NEWS BRIEF 40 SUN DAY 11 October 2015

ASSET MANAGEMENT SALES LEASING VALUATION & ADVISORY SALES MANAGEMENT OWNER ASSOCIATION

RESEARCH DEPARTMENT

ASSET MANAGEMENT SALES LEASING VALUATION & ADVISORY SALES MANAGEMENT OWNER ASSOCIATION

REAL ESTATE NEWS UAE EXPO 2020 TO SPUR BOOM IN UAE HOTELS REFURBISHMENT,

CONTRACTORS SAY DUBAI DUBAI SHOPPING CENTRE RENTS TO FALL FURTHER ON STRONG US DOLLAR ROYAL ATLANTIS ON PALM JUMEIRAH IS EXPECTED TO BE COMPLETED IN 2018 WHY DUBAI RENT NOT FALLING IN STEP WITH PROPERTY PRICES WHERE WAS DUBAI'S BIGGEST PROPERTY DEAL? DAMAC ON 30-DAY MISSION TO SELL DUBAI REAL ESTATE NAKHEEL CONFIRMS DH819 MILLION CONTRACT FOR THE PALM TOWER RENTS FOR SOME DUBAI FLATS DROP BY AS MUCH AS 19% DUBAI PROPERTY REGISTRATION DEADLINE INCHES NEAR DUBAI’S OFFICE REALTY PICKS UP SPEED DUBAI TO INTRODUCE NEW PUBLIC-PRIVATE PARTNERSHIP LAW NEXT MONTH TDIC APPOINTS NEW CHIEF EXECUTIVE UK LUXURY TOUR OPERATOR TO OPEN DUBAI OFFICE BY DECEMBER FIRST ROLLER COASTER INSTALLED AT LEGOLAND DUBAI DUBAI RENTS FOLLOW PRICES INTO DECLINE, SOME PROPERTY PROJECTS ‘DELAYED UNTIL NEXT YEAR’ WELCOME TO ‘DUBAI-ON-THAMES’ DUBAI SET FOR ITS FIRST RESIDENTIAL REIT AMID FALLING PRICES DUBAI MUST OVERHAUL BUSINESS PARKS TO ATTRACT GLOBAL TECHNOLOGY COMPANIES, SAVILLS SAYS OCCUPANCY RISES AT DUBAI FOUR AND FIVE-STAR HOTELS IN AUGUST DUBAI TO DRAW HALF A MILLION MEDICAL TOURISTS FIVE YEARS AHEAD OF SCHEDULE DUBAI PRIME OFFICE RENTS LIKELY TO STAY FLAT AS MAJOR NEW DEVELOPMENTS ADD TO SUPPLY GLUT RTA IN DUBAI PROGRESSES UNION OASIS PROJECT ABOVE METRO STATION ABU DHABI CHEAPEST AREA TO RENT STUDIO, ONE-BED APARTMENT IN UAE'S CAPITAL ABU DHABI PROPERTY SHOW FOR PAKISTANIS MORE CRUISE SHIPS EXPECTED TO DOCK AT ABU DHABI’S ZAYED TERMINAL

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CHEAPEST AREA TO RENT STUDIO, ONE-BED APARTMENT IN UAE'S

CAPITAL

FRIDAY 09 OCTOBER 2015 The UAE’s real estate market managed to perform resiliently in the third quarter 2015 with prices not falling as significantly as expected, according to a new report. Tasweek Real Estate Development said in its report that time was right for tenants to become homeowners, citing local consultancy advice, given that the equated monthly installments were below the monthly rental outgo. Prospective home buyers have to pay 25 per cent down payment for completed properties, while banks are allowed to offer 50 per cent of the property value as home loan in off-plan properties. Flexible payment plans are being offered by developers, depending on the construction progress. “We were surprised with how the market performed against expectations this quarter. This sets the sector up for a good year overall as it slowly prepares for a stronger and better 2016. As our report noted in Q2, diversification, favorable demographics and a sound regulatory environment will continue to protect the UAE’s property business from any harmful market shifts,” said Masood Al Awar, CEO, Tasweek. He, however, cautioned the ongoing slump in oil prices may eventually affect the overall management of various expenses and could have a trickle-down effect on the domestic economy. Abu Dhabi The capital’s residential market sustained the second quarter trend, with landlords continuing to protect rental levels via strict supply controls. Overall, third quarter prices did not change significantly over the previous quarter. The best annual apartment rental rates for the third quarter were offered at Muroor Road, with rates of Dh57,750 for a studio, Dh68,250 for one bed, Dh84,000 for two bed, Dh126,000 for a three bed and Dh168,000 for a four-bed unit . Renters could lease studio, one-, two-, three and four-bed units in Al Markaziyah for Dh57,750 pa, Dh78,750 pa, Dh94,500 pa, Dh136,500 pa and Dh189,000 pa, respectively. Average annual rates at Khalidiya for studio units stood at Dh63,000, one-bed at Dh78,750, two-bed at Dh99,750, three-bed at Dh147,000 and four-bed at Dh210,000. Al Reef community offered the best annual villa rents, with three-, four- and five-bedroom units going for Dh130,000, Dh160,000 and Dh180,000, respectively. Al Ghadeer rates for three- and four-bedroom villas were at Dh150,000 pa and Dh170,000 pa, respectively. In terms of sales, the best-priced apartments per square feet were in Downtown Reef (Dh950), Al Raha Beach (Dh1,400), Marina Square (Dh1,450) and Saadiyat Beach (Dh1,450), while average villa sale prices of two- and three-bedroom units in Hydra Village stood at Dh1 million and Dh1.4 million, respectively. Prices in Al Reef ranged from Dh1.5 million to Dh3 million, and Al Raha Gardens, from Dh2.5 million to Dh4.5 million, for three to five-bedroom villas. Dubai

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Residential prices remained stable overall, although the Dubai Land Department reported that transaction volumes dropped by 64 per cent compared to first quarter 2015. Average residential transaction prices also declined year on year by 12.7 per cent. The median transacted apartment price stood at Dh11,560 per square metres for the third quarter, while the median transacted villa price was at Dh13,024 per sqm. Dubai Marina retained its leading position in the top 10 most transacted areas, while Downtown Dubai and the Palm Jumeirah posted the highest apartment and villa prices, respectively. An additional 26,100 apartments and 2,400 villas are set for completion by 2016, the report said, adding 18 off-plan residential projects launched in the second quarter will add 5,000 units to the residential pipeline by 2019. “While already foresaw a solid year for industry, the third quarter figures show that the UAE’s property sector is still ripe for growth and expansion behind strong market fundamentals and high consumer confidence. Our latest market intelligence points to an even better 2015 than previously expected which will serve the industry well as it gears up for more activity on the lead up to the country’s 2020 World Expo hosting,” said Al Awar. Source: Emirates 24/7 Back to Index

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ROYAL ATLANTIS ON PALM JUMEIRAH IS EXPECTED TO BE COMPLETED IN

2018

THURSDAY 08 OCTOBER 2015 The Dh5.14 billion ($1.4 billion) Royal Atlantis Resort and Residences in Dubai has been named in the top 10 global influencers for new luxury developments, Knight Frank said in its “Global Development Report 2015”. Developed by Investment Corporation of Dubai and Kerzner International, the project, located on the crescent of Palm Jumeirah, next to the Atlantis resort, is designed by Kohn Pedersen Fox Associates and will include nearly 800 rooms and 250 luxury residences. The project will house a sky pool that will soar almost 90 metres above the Palm. The expected completion date is 2018. “Enabling work has already commenced on the project with the main construction tender floated,” market sources told Emirates 24/7. The UK-based consultancy labels the Royal Atlantis to be the first truly super-prime development in Dubai, having 65 individual layouts. “This in itself has set The Royal Atlantis apart from other developments by designing from the inside out - with the focus being on the quality, high specification and attention to detail that will attract buyers from all over the globe,” the consultancy stated. The other nine projects on the list were Opus in Hong Kong; One Sydney, No.1 Alfred Street, Sydney; Tour Odeon, Monaco; Shanghai Arch, Shanghai; Four Seasons Madrid, Madrid; Faena House, Miami; The Surf Club, Miami; Vancouver House, Vancouver and No.8 Royal Park, Beijing. “Hong Kong’s Opus, completed in 2012 and designed by Frank Gehry, raised the bar for prime development in Asia and influenced a new generation of luxury developments now evident across the region, most notably in China and India. Our snapshot is set to expand significantly in the next five years with the addition of ambitious projects across emerging centres in Asia, Australia, Russia and the Middle East,” said company Global Head of Research Liam Bailey. Emirates 24/7 has listed the mega projects coming up in Dubai with the list including Museum of the Future, Bluewaters Island, Dubai Creek Harbour, Dubai Water Canal, etc. Source: Emirates 24/7 Back to Index

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WHY DUBAI RENT NOT FALLING IN STEP WITH PROPERTY PRICES

WEDNESDAY 07 OCTOBER 2015 Though property prices in Dubai have fallen by 11 per cent year-on-year till August 2015, rents have declined by mere one per cent. The expected rental decline this year hasn’t been as steep as previously perceived as the supply of new housing units in the emirate has been far less than expected. In its third quarter 2015 report, JLL, a global real estate consultancy, estimates only 10,000 units to be delivered this year as against 25,000 estimated at beginning of the year. In the first nine months, just 4,000 units were delivered, while the last quarter is expected to witness supply of 6,000 units, thus bringing the total housing supply to 458,000 units by end-2015. The report, currently, estimates supply of 23,000 housing units in 2016 and 22,000 dwellings in 2017. “Prices are expected to continue softening over the remainder of the year and into 2016, before the emirate witnesses another growth cycle in the years leading up to Expo 2020,” the report said.

Dubai is expecting Dh25 billion in total investment in infrastructure-related projects in the run-up to Expo 2020 with nearly 277,000 new jobs being created. The Expo will run from October 20, 2020 to April 10, 2021, and aims to draw more than 25 million visitors to the country. The consultancy's price and rent decline percentages are based on Reidin.com figures. “The Dubai real estate market continued to experience a slowdown in performance during the third quarter, a trend which is expected to continue over the remainder of 2015,” said Craig Plumb, Head of Research, JLL Mena. The decline was primarily driven by tighter government regulations, higher inflation levels and a stronger dollar making property expensive for both local and overseas investors.

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Although Standard & Poor’s and Moody’s Investors Service, global ratings agencies have predicted property prices to fall by 10 to 20 per cent this year, the latter said government spending on infrastructure and encouraging foreign investments in various sectors will continue to support the real estate market over the next five years.

HSBC Global Research said previously that despite Dubai witnessing supply of 90,000 new units by 2018, the market will “fairly easily” absorb the supply even if the population grows less than five per cent per year. Data released by Dubai Statistics Centre shows non-labour population jumped by over 7 per cent in 2012 and 2013, while the number of households grew by 7.6 per cent in both years. Knight Frank, a UK-based property consultancy, has put rental yields in the emirate’s prime housing market at 7.42 per cent, which is far higher than 'safe haven' such as London. Source: Emirates 24/7 Back to Index

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ABU DHABI PROPERTY SHOW FOR

PAKISTANIS

TUESDAY 06 OCTOBER 2015 Abu Dhabi is gearing up to host the first ever Pakistan Property Exhibition as part of the International Real Estate and Investment Show (IREIS 2015). Attracting international and Pakistani expatriates to invest in the real estate sector, the exhibition, set to run from October 29 to 31 at the Abu Dhabi National Exhibition Centre, will convene developers, real estate advisers, private and institutional dealers from the Middle East, Europe and Asia Pacific regions under one roof. The value of Pakistan real estate market is estimated to be in the range of $200 billion to $400 billion, with overseas Pakistanis investing approximately nearly $3 billion, or 15 to 20 per cent of the last fiscal year’s total remittances, into the real estate market, according to Dome Exhibitions, Organizer of IREIS 2015. Pakistan received $16 billion in remittances during the last financial year. Qamar Chaudhary, Chief Executive Officer of Mass Com Solutions, said: “The exhibition will particularly spotlight the opportunities in the bourgeoning real estate markets across Pakistan through providing investors and visitors an ideal platform to meet with leading real estate companies, open up new business opportunities, and facilitate potential deals. “The exhibition will seek to convince visitors about the advantages of purchasing and investing in property in Pakistan, providing them with a better picture about the prevailing condition and trends in the market. Renowned speakers and industry insiders from across emerging markets will be present at the event to help visitors answer crucial questions regarding their investment plans.’’ The UAE has is home for around 1.2 million Pakistanis with the capital being home to a number of high net worth Pakistan population. Source: Emirates 24/7 Back to Index

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WHERE WAS DUBAI'S BIGGEST

PROPERTY DEAL?

TUESDAY 06 OCTOBER 2015 Eight transactions in Emirates Hills community totals Dh319.77m in Q3 2015. The buyer paid Dh2,279 per square feet for the upscale property in Emirates Hills. (Supplied) Despite the reported slowdown in volume of property transactions across Dubai to date in 2015, high net worth individuals are not hesitating from picking up prime properties. In fact, Emirates Hills, one of Dubai’s most affluent communities, has registered a deal worth Dh93 million – the biggest deal – in the third quarter 2015. Data shared exclusively by Reidin.com with Emirates 24|7 reveals the buyer paid Dh2,279 per square feet for the upscale property, with the transaction being registered with the Dubai Land Department on July 21, 2015. This website reported earlier that the biggest deal registered in the second quarter 2015 was worth Dh60 million for a villa in Emirates Hills. Eight of the top 10 costliest deals of the third quarter were registered in Emirates Hills, totalling Dh319.77 million, while Palm Jumeirah registered two transactions, worth Dh36.98 million. The second and third position villa sale transactions were worth Dh53.5m and Dh43m, respectively, in Emirates Hills. The fourth and the fifth were once again in the same master community, with buyers paying Dh40m and Dh31m, respectively, for the properties. Emirates Hills, a development by Emaar Properties, houses luxury-detached villas that have been sold as plots to investor to build their properties on. Palm Jumeirah deals were placed on the seventh and 10th position. The villas were sold for Dh21.48m and Dh15.50m, respectively. Last week, Knight Frank, a UK-based property consultancy, said rental yields for prime residential properties in Dubai were higher compared to other safe havens such as London, thus attracting income- seeking investors. Yield returns have reached 7.42 per cent in the mainstream market as of July 2015, it added. In September 2015, Damac Properties and Sobha Developer, two major developers in Dubai, shrugged off the pessimism of double-digit price declines this year or in 2016, ruling out oversupply fears. Source: Emirates 24/7 Back to Index

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DAMAC ON 30-DAY MISSION TO SELL

DUBAI REAL ESTATE

MONDAY 05 OCTOBER 2015 Dubai-based Damac Properties is heading on a month-long global roadshow to promote Dubai and highlight the strong business environment for overseas investment. Taking place on three continents, the campaign will highlight Dubai as a safe and secure city, with substantial infrastructure investment, ease of doing business and efficient and reliable regulations in which to operate. The company will be in India, UK and Kenya attending various events and exhibitions across the course of the month. “Dubai remains one of the most attractive investment cities in the world,” said company Senior Vice President Niall McLoughlin. “With a safe & secure environment, appealing business terms, stunning weather and of course, some of the most beautiful homes anywhere, Dubai is well placed to attract overseas investment.” The developer will be at the Property Investor & Home Buyer Expo in London, UK, on October 9 and 10; at the Times Property Show in Delhi, India from October 10 and 11 and the Kenya Homes Expo in Nairobi from October 15 to 18. Dubai is currently seeing a huge increase in tourism, with a nine per cent growth in visitor’s year on year, with the emirate welcoming more than seven million visitors in the first six months of 2015. Dubai International Airport is already the busiest international airport in the world, serving more than 70 million travellers last year. Dubai is set to welcome 25 million tourists by 2020 as it hosts the World Expo. As of June 30, 2015, Damac has delivered 14,375 homes and has a development portfolio of over 37,000 units at various stages of progress and planning. Source: Emirates 24/7 Back to Index

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NAKHEEL CONFIRMS DH819 MILLION

CONTRACT FOR THE PALM TOWER

SATURDAY 03 OCTOBER 2015 Nakheel has awarded a contract worth Dh819 million for the construction of The Palm Tower, its 52- storey, five star hotel and residential complex on Dubai’s Palm Jumeirah, the developer announced today. Nakheel has appointed UAE-based Trojan General Contracting and National Projects & Construction LLC to jointly build the landmark, which will stand almost 240 metres above Dubai’s world-famous Palm Jumeirah island. The Palm Tower comprises 504 luxury residences and a five star, 290-room hotel, including a rooftop infinity pool, restaurant and viewing deck. The hotel will occupy the first 18 floors of the building. The Palm Tower residences, on sale with prices starting from Dh1.7 million, comprise fully-furnished studios and one, two and three-bedroom apartments. Residents and guests at The Palm Tower will enjoy direct access to Nakheel Mall, currently under construction at the heart of Palm Jumeirah. The mall, one of 10 new, large-scale retail projects from Nakheel, will have 300 shops, cinemas, a medical centre, a fitness centre and a roof terrace offering fine dining outlets. The Palm Tower will also offer direct access – via a bridge and walkways – to Palm Jumeirah’s beach clubs, including Nakheel’s Club Vista Mare and Palm Promenade West Beach projects. The Palm Tower is one of 10 hotels being constructed by Nakheel as part of its expansion into the hospitality sector. Others are located at Deira Islands, Ibn Battuta Mall and Dragon City. Source: Emirates 24/7 Back to Index

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RENTS FOR SOME DUBAI FLATS DROP

BY AS MUCH AS 19%

SATURDAY 03 OCTOBER 2015 Although the cost of renting properties in some parts of Dubai has gone up, there are still bargains to be found in today’s rental market. According to the data compiled by a property portal, a number of apartments in Dubai Marina, Downtown Dubai, Jumeirah Lakes Towers, Dubai Sports City and Business Bay registered rental declines of between 2.6 per cent and 19 per cent in August 2015, when compared to the same period last year. This doesn’t mean rental figures across all types of apartments in these communities have declined. Smaller properties, such as studio and one-bedroom apartments, can command higher rates in sought- after communities, but can offer some bargains in secondary locations. So, for house hunters to save money on rent, the key is to do their own homework. Here’s a quick look at how much rents have risen or fallen in some of Dubai’s popular communities, according to property portal Bayut.com. The following data is based on hundreds of property listings on the company’s website. Dubai Marina What’s cheaper: Tenants looking to move to Dubai Marina can expect to pay less if they are looking for a one-bedroom or two-bedroom apartment, which registered rental declines of 13.9 per cent and 0.2 per cent, respectively. What’s pricier: If you have a tight budget, stay away from studio, three bedroom and four-bedroom flats, which registered wallet-busting increases of 28.9 per cent, 24.4 per cent and 8.2 per cent, respectively. Downtown Dubai What’s cheaper: Almost all property types in this premium location have shown rental declines of up to 10.3 per cent, so you have more chances of scoring a good deal. As of August 2015, rents for Downtown studio apartments dropped by 2.6 per cent, compared to the same month last year, while one-bedroom, two-bedroom and four-bedroom flats declined by 10 per cent, 9.2 per cent and 10.3 per cent, respectively. What’s pricier: Four-bedroom flats have gone up by 10.3 per cent, on average. Jumeirah Lakes Towers What’s cheaper: Rents for studio, one-bedroom, two-bedroom and three-bedroom flats have dropped by 12 per cent, 10.3 per cent, 9.3 per cent and 6 per cent, respectively. What’s pricier: Rents for four-bedroom flats have risen by 2.3 per cent. Dubai Sports City What’s cheaper: One-bedroom flats now generally cost 15.5 per cent less compared to about a year ago.

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What’s pricier: Studio apartments have increased by 11.3 per cent, as well as two-bedroom and three- bedroom properties, which went up by 7.8 per cent and 25.5 per cent, respectively.

Business Bay What’s cheaper: Tenants looking to stay close to Shaikh Zayed road are likely to find some bargains, with rents for studio, one-bedroom, two-bedroom and four-bedroom flats dropping by 12.7 per cent, 19 per cent, 17.2 per cent and 5.5 per cent, respectively. What’s pricier: The cost of renting four-bedroom apartments has risen by 5.5 per cent. Source: Gulf News Back to Index

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DUBAI PROPERTY REGISTRATION DEADLINE INCHES NEAR

WEDNESDAY 07 OCTOBER 2015 On March 19, Dubai Land Department issued a circular to all developers, purchasers and owners of properties in Dubai requiring mandatory registration of the units in the register maintained by it before June 30. This led to a huge rush from individual purchasers wanting to register directly, not forgetting the hundreds of purchasers who tried to register with the help of developers. As the deadline approached, the numbers seeking to register were still high. So the Land Department took the sensible decision to extend the deadline by three months. The new deadline is October 31 and applies to all properties. We understand that this registration deadline is both imminent and final. What does this mean for new investors/purchasers of incomplete properties? If you have purchased an off-plan property which has not been registered in the interim register (Oqood), you should immediately approach the developer and ask him to register your interest and make payment of any appropriate fees. If your property is registered in Oqood, but fees have not been paid yet, you should review your SPA (sales purchase agreement) to see if you are required to pay these. If you are, you should seek to do so at the earliest opportunity because the developer will need to pass these on to the Land Department before October 31 and provide you with the registration certificate. Don’t leave it until the last minute. What does this mean for owners who are in possession of a property but do not have the title deed? You should immediately approach the developer to find out the reasons for the delay in obtaining a title deed and whether your interest is registered with the Land Department. If the developer cannot be contacted or is not cooperating, you should approach the Land Department directly to secure the title deed. Does this circular cover long term leases as well? Until now, the focus has been more on the registration of freehold properties; however, the Law also requires registration of leases that are 10 years or longer. Please note this is separate to the Ejari registration requirements for short term leases. What are the consequences of not registering the property under the new directives? Dubai law requires all legal disposition in respect of real property to be registered in the register. Any sale or legal disposition which transfers or restricts ownership or any ancillary rights will be void if not registered. It is equally imperative that the developer and investors/purchasers should come forward and ensure that all sales are registered with the Land Department to secure the rights of both parties. For individual purchasers, they should think of the risks in not registering their interest in the property. If one buys a property and does not take transfer of legal title by registering, the property remains in the name of the seller and can be subjected to claims made against the seller or could be sold to another person or mortgaged without the buyer’s approval. Non-registration therefore exposes you to a risk of fraud or third-party claims against the property. Are there any penalties for not registering properties?

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Yes, if the circular was to be strictly adhered to. The Land Department could take action against defaulters by levying fines or suspending all transactions relating to those individuals/companies until the situation is rectified. It is not clear if penalties will be applied to individuals who fail to pay the fees, or to developers who fail to collect the fees from purchasers and remit these to the Land Department. If the latter, then it is probable the penalty will be passed on by the developer to the purchaser if the purchaser delays submitting documents or fees because most SPAs explicitly require the purchaser to pay the fees. A possible reason for an increased rush to register the properties before the [earlier] deadline of June 30 were the unfounded rumours the Land Department will increase registration fees to 8 per cent instead of the existing 4 per cent. Indeed, those who failed to register when the fees were 2 per cent have already incurred a penalty of sorts when the fee was doubled. We have also seen written communication between representatives at the Land Department and purchasers which suggests there will be a penalty levied equivalent to 4 per cent, if a property is not registered by the deadline. It remains to be seen whether that actually occurs or not. What about cancelled projects? The initiative clearly has good intentions; however, some questions remain unanswered on the scope of the directive from the Land Department. The directive does not distinguish between viable off-plan projects and those under cancellation with Land Department. Our enquiries have revealed that registration is not required for cancelled projects. However, recent circulars dealing with projects such as Dubai Pearl requiring purchasers to register their interests (albeit without paying a fee for now) have cast doubt over the status of such projects and registration requirements. In addition, it is not immediately clear whether there will be any follow on impact for a purchaser’s right to seek a remedy through the Judicial Committee if a project is liquidated and their interests are not lodged with the Land Department by October 31. A prudent approach for those with interests in cancelled projects is to seek written confirmation from the Land Department that they do not need to register and a failure to register will not affect their legal rights. The registration of real estate interests in Dubai is mandatory and a matter of public policy. Those who fail to ensure registration of their interests expose themselves to risks of losing their asset, either through fraud or through claims made against the existing holder of the title, and — potentially — to penalties imposed by the Land Department. Registration is clearly in the property owner’s interest and all should make it a priority to ensure such interests are registered as soon as possible. Source: Gulf News Back to Index

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DUBAI’S OFFICE REALTY PICKS UP

SPEED

WEDNESDAY 07 OCTOBER 2015 After going steady for the last two years, Dubai’s office leasing market sure looks to have kicked up a gear or two. And that too almost effortlessly. The brand new One JLT within DMCC free zone had it easy picking up a roster of blue-chip tenants; the Dubai Design District is well on its way as the address to be for those in high couture and creatives; and the many high-rises at DIFC are at peak occupancies with hardly any room to spare. Clearly, there is a very different fundamental driving Dubai commercial space as compared with what has been happening on residential space. ‘New stock recently delivered within buildings such as Index Tower and Burj Daman are providing much needed relief to the DIFC which is almost at full capacity itself,’ says the latest Dubai office market update issued by Knight Frank. ‘One of the most anticipated announcements within DIFC continues to draw market interest, where a joint venture between ICD and Brookfield is planning to deliver a 50- storey office tower that will sit behind Currency House and the Ritz Carlton with direct physical access into the free zone itself.’ Indeed, Emirates REIT early this week announced two further leasings — taking up 36,000 square feet — at the upscale 80-storey Index Tower, Both leases are for five years apiece. With the latest signings, ‘total occupancy of Emirates REIT’s portfolio (rises) to 76 per cent, well above Dubai’s average commercial occupancy rate. Further releases of fitted-out office floors at the Index Tower are expected by the end of October,’ the company said in a statement. ‘Signs towards the latter end of Q3 suggest that occupier demand for the remainder of the year will remain strong,’ the Knight Frank report adds. ‘With tenant’s end-of-year decision-making window now noticeably shorter, this has provided added stimulus and urgency to businesses who now need to move quickly to secure premises for occupation by Q1 next year. ‘Occupier activity continues to be seen in the shape of expansions, new start-ups, consolidations and renewals which has further reduced vacancy levels, especially within prime office developments where the supply of available space remains low.’ There is still plenty in the supply pipeline. Master-developers are again getting into the swing of launching premium standalone office projects. ‘The new office development at the Trade Centre, expected to be delivered in Q4 this year, will add some much needed grade A supply to the market,’ Knight Frank adds. Recent announcements have clarified that the development will now also be suitable for free zone based business as well as those with a DED (Department of Economic Development) trade licence.’ “The office leasing market has been active, particularly demand for small offices,” said Robin Teh, Country Manager at Chestertons Mena. “Office space near transit areas — Vision Tower in Business Bay and Almas tower in JLT — have seen high demand. “There is slight correction in prime areas such as DIFC. However, secondary areas such as Al Barsha and Silicon Oasis continue to see good demand.’

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JLL in its Dubai Q3 update released on Tuesday, finds that within the city’s commercial space, ‘tenants are migrating between free zones because of the lack of quality elsewhere. The limited available supply in Tecom for example has prompted tenants to take up space in JLT. This trend is likely to continue as demand for quality office space continues to grow. ’ Source: Gulf News Back to Index

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EXPO 2020 TO SPUR BOOM IN UAE HOTELS REFURBISHMENT,

CONTRACTORS SAY

SUNDAY 04 OCTOBER 2015 Opportunities for Dubai’s fit-out contractors are growing as owners launch projects to refurbish hotels in the run-up to Expo 2020. Emaar Properties is understood to be working on refurbishments of three of its Downtown Dubai properties, including The Palace and The Address Downtown Dubai following the recent rebrand of its Qamardeen Hotel to Vida and the refurbishment of Manzil. Moreover, Jumeirah Group is planning a refurbishment of one of the flagship restaurants at its signature Burj Al Arab hotel and has appointed Dutco Styles and Wood to oversee the project. Emaar Properties and Jumeirah Group did not respond to requests for comment. Adam Prowting, the new general manager for Dutco Styles and Wood, said he was prevented by confidentiality agreements from discussing the Burj Al Arab project, but said that “the majority” of the work being carried out by his 130-employee company was in the hospitality sector. “Hospitality has been the leading sector for the last couple of years,” said Mr Prowting, adding that the bulk of its work has been refurbishing rather than fitting out new hotels. “And we believe there are a lot more refurbs to come as well.” Mr Prowting said that internal research carried out by Ducto Styles and Wood has identified 60 major refurbishment prospects due to come on to the market. It is targeting a turnover of Dh150 million next year on the back of such opportunities. He said that hotels typically have a shelf life of six or seven years before they need to be fitted out again. Given that many of Dubai’s existing hotels were completed in the run-up to the 2008 financial crisis, many are overdue a facelift. “The recession slowed things down [but] we believe we’re coming out of that and there’s going to be a lot more competition in years to come. “There’s a need for it. A lot of venues are becoming outdated.” Research from Arcadis in 2013 estimated that 10,000 of Dubai’s hotelrooms will need an upgrade by 2020. Tom Gilmartin, the business development manager at Alec Fit Out, which is part of Al Jaber Group, put the cycle for major refurbishment at seven to 10 years, but added that it is now almost 10 years since the market’s peak in terms of new openings. “Refurbishments will form a very important part of the market coming up to 2020, as many of the older hotel owners will try to upgrade their assets to ensure they can compete against the newer developments,” he said.

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He added that owners plan for refurbishments to take place during the summer period when occupancy rates are lower.

“With this in mind, many clients are planning refurbishments now. Ideally, a contractor should be awarded [a contract] by February to enable engineering and procurement to take place before getting on to site.” Tarek Ardakani, the director of business development for Bond Interiors, said his company was also heavily involved in bidding for projects, but added that the market is “very competitive” and that margins were thin. Mr Prowting, who has worked in the UAE for nine years, agrees. “It’s the most competitive since I’ve been here. Margins are going down rather than stabilising or going up.” Khaled Bitar, the general manager of the Jordan-based fit-out contractor Artline, believes that although the UAE hotels market offers lots of business opportunities, the lack of profit means it is not one it is willing to explore. He was at The Hotel Show in Dubai last week, but was there mainly to meet clients from other parts of the region including Bahrain, Oman and Saudi Arabia, where it has worked on the refit of the Al Faisaliah Hotel. “Competition for contractors here in Dubai is very tough,” he said. “It’s an expensive country to live in. If my staff were here it would cost me treble what I am paying for them in Jordan. We also would need to be competitive in this market.” Source: The National Back to Index

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DUBAI TO INTRODUCE NEW PUBLIC- PRIVATE PARTNERSHIP LAW NEXT

MONTH

MONDAY 05 OCTOBER 2015 Dubai is set to introduce legislation next month that could draw more private investment into infrastructure projects including the extension of the city’s Metro. The law covering public-private partnerships is due to be introduced on November 19, and will allow the emirate to tap private sector funding for key projects such as the expansion of Al Maktoum International Airport and the extension to the Dubai Metro Red Line from Nakhel Harbour and Towers to the Expo 2020 site. Beyond the utilities sector, the adoption of public-private partnerships has faltered throughout the region, where traditional forms of procurement have been favoured. However, as regional economies face increasing budgetary pressures resulting from the weaker price of oil, public sector clients are increasingly turning to private finance to help pay for projects. The consortia bidding to build the extension to the Dubai Metro Red Line will be able to use public- private partnership (PPP) models as part of their bids, according to Dubai Roads & Transport Authority’s chief engineer for rail operations, Shahrin bin Abdol Salam. Tenders for the project, which have already been issued, are due to be handed back to the RTA in December, weeks after the new law covering public-private partnerships is introduced in Dubai on November 19. Contracts are expected to be awarded in January, said Mr Salam, who was speaking at the Meed Mena Rail & Metro Summit yesterday. Mr Salam said the formation of a public-private partnership as part of a consortium was “not mandatory” for bidders, but was an option. “If that’s what they want to put in to their bid, they are free to do so,” he said. The new Dubai law will remove the need for project-specific legislation for entities and for the government to act as guarantor for projects, as has been the case with the limited private finance rules that currently cover the power and water sector. It will allow any government entity to use PPPs to develop infrastructure so long as they meet certain conditions. For instance, all projects worth more than Dh200 million will need to form a special purpose vehicle (SPV) overseen by a committee containing a project CEO and a representative from the Department of Finance, although projects over Dh500m will still need the approval of the Supreme Committee. However, supplementary regulations are also needed to determine whether SPVs can be based in free zones and offer foreign investors stakes of more than 49 per cent. The first project to use PPP funding will be the new Union Square station plaza containing a number of towers that are set to be built above the existing Dubai Metro station.

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Speaking on the sidelines of Meed’s Mena Metro and Rail Conference, Abdullah Al Nuaimi, the UAE’s Minister of Public Works, said the private sector “would like to see the ground is strong” before providing the funding that will drive infrastructure projects. “The strength of the ground is actually nothing but the legislation and the regulations. And what we have today is a good starting point.” He added that the UAE has already “seen some good projects that made sense to the overall economy” that could benefit from private sector funding. “The government looks [at] PPPs as a great initiative to tie up the private sector and the government.” Trevor Butcher, the head of Middle East finance and projects at DLA Piper, said the new PPP law is “an overwhelmingly positive step forward for the future for the development of a PPP market in Dubai. “It gives government entities the freedom to define appropriate tender processes outside of the constraints of existing tender laws that simply don’t work for PPPs,” he said. The introduction of a new PPP law in Dubai follows on from the implementation of similar regulations in Kuwait and Bahrain. Source: The National Back to Index

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MORE CRUISE SHIPS EXPECTED TO DOCK AT ABU DHABI’S ZAYED

TERMINAL

MONDAY 05 OCTOBER 2015 The number of cruise ships docking in Abu Dhabi is set to increase by a fifth this season as the capital’s new Zayed Port cruise terminal opens by the end of this year. Abu Dhabi Ports said yesterday that it has scheduled a total of 112 cruise ships to stop in the emirate during the new 2015-16 season, up from 94 the previous season, representing a 19 per cent increase. The ships will bring a total of 205,000 passengers to the capital between September and May, up from 185,000 who flocked through the gates of Port Zayed last season. Passengers come mostly from Europe and the United Kingdom and often visit Abu Dhabi as part of regional tours which include Dubai, Bahrain, Muscat, Khor Fakkan and Khasab. The first cruise liner to dock in the capital this season was the 620-passenger MS Insignia, which pulled into Abu Dhabi on September 18. The government-owned port operator, which also manages Khalifa Port, said that its new 2,500 passenger capacity Port Zayed terminal was now more than 60 per cent complete. It reported that the envelope of the building had been completed and the fit-out for the passenger hall was 30 per cent finished. w“The upcoming modern cruise terminal at Zayed Port will be a demonstration of our commitment to innovation and stakeholder focus,” said Captain Mohamed Al Shamisi, the chief executive of Abu Dhabi Ports. “These developments further boost the Emirate’s tourism development, a major component in its economic diversification.” The number of cruise liner passengers visiting Abu Dhabi has increased dramatically since the capital’s first cruise season in 2006-07 when 36,000 passengers arrived at Port Zayed in 29 ships. Yesterday, Capt Al Shamisi gave the keynote presentation at the Seatrade Offshore Marine & Workboats Middle East conference and exhibition in the capital. Source: The National Back to Index

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TDIC APPOINTS NEW CHIEF EXECUTIVE

TUESDAY 06 OCTOBER 2015 Tourism Development & Investment Company (TDIC) has appointed Sufian Hasan Al Marzooqi as chief executive officer, the company said in a statement. “I am pleased to be given this opportunity to help guide TDIC during this exciting period, with distinctive projects currently underway, such as Louvre Abu Dhabi. I look forward to realising even more unique developments that will enhance TDIC’s portfolio while also raising Abu Dhabi’s reputation as a destination of choice in the UAE and beyond,” said Mr Al Marzooqi. TDIC, established in 2006, is a master developer of major tourism, cultural and residential destinations in Abu Dhabi. These include Saadiyat Island, which is being developed by the Abu Dhabi government mainly as a cultural destination with projects such as the Zayed National Museum,Louvre Abu Dhabi and Guggenheim Abu Dhabi. TDIC is also developing Desert Islands, a heritage-based tourism destination composed of eight islands. Mr Al Marzooqi holds a bachelor’s degree from the American University in Washington DC in Science and Technology Management, bringing with him experience in various fields as he held several key positions in Abu Dhabi Investment Authority. Source: The National Back to Index

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UK LUXURY TOUR OPERATOR TO OPEN

DUBAI OFFICE BY DECEMBER

TUESDAY 06 OCTOBER 2015 Elegant Resorts, a Saudi-owned luxury tour operator, plans to open an office in Dubai by December to target the international high-end outbound travel market from the Arabian Gulf. The UK company plans to invest about £1 million (Dh5.6m) in staff, training and equipment over the next two years, according to Michelle Sephton, the managing director of Elegant Resorts. The Dubai office represents its first major international foray. In February last year, Thomas Cook sold Elegant Resorts for £14.3m to Al Tayyar Travel Group from Saudi Arabia. “There is a gap in the premium luxury travel market here [as] nobody was delivering the whole service in the Middle East,” said Ms Sephton. “We will guide the travellers as a 24-hour service throughout the trip. The high-spending travellers from [the Gulf] are an attraction as well.” According to VisitBritain, the country’s tourism agency, visitors from the UAE spent £2,500 per person per trip, which typically lasted two weeks, in Britain in 2012. Founded in 1988, Elegant Resorts handles 20,000 passengers from the British market a year and has about 800 hotels in its database. “Dubai is a big destination and so is Abu Dhabi and Oman,” said Ms Sephton. “Sometimes travellers would use Dubai as a stopover.” Source: The National Back to Index

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FIRST ROLLER COASTER INSTALLED AT

LEGOLAND DUBAI

TUESDAY 06 OCTOBER 2015 The first roller coaster at Legoland Dubai has been installed at Dubai Parks and Resorts. The company said that the Dragon roller coaster is the park’s biggest ride at 16 metres high and will reach speeds of up to 60kph. It added that the ride will form the centrepiece of the park’s Lego Kingdom area, and that Legoland Dubai will feature six themed areas, more than 40 interactive rides, shows and attractions and 15,000 Lego model structures. The Dragon “weaves through the Legoland Castle before twisting and turning on to a fun-filled outdoor track,” it added. Dubai Parks and Resorts is scheduled to open in October next year, and will feature three theme parks - motiongate Dubai, Bollywood Parks Dubai and Legoland along with the Legoland Water Park. The parks will be located in Jebel Ali. “More than 50 per cent of the ride engineering and manufacturing across all of the theme parks has been completed and ride components such as Legoland’s Dragon ride have started arriving on site for installation,” said Stanford Pinto, chief parks operations officer of Dubai Parks and Resorts. The company said in August that it would open up more than a third of its employment opportunities to UAE nationals. It said that it expects to attract 5.5 million visitors in 2017. Source: The National Back to Index

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DUBAI RENTS FOLLOW PRICES INTO DECLINE, SOME PROPERTY PROJECTS

‘DELAYED UNTIL NEXT YEAR’

TUESDAY 06 OCTOBER 2015 Thousands of homes under construction in Dubai are being put on hold as property prices in the emirate continue to fall and rents start to sink. Between 4,000 and 5,000 homes that were initially scheduled for handover in the second half of this year have been delayed for at least another year to 18 months as the Dubai property market continues to soften, said JLL, a property broker. JLL said 1,700 homes had been completed in the third quarter, increasing the total residential supply to 452,000 units. Another 45,000 homes are expected to be delivered over the next two years. JLL said average apartment prices in the city fell 11 per cent over the past year because of the strong dirham, higher sales transaction fees and mortgage caps. Apartment prices slid an average of 3 per cent between July and September from the previous three months. Sales prices for villas fell 7 per cent year-on-year and 3 per cent quarter-on-quarter. Housing rents in the emirate, which had proved more resilient than sales prices, have also started to decline. JLL said that after about a year of remaining steady, average apartment rents in the city dropped 1 per cent in the third quarter and villa rents fell 2 per cent. The broker predicted that average housing rents in the city would continue to fall by as much as 10 per cent over the coming 12 months. “We expected rents to fall sooner than they did, and actually we are surprised that they held up for so long,” said Craig Plumb, the head of research at JLL’s Dubai office. “We don’t believe that there is one trigger for the fall in rents at the moment, but we expect it has a lot to do with a slowdown in the overall economy, meaning that employment growth has not been as strong as it was. “With oil prices staying lower for longer than was at first anticipated, the Government has been cutting back spending, which has led companies to be a bit more cautious with their hiring.” At the start of the year JLL predicted that average house prices would fall 10 per cent this year as the market experienced a slowdown following the dramatic boom, bust and boom of the previous decade. JLL last week revised its forecast for the year, predicting that average house prices would fall 15 per cent throughout this year. Last month, CBRE predicted that property price drops would continue next year after average Dubai prices fell 6 per cent in the year to the end of August, while Knight Frank reported that the Dubai

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residential property market was one of the worst performing in the world in the second quarter of the year, with greater price slumps than Greece, China and Ukraine.

Source: The National Back to Index

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WELCOME TO ‘DUBAI-ON-THAMES’

TUESDAY 06 OCTOBER 2015 Battersea Power Station represents an opportunity for regional buyers to be a part of the last great development opportunity in the British capital. Experience has taught Simon Murphy that when it comes to telling the Battersea story, it pays to take nothing for granted. “I did a presentation a year or so ago and at the end I asked, ‘Are there any questions please?’” the Englishman says. “That’s when somebody said, ‘Don’t you think people will object to living so close to a power station?’” The power station, decommissioned in 1983, is one of London’s most recognisable landmarks, and as Mr Murphy will explain to audiences in Abu Dhabi and Dubai this week, his answer to that question is a resounding No. Mr Murphy is the chief financial officer of the Battersea Power Station Development Company, a Malaysian-backed consortium that is funding the building’s regeneration as part of an estimated Dh45 billion programme, making it the largest residential development in London. He is in the UAE as part of a Middle East road trip to explain a scheme that has already attracted capital from the region. Last year the National Bank of Abu Dhabi was one of 12 banks that took part in a Dh2.6bn Sharia- compliant loan, providing development capital for the second and third phases of the Battersea Power Station development. The scheme promises to turn Battersea into the largest retail and leisure destination in central London, and will eventually include 4,000 new homes, 1.6 million square feet of office space, more than 40 restaurants and cafes, 150 shops, a 2,000-seat performance venue, 7 hectares of public open space and London’s newest Underground station. “It’s not about the hard sell. It’s about raising awareness and developing relationships,” Mr Murphy says. “We’ve already raised every penny we need to and National Bank of Abu Dhabi was a part of that facility, so we don’t need to raise any more money for this project for the next five years – and potentially ever. “The UAE events are partly for existing purchasers and also for other people who’d like to become a part of the Battersea story.” His subject is certainly unique. With its four unmistakable chimneys, Battersea Power Station is as much a part of London’s architectural identity as Buckingham Palace, the Palace of Westminster, or Tower Bridge. Its architect was Sir Giles Gilbert Scot, who is also responsible for the UK’s traditional red telephone boxes and Bankside Power Station, the building we now know as Tate Modern. The first phase of Battersea was built just before the Second World War as the main source of electricity for West London. The building is actually two power stations, the western Battersea ‘A’ and the eastern Battersea ‘B’, enclosed in the largest brick building in Europe. It is so large that its central boiler house is large enough to accommodate St Paul’s Cathedral, while each of its twin turbine halls is the equal of Tate Modern’s.

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But unlike the Thames-side gallery, which opened in 2000 after 19 years of dereliction, Battersea has had to wait 32 years for its renaissance. It only escaped demolition after it was listed in 1980 as a building of outstanding architectural importance. After several aborted attempts at redevelopment, the last of which collapsed in 2011, Battersea’s fortunes changed when the building and its associated 17 hectares of land were bought in 2012 for £400 million (Dh2.22bn). The first residents are not due to move on to the site until this time next year, but the project has already started to change the reputation of this long-neglected section of London’s South Bank. In November, almost four years before it is due to be completed, one of the power station’s fifth-floor apartments came back on to the market a few months after it had reportedly been bought by a Dubai buyer. In less than a year the asking price had risen to almost Dh9 million, an increase of more than 30 per cent. “It’s an entirely separate market from what’s going on in the real world,” the Kensington estate agent Chris Innes-Ker told the London-based Guardian newspaper at the time. “It seems to be defying all logic. It’s creating a market of its own.” Despite the excitement that surrounds Battersea among Middle East buyers and the agents who service them, the picture emerging from the London housing market is complex and the experience of investors, especially in markets whose currencies have depreciated against the British pound, is mixed. As the latest Knight Frank Global Development Report has reported, not only has London become the world’s leading city for the global wealthy, but property prices in London have risen dramatically above New York, its nearest rival in the global luxury real estate market. When the first phase of the Battersea Power Station development came up for sale in 2013, the sterling was relatively weak, demand for property among international investors was high, and the number of new London residential properties scheduled for construction had surged to its highest in 26 years. But while prices along the South Bank, which now stretches from Tower Bridge to Battersea, have risen by more than 22 per cent since January 2013, brokers Douglas and Gordon reported a fall in the value of luxury homes in the Battersea and Battersea Park area of 10 per cent, in the 12 months to June this year. In part this is the result of the strength of sterling compared with key investor currencies such as the Malaysian ringgit, the Singaporean dollar, the Chinese yuan and the Russian rouble, which lost 55 per cent of its value against the pound after Russian president Vladimir Putin’s annexation of Crimea last year. “We are witnessing softening of interest among buyers from Malaysia and South-East Asian regions, probably due to the prevailing volatile currencies and uncertainty in economic outlook,” said Sime Darby Berhad, one of the three main investors behind the Battersea project, in June. Battersea is at the western end of a River Thames stretch that runs between Vauxhall Bridge and Chelsea Bridge, and is regarded as the last great development opportunity in central London. Formerly an overlooked and ignored tangle of warehouses, light industrial units, wholesale markets and railway viaducts, the area has traditionally been seen as the poorer cousin of neighbourhoods such as Chelsea and Westminster across the river. Thanks to its designation in March 2012 as an “opportunity area” by the mayor of London and planning that set out an ambition to build 16,000 new homes, create up to 25,000 new jobs and a new park connecting Vauxhall with Battersea Power Station, all has changed.

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The resulting development bonanza, a forest of cranes, scaffolding and construction hoardings, has been dubbed “Dubai-on-Thames” by a local newspaper and is attracting buyers and developers from the Middle East. In June, Damac Properties of Dubai launched a 50-storey, 360-unit residential tower, Aykon Nine Elms, with interiors designed by Gianni Versace. “A number of agents have said that the best investment opportunity in London property is Nine Elms, and within Nine Elms it’s Battersea Power Station, and we believe that,” Mr Murphy said on a recent tour of the Power Station. “It’s finally OK now to say that you live south of the river. Taxi drivers will not say ‘No thanks, guv’ and drive away in the opposite direction.” For Battersea Power Station Development Company chief executive Rob Tincknell, the appeal of the project lies in a complex “cocktail” of issues and not just in the luxurious size and finishes of the homes on offer. They are, on average, 40 per cent larger than the London standard and have been particularly popular with buyers from the Middle East. Two-bedroom apartments planned for the roof of the power station measure 205 square metres. “We’ve had a number of high net worth individuals from the Middle East,” Mr Tincknell says. “One of our clients, who has just sold his penthouse in One Hyde Park, said he was fed up in Knightsbridge. There are too many people, he can’t go out anywhere without getting hassled, it’s too busy. He wants some peace and quiet and privacy. “Knightsbridge and Chelsea and Mayfair will always be there and they will never change, but I think that change is happening.” But he admits that it is the potential for significantly higher returns on investment in luxury properties south of the river that has excited buyers at Battersea. “The Thames has been a natural barrier to values in London forever. Why? There’s no such barrier in Paris or Chicago, but here there is and that’s mainly because there’s been a lack of infrastructure south of the river,” Mr Tincknell says. “Prices were about 50 per cent of the values in Central London over the river, but now we are about 80 per cent. That gap is narrowing substantially but it hasn’t happened here in Battersea yet. “We are still incredibly affordable and people genuinely believe that the capital appreciation here is going to be much, much higher.” Source: The National Back to Index

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DUBAI SET FOR ITS FIRST RESIDENTIAL REIT AMID FALLING

PRICES

WEDNESDAY 07 OCTOBER 2015 Emirates Reit plans to start Dubai’s first residential real estate investment trust as falling property prices boost potential returns from rental income. The new trust is expected to start operating later this year or early in 2016 depending on regulatory approval, Sylvain Vieujot, executive deputy chairman of Emirates Reit, said in an interview Tuesday. “When we looked at residential before, it was expensive,” Mr Vieujot said. “Now the whole market has come down, but at the buildings we are looking at, we don’t think rents will drop significantly.” Dubai’s rental market has remained strong even as home prices fell the most in the world this year. Rents declined 1 per cent in the year ending in August compared to a 10 per cent drop in selling prices, JLL said in a report yesterday. JLL predicts home prices will continue to decline this year and into 2016 as government rules tightening mortgage lending and a stronger dollar damp demand. Mr Vieujot is planning to spend as much as Dh2 billion buying entire buildings in Dubai and within investment zones in neighboring Abu Dhabi over the next two years. He is expecting an annual net yield of around 9 per cent to 10 per cent. Emirates Reit, which listed in 2010, owns properties valued at Dh2.1bn including schools, offices and retail. The company, which is listed on Nasdaq Dubai, plans to invest Dh1bn over the next 12 months, he said. Source: The National Back to Index

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DUBAI MUST OVERHAUL BUSINESS PARKS TO ATTRACT GLOBAL TECHNOLOGY COMPANIES, SAVILLS

SAYS

WEDNESDAY 07 OCTOBER 2015 Dubai’s string of glass-fronted, out-of-town business parks is becoming too outdated for the digital age, a new report from the property broker Savills warns. If it wants to attract the next big global economic driving force – a new generation of global technology companies – the city needs to change the way that it zones its property developments and create more pedestrian-friendly, “human-scale workplaces” such as can be found in London’s Shoreditch or New York’s Union Square. Last year, Dubai’s office supply increased 13 per cent, as a number of projects that were stalled during the global financial crisis in 2008 and 2009 were finally completed. “Modern Dubai is a late 20th- century zoned automobile city,” said Yolande Barnes, the director of world research at Savills. “In an industry where chance meetings and collaborations can add so much value, many of the more creative tech occupiers are moving away from the single-use environment and towards high-quality urban environments. This is at odds with the single-use, out-of-town approach of the free trade zones of Dubai.” David Godchaux, the chief executive of Savills’ Dubai operation, aid some developers were moving away from “mega- structures in which cars are essential, to more pedestrianised, urban communities which align with a high-end European lifestyle”. To that end, the Tecom Group in Dubai has been trying to create areas in the Dubai Design District (D3) to attract creative start-ups. The 21 million square feet D3 campus houses office space, small boutiques, galleries, workshops and artists’ studios. Tecom’s Internet City and Media City follow similar principles. On Tuesday, the property broker JLL reported that 283,000 sq metres of office space came on stream in the market during the three months to the end of last month, bringing Dubai’s total supply to 8.2 million sq metres. “Office demand has been focused on the higher quality offices of the central business districts,” said Craig Plumb, the head of research at JLL’s Dubai office. Source: The National Back to Index

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OCCUPANCY RISES AT DUBAI FOUR

AND FIVE-STAR HOTELS IN AUGUST

WEDNESDAY 07 OCTOBER 2015 Dubai’s four- and five-star hotels registered a marginal increase in occupancy in August even as room rates continued a declining trend year to date. Average occupancy increased by 0.6 percentage points compared to the same period last year to touch 75 per cent, according to Hotstats data. Room rates fell by an average of 10.8 per cent year-on-year to US$196.49, pulling the revenue per available room down by 10.1 per cent to $147.45 for the month. The average daily rate reduction in August reflects the ongoing trend of softer rates in Dubai, said Chris Hewett, an associate director at TRI Consulting, which compiles Hotstats data. “This is due to the strengthening US dollar, which has resulted in Dubai hotels being more expensive,” he said. “As a result hoteliers have reduced rates in order to maintain occupancy levels.” Occupancy levels have been fluctuating all year, however overall they have remained consistent with 2014 levels, he said. In August, Dubai International Airport reported a record 7.2 million travellers, up 8.4 per cent from 6.64 million year-on-year. In Cairo, the average hotel occupancy dipped by 4.4 percentage points year-on-year to touch 58.8 per cent, said Hotstats. The average room rate increased 10.9 per cent to US$123.44 Source: The National Back to Index

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DUBAI TO DRAW HALF A MILLION MEDICAL TOURISTS FIVE YEARS AHEAD

OF SCHEDULE

WEDNESDAY 07 OCTOBER 2015 Dubai is on track to achieve its target of attracting half a million medical tourists this year, five years ahead of schedule, with a revised strategy due next year, says a top official. In the first half of the year, 16 hospitals provided treatment to 256,097 international and domestic medical tourists in the emirate, generating combined revenues of Dh1 billion. “We expect that number to double when we collect data from across all the 30 hospitals and other facilities at the end of the year,” said Layla Al Marzouqi, the director of health regulation at Dubai Health Authority (DHA). “We expect to increase the number of medical tourists by 12 to 13 per cent every year.” She was speaking on the sidelines of the third International Medical Travel Exhibition and Conference (Imtec) in Dubai yesterday. About 40 per cent of the medical tourists were from abroad and the rest from the other emirates during the first half of the year, said Linda Abdullah Ali, the authority’s head of medical tourism. Dubai has been ramping up its medical tourism infrastructure, creating regulations and financial packages for the facilitators of medical tourism. Last month, the emirate introduced insurance for medical tourists with premiums of between Dh140 and Dh180 per trip in the event that medical complications develop within a month of treatment. The arrangement between the healthcare facility and the insurance company covers costs for return flights, hotel expenses and the treatment. Of Dubai’s 2,900 medical facilities – such as hospitals, clinics and day-care surgery centres – 26 hospitals are private and four are state-run. At least 10 private hospitals are expected to open in the next two years. The government-funded Dh673 million Al Jalila Children’s Specialty Hospital is under construction. Countries in the Arabian Gulf, the Commonwealth of Independent States and Africa were the top source markets for Dubai’s medical tourism industry. “We are not competing against India. We have our own market, and quality is what Dubai thrives on regardless of the price,” Ms Abdullah Ali said about India, which is striving to become a medical tourism destination. Although plastic surgery and wellness treatments are the most popular services, orthopaedic surgeries are the top revenue generators. At the 100-bed Prime Hospital near Dubai International Airport, about 5 per cent of its patients, or 2,000 a year, are foreign medical tourists, according to Riaz Khan, the general manager of Prime. “While we focus on plastic surgery and bariatric surgeries in line with DHA, we get patients for health check-ups to knee replacement surgeries,” he said. “We are also developing neurosurgery and complicated dental health care.”

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Prime Hospital works with Le Meridien and Al Bustan Rotana for patient stays, as well as two medical facilitators who help patients to secure travel visas, book hotels and select healthcare packages.

“In Dubai, regulations are strong, along with strong clinical outcomes at a reasonable cost,” Mr Khan said. Source: The National Back to Index

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DUBAI PRIME OFFICE RENTS LIKELY TO STAY FLAT AS MAJOR NEW

DEVELOPMENTS ADD TO SUPPLY GLUT

THURSDAY 08 OCTOBER 2015 An additional 1 million square metres of office space is soon to hit the Dubai market over the next 15 months as the economy shows signs of slowing. According to the property broker Knight Frank, the amount of office space in the emirate is set to rise from 9.5 million sq metres to about 10.5 million sq metres by 2017 as three major new developments come on stream. Prime office developments due for completion by this year include the remaining buildings in the first phase of Tecom’s 185,000 sq metres D3 development at the Design District, the 20,000 sq metres C1 office development at Dubai World Trade Centre, and Dubai Multi Commodities Centre’s (DMCC) 27,000 sq metres One JLT. Dubai property developers are already planning to build millions more square metres of prime office space in the coming years. They include the world’s tallest commercial tower, DMCC’s Burj 2020, and ICD Brookfield Place, a US$1 billion development between Investment Corporation of Dubai and the Canadian asset manager Brookfield. In a report published yesterday, Knight Frank reported “a slightly longer and sustained drop in occupier sentiment over the Ramadan period”, but said that leasing inquiries in the city remained “buoyant”. The broker said it expected prime rents to remain flat. That is because although 26 per cent of offices are vacant in Dubai, many of these are in buildings which have been sold to several owners through what is known as strata title, making them less appealing to international occupiers. Knight Frank said that prime office rents between July and September stood at Dh1,990 per sq metre per year – unchanged from the previous quarter but up 2.1 per cent from a year earlier. Offices in the Dubai International Financial Centre, home to financial institutions and law firms, had the highest rent, averaging at Dh2,530 per sq metre, while Emaar Square and Downtown, where many professional services firms are located, came second at Dh1,991 per sq metre. Rents in Internet City, Knowledge Village and Media City – home to Dubai’s technology and media centres and university campuses –stood at Dh1,615 per sq metre, while rents in Business Bay, where many of the new strata-built office blocks are located, stood at Dh1,507 per sq metre. This week, a report from rival broker JLL found that 53 per cent of the 283,000 sq metres of office space delivered in the third quarter was in Business Bay. “Dubai has effectively got a two-tier office market, with a lot of the new office space coming online being located in Business Bay and not being quite up to the same standards that you would get as the new developments being built in proven areas,” said William Neill, the head of commercial leasing and sales at Knight Frank.

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“With oil prices remaining low, we have been watching the market to see what that means for office demand. But so far, since the summer, we have seen an increase in the number of inquiries.”

Craig Plumb, JLL’s head of research in Dubai, said the city’s office market remained largely fragmented, highlighted by the continued “flight to quality”. “While the central business district continues to see strong demand and command higher (but stable) rents due to better amenities and parking, stock in secondary locations suffers from lower occupancy rates and rents. This is further aggravated by the excess supply of strata- owned office buildings that are likely to remain vacant in the short term,” he said. Source: The National Back to Index

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RTA IN DUBAI PROGRESSES UNION OASIS PROJECT ABOVE METRO

STATION

THURSDAY 08 OCTOBER 2015 Dubai’s Roads and Transport Authority (RTA) has issued pre-qualification documents to companies looking to develop the five-tower Union Oasis project above the Union Square metro station. The call for bidders to register for the project kick-starts what will be the first scheme to be completed under Dubai’s new public-private partnership regime, which is set to take effect on November 19. Under the Union Oasis project, the five mixed-use towers will be built on a site above one of Dubai’s busiest metro station. Last year, about 9 million passengers used the station, which is one of the main interchanges for the Green and Red lines. The towers will occupy 14,662 square metres of a total plot size of 37,885 sq metres. They will be connected at podium level and can consist of four basements, a ground and mezzanine level, and up to 20 storeys above ground. They can include a mix of commercial, office, residential, retail and hospitality space. An information memorandum sent to developers in August said the site had been dedicated to the metro’s construction in recent years, but its temporary loss “has left the surrounding districts … unconnected and unsupported”. It said Deira “has the potential to be known as the original downtown” of Dubai. As a result, any proposed scheme had to be “exceptional” and reflect the area’s heritage. The memorandum also highlighted the attractiveness of the terms for developers, who would lease the site for a 30-year period (excluding the three years it will take to build). They are not required to make an upfront contribution for land acquisition, they can take partial rent holidays in line with occupancy levels during the first seven years of operation, and they will be offered flexibility over the mix of uses. A source close to the project said the RTA was inviting interested bidders for one-to-one meetings with its project team to discuss the features and commercial aspects of the project. “The RTA is open for suggestions and structures that developers think will improve the commerciality of the project,” said the source. “What the RTA is trying to do is to make the project more collaborative, rather than just setting up the structure and presenting it to the market.” Developers looking to participate need to register their interest by December 3. The RTA will then issue the tenders with a bidding deadline for next April. The successful bidder, or bidders, will be selected by the end of next May. The public-private partnership being adopted for Union Oasis is expected to be the first in a series of projects that will tap private sources of finance for infrastructure improvements.

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On Monday at the Mena Rail and Metro Summit, Shahrin bin Abdol Salam, the RTA’s chief engineer for rail operations, said that consortia bidding to extend the metro’s Red Line to the site of Expo 2020 could form public-private partnerships to bid for the work, but said this was “not mandatory”. Bids for this project are due to be submitted in December, and a contract could be awarded by January. Trevor Butcher, head of Middle East projects and finance at the law firm DLA Piper, argued that Dubai’s adoption of public-private partnerships had been under consideration for years and “isn’t solely oil price- driven”. “I think there’s a genuine willingness to engage on a deeper level with the private sector,” he said. The RTA is being advised on the Union Oasis project by Faithful and Gould, a building consultancy, Ernst and Young, a professional services firm, and Trowers and Hamlins, a law firm. Source: The National Back to Index

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DUBAI SHOPPING CENTRE RENTS TO

FALL FURTHER ON STRONG US DOLLAR

SATURDAY 10 OCTOBER 2015 Dubai shopping centre rents are set to fall further as the strong dollar and a glut of new space force landlords to work harder to keep tenants. While super-prime shopping centres such as The Dubai Mall and Mall of the Emirates can still command the highest rents, smaller centres face a tough time. Al Khaleej Centre, situated on Bur Dubai’s Mankhool Road, is one of the city’s smaller malls that are being forced to rethink their tenant mix. It recently changed its focus with an open souq concept built around technology support and fast food. “When we launched the open souq in January we were asking Dh85,000 pa but we dropped that to Dh75,000 per annum in July,” said Hanan Kamal, leasing and marketing manager for Al Khaleej Centre. “We have leased 18 of the 29 kiosks but other interested parties are not committing because they think there is another drop in rents coming. “Our footfall is about 80,000 per month, which is good for the area and our size, but the big malls have taken their toll on the malls on the ‘wrong’ side of Dubai which means rents have to drop – you have to change to make people come.” But even tenants in some of the city’s mega-malls are starting to feel the impact of a strong dollar on their sales as the purchasing power of tourists from the euro zone diminishes. Slowing retail sales growth was cited recently by the electronics chain Plug Ins, which operates in locations that include The Dubai Mall and Ibn Battuta. It reported a 16.5 per cent fall in customer spending in its September consumer survey. The fortunes of the city’s malls are beginning to mirror that of its hotels, which have also been forced to drop room rates. “Hospitality has a huge impact on retail,” said Matthew Green the head of research for CBRE. “The fall in Russian visitors, who are traditionally heavy spenders, has a huge impact on mall operators and retailers. This will have an effect on rents, however mall operators have instituted turnover rents as commonplace now which can be 3 to 10 per cent, depending on the category. “This ties the operator into creating a viable sales environment. Dubai is still the darling of retail in the region. The UAE’s retail sector could be subject to divergence, with prime and super-prime malls demanding increasing rates but other less successful malls having to use rental price as a driver for commerce. “Shopping centres which do not enjoy a high footfall are currently contending with significant challenges in the retail market,” said David Macadam, the chief executive at International Council of Shopping Centres and Middle East Council of Shopping Centres. “High retail sales in a shop normally equates to higher lease rates. Lower sales, lower lease rates. Downward pressure on lease rates may occur in shopping centres when the retail sales are diminishing.

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“Lower retail sales are not always attributable to one or two factors, but generally many issues may contribute to the slowing of the sales.”

A report from JLL released last week said that sluggish growth in retail sales in the emirate had meant landlords “are now having to adopt more realistic and rational approaches to leasing in order to retain their tenant”. It expects rents to drop again in the final quarter of the year and into next year. During the third quarter, Mall of the Emirates added another 25,000 square metres of gross leasable area, while Majid Al Futtaim’s City Centre Me’aisem created another 23,850 sq metres of shopping space. The broker expects another 136,000 sq metres of space to be delivered in the remainder of the year, comprised mainly of extensions to existing super-regional malls. Source: The National Back to Index

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VALUATION & ADVISORY

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

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