NEWS BRIEF 07 SUN DAY 14 February 2016

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RESEARCH DEPARTMENT

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REAL ESTATE NEWS

UAE UAE EXPATS BUYING UK PROPERTY... HIGH RISK INVESTORS? UK FIRM ATKINS SHEDS 100 JOBS AS CONSTRUCTION HIT BY TIGHTENING MIDDLE EAST BUDGETS

DUBAI DUBAI PROPERTY PRICES FALL BY 11% IN 2015 - AFFORDABILITY KEY MARKET DRIVER IN 2016 SAYS ASTECO NEW TOWER TO REFLECT BOTH ISLAMIC AND MODERN ARCHITECTURE DUBAI'S FALCON CITY AIMS TO KICK-START AILING MEGA PROJECT DUBAI RENT ALERT: WHY RESIDENTIAL RENTS WILL FALL THIS YEAR… AND 2017 RENTS FOR 1-BED UNITS IN DUBAI'S BUR DUBAI, DEIRA UP 70% TO 86% DUBAI MAY HAVE MORE SMART CITIES IN INDIA DUBAI POPULATION EXPECTED TO RISE TO 5M BY 2030 TOUGH TIME AHEAD FOR DUBAI DEVELOPER DAMAC AS PROFIT FALLS SHAJI UL MULK: THE MAN, THE FACADE AND THE ADDRESS DOWNTOWN DUBAI FIRE ROTANA ADDS HOTELS ACROSS THE REGION DUBAI HOUSE PRICES TO FALL FURTHER, BUT AT A SLOWER RATE THAN 2015 ACTION HOTELS PAYS $10M FOR DUBAI MEDIA CITY PLOT ARCHITECTS KEEN ON CALATRAVA-DESIGNED TOWER AT DUBAI CREEK PROJECT RISE IN PROFIT FOR DUBAI’S EMAAR MALLS LESS THAN EXPECTED

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ABU DHABI ABU DHABI’S RESIDENTIAL MARKET TO SLOW DOWN IN 2016

RENTS FALL IN SOME OF ABU DHABI’S HIGH-END PROPERTIES PROPERTY REPORT REVEALS ABU DHABI AND DUBAI’S MOST SEARCHED LOCATIONS

NORTHERN EMIRATES RAK PROPERTIES APPOINTS TWO US FIRMS FOR RESORT PROJECT MANAZEL REAL ESTATE LAUNCHES NEW INVESTOR RELATIONS WEBSITE AND MOBILE APP DUBAI RENTAL SOFTNESS MAY HIT NORTHERN EMIRATES RAK PROPERTIES APPOINTS LEADING ARCHITECTURE & INTERIOR DESIGN FIRMS

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RAK PROPERTIES APPOINTS LEADING ARCHITECTURE & INTERIOR DESIGN FIRMS

FRIDAY 12 FEBRUARY 2016

Ras Al Khaimah’s biggest property developer listed on the Abu Dhabi Stock Exchange, said it has announced that it has appointed award-winning American firms Perkins Eastman and Wilson Associates to provide their world-renowned expertise in architecture and interior design to Anantara Mina Al Arab Ras Al Khaimah Resort which is set to open in 2018.

New York City -based Perkins Eastman is an international architecture firm backed with diverse services from interior design, urban design, planning, landscape architecture, graphic design and project management, while Dallas, Texas -based Wilson Associates is an interior designer that creates iconic and progressive luxury environments. The two are key additions to the elite roster of world-class contractors and partners that are collaborating on making the hotel a model of modern design with minimal impact on the environment.

“Our partnership with these distinguished firms will compliment Mina Al Arab which was created with the environment in mind, showcasing and protecting Ras Al Khaimah’s natural beauty particularly along its natural coastal wetlands. Its master plan includes provisions for unique natural trails that will immerse guests in the richness and diversity of the Ras Al Khaimah natural environment. Perkins Eastman and Wilson Associates will help capture these elements in the hotel’s interior and exterior appearances,” Mohammed Sultan Al Qadi, Managing Director and CEO, RAK Properties , said in a statement.

A flagship development of RAK Properties , Mina Al Arab is emerging as a major player in Ras Al Khaimah’s efforts to establish the emirate as a unique destination for leisure and adventure. The project stands alongside a scenic coastline stretch around 88 kilometres north of Dubai International Airport. It embodies RAK Properties’ focus on building well-planned out communities marked by superior quality, modern design and sustainability. Source: Gulf News Back to Index

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DUBAI PROPERTY PRICES FALL BY 11% IN 2015 - AFFORDABILITY KEY MARKET DRIVER IN 2016 SAYS ASTECO

SUNDAY 07 FEBRUARY 2016

22,000 apartments and 7,700 villas schedule for delivery this year, keeping downward pressure on sales and rental rates through 2017

Leading real estate consultancy Asteco has released its latest Dubai report, providing an historic review of last year and 2016 outlook, with affordable communities leading the way in terms of rental demand and investor opportunity against a scenario of significant oversupply looming in the high-end and luxury segments.

The report flags the impact of delayed project delivery in 2015 and a large pipeline for 2016, coupled with the demand slowdown and continued low oil prices, as an indicator of market prospects this year, with both rental rates and sales prices coming under further pressure.

A total of 13,500 apartments and 800 villas were added to Dubai's residential real estate supply in 2015, and a further 22,000 apartments and 7,700 villas are scheduled to be delivered in 2016, with downward rental rate pressure likely to continue through to 2017, says the report.

"However, if we look to the medium and long-term, the outlook is more positive with demand more than likely to grow in line with the progress of key infrastructure projects currently underway, such as Dubai World Central Airport and Expo 2020," said John Stevens, Managing Director, Asteco .

Residential sales recorded across-the-board declines, with villa sales prices down year-on-year by 11% and apartments by 8%. Villas on Palm Jumeirah recorded price declines of 13% over the year, dropping to AED 2,475 per square foot on average and The Meadows was also down 15% to AED 1,150.

End-users, rather than investors, were the predominant buyers of villas and townhouses, with a clear preference for smaller 2, 3 and 4 bedroom units, rather than large villas. New communities such as Mudon and Arabian Ranches Phase 2 saw improved levels of activity, offering better-priced yet good quality alternatives to some of the more established areas.

At the high end of the apartment market, Jumeirah Beach Residence was down 16% to AED 1,370 per square foot and apartments on the Palm Jumeirah dropped 14% to AED 1,720 per square foot on average.

Villa rentals were down 9% on average year-on-year, but Al Barsha recorded an increase for three- bedroom villas, up 9.2% to AED 213,000 per annum while in Mirdiff similar properties rose 4.2% to AED 138,000.

The biggest falls came in Jumeirah and Umm Suqeim where three-bed villas dropped more than AED 50,000 or 20% on average to hit AED 195,000, while larger four-bedroom homes in Arabian Ranches and Jumeirah Park were also down 19% to AED 243,000 and 15.5% to AED 145,000 respectively.

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"With fresh new supply entering the market, this is forcing property owners, especially of older independent villas, to become increasingly competitive on pricing," remarked Stevens.

With supply handover slower than anticipated in 2015, apartment rental rates remained broadly stable over the year, dipping just 1% on average, although Asteco recorded disparities between different areas.

Apartment rental rates were down by 4% on average, with Sheikh Zayed Road recording the highest drop of over 12%. Dubai Marina and Palm Jumeirah both saw a year-on-year dip, with a one-bedroom apartment dropping 13.3% to AED 98,000 and 10% to AED 135,000, respectively.

The DIFC area was not immune either in 2015, two-bedroom units have dropped 8.7% to AED 158,000 per annum, as did JBR with the highest average decline for a two-bedroom apartment, dropping 9.2% to AED 148,000.

"For property owners, adjustments in terms of rental expectations and payment flexibility will have to be made. And, as usual in cases of increased supply, better quality, well managed or value-for- money properties will be able to achieve higher occupancy levels than others," noted Stevens.

The commercial office sector fared slightly better despite significant new space of 500,000 square metres coming online in 2015 and 1.1 million square metres set to be delivered in 2016. H1 2015 saw improved levels of demand leading to moderate increases in rental rates in certain areas.

"The majority of new office supply entering the market this year will be strata-owned buildings in popular office areas like Business Bay and Jumeirah Lake Towers. Sales demand is expected to come primarily from SME level end-users," added Stevens. Source: Press Release 2016 Back to Index

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DUBAI POPULATION EXPECTED TO RISE TO 5M BY 2030

SUNDAY 14 FEBRUARY 2016

The population of Dubai is expected to increase to five million by 2030, said Hussain Nasser Lootah, Director-General of Dubai Municipality.

Speaking on the final day of the fourth World Government Summit in Dubai, Lootah said, as a consequence of increasing population and depleting natural resources, there is a parallel increase in demand on education, energy, employment, housing and all the other issues.

Whether it be improving the traffic congestion, managing waste, or promoting environmental awareness to communities, Lootah added that the current model of cities would not be sufficient to realise future requirements of the community.

To prepare for a brighter, sustainable future, he reiterated the importance of developing institutional partnerships and exchanging of information with other countries.

Mayors and key representatives of sister cities and organisations gathered to sign the ‘Dubai Charter of Sustainable Development Cities Alliance’ seeking to collaboratively achieve the vision of building a sustainable future for Dubai.

Participants came together on the final day of WGS to discuss about sustainable development of future cities in a round-table session titled 'Shaping Future Cities'.

Lootah highlighted the challenges that governments face when planning a sustainable city that not only places people’s welfare at the forefront, but also preserves the natural resources.

Representatives shared views on the aspect that international conventions and covenants would be essential in building cities that would preserve natural resources and achieve balanced sustainability. The experts concurred that prioritising welfare of the communities and natural resources is equally important for the benefit of future generations.

Mayors of Ankara, Casablanca, Amman, and Al Maddinah exchanged successful experiences in building sustainable communities that reduce utilization of traditional energy and focus on renewable energy or alternative sources of energy.

Manvita Bardai, Director of International Capital Market Association-India, also added that in order for cities to remain on the correct path of prosperity and sustainability and ensure leaders take the right steps to achieve high standard of quality in cities, data needs to be assembled and shared with global communities. Source: Gulf News Back to Index

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DUBAI MAY HAVE MORE SMART CITIES IN INDIA

THURSDAY 11 FEBRUARY 2016 Dubai Holding could expand its smart city initiatives in India to add more cities beyond Kochi. Ahmed bin Byat, Chairman Dubai Holdings, told Emirates 24|7 that it is actively in talks with authorities in India about expanding its smart city projects in two more cities, but refused to provide specific details. “We are currently in talks with couple of more cities. I cannot reveal the names. We will make the announcement in due course,” said Byat, who was speaking at the World Government Summit in Dubai. When specifically asked if the announcement would be made during the state visit of His Highness Sheikh Mohamed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces, he said, "No. There would be a lot of announcements made. But our announcements will not be part of this visit," he said. Dubai Holding through Tecom is currently involved in a smart city project in Kochi, Thiruvananthapuram, and the inauguration of the first phase is scheduled for February 20. The project, when fully complete, will comprise of 8.8 million sq ft of built up space, out of which at least 6.21 million sq ft will be specifically for IT/ITES/allied services. Work on the project which started in May 2007 has witnessed intermittent delays following various controversies, starting from allocation of land to project development. While Kochi was the first smart city project in India, the country’s government has announced plans to build a total of 96 smart cities throughout the country and has announced an investment of $7 billion over the next five years. It recently announced an initial list of 20 centres or cities where the first wave of smart cities will be built. Source: Emirates 24/7 Back to Index

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RENTS FOR 1-BED UNITS IN DUBAI'S BUR DUBAI, DEIRA UP 70% TO 86%

THURSDAY 11 FEBRUARY 2016 Rents of one-bed apartments in Bur Dubai have risen by 70 per cent between 2011 and 2015, while rentals in Deira jumped by 86 per cent during the same period, reveals data released by Asteco, a real estate consultancy. Average rentals in the above two communities stood at Dh73,000 per annum (pa) and Dh65,000 pa in 2015. In Bur Dubai, rents touched the lowest in 2011 when average rent for one-bed stood at Dh43,000 pa. Similarly, the lowest in Deira was way back in 2012, with average lease rates at Dh35,000 pa. The highest rentals for the areas were in 2008, with the cost of renting apartment in Bur Dubai and Deira at Dh105,000 pa and Dh88,000 pa, respectively. In 2009, rentals fell by 59 per cent and 45 per cent, respectively, with average rates being Dh43,000 pa and Dh48,000 pa, the consultancy said. Last month, Emirates 24/7 reported that landlords in Bur Dubai, Karama and Deira areas were offering freebies such as zero commission, multiple cheque payments and sharing of apartments. Asteco expects residential rents to fall in Dubai in 2016 and 2017 if “all housing units are delivered on time.” “Rental performance in 2016 will be highly dependent on the timely delivery of supply. Assuming the anticipated supply is handed over on time, rental rates are likely to come under pressure over the course of not only 2016, but also 2017 onwards,” it said. A total of 13,500 apartments and 800 villas were delivered last year, another 22,000 apartments and 7,700 villas are expected to be delivered in 2016. Though JLL, a real estate consultancy, also expects residential rentals softening in the short term, it believes rentals are likely to increase again, perhaps as soon as 2017. Source: Emirates 24/7 Back to Index

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DUBAI RENT ALERT: WHY RESIDENTIAL RENTS WILL FALL THIS YEAR… AND 2017

MONDAY 08 FEBRUARY 2016 Residential rents will fall in Dubai in 2016 and 2017 if “all housing units are delivered on time,” according to Asteco, real estate consultancy. “Rental performance in 2016 will be highly dependent on the timely delivery of supply. “Assuming the anticipated supply is handed over on time, rental rates are likely to come under pressure over the course of not only 2016, but also 2017 onwards,” the consultancy said in a new report. A total of 13,500 apartments and 800 villas were delivered in 2015 while a further 22,000 apartments and 7,700 villas are scheduled to be delivered this year. The consultancy said that the drop in rates will be beneficial to tenants who will be able to negotiate better terms upon contract renewal. It will also assist in unlocking demand from some of the many households sharing housing accommodation who could now potentially afford their own. As for property owners, adjustments in terms of rental expectations and payment flexibility will have to be made. ‘Increased supply, better quality, well managed or good-value-for money properties will be able to achieve higher occupancy levels than others,” the consultancy asserted. Last month, JLL, a real estate consultancy, said that the UAE was unlikely to see oversupply of housing units and commercial space in 2016, with residential rentals softening in the short term. It, however, said prices and rentals are likely to increase again, perhaps as soon as 2017, as the UAE continues on its path to becoming a more mature real estate market. Dubai developers are expecting delivery of 26,000 units this year, while the figure stands at 10,000 units in Abu Dhabi, JLL said. In its report, Asteco states that the trend of falling prices, which began in 2015, is expected to continue during the course of the year, but at a more moderate pace as rates in several developments have already declined sufficiently to encourage deals concluding. With several of the previously launched off-plan projects coming closer to completion, it expects interest for these properties, leading to higher transaction levels.

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Smaller units will be preferred to larger ones, with stable transaction levels for studio and one bedroom apartments and smaller one-, two- and three-bedroom townhouses and villas.

Sales for large, premium units are, however, are likely to remain subdued during the year, driven by few buyers. The US Federal Reserve’s raise in interest rates in December 2015 could lead to slightly higher finance costs and thus increased lending costs for end-users, the consultancy said. Source: Emirates 24/7 Back to Index

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ABU DHABI’S RESIDENTIAL MARKET TO SLOW DOWN IN 2016

WEDNESDAY 10 FEBRUARY 2016 Abu Dhabi’s residential property market is expected to see a slowdown in demand in the next 12 months, after relatively slow but positive market performance in 2015. However, this may not lead to a major drop in rental rates due to the limited amount of new supply that is coming online this year, according to the latest report by Asteco , a real estate services firm. “The UAE’s overall market conditions are under pressure due to lower oil prices, and this will lead to a reduction in government spending. In turn, this could impact future demand as growth slows down and salary levels remain stable,” the report stated. It added that while lower demand may put pressure on both rental rates and sales prices, limited supply is likely to minimise the pressure, at least compared to Dubai. “With the limited amount of new supply anticipated for delivery in 2016, in addition to a slowdown in job creation, rental rates are overall expected to remain at their current levels. However, we’re expecting a slight increase in rental rates for some popular projects, in addition to some older buildings inside Abu Dhabi City that had not increased rates in 2015,” as per the report. In 2016, Abu Dhabi is expected to add 3,000 apartments and 850 villas to its residential supply. Last year, a total of 2,000 apartments and 100 villas were delivered, including 1,010 units in two projects on Reem Island, and 312 units on the Corniche. Apartment rental rates rose by five per cent on average in 2015, with prime projects achieving up to 10 per cent growth. Meanwhile, apartment sales prices went up 3-4 per cent during the year. Asteco said it did not expect to see any major drop in residential sales prices in 2016 for completed properties due to sustained demand by owners-occupiers and investors. Sales for new launches, which slowed down in 2015, are set to pick up once buildings are nearer completion. This could occur in 2017 rather than 2016, however. “Whilst reduced government spending affected the Abu Dhabi market, the emirate experienced stable sales prices and continued rental growth as demand, albeit more subdued, continued to outstrip supply in specific market segments. The continued obstacle in the Abu Dhabi market is the lack of transparent property ownership laws and regulations, which continued to impair sales especially for potential investors residing

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abroad. However, this will potentially be addressed with the new legislation becoming effective in 2016,” said John Stevens, managing director of asset services at Asteco .

At the top end of the market, prime two-bedroom apartments on Abu Dhabi Island were renting at an average of Dh191,000 in 2015 — up from Dh175,000 in 2014. By the end of 2015, the number of residential units reached around 234,000 units. Source: Emirates 24/7 Back to Index

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DUBAI'S FALCON CITY AIMS TO KICK- START AILING MEGA PROJECT

TUESDAY 09 FEBRUARY 2016 The main developer of one of Dubai's most outlandish real estate projects, the Falcon City of Wonders, says the long-delayed project will gain new life this year with around $2 billion in new developments. The falcon-shaped project has seen only about a tenth of the 5,500 planned homes built since its launch in 2005 and although billed to include outsized replicas of The Pyramids and the Taj Mahal, there are as yet no "wonders" on the 42 million square foot plot. Salem Ahmad Almoosa Enterprises, the family-owned conglomerate that is spearheading the development, says the project's troubles have been caused by sub-developers in charge of attractions such as replicas of the Leaning Tower of Pisa, the Eiffel Tower and recreations of downtown areas of the likes of London and New York. "When we sold these we made it very clear, they had to start construction immediately and they kept on delaying," Alharith Almoosa, vice-chairman of Falconcity of Wonders told Reuters at a property exhibition in Hong Kong this month where he was publicizing the project. "Deadline was before yesterday, a long time ago. It's an expensive agreement, there are damages to us if they don't," he said. Almoosa said Falcon City has since retaken control of more than 10 of these sub-developments which include a mix of residential units, retail, offices and hotels. The company achieved this via Dubai's real estate regulations, arbitration or amicable agreement, he said but declined to provide further details or identify the sub-developers, citing confidentiality agreements. Almoosa said the overall project could still be completed by 2020 and that his company was in talks with new investors but declined to provide more details on how the $2 billion in new developments would be funded. Gaining new investment could be a tough sell, with Dubai property prices again in decline and transaction numbers also down following a sharp rebound from the crash of 2008-10. "Sometimes the agreement moves forward, sometimes agreement rolled back, this is normal business procedure. Not every day is a happy day," said Almoosa, adding that Dubai's hosting of the Expo 2020 exhibition will buoy its property sector. "Whenever anyone says Dubai's market has an over-supply of residential (property), they have to think twice. We have to start contracts now to meet future demand," Almoosa added.

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Source: Emirates 24/7

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UAE EXPATS BUYING UK PROPERTY... HIGH RISK INVESTORS?

SUNDAY 07 FEBRUARY 2016 Expats usually ‘red-flagged’ due to lower UK credit rating as they have lived outside Britain, earned different currency and worked for non-British firm Colourful London houses: Expats in the UAE and Qatar are piling into the British property market. (Shutterstock) Expats in the UAE and Qatar are piling into the British property market in order to beat the UK’s stamp duty surcharge but many will face hurdles, says financial advisory organisations. The observation comes ahead of the introduction this April of a 3 per cent stamp duty surcharge on UK properties for buy-to-let investors and second homeowners compared with residential buyers. “More than 70 per cent of all enquiries come from people living and working outside Britain. The overwhelming majority of these individuals - approximately 45 per cent - currently reside in Qatar and the UAE,” says Kevin White, Head of Distribution at deVere UK. “There has been a 60 per cent month-on-month uplift in enquiries from Qatar and the UAE. Expats from these Gulf nations are now piling into the British property market. “We attribute this rush-to-buy phenomenon to those expats who, quite sensibly, want to avoid being subjected to the extra levy. No-one wants to pay an extra 3 per cent in stamp duty.” A series of recently published reports confirm deVere Mortgages’ observations of a buoyant UK property market, with demand at a three-month high. However, there are extra complications for non-UK residents. White continues: “Whilst demand for UK property soars, expats need to be aware that there are extra hurdles that they will have to face. “Expats should know that they are typically deemed as ‘high risk’ by the vast majority of UK lenders. This is often the case even for those who have substantial assets and/or a high, stable salary. They are usually ‘red-flagged’ due to a lower UK credit rating as they have lived outside the UK, earned a different currency and worked for a non UK-based firm. “Expats also need to consider other important factors including the pitfall of wasting money on excessive rates and the ability to reclaim tax within 18 months. “Therefore to avoid wasting time, effort and money, it is recommended that expats wanting to purchase property in the UK seek advice from advisers who have relevant experience of cross- border financial matters, who will help them fulfil the criteria in an increasingly strict mortgage

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environment, and who have established relationships with the relevant UK lenders,” White said.

Source: Emirates 24/7 Back to Index

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DUBAI RENTAL SOFTNESS MAY HIT NORTHERN EMIRATES

SUNDAY 07 FEBRUARY 2016 If more new homes get delivered in Dubai — that’s still a big ‘if’ going by the records of recent years — this could have a significant impact on rentals not just within the city, but in the northern emirates as well. But for that to happen, nearly all of the 20,000 new apartments expected to be delivered this year in Dubai should make the finish-line. The Asteco report estimates that across Dubai, property values were down 11 per cent during 2015. If so, “rental rates are likely to come under pressure over the course of not only 2016, but also 2017 onwards,” states the latest market update issued by Asteco . “Consequently, this could affect rental rates in the northern emirates as any prolonged declines in Dubai, particularly in rental values, typically affect Sharjah and Ajman. “This drop in rates will be beneficial to tenants who will be able to negotiate better terms upon contract renewal. In addition, the reduction in rates could also assist in unlocking demand from some of the many households sharing housing accommodation who could now potentially afford their own.” In Asteco’s estimates, rentals across Dubai fell by a marginal 1 per cent, with the upscale locations showing a marked dip. In comparison, official rental index suggests the dips were more in the 3-5 per cent range across the board. Abu Dhabi the exception Abu Dhabi remains the exception to the rule. “Abu Dhabi has more of a limited amount of supply in the pipeline due for completion during 2016,” the report adds. “As a result, vacancy rates are likely to remain low despite a potential reduction in demand, implying stability and potential growth, for both sales prices and rental rates.” Will developers start getting generous with their delivery schedules in Dubai and elsewhere? Even last year, there were many who could not see this through, forcing residents to make do with high demand and limited supply. “Despite the numerous property launches in Dubai over the past few years, it is likely that a substantial proportion of these projects will be curtailed due to market conditions, which will allow stock, currently under construction and due for delivery in the next two to three years, to be absorbed,” the Asteco report notes.

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Where developers were able to stick with their promises on delivery, end-users were willing to clamber on-board. In particular, they were willing to put their money for those properties that offer a modicum of space tied to a reasonable pricing. “New communities such as Mudon and Arabian Ranches Phase 2 saw improved levels of activity, offering better-priced yet good quality alternatives to some of the more established areas,” the report notes. New supplies are also having an impact on values of existing properties. “A substantial amount of villas being handed over in Jumeirah Park, Mudon and Arabian Ranches Phase 2... resulted in a sharp correction as Arabian Ranches and Jumeirah Park both recorded 12 per cent decline since [the fourth quarter of] 2014. The rate of decline, however, slowed down during the last quarter of 2015 as occupancy levels improved, and some of the newly handed over communities even witnessed modest rent increases.” Even premium villa-dominated neighbourhoods such as Jumeirah and Umm Suqeim also “suffered” from new supply, “recording drops of over 10 per cent over the year as many of the tenants left the country or had reduced housing allowances,” the report adds. “In addition, substantial new supply in the area has been delivered, forcing property owners, especially of older villas, to become increasingly competitive on pricing. Source: Emirates 24/7 Back to Index

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MANAZEL REAL ESTATE LAUNCHES NEW INVESTOR RELATIONS WEBSITE AND MOBILE APP

SUNDAY 07 FEBRUARY 2016 Manazel Real Estate PJSC ("Manazel"), a leading UAE developer, today announced the launch of its updated Investor Relations (IR) website and new mobile app. These digital IR tools enhance Manazel's communication with its stakeholders by increasing transparency to provide investors with instant access to the most up-to-date and relevant information to help in their investment decisions. Manazel's refreshed IR website and new mobile app, Manazel IR, provide a central resource for financial and operational information, making it easier for existing and potential investors to learn about the company and follow Manazel's corporate activity at a time and place that is most convenient. The new digital tools allow investors to access Manazel's share performance as well as use interactive charts to display performance. The IR website allows investors to sign up to share alerts to receive updated information about changes in the company's share price. The app, which has been optimized for Apple and Android devices, provides instant access to Manazel's latest financial results, the most recent corporate news and a comprehensive archive of annual reports. It digitizes interaction between the company and its investors by encouraging sharing via Twitter and email and is available in 17 different languages including English and Arabic. Manazel's CEO's Hassan Fahmi, said: "Manazel's new IR website and app provides investors and financial analysts with an easy-to-use tool which consolidates relevant and timely information about Manazel Real Estate in this new digital platform. This marks an important step in the development of our IR strategy, which recognizes the growing importance of digital technology to investors. Manazel continually strives to enhance engagement with the investment community and our digital IR tools support our efforts by leveraging technology to provide useful information in a timely manner." The launch of the website and app is the first of many IR initiatives Manazel is undertaking to enhance its investor communication following its listing on the Abu Dhabi Stock Exchange in November 2014. After a strategic restructuring, Manazel implemented a new business strategy during 2015 with a focus on growing non-cyclical revenues through diversification into closely aligned growth centres. To access the website visit www.manazel-re.com and to download the IR app, visit the iTunes store and Google Play and search for 'Manazel IR'. Source: Emirates 24/7

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R AK PROPERTIES APPOINTS TWO US FIRMS FOR RESORT PROJECT

SUNDAY 07 FEBRUARY 2016 RAK Properties has appointed the US firms of Perkins Eastman and Wilson Associates for the architecture and interior design works at Anantara Mina Al Arab Ras Al Khaimah Resort, which is to open in 2018. “Our partnership with these distinguished firms will compliment Mina Al Arab, which was created with the environment in mind, showcasing and protecting Ras Al Khaimah’s natural beauty particularly along its natural coastal wetlands,” said Mohammad Sultan Al Qadi, Managing Director and CEO, RAK Properties. The Mina Al Arab project runs alongside a coastline stretch and around 88 kilometres north of Dubai International Airport. Source: Gulf News Back to Index

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RISE IN PROFIT FOR DUBAI’S EMAAR MALLS LESS THAN EXPECTED

SUNDAY 07 FEBRUARY 2016 The tills may still be ringing and the droves of tourists still arriving, but Dubai’s retail juggernaut showed signs of slowing slightly yesterday as fourth-quarter profit at the emirate’s largest shopping centre owner missed analysts’ expectations. Profit for the quarter ended December at Emaar Malls Group, which owns Dubai’s largest shopping centre, The Dubai Mall, stood at Dh435 million, up 5.5 per cent compared with a year earlier. Although the profit was up, it was still lower than analysts’ forecasts, missing Bloomberg’s consensus of Dh455m. It prompted suggestions that a market slowdown influenced by oil price falls and the strong US dollar is putting the brakes on the mega mall’s recent massive growth. Rents from Emaar Malls’ 6 million square feet portfolio of malls in Dubai – The Dubai Mall, Souq Al Bahar, Dubai Marina Mall and Gold & Diamond Park – rose to Dh821 million, up by 3 per cent on the same period a year earlier. Sales, marketing and general expenses for the quarter stood at Dh116m, 6 per cent higher than for the same period the previous year and again missing analysts’ expectations. The increases came as a total of 124 million visitors flocked through the doors of the malls last year – the equivalent of 50 times the entire population of Dubai and a 9 per cent increase on the previous year. Emaar Malls said that 80 million people alone visited The Dubai Mall last year, the highest number in the world for any shopping and leisure centre. Full-year profit came in at Dh1.65 billion, 2.4 per cent lower than analysts’ estimates, but still 23 per cent higher than the previous year. Full-year rents were also up 11 per cent compared with the previous year at Dh2.99bn. “The retail sector is a key contributor to Dubai’s GDP and Emaar Malls’ assets mark a significant contribution to defining our city as must-visit destination for retail and leisure,” said Mohamed Alabbar, the chairman of Emaar Malls and Emaar Properties. Emaar Malls’ share price fell by 3.4 per cent during trading yesterday to close at Dh2.49. Figures from the Dubai Economy Tracker show that Dubai’s economy grew at its slowest pace for more than five years in December as low oil prices and the strong US dollar took their toll. The number of high-spending Russian visitors splashing their cash at The Dubai Mall has also fallen dramatically. According to Dubai Tourism, the number of tourists coming to Dubai from Russia, CIS and the eastern European region dropped by 22.5 per cent last year compared with 2014.

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“Profits are slightly lower than we expected and costs are slightly higher than consensus, which is something we are putting down to the effect of low oil prices and the strong dollar,” said Saleem Khokhar, the head of fund management at National Bank of Abu Dhabi. “However, in general these are still very good results and do not give us any concerns for the long term.” Last year, the real estate group JLL predicted that about 403,000 sq metres of new mall space will be completed this year, which will prompt retail rents in the city to start to fall. Source: The National Back to Index

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NEW TOWER TO REFLECT BOTH ISLAMIC AND MODERN ARCHITECTURE

SUNDAY 07 FEBRUARY 2016 A new tower combining Islamic and modern architecture will soon be rising on the shores of the Dubai Creek. On Saturday, His Highness Shaikh Mohammad Bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, approved the engineering design of the yet-to- be-named tower, which will be built by Emaar . Shaikh Mohammad, accompanied by Mohammad Ali Al Abbar, Chairman of Emaar , and Fadel Al Ali, Chief Executive Officer of Dubai Holding, visited an exhibition at Burj Khalifa in which six global consultancy-engineering companies were competing for the new tower’s design. Shaikh Mohammad reviewed the engineering designs and approved a design by the renowned Spanish designer the Santiago Calatrava Valls, who is also credited with works including the World Trade Centre Transportation Hub in New York, Chicago Spire Tower, Calgary Peace Bridge and the Olympic Sports Complex in Athens, among others. The new building, which will be an observation tower, will be linked to the central island district of Dubai Creek Harbour, on integrated development on the Dubai Creek. What will be offered inside the tower has yet to be released. According to a statement on WAM, the design will reflect Islamic architecture and the UAE’s rich culture and heritage. Shaikh Mohammad lauded the idea of the new tower and its building at one of the most important historical sites, which is expected to be a major tourist destination once complete. “The sustainable development is pressing ahead steadily as we planned before and we will continue until achieving our aims and our people’s aspirations,” Shaikh Mohammad said. Shaikh Mohammad described the tower as a unique architectural masterpiece on a par with Burj Khalifa and Eiffel Tower. Al Abbar thanked Shaikh Mohammad for his continuous support and confidence in Emaar’s projects, which will “propel our company toward more success and boost the national economy, as well as contribute to developing smart cites.” “The new tower is designed in Dubai creek to become a monument and cultural and tourist landmark combing Islamic architecture and modern design. It will be unique in its design to stand as an iconic building that reflect cultural diversity,” Al Abbar said. The work on the tower will begin over the next few weeks and its height will be announced later, he added. Source: Gulf News Back to Index

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A RCHITECTS KEEN ON CALATRAVA- DESIGNED TOWER AT DUBAI CREEK PROJECT

SUNDAY 07 FEBRUARY 2016 The new Santiago Calatrava-designed observation tower, which will be the centrepiece of Emaar Properties’ Dubai Creek project, has been welcomed by architects. The tower’s design was approved by Mohammed bin Rashid, Vice President of the UAE and Ruler of Dubai, on Saturday, following an international design competition featuring six consultancy firms. The winning design by the Spanish-Swiss architect provides a modern twist on Islamic architecture, and was described by Sheikh Mohammed as an “architectural wonder that will be as great as Burj Khalifa and the Eiffel Tower”, according to the state news agency Wam. The height of the tower has not been specified but in drawings provided by Emaar it looms high over neighbouring towers. Emaar said a name for the tower has not yet been chosen. Its chairman Mohamed Alabbar said the new tower would prove to be a cultural and tourist landmark, adding that construction would begin within the next few months. The tower is to be linked to a central island district within the Dubai Creek Harbour district, which is being developed by Emaar and Dubai Holding. The pair signed a joint venture to develop Dubai Creek Harbour in October 2013, stating that it would be a master-planned city over 6 million square metres – three times the size of Emaar’s Downtown Dubai district. Last month, Emaar Properties also said that it had started work on Dubai Creek Residences – a network of six residential towers of 30 to 40 storeys being built on the same island district. The construction contract was awarded to Al Basti & Muktha and the towers are scheduled for completion in 2018. P Martin Dufresne, design principal and partner at U+A Architect, said that in choosing a design from a “signature” architect such as Mr Calatrava, Dubai is taking a different approach than it did when developing Burj Khalifa. “I think it’s quite brilliant that they are coming in with a Calatrava. He is a class A architect [responsible] for monumental projects – things that are always pushing the limits of engineering.” Mr Dufresne drew similarities between the appointment of Mr Calatrava to build this tower and Bilbao’s appointment of Frank Gehry to build its Guggenheim museum, which gained the city international attention when it opened in 1997.

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“Of course, Dubai doesn’t need that, but it adds to the sophistication that the city is trying to reach in terms of its architecture. So I think it’s a really good choice.”

Paul Priest, a director and head of Mena studios for the architecture firm Benoy, said that he felt the Calatrava-designed tower “will be an excellent addition to Dubai’s skyline”. Mr Priest said: “Well-designed buildings become signatures of the city.” He added that it would play an important role in the development of the wider Dubai Creek area.“Towers, by their nature are the iconography of wider developments and, as such, generators of investment and catalysts for change. “It must be more than an icon and become a destination. How this is executed is yet to be seen, but promises to become another brilliant facet to the city of Dubai.” Yahya Jan, a design director and vice president of Norr Group, said that this would be Dubai’s first purely observational tower, but that other cities like Toronto were well-known for them. “I think it’s a great location for an observation tower. It’s in a natural, heritage setting. At the same time, it looks both down the creek to the heart of traditional Dubai and out towards the new Dubai – the Burj Khalifa, Downtown and beyond.” Source: The National Back to Index

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UK FIRM ATKINS SHEDS 100 JOBS AS CONSTRUCTION HIT BY TIGHTENING MIDDLE EAST BUDGETS

SUNDAY 07 FEBRUARY 2016 Construction companies are laying off staff as experts warn that the low cost of oil will continue to bite into budgets this year. Last week the British engineering company Atkins became the latest construction-related firm to cut jobs in the region as it made about 100 of its 2,000 Middle East-based staff redundant because of worsening economic conditions. Atkins said that the job losses from its property and infrastructure teams were the result of a continued slowdown in both the UAE real estate market and infrastructure sectors. “We have been continually assessing the regional market carefully over the last few months and have seen an ongoing slowdown in awards of new projects across the property and infrastructure sectors,” an Atkins spokesman said. “Unfortunately, due to these worsening economic conditions, in recent weeks we have therefore taken the difficult decision to make almost 100 people redundant in our Middle East property and infrastructure teams.” Much of Atkins’ business in the region comes from railway contracts and other large-scale infrastructure work, as well as large property projects. The company has been heavily involved in designing the initial stages of Etihad Rail in the UAE, while in Qatar it is currently working on designs for Doha Metro Red Line South and in Saudi Arabia it is working on designs for the Riyadh Metro. In Dubai the company is working on major real estate projects such as Emaar’s Dubai Opera District. Oil prices have fallen from more than $110 per barrel eight months ago to about $30, hitting state budgets and spending. On Friday, the ratings agency Standard & Poor’s revised its predictions for the emirate’s balance sheet, estimating that Abu Dhabi’s budget would run at a deficit of about 5 per cent of the emirate’s GDP for the next three years. In January the UAE rail operator Etihad Rail announced a “restructuring initiative” thought to have included slashing almost a third of its workforce as the government comes under pressure to reign in spending. Other major infrastructure projects in the emirate are likely to come under pressure in the coming months as state budgets are squeezed further.

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Local recruitment consultants reported that Atkins was among a flurry of engineering and construction companies currently making redundancies after reduced government budgets.

“Over the past few months the number of phone calls we have been receiving from construction professionals who have been laid off has definitely increased,” said Ben Waddilove, an international director at the recruitment consultant Macdonald & Co. “At the same time we’ve also seen a drop in the number of instructions we are receiving from clients looking to recruit construction professionals, with a drop of probably around 10 per cent. It seems to be mostly firms doing work for or with links to the Abu Dhabi government,” he added. Low oil prices are also having a dampening effect on property markets across the UAE with house prices in Dubai down by an average of 11 per cent in 2015, according to the property data company Reidin and remaining flat in Abu Dhabi. Source: The National Back to Index

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ACTION HOTELS PAYS $10M FOR DUBAI MEDIA CITY PLOT

SUNDAY 07 FEBRUARY 2016 The Kuwait-owned Action Hotels has bought a freehold site in Dubai Media City for US$10 million and plans to open a property by 2018. The developer of three and four-star hotels said that it bought the 5,553.5 square metre site within Media City’s Innovation Hub from a subsidiary of Dubai Holding’s Tecom Group. Innovation Hub is a new, 1.6 million sq feet complex being built at Media City that will have up to 15,000 workers. The area is served mainly by five-star, luxury hotels while there is only one other mid-market hotel nearby, Action Hotels said. The company said that it is in talks with several hotel brands with a view to operating the property, which it plans to complete in 2018. Action Hotels has one other Dubai property: a four-star hotel being built in Dubai Healthcare City on the other side of the emirate, close to Sharjah. It owns a Premier Inn property in Sharjah and is developing other UAE hotels, including a Tulip Inn at Ras Al Khaimah and a Staybridge Suites in Abu Dhabi. “I am delighted that we have agreed to acquire this prime freehold plot of land in such a desirable area,” said Sheikh Mubarak A M Al Sabah, the founder and chairman of Action Hotels. “This acquisition reinforces our presence in key locations in Dubai. “Media City is a thriving area of Dubai with more than 4,500 companies and we have identified strong demand for quality, affordable accommodation. This sought-after location is generating significant operator interest and as always we will be working with our partner hotels brands to secure the best terms.” Charles Bott, the head of hotels, hospitality and leisure at the property consultancy Cavendish Maxwell, said that branded, budget and mid-market hotels in the Middle East were a relatively new phenomenon but there has been a surge of investment in them. This is partly because the region has higher-than-average daily room rates and occupancy levels. “A second factor is the high number of Middle East business guests who have come to believe in the importance of brands. Luxury hotels have educated the market to like brands,” he said. Mr Bott said that another major motivating factor is that budget hotels tend to be more profitable than five-star properties as they cost less to develop and have more resilient occupancy levels in times of a downturn.

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“Worldwide trends show that a return on investment for a five-star hotel would take – on average – between seven and nine years, compared to the return on a budget hotel of five to six years,” he said. Source: The National Back to Index

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DUBAI HOUSE PRICES TO FALL FURTHER, BUT AT A SLOWER RATE THAN 2015

SUNDAY 07 FEBRUARY 2016 House prices in Dubai are likely to fall further this year, but at a slower pace than in 2015 even as further supply comes on to the market, according to Asteco. The property consultancy’s fourth-quarter report for Dubai and the Northern Emirates stated that villa prices fell by 11 per cent last year and apartment prices dropped by 8 per cent. About 13,500 apartments and 800 villas and town houses were delivered last year, which was fewer than initially expected. As a result, approximately 22,000 apartments and 7,700 villas and town houses are due to be handed over this year, including 500 villas at Living Legends in Dubailand and 506 apartments at the much-delayed Marina 101 project. Asteco said that the luxury end of the market remained oversupplied, which will lead to further house price declines and a drop in rents during 2016, with many tenants relocating to newly- completed units. In the short term, this will have a knock-on effect on rents in the Northern Emirates, as any prolonged declines in Dubai typically affect Sharjah and Ajman. However, it added that the affordable housing sector, including staff and labour accommodation, remained undersupplied and said that when construction activity for infrastructure projects related to Expo 2020 ramp up, demand over the medium and longer term will continue to grow. Villa prices dropped by an average of 15 per cent at The Meadows to Dh1,150 per square foot and by 13 per cent at Palm Jumeirah to Dh2,475, according to the study. Apartment prices fell by 16 per cent at Jumeirah Beach Residence to Dh1,370 per sq ft and by 14 per cent at Palm Jumeirah to Dh1,720 per sq ft. “With fresh new supply entering the market, this is forcing property owners, especially of older independent villas, to become increasingly competitive on pricing,” said the Asteco managing director John Stevens. Rents fell by 1 per cent on average, but were much higher in premium areas such as Sheikh Zayed Road (down 12 per cent), Dubai Marina (down 13.3 per cent) and even DIFC (down 8.7 per cent). “For property owners, adjustments in terms of rental expectations and payment flexibility will have to be made,” Mr Stevens added. “And, as usual in cases of increased supply, better quality, well-managed or value-for-money properties will be able to achieve higher occupancy levels than others.”

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Asteco said that on average, a one-bedroom apartment currently attracts a rent that is 24 per cent below the market peak reached in 2008, but 69 per cent higher than the trough in 2011. Two -bed apartments rent at 20 per cent below 2008 peaks. A ReidIn/Unitas report, also published yesterday, said that although homes have only appreciated in value by just 16 per cent since 2009, total returns including rental income over the same period have been closer to 70 per cent. It argued that although prime properties have had higher levels of price growth (26 per cent), in terms of overall returns the gap is just 10 per cent as affordable housing offers better yields. Source: The National Back to Index

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PROPERTY REPORT REVEALS ABU DHABI AND DUBAI’S MOST SEARCHED LOCATIONS

MONDAY 08 FEBRUARY 2016 The two most desirable areas in Abu Dhabi and Dubai for tenants are Khalifa City A and Dubai Marina, the annual Dubizzle property report has revealed. In Dubai, more than 68 million searches were made on Dubizzle last year for apartments for rent in Dubai Marina, followed by International City, that had over 47 million searches, and then Jumeirah Lakes Towers, which had more than 42 million searches. The most searched communities for those looking to rent in Abu Dhabi last year were Khalifa City A, with more than 24 million searches, followed by Al Reem Island and Mohammed bin Zayed City with more than 17 million searches each. Demand for more affordable properties has grown in searches for Jumeirah Village Circle and Dubai Sports City in Dubai, both of which made the city’s top-10 most searched areas list, said Ann Boothello, product marketing manager for property at Dubizzle. “As of December 2015, the price per square foot in these two communities was recorded at a reasonable rate of Dh918,” she said. “In terms of type of accommodation searched for, in Abu Dhabi, two-bedroom apartments were the most sought-after in the popular Reem Island community, for both rent and sale, while one-bedroom apartments were the most popular search criteria in Dubai Marina.” Junaid Lirza, a team coordinator at Binayah real estate agency in Dubai, said that people liked to rent or buy apartments in Dubai Marina as it was a family friendly environment and a bustling part of the city. “Most of our clients prefer Dubai Marina and JLT because it is surrounded by all the services and a family-friendly community,” he said. “For affordable units, clients look for apartments to rent in International City and the new project in Dubai Sports City and International Media Production Zone, while many people prefer to buy houses in Mudon community and Arabian Ranches because of reasonable prices.” Mary Clemente, marketing officer at Master House Properties in Abu Dhabi, said that expats were taking to Al Reem Island for similar reasons – for the community environment and vast array of services provided. “Our clients and many expats prefer to rent and buy properties in Al Reem Island and Saadiyat because it’s a quiet environment suitable for families and has close access to all the needed services,” she said. “Clients can find a two-bedroom apartment starting from Dh120,000 to Dh160,000 [in rent per year].

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“Mohammed bin Zayed City and Khalifa City offer more affordable prices and many facilities around. For buying an apartment, clients prefer Al Raha Beach and Al Reem.”

According to the report, Dubai Marina continues to lead in the rental and sales market, with more than 23 million searches made on for sale properties last year. This was followed by JLT and Downtown Dubai, which recorded more than 15 million searches on for sale properties. In the capital, the most searched for area when it came to buying property was Al Reem Island, with more than six million searches. It was followed by the Shams Abu Dhabi community, which posted a little over two million searches. Source: The National Back to Index

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ROTANA ADDS HOTELS ACROSS THE REGION

MONDAY 08 FEBRUARY 2016 Abu Dhabi’s Rotana is pushing ahead with its expansion in the Arabian Gulf even as it looks to offset challenges at home. The hotel group plans to add five properties in Saudi Arabia this year, three in Qatar and one in Kuwait by the end of 2018, said Guy Hutchinson, the company’s chief operating officer. It is already present in the Gulf with a total of eight properties in Bahrain, Saudi Arabia, Kuwait, Oman and Qatar. Rotana also expects to open four properties in the capital and five in Dubai over the next five yeas, accounting for 3,598 more rooms. These will take the company’s property count to 44 in the UAE. The supply glut of hotel rooms in Abu Dhabi and Dubai coupled with the effect of currency fluctuations are driving down average room rates and taking a toll on occupancy. “The shift in the UAE’s feeder market dynamics due to challenging global economic conditions has brought [Arabian Gulf] travellers into sharper focus than ever before,” Mr Hutchinson said. “Although the market environment continues to remain challenging, we see many positive trends and developments that could yet propel hospitality growth in the region.” He said these include increased infrastructure spending by regional governments, continuing rise in intra-regional travel percentage and the rapid growth of Mice (meetings, incentives, conferences and exhibitions) tourism. About 37 per cent of Rotana’s room nights and 40 per cent of the room revenue are generated from the Gulf region. There is also a renewed investor confidence in the UAE’s hospitality sector. “Investors usually have a longer-term outlook and the buying opportunity is in the next couple of years,” according to Simon Allison, the chairman of Hoftel, an organisation of hotel property investors. “It is now cheaper to buy and cheaper to build.” Hoftel, which has 75 members worldwide, including Abu Dhabi National Hotels and Aldar, organised the two-day Gulf and Indian Ocean Hotel Investors’ Summit in Dubai which started on Monday. Source: The National Back to Index

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SHAJI UL MULK: THE MAN, THE FACADE AND THE ADDRESS DOWNTOWN DUBAI FIRE

TUESDAY 09 FEBRUARY 2016 Shaji Ul Mulk is the man behind the facades of a thousand towers. The billionaire Indian businessman runs the world’s biggest maker of aluminium panels found on skyscrapers worldwide. One of those was The Address Downtown Dubai, which on New Year’s Eve took minutes to erupt in a spectacular ball of flames. It was the latest in a string of high-rise facade fires linked to the use of highly flammable aluminium cladding panels. But unlike those that went before, this was broadcast live to a global audience of millions. It was impossible to ignore and it may yet mark the end of an architectural era. Mr Mulk agreed to speak exclusively to The National and reveal for the first time his part in a story that is still unfolding. It is not just an account of panels and towers, but of the pursuit of profit by developers, contractors and suppliers. It is the story of a city entering its golden age of development, but with building codes struggling to keep pace. Ultimately, it is a story about money. The fortunes of the tycoon who arrived in Dubai in 1982 as a young graduate are intertwined with the city’s boom years, when hundreds of towers were built with incredible speed. By 1985 he had started his own company making tiles but it was not until the early 1990s that his business empire began to grow when he acquired the rights to develop a brand of aluminium composite panel called Alubond USA. Ranked among the top Indian business leaders in the region by Forbes, Mr Mulk, like his business, is a man of many facades. He is a cricketer, a philanthropist, an industrialist and a networker. He is often pictured with celebrities and statesmen. The former president of Pakistan Pervez Musharraf was a guest at his daughter’s wedding in 2013, when Dubai’s Atlantis Hotel was transformed into a lavish Mughal palace – reflecting his own family roots that trace back to a ruling dynasty of southern India. He founded a group of top Indian business leaders in the UAE and called it “The Icon Club”. Even some of his adversaries in business privately describe him as “a charming man”. That charm is on display as he defends the panels that covered The Address Downtown Dubai.

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“This is not an Alubond story – it is a national story,” he says. “It is well known there are hundreds of buildings at risk – it is just a matter of bad luck as to which one catches fire.”

Now he wants to call time on the manufacture of the very panels that helped to make his fortune. He reveals how buildings could be made safer without prohibitively expensive full-scale replacement programmes for the cladding. He also highlights fire risks beyond the aluminium composite panels. Today, Mulk Holdings has interests in health care, property, commodities, power generation and renewable energy. But it was when the company started to make facades that business really boomed. He bought the rights to make Alubond panels from a US company based in Rockford, Illinois, in 1999. Soon the panels were exported around the world as the company spread from its Ajman factory to open plants in India, Africa and Europe. The name led many to assume Alubond USA was from the United States. At a time when the perception of quality was often tied to where building products were made, it was effective marketing. But competitors seethed. One even sent an investigator to verify the company’s address in Rockford. A summary seen by The National describes the premises as a very small strip mall where the group “may have a post office box”. Mr Mulk rejects the claim that the brand name is misleading. “We never claimed anywhere we had a manufacturing facility in the US. We are by far the largest panel manufacturer in the world. The perception of the word ‘USA’ is neither here nor there. The competition can talk.” The classification and testing of aluminium composite panels is an alphabet soup of technical terminology. But most of the panels that are used today can be separated into a few main grades closely aligned with how much plastic they contain. The best ones that are described as being “non-combustible” contain almost no plastic material. They are increasingly specified for skyscrapers in the developed world, as well as in some developing countries. The worst ones contain a high proportion of plastic, which when ignited can burn with spectacular speed and ferocity. These are commonplace in the region and are thought to be on most skyscrapers. They are about 30 per cent cheaper than non-combustible alternatives, which perhaps explains their popularity. “If you asked me how many buildings had fire-rated minerals before 2012, I would say ‘negligible’,” he says. The videos of fires on buildings with plastic-filled cladding are remarkably similar.

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They tend to burst up the facades of skyscrapers within minutes, while falling panels dripping black molten plastic can ignite lower floors, causing secondary fires. The Address blaze took less than two minutes to leap 40 storeys. Several recent UAE blazes followed a similar pattern. The Address, originally called the Burj Lake Tower, was an important project for Alubond. It was being built alongside the world’s tallest – then known as the Burj Dubai. The client was Emaar Properties, the best-known developer in the city, and the designer was the internationally renowned Atkins. It immediately became the poster child of the company. For years it was used to promote Alubond USA panels in brochures and in magazine advertisements. But in a cruel twist, it has now become a totem of public anger over the fire safety of hundreds of high-rise buildings. “Everything before 2012 had only LDPE [low-density polythene], that is the reality,” he says. “Most of the cladding you see in the whole country, the whole GCC for that matter.” He argues that the focus on the panels is only part of the story. The silicone used to seal the gaps between panels as well as the “backer rods” that are found directly behind those strips of silicone to hold them in place could also be responsible for rapid flame spread, he claims. His solution is to make suppliers responsible for the entire installation of exterior wall systems and therefore have direct responsibility for materials used. The world of the cladding industry The tightly knit world of the cladding industry is a complicated one. Architects, consultants, developers, contractors, fire engineers and regulators work closely with each other on projects where billions of dollars are at stake. It appears easy to blame the developers that used the flammable panels as well as the manufacturers that made them, but the reality is more complex. Manufacturers typically sell panels of varying quality from the highly combustible to the non- combustible, depending on what their customers require. That in turn is determined by the relevant building codes that apply. Property developers may award a lump-sum contract to a builder, who in turn subcontracts the cladding to a specialist. That company would then seek out the cheapest product able to meet the specification. Because facades are often sourced in the late stages of a project, when budgets may have already overrun, specifications can be reviewed and cheaper products used. It is the narrative of an entire supply chain rather than particular players within it. “We sell what the customer asks for. We are not the installers, we are not the architects, we are not the engineers,” he says. This summarises the basic position of the aluminium composite panel manufacturing industry when challenged about the fire safety of its product.

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They know precisely how their panels perform when ignited, and have done for decades. But if a market exists for them, they will supply it – at least until now. The Address fire may yet change that system. Mr Mulk says he would like to get all the main manufacturers to commit collectively to stop supplying plastic filled panels. Significantly, he is also about to build a production line to manufacture the sort of non-combustible panels the company already makes in Turkey, where their use is mandatory on tall buildings. Demand for non-combustible panels regionally has been minimal. But the move by Mulk Holdings to start a production line indicates that he anticipates a change in demand. “From what we understand about what is coming, the implementation will be very strict,” said Mr Mulk. At the sprawling Alubond factory in Ajman, he rigs up an impromptu demonstration of a polythene-filled panel of the type used on most of the buildings in the country before 2012. When a blowtorch flame is applied, it quickly starts to drip black molten plastic and in less than a minute and a half is burning fiercely. He does the same to some strips of silicone and backer rods to demonstrate their combustibility in support of his claim that these materials should also face increased scrutiny. The plastic mix inside the panels used on The Address Downtown remains a secret. He insists he does not know their exact composition. “In those days the mix was some part of LDPE and some part minerals. We can only assume that LDPE was more than minerals. We didn’t ask the question. You are talking about 10 years ago – we had no codes, no awareness, no need.” Skyscraper design has to take on a new dimension More than one month on from The Address blaze, skyscraper design faces unknowing. The dangers posed by flammable materials, which may extend beyond the panels themselves as Mr Mulk suggests, are becoming increasingly evident. The regulatory response has to be comprehensive. The reasons go beyond health and safety and encompass reputation protection, the avoidance of litigation and the restoration of investor confidence. If regulators stop short of specifying the use of non-combustible panels for new skyscrapers building insurers may eventually make their adoption effectively mandatory anyway by refusing to underwrite the associated facade fire risk. It is hard to imagine the full-scale replacement of flammable building facades of skyscrapers in Dubai, as the cost involved would be ruinously expensive. Dubai Civil Defence has indicated one option is to install fire breaks using non-combustible panels that would at least limit the potential for fires engulfing an entire elevation. They would act like huge aluminium band aids around buildings – stopping a fire spreading up or down.

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But it remains an unproven solution, and as some engineers point out, it does not address the risk of secondary fires starting from falling burning debris and molten plastic.

Neither would it necessarily prevent a “domino fire”, as occurred in Doha in May 2006, when burning panels fell from one tower and started a fire in another. But until now no better financially realistic response has emerged. Mr Mulk believes developers now have a moral responsibility to make their buildings safer by undertaking such works. He says there is also a commercial incentive. “If I was a building owner I’d be the first one to do it because you immediately bring value to your building. In the worst scenario, if it burns it will only burn three floors. The feeling of social responsibility has to be there. I’m sure all the developers have made enough money from the buildings.” He says he too would be willing to undertake such work at cost. “It should not be about making money,” he says. Mr Mulk is not a man who likes to look back. It is clear he sees The Address fire as in the past – an event he cannot change, however much he would like to. But what also comes across is a desire to change his industry and to play his part to make buildings safer. What does he think about the fire on New Year’s Eve 2016? He acknowledges the human impact of the fire and for a second the businessman facade disappears. “Nobody envisaged so many fires,” he says. “We will come forward and do our bit to give back to society where we can. That’s all you can do.” Source: The National Back to Index

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RENTS FALL IN SOME OF ABU DHABI’S HIGH-END PROPERTIES

TUESDAY 09 FEBRUARY 2016 Some upmarket Abu Dhabi landlords are starting to offer tenants small rent reductions as the low price of oil prompts the capital’s housing market to soften. Overall average housing rents in Abu Dhabi fell by 1 per cent during the three months to the end of December 2015, the real estate services broker CBRE reported, as landlords reduced rents for some larger and higher-end apartment types. However, rents ended 2015 about 4 per cent higher than they started the year, the company said, particularly driven by rent rises for smaller, more affordable homes. It said that tenants looking for cheaper accommodation were renting homes in off-island locations such as Khalifa City, where annual rents for one-bedroom apartments are between Dh40,000 and Dh55,000. In the city centre, they rent for between Dh60,000 and Dh110,000. “In response to the tempered market outlook, some landlords are now starting to offer tenants more flexibility, while also becoming more receptive to minor rental discounts, as they strive to maintain and build tenant loyalty to uphold occupancy rates,” said Matthew Green, the head of research and consulting in CBRE’s Dubai office. Abu Dhabi scrapped its rent cap, pinning rent rises for existing tenants to just 5 per cent, in 2013. The move, which came at a time of an economic boom, helped fuel rampant inflation in 2014 and led to the brokerage ranking Abu Dhabi as the second most expensive place to rent in the world last year – something that has prompted many tenants to up sticks to the cheaper parts of town. But the oil price slump has prompted the Government to put some planned infrastructure projects on hold, precipitating a series of job cuts in the capital’s highly paid oil and gas, infrastructure, construction and services sectors. The UAE rail operator Etihad Rail last month announced a “restructuring initiative” thought to have included cutting almost a third of its workforce as the Government comes under pressure to rein in spending. And last week, the British engineering company Atkins became the latest construction-related group to cut jobs in the region because of worsening economic conditions. The western law firms Simmons & Simmons, Latham & Watkins, Baker Botts and Herbert Smith Freehills have also recently closed their offices in the capital. Other major infrastructure projects in the emirate are likely to come under pressure in the coming months as state budgets are squeezed further, possibly leading to further staff cuts for the sort of well-paid expats who would otherwise be renting upmarket apartments in the city.

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CBRE’s figures confirm reports of a general slowdown in Abu Dhabi rents last year. Last week, the property data company Reidin reported that, according to its figures, rents in the capital fell by an average of 3.8 per cent last year. Source: The National Back to Index

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TOUGH TIME AHEAD FOR DUBAI DEVELOPER DAMAC AS PROFIT FALLS

THURSDAY 11 FEBRUARY 2016 Damac warned that it was facing a “challenging competitive environment” after the Dubai developer posted an 8 per cent drop in fourth-quarter profit. In its full-year results for 2015, Damac said that market conditions in Dubai had cooled significantly since the previous year as profit for the three months to the end of December fell to Dh842.8 million from Dh916.3m a year earlier. Damac said that it had booked nearly Dh500m in penalties from customers who in the years since the global financial crisis had walked away from their off-plan home purchases – a more than 20-fold increase on a year earlier. Hussain Sajwani, Damac’s chairman, told investors that tough conditions create opportunities for developers. “The Dubai real estate market is at a consolidation point in the cycle and the rapid growth witnessed in 2012-2014 is now behind us,” Mr Sajwani said. “However, this market creates opportunities for well-capitalised and experienced companies like ourselves with a strong track record.” Damac said that the results included a provision in the 2014 figures of Dh155.6m and that underlying profit was actually up 10 per cent. Revenue for the quarter increased 6.2 per cent to Dh1.7 billion from Dh1.6bn the previous year, Damac reported yesterday. The company reported that its profits had been boosted by income it booked from cancelled sales, which rose to Dh480m, up from Dh22m the previous year. Damac said that the cancellations related to customer advances that had been retained after the global financial crisis and that were only now being shown on its balance sheet. Damac, like other developers in Dubai, has been hit by falling oil prices and a strengthening of the dirham, which have led to a property slowdown in its home city where 92 per cent of its developments are located. The company reported that the value of the homes it had sold to investors during the fourth quarter of last year fell to Dh2bn, down from Dh2.7bn a year earlier. “The way we look at the oil price is that, yes, it’s a challenge but it’s also an opportunity at the same time,” said Hazem Abdallah, the vice president for investor relations. “For every guy who feels a little bit poorer because of the oil price there’s a guy who feels a little bit richer.” Annual profit at Damac increased by 40.6 per cent to Dh4.5bn from Dh3.2bn a year earlier, while revenue for the full year more than doubled to Dh8.5bn from Dh3.7bn a year earlier. One of its most high-profile Dubai developments is built around a golf course designed by Donald Trump’s Trump Organisation. Damac said that it had seen “no noticeable effect” on sales after the US presidential candidate went on an anti-Muslim tirade.

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Damac shares fell by 4.2 per cent in Dubai trading yesterday to close at Dh2.49.

“On the face of it these figures look very good but if you dig a little deeper it becomes clear that Damac, like other housebuilders, is started to be affected by the slowdown,” said Tariq Qaqish, the deputy head of asset management at Al Mal Capital. “The economy of the UAE is built on oil revenue and in Dubai, real estate is a massive contributor to GDP. Damac will definitely be affected by these issues, probably even more so in 2016 than last year.” Source: The National Back to Index

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VALUATION & ADVISORY With 30 years of Middle East experience, Our professional advisory services are conducted by suitably qualified personnel all of whom have Asteco’s Valuation & Advisory Services had extensive real estate experience within the team brings together a group of the Gulf’s Middle East and internationally. leading real estate experts. Our valuations are carried out in accordance with Asteco’s network of offices in Abu Dhabi, Al Ain, the Royal Institution of Chartered Surveyors Dubai, Northern Emirates, Qatar, Jordan and the (RICS) and International Valuation Standards Kingdom of Saudi Arabia not only provides a deep (IVS) and are undertaken by appropriately understanding of the local markets but also enables qualified valuers with extensive local experience. us to undertake large instructions where we can quickly apply resources to meet clients requirements. The Professional Services Asteco conducts Our breadth of experience across all the main throughout the region include: property sectors is underpinned by our sales, leasing and investment teams transacting in the market and • Consultancy and Advisory Services a wealth of research that supports our decision • Market Research making. • Valuation Services John Allen BSc MRICS

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