News Brief 02

ASSET MANAGEMENT SALES LEASING VALUATION & ADVISORY SALES MANAGEMENT OWNER ASSOCIATION

NEWS BRIEF 02

SUNDAY, 14 JANUARY 2018

RESEARCH DEPARTMENT

ASSET MANAGEMENT SALES LEASING VALUATION & ADVISORY SALES MANAGEMENT OWNER ASSOCIATION

REAL ESTATE NEWS

UAE / GCC WE’RE MOVING IN ALL DIRECTIONS TAKING THE PAIN OUT OF THE WORKPLACE DRAKE & SCULL COMPLETES CORPORATE DEBT RESTRUCTURE FOREIGNERS TO BE ALLOWED TO OWN UP TO 49% OF LISTED SECURITIES MOVENPICK TO OPEN HOTEL IN BASRA EMPLOYMENT OUTLOOK IN UAE TO IMPROVE THIS YEAR, SAY RECRUITMENT SPECIALISTS UAE GROWTH TO ACCELERATE IN 2018 GCC BANKS SET TO BREATHE EASIER IN CURRENT YEAR AFFORDABLE HOUSING SET TO PICK UP PACE IN 2018 WHAT IS RECOURSE FOR DEVELOPERS WHEN INVESTORS FAIL TO PAY? DRAKE & SCULL EXPECTS TO RESTRUCTURE DH1 BILLION OF SAUDI DEBTS BY MARCH THE SELF-DRIVING REVOLUTION WILL ALSO ALTER URBAN REAL ESTATE UAE LEADS GROWTH PATH UAE TO DISTRIBUTE 70% OF VAT REVENUES TO LOCAL GOVERNMENTS RUSSIAN VISITORS TO GCC TO INCREASE 38% BY 2020 INVESTORS RUSH TO PICK UP DUBAI’S AFFORDABLE HOMES SAUDI BINLADIN GROUP DENIES GOVERNMENT TAKEOVER AFTER CHAIRMAN DETAINED DUBAI THE LUXURY HIGH-RISE MARKUP DEVELOPER PREPARES GROUND FOR AN ‘OLD CITY’ IN DUBAI IN SEARCH OF MANSIONS DUBAI’S NEW OFF-PLAN SALES REGULATIONS: WHAT WE KNOW AND DON’T KNOW RENTAL INDEX 2018: INSIGHTS FROM EXPERTS DUBAI'S REAL ESTATE RECORDS ROBUST DH285B IN 2017 DEALS

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REAL ESTATE NEWS DUBAI INVESTMENTS PARK, IMDAAD INK FACILITIES DEAL DUBAI WILL HAVE A ‘FESTIVAL’ FOR PROPERTY SALES TOO DECEMBER'S PRICIEST DUBAI PROPERTY DEAL BAGS DH18.92M ARABTEC UNIT WINS DH250M CONTRACT FOR OPERA DISTRICT NEW IBIS HOTEL MARKED FOR JUMEIRAH VILLAGE DUBAI'S DH7B WALLED CITY PLAN TO MIRROR ISLAMIC ERA UAE RANKED 4TH GLOBALLY IN TERMS OF SKYSCRAPERS DUBAI PROPERTY ABSORBS DH285 BILLION IN 2017 SHOULD UAE PROPERTY AGENTS CHARGE VAT ON COMMISSION? UNION PROPERTIES TO SELL ENTIRE STAKE IN DISTRICT COOLING FIRM EMICOOL NEW TALLEST HOTEL IN THE WORLD SET TO OPEN IN DUBAI UPP UNIT ACQUIRES STAKE IN PALM HILLS DEVELOPMENT YIELDS FOR DUBAI'S AFFORDABLE HOMES SET TO FALL FURTHER ABU DHABI AL WAHA RESIDENCE TO BE COMPLETED BY 2020 ALDAR CLOSE TO MORE PROPERTY HANDOVERS IN ABU DHABI DUTCH BUILDER SAYS WORK HAS STARTED ON YAS ARENA PROJECT NORTHERN EMIRATES MAJID AL FUTTAIM OPENS MALL IN RAS AL KHAIMAH MOODY’S STRENGTHEN INVESTORS CONFIDENCE OF SHARJAH’S BUSINESS ENVIRONMENT MALL DEVELOPERS IN NORTHERN EMIRATES GO BIG SHARJAH ECONOMIC AND RESIDENTIAL PROPERTY REVIEW TIGER ANNOUNCES DH10B PROJECTS IN DUBAI, SHARJAH

INTERNATIONAL UK HOUSE PRICES FALL FOR FIRST TIME IN 6 MONTHS PREMIUM OFFICES CHEAPER TO RENT IN DUBAI THAN HONG KONG, NEW YORK AFTER THE WEST, CHINESE TURN TO EAST FOR PROPERTY

ASSET MANAGEMENT SALES LEASING  VALUATION & ADVISORY SALES MANAGEMENT OWNER ASSOCIATION

WE’RE MOVING IN ALL DIRECTIONS Wednesday, January 10, 2018 Established in 2000 when the entire property market was liberalised, Nakheel has come a long way to becoming one of the leading developers in the region, with a strong customer base, particularly in foreign markets such as India. To date, it has sold about 4,500 properties worth of $2.5 billion (Dh9.18 billion), with 11-12 per cent of its current customer base from India. The company’s CEO, Sanjay Manchanda, talks to PW about the company’s new and ongoing projects and strategy to attract Indian investors. Tell us about your marketing efforts in India. At the moment, we have properties across the spectrum, starting from $145,000 to almost $1.1 million. For example, a one-bedroom apartment in International City comes for around $145,000, which is roughly about 9.3 million Indian rupees at current exchange rates. We also have three- and four-bedroom ready-to-move-in villas at Al Furjan for 50 million rupees. It is a very new residential community we are building within the World Expo 2020 hinterland. We also have The Palm Tower, a 52-storey building on the Palm Jumeirah which has one-, two- and three- bedroom units, and prices start from almost $500,000. There are many developers looking to attract Indian investors. What’s the unique selling point of your projects? I think it comes as an entire package — location, quality, budget and credibility. Real estate is all about location. Not only have we selected good locations, but also have kept an eye on the quality of projects. People want to buy from credible developers who will deliver. How are you helping the buyers obtain finance? We have extended a helping hand by deferring the payment plans. Earlier we used to insist on paying over one year, but now we can look at two years, even three years, depending upon the scheme, market and demand. In some of our ready-to-move-in projects, customers can pay over three years, which means you can sign a contract, make whatever payments under the plan, and start living. As you are utilising the unit, you’re still continuing to pay. So that is something which we are already offering. We also have very successful tie-ups with financial institutions — some are formal and some informal. Also, accessibility to finance is relatively easier now, and the lending rates seem to be very competitive. So when you have all these, people are encouraged to buy. Tell us about your Warsan Village project. What are you doing to attract Indian investors? It’s location is good on an arterial road. It is next to a very well-developed community, International City, and we’ve added certain elements and continuing to add elements around that area. We’ve done what we call a souq or bazaar or a community centre there. We are improving the usage of land around it by developing more retail space. We have just doubled the capacity of Dragon Mart and added a cinema. We’ve added entertainment which was not there. What’s your business strategy keeping the current market in mind? Our strategy is to continue doing what we’re good at, but at the same time developing other verticals of the business. It’s not that we don’t have any off-plan projects. We do have off-plan projects such as Palm 360, and

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there is another project which will be coming very soon and others in the pipeline. But, yes, we are very receptive to what is happening in the market and that’s very important for any company.

We would continue to develop our cash-generating assets, which we have already doubled now, and improve on that. We never had hotels previously, but we are now on target to build almost 6,000 rooms, of which almost 660 are in operation. We’ve already started construction of our 800-room resort. A 550-room resort will soon start. So we’re moving in all directions. You seem to have lately adopted a conservative approach when launching new projects. I won’t say conservative. We have a couple of off-plan projects like The Palm Tower. We also have Palm 360, which is targeted at a very high end of the market. What we are seeing in the Dubai market today is that a lot of launches are happening in the $0.5 million to $2 million space. We already have some ready products for that. And, then again, it also depends on where our land bank is. I can’t do a $0.5 million per unit on a project on a seafront; people will say, this is not right. Will you be launching any new off-plan project soon? We’re on course to bring off-plan projects to the market. I cannot give any timelines. It has to be considered in line with what we see in the market, what we believe is our priority in the overall resource allocation, and how we go about delivering what we have committed to our shareholders and stakeholders. The timing will be determined partly with where we are in our overall strategy and partly by the market. Any advice to investors as the World Expo 2020 draws near? To be honest, you cannot give anybody any advice unless you know the investors’ criteria. I read between the lines when people say that everything is going to stop after 2020; it’s not going to happen like that. If you look at the economic indicators, they are all seeing growth — whether it is population, number of businesses opening, size of the infrastructure, travel and trade. The UAE’s GDP is growing at about 3-3.5 per cent. So in that scenario, you will always have demand coming through. Tell us about Palm 360. We announced Palm 360 some time back, but we are going to do some fine-tuning on the project. We have not even started sales. We will be announcing the date of sales, which will happen next year. Give us an update on the Deira Island project. Deira Island is moving nicely. The first phase of infrastructure work has been completed. Now we are looking to commence the second phase of infrastructure work. We have put the night market on the advanced stages of the construction. Work has started on the 800-room resort, and the 600-room beachfront resort. We have announced the award of a construction contract for the mall. So we are moving on Deira Island as planned. What is the plan for the Palm Jebel Ali? When do you plan to bring it to the market? For Palm Jebel Ali, the plan is the same that we will bring it to the market when we believe the market is appropriate to absorb that kind of inventory. The reclamation is done. We review our projects regularly in conjunction with the market and then we make certain decisions based on that. Source: Gulf News Back to Index

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TAKING THE PAIN OUT OF THE WORKPLACE Wednesday, January 10, 2018 Most of us have suffered from a nagging back-pain, sore elbow, aching wrist or throbbing headache at work. But until a decade ago, most people were unaware of the deep correlation between these health issues and the work environment. Growing research over the years has shown that work-related health issues are common across most workplaces and have a deep impact on employee productivity and the overall wellbeing of the human asset in an organisation. Human engineering, or ergonomics, as it is popularly referred to, is the science that studies people’s efficiency in their working environment. With a whopping 70 per cent leave from work now being accorded to back pain in developed global markets, it is little wonder that ergonomics has taken centre stage in corporate policy and spend. We spoke with Alan McDonald, managing director, Middle East and North Africa, Humanscale, about the importance and benefits of ergonomics in today’s workspaces, whether in office or at home. Why is ergonomic furniture so important? Ergonomics is the science of fitting the task to the worker to maximise productivity, while reducing discomfort, fatigue and injury. Actually, there is very little that is ergonomic about traditional office furniture. It has been keeping people still for over 50 years. Desks that don’t move, computers and monitors on the desks that don’t move, and chairs that people don’t know how to unlock; which means that the humans in these work setups don’t move either. The data is very clear that sitting perfectly still is one of the unhealthiest things you can do, maybe even worse than smoking. Movement is the key to staying healthy at work. Static furniture makes the user change posture to suit it. At Humanscale, we make ergonomic tools that adjust to the user, not the other way around. Which pain points does your range of furniture address? The correct use of our ergonomic products helps reduce a variety of musculoskeletal disorders, carpal tunnel syndrome and repetitive strain injuries. What are the top benefits of ergonomic furniture and accessories? On average we sit at our desks longer than we sleep in our beds. None of us would buy a bad mattress, so why do we buy poor-quality task chairs? The investment to make you more comfortable at work means you are not only more effective and productive, but also looking after your health. Give us some examples of ergonomic furniture. • Workstation seating Task chairs are those that automatically adjust using your weight. This means you can move from posture to posture and still be fully supported. Around 98 per cent of users do not know how to adjust their expensive adjustable task chair, so we designed a chair that does the adjustments for you. • Monitor arms Monitor arms allow you to bring your work forward so you can sit in a neutral posture. This prevents a user being hunched over the desk, causing strains and stresses. A monitor arm helps increase the space at the desk by reducing stand supports such as boxes or A4 paper stacks. They are also great tools to aid collaboration. Around 60 per cent of collaboration happens at the desk rather than a meeting space. The ability to move a screen around and share work is a big help.

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• Sit/stand tools

Our sit/stand tools are designed to enable instant and intuitive switch from a seated to a standing position. Research indicates that one should be standing for 15 minutes of every hour. After an hour of sitting, your metabolism will reduce by up to 90 per cent. Standing stimulates blood flow, keeping you feeling fresh, reducing the need for caffeine and getting you past the post-lunchtime lull. • Lighting The standards for most ambient lighting in offices were written in the 80s and 90s, when paperwork and green screens were prevalent. This means that in general office lighting is too bright. With the advanced technology in flat screens today, we can work on our computers in almost near darkness. However, we have not yet become the paperless office everyone envisaged. This is why we need a task light to personalise the lighting we need. Also, task lights help reduce energy costs by up to 40 per cent. Are your products also designed for home? All of our products can and are used in a home office. Some of our task lights are also well suited to residential and hospitality settings. Work is no longer tied to any one space and is constantly evolving — intuitive design means that a single product can solve a variety of functions and meet multiple requirements. Source: Gulf News Back to Index

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DRAKE & SCULL COMPLETES CORPORATE DEBT RESTRUCTURE Monday, January 08, 2018 Dubai-listed Drake & Scull International (DSI) on Monday said it has completed the restructuring of its corporate general bank debt in the UAE and also secured new credit lines and working capital for its projects. DSI also reached agreements with nine regional and local banks to refinance Dh566 million, comprising 56 per cent of its total corporate general debt, which stood at Dh1.07 billion as of September 30, 2017, according to a statement by the firm. The tenure and the maturity of the Dh566 million corporate general debt have been extended and re-termed on average for three years. The remaining tranche of the company’s corporate general debt, comprising Dh440 million sukuk, will mature in November 2019. The company will initiate talks with its sukuk holders to refinance this tranche in the second half of the fiscal year 2018, the statement said. As of September 30, 2017, the total bank debt of the group stood at Dh2.92 billion. Corporate general debt and projects debt comprise 34 per cent and 66 per cent of total bank debt respectively. “The completion of our debt restructuring in the UAE will enable us to accelerate projects performance and delivery in Dubai and Abu Dhabi. This represents a key priority for the Group as we continue to streamline the business and unlock value across all operating segments,” said Rabih Abou Diwan, Investor Relations Director, Drake & Scull International. Source: Gulf News Back to Index

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FOREIGNERS TO BE ALLOWED TO OWN UP TO 49% OF LISTED SECURITIES Wednesday, January 10, 2018 Saudi Arabia will lower minimum assets under management for qualified foreign institutions (QFIs) starting this month and will allow foreigners to own up to 49 percent of listed securities as it opens up its stock market and plans what could be the world’s biggest initial public offering. The regulator raised the limit for a single qualified foreign investor in a company to 10 percent and set the ceiling for foreign holdings in all categories, whether resident or non-residents, at 49 percent, the Capital Market Authority (CMA) said in a statement on Tuesday. In an initial proposal in 2014 that became effective the following year, the regulator had set a 5 percent limit for a QFI in a single company. The CMA also lowered the level of assets under management or custody investors must have to 1.875 billion riyals ($500 million) from 3.75 billion riyals, saying it may reduce this further still. That’s just one 10th of the initial proposal of 18.75 billion riyals. The formal approval of the new requirements, which take effect Jan. 23, affirms an amended draft proposal from November. Saudi Arabia is opening up its stock market as it takes steps to wean the economy off oil. The government plans to create the world’s largest sovereign fund and sell hundreds of state assets in the process, including Saudi Arabian Oil Co., as well as stakes in the stock exchange, football club and flour mills. Source: Gulf News Back to Index

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MOVENPICK TO OPEN HOTEL IN BASRA Tuesday, January 09, 2018 Movenpick Hotels and Resorts announced on Tuesday it will open a new property in Basra early this year as it aims to capitalise on what it described as Basra’s status as “Iraq’s economic capital.” In a statement, Movenpick said Basra was a regional oil and gas hubs, and that the 152-key property is on track to open its doors in the first quarter of 2018. The hospitality chain said the hotel will be located in the centre of Basra and will fill a gap in the market for upscale hotels. Source: Gulf News Back to Index

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EMPLOYMENT OUTLOOK IN UAE TO IMPROVE THIS YEAR, SAY RECRUITMENT SPECIALISTS Tuesday, January 09, 2018 If you're looking for better employment opportunities this year, you may have a better shot at landing a job in 2018 compared to a year ago. This is because, with the introduction of value-added tax (VAT), improving business conditions, and as companies who have previously downscaled are looking to get back on track and Expo 2020 drawing closer, job openings are gradually moving back into the picture. According to hiring specialists Hays, recruitment activity in the UAE and the rest of the Gulf Cooperation Council (GCC) region is set to increase this year compared to 2017, with 71 per cent of companies looking to hire additional staff in the next 12 months. Within the UAE alone, 70 per cent of employers plan to hire, while 63 per cent forecast market activity to increase year-on-year for their business. As of 2017, nearly half of organisations across the region (40 per cent) reportedly expanded headcounts. And so far, there has been an increased demand for workers to fill sales and executive positions, as well as information technology (IT), construction and property, and tax-related roles. However, some companies are still keeping a lid on personnel costs, with a third of employers reporting to have cut down on their workforces in 2017 and 2016. These trends shared by Hays were based on a survey of 4,250 professionals in the GCC. Chris Greaves, managing director of Hays Gulf region, said some organisations are actively hiring as they have seen many opportunities opening up as a result of the "continued diversification of the local economy and the growing globalised nature of the market." What companies are looking for He said there is significant demand for people in sales, particularly business development professionals with industry experience and networks. This is due to the “increasing volume of new business ventures being drawn to the region in response to the tax-free environment, relatively low barriers to entry and the UAE’s location as a central hub for business.” UAE companies especially those who have previously downscaled, are also looking to hire C-level turnaround specialists “who can lead their business into sustained periods of growth.” “Beyond these, we also believe there to be an increasing number of roles available within the IT industry, thanks to a growing focus on e-commerce and digitalisation of businesses across all sectors, and construction and property industries in response to the growing number of affordable housing projects set to take place within UAE and Saudi Arabia,” he added. “Regionally of course, the upcoming introduction of VAT will also drive new opportunities for tax implementation specialists and there will be growing interest and investment in the job market in the build up to Expo 2020.” Source: Gulf News Back to Index

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UAE GROWTH TO ACCELERATE IN 2018 Tuesday, January 09, 2018 The UAE economy is geared to grow at an accelerated pace at 3.9 per cent in 2018, the Ministry of Economy said on Tuesday. Citing a forecast by the UAE Central Bank, Abdullah Al Saleh, Undersecretary for Foreign Trade at the Ministry of Economy, said government investment in infrastructure projects and growth in foreign trade would spur gross domestic product (GDP) growth in 2018. He was speaking at the UAE Economic Outlook Forum. The fifth edition of the forum, organised by Departments of Economic Development in Dubai and Abu Dhabi, focused on the role of foreign direct investment and trade in encouraging innovation and productivity. In December, the UAE Central Bank estimated GDP growth in 2017 at only 1.6 per cent, partly because of cuts in oil output under a global deal among producers. This year, oil output is not expected to be cut further. In October, the International Monetary Fund (IMF) projected the UAE economy would grow 3.4 per cent in 2018 while overall GCC growth is poised to rebound to 2.2 per cent. The UAE's non-oil private sector ended 2017 on a strong note with business conditions improving at the sharpest pace in 34 months in December. "Steep expansions in output, new orders alongside solid export demand growth underpinned the most recent upturn. In terms of inflation, input cost pressures softened during December, while selling prices fell for the fourth month running," Emirates NBD said in a recent report. Analysts believe that while diversification will better place the UAE to entrench itself from further volatility in oil fortunes, a five per cent value-added tax introduced from January will help boost state revenues by Dh12 billion. A joint report by the Institute of Chartered Accountants in England and Wales and Oxford Economics said after outpacing the rest of the GCC in economic growth in 2017, the UAE is set to almost double its expansion rate in 2018. According to the report, the UAE will record an accelerated growth in 2018 to 3.6 per cent from 1.7 per cent in 2017. The momentum will further gain pace in 2019 to post 3.6 per cent growth. According to the IMF, while consumer price inflation in the UAE will edge up slightly from 2.1 per cent in 2017 to 2.9 per cent in 2018, the UAE will record current account balance at 2.1 per cent this year and next. Most forecasts show that Abu Dhabi's GDP growth is expected to pick up in 2017 to 3.9 per cent and 4.7 per cent in 2018 - outpacing the overall UAE's GDP growth rates over the same period respectively. The Institute of International Finance predicted that the UAE would continue to be the best-managed economy in the region. The UAE possesses large financial buffers - estimated at around $670 billion - on top of its safe-haven status, excellent infrastructure and a relatively diversified business-friendly economy. All these advantages will help the economy cope with the prolonged low oil price environment, the IIF said. Garbis Iradian, chief economist at the IIF, said despite predictions of a slowdown in economic growth elsewhere in the region, the UAE's economic performance would improve in 2017 and 2018 with firming oil prices, an improvement in global trade and the expected easing pace of fiscal adjustment. Source: Khaleej Times Back to Index

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GCC BANKS SET TO BREATHE EASIER IN CURRENT YEAR Tuesday, January 09, 2018 Underpinned by improving stable financial footing, banks in the GCC should breathe a little easier in the year ahead, S&P Global Ratings said. After two years of significant pressure, 2018 would mark the stabilization of the financial profiles and performance of GCC banks, barring unforeseen events, S&P said in its report titled "GCC banks should see a more stable financial footing in 2018 The ratings agency noted that GCC banks would have recognised most of the impact of the softer economic cycle on their asset quality by mid-2018. "That's except for Qatar, where trends in asset quality will depend on how the boycott of the country evolves. Relatively sluggish economic conditions will also keep lending growth muted, as we do not expect oil prices to rebound significantly," it said. The cost of risk of the bank in the region will increase in 2018 because of the adoption of IFRS 9 (international financial reporting standards) and the higher amount of restructured and past due but not impaired loans sitting on their balance sheets, the ratings agency noted. However, the general provisions that GCC banks have accumulated over the years will help a smooth transition to the new accounting standard, it said. "GCC banks' liquidity improved in 2017, and we do not foresee a major change in 2018. Continued debt or sukuk issuance by the GCC governments in 2018 will absorb some of the liquidity without a major change in GCC banks' risk appetite. Finally, we think that GCC banks' profitability will stabilise at a lower level than historically, underpinned by an increased cost of risk and the introduction of value added tax, some of which banks will pass on to their clients" S&P said. Banks in the GCC continue to display strong capitalisation by global standards, albeit with signs of quantitative and qualitative deterioration. "Over the past year, we have affirmed most of our ratings on banks in the GCC. We have taken a few negative rating actions, most of them on banks in Bahrain, Oman, and Qatar. Overall, 28 per cent of our rated banks in the GCC currently have a negative outlook," said S&P. Bank with negative outlook are concentrated in Qatar, due to the potential effect of the boycott on Qatari banks' funding profiles, asset quality, and profitability, but there are a few banks in other GCC countries where idiosyncratic reasons drive our negative outlook, said the report. The report noted that the slowdown in economic activity over the past two years only resulted in a slight increase in nonperforming loans (NPLs). On September 30, 2017, NPLs to total loans for the rated GCC banks reached 3.1 per cent, compared with 2.9 per cent at year-end 2016. "We expect NPL ratios to continue to deteriorate in the next six months and then progressively stabilize, mirroring the stabilisation of the GCC countries' real economy. Overall, we do not expect the NPL ratio to exceed five per cent in the next 12-24 months." The ratings agency said Qatari banks' asset quality is under increasing pressure. On a positive note, rated GCC banks still enjoy strong NPL coverage by provisions, at 139 per cent on Sept. 30, 2017. "These provisions will prove helpful as banks move to IFRS 9 in January 2018. While we think that the overall impact of IFRS 9 adoption on GCC banks will be manageable, in our view a higher cost of risk will persist for some time," S&P said. Source: Khaleej Times Back to Index

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AFFORDABLE HOUSING SET TO PICK UP PACE IN 2018 Wednesday, January 10, 2018 Dubai is often hailed as the queen of luxury housing. After all, it has some of the world's tallest and most expensive properties, securing a spot among top housing markets globally. As the business hub in the Middle East, Dubai surely has a real estate market to match and it is rapidly growing, and it's only going to grow stronger in the coming years. However, Dubai's appeal is not limited to its luxury high-end priorities. Led by a surge in young and middle- income working class population, Dubai is witnessing an incremental demand for affordable housing similar to that seen in major international markets in the late 90s into early 2000s. This has not gone unnoticed by domestic and regional real estate developers. Numerous developers have identified affordable housing as a leading growth segment, reporting double-digit sales growth. Many are seeking to capitalise on this upswing by offering generous and flexible payment schemes, thus bringing the prized asset within the reach of many and turning tenants into owners. This trend is expected to pick up significant pace in 2018. In the past year, the regulators too have displayed immense support for the affordable housing segment. The Dubai Land Development (DLD) plans to incentivise developers to build affordable housing options in central locations, thereby addressing the gap in the market for such offerings. Underpinning the appeal of affordable housing are the twin drivers of population growth and employment opportunities. Dubai plays host to vast number of opportunities for international investors, and as a result of which the sector is in many ways fragmented and unaffordable - for the local population. International investors still represent a clear majority of the Dubai property transactions; a number significantly higher than that seen in more developed markets. This balance is shifting, aided by a surge in population and more people entering into the workforce. The Expo 2020 is a critical catalyst in generating employment opportunities and attracting top talent from various parts of the world. Standard Chartered expects 300,000 new jobs to be created between 2018 and 2021, resulting from hosting the international event in Dubai. With so many new jobs being created, all signs are pointing towards a rise in demand for affordable housing in 2018 and beyond. Furthermore, according to the Dubai Municipality, Dubai's population is projected to grow to over five million by 2030; it is bigger than major international cities such as Sydney and Singapore. In short, this trend signals a new reality - the next few years will present a large, localised population that is shielded from the vagaries of foreign investments in local property markets, and where demand for affordable housing is high and rising. It is little surprise, then, that real estate developers are responding with a number of affordable residential projects in the pipeline. This trend is expected to continue to shape in 2018 and the effect will be felt for years to come, simply because for developers seeking critical mass and for investors providing a reasonable return on their investments. Furthermore, Dubai currently offers yields which are already between eight to 12 per cent, one of the highest in the world. By comparison, properties in London offer around three to four per cent returns while in Mumbai, a 2.5 to three per cent return on rentals is common.

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Further boosting the appeal of the affording housing segment are the attractive extended payment plans being offered by developers. However, with significant number of projects in the pipeline, it will be critical to see if both parties honour their side of the commitment, with developers delivering projects on time and investors honouring their payments as promised, which could determine the future of the sustainability of affordable freehold housing in Dubai, at least in the medium term. Source: Khaleej Times Back to Index

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WHAT IS RECOURSE FOR DEVELOPERS WHEN INVESTORS FAIL TO PAY? Tuesday, January 09, 2018 In the instance of off-plan property purchase, historically a degree of risk is placed on the part of the investor. It is accepted that, with the outlay of funds for a product not yet in existence or at completion, the purchaser requires a certain degree of protection over and above the ordinary due diligence one would be expected to undertake prior to purchase of a premises in a projected real estate development. To ensure that investors are adequately protected, lawmakers have prescribed various requirements that developers seeking to procure funds from off-plan sales must satisfy prior to marketing and sale of off-plan real estate units. In terms of Law No. 8 of 2007, a dedicated escrow account must be opened with an accredited identified agent of the Dubai Land Department (DLD), which agent is tasked with maintenance of complete record of transactions as well as audited account thereof. Further, mandatory registration of all real estate projects under the Real Estate Regulatory Agency (Rera) is required in terms of Law No. 7 of 2006, as well as appropriate developer licensing and documentation delivery in support of their intended project. Any and all disposal of units in the project are to be recorded on the interim real estate register under Law No. 13 of 2008. Further, particular process is identified under Law No. 9 of 2009, equipping the Rera with the ability to cancel stalled projects as and when required. As with all contracts, benefit does not ordinarily accrue in the absence of obligation. Any prospective property owner commits to performance under the terms agreed which would ordinarily involve periodic payment toward the subject unit in the proposed development. In the event of failure to pay the agreed upon amount, the investor could potentially render a developer unable to complete, leading to a propensity for project cancellation. It is, therefore, encouraging that lawmakers have deemed it appropriate to amend the legislation surrounding off- plan purchase and introduce extended protections whereby a developer that does not receive payment per the agreed schedule may initiate action to ensure their project does not suffer protracted cancellation processes owing to insufficient funding. The update issued on the law relating to interim property registration, under Law No. 19 of 2017 amending Law No. 13 of 2008, provides particular and substantial recourse to developers where an investor fails to perform in accordance with the terms of the sale and purchase agreement. The amendments provide that the DLD may be requested to issue 30 days' notice per the required form to an investor whereafter the parties to the contract are invited to resolve issues per amicable settlement. Thereafter, and assuming the parties are unable to reach settlement, the DLD is furnished with the authority to issue an official confirmation of the developers' fulfillment of contractual obligations specifying the percentage project completion per their records. Recourse available to developers is now clearly outlined with variant degrees of remedy, inclusive of withholding amounts and contract termination, dependent upon the statement of project completion as released by the DLD. Further, no formal legal action is required, providing streamlined and expeditious access to the available remedies. Under the amendments, where the real estate project percentage completion reflects 80 per cent or above, the developer is entitled to retain amounts received and continue with performance demanding that the investor

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deliver the due amount. Alternatively, at the developers' option, the DLD may be instructed to auction the subject unit for collection of balance amounts due by the purchaser, or the developer may unilaterally cancel the contract and retain 40 per cent of the purchase price, returning the remaining amounts to the defaulting investor within one year of termination of the contract, alternatively within 60 days following resale of the unit (whichever occurs first). The amendments go on to provide variable deductions and options applicable, depending upon percentage completion identified by the DLD. Where the project completion is between 60 per cent to 80 per cent, the developer may cancel the contract, retain 40 per cent purchase price and return the remaining amounts as specified and where completion is at below 60 per cent, the developer is entitled to retention of 25 per cent. These additions to the existing rules are likely to assist developers that would otherwise be forced to pursue lengthy court process or initiate arbitration proceedings against defaulting investors involving substantial costs and potential project delay as a result. Real estate projects invariably encounter delay and face cancellation as a result of funding issues. Thus, fewer bureaucratic hurdles in accessing escrow funds and initiating action against a defaulting investor, as well as provision of alternate remedy under the amendment, is valuable in promoting equal protection of contracting parties and providing necessary process in retention of funds at critical points in completion of real estate development. Source: Khaleej Times Back to Index

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DRAKE & SCULL EXPECTS TO RESTRUCTURE DH1 BILLION OF SAUDI DEBTS BY MARCH Monday, January 08, 2018 Drake & Scull International expects to finalise restructuring of approximately Dh1 billion of debt it raised for projects in Saudi Arabia by March-end this year. It will begin negotiations with bondholders in the UAE to refinance Dh440 million worth sukuk in the second half of 2018, the company said yesterday. The Dubai contractor, which was hit hard by a slowdown in the Arabian Gulf economies, has already reached an agreement with a group of nine lenders to refinance Dh566m of corporate debt. Under the deal agreed in the fourth quarter of 2017, the banks on average have extended the maturities by three years on loans, representing 56 per cent of the company’s total corporate general debt, which at the end of September last year stood at Dh1.07bn, DSI said in a statement on the Dubai stock exchange, where its shares are traded. The company has secured new credit lines and working capital facilities for its ongoing and new projects portfolio. The Dh440m sukuk, due to mature in November 2019, makes up the remaining tranche of the DSI’s corporate general debt, it said. The DSI group’s total bank debt at the end of the third quarter of 2017 had reached Dh2.92bn. DSI’s shares surged 6.5 per cent in early trading before losing momentum, ending the day down 0.4 per cent at Dh2.29. The company launched a recapitalisation programme early last year in the face of mounting losses, with Dubai- based investor Tabarak Investment becoming the company’s largest shareholder through an investment of Dh500m. “The latest deal with the banks reflect the confidence in the DSI turnaround plan, the resilience of the group’s business model and the positive outlook of the company in the MEP [mechanical electrical and plumping] sector, despite the cyclical challenges that impacted the regional construction industry,” said Rabih Diwan, DSI’s investor relations director. “Our main objective is to drive a consensual restructuring plan with all our creditors across the region to rebalance our capital structure to be more efficient and conducive for our business plan and future prospects.” DSI posted a Dh318m loss for the third quarter of 2017, as contract revenues declined by a third year-on-year and general and administrative costs almost doubled. Source: The National Back to Index

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THE SELF-DRIVING REVOLUTION WILL ALSO ALTER URBAN REAL ESTATE Wednesday, January 10, 2018 Le Corbusier, in his seminal 1925 book The City of Tomorrow declared, “The motor car has completely overturned all our old ideas of town planning”. Almost 100 years later, we are at a similar turning point, with the rise of autonomous vehicles and the demand for urban transport creating a perfect storm — and a perfect challenge — in how city planners approach the plans for the new neighbourhood. Self-driving vehicles have caught not only the imagination, they threaten to change the very nature of transportation. Currently, vehicles stay idle on average more than 90 per cent of the time, according to a recent paper commissioned by MIT. As these autonomous vehicles enter the system, they dramatically reduce the population of cars and therefore fuel usage, congestion and other externalities. A Harvard study estimates that for every shared car, there will be a removal of up to nine cars from the streets. In a city like Singapore (and soon Dubai), the entire transportation needs could be met by 30 per cent of its existing car fleet. Whilst these concepts are hard to comprehend, it appears that these might be a reality within a 15-20 year time frame, similar to the revolution unleashed by the internal combustion engine. These changes have dramatic implications for the urban infrastructure of the city. Consider parking for instance: in any urban city, parking spaces occupy between 6-10 per cent of the urban landscape, an area that is currently expanding at double-digit rates. If more vehicles were shared, we would need dramatically fewer paring spaces and lots. Over time, these valuable areas of urban land would need to be redeveloped to create a whole new spectrum of social services, ranging from public amenities such as parks, bike lanes and fitness trails, to the building of new accommodation, especially affordable and mid-income housing, as parking lots start to become unviable. This was very much a key takeaway in a study by the city of San Francisco. This re-allocation of urban land promises to make downtown areas more efficiently circulated, as the costs of congestion go down, and on the other, looks to increase density as valuable tracts of land get snapped up by private sector developers looking to maximise yield. Autonomous vehicles also promise to push the drive towards “suburbia”, another event foreseen by Le Corbusier in his 1941 book “The Four Routes”, where he stated “the railway converted the cities into true magnets; they filled and swelled without control, and the countryside was abandoned. Luckily, the automobile, through the organisation of roads, will re-establish this broken harmony and start the repopulation of the countryside”. Trial and error Given self-autonomous cars, and the fact that people can sleep whilst commuting, it is likely that the push for suburban neighbourhoods will increase, especially as people strive to look for more economical neighbourhoods. Currently, far-flung communities would be far more easily accessible, and this would have the effect of reducing the price differential between downtown neighbourhoods and their suburban counterparts. In Dubai, it is likely that both these forces will exert themselves over the next decade as this revolutionary technology starts to get mainstream usage. Newer masterplanned communities are already starting to incorporate some of thee dynamics into their planning, although it is likely that there will be some amount of trial and error before neighbourhoods start to settle. This relates to both the technological as well as the urban planning aspect of the equation.

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The sharing economy and the advances in communication will likely spawn the drastic decline of the private (and public) parking space industry. And from a real estate development perspective, promises to usher in an exciting era of redevelopment. Dubai, in most areas of urban architecture and infrastructure, has been ahead of the curve, and it will come as little surprise if this trend is also adopted by city planners and urban and suburban developers within the next five years. The overall mission of human settlements and cities remains the same now as it did at its inception — bringing us together. Newer technologies should facilitate that purpose. Source: Gulf News Back to Index

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UAE LEADS GROWTH PATH Wednesday, January 10, 2018 The World Bank predicted that the global economy would grow 3.1 per cent this year - best showing in seven years - as the UAE is poised to rebound with a 3.1 per cent upswing in 2018. The pace of world growth was expected to moderate to three per cent in 2019 and 2.9 per cent in 2020, the Washington-based bank said in its latest forecast, which it described as a clarion call for public action to prevent growth from slowing. The bank affirmed that the outlook for the global economy is better than expected - rather than worse - with all regions seeing improved growth. "The global economy is set to expand by 3.1 per cent in 2018, slightly up from three per cent last year and marking the first year since the 2008 Great Recession that it will near or achieve full growth potential." "A broad-based cyclical global recovery is underway, aided by a rebound in investment and trade, against the backdrop of benign financing conditions, generally accommodative policies, improved confidence, and the dissipating impact of the earlier commodity price collapse. Global growth is expected to be sustained over the next couple of years - and even accelerate somewhat in emerging market and developing economies thanks to a rebound in commodity exporters," the bank said. The 189-nation lending organisation cautioned about some risks it sees to the international economy. While the UAE will be growing at the fastest pace among the GCC countries, in the Middle East and North Africa, the growth is forecast to pick up over the medium term, as reforms across the region gain momentum and as fiscal adjustments ease amid a projected rise in oil prices, the bank said. In Mena, improved competitiveness and external conditions are expected to further support growth in oil importers. Key risks to the regional outlook are tilted to the downside, including continued geopolitical conflicts and weakness in oil prices," the bank said. The forecast said China, the world's second-largest economy, would grow 6.4 per cent this year. And it foresees growth of 2.1 per cent in the eurozone. In India, GDP growth is expected to reach 7.3 per cent in 2018 before strengthening slightly in 2019-20 to 7.5 per cent, the World Bank projected. The United States saw a smaller upgrade to 2.3 per cent last year and 2.2 per cent this year, while Japan rebounded to 1.7 per cent in 2017 and an expected 1.3 percent this year. The fastest-growing region in the world is East Asia and the Pacific, according to the report. In poorer countries in Africa, Latin America, the Middle East and Asia, economic growth is expected to expand to 5.4 per cent in 2018 as commodity prices firm but not as much as previously expected. Growth in Sub-Saharan Africa is forecast to reach 3.2 per cent this year and 3.5 per cent in 2019, the bank said. World Bank president Jim Yong Kim cautioned against complacency. He urged policymakers to make needed investments in such areas as education and infrastructure as a way to lift lagging worker productivity and increase future growth. "If policymakers around the world focus on these key investments, they can increase their countries' productivity, boost workforce participation and move closer to the goals of ending extreme poverty and boosting shared productivity," Kim said.

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In an update of its twice-yearly economic report, the World Bank however warned that the economic upswing this year was temporary unless governments adopted policies that would focus on increasing workforce participation.

However, the bank warns that countries must make investments to improve their growth prospects, and the time to do that is before the next economic crisis hits, as it inevitably will. World Bank economist Ayhan Kose said increasing the ability of countries to grow faster is "the single most important issue for the global economy. The big story is a good story. Global growth will be stronger than what we expected." Source: Khaleej Times Back to Index

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UAE TO DISTRIBUTE 70% OF VAT REVENUES TO LOCAL GOVERNMENTS Sunday, January 07, 2018 The UAE will allocate 70 percent of the revenue from VAT to local governments across the seven emirates, the government announced. Dubai Ruler and UAE Prime Minister, Sheikh Mohammed, announced the decision during the first UAE Cabinet session of the new year at the Presidential Palace in Abu Dhabi. The Cabinet reviewed the implementation of VAT, including controlling the local markets to guard against any unplanned price hikes. It also reviewed the plan to distribute the revenues collected from the value added tax to local governments to ensure that tax revenues are used to support development project. “We have decided to distribute value added tax revenues in the UAE so that local governments will receive 70 percent of these revenues to achieve better local services, greater community development, and wider support for our citizens," Sheikh Mohammed said. “The government will be transparent about the nature of these projects and firm in controlling the markets to prevent price hikes, and will continue to consult with citizens in order to serves their interests in the first place," he added. The government also adopted the UAE Water Security Strategy 2036, which aims to ensure the availability of safe water in sufficient quantities, during normal and emergencies situations. The strategy includes a list of measures for enhanced water supply including, alternative water sources, emergency water production and distribution, storage mechanisms and water networking across the UAE and a number of legislative items. Source: Arabian Business Back to Index

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RUSSIAN VISITORS TO GCC TO INCREASE 38% BY 2020 Saturday, January 13, 2018 The number of Russian tourists travelling to the GCC in 2020 is expected to be 38 per cent higher than the arrival figures recorded for 2016, according to data published recently by Arabian Travel Market, ATM 2018, which takes place at Dubai World Trade Centre from April 22 to 25. Simon Press, Senior Exhibition Director ATM, said, “Traditionally, the GCC has always been popular with Russian tourists but over recent years, we have witnessed some fluctuations in their arrival rates across the GCC, which was a reflection of volatility in the financial and energy markets. As those factors begin to steady, we are seeing more and more Russian visitors arrive and we expect this to continue.” Russia’s links with the GCC strengthened in 2017 with the introduction of additional airline routes, visas on arrival in the UAE for Russians, a new generation of leisure attractions, retail destinations and a broad range of hotels and resorts right across the GCC region. “An increase of 38 per cent on 2016 arrival figures provides a significant boost to the regional tourism industry and is supported by a number of stakeholders, from immigration initiatives, to the region’s hotels, its F&B venues, resorts, theme parks and malls, which all appeal to Russian visitors,” he continued. Commissioned by ATM, ahead of its 25th edition, the research study by Colliers International found that while the UAE will account for the majority of Russian arrivals, Oman will actually experience the highest Compound Annual Growth Rate, CAGR, at 9.2 per cent. Both countries eased visa requirements for Russian nationals in 2017, in line with their respective tourism strategies. The Colliers research also showed that UAE visitors to Russia were forecast to increase by 15 per cent in 2018, compared to 2016, as Russia hosts the World Cup. In the first three quarters of 2017, Dubai reported a 98 per cent year-on-year increase in the number of Russian arrivals, and the country is one of the emirate’s top 10 source markets. Comparative growth Elsewhere in the UAE, Russian hotel guest arrivals increased 41 per cent in the first quarter of 2017, according to Abu Dhabi TCA and Ras Al-Khaimah, which recorded a 10 per cent YoY increase in international arrivals in the first half of 2017, Russia was the second largest source market last year, with arrivals from the country up 84 per cent YoY. Despite the UAE and Oman leading comparative growth, Saudi Arabia is predicted to witness an increase of at least 20 per cent in Russian visitors to the Kingdom by 2020. According to the report, the increase is being driven by the firming of the Russian rouble, which has been helped by Russia’s decision to join Opec and cut oil production. Over the last 25 years, Russia has been well represented at ATM, with exhibitors including Moscow City Government, National Tourist Union and the city of St Petersburg. Russian visitors to the exhibition increased 17 per cent YoY between 2016 and 2017 and 9.4 per cent of total visitors last year were interested in doing business with Russia. Source: Gulf News Back to Index

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INVESTORS RUSH TO PICK UP DUBAI’S AFFORDABLE HOMES Saturday, January 13, 2018 Investor alert — buyers rushing to snap up Dubai’s affordable property options need to get a reality check. The higher yields they expect to realise from these may be fleeting. Because there are too many of these similarly priced homes are getting built now for delivery by 2020, “the high yields expected by many post-handover are unlikely to be sustained”, says a new market update from the consultancy Core Savills. More so, “if rental demand of these projects is insufficient at handover, this supply surge is expected to exert considerable downward pressure on rents (and) leading to faster yield compression. “Eventually, this contraction in yields will reduce investor demand, in turn pulling sales prices down over the midterm.” An estimated 120,000 plus properties could be added in Dubai by 2020-21, with about 30-40 per cent deemed affordable. These are units carrying price tags of under Dh1,000 a square foot and with smaller built areas as well (800-1,100 square feet being the norm). For the moment, investors are piling into this category, thinking they would be able to generate better returns from future rentals. Between 2014-16, “the stronger decline in (property) prices and only a slight weakness in rents allowed yields in this segment to rise 68 base points representing a relative 8 per cent increase, which worked towards increasing demand,” the report adds. “Most of this buyer demand was led by investor buyers as opposed to end users, who could not afford to shift to ownership due to continued affordability issues.” For the longer term sustainability of the market, today’s tenants will need to start buying and become end users. But, based on market evidence, these tenants are staying put. And which could be why rents within the mid- to lower-end of Dubai’s residential space have not dropped as much as those in high-end areas did. As for the high-end areas, prices could stabilise and the rental declines start to slow down, Core reports. For the overall market, apart from rental declines, factors within the broader economy too could pull down yields. There is the “ongoing strength of the dollar and the imminent — albeit probably limited — inflationary effects of the introduction of VAT are expected to compress investment yields.” In Dubai’s office realty space, it’s all hunky-dory at the top end. Prime districts — including DIFC, D3, Tecom and One Central for example — all experience high demand, evidenced by steady pre and post-leasing activity, the Core report notes. “Master developers of Grade A stock have traditionally preferred not to sell due to the high rental demand. Such developers are typically cash-rich and can therefore sustain the leasing cycle, allowing them to hold on to the stock indefinitely.” As such, there were fewer institutional investors active in this tier due to the limited of investment-grade stock available for sale. Apart from limited stock available for them to buy, they may also be put off by the shorter leasing periods offered at prime commercial property. “Institutional investors typically prefer investment grade assets that are tenanted by blue-chip occupiers with long-term leases of 15 years or more. The average lease terms for prime occupiers in Dubai, however, are much shorter, ranging from five to nine years, largely due to the 4 per cent transfer fee applicable on the total lease

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value for a duration above 10 years, which deters occupiers from considering longer term options. “Furthermore, many office complexes within freehold areas are developed and controlled by free zone authorities, while land in onshore areas remains leasehold.” Reits spice up the action in Dubai’s property market In the last two years, real estate investment trusts (Reits) have snapped up quite a few high-exposure properties and projects, such as the “purchase of The Edge, Uninest and South View School by ENBD REIT”. According to David Godchaux, CEO of Core Savills, “Given that Reit’s currently represent a notably small share of the UAE’s listed real estate market compared to other global hubs, the sector is expected to continue expanding over the midterm. By further integrating real estate and capital markets, Reits will potentially increase funding avenues for developers as well as provide smaller investors access to diversified property investments.” Source: Gulf News Back to Index

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SAUD I BINLADIN GROUP DENIES GOVERNMENT TAKEOVER AFTER CHAIRMAN DETAINED Saturday, January 13, 2018 Saudi Arabia's oldest contracting firm, Saudi Binladin Group, denied on Saturday it had become fully state-owned after its chairman was detained in an anti-graft crackdown, but said some shares may have been transferred to the government. International media this week reported the government had taken over SBG after chairman Bakr bin Laden was detained. The Saudi Binladin Group "would like to confirm that it remains a private sector company owned by its shareholders", it said in a statement. But some company shares may have been transferred to the government in a settlement of "outstanding dues", it added, without providing any details on the size of any such shares. "Based on information available to the management, some of the shareholders may have agreed a settlement that involves transferring some SBG shares to the government of Saudi Arabia against outstanding dues," the statement said. Bakr was among dozens of princes and elite businessmen and officials arrested two months ago in a crackdown on corruption ordered by Crown Prince Mohammed bin Salman. Saudi authorities have said they were negotiating financial settlements with those detained that could earn state coffers about US$100 billion. Established in 1931, the contracting company quickly grew after it expanded two mosques in the Muslim holy cities of Mecca and Medina. SBG has encountered serious difficulties in the past few years and has laid off tens of thousands of employees. The Saudi-based Binladin construction firm belongs to the family of the late Al Qaeda leader Osama bin Laden. Source: The National Back to Index

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THE LUXURY HIGH-RISE MARKUP Wednesday, January 10, 2018 Living in the same popular community in Dubai doesn’t always mean that all residents pay the same per-square- metre price range representing the intrinsic value of the properties. In fact, prices can be substantially unbalanced within the same area, depending on whether one buys into a posh high-rise or a less-sophisticated building. This phenomenon of a markup much higher than a property would merit is present all over the emirate, and buyers need to factor this in when comparing properties in a master development. There are certain communities where hefty premiums for residences in high-rises are nothing uncommon, namely Dubai Marina, Downtown Dubai, Palm Jumeirah and other top-notch areas where prices of luxury high- rises and villas are about 25 per cent higher than the median prices in the same community — in some cases the price difference is even threefold. Asked which building would be representative for such contortions, Taimur Khan, senior analyst at Knight Frank in Dubai, cites the 50-storey Le Reve tower in Marina as among those that standout with a hefty markup. It is arguably the most luxurious residential building in the community with 80 penthouses designed as royal or presidential apartments, targeting the rich and famous. “Le Reve registers as one of the most expensive properties in the Dubai Marina area, offering a well-finished product in a desirable area, but at a markup price” Khan tells PW. Apartments in Le Reve command prices of up to Dh43,000 per square metre, which is at the level of Paris, New York, Lausanne and Munich. In fact, the markup can go up to 150 per cent when compared to the average prices in Marina and Jumeirah Beach Residence, which are already among the most expensive residential communities in Dubai. There are other high-priced towers in the area, namely iconic buildings such as Emirates Crown, Cayan Tower, Bayside Residence, Silverene Towers and Al Yass Tower, where luxury apartments for at least double the median price in the area have been sold. “Counting in more high-end buildings in this area, the average markup is 26 per cent in terms of price per square metre than the median price for the Marina area,” Khan notes. Another popular area, Downtown Dubai, where the Burj Khalifa, the world’s tallest tower, offers residences with prices between Dh32,000 and Dh43,000 per spare metre as opposed to the district’s median sales price of Dh22,700. “In Downtown, residences rank high in terms of demand in the prime space, with great views of some of the major attractions of the area and well-finished products. Compared to the average square-metre price of Downtown, these projects have an average uplift of around 21 per cent,” Khan says. Where Dubai stands The difference in prices seems to be in line with other major global cities and more mature markets. “Newly built premium residences are anywhere between 15 per cent and 25 per cent over local embedded values in mature international markets such as London, New York or Los Angeles,” says Safina Ahmad, head of residential agency at CBRE Middle East. “Of course, in parts of these cities, it’s the rarity of a new-build opportunity that drives prices up. As one moves away from the central parts of a town, a premium remains.” Compared to those in mature markets, luxury high-rise properties in Dubai are “possibly one of the most fragmented areas of Dubai’s real estate market”, she notes. Adding to that, Dubai is a much younger market, so the rarity factor doesn’t come into play in a big way.

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A good example where the phenomenon of a markup occurs is the Dubai Creek, where the Volante Tower’s pricing surpasses almost every other residential tower in Dubai. “Volante is a prestige offering, so there is a value beyond its utility value. Every apartment ticks the super-prime box,” Ahmad says. In Dubai International Finance Centre, Ahmad identifies “two or three residential buildings that are a standout favourite”. Within those relatively older buildings, there is a preference for upgraded apartments because buyers are looking for an improvement on the quality of the products currently being put into the market, even in high- end communities. Another important factor for the disparity in prices within a community is that prior to the global economic downturn of 2008-09, some developers in Dubai were building with only a 25-year life span in mind. Compared to new prime buildings being brought into the market today, they now have much longer life spans, therefore, a substantially higher quality and higher prices than older buildings around them. “These buildings are within the same micro markets, so community medians can only go so far in giving a sense of the price,” Ahmad explains. “But median prices do not provide enough information for buyers to make informed decisions about appropriate pricing levels for new premium developments.” Knight Frank’s Khan adds that due to location, quality of finishing and amenities, premiums for prime apartments are not a surprise. “While there are new products which are of good quality in new communities, locations such as Marina, Downtown and the Palm will continue to be on the radar for buyers, given they offer existing vibrant communities with a range of facilities,” he says. The case for investors That said, the question remains whether paying a hefty markup in other than the most sought-after locations makes sense from an investor’s point of view, particularly in terms of appreciation and resale value. Even in Dubai, where residents know building names better than street names, there are limits. “In fact, there are ceiling prices within every micro market, and even prestige buyers are value conscious,” says CBRE’s Ahmad. “Today’s buyers, even those in the market for a luxury product, are starting to ask for details of the tangible attributes that make the product comparatively superior. As long as developers refrain from making contractual commitments to a tangibly superior product, their ability to achieve the premiums we have been seeing in Dubai will quickly start to drop.” There is a substantial pipeline of new luxury real estate projects in Dubai, notably Dubai Creek Harbour, Bluewaters Island, Dubai Hills Estate, The Alef Residences and The One on Palm Jumeirah, Imperial Avenue in Business Bay, the 188 tower in Downtown, Hillside in Jumeirah Golf Estates, as well as various luxury towers in Mohammad Bin Rashid City. Many apartments in these developments have price tags of more than Dh10 million. The broad variety of new premium units coming on the market means that prices for existing luxury apartments are up for adjustment. What’s the right investment strategy? According to Ahmad, buying property at a premium can be a good investment depending on the type of investor and the investment strategies and objectives. “If the buyer’s goal is to buy an apartment off-plan and flip it before completion, it is likely that in a rising market developers will increasingly price this growth into their own launch values, in turn diminishing the opportunity for quick returns for buyers,” she reckons. This means that popular luxury developments in the final stages of completion normally do not have much appreciation potential. If a buyer is buying to lease, it is important to have a realistic net yield in mind. If yield play is the buyer’s priority, the focus is likely to be on potential rental returns, factoring in service charges and other fees, which are usually higher in luxury developments.

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For end users, quality is the key determining factor. Few buyers understand what the 10-year guarantee on building units includes, but this is key to understanding what the real cost of owning property is likely to be.

“Maintenance and construction defects of some sort are issues that now arise more frequently. Most of the buildings in Dubai are new, and it takes time for defects to be revealed and the likelihood is that claims will increase going forward,” Ahmad says, adding that “building codes in Dubai are excellent but as in other emerging markets, it takes a little while for enforcement efforts to catch up.” In a nutshell, it is all about how the luxury is perceived and if a buyer is ready to pay for this perception. “It is important for buyers to be fully aware of what the terms ‘luxury’ and ‘prime’ mean. A good building usually features a variety of quality differentials, including energy-conscious construction, as well as architectural and design merits that a brochure has not enough room for, so it overuses vague terms such as luxury,” Ahmad says, adding that buyers should pay more attention on details such as materials, aesthetic values and longevity. “Few people buy a car because of the word luxury. Their decisions are based on horsepower and other features of the car. It’s amazing that many property buyers are unaware of what materials their building is made of or what the quality of their property’s features is.” Source: Gulf News Back to Index

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DEVELOPER PREPARES GROUND FOR AN ‘OLD CITY’ IN DUBAI Tuesday, January 09, 2018 A touch of old Arabia — a new development in Dubai hopes to recreate some of that history through a project expected to cost between Dh5 billion to Dh7 billion. Land for the proposed “Knooz Alsharq City” is currently being negotiated and could take up between 15 million to 20 million square feet. In what is a significant departure from standard real estate developments now, the city would be built around a mosque, in much the same way that it was in ancient Damascus. In fact, the detailing of the new masterplan owes a lot to the “old city” of Damascus and even to recreating the ancient Roman gates that surrounded it. Elaborate alleyways and other architectural touches are being integrated to give that authentic look and feel. (As with the original, there will be seven exits/entrances to the new city.) Interestingly enough, the project was first planned for Damascus itself, and then the conflict happened. The promoters then considered Bahrain and Jeddah among likely possibilities before finalising on Dubai. Now, it hopes to conclude negotiations for the land and be in a position to launch a full plan in three months. Market sources speculate that the location could be somewhere in Dubailand or one of the newer master- developments in the city. GCC and other Arab investors had been particularly active in Dubai’s real estate market last year, together accounting for Dh51 billion. The tensions over Qatar hardly spilt into the property transaction space, as per the latest Dubai Land Department data. The promoters of Knooz Alsharq City include Loulouat Alsharq Investment and Development and Ali Cloud Investment (ACI). The latter has real estate interests in the UAE before this, but not to the scale of Knooz Alsharq. It also had alternative investments, such as a $100 million (Dh367 million) investment in India’s e-distributor Just Buy Live, and in an Islamic bank in Uganda. “We could bring in other investors for the City and reduce our equity to 50 per cent from the current 95 per cent,” said S.M. Ali, Chairman and Managing Director at ACI. The current design plan is to allocate 15 per cent for commercial areas within the city, including traditional Arab souqs. Residential would take up another 25 per cent. Design touches to the future city includes being inspired by the cities of the Umayyad, Mamluk and Ottoman times. For now, the promoters are only focused on the main thing — getting the designated land in their hands. Source: Gulf News Back to Index

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IN SEARCH OF MANSIONS Wednesday, January 10, 2018 Dubai saw of the priciest villa transactions happening in the secondary market last year. The total luxury villa sales in Dubai in the third quarter amounted to Dh688 million, with 71 per cent of transactions from Emirates Living areas. Deals at Emirates Hills alone have been worth Dh107 million. According to high-end real estate company Luxhabitat, an Emirates Hills villa with a built-up area (BUA) of 22,780 sq ft was acquired for Dh95 million in the third quarter. A 19,982-sq-ft villa also in Emirates Hills was the second most expensive at Dh60 million, followed by two smaller Palm Jumeirah villas measuring just over 7,200 sq ft each that were sold for Dh27.5 million and Dh22.5 million, according to the Luxhabitat report, which was based on data from REIDIN and the Dubai Land Department (DLD). The fifth costliest villa transaction recorded was also in Emirates Hills, a 10,588-sq-ft unit that was sold for Dh20 million. In January last year, Luxhabitat also sold a villa in Dubai Hills for Dh38.2 million. Many of the firm’s agents deal ready and off-plan villa properties valued between Dh40 million and Dh50 million. Dubai Hills and District One are among the emerging areas for prime properties to look out for, according to Sally Ann Ghai, associate director of Luxhabitat. In February last year, Better Homes also sold two luxury eight-bedroom mansions in Umm Al Sheif, a leasehold community, one for Dh40 million and another for Dh41 million. “Real estate companies are now offering fantastic deals for luxury properties, which give investors in Dubai plenty of investment options to consider,” says Ahmed Taha, residential consultant at Better Homes. “There is demand for luxurious and modern villas in locations like the Palm Jumeirah and Emirates Hills — two of the most prominent freehold communities in the city.” For her part, Leigh Williamson, an associate at Gulf Sotheby’s International Realty, picks Jumeirah Bay and La Mer as among the new top destinations. “I firmly believe that one day they will become the most prestigious addresses to own a private luxury villa,” says Williamson. A new boutique development in Jumeirah Golf Estates is also in her shortlist of top prime developments. “There are only 24 villas all designed with a modern quality concept, ideal for a family looking for that perfect golf course lifestyle and luxury,” says Williamson. Dubai’s attractions Ghai says the opportunities that Dubai offers in both business and lifestyle have always attracted the ultra rich. “With an international population, it is impossible to understand its value as a world central home base without considering how the UAE fits into the global landscape,” says Ghai. “The property market that caters to these people needs to be understood in the context of the global alternatives, as to some extent any decision to invest here both financially and emotionally will be weighed against what the rest of the world offers.” Ghai points out that the ready luxury property market has been stable over the last 18 months, but the pace of sales in the off-plan market has had a significant impact on the secondary market, eating into the available cash. “However, the unfinished and finished property sectors are very different animals, and waiting months to years for a liveable home is not a viable option for many,” she says. For off-plan options, she says, “Dubai Hills is an important new Emaar community, well thought-out and delivering unprecedented luxury in an integrated community. Bulgari and La Mer offer coastal living as an alternative to the Palm, and Sobha Hartland has plots along the Canal in the heart of the city, which can be self or developer built.” Global standards The high-net-worth (HNW) buyers come with a global understanding of a luxury lifestyle, hence, they need to be catered accordingly. “A luxury home purchase for the ultra-rich in Dubai is probably going to be a family home

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rather than a pure investment,” says Ghai. “They come with a far keener eye for detail and more personal considerations, so it’s vital to understand a client’s personality and aspirations, often conveyed very subtly, and meet those requirements in a home. “The wealthiest individuals will have experienced internationally the highest level of finishes, materials, innovative home systems and luxury, with the lifestyle component of convenience built in. Not all of Dubai’s luxury properties will meet this international gold standard, so the first factor to consider is whether a home stacks up on the world stage. Therefore, older properties will need to have been renovated, often gutted and re-imagined, to even compete.” Behavioural shift Jason Hayes, founder and CEO of Luxury Property, sees a demographic change in the requirements of HNW buyers, wherein their needs are moving from apartments and penthouses to villas and mansions. “We are seeing more and more HNW clients with a requirement for high-value villas and mansions. This applies not only to clients with families but also to clients electing to call Dubai home, their principal primary residence,” says Hayes. “In the past, Dubai tended to be a place for vacation or second or third homes, but we feel there has been a subtle shift with clients electing to live in Dubai year-round. They escape the rather warm summer months to their holiday homes in Europe. In light of this, we see an uplift in demand for large family homes and mansions.” Hayes also observes the luxury ready villa market as stable with demand increasing. “The absence of new stock means supply of ready luxury villas has stagnated,” says Hayes. “This will change when developers start handing over. However, the key issue tends to be the quality and pricing of villas. Our clients prefer to buy turnkey with little or no work to do. A move-in villa priced correctly will always sell quickly.” Although the number of luxury villa communities is growing, Hayes believes there is still space for more quality luxury developments. “Recent launches at Jumeirah Golf Estates has proved popular as has the Gardenia Villas in Sobha Hartland,” says Hayes. “Sidra in Dubai Hills Estate recently launched its third phase and continues to be an incredibly popular product. “Off-plan villa projects offering high-end units include Dubai Hills’ contemporary Sidra from Dh3.7 million and stunning golf mansions in modern, contemporary or Arabesque style from Dh39 million. District 1 by Meydan Sobha has luxury villas from Dh20 million-Dh100 million. XXII Carat on the Palm also has stunning villas incredibly well designed with direct beach access and amazing views. The Nest in Al Barari is a beautiful development of contemporary villas and will be handing over soon. Sobha Hartland at MBR City has contemporary Canal-facing villas located close to downtown.” Selling movement Dubai has always been about high-end luxury real estate buyers, so they never really left in essence, says Williamson, adding that these buyers and sellers like to work quietly within the market and continue to do so. Moreover, she points out that the high-end luxury villa deals now take much longer to close. “The big villas or penthouses, generally, will take between 12-18 months to get sold. For sellers, it is vital that they work with a professional agent exclusively, listen to their expertise, and trust the process,” says Williamson. “Also, luxury property sellers should price their villa at a sellable price in today’s market to get it sold, not an emotional price they feel it is worth, which is often the case we deal with. Dubai is still not a mature market like London or New York to command certain prices. One day we will be up there, but we are not there yet.” Williamson says there are so many overpriced properties sitting for too long, and she believes this is not helping the luxury market. Being exclusive with one agent will allow the seller to control the price as all other agents would know they need to work through that one agent, she explains.

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In this regard, the high-end villa market can be tough. “Sellers must be patient and should listen to their agent when they tell them the actual selling price and adjust accordingly,” says Williamson. Buyers have choices, they look around now and generally not just in one location. “Find a good agent and stick with it. Buyers will not get a better deal by cutting out their agent.” Source: Gulf News Back to Index

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DUBAI’S NEW OFF-PLAN SALES REGULATIONS: WHAT WE KNOW AND DON’T KNOW Wednesday, January 10, 2018 The government of Dubai has recently issued Law No. 19 of 2017, which is a partial update to the 2008 and 2009 interim property registration laws. The 2017 law relates to off-plan property sales in Dubai, and in particular deals with a new procedure following the breach of a sales agreement by an investor. While we are awaiting the full terms of the new law, the statement issued by the government of Dubai suggests that the revised procedure will protect both developers and investors. So what are the likely key differences between the old and updated procedures for dealing with an investor who has defaulted? As before, the Dubai Land Department (DLD) will have authority to serve a 30-day notice on a defaulting investor to cure the default. Typically in the past, these were served in person or more commonly by registered or electronic mail. The new law will give the DLD extended powers to serve notices in any method it deems appropriate. A new method of notification could also include notices in newspapers or general notices on the DLD website. While these are not yet confirmed, they are a possibility, which investors should be aware of. Amicable settlement Whether or not the DLD has served a default notice on the investor to pay any overdue sums, the developer and investor will be encouraged to amicably settle the arrears or other breach. The final settlement agreement must be appended to the sale and purchase agreement (SPA) and signed in writing by both parties. This will be welcome news for many investors as their SPAs may not have a clause obliging the parties to amicably settle any disputes. The existence of such a settlement agreement may help to relieve some of the financial pressures on the investor, e.g. offer an extended grace period to pay the arrears, while ensuring the investor will still be able to purchase the property. Where an investor fails to honour the terms of the SPA or if a subsequent settlement cannot be reached, the DLD may issue an official document. This form of declaration will state that a developer has fulfilled its legal obligations under the SPA and also specify what percentage of the unit has been completed. We have not had sight on what grounds the DLD will produce such a declaration, but such an official document could be issued by the DLD at its discretion. How the developer would then use the declaration is yet to be confirmed. A developer is likely to have extended rights to void the SPA and sell the property at any stage of the progress of the project where the investor has defaulted and not remedied the default. Typically, a developer could even void the SPA and sell the property if the property works have not yet started, provided this is not down to the control or negligence of the developer. Where the developer voids the SPA, it would be obliged to return any surplus funds to the investor within one year of cancelling the SPA. Or if the developer resells the property at auction, the developer would have to repay such surplus funds to the investor within 60 days of reselling the property, whichever is earlier. Exactly how much funds will be retained by the developer or returned to the investor will depend on the project completion status. Developer’s options Where the project is over 80 per cent complete, the developer has the following options:

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• Retain all the sums paid by the investor, request the investor to pay the remaining sums and continue with the development of the project.

• Ask the DLD to auction the property to collect any outstanding balance. • Unilaterally retain up to 40 per cent of the off-plan sale agreement price and return any excess amount to the investor within one year of the termination of the agreement or within 60 days of the auction sale, whichever is earlier. Where the project is between 60 and 80 per cent complete, the developer may unilaterally terminate the agreement, retain not more than 40 per cent of the sale agreement’s value and return any excess amount to the investor within one year of the termination of the agreement or within 60 days of the auction sale, whichever is earlier. While the rules for off-plan sales have tightened, developers will have more authority to deal with defaulting investors. Investors, on the other hand, will find some comfort in the new timescales governing the return of their monies. Source: Gulf News Back to Index

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RENTAL INDEX 2018: INSIGHTS FROM EXPERTS Wednesday, January 10, 2018 The Dubai Land Department’s new rental index for 2018 is up and running for all residential, commercial and industrial properties in Dubai. Here is what property experts say about the new index and its impact on rental market activity. Reflects current rents Dounia Fadi, CEO, MD Properties In the property market, the law of supply and demand is prominent and it dictates the equilibrium price of a property whether you are talking sale or rent. Dubai lately has more supply than it has ever seen. Hence, rents have gone down by 10 per cent since the first half last year, and average rents have changed in various areas of Dubai. The Dubai Land Department (DLD) rental index for 2018 based on new data and figures will allow a more accurate rental increase calculation and will be used as a reference for tenants, brokers and landlords alike. However, there are more aspects and factors to consider when pricing or evaluating property such as size, quality, location, view and maintenance. Also, the DLD has only updated the average values and not the law, so the initially introduced percentages and rent increase guidelines still apply as before. The index helps to give an overview of the market, but it does have a few drawbacks. For example, if a landlord wishes to increase rent and uses the calculator it might deny the increase, however, in reality when a landlord has to decrease the rent the system does not prompt to how much you need to drop. So, the tenant is discouraged on the higher side of the lease, but the landlord is not encouraged to reduce rent. Fair protection Alia Jamal, director of leasing and commercial, Gulf Sotheby’s International Realty This year, based on the new calculator, a majority of tenants should not face an increase with the new brackets, but landlords can also increase rents where applicable. The calculator offers fair protection for both landlord and tenant. The increase percentage set between 5 per cent and a maximum 20 per cent offers transparency for any increases if applicable. Enhanced data collection Zarah Evans, managing partner, Exclusive Links Real Estate The new index format is a positive move for the rental market and beneficial for both landlords and tenants, allowing rents to be adjusted based on the supply and demand within the specific area. Therefore, it assists in regulating the market. The index will be updated once per year to give fairness to each party and avoid any conflict. This new index format is more beneficial as it shows a more accurate market rate than any previous ones, as all data has been collected from the tenancy contracts registered with Ejari, along with units registered in the DLD database. This is the first time a land rent index has been added for land with annually renewable lease contracts. Easy ROI indicator Kunal Puri, CEO, La Capitale Real Estate Broker

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The DLD is one of the few government departments across the world which has a rental increase calculator that helps in bringing transparency and clarity to the real estate market. All can take advantage of it, be it a buyer, seller, tenant or agent. Moreover, it also helps in calculating the accurate return on investment (ROI) on any property. This eventually leads to accurate selling price of the property. In this year’s rental index we can see that there is a decline in the rent price of different properties across separate areas over last year. This will help a lot of residents to either upgrade their current residence or use those funds towards their savings. Grants negotiation power Sandrine Loureiro, operations manager, Rocky Real Estate The rental index is a trusted source accessible to everyone, so even though it lacks details such as views, building quality, etc., it allows fair judgment for all parties concerned. It gives owners clear guidelines about what they can and cannot charge upon lease renewal. Tenants are protected from random increases and informed about the market rates, which gives them negotiating power. They still need to make more detailed comparisons by building classification and this is where brokers can assist with well-presented listings. By reviewing the index once a year, the index allows both landlords and tenants 90 days before the termination of the lease to inform the other party about their decisions. Land tab advantage Mario Volpi, chief sales officer, Kensington Exclusive Properties This year’s rent index has introduced a land tab, allowing industrial and commercial property such as factories, showrooms and other general industrial establishments to be featured in addition to the land itself. The index has seen a softening of rents pretty much across the board. Despite the majority of the data coming from the Ejari system, these reductions do not truly reflect the larger price drops in certain areas. Due to the broad average price bands, there could be some increases that are apparently not indicative of what is happening in the rental market. The fact that it has reduced the rents shows that it is in general in touch with the market, however, the DLD is working to make it more sophisticated to take into consideration attributes such as size, view, facilities, modernity, etc. When this is available, both landlords and tenants will finally be in a state of equilibrium. Source: Gulf News Back to Index

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DUBAI'S REAL ESTATE RECORDS ROBUST DH285B IN 2017 DEALS Tuesday, January 09, 2018 Developers’ offplan push and sustained demand for plots ensured Dubai’s real estate market ensured an overall transaction value of Dh285 billion — and 10 per cent higher than the Dh259 billion in 2016. The 2017 total was achieved through just over 69,000 deals, according to Dubai Land Department states. That compares with 41,776 deals entered through 2016 worth Dh259 billion and 63,719 transactions in 2015 worth Dh267 billion. Investment into Dubai’s real estate during the period was valued at Dh107 billion, with 39,480 investors coming on board. UAE nationals made up the single biggest buyer demographic, committing Dh25.30 billion, and followed by Indian buyers, with Dh15.6 billion (Dh12 billion the year before). Saudis were in third place, at Dh7 billion plus, and ahead of UK and Pakistani passport holders, who did Dh6 billion and Dh5 billion worth of deals. As such, Arab buyer participation in Dubai’s real estate was quite definitive, and despite the pall cast over the region just ahead of summer over issues involving Qatar. Another big plus Dubai’s developers will take forward is the buying support from Chinese investors. Gulf-based investments alone came to Dh37.28 billion, while other Arab nationalities pitched in with Dh14.22 billion. In 2016, GCC citizens had channeled Dh35 billion. And even as developers pushed the affordable message to buyers, the top investor pick in 2017 was the Burj Khalifa, with 2,008 deals netting Dh7.36 billion. Business was second, as new offplan launches and completed projects pulled in buyer interest. The high-rise cluster had 3,763 transactions worth Dh7.11 billion. Dubai Marina was placed third, at just under Dh7 billion from 3,300 deals. Interestingly, Palm Jumeirah was the top location for mortgage-backed purchases, at Dh12 billion from 731 deals. The Palm purchases typically involve ready cash buyers, who are not too bothered about collecting funds from banks. But 2017 sees a departure from the norm, at least for that prime location. Business Bay again comes in second, with 769 deals of Dh6 billion having a mortgage component. And Dubai Marina placed third, with Dh3.7 billion in mortgage-driven deals. That mortgage lenders are taking on more exposures represent a welcome development for the market. And with developers pushing hard on offplan sales - through the various incentives - 2018 could see the deal flows being sustained. All eyes will now be on what the Q1-18 numbers will have to say. “Looking at the details from 2017, the sale of land, buildings and units in the Dubai real estate market totalled Dh114 billion through 49,000 transactions, while mortgages for the same three categories reached Dh138.5 billion through 15,700 transactions,” said the director-general. “There were approximately 4,000 other transactions valued at approximately Dh33.3 billion, where the total turnover was Dh285.562 billion from 69,000 transactions.” Clearly, 2017 had a lot to offer for Dubai’s property market. Source: Gulf News Back to Index

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DUBAI INVESTMENTS PARK, IMDAAD INK FACILITIES DEAL Monday, January 08, 2018 Facilities management company Imdaad will provide external cleaning services to Dubai Investments Park (DIP) as per an agreement signed between the two companies. The value of the contract is Dh6.8 million and is valid for a period of three years. Imdaad will be responsible for the external cleaning of the 2,300-hectare DIP along with waste collection and disposal services within the development, according to an announcement by DIP on Monday. “DIP’s agreement with Imdaad is aimed at continuing to ensure a clean and dynamic living environment for its residents and communities,” said Omar Al Mesmar, General Manager of DIP. The agreement will come into effect from February. Source: Gulf News Back to Index

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DUBAI WILL HAVE A ‘FESTIVAL’ FOR PROPERTY SALES TOO Monday, January 08, 2018 A three-day Dubai property sales ‘festival’ will be launched in April, with price discounts from developers and even a possible waiver of fees from participating banks on mortgage registrations at the event. The Dubai Land Department is providing its official stamp to the three-day event, which opens April 9. It is being organised by a private entity. There will also be property auctions — either online or at the venue — for ‘distressed’ properties, from developers or investors who want to make an exit. But the Land Department itself will not directly be putting up any distressed properties on its database, a senior official said. All developers with projects backed by escrow accounts will be allowed to sell at the Dubai Property Festival (DPF), according to Dawood Al Shezawi, head of the DPF Organising Committee. Whether the properties are ready units or off-plan sales will be up to the developers and participating brokers to decide. The three-day opens up a sales calendar for the property market in the first-half of the year, and in line with what Cityscape Global does during its September/October run. The plan is to make DPF into an annual event. (It was in September last that developers exhibiting at Cityscape in Dubai were allowed to sell from their stands. This came about after nearly a decade when no such direct sales were allowed.) It will be interesting to see how much of a price discount or incentives developers are willing to give. Already, the market is seeing developers with offplan sales subsiding by extending payment plans to well after handover, with two to five years being the average. Some have even extended payments to 10 years after handovers. And Dubai property prices are not seeing upward movements... in such a situation will developers be willing to undercut their prices further? What could happen is developers pushing inventory from their older projects at special prices during the April event. “Much in the same way that retailers leverage the Dubai Shopping Festival, developers could do the same with the DPF,” said Anuj Jain, head of sales operations at Sobha, which has ongoing projects at MBR City. Property buyers at the Festival could see participating banks ‘waive’ processing fees. Land Department officials declined to say whether they would consider waiving or halving the 4 per cent registration fees during the event. The festival could also be a marker on how quickly transaction volumes in Dubai’s property market build up this year. The first-half of 2017 recorded one of the best runs in recent years, and to a great extent, the pace was maintained in the second-half as well. Developers who participated at the launch event for the festival also sounded out some concerns. Salem Al Moosa, the developer of Falconcity, said there ought to be better coordination between banks and developers when it comes to funding. “Financing for developers is slowing down, and if one developer gets into a problem, it is instantly assumed that everyone else is facing a similar situation. Why should this be the case for developers who have got nothing to do with it?” Source: Gulf News Back to Index

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DECEMBER'S PRICIEST DUBAI PROPERTY DEAL BAGS DH18.92M Sunday, January 07, 2018 A seven-bedroom villa for Dh18.92 million - this was reportedly the costliest property deal in Dubai during December. The villa in Emirates Hills has a built-up area of 15,500 square feet. The seller and buyer details have not been revealed. In what everyone says is a challenging environment, there will still be an “opportunity for the right deal at the right price in the right location”, according to the broker involved in the deal. “The correct opportunity offers several benefits that include value appreciation, equity build up, rental income and an unmatched sense of achievement,” said Riyaz Merchant, the CEO of Realty Force. “I believe in the saying that don’t wait for buy real estate, buy real estate and wait.” The property is close to the Montgomerie Golf Club and also features a theatre, two lounges, and basement parking for up to six cars. There have been quite a few big-ticket transactions all through 2017, with the costliest being the Dh102 million for a penthouse on Omniyat Properties’ under development One Palm. Emirates Hills too saw Dh50 million and over deals, as did the Bulgari apartments on Jumeirah Bay. Source: Gulf News Back to Index

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ARABTEC UNIT WINS DH250M CONTRACT FOR OPERA DISTRICT Sunday, January 07, 2018 Arabtec Holding announced that its wholly-owned subsidiary Emirates Falcon Electromechanical Co (EFECO) has entered into a contract with TAV Tepe Akfen Construction for a Dh250 million project. The contract is for mechanical, electrical, and plumbing works for two towers in the Opera District by Emaar Properties. Project works will commence in January 2018 for 34 months, the Dubai-listed construction company said. Arabtec share prices jumped 6.53 per cent on Sunday to Dh2.61. Source: Gulf News Back to Index

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NEW IBIS HOTEL MARKED FOR JUMEIRAH VILLAGE Tuesday, January 09, 2018 There will be an Ibis hotel at Jumeirah Village, following an agreement between the master-developer Nakheel and the operator AccorHotels. The 252-room property will span 126,000 square feet across 16 floors and is expected to open in 2021. “Our hospitality business continues to go from strength to strength, as we design and deliver a diverse range of hotels, resorts and serviced residences at key locations across Dubai, and partner with world-leading hotel brands to bring new hospitality concepts to the emirate,” said Ali Rashid Lootah, Nakheel’s Chairman. The JVC hotel is one of 17 projects in Nakheel’s Dh5 billion hospitality expansion programme. Source: Gulf News Back to Index

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DUBAI'S DH7B WALLED CITY PLAN TO MIRROR ISLAMIC ERA Tuesday, January 09, 2018 Ali Cloud Investment and Loulouat Alsharq for Investment and Real Estate Development plan to develop a Dh7- billion walled city in Dubai which will mirror the architecture and design of old Islamic eras. Spanned over 20 million sqft, Knooz Al Sharq City will reflect the traditional lifestyles of three Islamic eras - Ottoman, Mamluk and Ummayad dynasty which ruled the Muslim for hundreds of years. The resident will relive the great Islamic eras. Since it is expected to be a major tourist attraction, the visitors will see the architecture marvels which prevailed in Baghdad, Damascus and other Middle Eastern cities during those eras. To be built around a huge mosque, the city will have seven Roman-era style gates. Four gates are named after the late Sheikh Zayed, Sheikh Khalifa bin Zayed, Sheikh Mohammed bin Rashid and Sheikh Mohammed bin Zayed. The other gates are named after prominent Islamic cultures, such as the Mamluk and Umayyad Gates. Knooz Al Sharq City' will be free from cars as the residents and tourists will be transported by carts pulled by donkeys and horses. While the alleys and walkways will be narrow around the mosque. SM Ali, Group CMD, Ali Cloud Investment, said they hold 95 per cent stake in the project while Loulouat Alsharq for Investment and Real Estate Development - which is also master developer - will hold the remaining share. The project will be completed in five phases, housing villas and townhouses as well as 1,2,3 and 4 bedroom apartments. The company will announce the official launch, completion and location details in the next couple of months. Around 50 per cent of the 20m sqft area will be dedicated for apartments, 25 per cent for villas and townhouses, 20 per cent for cultural activities. "Knooz Al Sharq city will comprise traditional houses inspired by Islamic civilisation and rich Arab heritage, retail shops, museums showcasing Mamluk, Umayyad and other Islamic artefacts, as well as restaurants, traditional bathrooms, recreational facilities and venues for social events and performances. It will also be home to a market for crafts and gifts, sports clubs, social and cultural forums, scenic parks, and a special area designated for public auctions where antiques, art masterpieces, artefacts and paintings will be auctioned," said Mohammed Hesham Khair Al Zeen, partner and director of Louloulat Al Sharq company. The museum will have artefact collection from the Islamic, Chinese, Roman, Greek and Indus Valley eras. The project will also include traditional hotels called caravansaries, three mosques, one is named after "The Mother of the Nation", the other named after the late Sheikh Rashid bin Saeed Al Maktoum, and the third one called the Sheikha Latifa bint Hamdan Al Nahyan mosque. Other facilities will include a tribute museum to commemorate the late Sheikh Zayed bin Sultan Al Nahyan, and another museum dedicated to paying tribute to the late Sheikh Rashid bin Saeed Al Maktoum. The company aims to replicate this model at a later stage in Saudi Arabia and Bahrain. Source: Khaleej Times Back to Index

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UAE RANKED 4TH GLOBALLY IN TERMS OF SKYSCRAPERS Monday, January 08, 2018 Known for its skyscrapers and great architecture, Dubai continues to add on its long list of skyscrapers with three out of five tallest buildings completed in 2017 were in Dubai, says the Council on Tall Buildings and Urban Habitat (CTBUH) report. Overall, UAE saw completion of four skyscrapers with 200-metre plus height in 2017. The UAE is now ranked 4th globally in terms of skyscrapers with 95 towers reaching 200 metres or greater in height by the 2017-end. The mixed-used 101-storey hotel and residential development - Marina 101 - was the tallest completed skyscraper in Dubai last year - scaling 425 metres. Developed by Emaar Properties, it is now second tallest building in Dubai and UAE after Burj Khalifa, the world's tallest tower. In the Middle East, Marina 101 is the third tallest and 18th globally. "With architectural elements reminiscent of art-deco design, Marina 101 stands out in a city full of supertall structures. The tower will accommodate serviced apartments and Middle East's first Hard Rock Hotel. Flared projections acting as light dishes break the vertical monotony of the supertall tower as it rises, culminating in a 45-metre crown that caps the building and sets it apart in the surrounding skyline," says CTBUH. Within the tower, the vertical transportation system consists of a total of 28 elevators. The 73-storey Address Boulevard - which scales 370 metres in height - is the second tallest completed building of 2017 in Dubai. Developed by Emaar Properties, the tower houses residential, hotel and retail units. It is the 6th tallest building in Dubai, 7th in the UAE, 9th in the Middle East and 33rd in the world. Located next to Burj Khalifa, the tower is situated with convenient access to Mohammed Bin Rashid Boulevard, and near The Opera District. Crowned by two matching spires, the tower has a 196-room hotel operated by The Address Hotels + Resorts, and 530 serviced apartments. The structure sits on a multi-level podium, with the upper level providing separate lobbies for the hotel and serviced apartments. In an elliptical shape, the tower's gentle curves ensure that all apartments and guestrooms have unobstructed views of Downtown Dubai and beyond. An enclosed moving walkway joins the tower to the Dubai Metro, The Dubai Mall, and other key developments. Boost tourism, real estate Imrann Nawab, director of sales, Gulf Sotheby's International Realty, is of the view that skyscrapers play a critical part in Dubai making a mark in the global map. "With the help of these tall beautiful structures, Dubai creates new records and these in turn give Dubai global recognition... These tall structures help boost the real estate and tourism economy too, the two factors that majorly drive and effect the country's GDP. For example, regarding the building of the tallest skyscraper next coming in Dubai, famous architect Michael Calatrava believes new Tower is a critical "beacon" helping the city state reinforce its unique role in the world," says Nawab. "In short, skyscrapers give a perceived image of luxury to Dubai. Due to their record breaking developments and tall structures many foreigners automatically believe Dubai is the land of rich. These tall structures also drive

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great attention of investors and residents not only for the skyscrapers but also towers/buildings around these. These help increase sales transactions an also make it a major landmark or hub that many people relate to," concludes Nawab. The pencil-shaped Ahmed Abdul Rahim Al Attar Tower, located on the region's most prestigious and expensive area of Sheikh Zayed Road, was the third tower with over 200-metre height completed last year. Also named 101 Sheikh Zayed Road, the 76-storey tower is 342 metres tall and houses residential apartments. Developed by Al Attar Properties, it is the 12th tallest tower in Dubai, 13th in the UAE, 15th in the Middle East and 48th worldwide. Horizon Tower A in Abu Dhabi was the last year's fourth tallest completed building in the UAE, featuring 63 storeys and 205 metres high. It is 22nd tallest tower in Abu Dhabi, 90th in the UAE and 127th in the Middle East. The residential tower is located at Reem Island and is developed by Tamouh National Trading & Contracting; TSL Properties. "Skyscraping homes have always held an allure; a house with a view, a life in the sky," said Rizwan Sajan, founder and chairman Danube Group. With so many different nationalities in UAE and people with different salary brackets, Sajan said it's difficult to compare how skyscrapers sell better than the other towers as the target investors for both the categories will not be the same. Source: Khaleej Times Back to Index

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DUBAI PROPERTY ABSORBS DH285 BILLION IN 2017 Tuesday, January 09, 2018 Dubai registered 69,000 real estate transactions exceeding Dh285 billion in 2017, according to the Dubai Land Department (DLD). This compares to property transactions worth Dh259 billion entered through 41,776 deals in 2016. The rise in transactional volumes and value was owing to the boom in demand for off-plan properties in 2017. Sultan Butti bin Mejren, director-general of DLD, said: “The figures for total transactions, including sales, mortgages and others, confirm the current strength of the Dubai real estate market.” “Twelve months ago, the residential ready market was witnessing stabilisation and bottoming out in some cases. Off-plan developers took notice and began to offer competitive payment plans, many of which spanned beyond promised handover dates. While this has led to a short-term delay in an expected overall market price recovery, it has also led to a 45 per cent annual increase in off-plan home transactions, resulting in a 26 per cent annual leap for overall residential unit sales. Therefore, these figures come as no surprise given the current nature of Dubai’s buyer market,” observes Haider Tuaima, head of real estate research at ValuStrat. The sales of land, buildings and units in the Dubai real estate market totalled Dh114 billion through 49,000 transactions, while mortgages for the same three categories reached Dh138.5 billion through 15,700 transactions. There were approximately 4,000 other transactions valued at approximately Dh33.3 billion. “The DLD figures affirm what we have been saying throughout the year: despite the gloom and doom prognostications on offer by the analyst community, transactions have continued to increase steadily, defying expectations. Some of the reasons are well-known: post-handover payment plans and return guarantees have spurred investment in the off-plan areas,” says Hussain Alladin, head of IR and research at Global Capital Partners. The breakdown UAE investors led the list of nationalities investing in Dubai real estate, committing Dh25.3 billion (Dh22 billion in 2016). Indian investors stood second by investing Dh15.6 billion (Dh12 billion). Saudis came in third place with investments exceeding Dh7 billion, followed by British and Pakistanis whose investments amounted to Dh6 billion and Dh5 billion respectively. Other active investors include Chinese, Jordanians, Egyptians and Canadians. Gulf-based investors deployed worth more than Dh37 billion while other Arab investors clinched deals worth over Dh14 billion. Foreign investors committed Dh56 billion in 2017 while women investors channelled over Dh27 billion. Areas in demand The favoured investment destination in 2017 was the Burj Khalifa which attracted Dh7.36 billion in sales. Business Bay followed with 3,763 transactions worth Dh7.12 billion, while Dubai Marina took third place with 3,300 transactions worth nearly Dh7 billion. Hadaeq Sheikh Mohammed bin Rashid came in fourth place with 1,948 transactions worth Dh5.672 billion and Al Barsha South Fourth ranked fifth through 3,138 transactions worth around Dh4 billion.

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“Madinat al Mattar [Dubai South] has seen a surge of transactional activity, as has Meydan. These are indicative of the interest in newly developing communities that are now taking centerstage in the minds of investors. This highlights the growing investor appetite that is not only there for Dubai real estate, but specifically for developing areas [the suburban effect],” points out Alladin. Palm Jumeirah witnessed the most mortgage-backed purchases with 731 transactions exceeding Dh12 billion, followed by Business Bay with 769 transactions worth nearly Dh6 billion. Dubai Marina ranked in third place with 1,127 transactions worth over Dh3.7 billion, Al Barsha South Fourth came in fourth place with 670 transactions worth over Dh2.6 billion and Burj Khalifa placed fifth with 545 transactions worth over Dh2.5 billion. “We have also witnessed a surge in mortgages, crossing the tipping point, where more than half of the overall activity has been done through the mortgage market. This attests to the appetite of the banking sector in terms of asset-backed financing,” adds Alladin. Source: Khaleej Times Back to Index

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SHOULD UAE PROPERTY AGENTS CHARGE VAT ON COMMISSION? Wednesday, January 10, 2018 While there is no VAT on rent, agents are adding the tax to the commission they take. Is that right? NN, UAE VAT is chargeable on the goods and services of all companies with a turnover of over Dh375,000. While VAT is not attached to the actual rental amount of residential property, it is chargeable on the commission if a tenant chooses to use the services of a broker. It is important to stress that this extra amount does not go into the broker's pocket but is passed on to the Federal Tax Authority (FTA) as demanded. The best way to verify if a company is registered is to request to see their Tax Registration Number. In time, I suspect this will be visible on the FTA's website.I moved out of my apartment in Dubai Marina towards the end of October 2017, just over two years after moving in (my move in date was August 2015). Towards the end of my lease, which should have been August 2017, I extended by a couple of extra months. I did not sign a new contract nor were there any Ejari issues. However, my agent is now refusing to give back my full deposit of Dh4,200. They want to deduct Dh1,700: a Dh1,000 administration fee for the contract extension (no documents were signed nor presented), a Dh500 fee for a bounced cheque that happened months before I moved out, and Dh200 for cleaning and two lightbulbs. In fact, the landlord owes me Dh550 for a new water heater I paid for, which he was meant to reimburse. When I moved in I actually spent nearly Dh2,000 having the apartment deep cleaned and painted, as it was dirty and infested with cockroaches. I have emailed both the landlord and agent - the agent keeps telling me he is travelling and the landlord does not respond. I don't know what to do; Dh1,700 is a lot of money considering the apartment was handed back in great condition and I don't want to walk away from that money as I know filing a complaint will be long and painful. What would you advise? SB, Dubai Your dilemma is one of the most common I face when replying to renters' problems. This issue will continue to be a problem for tenants until the competent authorities adopt a stricter system when it comes to a tenant's deposit. Looking at your situation specifically, you have three choices: 1. Continue communications with the agent and landlord to come to some agreement with what is fair and to discharge the amounts that are the responsibility of the landlord and tenant. With reference to the Dh1,000 admin fee, my first reaction was that this is very cheeky. Brokers do charge this amount for the renewal of the contract, but normally only when the renewal is for a full year not just a few months and especially as no new contract or paperwork has been prepared. 2. You could also file a case at the Rental Dispute Settlement Centre to get your full deposit back. This decision, however, will be based on your personal finances, as to file a case costs 3.5 per cent of the rental amount. Should the case be found in your favour, the filing cost is normally included in your award. Looking at the amount in question this choice may not be a wise decision in terms of time, effort and expense. 3. Your last choice is to put this whole thing down to experience and move on. I realise this option is probably not a preferred move given that it is expensive to just walk away.

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In reality, all three options may not necessarily give you the conclusion you seek but unfortunately the deposit system in its present form will mean you have to involve time and effort to get some form of satisfaction.

Source: The National Back to Index

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UNION PROPERTIES TO SELL ENTIRE STAKE IN DISTRICT COOLING FIRM EMICOOL Wednesday, January 10, 2018 Dubai real estate developer Union Properties is in the final stages of a deal to sell its entire stake in district cooling company Emicool, as it looks to generate additional revenues and expand into new markets. The company has received several offers for its shareholding in Emicool from UAE firms, it said in a statement on Wednesday to the Dubai Financial Market, where its shares are traded. Union Properties is finalising the necessary legal formalities, and will be announcing the buyer in the coming days, it said without identifying the potential buyer or the financial details of the deal. Emicool, which provides chilled water for residential, commercial and industrial air conditioning systems around Dubai is a joint venture with Dubai Investments. Union Properties' share of net assets in the company was valued at Dh355 million, according to the annual report. “The sale of Union Properties’ stake in Emicool is another important milestone for us, and will contribute to our new strategy to enhance our investments, diversify our revenue streams, expand our business, and venture into new markets,” Ahmed Khouri, the group chief executive of Union Properties said. “At a time when Union Properties is undergoing a new phase of growth, this move further strengthens our focus on core operations, and tapping into new sectors.” Union Properties, which restructured its board in May, has struggled to maintain profitability amid sliding real estate prices in the UAE. It is looking to diversify income streams, expand its footprint outside its home market and enter new business lines. The developer, in the second quarter of 2017, posted its biggest-ever quarterly loss of Dh2.3 billion after a Dh2.8bn write-down of asset value by its new management team. It also reported a Dh45m loss in the third quarter of last year. The company in December said it will sell shares in its facilities management unit through an initial public offering in the second half of 2018. Union Properties will float 100 per cent of ServeU by listing the unit on the Dubai index and will use the proceeds from the sale to boost its investment portfolio and operations, it said at the time. The developer is launching new projects to expand its portfolio of properties, with a focus on assets that could generate recurring revenues. The company has set up Union Malls to provide retail and leisure options at its developments and launched its inaugural mall in Motor City in 2017. It also established Al Etihad Hotel Management, a wholly-owned unit to develop and manage luxury hotels and furnished residences in Dubai, and also launched an investment arm, UPP Capital Investment, that will focus on direct and indirect property investments. The company, which already has three hotels under development in its flagship master development Motor City, plans to extend hospitality and facilities management services for around 3,000 serviced apartments and 3,500 hotel rooms and later expand the scope of business to other developments in Dubai. Source: The National Back to Index

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NEW TALLEST HOTEL IN THE WORLD SET TO OPEN IN DUBAI Sunday, January 07, 2018 The new tallest hotel in the world is set to open in Dubai, taking the crown from the current holder, also located in the emirate. The Gevora Hotel, at 356 metres in height (or 75 floors), will overtake Business Bay’s JW Marriott Marquis by just one metre when it opens in Q1 this year. Located on Sheikh Zayed Road in the Trade Centre area, Gevora Hotel will have 528 guest rooms and suites and four restaurants. The smallest deluxe rooms measure 46 sq m, Time Out Dubai reports, with the largest two-bedroom suite measuring 85 sq m. The new hotel will be a dry one and promises to “boast the best of Middle Eastern hospitality and exclusivity”. As well as a main pool deck with swimming pool (pictured below), Jacuzzi and kids’ pool, the health club on the 12th floor includes state-of-the-art facilities and separate ladies’ and men’s gyms. The hotel also has a luxury spa on the 71st floor. Source: Arabian Business Back to Index

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UPP UNIT ACQUIRES STAKE IN PALM HILLS DEVELOPMENT Thursday, January 11, 2018 Union Properties, the Dubai-listed developer, said one of its units has acquired a 5.68 per cent stake in shares of Palm Hills Development, which is based in Egypt and listed in both Cairo and London. In a statement, Union Properties said the acquisition was by its wholly-owned investment arm, UPP Capital Investment. The company said the acquisition is part of Union Properties’ plan to enhance its investments inside and outside the UAE, diversify its revenue streams, expand, and venture into new markets. Source: Gulf News Back to Index

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YIELDS FOR DUBAI'S AFFORDABLE HOMES SET TO FALL FURTHER Saturday, January 13, 2018 Residential yields in Dubai's affordable market are expected to decline much faster than in the prime market, say a report released by real estate consultancy Core Savills. Over 2014-2016, the prime segment saw a combination of weakening prices but comparatively stable rents, encouraging a share of tenants to shift towards ownership. This drove down rental demand and gradually caused prices to stabilise over 2017. This caused yield compression by an average of 57 base points, representing a relative decline of 11.2 per cent across prime and mid-market communities during 2017. David Godchaux, CEO Core Savills, says: "In the near term, we expect prices to continue stabilising in the prime and mid-market segment but the current decline in rents to decelerate, allowing yield compression to slow down." Meanwhile, in the affordable and lower mid-market segment, the stronger decline in sale prices and only a slight weakness in rents over 2014-2016 allowed yields to rise and in turn increase buyer demand. However, most of this buyer demand was led by investor buyers as opposed to end users; who could not afford to shift to ownership due to continued affordability issues. Godchaux states: "Investor buyers continue being drawn to the affordable segment due to the current high yields and easier payment plans while a few developers see robust off-plan transaction volumes as an encouraging sign and continue bringing more stock to the market. Given that affordable segment's supply pipeline is looming with substantial off-plan deliveries in the run-up to 2020, the high yields expected by many investors post handover are unlikely to be sustained." He further adds: "If rental demand of these projects is insufficient at handover, this supply surge is expected to exert considerable downward pressure on rents, leading to faster yield compression. Eventually, this contraction in yields will reduce investor demand, in turn pulling sales prices down over the mid-term." Dubai's overall real estate market faces other headwinds as well - the "ongoing strength of the US dollar and the imminent - albeit probably limited - inflationary effects of the introduction of VAT are expected to compress investment yields." Developer margins fall According to the report, developers have seen total expenses rise significantly over the past few years. This is largely due to increasing overhead and compliance costs associated with the introduction of regulations which require developers to raise construction and development standards. The high charges associated with compliance are placing a major burden on budgets. Developers have seen profit margins decline significantly. "Developers' margins are also being compressed by increasing price competition in the market, and many are reducing their prices per sq ft, bringing down average prices particularly in the off-plan market. Despite rising costs, their competitors are being forced to do the same, thus further shrinking developer profit margins," explains Godchaux.

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Over the long term, such competition is likely to drive less efficient developers out of the market. This effect is most likely to impact smaller developers that cannot benefit from significant economies of scale.

More power to Reits Real estate investment trusts (Reits) in UAE are increasingly becoming an instrument of investment, both for institutional and retail (individual) investors, says the report. "The UAE's Reit sector saw expansion accelerate over 2016-2017, including a number of high-profile acquisitions such as the purchase of The Edge, Uninest and South View School by ENBD Reit," cites the Core report. Godchaux explains: "Given that Reits currently represent a notably small share of the UAE's listed real estate market compared to other global hubs, the sector is expected to continue expanding over the mid-term. By further integrating real estate and capital markets, Reits will potentially increase funding avenues for developers as well as provide smaller investors access to diversified property investments." Source: Khaleej Times Back to Index

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AL WAHA RESIDENCE TO BE COMPLETED BY 2020 Monday, January 08, 2018 Al Waha Residence, a new residential project coming up at Masdar City with 600 units, is expected to be completed by 2020, developer Reportage Real Estate announced on Monday. The project with luxury studios and apartments is being designed to meet strict environmental standards and will achieve a 3 Pearl rating according to the Estidama rating system, a framework for sustainable design and construction developed by the Abu Dhabi Urban Planning Council. Reportage Group is also developing the 170-unit Leonardo Residence at Masdar City, due for completion in the first quarter of this year. Source: Gulf News Back to Index

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ALDAR CLOSE TO MORE PROPERTY HANDOVERS IN ABU DHABI Wednesday, January 10, 2018 Abu Dhabi's property supply is set to receive a boost as developer Aldar said it is close to handing over plots at two more new projects during the first quarter. Units on Nareel Island, on the coast of Al Bateen and featuring private beaches, are scheduled to start being handed over this month. Meanwhile, plots at Al Merief, a residential community specifically designed for Emiratis in Khalifa City, will also be handed over during the first three months of this year. Aldar said it would continue to hand over homes at its Ansam development on Yas Island and Al Hadeel at Al Raha Beach. Other developments on Yas Island are "on track at various stages", Aldar said. "At West Yas, interior work is progressing well and nearing completion in certain areas, with more than 300 villas under the final fix and testing stage, in preparation for handover to customers," it said. "In addition, the school, mosque and retail building have been handed over." At Mayan, "building activity continues as shoring, enabling and reinforcement works continue across the entire project". At Yas Acres, Aldar said villa and town house construction "is well under way in the three precincts launched to date, with work on the main utility networks progressing across the entire site". Main works on The Bridges on Reem Island are set to commence early in the second quarter. Elsewhere on Reem, Aldar said Meera is making "steady headway, with glazing and facade work nearing completion on both buildings". Property brokers have been in agreement that rents will continue to fall during 2018, having slipped in the region of 10 per cent last year. Cluttons said in its Winter 2017-18 Abu Dhabi Property Market Outlook that rents and sale prices had been affected by lower housing allowances and the introduction of VAT, which came into effect on January 1. Source: The National Back to Index

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DUTCH BUILDER SAYS WORK HAS STARTED ON YAS ARENA PROJECT Monday, January 08, 2018 Dutch construction firm, BAM International, said on Monday that work has started on Yas Arena, which will be a 18,000-seater venue on Yas Island. The announcement follows the decision last month by UAE-based developer Miral Asset Management to appoint the company to deliver the construction of the arena. Yas Arena will be used to host events in a temperature controlled environment and BAM said in a statement that it expects to complete the project by November 2019. The arena is designed by HOK, with support from Pascall+Watson. HOK also designed the adjacent arena retail and dining destination along the boardwalk, forming a mixed-use anchor on the east end of Yas Bay. Abu Dhabi events company Flash Entertainment will host gigs and sports events inside the Yas Arena and it has been designed in a way it can host a variety of events, from tennis tournaments to wrestling matches and more. BAM International added that it has successfully delivered various projects on Yas Island, including the Crowne Plaza and Staybridge suites hotels, as well as the Welcome Pavilion which provides visitors with a luxury shopping, resting and leisure area before or after the visit to the island’s many attractions. Source: Arabian Business Back to Index

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MAJID AL FUTTAIM OPENS MALL IN RAS AL KHAIMAH Tuesday, January 09, 2018 The first Majid Al Futtaim owned mall in Ras Al Khaimah has opened, bearing the My City Centre branding. The Dh68.5 million development has a gross leasable area of 5,494 square metres and features more than 30 brands. The facility — named My City Centre Al Dhait — complements the group’s additional investments in the northern emirates, which include the expansion of the City Centre Ajman and City Centre Sharjah in 2018. “We will deliver a diverse retail offering in an accessible location within the expanding residential areas of Ras Al Khaimah,” said Ghaith Shocair, CEO — Shopping Malls, Majid Al Futtaim — Properties. Source: Gulf News Back to Index

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MOODY’S STRENGTHEN INVESTORS CONFIDENCE OF SHARJAH’S BUSINESS ENVIRONMENT Wednesday, January 10, 2018 HE Sultan Abdullah bin Hadda Al Suwaidi, Chairman of Sharjah Economic Development Department (SEDD), confirmed that the data released from “Moody’s Cooperation” on the emirate's rating were due to the positive cash flows in Sharjah. Such a thing reinforce Sharjah’s position on international and regional financial and banking institutions as well as the challenges of the economic future. This also reflect the wise leadership, professional management, and promising future for investments in the public and private sectors in Sharjah. Also, Al Suwaidi said that the emirate's rating at A3 is based on the increase in government revenues and the stability of the budget indicators, in addition to the relatively high GDP per capita. Likely, it depends on the increase in business indicators in the emirate and the procedures in Sharjah's economy for facilitating licenses in the emirate and promoting them locally and globally. Besides, Al Suwaidi pointed out that such evaluation will be a very effective factor to attract investment that add to the factors already available in the emirate such as the attractive environment for living and conducting business, especially in terms of fees and business costs as well as inflation rates that should not exceed 0.4%. This thing is what makes Sharjah an attractive place for investment locally and globally, in addition to the strong and stable growth rate in GDP. Furthermore, HE added that the latest classification by “Moody” demonstrates that Sharjah's economy blends diversity, efficiency and contributes to enhance confidence for existing investors and open up prospects for more investors in the future. Likewise, the continuous growth in Sharjah’s GDP that is close to AED 90 billion and an average growth of 12.6% in the emirate over the past five years contributed in increasing the cash flow. This flow was affected by the development of travel and tourism and the increase of 2% in revenues in 2016, and the 3.8% increase in fixed capital formation with continuous growth of the economic sectors in 2016, especially in the fields of manufacturing by 10%. Also, it was affected by the increment in investing at the infrastructure in the area of electricity, water and gas with 21.3% growth, transport and storage by 9.1%, information and communications by 5%, scientific and technical activities by 9.5%, with a large increase in investments and fixed capital formation in the education sector by 24.1%. HE added that the promising projects launched by the Emirate of Sharjah in the last two years, including mega real estate projects, the development of Souq Al Jubail, the establishment of Souq Al Haraj, the development of Tilal City and Heart of Sharjah, in addition to spending on cultural events such as Sharjah Biennial and Sharjah Heritage Days, demonstrate the great diversity of the economic vision in Sharjah. It also reflects the ability to invest and generate revenues in sectors where Sharjah has a competitive edge such as culture, education, heritage and hospitality. In addition, it is an evidence to the success of the policy of networking and promotion with international partners and an indicator of success at a time where there is a slowdown in international trade and a decline in oil prices too, which indicates the strength of the economy of Sharjah. Also, HE

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illustrated that the positive impact will remain in the coming year, especially in terms of business, new projects and the volume of investments. Such a thing will enhance the flow of investments and will help in launching new opportunities to deal with international financial institutions due to the wise directives of HH Sheikh Dr. Sultan bin Muhammed Al Qasimi, Supreme Council Member and Ruler of Sharjah. Moreover, Al Suwaidi stated that this assessment will support the strong economic sectors in Sharjah, which will enhance the role of the industrial sector that is considered one of the main sectors in the emirate. This sector contributes in about 17% of Sharjah’s GDP. Thus, SEDD seeks to provide all the services and facilities that increase the rates of industrial sectors in Sharjah too. Additionally, Al Suwaidi clarified that the application of the selective tax and Value Added Tax “VAT” that has come in effect in January in 2018 will help companies and markets to apply the largest and adopt the best accounting systems that comply with the tax. HE stressed that the tax will not affect or change the status of Sharjah as a regional center of business too. He also indicated that the application of these rates will not affect the competitive advantages it provides for business, both in terms of location, ease of export and import, or in terms of the development of infrastructure and legislation in the country in general and the emirate in particular. The Chairman pointed out that the tax system and procedures in the country resulted from deep studies related to all the options needed to provide new sources of funding to allow the government to continue to develop an infrastructure that looks forward to the future and ensures the continued improvement of the quality of its government services. All of this will help in attaining the vision of the wise leadership in offering the potentials to ensure the happiness of people that will enhance the financial burden of the country and the emirate. Likely, Al Suwaidi pointed out that Sharjah’s economy continues to increase its services and to strive for smart services thus to improve the business environment and investor satisfaction. Such assessments are a strong incentive for government departments and utilities to continue their efforts to provide more efficient services to highlight Sharjah as a unique model and a successful investment environment. It is worth mentioning that “Moody’s” granted the emirate of Sharjah with “moderate” rate due to its strong growth dynamics, high GDP per capita and strong competitiveness. Also, Sharjah is the third largest economy in the UAE, with domestic production exceeding 150 billion dirhams in 2016. Besides, the weak dependence of Sharjah's economy on oil compared to other oil exporting countries is a source of credit power and partial protection from volatile oil prices. Thus, “Moody’s” expects real GDP to grow by 2.7% annually in 2018 and 2019, driven by higher commercial and tourism activity in the emirate. Source: Sharjah Economic Development Back to Index

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MALL DEVELOPERS IN NORTHERN EMIRATES GO BIG Thursday, January 11, 2018 For UAE’s shoppers wanting a piece of new action, it’s time they set their Google Maps to locations headed north. Because the Northern Emirates are now seeing mega mall developments that will give their retail sector a full- scale makeover. Sharjah is already en route with a couple of these projects, one at “Tilal City”, and the other by Lulu Group owned Line Investments near the cricket stadium. More retail and leisure attractions are on the way in the emirate at master-developments from Arada and Eagle Hills. Line Investments on its part is not confined to Sharjah when it comes to taking on new projects — it is building Umm Al Quwain’s first mega-mall and which is scheduled for an opening later this year. And offering a gross leasable area of 20,000 square metres. (And in Dubai’s Silicon Oasis, Line Investments is creating 80,000 square metres-plus — just for the first phase.) Mall developers are not just concentrating on going big and wide. Majid Al Futtaim Properties opened a Dh68 million community mall in Ras Al Khaimah. Now, it is Ajman’s turn to come to the retail party. Ajman Holding recently announced its first step into creating a retail destination, which will take the form of the “Mirkaaz Mall”. The first phase should entail costs of Dh500 million and a gross leasable area of 38,000 square metres. The promoters are aiming for a Q4-19 opening. For now, their focus is centred on handing out the key contracts. “We are ready to announce the main contractor from the shortlist,” said Inas Abu Shashieh, Corporate Services and Special Projects Director at Ajman Holding. “Our intention is pretty straightforward — build the largest shopping and entertainment destination in Ajman and make sure residents spend more time in the city. And create something that will compel visitors.” It is a formula that has worked well for Dubai’s “destination” malls and in Abu Dhabi, where Yas Mall is proving to be an all-year attraction. Abu Dhabi’s Marina Mall — arguably occupying the best stretch of real estate right on the Corniche — has committed to a Dh3 billion expansion that would build up on land either side of the existing facility. With the Mirkaaz, Ajman Holding believes it has the location that can help meet all of its targets. “It’s not on the city’s outskirts, but with a location that can serve a future catchment area of 50,000 residents. It is right at the juncture between Ajman and Sharjah and easily accessible via Shaikh Mohammad Bin Zayed Road. Right through to the time of the project’s launch, we have been doing the numbers — and they are very much in our favour.” The land available stretches to 93,000 square metres. The number of shops will be over 100, and in keeping with the prevailing wisdom in the industry, F&B gets a sizeable helping of space. Once it opens and gets into the swing of things, visitor traffic could touch 1 million a year. That is quite a substantial total for the Ajman marketplace, and more so given that before Mirkaaz, there was no such destination magnet. Abu Shashieh is already thinking further down the road. A second phase will look to add a residential component and a hotel. “The master plan has not been finalised, but we will continue to study what’s the best mix until decision time. The best part is that the land is already with us and that’s quite substantial for all that we have in mind.”

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Once the new-generation retail attractions come up in the Northern Emirates, the mall owners’ immediate priority will be to get residents to spend more of their time and money at the shops and entertainment options. In this regard, they have the ready benchmark that Abu Dhabi’s mall developers — particularly Aldar Properties with the Yas Mall — has set. Build the right sort of mix, and malls will be able to retain and grow their visitor traffic. It is now the turn of malls in the Northern Emirates to prove that it will work just as well up north. Future visitors to the Mirkaaz Mall in Ajman will have a reason to look to the skies. It is said to be the first mall to feature a “sprawling Atrium roof”, stretching to 36 metres in length and covering an area of 7,920 square metres. Source: Gulf News Back to Index

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SHARJAH ECONOMIC AND RESIDENTIAL PROPERTY REVIEW Tuesday, January 08, 2018 Sharjah, the third largest emirate with a total land area of around 2,600sqkm, borders Dubai to its south, Ajman and Umm Al Quwain to its north and Ras Al Khaimah to its east. Sharjah has become an alternative rental housing option to Dubai, due to the availability of lower-cost housing and regular migration between Sharjah and Dubai. Coupled with this, the significant investment in Sharjah’s real estate sector can be explained by the government’s decision to allow leasehold sales to all non-Arab expats for terms of 100 years in selected developments. Sharjah’s economy is much more diversified compared to other emirates, with no one sector accounting for more than 25% of the total, per published data in 2015. According to the Department of Statistics and Community Development in Sharjah, the real estate and business services sector was estimated to account for the largest share of the economy at 22.6%, followed by the manufacturing sector at 16.3% and the wholesale and retail trade sector at 12.1%. Sharjah’s infrastructure sector is well supported and funded not only by the emirate’s government but also by the UAE federal government, which allocates large-scale infrastructure projects including main roads, hospitals and schools. In January 2017, the government of Sharjah allocated 30% of the approved annual budget of $6bn to the infrastructure sector, an increase of 7% from 2016. As a result, Sharjah is witnessing significant developments across all infrastructure segments on the back of government support, despite the ongoing economic slowdown and political instability in the GCC. This is driving demand for the real estate sector in the region. Real Estate Investments According to Sharjah’s Real Estate Registration Department, the real estate sector saw a 37.2% increase in the value of transactions in the third quarter of 2017, compared to the same period in 2016. In August of 2017, the Sharjah Real Estate Registration Department announced a 23% growth in the number of residential sales transactions in the first half of 2017 and a 46% increase in real estate sales transactions. For investment in Sharjah’s real estate sector, the strongest demand is from within the UAE, followed by other GCC countries, including Kuwait and Saudi Arabia, that have maintained strong ties to the emirate over the years. Residential property market The residential property market in Sharjah, with regard to purchasing and renting, is heavily linked to Dubai, with migration between the two emirates regularly occurring during times of boom and decline. Sharjah has long been an alternative housing option to Dubai, particularly given the lower-cost choices it presents. There is an overall demand for housing from families in Sharjah and those relocating from Dubai looking for residences in planned communities close to the Sharjah airport and outside the city centre. Prior to 2014, Sharjah had limited freehold ownership, available to only GCC and Arab nationals in a selection of locations. In 2014, the government of Sharjah passed a law that allowed leasehold sales to all non-Arab expats for terms of 100 years in selected developments. To control the risk of opening up the Sharjah market to the large foreign population of the UAE, the leasehold ownership is currently restricted to those that hold a UAE residence visa. Additionally, only a selected number of residential developments are permitted to offer this leasehold ownership, master planned Al Tilal City being among the first.

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Other master communities, including Al Zahia and Arada’s Nasma Residences, are open to all nationalities for leasehold ownership. Al Zahia primarily offers five-bedroom villas and apartments with prices of $261-285 per sq ft, while Nasma Residences includes two- and three-bedroom townhouses, four-bedroom semi-detached houses and five-bedroom signature villas, with unit sizes of 1,500-3,500 sq ft starting at $271,000. Other developments throughout Sharjah will be assessed in the coming years, and if additional developments are given this permission, it is likely they will act as a catalyst for investment in Sharjah’s real estate market. Area report: Al Khan Al Khan is an established residential area in Sharjah, due to its proximity to Dubai and the grade of residential developments. The area features many residential and commercial buildings and retail outlets, with close proximity to entertainment projects such as Al Majaz Park. It accommodates high-rise residential buildings, primarily offering two-bedroom and above apartments and other amenities including a swimming pool, gym, playground and prayer room. Rents are marginally higher than in other areas in Sharjah, due to large unit sizes, especially in the towers that overlook the Al Khan Lagoon. For instance, a two-bedroom apartment in neighbouring Al Nahda is likely to cost $12,800-17,800 to rent, while in Al Khan it could cost $15,600-19,100. Two- and three-bedroom apartments are the most commonly rented unit types and there is limited availability of smaller unit sizes and one-bedroom units. The majority of the projects in Al Khan that overlook the Al Khan Lagoon are also two- or three-bedroom units. Additionally, some buildings have three- or four-bedroom duplex or penthouse units – the area is considered more appealing for families because of the range of sizes it provides. Source: ME Construction News Back to Index

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TIGER ANNOUNCES DH10B PROJECTS IN DUBAI, SHARJAH Friday, January 12, 2018 Tiger Properties has announced plans to develop 18 real estate projects in Dubai and Sharjah, from 2018 until the end of 2020, at a total cost of Dh10 billion. The group said it will launch the “The Square” project in Dubai with a total of 400 units, costing Dh500 million, which will be the first of 12 projects to be launched this year. On the sidelines of a press conference held by the group in Dubai to announce the launch of “The Square” project, Eng. Walid Al Zoubi, Chairman of Tiger Group, revealed the company’s intention to expand its portfolio to include other projects in Abu Dhabi, where a number of projects are being considered for implementation during the next phase as well as plans to implement an integrated city in Ajman. Al Zoubi noted that during the past year, the company handed over 2,000 housing units for both sale and lease. It is expected that 2,000 new units will be delivered in 2018. The company’s investment plan includes the development of 13 projects in Dubai and five projects in Sharjah. He referred to the Group’s investments in the hospitality sector, adding that Tiger Group is also plans to enter the education sector for the first time in the UAE. Source: Gulf News Back to Index

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UK HOUSE PRICES FALL FOR FIRST TIME IN 6 MONTHS Tuesday, January 08, 2017 British house prices unexpectedly fell in December compared with November, their first decline in six months, mortgage lender Halifax said on Monday, adding to signs of weakness in the country’s housing market since the 2016 Brexit vote. House prices slipped by 0.6 per cent month-on-month after a 0.3 per cent rise in November, Halifax said. Economists taking part in a Reuters poll had expected prices to rise by 0.2 per cent. On an annual basis, house price growth slowed to an annual 2.7 per cent in the three months to December, weaker than a rise of 3.9 per cent in November. The Reuters poll of economists had pointed to a 3.3 per cent rise. Shortly before the referendum decision to leave the European Union in June 2016, Halifax was reporting annual gains in house prices of around 10 per cent. The pound’s fall after the vote pushed up inflation and added to pressure on the finances of households. Furthermore, many businesses are holding back on investment decisions as they await clarity on Britain’s future relationship with the EU. Samuel Tombs, an economist with Pantheon Macroeconomics, said the Bank of England’s first interest rate hike in more than a decade, made in November, was also weighing on the market. “Halifax’s data suggest that the recent jump in new mortgage rates has poured cold water on a market that already was flagging,” he said. Two surveys published earlier on Monday showed that British shoppers tightened their belts over Christmas, leading to the first year-on-year fall in spending since 2012, and leading businesses aim to do the same over 2018. “The housing market in 2017 followed a similar pattern to the previous year,” Russell Galley, managing director of Halifax Community Bank, said. “House price growth slowed, whilst building activity, completed sales and mortgage approvals for house purchase all remained flat. This has been driven by a squeeze on real wage growth and continuing uncertainty over the economy.” However, a shortage of homes up for sale was likely to continue to shore up the market and Halifax reiterated its forecast for growth of between 0 and 3 per cent in house prices in 2018. Last week, rival mortgage lender Nationwide said its measure of British house prices grew last year at its slowest pace since 2012 and in London it fell for the first time in a full year since 2009. Source: Gulf News Back to Index

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PREMIUM OFFICES CHEAPER TO RENT IN DUBAI THAN HONG KONG, NEW YORK Tuesday, January 09, 2018 Occupancy costs for premium office space in the DIFC in Dubai remained largely unchanged over the past year at $94 (Dh345) per square foot per year (this figure includes the net rent plus additional fees and service charges). This places Dubai behind London (West End: $193; City: $108) and at a similar level to other second tier cities within Europe such as Stockholm ($94) and Moscow ($89), but ahead of other leading cities such as Frankfurt ($73) and Paris ($52). Toby Hall, head of office and business space leasing, UAE, JLL, said: "The DIFC in Dubai is a great example of a market which offers premium office space in a competitive city which attracts global talent and innovation. The demand to have more premium office space has significantly increased and we will be observing an upsurge in supply of improved quality space across Dubai over the coming few years," he added. Occupancy costs for premium space have increased by an average of four per cent in USD terms during 2017, but this is not the case in Dubai, where no increase was recorded during 2017. As with other global markets, the level of vacant space within premium buildings in Dubai remains below that in the general market, illustrating the demand among tenants for space in the best quality buildings. While there is greater occupier choice in the overall market, space in premium buildings remains limited, with vacancies in premium buildings remaining below five per cent in Tokyo CBD, Hong Kong and London. The same trend is apparent in Dubai, with vacancies in the premium space in the DIFC and the CBD far below that of peripheral office sub-markets with inferior quality space. The shortage of premium space in the DIFC has encouraged developers to commence or complete a number of new projects in this location in recent years. The most prominent of these is ICD Brookfield Place, which is being developed in a joint venture between the Investment Corporation of Dubai and Brookfield Property Partners. The Eurozone offers the most competitive costs globally for premium space, averaging $63 per square foot per year, compared to $85 in the Americas and $111 in Asia Pacific. Warsaw ($40), Brussels ($48), Amsterdam ($49), La Défense, Paris ($52) and Berlin ($56) are named as some of the best value-for-money markets in Europe. Outside of the Eurozone and the Middle East, the most expensive premium office rents globally are found in Central Hong Kong ($323), New York's Midtown ($194) and Beijing, Finance St ($190). Source: Khaleej Times Back to Index

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AFTER THE WEST, CHINESE TURN TO EAST FOR PROPERTY Wednesday, January 10, 2018 To sell real estate in Cambodia, agents are brushing up on their Mandarin. Across the traditionally low-rise Cambodian capital, a building boom is becoming more noticeable as it pushes higher into the sky, and its largest projects are often geared toward Chinese investors, who have only recently taken interest in the nation’s real estate market. Chinese investors are flocking to Phnom Penh, which had primarily been an investment destination for southeast Asians, Taiwanese, Japanese, South Koreans and some Westerners. For many of the capital’s largest projects, Chinese are now viewed as the target market. “Historically, Chinese investment in Cambodia has mainly been in infrastructure,” Ross Wheble, the country manager for Cambodia for the real estate consultant Knight Frank, said. “It is only within the past 18 months that we have started to see the entry of Chinese developers and individual investors.” This year is going to be a big one in terms of high-end residential property coming on line, Wheble said. In 2017, 3,488 high-end residential units were added to the existing supply in Phnom Penh, he said, adding, “We forecast an additional 15,688 units to complete in 2018.” One of the largest companies vying for Chinese investors is the Prince Real Estate Group. In the city’s central district of Chamkar Mon, across the street from Cambodia’s National Assembly and the Australian Embassy, statues of Minions characters stand outside a showroom for Prince Real Estate. A large sign, in Chinese and Khmer, advertises luxury condominiums ranging from 23 to 175 square meters with an expected 12 per cent annual return on investment and monthly payment plans from $386 (Dh1,417). Next to the embassy, a competitor’s almost-completed project called the Bridge — Cambodia’s tallest and largest residential development — looms large. Chinese investors and affluent Cambodians Prince Real Estate has multiple projects in Phnom Penh’s centre. Its 37-story Prince Central Plaza, with more than 1,000 condominium units, is scheduled for completion in May. The 27-storey twin-towers of Prince Modern Plaza are set to be finished one year later. It owns one completed project, Diamond 1, on Diamond Island, a 1-mile-long parcel of land adjacent to the city’s only casino that is buzzing with real estate projects aimed at Chinese investors and affluent Cambodians. Outside the firm’s showroom, shuttle buses stand ready to transport prospective buyers to Prince Central Plaza, while sales agents fluent in Mandarin wait to show off model units, which sell for $2,600 a square meter on lower levels and up to $4,000 a square meter for penthouse units. “In terms of purchasing, it’s basically all Chinese,” said Chen Jingjing, a sales agent, who noted that most buyers tended to come from Fujian and Zhejiang provinces, along with the cities of Shanghai and Shenzhen. “Most people are buying for investment, but some will live in their flat because they have a company or do business here,” she said. Around 90 per cent of the units at Prince Central Plaza had already sold, she said, with around half the Chinese buyers paying cash.

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Cambodia offers rapid economic growth, a young population and good returns on investment, but there are other reasons that the Phnom Penh property market appeals to Chinese investors, including China’s mounting debt. “Chinese businessmen are acutely aware that the country has a chronic debt problem, and it’s anyone’s guess in a place as opaque as China when that bubble will explode,” said GeorgeMcLeod, a political risk consultant based in Bangkok. “Businessmen with wealth in excess of a few million dollars are scrambling to squirrel cash outside of China’s borders and the reach of its unpredictable authorities.” Anti-money laundering policies Additionally, Cambodia is primarily a cash economy, with the US dollar accounting for the vast majority of money in circulation, which creates opportunities for money laundering. “Cambodia’s banks have lax internal controls and policies around anti-money laundering and know-your-client compliance, making them wide open to serve as vehicles to launder cash from criminals and corrupt government officials,” McLeod said. “Given my experience doing investigations in Cambodia, I am convinced that laundered money from the PRC is a substantial portion of property investment in Phnom Penh.” Another major selling point for Chinese buyers — one that features prominently in marketing materials for many real estate developments — is that Cambodia is a key participant in One Belt, One Road, an infrastructure initiative from President Xi Jinping of China that is harnessing hundreds of billions of dollars in state and private investment to bring Southeast Asia, Central Asia, Europe and other regions closer to China. Cambodia’s prime minister, Hun Sen, has become one of China’s most reliable friends. Having used Vietnamese support and then Western aid to consolidate and preserve his rule over the last three decades, Hun Sen has moved on to become China’s strongest ally in Southeast Asia, an area where Beijing has extensive development plans. In December, Chinese firms pledged to invest an additional $7 billion in Cambodia, including in a highway that will connect Phnom Penh with Sihanoukville, Cambodia’s main port. Sihanoukville is also a major destination for Chinese property investment and China’s Belt and Road ambitions. Belt and Road initiative The highway will reach from Sihanoukville on the Gulf of Thailand to Phnom Penh’s international airport. Unsurprisingly, the Sen Sok district surrounding the airport is attracting more Chinese residential development and investment. Like Prince Real Estate’s developments, the Star City project in the Sen Sok district is also using the Belt and Road initiative to attract buyers. The nearly 400,000 square foot joint development by the Cambodian conglomerate Thai Boon Roong and China’s Xinghui Property is being built by a company from China’s Sichuan province. It will feature five condo buildings and a hotel, apartments and offices, with a total of 2,112 units for sale. Star City’s location near Phnom Penh’s airport and the highway to Sihanoukville is made even more attractive by lower costs for condo and apartment buyers, the Star City deputy sales manager, Chhiv Vining, said. The Sen Sok district is an up-and-coming area with units starting at $1,600 a square metre. Chhiv said that 80 per cent of Star City’s Tower A had been sold, and sales had just begun on Tower B, but were limited to studios and one-bedroom units. She estimated that Chinese investors accounted for 80 per cent of buyers so far. “We’re looking to the Chinese market first,” she said. Source: The National Back to Index

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