shops and other commercial property will be subject to the new 5 per cent VAT levy.

But sales and leases of residential property will be exempt from the tax, along with undeveloped land. Property development and the first sale of new homes will be subject to a zero rate of VAT.

This means property developers will be able to claim back any VAT they have to pay from the Government.

"These charges are broadly in line with what we expected and in line with the way in which VAT operates elsewhere in the world," said Alan Robertson, the chief executive for JLL’s Middle East operation. "Obviously no new tax is going to be exactly welcomed, but from what we can see the tax is designed to be cost-neutral to registered businesses, so we do not expect it to have too much impact on commercial organisations."

Last week the Ministry of Finance announced that businesses which provide taxable goods or services with annual revenue of more than Dh375,000 will be required to register. Businesses with tax•able supplies below Dh375,000 but over Dh187,500 will also have the option to register.

"I think with all these things dealing with the unknown is far worse than dealing with the known and now that the details of the new tax are coming out, occupiers will able to put the right systems in place in preparation to deal with it," said Matthew Dadd, a real estate partner at Knight Frank in Abu Dhabi.

"I’m not sure that many of the occupiers we deal with have yet come to grips with the fact that we are less than a year away from implementation," he added.

The Ministry of Finance will start registering companies that are above the yearly threshold for value added tax in the second half of this year as the country gears up for implementing the levy from January 1, 2018. Source: The National Back to Index

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MORE REAL ESTATE INVESTMENT TRUSTS EXPECTED IN UAE

Monday, March 27, 2017

The asset manager behind the UAE’s second listed real estate investment trust (reit) expects more to follow.

Emirates NBD Asset Management listed ENBD Reit on Nasdaq Dubai last week.

"There is room in the UAE for 10 or 20 reits," said Anthony Taylor, fund manager of real estate for Emirates NBD Asset Management. "This is a very significant part of the investment horizon. We feel comfortable, being second, that many more will follow and it’s important to have an established market."

Although listed reits have only existed in the UAE since the launch of Emirates Reit on Nasdaq Dubai in 2014, institutions have been setting up unlisted collective investment vehicles since the mid-2000s.

These include the US$200 million Arabian Real Estate Investment Trust, set up in 2006 by HSBC and Daman, the original Emirates Reit vehicle which was established in 2010 by Dubai Islamic Bank and Dubai Properties and the original ENBD Reit, which was set up as a Jersey- based open-ended real estate fund in 2005. Unlisted reits also operate in Kuwait and Bahrain.

Despite generating attractive yields, many reits in the GCC have struggled to acquire the sort of big-ticket blocks of apartments and offices in which reits traditionally invest.

Fund managers say that for large assets worth more than Dh1 billion, yields have shrunk to between 5.5 and 6 per cent as trusts compete with sovereign wealth funds, private family groups and Asian pension funds.

But with more investment grade stock completing in the UAE and an economic slowdown making it harder for companies to get their hands on cash for expansion, analysts predict that more reits are likely to list.

"Reits are attractive to investors because they offer a better distribution than buying shares in a listed property company," said Craig Plumb, the head of research at JLL’s Dubai office. "We believe that there will be an increase in the number of reits listed in the UAE going forward as we are likely to see big real estate owners and developers putting property into a trust."

Last month the fund manager behind Emirates Reit said it had teamed up with Al Hamra Real Estate Development and National Bonds to create the UAE’s first residential real estate trust, which is expected to float on one of the UAE markets at a later date. The fund manager is also looking to set up reits based around hotels, logistics and sporting assets.

Last year the Saudi Arabian government passed new rules allowing reits to be traded on the Tadawul and paving the way for two new reits to be listed there – the 500 million Saudi riyals (Dh489.6m) Riyad Reit and the 118m riyals Al Jazeira Reit. Under the new rules, Saudi reits are allowed to invest up to 25 per cent of their total asset value in properties outside the kingdom. According to NBC Capital, the listed two reits apiece in the UAE and Saudi Arabia compares with 241 in the US, 57 in Japan, 48 in Australia, 31 in France, 43 in the UK, 47 in Canada and 41 in Singapore.

The bank says it expects the number of reits in Saudi Arabia and across the region to "increase significantly" over the next two years.

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"Reits in the GCC region are at the nascent stage," said NBC Capital in a note to investors this month. "With the exception of Saudi this is due to factors including a lack of legislation [until recently], relatively small populations of GCC countries [hence lower demand] size of stock markets, and misplaced demand and supply (the reit asset base is primarily GCC; however, the region’s population largely comprises expats). In our view, as each of these factors is mitigated and the market matures, more reits should evolve in the region." Source: The National Back to Index

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QATAR’S UK INVESTMENT TO SURGE DESPITE BREXIT

Monday, March 27, 2017

Qatar will invest £5 billion (Dh23.14bn) in Britain over the next few years, the country’s minister of finance said during a visit to London on Monday.

Earlier, the head of Qatar’s sovereign wealth fund said he still saw opportunities to invest in Britain after it leaves the European Union.

"Qatar will invest £5bn in the UK over the next three to five years," said the finance minister Ali Sherif Al Emadi on the sidelines of a Qatar investment forum.

Qatar had said it would announce major new investments in the United Kingdom this week, deepening the countries’ trade ties as it prepares to quit the European Union.

The emirate’s prime minister, Sheikh Abdullah bin Nasser bin Khalifa Al Thani, is leading a delegation of more than 400 officials and business executives to London and Birmingham to a two-day meeting with UK counterparts, according to government statements. The visit concludes on Tuesday, a day before the UK prime minister Theresa May plans to start the two-year clock on Brexit negotiations by invoking Article 50 of the Lisbon Treaty.

"Qatar has great confidence in the UK, and this confidence will be demonstrated in the additional investments we will make over the next decade," Mr Al Thani said Monday as the event opened at London’s Grosvenor House Hotel. He disclosed no details about prospective deals.

Qatari investments would help to cushion the economic fallout from Brexit on both sides. Ahead of the break, the UK is taking steps to maintain foreign investments, going as far as to provide written assurances to Nissan in an effort to stem competition from other EU members that want to poach talent and capital.

Qatar, too, has a big stake in keeping the UK economy and asset prices strong during and after Brexit. It is the world’s biggest producer of liquefied natural gas, and delivers 90 per cent of the UK’s imports of the fuel. The emirate stepped in to invest billions in Barclays during the global financial crisis and has built up a stock and property portfolio worth more than £40 billion (Dh184.63bn) over the past decade.

The delegation to the UK this week includes the chief executives of Qatar Investment Authority (QIA), Qatar Petroleum and Qatar Airways. George Iacobescu, the chairman and chief executive of Canary Wharf Group, partially owned by QIA, and Xavier Rolet, the chief executive of the London Stock Exchange Group, another portfolio company, are also attending the investment forum.

"Qatar doesn’t see Britain leaving the EU as impacting their relationship and it may be an opportunity for it to be stronger," Rachel Pether, an adviser at the Sovereign Wealth Fund Institute, said in Dubai.

Protecting the value of Qatari assets in the UK -– which range from Harrods department store, a stake in Sainsbury grocery chain and upmarket properties such as the Savoy Hotel and the Shard tower – is not the only motivation behind the emirate’s road show. Lower oil prices have sapped government revenue, forcing Qatar, the richest country in the world on a per-capita basis, to issue Us$9bn bonds in May. Officials are seeking more

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investment flows as the country diversifies its economy away from oil and gas and continues a $200bn infrastructure upgrade before the Fifa 2022 World Cup.

"We want to attract institutional money from the UK, especially through our forthcoming exchange-traded fund that will list on the Qatar Stock Exchange," said Fahmi Alghussein, the chief executive of the Doha-based asset manager Amwal, who plans to attend the London trade event.

One indicator of Qatari appetite for investment in the UK is continued purchases of real estate, both by the state fund and individuals. Foreign investors see the top end of London’s property market as an attractive haven, with the pound’s slump offsetting political uncertainty, according to Laurence Ronson, sales director at Ronson Capital Partners. That is despite the fact that owners are holding back while the value of their homes stagnates and in many of the best districts of the capital, decline.

"London looks like exceedingly good value in terms of a weakened sterling," said Mr Ronson, who is developing two luxury buildings in the capital. "We’ve seen that with Chinese, Middle East and American money looking at opportunities. All the doom and and gloom that has been predicted post-Brexit has not happened. In fact, the economy is growing."

* Bloomberg Source: The National Back to Index

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LONDON LUXURY HOMEOWNERS TURN TO AIRBNB AS SALES SLOW

Monday, March 27, 2017

Luxury-home owners in London’s best districts, of whom 41 per cent are from overseas, are turning to companies such as Airbnb and property brokers to secure income as their properties languish on the market.

Others are trying to boost leasing income with shorter contracts after long-term rents in the most expensive districts fell 5.1 per cent in the year through February.

For overseas landlords, the devaluation of the pound is also hurting their returns and prompting them to look for ways to generate revenue.

Frustrated after searching for a buyer for two years, the owner of one luxury apartment overlooking London’s Hyde Park decided to rent it out for £1,500 (Dh6,920) a night.

"It was a very lofty valuation and I think they’ve always been chasing the market," said Hasan Hasan, the co- founder of the property broker Xenyos, which is handling the rental. Now the landlord, a developer trying to sell the property at a reduced price of £8.65 million after a refurbishment, will at least recover some of his investment while he waits for a buyer, he said.

The number of London properties listed on Airbnb almost doubled in a year to 50,000 at the end of 2016, according to data compiled by broker Jones Lang LaSalle. The London Mayor Sadiq Khan warned the city’s policymakers this month that the rise of short-term rentals risks making fewer homes available for permanent residents.

A record 35,000 new high-end London properties – enough to cover Hyde Park twice – are planned in the coming decade, 40 per cent more than in 2014, according to the consulting firm Arcadis. Sales of London homes under construction in 2016 dropped to their lowest in four years, leaving developers with a record inventory of unsold properties, after tax increases dented demand for high-end homes.

That has encouraged sellers to offer properties for rent while they wait for the market to recover, according to the Knight Frank associate Tom Bill. The number of properties available to rent in London’s best districts rose 20 per cent in the six months through February, according to research published by the broker.

"Demand in the long-let market has not been very strong after the Brexit vote, but property owners need to maintain their profit," said Gao Xiang, the president of JC International Property, a broker that specialises in Chinese and Japanese investors in London. "The price-to-rent ratio is far less than investors expect."

Landlords will see cuts in tax breaks for mortgage-interest payments starting next month. The growing pressure on returns has sparked interest in short-term leasing, according to Mr Hasan, whose company has recently taken on properties in the South Kensington and Notting Hill districts that had previously been long-term rentals.

"The tax changes for smaller investors have had a real effect – in some cases they are looking at loss-making properties," he said at a luxury apartment his company manages in London’s Maida Vale district.

Many landlords are unaware that there is a 90-day limit on short-term rentals for entire homes, or deliberately seek to subvert it. That prompted Airbnb to announce in December that it would bar London listings for longer

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than the permitted period unless they have the correct approvals. Previously, almost a quarter of the homes listed for rent in their entirety on the website had exceeded that limit, said the researcher IPPR in a report sponsored by Airbnb.

Overseas buyers have another incentive to seek higher returns from short-term rentals. The pound has fallen about 16 per cent against the dollar since the United Kingdom voted to leave the European Union on June 23. That means pounds paid in rent will not go as far in servicing mortgage payments.

"My biggest concern is the scale, cost and currency of overseas mortgage debt secured against new build homes, particularly by Asian buyers," said the real estate researcher Neal Hudson. "Anecdotal evidence suggests that many of these buyers have been using local mortgages to fund their purchases."

Among Xenyos’ current short-term rental listings are several apartments in Chelsea Bridge Wharf, an apartment block in the Nine Elms districts developed by Berkeley Group. One of those homes is financed with a mortgage from a Saudi bank, Mr Hasan said, underlining the owners’ desire to maximise returns.

"The central London housing sales and rental markets have been weak in recent years and this has put pressure on developer and investor returns," Mr Hudson said. "With a large number of new homes expected to complete this year, prices in both sales and rental markets could come under further downward pressure due to increases in supply."

* Bloomberg Source: The National Back to Index

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ARABTEC CHIEF SAYS A SHAKE-UP IS ON THE WAY

Sunday, March 26, 2017

A major shake-up of Arabtec’s management is under way as part of its restructuring.

Hamish Tyrwhitt, the new chief executive who was appointed last November, told The National that "by two-to- three months’ time, probably 60-70 per cent of my direct reports will be new to the company".

"I’ve already put in one of five regional directors to replace someone that had retired. I’ve got a CFO [chief financial officer] joining in two weeks who is a very experienced CFO with published companies who I have worked with for a long time [and] is going to be a terrific asset. Two other operating company MDs [managing directors] are on their way, a COO [chief operating officer] and a few other people."

He said that the shake-up had not involved widespread sackings, and in many cases is merely replacing acting heads or roles that have been vacant.

"The CEO role at the holding company had been an acting role for over two years, the CFO role had been acting for over two years, the general counsel role has been an acting role for over two years, Efeco [its MEP subsidiary] hasn’t had an MD for, I think, 18 months."

The company is also in the process of a strategic review to offload a number of investments and subsidiaries. Already accounts filed last week show that it disposed of an investment in Powercon Switchgear – a company that had net assets of Dh3.6 million – for Dh1.

It also de-recognised accounts for four subsidiaries in Saudi Arabia that had been up for sale for more than two years on the basis of a "discontinuation of major operations". The subsidiaries were run as a joint venture with Saudi Binladin Group.

Mr Tyrwhitt said that although this joint venture "is not dormant", it is one which is not likely to be active until Saudi Binladin can resolve its own cash flow issues.

"But providing that Binladin is still there, then we would do that," he said. Although Arabtec has its own, 100 per cent-owned contracting entity in Saudi Arabia, Mr Tyrwhitt said this is "not a market that we are going to put a huge investment in" in terms of bidding for new work this year.

Instead, it plans to raise money through disposals, and to reinvest this on building other parts of the business, including a greater focus on infrastructure. He said that 75 to 80 per cent of current bids were for opportunities in the UAE, which matches its current revenue profile.

He said that there were a number of investments held by the company, including shares and minority stakes.

"We’re not an investment company, we’re a construction company. Once we’ve had a strategic review, I’d be looking at recycling that capital into the core of the business."

He said the push into infrastructure it has identified as an area for growth can be done through existing companies, and with both existing and new management.

"All of the managers coming in have that ability.

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"But even the employees – I can pull together thousands of people who have done heavy infrastructure projects. If you look at Midfield Terminal – that’s one of the most complex infrastructure projects ever undertaken. [Look at] Burj Khalifa – if you can build the Burj, you can certainly build a bridge."

Nishit Lakhotia, an analyst with Bahrain-based Securities & Investment Company, said that Arabtec has already changed its management team several times during the past five years.

"We hope to see some stability now post this restructuring," said Mr Lakhotia.

He argued that the disposal of non-core assets was a priority given that Arabtec is currently in a posi•tion of negative equity.

The company’s audited accounts filed last Wednesday showed that it declared a Dh3.4bn loss as it wrote off Dh1.9bn in impairments.

Mr Lakhotia said that he hoped for an improved performance from the business given the scale of its most recently announced losses. "That they have taken everything in one quarter, now they want to start afresh, do this rights issue, start executing projects and show some profitability."

Mr Tyrwhitt said that he had been chosen by the board to take over the company "based on a track record of doing it successfully in the past in other countries".

He also pointed to the turn•around that has already begun at Dubai-based contractor Depa, where he was appointed as chief executive in April last year. His subsequent appointment to the dual role as chief executive at Arabtec (which is Depa’s biggest single shareholder, with a 24.3 per cent stake) came after demonstrating three quarters of profitability. Source: The National Back to Index

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DUBAI DEVELOPERS DOWN WITH NEW

LAUNCHES

Saturday, April 1, 2017

The race is on — Dubai’s developers are rushing ahead with new off-plan launches before the market gets overcrowded with them. Get in now, start selling and mop up as many buyers before the next developer comes out with his offering … so goes the thinking.

“The market is already starting to feel a little oversupplied with off-plan apartment launches,” said Juwaad Beg, CEO of Elite City Real Estate, which has launched a Dh500 million high-rise in Business Bay. “But the number of jobs are not increasing, which means developers have to keep focusing heavily on investors to get their inventory moving.

“Once there is too much of a particular asset category, the sales part can get time consuming and add to the costs.

“How the new projects are priced will be decisive in ensuring successful sales.” (For its project, Beg pegged the price at Dh1,300 a square foot. A high-end development on the next plot averages Dh1,650. Completion is scheduled for first quarter of 2020.) “Business Bay is well on its way to be the next big relocation destination in Dubai — offices are already moving in there,” said Beg. “It’s a given that more residents will start doing so as soon as some of the ongoing projects are done. We are offering fully-furnished units and for the investor that means increased chances for higher yields.” (Currently, a standard studio in Business Bay would average Dh65,000 or so in rents. Getting it furnished could firm up the asking rent to between Dh75,000-Dh80,000. And for the Elite Bay, the developer is capping service charges at 1 per cent, which he says would add to the investor’s yields as well.) If for one developer it makes sense to get going in an emerging residential hot spot, for another, building a new one at the city’s most established freehold clusters is the done thing. More so if it is a water-side plot … and one of the last ones at that.

The most transactions

A new investor-developer will shortly launch a G+27-storey tower at Dubai Marina. “More details will be announced closer to the actual launch — but the pricing will be between Dh1,500-Dh1,700,” said Umar Bin Farooq, Director at One Broker Group (OBG), which has exclusive rights on the project. “Dubai Marina remains the master-development generating the highest number of enquiries from end users/investors.

“Each year it is the location with the most transactions in Dubai, and the premium properties there are fetching Dh2,000 psf and over. We will be competitively priced.”

OBG is a fairly recent creation, with five brokerage firms coming under one umbrella to take on off-plan projects on an exclusive basis. “For developers to set up their own sales and marketing teams is a cost … we come in and do the needed on their behalf,” said Farooq. “We have the database of potential investors between the five agencies. In a market where buyer sentiments are still cool, we know where to get the buyers.

“OBG prefers to get into a project right from the planning stage … that way we can give our inputs on maximising opportunities with that launch. Even changing the dimensions of a window and what it faces on the outside can have an impact on buyer expectations.”

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Platform for retail investors

For UAE-based residents with plans to acquire a property, decisions can be tough. Should they look to overseas markets — UK is decidedly cheap with the pound’s slide, or should that be India where the property market is still nursing its way back to health. In recent years, some UAE based investors have been quite taken up with possibilities in Central Europe.

The International Property opening Sunday (April 2) in Dubai will serve as another platform for retail investors to make up their minds. Or they can keep their funds closer home, picking up a property of their choice in Dubai itself.

Newer locations beckon them as well — the Meydan One District (part of the massive (MBR) Mohammad bin Rashid City) and Dubai Creek Harbour from Emaar. Off-plan launches at the latter has scored with investors, while the launch of Meydan One’s mall development should build up a higher profile for the location going forward.

Other prime launches will be anything alongside the Dubai Water Canal, the Al Habtoor City enclave, and off Dubai’s shores, the Bluewaters Island and Jumeirah Bay Island, both from Meraas.

And if it is a slightly more affordable proposition investors are after, head south. Or Dubai South, to be precise. Or take a detour to some of the clusters in Dubailand.

Factbox: Northern Emirates offer property options as never before

Ras Al Khaimah has made many a stride in securing a spot in the UAE’s freehold spotlight, a fact emphasised by Emirates REIT’s latest investment fund acquiring a slew of residential properties in Al Hamra Village.

Another Ras Al Khaimah development to attract serious developer and investor attention is Al Marjan Island, with Emaar Properties recently coming on board to develop 2 million square feet on its, including a hotel. Another developer, Select, also announced that phase one of its Dh1.1 billion residential project there is complete. Handovers and occupation will start this quarter.

Sharjah also sees an Emaar push, in an alliance with Sharjah Government entity Shurooq and Abu Dhabi based Eagle Hills. They come under the banner of Omran Properties for three projects with a combined investment value of Dh2 billion plus. Source: Gulf News Back to Index

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THE INAUGURAL EDITION OF ‘FUTURE CITIES SHOW’ 2017 TO KICK OFF ON SUNDAY

Saturday, April 1, 2017

The inaugural edition of the ‘Future Cities Show’ will kick off on Sunday in Dubai World Trade Centre, under the patronage of UAE Ministry of Infrastructure development and themed as “Sustainability, Innovation, Happiness”.

The show has many strategic partners: Dubai Land Department, Federal Transport Authority- Land and Maritime, Sheikh Zayed Housing Programme, and the Sustainable City. It will witness through three days participations of exhibitors from both public and private sectors.

In the Sustainability Zone, exhibitors include Dubai Investment, Roof Care, Tadweer, among others. While in the Innovation Zone, exhibitors encompass Wattway, ArcSecond, and University of Wollongong and many others. In the Happiness Zone the show hosts Robox, Velours, and ESenses and many other exhibitors. Source: Gulf News Back to Index

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ALDAR AWARDS DH500 MILLION DEVELOPMENT CONTRACT FOR MAYAN

Saturday, April 1, 2017

Aldar Properties PJSC, an Abu Dhabi listed property development, investment and management company, has awarded its main contract for Mayan, a luxury residential development located on Yas Island, to Ghantoot General Construction, one of the leading construction companies in the region.

The Dh500 million contract will deliver the construction of five, eleven-story buildings.

Situated on Yas Island, Mayan offers studios, one, two, three and four-bedroom apartments, as well as a select number of golf course homes and beach-front villas. Source: Gulf News Back to Index

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RENT DECLINES 'NOT ENOUGH' TO MAKE DUBAI HOUSING AFFORDABLE TO EVERYONE

Thursday, March 30, 2017

For many of the expatriates working in meagre pay, sharing rooms and crowded living spaces with other tenants may just continue to be a reality.

The lack of affordable housing continues to drive a huge number of expatriates to live in shared accommodations and even with the continued fall in rents, many household budgets remain squeezed, property consultants told Gulf News.

Overcrowding in properties is being shunned in Dubai, but many have opted to share their flats and villas in order to save money on rent. Those that continue to risk fines from municipality inspectors commonly referred to as “baladiya” are workers who don’t make seven-figure salaries, especially individuals who barely earn Dh6,000 a month.

Residential rents in Dubai have fallen by 14 per cent since the peak in 2014. However, this is not enough to accommodate the “typical resident that shares housing,” according to Jesse Downs, managing director of Phidar Advisory.

“There is a large and critical portion of the workforce that remains priced out of the market,” Downs told Gulf News. “Housing costs have decreased recently, which will invariably change the nature of shared accommodation, but it seems unlikely that it will significantly reduce the total number of shared households.”

“It likely decreases the density of households as residents disperse to new options and share with fewer people.”

Downs is reacting to unconfirmed reports that Trakhees will do random inspections to check overcrowding in middle to high-end flats, including those in the Palm Jumeirah, Jumeirah Lakes Towers, Discovery Gardens and International City.

Lukman Hajje, CCO of Propertyfinder Group, noted that while they don’t condone shared accommodations, hundreds of such properties are still being advertised online.

“One doesn’t have to search too hard to find hundreds, if not thousands of ‘partitioned rooms’ or extra bed space’ advertisements on other popular UAE websites.

“It is this segment of the market that this new initiative by Trakhees will target. These are the most vulnerable residents of the city but few people would want to live in a building that is massively overcrowded due to illegal room sharing and subletting,” Hajje told Gulf News.

In November 2016, there were estimates that, while the majority of Dubai’s 2.6 million population are willing to spend Dh100,000 a year or less on housing, only 25 per cent of the residential units available for rent are within the price range.

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Hajje said that two-bedroom flats in Dubai now cost an average of Dh140,000 to rent, and as of the last count there were 1,345 Dubai properties advertised for lease on their website that are under Dh50,000 per year.

“But most of these are expensive if your income is under Dh6,000 per month and people within this segment struggle to find affordable legal accommodation virtually anywhere in Dubai.”

“Sharjah, where the medium advertised price for a two-bedroom apartment is currently Dh55,000 per year and Ajman where the medium advertised two- bedroom apartment is Dh 38,000 per year are popular choices for the lower income workers, many of whom commute daily to Dubai.”

According to recruitment specialists, residents who receive below Dh6,000 a month include those who work as waiters, customer service personnel, teaching assistants, hotel room attendants, room boys, housekeepers, janitors and cleaners, aside from construction employees.

The latest Salary Guide by Cooper and Fitch showed that those who work as sales assistants at various retail shops have monthly salaries ranging between Dh5,000 and Dh8,000. There are those who are in the supply chain industry, including materials engineers, who earn Dh5,000 to Dh9,000 monthly.

Hajje, however, pointed out that Dubai has done a lot to address the affordable housing shortage in the past few years. In fact, he noted, many of the apartment blocks that have been pumped out into the market recently are aimed at the lower to middle-income segment.

“In addition to the traditional affordable locations such as Discovery Gardens and International City, there are numerous projects in Dubai Land, Dubai Sports City, JVC (Jumeirah Village Circle), DSO (Dubai Silicon Oasis) and DIP (Dubai Investment Park) just to name a few. Thousands more are planned in Dubai South and elsewhere across the city.” Source: Gulf News Back to Index

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NEW FIVE-STAR HOTEL TO OPEN IN BUR DUBAI

Thursday, March 30, 2017

A new five star hotel being built Bur Dubai will open in October 2011, it was revealed this week.

Sol Melia, the Spanish company behind the AED200m project, announced at the Arabian Travel Market that the hotel would open on 12th October, to coincide with national day in Spain.

Andre Gerondeau, executive vice president of the hotel division at Sol Melia, said he hoped the hotel was the first of many in the GCC.

"This is the first step towards realising our expansion plans for the region. We are currently negotiating with potentil partners in Qatar, Saudi Arabia and Jordan and we hope to make further announcements in the near future," he said.

Gerondeau added that the hotel would focus on guests coming to Dubai from Spain, a trend which has become popular in the last few years, amounting to 30,000 in 2010.

He said this is set to increase as Emirates opened its first daily flight to Madrid last summer while Iberia operates four weekly flights to Dubai. Meanwhile, Emirates flights to Buenos Aires and Rio de Janiero would bring in tourists from South America.

"We believe that our traditional Spanish hospitality can offer a new dimension to customers in the region," Gerondeau said. Source: Gulf News Back to Index

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SHARJAH’S NEW INDUSTRIAL CLUSTER GETS INTO SHAPE

Wednesday, March 29, 2017

Sharjah’s push to create a brand new industrial cluster gets a major boost with the handover of plots to investors at the Al Saja’a Industrial Oasis. The entire project covers 14 million square feet plus, which can be developed for industrial, commercial, mixed-use and retail.

It is situated close to Sharjah International Airport and Al Hamriya Port. Key features include direct access off Emirates Road (E611).

Prices start from Dh86 per square feet for the light industrial plots.

The first phase — featuring 55 plots — was sold to investors on freehold as well as 100-year lease basis. A second phase, with 114 plots, is now on sale. A third phase will follow at a later date.

“ASIO is not a free zone but we can offer free zone benefits to companies establishing in Sharjah,” said a spokesperson at Sharjah Asset Management Holding, an investment arm of Sharjah Government. “Sharjah’s industrial areas represent almost 18 per cent of the emirate’s total land area. Now, some of these areas are in conflict with the Government’s city growth objectives.

“The launch of ASIO is to provide alternative land made available to assist in the relocation of businesses from the inner city industrial areas to fringe industrial developments.”

Apart from the free zone-type benefits, investors in these plots are also exempt from service charges. Bank finance is also being offered.

“As one of the largest industrial projects in the region, ASIO is expected to create up to 21,000 jobs when fully developed,” the spokesperson added. Source: Gulf News Back to Index

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DUBAI’S GO FOR SIZE APPROACH PAYS IN INDUSTRIAL REALTY

Wednesday, March 29, 2017

Going for size does pay dividends ... even in the toughest of times. Dubai’s emphasis on building up its industrial and warehousing real estate is winning itself a lot of favour.

Last year, enquiries from the industrial and manufacturing sector were up 18 per cent for suitable locations in some of the emerging industrial free zones, according to a new update from Knight Frank, the consultancy. “There has also been strong demand for warehousing from the fast moving consumer goods general trading sector, particularly for Grade A specification properties, with built-up areas greater than 100,000 square feet. Enquiries from general trading companies encompass approximately 18 per cent of total interest in 2016.”

Mid-sized facilities in comparison had a tougher time of it to fill up space. Demand actually subsided for warehousing space that only offered around 50,000 square feet, with “occupiers postponing new purchases and requirements for new facilities that require substantial investment.”

Dubai Industrial City and Dubai Wholesale City will remain major beneficiaries going forward, alongside pockets of the city’s more established belts for industrial activity. But, with the older areas, they better have assets offering significant capacities.

Institutional investors continue to pick up industrial assets for which ready-made end-user demand exists. Last week, Bahrain’s Arcapita, an alt-investment firm, announced that it picked up a set of “income-generating” logistics assets in Dubai, in a transaction valued at $150 million. The 10 units together offer 1.2 million square feet. (The deal follows another Arcapita did last year in Dubai, featuring logistics units in the Al Quoz area.)

“We aim to capitalise on the burgeoning logistics sector of the UAE, which is increasingly being driven by the growth of e-commerce and the increase in regional trade,” said Atif Abdulmalik, Arcapita’s CEO, in a statement.

The Knight Frank report does reiterate that point, and notes these assets’ “perceived resilience to adverse economic conditions”. Source: Gulf News Back to Index

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MUTED DEMAND IN DUBAI’S OFFICE

SECTOR

Wednesday, March 29, 2017

Dubai’s office sector has come under pressure against a backdrop of macroeconomic challenges that have prompted many companies to adopt a conservative approach to new leasing. Last year average rents fell by 3 per cent year-on-year, while average sales dropped 5 per cent, reports Asteco.

“The continued macroeconomic uncertainty is undoubtedly having an impact on all elements of property,” says John Stevens, managing director of Asteco. “Enquiry levels for large units were particularly low as market sentiment is discouraging many companies from expanding or for new entries coming into the market.”

From a sales perspective, Stevens says average office prices continued a downward trend, declining by 2 per cent in the fourth quarter last year and 5 per cent annually. “Demand is [coming] from small businesses for piecemeal offices of sizes below 18.5 sq m,” says Stevens.

Overall, there was low uptake of new office space in Dubai last year.

According to a JLL report, the total amount of occupied office space in Dubai increased by around 240,000 sq m last year, which is about 30 per cent below the average absorption of the previous five years. “This reflects not only the lower activity of the oil and gas sector, but also regional and global economic uncertainties, which have delayed the leasing decisions of some global companies,” says Dana Williamson, head of tenant representation and corporate solutions at JLL Middle East and North Africa.

She says the finance and banking sector has seen some expansion, but most of the new deals have been relatively small. “The strongest of the traditional office sectors last year had been media and IT, but we have also seen growth in interest in office space from manufacturing and logistics companies, and we expect this trend to continue into 2017.”

According to Cluttons’ Dubai Bulletin, most sub-markets of Dubai registered decreases in upper-limit rental rates, with Garhoud (Dh90 per square foot) ending the year 18.2 per cent down, while Al Barsha (down 10 per cent) and Deira (down 9.1 per cent) were the next weakest performers. On the other hand, Dubai International Financial Centre (DIFC) registered a rental growth of 5.7 per cent in the upper limit last year.

Murray Strang, head of Cluttons Dubai, says, “Definitely, 2016 was a relatively subdued year for the Dubai office market. A number of global economic issues were key in dampening business growth and appetite for investing into office premises.”

Strang says rents have generally fallen in most areas, but there are locations like DIFC where the rents continue to strengthen due to limited new supply. “Conversely, however, there are other locations such as Business Bay where in the last 12-24 months the market has seen a huge amount of new supply and landlords struggling to attract tenants ahead of considerable local competition,” explains Strang.

He adds that rents have also come down in Jumeirah Lakes Towers (JLT) at the southern end of town. “JLT has struggled because there have been some sizeable new buildings such as Mazaya Business Avenue and a few others with multiple strata ownership structures, which were handed over in the last year or two and have

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launched considerable new vacant space onto the market,” says Strang. “As a result, neighbouring buildings and landlords have had to drop their rents to be competitive and secure tenants.”

On the flip side, he says in nearby Dubai Internet City and Dubai Media City, the level of supply is far more limited, and as such demand is sustained and rents have maintained a strong level.

Best-performing sector

The most active sectors identified by market observers continued to be finance and media-related organisations in DIFC and Media City respectively.

Cluttons’ reports that the technology, media and telecoms (TMT) sector is among the most active in Dubai, thanks to the government’s innovative drive and desire to position the city as a leading tech hub.

“The rising star in the office occupier market is certainly the TMT sector and Internet City and Media City remain the core focus of this rapidly expanding and ever-important sector for Dubai’s economy,” says Faisal Durrani, head of research at Cluttons. “The government’s recent Future-Accelerators Programme is paving the way for further strong expansion in this area over the short term.”

However, he adds that with limited space available in high-demand locations, interest is likely to rise in complementary free zones such as Dubai Science Park.

While the media and IT sectors are likely to expand further over the next few years, Williamson says there is some space available to accommodate this growth in popular locations such as Tecom (Internet and Media City). “Tecom has a major project [Innovation Hub] under construction, which will provide high-quality office space for both single tenants and multi-tenanted buildings over the next five years,” says Williamson. “In combination with some smaller new developments planned in the Internet and Media zones, the Innovation Hub is likely to satisfy potential demand.”

Knight Frank says the fourth quarter was the best-performing quartile last year, on the back of marginally increased occupier sentiment. Matthew Reason, commercial leasing surveyor at Knight Frank, says, “[In light of difficult conditions last year], landlords started to offer greater incentives and increased their flexibility as the market dynamic shifted to an occupier market.”

Knight Frank identified many non-free zone locations where rents decreased, including Business Bay and Shaikh Zayed Road, although rents in key free zones remained strong. “Areas that saw the greatest performance during the year continued to be in Tecom [Barsha Heights], namely Dubai Internet City and Media City, and DIFC. The performance of areas such as Dubai Design District declined as their rents increased substantially on the back of stronger occupancy levels, while occupancy of strata-owned assets in Business Bay continued to dwindle,” says Reason.

In Dubai, demand for rental units remains focused on better-quality buildings and the market has seen a continuation of the “flight to quality” in recent years. While all tenants are price sensitive, Williamson says the differential in rentals between popular buildings and the less-preferred ones has widened in the Dubai market. Average deal size is small to medium, between 500 sq m and 1,000 sq m, with some larger deals of up to 10,000 sq m.

The strongest demand, however, has been for single-owned buildings, with many tenants remaining wary of taking space in strata-titled space where they may have to negotiate with multiple landlords. In terms of location, Williamson says the central business district (CBD), from the Dubai World Trade Centre to Downtown Dubai, and the popular free zones remain in favour. “Vacancies in existing space in the CBD fell to 15 per cent last year, its lowest level since before the global financial crisis in 2008-09,” she points out.

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Outlook 2017

Industry experts don’t expect significant rental growth this year, as the overall economy remains relatively flat and there is sufficient new supply to accommodate expansion plans of most companies. Head count numbers of businesses is expected to remain stable this year, while others may grow but to a lesser extent compared with the forecast a few years ago.

“We expect to see both office rental rates and sales prices to continue to come under pressure as new developments are handed over,” says Stevens. “Demand, however, is expected to remain low. Similarly, both tenants and buyers will expect attractive rates, incentives and flexible payment terms.”

JLL estimates supply levels this year to remain relatively modest, with just 300,000 sq m of new space scheduled to enter the market. This represents less than 4 per cent of the total market of 8.5 million sq m. “With supply levels remaining modest into 2018, with only 85,000 sq m currently scheduled for delivery, the market is not expected to see an increase in oversupply of office space over the next few years,” says Williamson.

As with last year, she expects the market to remain polarised between relatively small leases and build-to-suit activity to satisfy larger requirements.

However, Knight Frank expects the Dubai commercial office market to record a slight improvement this year. Last year, Knight Frank reported that occupiers concerned with market stability put their commercial office searches on hold and extended for 6-12 months to re-evaluate the situation in the new financial year.

“With stabilised oil prices and continued government investment, occupier sentiment has improved and [businesses] have since resumed their office searches, capitalising on the reduced office rents and greater incentives offered by landlords,” explains Reason.

Knight Frank expects a large amount of stock next year, with projects such as ICD Brookfield, Gate Village 11, One Central and HSBC Headquarters coming online, which will be a welcome addition to Dubai’s limited grade A space. Meanwhile, a large quantity of new projects in Al Manara (Jumeirah side) has recently been delivered or is due for delivery in the second quarter.

“The single-owned office buildings offer tenants reasonable quality office accommodation, however the fierce competition between the neighbouring developments is likely to push the gap between asking rates and achievable rates further, with asking prices up to a third higher than achieved rates,” says Reason. Source: Gulf News Back to Index

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ASK PW: TAKING THE DISPUTE OUT OF RENT DISPUTES

Wednesday, March 29, 2017

What should you do if your landlord suddenly serves you notice?

Imagine you’ve been the model tenant paying your rent on time and keeping the property in great order and suddenly the landlord decides he wants to sell the property. Here’s what you can do if you’re evicted or receive an early termination notice.

In theory, if the property is sold and transfers to a new owner or landlord you should be fine to continue living there until the end of your contract. Article 28 of the Original Law actually says “The transfer of title to a new landlord shall not affect tenant’s right to continue occupation of the property in accordance with the tenancy contract.” However, as is so often the case, many sellers prefer to sell their property as vacant. What then?

In this case, Article 25(2)(d) of the Landlord Tenant Law states that the Landlord can ask you to leave upon expiry of your tenancy contract if he owns the property and wants to sell it. However, it’s not just a question of simply informing you that you can’t renew his contract once it expires and asking you to promptly move out on the expiry date.

The same Article states that the landlord needs to notify you of the reasons for eviction at least 12 months prior to the date of eviction. What’s more this should be done through the Notary Public or by registered mail.

This seems simple at face value, but there can be some further hidden complications. A recent example of this occurred with somebody who had a tenancy contract which started in March 2016. They were shocked to receive an eviction notice at the start of the year and assumed that when March came they would have no other choice than to start house-hunting again. However, in a case like this the landlord can’t simply tell the tenant to leave when the contract expires, as the 12-month notice period hasn’t been served.

In other words, if for example, your contract started on 2 June 2016 and you receive a notice today stating that you are about to be evicted upon the expiry of the term, you wouldn’t have to vacate when your contract ended on 1 June 2017 as the notice must be served 12 months prior to the date of eviction. So, from the landlord’s point of view it is also important to be vigilant and ask the tenant to vacate 12 months from the date of the notarised notice. Additionally, landlords should be careful when the lease expires not to renew it on the same terms. The reason for this is it may give the tenant the right to continue to occupy the property until the renewed lease expires – ie June 2018.

What happens if you want to end your contract early?

There are times when some of us need to end our contract mid-term. So, will your landlord accept your notice for early termination, and what is the law?

The law (Article 7 of the Original Law) states that “If the tenancy contract is due and valid, it cannot be unilaterally terminated by the landlord or the tenant, unless both parties agree on such termination or in accordance with the provisions of this law.” This means that nobody can change the terms of the lease and end the tenancy unless there is provision for this in the contract. In the event that no such provision exists, your landlord may be entitled

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to receive the rent amount for the entire term of the tenancy contract. This could be a nightmare financially, so the best advice here is to carefully check the termination provisions in your lease before signing.

When you first sign a tenancy agreement it is also wise to check is whether you need to give notice to terminate the tenancy at the end of the term. If you don’t give sufficient notice there’s always the danger that the tenancy could automatically renew, leaving you liable to pay the rent for the entire period of the renewed term.

Ultimately whether you’re a tenant or a landlord, it’s important to have a good idea of the laws of the UAE. Source: Gulf News Back to Index

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THE MODERN WORKSPACE

Wednesday, March 29, 2017

The modern workspace and the expectations of the corporate employee are changing. Some cultural differences between the GCC and the West mean that the needs of users vary to an extent. However, on the whole, designers are tasked with creating spaces that are also aligned with company objectives, ethos and culture. On top of this, companies and their work spaces are expected to promote productivity and staff well-being.

With companies such as Google famously providing spaces to essentially work, rest and play, other high-profile firms, particularly those with an international footprint, are expected to follow suit, as they strive to attract talented workers. A focus on work-life balance has also emerged over the past decade, particularly when it comes to working parents. It has become more common, particularly in industries where physical presence is not necessary, to measure staff performance by the delivery of work, rather than the number of hours.

There are changes in thinking in terms of how team members interact. It is certainly a trend to have larger proportions of workspaces in an open-plan format. The decision is not purely based on cost savings, with the amount of floor space required per employee being reduced, but to also encourage interaction. The aim of the modern workplace is to promote collaboration and openness, as well as sharing of ideas. Obviously, the suitability of being purely open plan depends on the activities of the business and the people that work there.

Different requirements

While many staff members approve of open-plan areas, as they enjoy the energy that is brought about by the activity around them, others, particularly those whose work requires long periods of concentration, require limited noise and interruption. The number of meeting rooms also depends on a company’s needs, however, where a large, rather intimidating-looking boardroom was a standard, there is now a greater number of smaller meeting spaces as management styles and business operations have evolved.

The popularity of open-plan workspaces is not favoured by all; there are those who require quiet places to work, but there are also cases where firms or designers of spaces have got it wrong. Common issues include poor layout, insufficient space and poorly managed transitions — where flexi-working, hot-desking and even “standing meetings” are concerned. While the intention is to offer more freedom, there can be an issue of depersonalisation, whereby workers are crammed into workstations or benches to maximise space utilisation in smaller-than-ideal work areas 5 sq m per person or less.

Hot-desking, where workers are allocated desks on a rota system, has become more popular and is provided by serviced offices and co-working spaces. It is promoted as a positive, modern way to work, but if not managed well, it can have the effect of distancing employees from the firm as they do not have a “permanent” space and may feel less engaged.

Extended office

Outside of the office, the work environment extends to the building and surroundings, which includes the provision of dining options, health clubs and other amenities and conveniences. In a hot climate, where much of the time workers are unlikely to spend breaks or lunches outside, on-site services and proximity to shopping malls are important. Therefore, the modern office building needs to tick a variety of boxes in order to compete, particularly in a “tenant’s market”.

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Grade A iconic buildings, such as United Tower in Bahrain and the upcoming ICD Brookfield in Dubai, have begun to tap into this trend by providing on-site facilities and, in some cases, becoming truly mixed use, with ICD

Brookfield connected to a 13,935 sq m five-storey retail centre. Source: Gulf News Back to Index

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WHAT’S YOUR PREFERRED INVESTMENT ASSET?

Wednesday, March 29, 2017

The investment atmosphere today may seem complex and daunting, with a plethora of financial products being pushed in the market. Making sense of your expenditure, debts and investments can be slightly overwhelming.

Diversify and conquer

Fortunately, financial planning need not be confusing if one adopts a clear strategy. For those who prefer the simple, straightforward approach, it is best to map out the short, medium and long-term objectives and invest in a diversified manner, so as to minimise risks. Short-term investments have to be liquid and accessible for emergency situations and need not yield high returns.

These could be in the form of government Sukuk (Sharia-compliant bonds), income from savings accounts or term deposits. A medium-term strategy can afford to be aggressive, where one can pitch for higher returns, while spreading the risk between a basket of Sharia-compliant stocks, Sukuk or Sharia-compliant Exchange Trade- Funds.

Selecting property

However, a sound, long-term investment portfolio should be structured in a way that it absorbs risks and meets all your financial goals, right up to the retirement years. The only investment that serves a multiplicity of purpose, over various phases of one’s life, is property. Interestingly, for a large number of investors, buying property is easier than working the equity markets and can be a much-loved project.

Property is a tangible asset that can provide you with an income during your life-time, even as you pass on the asset to your children. It remains one of the more effective instruments to beat inflation in the long term. It is a hybrid asset with the capital appreciation of a stock, but the income-producing capacity of a bond/Sukuk. Returns on property are about one or two points higher than the inflation rate and because of its secure nature, banks are prepared to finance it.

Rental returns

In the long term, property investment can deliver solid returns. While share prices can decline by as much as 10 per cent a day, this kind of fluctuation is extremely unlikely in the real estate market. The opportunity to earn rental income is one of the most attractive features of property investment in the UAE. Rents in Dubai can range from Dh40,000-Dh100,000 a year for a one-bedroom apartment and even in a soft but stable scenario, the market can yield good returns.

Time it right

The question which often puzzles UAE investors these days is the right time to buy an apartment. While it’s true that the macroeconomic environment last year was not conducive, and that increased jobs cuts across the UAE have put a downward pressure on rents and sales prices, the situation is far from bleak. In Dubai and Abu Dhabi, sales prices and rents dropped last year, and while analysts expect to see further downside pressure this year, they believe the worst is over for the residential market. The UAE remains one of the most favourable environments for capital growth and income yield.

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The sector has matured considerably, and the strong fundamental drivers of Dubai’s real estate are all expected to propel the market into another growth cycle in the run-up to the World Expo 2020. Interestingly, expatriates have a better opportunity to build their portfolios. They are in a position to expand their investments by buying in the local market, as well as their home countries. Records show that in the first half of last year, the top foreign property buyers in Dubai included Indians, British, Russian and Pakistani investors. They have shown great agility by taking advantage of opportunities in Dubai and in their countries. In fact, many expats have availed personal financing in the UAE to buy properties back home and further diversify their portfolio.

Note of caution

Handling property is not entirely a walk in the mall. It costs a sizeable chunk of money to complete a property transaction, pay broker fees and get it registered. Properties also come with running costs. There will be periods where an apartment may stand empty, even as you continue to pay a finance and maintenance.

Also, property is not a liquid asset. It takes time and extensive paper work to sell a property. For those seeking liquidity along with returns, it is better to invest in Sharia-compliant stocks, as shares can be bought and sold virtually and instantly.

Ultimately, building an investment portfolio and deciding your asset class should be based on your individual circumstances, needs and preferences. Remember to keep it simple and don’t invest in something you don’t understand.

The writer is the Head of Home Finance, Noor Bank. Views expressed in the column are the writer’s own and do not reflect those of the publication. Source: Gulf News Back to Index

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AYIA NAPA MARINA: LUXE HOMES AND EU

CITIZENSHIP

Wednesday, March 29, 2017

PW speaks to Stavros Caramondanis, CEO of Ayia Napa Marina, about the development and insights about Cyprus’ property-linked citizenship programme.

Who are your target groups for this investment, apart from UAE and other GCC nationals? Do other foreign investors qualify?

Ayia Napa Marina appeals to a wide international audience of investors because the project offers an unparalleled home ownership experience. With a beautiful, sun-drenched location at the tip of three continents, Ayia Napa Marina boasts an array of luxurious accommodation options, complemented by world-class berthing options and retail, hospitality and lifestyle amenities.

The incentive of European citizenship holds great appeal for potential investors eager to leverage this offer for both themselves and their immediate family. Through the project, those who make an investment of €300,000 (Dh1.19 million) will be granted a permanent residence permit for themselves, their spouse and children. Cypriot citizenship will be granted by the government of Cyprus — thereby allowing them the right to live, work, travel and invest anywhere within the 28 EU member states — following an initial investment of €2 million. This landmark opportunity opens a number of doors for potential investors and provides additional benefits to investing in the Ayia Napa Marina project.

The recent launch at the Burj Al Arab in Dubai marked the beginning of a strategic campaign in the emirate and the maiden foray of our international roadshow. In the next few months we will participate in key exhibitions such as the Dubai International Boat Show and Dubai International Property Show, in addition to hosting a promotional stand at the Mall of the Emirates. These activities are part of a wider and strategic international campaign that positions Ayia Napa Marina as an exclusive marina project that provides comfortable and luxurious living, as well as a profitable investment opportunity.

Tell us about your relationship with Sawiris Group for the €220-million development.

Ayia Napa Marina is the realisation of a dream and vision of the project’s partners, Egyptian investor Naguib Sawiris and Cypriot entrepreneur Gerasimos Caramondanis, founder of Caramondanis Group. The value added by Sawiris not only guarantees that the project will be successfully implemented, but attention to quality and detail will be emphasised. In turn, Caramondanis Group enjoys a well-respected local reputation and its 55-year leadership in mechanical and electrical engineering complements the sponsor’s team.

To retain the residency permit, is it necessary to spend a minimum amount of time in Cyprus per year?

There is no requirement to reside in Cyprus after acquiring citizenship.

Does Cyprus residency entitle the holder to free travel across the EU?

The permanent residency permit is for Cyprus only, while those who acquire Cyprus EU citizenship will gain full access to the EU. Citizenship is also granted to the investor’s spouse, children under the age of 18, as well as adult dependent children up to 28-years old who are full-time students. The citizenship is irrevocable and cannot be cancelled.

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What would be the estimated yield of a residence within the project in case it is rented out or utilised as rental holiday property?

We expect the majority of buyers to purchase property to supplement their main residence in their home country. Cyprus’ weather and climate lend itself as the ideal location for investors based in the Middle East to use the Mediterranean island as a summer home.

However, for those looking to sell or rent their property within the development, the return on investment is expected to be healthy at around four to five per cent per year. Ayia Napa Marina is an unprecedented development in Cyprus. Due to the high demand for rental units, both short and long term, we anticipate the return on investment will be far greater than the regional average. Since we shall operate the marina and the residences for the next 50 years, this gives the necessary comfort to our clients that we shall be running on their behalf the facility management of their property, giving them only healthy yields without headaches.

Furthermore, we expect a series of events and activities across the community to significantly boost demand — especially from international tourists, the global marine community and conference participants utilising the on- site event centre.

How long is the process of acquiring residency or citizenship?

The procedure of obtaining Cyprus citizenship by investment takes approximately six months to be approved, though a fast-track route is available, which reduces the process to three months. To gain this, investors must hold a Cyprus residence permit first to qualify, which is offered with investments of over €300,000 and takes two months to process. Source: Gulf News Back to Index

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'LONGER' THAN BURJ KHALIFA?: NEW TOWER AIMS TO BREAK RECORD

Tuesday, March 28, 2017

A company based in New York is looking to build a U-shaped tower that will surpass the total length of Dubai’s most popular landmark.

A project recently unveiled by Oiio Studio, the Big Bend is envisioned to stretch 4,000 feet long, beating the length of Burj Khalifa, which currently holds the crown as the tallest tower in the world at 2,720 feet.

The skyscraper has created quite a social media stir, with a record-breaking length and a design that clearly defies conventional building norms. It is currently being advertised as an architectural masterpiece that seeks to transform the skyline of Manhattan’s Billionaire’s Row, a prestigious location on the southern end of Central Park.

However, while its total length is longer than that of Burj Khalifa, The Big Bend will still be a bit shorter in height: it will rise only up to a certain point then curve back down.

When asked whether the project, once completed, will take away the crown from Burj Khalifa as the world’s tallest tower, the proponents agreed that the matter will definitely be subject to discussion.

“Should the project become a reality, there is certainly going to be an interesting debate about that. It should be interesting because people would have to take sides,” said Ioannis Oikonomou, the skyscraper's designer, in an email sent to Gulf News.

Big Bend

What’s unique about the skyscraper, though, is that it will have a lift that can travel in curves, horizontally and in continuous loops.

“The innovative track changing system allows for the horizontal connection of two shafts on the top and bottom to create a continuous loop,” the company said in a statement.

Oiio Studio said the slender building is actually designed to work around the height limitations in Manhattan.

“If we manage to bend our structure instead of bending the zoning rules of New York, we would be able to create one of the most prestigious buildings in Manhattan. The longest building in the world. The Big Bend can become a modest architectural solution to the height limitations of Manhattan.”

The project is still looking for investments. Source: Gulf News Back to Index

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GCC REALTY INVESTORS’ GLOBAL HUNTING

GROUND

Monday, March 27, 2017

Despite a fall in oil prices and economic attention turning increasingly inwards, investors from the still abundantly affluent GCC countries keep value hunting on the international property market. Political and economic developments such as a looming Brexit, a new administration in the US, demonetisation in India, the refugee crisis in Europe or the tense situation in Turkey are not holding GCC investors back from looking for good real estate deals, and outbound investments are streaming steadily.

Exact figures are hard to come by since there are no capital transfer limits from GCC states and, therefore, no official records on overseas property investment. Globally, according to CBRE, outbound commercial property investment flowed mainly into hotels, offices and retail property, with New York, London, Hong Kong, Paris, Milan, Atlanta, Washington, Tokyo, Sydney and Frankfurt being the preferred destinations, while investment into residential property is focusing on other locations.

As Dubai hosts the International Property Show next week, real estate brokers and realty expo organisers identify some of the current hotspots for outbound residential real estate investment from the Middle East.

London and UK

The Brexit referendum and the increased stamp duty have not been able to curb Arab investor interest in the UK capital. Actually, the fall in the value of the pound relative to the US dollar and dollar-pegged currencies outweighs concern about the UK possibly leaving the EU. “We are still seeing strong demand for London from the GCC and also into the outer areas for GCC investors driven by a search for higher yields,” says Victoria Garrett, Partner at Knight Frank Middle East. “In terms of a safe haven for investment from the GCC, London is still the number one destination for high-net-worth individuals looking to live, work and educate their children. London offers opportunities for investment from studios to let in developing hotspots to trophy asset penthouses in prime central locations.”

In fact, while prices in the prime central London market slipped by 6.3 per cent last year as changes to the stamp duty weakened demand, the final quarter saw activity strengthen as buyers adjusted to the new tax burden. The weaker pound has also led to a value hunt for long sought-after locations, for example Mayfair, making this exclusive area more financially accessible.

It is also understood that Middle East property investors in London are not really concerned that much about Brexit. “We do not get the impression that London is a springboard to major cross-border EU deals by Middle Eastern investors,” says Jonathan Lawrence, partner in the London office of global law firm K&L Gates. Thus, the UK possibly leaving the EU doesn’t really influence buying decisions.

Richard Bradstock, director and head of Middle East at international property investment firm IP Global, is looking at the broader UK market and not just London.

“With the results of the Brexit vote and the sharp fall of the pound, now is the perfect opportunity for dollar- pegged Middle East investors to tap into the long-term potential of the UK market,” he says. “We believe the ‘safe haven’ element is likely to remain a permanent fixture for the UK market, as the exchange rate will bounce back in time, which is why this ‘Brexit discount’ is a short window of opportunity.”

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Bradstock directs his clients to other UK destinations, namely Manchester and Liverpool. “Manchester is one of the strongest buy-to-let cities in the UK,” he says. “Not only are 63 per cent of households renting, which is 24 per cent above the UK average, but in the extended city centre four out of five apartments are rented. In Liverpool, property demand remains strong, with a 6 per cent price growth in June to September last year. We believe demand is likely to rise further as the population of Liverpool is predicted to grow from 870,000 to 1.6 million by 2040.”

India

Property investment in India originating from the GCC is interestingly not driven by GCC sovereign wealth fund or wealthy individuals, but by Indian expats who repatriate their earnings. “The 2.6-million strong Indian expatriate community in the UAE pumped $1.69 billion (Dh6.21 billion) into the Indian real estate market in the first nine months of 2016,” Ajmer S. Kairon, CEO of Raffles Residency, a Singapore-owned developer focusing on the Indian residential property market, tells PW.

“The Indian growth story remains one of the more positive ones despite global slowdowns,” says Kairon. “That is the prime reason for Indian real estate to continue to be attractive to foreign investors. The real estate sector was at the forefront of the government agenda during the budget announcement.”

Indian cities such as Bangalore, Mumbai, New Delhi, Hyderabad, Chennai and Pune appear as preferred locations for investors, with a few luxury developments also attracting the affluent. Particularly, Bangalore has been the fastest-growing city in India over the past few decades, where IT has been the major growth driver responsible for aggressive real estate development.

“The introduction of pro-growth initiatives such as the Real Estate Regulation and Development Act last year is expected to create positive sentiment as far as homebuyers are concerned,” says Sunil Sharma, vice-president of marketing and CRM at Mahindra Lifespace Developers, one of the most reputed residential property developers in India. “This is an opportune time to invest in property in India. Homebuyers can benefit from attractive payment plans for under-construction projects, as well as lucrative offers for ready-possession apartments. The fact that India remains among the world’s fastest-growing major economies adds to the attractiveness of Indian real estate as an investment option.”

Cyprus

The small Mediterranean island of Cyprus has developed into somewhat of an insider tip for investors who want to combine the convenience of a holiday home or the purchase of a rental property on an island with a pleasant climate and a very advantageous residency programme. Cyprus recently amended it citizenship-by-investment scheme, an important part of which is a citizenship-by-investment option especially designed for property investors. It grants citizenship — and with it the right to live, work, study and invest in all 28 EU countries — to those who invest a minimum of €2 million (Dh7.93 million) in real estate. For a smaller investment of €300,000, Cypriot residency is granted.

Morocco

Morocco recently started to attract GCC investors to its real estate market, following investments in other sectors such as tourism, energy, construction and agriculture. Morocco is so far the only country in the Maghreb that has benefitted from such a large increase in investment from the GCC in the last few years, after the country started to ease its formerly red tape-ridden investment and registration procedures. The country is also attractive for Middle East investors due to its distinguished culture influenced by its Berber, Arabian and European heritage.

That said, property in Morocco can still be had for reasonable prices as the country is currently running through a period of re-adjusting real estate values after years of prices increasing. Experts see this as a window of

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opportunity: while Morocco’s economy grew a lacklustre 1.8 per cent last year, the lowest in 17 years, it is expected to accelerate and get back on track in the next two years, with projected GDP growth rates of 4.8 per cent this year and 4.2 per cent next year.

Destinations to look at are certainly Marrakesh with its beautiful mosques and opulent palaces and gardens. Other hotspot are Rabat, Casablanca and Fez, while Tangier, the country’s most important port city on the Strait of Gibraltar and gateway to Europe, recently saw a number of upscale villa and seaside luxury property projects by European and other international developers for prices half of those in European hotspots at the French or Spanish coast.

Philippines

The Philippine property market, similar to India, has received a big boost from the Filipino expat community in the GCC. Surveys found that around a fifth of Filipinos working in the GCC are planning to invest their savings in property on the archipelago for their own use and to earn rental income. The Philippine population has just crossed 100 million, increasing demand for urban dwellings especially from young professionals and families. Another phenomenon is the growing number of retirees and other foreign buyers who want to live and do business in the Philippines and benefit from the relaxed property ownership regulations and long-term visas, as well as the moderate living costs and the warm climate.

In exceptional cases, wealthy GCC investors have been looking into the possibility of acquiring private islands and converting them into tourism free zones, but negotiations in this regard are just in the nascent stage.

There are a number of developments mainly in the urban area of Metro Manila, Cebu City and in the provinces of Laguna, Bulacan, Cavite, Iloilo and Davao, as well as holiday homes scattered across the many islands. A few districts in Manila have developed into nerve centres of the real estate sector. One is Bonifacio Global City, a financial district in Makati surrounded by office towers housing multinational companies, which has experienced quite a number of premium developments mainly targeting the well-off crowd.

Cebu City has emerged as a hot property market for its well-salaried business process outsourcing workforce, apart from being a popular retirement destination.

Honourable mentions

The US remains interesting, although it is unclear whether the current administration intends to change legal frameworks with regards to immigration or the residential status of an investor. “Trendy neighbourhoods such as New York’s Lower East Side have traditionally been overlooked for more established areas,” says Dana Salbak, head of research in the Middle East and North Africa at Knight Frank. “However, recent housing developments such as the $1-billion (Dh3.67 billion) Essex Crossing Development in New York City are acting as catalysts for wider gentrification.” Bradstock, meanwhile, sees a “hidden gem” in Chicago, which he expects to be a key US property investment destination this year.

“The city has the sixth highest GDP among world cities and is diversified across a variety of markets that include finance, technology, telecommunications and transportation,” says Bradstock, adding that since July 2013, average condo prices have risen 16.2 per cent.

Other promising neighbourhoods mentioned by Knight Frank are the 10th Arrondissement in Paris, Woodstock in Cape Town and Mediaspree in Berlin, an office and residential development inspired by London’s Canary Wharf district and currently one of the largest property investment projects in Germany’s capital. Salbak also sees “strong appetite” for holiday property in Cannes on the French Riviera and around Lake Geneva in Switzerland.

International Property Show

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Date: April 2-4

Venue: Dubai World Trade Centre

Time: 10am-7pm

Countries participating:

UAE, USA, UK, Portugal, Cyprus, Spain, Pakistan, India, Philippines, Malaysia, Sri Lanka, Mauritius

Attractions:

* Investment by residency

* Luxury property (local and international)

* Golden visa programme

* Sustainable homes

* Immigration services

* Affordable housing

Special focus:

The Real Estate Brokers Village in collaboration with the DLD. Brokers here will offer the best and latest properties in Dubai, and visitors will have special discounts and offers during the three-day show.

Visitors expected: 16,000 in three days Source: Gulf News Back to Index

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DUBAI PROPERTY LAUNCHES NEW APARTMENT PROJECT, MUDON VIEWS, IN DUBAILAND

Wednesday, March 29, 2017

Dubai Properties (DP) has announced the launch of Mudon Views, a lively, dynamic and vibrant apartment complex, within the popular Mudon residential master community in Dubailand.

The launch comes amidst growing demand for high return real estate investments in the expanding Dubailand district in Dubai. The first phase of the launch includes one, two and three bedroom apartments in two buildings, which will be part of a larger wholly integrated residential community with villas and townhouses.

The developer registered great success with the showcasing of the Mudon Views project at the recent Dubai Property Show in Shanghai that took place at the Shanghai World Expo Exhibition and Convention Centre from 24-26 March. The company, which was a Platinum Sponsor of the show, received a strong response from Chinese property investors who were particularly interested in Dubai’s wide range of residential investment developments in the Dubailand district, led by Mudon Views. Mudon is one of the most sought after developments for its green and family-friendly environment that offers an active and healthy lifestyle.

Masood Al Awar, Chief Commercial Officer at Dubai Properties said, "Communities like Mudon Views continue to be a key investment category for property buyers, especially families who are in search of holistic living within self-reliant communities that are complete with all facilities and amenities. The success of Mudon and other projects we have launched in this district including Arabella 1 and Arabella 2 are testimony to investors’ interest in the finest caliber of housing in new and emerging parts of the emirate." Source: Emirates Business 24/7 Back to Index

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ABU DHABI INTERNATIONAL AIRPORT WELCOMES OVER 1.9M PASSENGERS IN FEBRUARY

Thursday, March 30, 2017

Abu Dhabi International Airport, AUH, welcomed more than 1.9 million passengers in February, registering a 2.5 percent increase in passenger traffic compared to February, 2016. Terminal 3 at the airport registered a 26.2 percent growth in passenger traffic and 28.6 percent increase in flight traffic.

Passenger traffic to and from Saudi Arabia increased significantly to 13.3 percent due to new flights added by Saudi-based Flynas airline to Jeddah and Madinah, making the Kingdom the second most popular route for passenger traffic at Abu Dhabi International Airport.

Incoming and outgoing UK passenger traffic grew by 9.9 percent, mainly due to London passenger traffic which grew by 21.5 percent due to the addition of a third daily Etihad A380 flight to the UK’s capital.

Passenger numbers to Egypt continued to grow significantly and recorded an increase of 24.1 percent, boosted by Etihad’s four daily flights to the country and the operation of Fly Egypt to Alexandria, which added 1,522 passengers during February.

The top five destinations from AUH during February 2017 were London, Bangkok, Mumbai, Doha and Jeddah, accounting for 18 percent of total passenger traffic. The daily average number of passengers was 68,237, with an average movement of 270 aircraft per day. Source: Emirates Business 24/7 Back to Index

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SMES AT ANNUAL INVESTMENT MEETING

IN DUBAI PITCH FOR ACCESS TO CAPITAL

Saturday, April 1, 2017

The UAE’s small and medium-sized enterprises need access to international investment to support the sector’s growth and in Dubai this week some of the country’s most promising entrepreneurs have been lined up to pitch their ideas to the global investors, economists, ministers and experts who control where that critical funding is deployed.

The seventh Annual Investment Meeting (AIM), which starts today and runs until Tuesday at the Dubai International Convention and Exhibition Centre, is expected to attract 150,000 attendees from 140 countries, including 500 exhibitors.

"Beyond access to capital, foreign investment can offer SMEs critical access to new technologies, which cannot always be achieved through domestic investments or trade," said Neeraj Agrawal, the executive director of Crescent Enterprises and group chief financial officer of Crescent Group. "Foreign investors with specific strategic leverage and industry know-how can often bring a unique combination of capital, skills and experience to the table."

At AIM, 25 start-ups from across the world, including some from the UAE such as Scout My Car, the vehicle inspection company; My Trip Photo, a self-service photography service for the hospitality sector; and Malek-e, which produces wearable GPS trackers for children, have been invited to pitch on April 3.

"Foreign investments are attractive to local start-ups, not just because of the injection of capital, but more importantly for access to new markets and mentorship," said Abdulrahman Abdi, the senior manager for product development at The Cribb, the co-working space in Al Quoz that also mentors start-ups. "Foreign investors open doors for the entrepreneurs to expand to geographies that they deem valuable."

The manufacturing sector is another area that could benefit from greater foreign investment, especially with the benefit of technology inputs provided by international partners.

"The UAE’s ranking as one of the top 15 investment hotspots globally, and the best in the region, builds on its status as a shipping and logistics hub, with a highly diversified economy," Mr Agrawal said.

"There is also an opportunity to strengthen the scale and scope of [foreign direct investment] in emerging sectors, such as health care and environment."

Abu Dhabi Ports will also participate at AIM to promote Khalifa Industrial Zone Abu Dhabi (Kizad) as an investment destination. "Free zones are a major point of attraction for global industries and our participation this year at AIM comes at a time when we have recently announced our massive expansion of the Khalifa Port Free Trade Zone," said Mohamed Al Shamisi, the chief executive of Abu Dhabi Ports.

The UAE is the ninth largest destination in Asia for foreign direct investment (FDI), according to the 2016 Global Investment Report from the United Nations Conference on Trade and Development. In 2015, FDI flows amounted to US$13 billion, a 25 per cent increase on 2014.

The top three investor countries were the UK, the US and India with the top three sectors being financial services, real estate and wholesale and retail trade, including car repairs.

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Last year, Dubai attracted Dh25.5bn in FDI inflows and ranked seventh globally as an FDI destination, according to an FDI monitor from Dubai FDI.

Source: The National Back to Index

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DUBAI NON-OIL TRADE VOLUMES FIRM

Saturday, April 1, 2017

Dubai’s non-oil trade volumes grew at 6.1 per cent annually over the past five years as economic growth strengthens for the emirate.

Last year alone, the volumes grew by 8.2 per cent to 92.4 million tonnes compared with the previous year, "reflecting the resilience of the emirate’s economy, and reinforcing its reputation as a global trading hub", according to Dubai Customs.

Currency fluctuations dragged down the value of trade, which declined by 4.1 per cent to Dh1.276 trillion in 2016 from Dh1.331tn in 2014.

In euros, which weakened by 23.4 per cent against the US dollar during the same period, the value grew by 15 per cent to €314 billion (Dh1.22tn) last year from €273bn in 2014. In terms of sterling, which weakened by 25.6 per cent against the dollar between 2014 and 2016, trade value increased to £257bn (Dh1.184tn) in 2016 from £220bn in 2014, up 16.8 per cent. "The results highlight the wisdom of our leadership in planning for the years ahead for the benefit of the nation decades from now," said Sultan Ahmed Bin Sulayem, the DP World chairman and chief executive and chairman of Ports, Customs and Freezone Corporation.

"Dubai’s flexibility and ability to adapt to change and world-class infrastructure are paying dividends."

The IMF forecast a 3.6 per cent economic growth this year, ahead of the 3.1 per cent growth forecast from Sheikh Ahmed bin Saeed, the chairman of the Economic Development Committee. It grew at 3.3 per cent last year.

The growth in non-oil trade volumes coincided with the growth in non-oil foreign trade.

Dubai’s non-oil foreign trade touched Dh1.276tn last year, up from Dh754bn in 2009, announced Sheikh Hamdan bin Mohammed, Crown Prince of Dubai and the chairman of Dubai Executive Council, last month.

Of the figure, imports made up the majority at Dh800bn, while re-exports and exports accounted for Dh330bn and Dh140bn respectively.

China, India, the United States, Saudi Arabia and Germany were Dubai’s top five trading partners. Source: The National Back to Index

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N EW FINANCE HUB A GIFT FOR GUJARAT

Saturday, April 1, 2017

A new financial district is rising on industry wasteland about 30 kilometres from Ahmedabad, the capital of Gujarat in western India.

The first gleaming towers of glass and steel have already sprung up and bankers are busy with meetings in the modern buildings.

Nearby, construction workers are building what will become a World Trade Centre.

Gujarat International Finance Tec-City, or Gift, as the project is known, was announced when Narendra Modi was the chief minister of Gujarat, back in 2007. Mr Modi India’s prime minister.

Construction work for the ambitious project, located at Gandhinagar, began in 2011.

The development – which is scheduled to cost between US$10 billion and $11bn to complete – still has a long way to go, with its estimated completion in 2025. The master plan shows the financial hub and its surroundings, designed as a "smart city" over 359 hectares, with shopping malls, hotels, homes and schools.

It is being touted as India’s first international financial services centre and is aimed to compete eventually with the likes of Dubai, Singapore and even Mumbai, India’s own financial capital.

"A combination of factors are there to support an international financial services centre in Gujarat," says Ajay Pandey, Gift City’s managing director and group chief executive.

"The cost of operations in Gujarat is 30 per cent lower, if not more, from some other parts of the country. It is very well connected and, in fact, has the eighth-largest airport in the country, just an hour [by flight] from Mumbai, New Delhi."

Gift is a joint venture between the government of Gujarat and IL&FS, an Indian company in which sovereign wealth fund Abu Dhabi Investment Authority is one of the shareholders. Gift is responsible for putting the infrastructure in place while developers take on the responsibility of funding and building the other components of the city.

That is not the project’s only connection with the UAE. Gift has recently signed memorandums of understanding with Abu Dhabi Global Market (ADGM) and Dubai International Financial Centre to collaborate on efforts to develop their respective financial markets through initiatives such as exchange of knowledge and exploring business opportunities.

"India definitely needs a financial services hub," says Saurabh Mehrotra, the national director of advisory at Knight Frank India. "Mumbai is the financial capital but Mumbai is one the costliest real estate [areas] in the country. Hence, a B-city is an ideal choice."

With a high-speed rail link planned between Mumbai and Ahmedabad, he says the location of Gift did "look like one of the better choices".

But there are some potential drawbacks that could hinder its growth, he says.

"Gujarat has its own set of challenges," says Mr Mehrotra. "First and foremost, the biggest challenge is getting a workforce. Companies in Gujarat have struggled to get employees because the general culture of that state is that

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people prefer to have their own businesses rather than take up corporate employment. It also becomes a little difficult to get high-end staff to move to Gujarat because of various restrictions, including the liquor restriction because Gujarat is a dry state. The society which develops around a financial services hub with high-end investment bankers would look at luxuries of life, for which this state suffers."

Mr Modi has outlined plans for India to have 100 new smart cities. Being based in his home state, Gift is seen as the leader in the way these plans could serve as inspiration for how other smart cities are built in India.

Part of the reason for Mr Modi’s rise to prime minister is his transformation of Gujarat into a business-friendly destination, raising hopes that he would be able to do the same for the country. Source: The National Back to Index

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FUTURE OF INDUSTRY: ZONESCORP TO OFFER SMES WAREHOUSE LEASES IN ABU DHABI

Wednesday, March 29, 2017

ZonesCorp, the largest developer and operator of purpose-built industrial zones in the UAE, said that in a bid to give the struggling small and medium-sized industry a shot in the arm it was building prefabricated warehouses that will be leased out to them at competitive rates.

The industrial zone operator will put up 261 prefabricated, ready-to-use units covering 300,000 square metres in the Industrial City of Abu Dhabi. Of the total, 80 per cent of the units have been set aside for warehousing and 20 per cent for light industrial units, said Saif Ali Aziez Al Sheraifi, the project manager at Zones•Corp.

The company did not disclose how much the whole project was worth but that it would spend Dh90 million on the first phase, Mr Al Sheraifi said that leasing costs would be competitive.

"This project is designed to fac•ilitate the growth of SMEs and to meet the growing demand for high quality flexible warehousing," said Saaed Eisa Al Khyeli, the director general of Zones•Corp.

"We firmly believe that a flourishing SME sector is the cornerstone of any thriving economy and the UAE is no different. The project is also firmly in line with the Abu Dhabi 2030 Vision to build a sustainable and diversified, high value-added economy."

The average size of the units will be 500 square metres but units up to 1,500 sq metres will be available.

SMEs make up 90 per cent of registered companies in the country and authorities have been banking on small businesses to bolster economic growth at a time when the hydrocarbon industry is in the doldrums because of low oil prices.

The SME segment has not been untouched by the resultant economic fallout – many small business owners skipped town at the height of the drop in oil prices in 2015, leaving what was estimated to be Dh5 billion in unpaid debts.

That has made lenders more reluctant to stump up fresh cash, making life increasingly difficult for entrepreneurs. In turn that has limited the amount of money these cash-strapped businesses have to spend on things such as warehouses. Source: The National Back to Index

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NEW AUTOMOTIVE CITY PLANNED FOR SITE WEST OF ABU DHABI

Tuesday, March 28, 2017

Plans for a major new auto hub in Abu Dhabi have been unveiled at the Global Manufacturing and Industrialisation Summit (GMIS).

Zones Corp, the body responsible for developing specialist economic zones in the emirate, said Rahayel City will contain space for automotive manufacturers, distributors, dealers and parts providers. It will stretch over 12 square kilometres of land.

Work has already started on the first phase of the project, which will involve a Dh1.6 billion outlay on its infrastructure. It is expected to be complete by the end of this year.

Utilities and other infrastructure will be provided to up to 1,800 plots that can be used as car showrooms, service centres, workshops, warehouses, auction houses and for other light industrial purposes.

New residential areas and public recreation facilities will also be built at the site, according to Zones Corp.

It said that Rahayel will be built about 12 kilometres west of Abu Dhabi island on a site chosen for its transport links.

It will be built alongside two major highways towards Al Ain and the Western Region, with its plans also incorporating fut•ure rail links.

Ahmed Ateeq Al Mazrouei, the executive director of the Rahayel City project, said the site would be "a significant contributor to the national economy not only as a regional investment destination but through the creation of skilled jobs for workers in all fields relating to the automotive industry".

The UAE is not the only Gulf country weighing up a move into automotive manufacturing. The Saudi National Automobile Manufacturing Company signed a deal with South Korean manufacturer Daewoo to build a car making plant in the region two years ago. Last month, it agreed a separate deal to build an automotive cluster at the proposed new PlasChem Park being developed next to the U$20bn Sadara chemicals complex at Jubail Industrial City. Source: The National Back to Index

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R TA SAYS NEW DH1.2BN DUBAI ROAD CONTRACTS WILL IMPROVE LINKS TO JEBEL ALI PORT

Sunday, March 27, 2017

A pair of contracts have been awarded for new road projects in Dubai worth almost Dh1.2 billion.

Dubai’s Roads and Transport Authority (RTA) has awarded a Dh393 million contract to build the 7th interchange on Sheikh Zayed Road, which involves construction of a four-lane bridge above Sheikh Zayed Road, and a Dh792m contract to build parallel roads from the Interchange that will provide improved links to Sheikh Mohammed bin Zayed Road and Emirates Road, easing traffic congestion in the area.

It will also improve the movement of goods to and from DP World’s Jebel Ali port.

The 7th Interchange project involves the construction of a new bridge over Sheikh Zayed Road linking from Jebel Ali Port via Dubal Road on one side of the interchange through to Al Yalayis Road on the other.

It will add two lanes from Sheikh Zayed Road turning onto Al Yalayis Road from the east, and two lanes from Al Yal•ayis Road onto Sheikh Zayed Road from the west. Traffic light signals from Gates 1 and 2 at Jebel Ali port will also be improved.

The parallel roads project involves the widening of Al Yalayis Road from three lanes in each direction to six, boosting the capacity of the number of vehicles that can travel on it in each direction to 10,000 per hour. The upgrade involves a 6km-long stretch from the 7th Interchange on to Mohammed bin Zayed Road and Emirates Road.

Under the same contract, a new 5km stretch will be added to Al Asayel Road, extending from Emirates Hills through Jumeirah Islands on to Jebel Ali Free Zone. New feeder roads will also be built at intersections between Al Yalayis Road, Al Asayel Road and First Al Khail Road, including two new fly•overs. A two-lane flyover across Al Asayel Road will link Qarn Al Sabkha Road to Sheikh Mohammed bin Zayed Road, improving access to the Al Furjan community.

Space has also been created to accommodate the future Etihad Rail project

The RTA did not say which firms have been awarded the contracts. However, it is understood that Wade Adams has already begun working on the 7th Interchange project.

China State Construction Engineering Corporation Middle East’s chairman Yu Tao told The National last month that it had been awarded the Dh792m parallel roads project.

Mattar Al Tayer, the director-general and chairman of the RTA, said the new projects "are prompted by Dubai’s sustained development, and the need to meet the requirements of growth and urban development".

"These are also part of the road projects approved for easing mobility and accessibility to the site of Expo 2020," he said.

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The RTA also said that it had recently completed the final phase of the Dh228m Al Houdh Interchange project at the Al Houdh roundabout linking Sheikh Mohammed bin Zayed Road and Al Yalayis Road.

The work has also involved widening Sheikh Mohammed bin Zayed Road from this intersection to the new Al Maktoum Airport road. Source: The National Back to Index

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