NEWS BRIEF 04 SUN DAY 25 January 2015

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RESEARCH DEPARTMENT

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REAL ESTATE NEWS UAE

UAE RESIDENTS: 6TH RICHEST IN WORLD, BUT WHO'LL FUND RETIREMENT?

DUBAI

NAKHEEL WINS COURT VERDICT ON WATERFRONT PAYMENTS LOW-INCOME EMIRATI FAMILIES TO BE PROVIDED WITH NEW HOMES DUBAI’S DEVELOPERS PUSH ON WITH NEW LAUNCHES CONSORTIUM WINS CONTRACT FOR EXPO 2020 PROJECT DUBAI REAL ESTATE MARKET STABILISING NEW LIST OF CANCELLED DUBAI PROPERTY PROJECTS; WHERE REFUNDS EXPECTED UP FORAYS INTO DUBAI'S MID-RANGE HOTEL CATEGORY DP LAUNCHES MORE UNITS IN THE VILLA PROJECT MOST DUBAI TENANTS ESCAPE CONTRACT TERMINATION... HOW? WHAT AILS ROADS IN JUMEIRAH VILLAGE CIRCLE? RENTS TO FALL IN DUBAI? 25K NEW UNITS LIKELY DUBAI’S RENTAL DECLINES ARE SELECTIVE DUBAI DEVELOPER TARGETS DH9K-DH15K EARNERS DUBAI’S REALTY CAN NAVIGATE PAST OIL PRICE SLIDE DUBAI BUILDER ARABTEC WINS DH345M ADNOC HOUSING CONTRACT NAKHEEL TO BUILD 4,000 NEW RESIDENCES IN JEBEL ALI NAKHEEL PROFIT SOARS DESPITE FEWER HOME COMPLETIONS FOR DUBAI DEVELOPER STRONG RESPONSE FOR MEYDAN FREEHOLD VILLAS IN DUBAI

ABU DHABI

ABU DHABI TO BUILD LOW-COST HOUSING FOR UAE RESIDENTS DH8M SAADIYAT ISLAND VILLA AIMED AT THE LESS WEALTHY ABU DHABI PROPERTY DEVELOPER ALDAR TO SETTLE DH1BN OF DEBT HOME PRICES FLATLINE IN ABU DHABI AND DUBAI WITH SLOWDOWN EXPECTED TO CONTINUE

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NAKHEEL WINS COURT VERDICT ON

WATERFRONT PAYMENTS

WEDNESDAY 21 JANUARY 2015 The Dubai Courts have ruled in favour of Nakheel on the developer’s payment claims against investors who had acquired plots in Dubai Waterfront. The investors — Safi Qurashi and his business associates — will have to pay the master-developer Dh11 million as per the judgement, Nakheel said in a statement issued on Thursday. “Nakheel has obtained an attachment to recover the judgement debt,” according to the verdict by the Courts. Nakheel declined to offer further details on the case, which a spokesperson said was a “recent development”. Safi Qurashi, CEO of Q Group, issued a comment saying he was surprised by Nakheel’s statement, which he called “very misleading.” “The facts are that in December 2013 the Dubai Courts ordered that I should receive Dh31.3m from a complainant, after clearing me of any criminal charges in a case of security cheques, which the courts ruled should never have been banked,” the statement said. Qurashi’s statement also said the judgement referred to in the Nakheel statement relates to an attachment order by the court for some of the money still owed to his company. The project in question was launched — and extensive spadework done — during the boom period in the middle part of the last decade. Investors were quick to pile into the project as the first clusters were released to sub-developers and property buyers. But once the downturn hit, the project was among the many that was placed on hold. But, in the recent past, there have been movements related to the project through specific project launches — the Badrah and Veneto — by Nakheel , valuation works, collection of payments related to plots bought by developers/investors, etc. “When the Waterfront was launched, it was the last piece of undeveloped seafront and as such was considered prime property,” said Sameer Lakahni, Managing Director at Global Capital Partners. “The crash in 2008 and subsequent litigation caused values to recede. Buying activity “But Nakheel has been methodically overcoming these issues to ensure the area retains its value as a prime residential district of the future.” According to Ranjeet Chavan, Director at SPF Realty, “Buying activity is yet to take off in a big way on the Waterfront … though it’s still early days in its relaunch phase. All of the activity continues to be led by Nakheel. “But there aren’t any more of the credit notes related to the Waterfront — issued by Nakheel at the time of the downturn — floating about in the market.” The credit notes were issued by the developer to those investors in delayed projects and which could be used by them to take up positions in ongoing or completed ones. Meanwhile, Nakheel on Wednesday again confirmed that it had no plans to launch redevelopment works for the Palm Jebel Ali, which was conceived to be the second instalment of the Palm trilogy. “That’s definitely not on the agenda right now,” said Ali Rashid Lootah, Chairman of

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Nakheel. The third project in the original series has taken on a completely different form and function through “Deira Islands”.

Source: Gulf News Back to Index

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LOW -INCOME EMIRATI FAMILIES TO BE

PROVIDED WITH NEW HOMES

THURSDAY 22 JANUARY 2015 Hundreds of low-income Emirati families caught up in debt or unable to sustain their needs will be given new accommodation and have their needs addressed following an initiative launched yesterday which relies heavily on donations. Two charity organizations, Dar Al Ber and Bait Al Khair, have collaborated under a new social and charitable initiative called ‘Showing Gratitude’ to help 200 underprivileged Emirati families registered in both associations. Suitable homes will be found for them and all their expenses covered until they receive their final accommodation from the government. The two associations have already identified the 200 families and have selected them based on how urgent their situation is and their living conditions after a committee researched and evaluated certain Emirati families living without a breadwinner. Abdullah Ali Bin Zayed, Chief Executive Officer of Dar Al Ber Society said there was an urgent need to find long-term solutions to such problems in society, and that the larger the cooperation between associations and the larger the donations the faster the results. “Based on a joint committee we were able to identify Emirati widows, divorcees, the elderly and orphans who desperately need help. Five families were given priority under this initiative and we’ve already started following up with them and addressing all their needs,” said Bin Zayed. He also said that the joint committee will be following up with the project’s progress and do all the legal and financial supervision. As part of the initiative, a joint bank account has been opened in Dubai Islamic Bank for people who want to donate for the cause and the two associations have already collected Dh1 million each. Abdeen Taher Al Awadhi, General Manager at Beit Al Khair Society, said that they want to help as many families as possible, and that it all depends on the amount of donations coming in. “There are some serious cases we found with families who have been living in rented houses and are unable to pay for their homes any more. We need to cover all the costs they are unable to pay and reunite them with their families in the city they belong to,” he said. Saeed Mubarak Al Mazroui, Deputy General Manager of Beit Al Khair, said that the welfare of Emirati remains the government’s top priority and “the government always provides enough help to all members of the society”. “Together, through combined efforts, we can end this problem. Helping these families with a small amount of money will not solve the problem because after a couple of months they will not have money for water, electricity and schooling. These issues will be addressed through this project until they get their final homes,” he said. He also said that charity associations act as mediators between different sectors and underprivileged families to speed up the process of finding a solution to their problems.

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The process of getting a house from the government depends on signing up in a housing programme, but usually the waiting list takes two to three years which forces some families to rent a home until their home is ready. Source: Gulf News Back to Index

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DUBAI’S DEVELOPERS PUSH ON WITH

NEW LAUNCHES

WEDNESDAY 21 JANUARY 2015 Reef Real Estate, on Tuesday, launched the 38-storey Reef Residence, which it says is the first tower project at Jumeirah Village Circle. The plot is on the “periphery” of the community and adjacent to Els Golf Course at Dubai Sports City. “All approvals from Dubai Land Department/Rera (Real Estate Regulatory Agency) have been obtained to make off-plan sales and the escrow account is also established,” said Ahmad Al Mansouri, CEO. “We are confident since the pricing of the units offers value for quality and location.” In the first phase, units will sell for Dh770 a square foot, and thereafter the “average blended price” would be Dh885 a square foot. On whether more launches could be in the offing from the company, Al Mansouri said: “We have had positive response for the project and accordingly we perceive to have a busy launch schedule this year. We currently hold sufficient land bank to develop ... key locations will be in Jumeirah Village Circle and Downtown Jebel Ali as we hold more plots in those locations.” (The company has completed three high- rise projects to date, two of these being in Jumeirah Lakes Towers.) Other developers will be taking their cue for their own launch plans from the level of buying activity through the first quarter. Those who have already launched projects are going in for focused marketing campaigns to strike a chord with potential buyers. Just recently, a leading developer dropped plans for a major roadshow in Moscow given what has been happening to rouble. Instead, it is focusing on generating demand from the local market and UK based investors. Key difference Interestingly, more developers are starting to launch sales of their off-plan projects by placing a bank guarantee with the Dubai Land Department rather than wait for construction to reach the 20 per cent mark. In a way, this means a going back to what used to be the norm right up to late 2008 — have the sales launch first before starting on the building. But there is one key difference between now and then. “There are ironclad guarantees that have to be furnished by the developer — to show that he has the means to take on a project and complete it — with the Land Department,” said Anand Lakhiani, Partner at Indigo Properties, developer of the ‘Zen’ project in Dubai Golf City. “The real estate authorities need assurance that the developer can have sufficient cash on call through a project’s development cycle. “This limits — even does away altogether — the chances of a developer who doesn’t have the funds coming in and trying to sell off-plan. It also reduces the chances of a developer running out of funds and shelving a project.” According to Lakhiani, “A developer could get a bank guarantee at a decent margin to start rolling out the project planning. No developer would like to wait before launching sales — delaying only adds to the variables that could come into play in the process. It’s much better to hand in the guarantee and start on the sales programme as soon as the clearances are given.” (Indigo Properties expects the main construction works to start on the Zen — which will feature upscale townhouses and villas — by late March. It started with the sales cycle in October.) Since the second half of last year, there has been a marked increase in off-plan project announcements. Many of these projects have either started with the construction or will shortly be doing so.

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These would be enough to keep the construction side of things ticking along. And if more developers like Reef decide to stick with their launch programmes, Dubai’s property market will have enough happening to make for a busy first half. Source: Gulf News Back to Index

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CONSORTIUM WINS CONTRACT FOR

EXPO 2020 PROJECT

FRIDAY 23 JANUARY 2015 A consortium of CH2M HILL and Mace has been tasked with all real estate and construction related project management for the Dubai Expo 2020 master-development, Dubai Trade Centre — Jebel Ali. Dubai World Trade Centre is the project promoter. US-based CH2M HILL and UK’s Mace formed a joint venture to bid for the “highly competitive multi- company tender, which included multiple firms with experience in large-scale developments. The appointment at the end of the procurement process sees the two firms providing full-service consultancy, real estate programme management, design, and construction and operations management for the development. “In CH2M HILL and Mace we have a proven partner that we feel confident will enable the delivery of a state-of-the-art home for Expo 2020 Dubai,” said Ahmad Al Khatib, Director — Real Estate, DWTC. “The success of the development is critically linked to its timely and efficient evolution to the planned legacy of Dubai Trade Centre — Jebel Ali.” Gated area The master district will also host Expo 2020 Dubai within a secure gated area when the six month event debuts in October 2020. Post Expo 2020 Dubai, which runs until April 2021, the site will become “a new focal point of global business tourism for the region”. CH2M HILL and Mace have joined forces in the past on multiple projects, including, most recently, to deliver London 2012 Olympic and Paralympic Games. Separately, CH2M HILL played a consulting role on Rio 2016, while Mace is the programme manager for the Qatar Public Works programmes and provided advice to the organising committee of Astana Expo 2017. Within the region, they have independently delivered successes on major mixed-use projects such as Jumeirah Beach Residences, Mall of the Emirates, Business Bay development, Media City, Silicon Oasis, and Abu Dhabi’s STEP Programme, ENEC Nuclear Programme and Masdar City. Source: Gulf News Back to Index

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DUBAI REAL ESTATE MARKET

STABILISING

SUNDAY 18 JANUARY 2015 Dubai's real estate market appears to be stabilizing with the cost of renting and buying apartments registering zero increases in the last part of 2014, a new report suggests. Property analysts expect the market to remain subdued in the next 12 months, as more residential units are scheduled to open their doors to new tenants. The latest report by Jones Lang Lasalle (JLL), which uses data collated by REIDIN.com, stated that the average rents and property sale prices remained "relatively flat" in the second half of 2014. There were also "marginal declines" in rates over the last quarter. "On an annual basis, the REIDIN rental index shows growth levels dropping from 18 per cent in 2013 to 15 per cent in 2014," the report said. Overall, average apartment rents went up by 18 per cent during the whole of last year, while villas registered a 5 per cent increase. With Dubai's economy forecast to grow further and more jobs will be created this year, JLL expects the demand for affordable housing to increase over the next 12 months. "This comes as a proposal to ensure the availability of affordable housing for the middle-income segment of the market is currently under review. These efforts aim to create a balance between the supply of luxury and affordable housing units that cater to all residents in the emirate, as many were previously priced out of the market during the 2013/2014 price rally." John Stevens, managing director of Asteco, earlier observed that Dubai's rents and sales prices dropped for the first time in recent months since 2012. "Dubai's real estate sector has witnessed further stabilization and a slowing down of rental rates...We have seen both residential rental rates and sales prices decline as a result of a natural adjustment to ongoing new supply entering the market," Stevens told Gulf News. Around 25,000 new residential units are expected to enter the market this year and this will likely dampen any price movements. "The residential sector is likely to remain subdued over the next 12 months as the market is expected to absorb 25,000 additional units in 2015. In reality, we remain cautious of the delivery of some of these projects within the timeframe," JLL said. Source: Gulf News Back to Index

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NEW LIST OF CANCELLED DUBAI PROPERTY PROJECTS; WHERE

REFUNDS EXPECTED

SUNDAY 25 JANUARY 2015 The Dubai Courts has listed 166 real estate projects in its newly-issued project cancellation list, Emirates 24|7 can reveal. The Cancelled Real Estate Projects Committee is currently hearing 17 projects all of which were launched by Reliance Estate Development. Two projects by Khyool Investment – Abjar Tower and Faras 2 – have been liquidated and money has been distributed among investors. The courts, however, clarify that there is no specific time period for the judgment to be passed in projects that are under consideration with all investors being informed of the final judgment using different ways of communication listed in advance on its website. The Real Estate Regulatory Agency (Rera), the regulatory arm of Dubai Land Department, has never officially published the list of cancelled projects. Here is the official list (# developers name and followed by the projects) of cancelled projects mentioned by the Dubai Courts under various categories. Cancelled projects that have been liquidated and distributed among investors # Khyool Investment LLC Abjar Tower Faras 2 Cancelled projects currently under hearing by the committee # Reliance Estate Development Reliance 1 to 16 Cancelled projects, which have been heard and registered by the committee, and are in process of distributing amounts among investors # High Rise Properties LLC Dorna Tower Orchid Residences The Heights-Golden Waves Business Tower The Heights-Silver Rotating Residence

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High Rise Boulevard 1

High Rise Boulevard 2 # Hampstead & Mayfair Development Limited Hampstead Residences # Zenith Real Estate Development (LLC) Zenith Tower A3 # Orbit Holdings Limited Orbrit Holding # IR Investments Holding Company Limited Tonino Lamborghini-Elettra Residence # M E Development L.L.C Windsor Residence # Cliff Dwellings Enterprises Ltd Global Golf Residence # Galadari Investment Office Limited G-Office Tower # Bux Holdings Limited Beti Ul Funoon # Parshwa Holdings Limited Sapphire # Escan Real Estate Escan Tower Eden 1 Eden 2 # Al Zahra Properties Sunset Gardens A Sunset Gardens B Sunrise 2 # Alternative Capital Invest Gmbh (Branch) Wings of Arabia # Makaseb Properties Rufi Tower (Quattro) Rufi Lake View Archery Tower Quattro West

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# Merwess Abdulaziz

Azizi Feirouz I Azizi Feirouz Ii Azizi Feirouz Iii Azizi Fountanne Tower # Remah Holding Limited Tower 88 # Dujan Properties Ltd Eden Blue Cancelled projects which have been transferred to the committee and will be heard soon # Sanali Holdings Fze Sanali Business Tower Sanali Business Heights Sanali Capital Avenue # Azizi Investments (L.L.C) Al Masa Ii # Integral Properties Development Integral 05 # Qureshi Faisal Abdul Aziz Dunes Dahlia # Dunes Group Developments Limited Dunes Lilac # Royal Holdings Ltd Global Elahi Residence # Al Tafany Properties Limited Al Tafany Tower # Crown Two Holding Limited Crown Royal # Noorzak Investments Limited Jehaan 2 Jehaan 3 Jehaan 4 Jehaan 6 Jehaan 11 Jehaan 9

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# Diamond Arch Limited

Diamond Arch 1 Diamond Arch 2 # Jab Developments Inc Pebble Stone # Oasis JV Limited Oasis Heights # Sheth Estate (International) Limited Iris Mist # Al Mas Worlds Investment Limited Soraya Tower II # Kleindienst Properties The K Suites # Salya Homes Limited Mario Valentino Boulevard # Star Surveying & Evaluating Services Sahara One # Burj Alalam Holdings Limited Burj Alalam # Rufi Down Town Residency Limited Rufi Royal Residency # 32 Group Properties Limited Paris Residence # Umesh Kumar Vinodrai Chug Insignia Residence # Desert Dream Investments & Development Properties Dream Harbour Dream Square # Baiti Properties Development LLC Al Qurashi # Flamingo Investments Limited Sanali Flamingo # Erc Property Developers Limited The Heights # Westar Properties Ltd Westar Galaxy

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# Dheeraj & East Coast (LLC)

The H.Q # Cenita Global Ltd Casa Verona # Sheffield Real Estate LLC Sheffield Classique # UAE Waterfront Group Limited Royal Bay # Profile Zero Five Five Limited Zero Five Five # Syndicate Sealine Limited Mystica # Bangash Developments Limited Royal Deluxe Villas Royal Luxury Villas Royale Garden Residence # Al Faraa Properties Burj Al Faraa Image Residences # ACW Holding Ltd Platinum 2 # Sternon Developers Limited Sternon Tower 1 # Jasmine Garden Limited Jasmine Garden # Chapal World LLC. Chapal Emirates Point # Satnam Singh R & R Tower I # Infinity Emirates Investments LLC Soccer Tower # UK-CIG Developments (JVS) Limited Metropolis Lofts # New World Investments Limited World Wide Tower

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# Star Developers Limited

Nathalie Tower # D10 Awf Investment Limited Aquarius Gate Tower # Jab Mosaistone Developments Inc Mosia Stone # Mahdi Amrollahi (Partner) Antar Marzooq (Owner) Pisa Tower Residence # Sameer Mahmoud Al Ali Zenith Tower # Es Investments Limited Kpm 2 & 3 # Smart Home Properties Elegant Tower # Premier Group (Fzc) Berlin City Center # Aryene Property Developers Limited Aryene Wonders # Evergreen Signature Investment Limited Le Stelle1, 2, 3, 4, 5 # Diamond Properties Limited Blue Moon Tower # Rufi Luxury Heights Limited Rufi Luxury Heights # Optimo Arabia Limited Arabia Tower # Elan Investment Limited Sanali Quantum # Gulf Line International Ltd North Gate Business Tower # Beliza Resources Limited Prodigy4 # German Holding Group (L.L.C) Mira Palace # Oakgrove Global Limited

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Prodigy2

# Avetona Global Limited Prodigy5 # Mirjana Resources Ltd Prodigy3 # Neel Devcons Limited Phoenix Wings # Ashai Tower JVS Limited Ashai Tower 5 # Rufi Grand Apartments Limited Rufi Grand Apartments # Luxor Investments Limited The Signet # Pearl Properties The Palesides # Kensington Global Investments Inc Kensington Krystal # Yra Enterprises Limited Schon Suites and Schon Residence # City-D Investments Limited Pangkor Laut Luxury Residence & Spa Village # Malson Limited Maison Residence Collection # V Resorts Ltd V-Greece on The World # Alternative Capital Invest Gmbh (Branch) Palazza Arabia Venetian Arabia # Sama Emirates Estate Development (L.L.C) The Sama World Tower # Al Duaa Holdings (Fzc) Alduaa Marina Tower # Spain Select Limited The Aquitainia # Hampstead & Mayfair Development Limited

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Hampstead & Mayfair Boutique Residences

# Bela Vida Limited Dolce Vita # Alternative Capital Invest Gmbh (Branch) Sami Q Tower # Grun Developers Limited PKS Residences # Kleindienst Properties The K Hotel # Anis Holdings Limited Chase Residency # Crown Three Holding Limited Taiba # Sungwon (Fze) Santeview # Hydra Properties (L.L.C) Hydra Towers # Ahmed Abdul Rahim Al Attar Properties LLC Toronto Vancouver # Posh Holdings Limited Posh Lifestyles # Fortune Serene Limited Fortune Serene # Dja414 Investment Limited Sienna Square # AAA Facilities Management Services (L.L.C) Eclipse Tower # Escan Real Estate Escan Tower # Alternative Capital Invest Gmbh Victory Bay Tower # Burj Al Dua'a Limited The Plaza # Alternative Capital Invest Gmbh (Branch)

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Pershing Luxury Beach Residence Tower

# Zero Five Zero Limited Zero Five Zero # Sebco Limited Sebco Residence # Planetex Holdings Co Limited Crown Avenue # PND Investments Ltd 10 Tower # Heman Red and General Trading Limited I-Dubai According to Dubai Courts, the committee for the liquidation of cancelled real estate projects and settlement of rights related thereof specialises in liquidation of real estate projects by which a final decision of cancellation has been issued by Rera whereas the judgments, orders and decisions issued by the committee shall be final, peremptory and not appealable by all means of a regular appeal and shall be executed by the implement department of the court. Source: Emirates24/7 Back to Index

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UP FORAYS INTO DUBAI'S MID-RANGE

HOTEL CATEGORY

WEDNESDAY 21 JANUARY 2015 Union Properties (UP), a Dubai-based developer, will be launching a 4-star hotel in Dubai Investment Park (DIP), thus entering the mid-range hotel category that is expected to boom by 2020, ‘Emirates24|7’ can reveal. “We will be building a boutique hotel, which will consist of 150 rooms and 50 serviced apartments. A hospitality consultant has been appointed for market research,” a company spokesperson told this website. No timeframe was given on when work will start on the project. In September 2014, company General Manager Ahmad Khalaf Obaid Bin Touq Al Marri had told this website that they were planning hotels in the three- and four-star category with three plots dedicated in MotorCity, Dubailand, and one in DIP. The developer, which is listed on Dubai Financial Market, is planning to operate and manage at least 1,000 keys in the coming five years. “That is our plan for the future. We are also working on many things such as a leisure and entertainment district in MotorCity with the aim to make the development a unique family destination,” said Al Marri said. Last year, the company launched three projects valued at Dh2billion, including Dh1.1bn the Vertex, a five-tower project, in MotorCity. The company has been working on their new plans for some time, but it was Dubai’s Expo 2020 win that has now fasten up the pace of these new launches. “Dubai’s Expo 2020 win has propelled us to fasten the pace of implementing our business strategy… what we would have announced a few years later, we are announcing now,” he added. Dubai will be hosting the Expo 2020 from October 2020 till April 2021, which will bring over 25 million visitors to the emirate. To propel growth in mid-range hotel segment, the Dubai government has already announced financial incentives, which includes companies to be granted a concession on the standard 10 per cent municipality fee, land transfers becoming easy with approvals being centralised and given within three months. In the third-quarter, UP reported net profit declining 26 per cent due to fall in revenue from property management and home sales. Net profit was at Dh127.93million compared with Dh171.89m in the corresponding period of 2013. Source: Emirates24/7 Back to Index

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DP LAUNCHES MORE UNITS IN THE VILLA PROJECT

TUESDAY 20 JANUARY 2015 Dubai Properties (DP), the real estate arm of Dubai Properties Group (DPG), has announced sale of additional units in its The Villa master community in Dubailand. Limited units are available in the Valencia and Mallorca types of villas, comprising five- and six-bedroom Spanish-style courtyard villas. The units are completed and ready for handover by the end of January 2015. Mohammed Al Habbai, Chief Officer for Urban Planning and Infrastructure at DPG, said: “The Villa has established itself as one of the more attractive and popular investment options for both investors and families delivering ready to move spacious units in a popular community with ample facilities. “Our ongoing investment in this sector will continue to support the provision of homes for the increasing population of Dubai while meeting the needs of the market and we look forward to seeing The Villa community continue to grow and become home to more families in the Emirate.” The villas are priced between Dh6 million and Dh8 million. The project is located in close proximity to Dubai Academic City, Silicon Oasis, Dubai Outlet Mall and accessible from major highways including Emirates Road and Al Ain Road. DP has successfully delivered residential and mixed-use developments including Jumeirah Beach Residence, Layan in Dubailand, and Executive Towers, Vision Tower and Bay Square projects in Business Bay. Source: Emirates24/7 Back to Index

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MOST DUBAI TENANTS ESCAPE

CONTRACT TERMINATION... HOW?

TUESDAY 20 JANUARY 2015 Whether it was direct negotiation with their landlords or filing a case with the Rental Dispute Settlement Centre (rental committee), majority of Dubai tenants have been successful in avoiding termination of their rental contracts, according to a new report. “Only 31 per cent of respondents challenged the proposed termination and of those over 84 per cent did so by way of direct negotiation. Where a challenge was issued, either directly or through the Rental Committee, over 64 per cent were successful,” Hadef & Partners, a UAE-based law firm, said in its report 'The legal state of the Dubai property market.' Emirates 24|7 had reported earlier the RDSC, the judicial arm of the Dubai Land Department (DLD), had become operational from December 2013 and would resolve most of the disputes in a maximum of 30 days. The centre was established following the issuance of Decree No. 26 of 2013 and is aimed at enhancing legal procedures that facilitate settlement of rental disputes. According to the Article 16 of the decree, the rental committee will have to judge all lawsuits within a period not exceeding 30 days from the date of referral of the case to them. However, the deadline can be extended in accordance with the rules and procedures adopted by the chairman of the centre in this regard. To control arbitrary rent increase, Dubai issued Decree No 43 of 2013 (read below) that sets a specific band for maximum rent increases that a landlord can demand at the time of renewing leases. Though the implementation of the rent cap was anticipated by some in the market to increase lease terminations - this does not appear to be reflected in the results, the law firm said. The report revealed that over 80 per cent of tenants saying “their landlords had not attempted to terminate their lease in 2014”. In cases where landlords did seek terminating of contracts, 62 per cent of cases were on the basis of the sale of property, it added. On an annual basis, Reidin rental index shows rents in Dubai declined to 15 per cent in 2014 compared to 18 per cent in 2013. JLL, a global real estate consultancy, expects 25,000 new units to be delivered this year, which it believes will further slowdown rental increases. This website had quoted Marwan bin Ghalita, Chief Executive Officer, Real Estate Regulatory Agency (Rera), the legal arm of DLD, in October 2014 as saying no tenant could be evicted unless the landlord had served a 12-month notary public notice. “If there is no valid reason, the rental committee is likely to extend your contract. In case, the owner does not sell, the committee will block it in the system so he/she can’t rent it and if the owner is going to use it for personal use then he/she cannot lease for two years,” he then said. Rent decree

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In order to control the arbitrary rent increases, Dubai government released a new rent decree in December 2013.

The Decree, No 43 of 2013 now sets a specific band for maximum rent increases that a landlord can demand at the time of renewing leases. The decree is applicable to private and public sector owned properties in Dubai, as well as within the free zones. - No rent increase if the rent of the property unit is less than 10 per cent of the average rent of a similar property in the same residential area. - If the rent value is between 11 per cent and 20 per cent less than the average rent of a similar property, the maximum rent increase shall be equal to 5 per cent of the rent value. - If the rental value of a unit is between 21 and 30 per cent less than the average rent of a similar unit, the maximum rent increase shall be equal to 10 per cent of the rental value. - If the rental value of a property is between 31 and 40 per cent less than the average rental of a similar property, the maximum rent increase shall be equal to 15 per cent of the rental value. - If the rental value of a property unit is less than 40 per cent or more of the average rent of a similar unit, the maximum rent increase applicable is of 20 per cent. The average similar rental value of the property will be determined by the Rera's rent index. Source: Emirates24/7 Back to Index

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WHAT AILS ROADS IN JUMEIRAH

VILLAGE CIRCLE?

TUESDAY 20 JANUARY 2015 Parul Arya and his family moved to Jumeirah Village Circle (JVC) a couple of years ago, persuaded by promises of a well-serviced residential community. Instead, he says, he faced a barren landscape with hopes that infrastructure development would soon pick up. Two months ago, he moved out. “The other day, my sister barely escaped a traffic accident.” Parul refers to the lack of road signage in the community, a shortcoming which he believes endangers the lives of residents. “There are no speed breakers, no ‘Stop’ signs and no traffic lights, while motorists drive at a speed of 120kmph on internal roads,” he says. “As they approach the bare roundabouts without any signs of direction, everybody thinks he has right of way and consequently zips though the intersection without slowing down. Many accidents have happened in this way.” Road safety and infrastructure have been the theme of complaints coming from the community. “Bad road layout, dodgy one-way systems, bad intersections with lack of road signs hence accidents on a daily basis and a lot of speeding cars. Roundabouts are badly built and lots of rubbish is in the roads,” writes Louis on a website called Flat Reviews, where he reviewed his residence in the community during 2014. The complaints are not new. End-2013, Emirates 24|7 published a story reporting of the same circumstances. At the time Dubai Police revealed 5 accidents had taken place that year with one fatality, while 11 accidents had occurred in the community in 2012. In response to our queries, the Roads and Transport Authority (RTA) at that time had said that it had approved the JVC Masterplan along with the required signage and pavement markers in coordination with Nakheel. Commenting on the current situation, Nakheel stated: “As master developer, Nakheel has completed all infrastructure, including roads and streetlights, and has handed over serviced plots to third party developers. Third party developers complete their individual projects to their own timelines.” Awarded projects Indeed, contracts for the construction of more residential units are typically paired with infrastructural developments. In the latest update on January 8, 2015, the construction of a number of villas with all infrastructure and road works in a residential community was tendered. Completed tenders awarded over the last couple of months do not look much different; the construction of new residential units is linked with the road infrastructure in the same area. However, speaking to a third-party developer that was awarded the construction of roads and paving including curbstone works, speed humps, traffic signs and road marking, the constructor revealed that the project had been postponed by Nakheel.

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“This project was awarded to us in 2013, and we were set to start works in December 2014. However, the commencing date has been postponed by Nakheel,” said a representative of the company who preferred to remain anonymous. He was unable to confirm the reasons for the delay, as they concern an internal decision of the master developer. However, construction of residential units could be in the way of infrastructural work at the moment, he suggested. “All aspects of road infrastructure are within the scope of this project, which requires 150 days to be completed,” he added. According to the source, the project includes not only road signage on existing roads, but also the construction of new internal roads and a promised link to Al Hessa Street. The community lies in close proximity to Al Hessa Street, but a connection to the vital road remains absent. According to residents, this means an extra loop of around 20km to reach Al Khail Road. “There are only two exits from the community both leading to Al Khail Road. An exit to Al Hessa street is needed to allow easier access,” writes Louis in the review. Nakheel informed this website that there are plans to open more exits to the community, but did not elaborate on the plans. Expansion plans The 860 hectare circle-shaped community, surrounded by main arteries such as Sheikh Mohammad bin Zayed Road, Al Khail Road and Hessa Street has gained the attention on many fronts. A major announcement was that of plans to construct a community mall. “We are building a 1 million sqft Mall - called The Circle Mall - at JVC, as part of our retail expansion strategy. The mall will contain shops, restaurants, cinemas etc., and will complement another larger mall at Jumeirah Village Triangle on the other side of Al Khail Road,” commented Nakheel. Construction is set to start in the first quarter of 2015, with an expected completion date in 2017 announced the master developer earlier. Two new parks were opened in 2014, as part of a plan to introduce 28 parks to the community altogether. Further, 200 building designs from third party developers have been approved, which will add to the 81 buildings completed by third party developers. Nakheel itself has constructed and handed over 615 villas at JVC, with work on another 90 villas ongoing. As many residents seemed to be drawn by the relatively low prices in rent as well as sales, the community is booming. According to Nakheel, it is set to house more than 300,000 people when fully completed. And as residents willingly flock to the community under construction, rental prices are steadily on the rise. Source: Emirates24/7 Back to Index

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ABU DHABI TO BUILD LOW-COST

HOUSING FOR UAE RESIDENTS

MONDAY 19 JANUARY 2015 Abu Dhabi General Services (Musanada), a government-owned company, is planning to build hundreds of low-cost houses in Al Manaief City in the Western Region. As per the project brief issued, the city will have 500 studio units of 25 square meters each, 220 one- bed units of 40 square meters each and four community centres with a total area of 5,800 square meters. A design consultancy tender has been recently floated. Arabtec, a Dubai Financial Market-listed company, said in April 2014 it was in discussions with Abu Dhabi government to build thousands of new homes for lower paid workers around the capital. Musanada was established in December 2007 by Law 27/2009 and provides support services to government entities in areas of facilities management, construction, contract management, catering, logistics, states the company website. In 2010, the Abu Dhabi Urban Planning Council published a middle-income rental housing policy, with the website still stating it considers the provision of quality affordable housing as an important component in the long-term strategic development of the capital. When issued, the policy had required 20 per cent of the residential gross floor area in multi-unit residential buildings within developer-led planned developments to be developed and managed as middle-income rental housing. The key components put rental prices between Dh25,200 and Dh88,200 per annum, approximately 35 per cent of total annual household income with units being rented for a minimum period of 10 years among other regulations. However, there has been no update on the policy. ‘Emirates 24|7’ reported earlier that Dubai developers were now focusing on launching ‘affordable’ housing, targeting UAE residents in low- to mid-income level. Read: Dubai developer targets UAE residents earning Dh9k-Dh15k per month JLL, a real estate consultancy, said on Sunday demand for ‘affordable’ housing is expected to increase over the next 12 months as Dubai’s economy continues to expand and job creation grows Source: Emirates24/7 Back to Index

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R ENTS TO FALL IN DUBAI? 25K NEW

UNITS LIKELY

SUNDAY 18 JANUARY 2015 Dubai is likely to get 25,000 new housing units in 2015 with the residential property market remaining subdued, according to JLL. “The residential sector is likely to remain subdued over the next 12 months as the market is expected to absorb 25,000 additional units in 2015,” the consultancy said in Q4 Dubai market overview. However, it added that it remains cautious of the delivery of some of these projects within the timeframe. The residential market stabilised in the second half of 2014 as average rents and sale prices remained relatively flat, with marginal declines over the last quarter. The Reidin rental index, JLL said, showed growth levels falling from 18 per cent in 2013 to 15 per cent in 2014, while the sales index pointed to a decline from 23 per cent in 2013 to 20 per cent in 2014. CBRE, a global real estate consultancy, said earlier it believes supply of 20,000 new units this year could have a “deflationary” impact on sales and rental rates. Cluttons, another real estate consultancy, however, has said that tenant demand remains exceptionally strong despite the “cooling” of rents, which reflects that the “current period of rental stagnation is likely to be short lived” as economic expansion continues and expected rise in the level of job creation. Last week, Dubai Land Department said real estate transactions had fallen by 7.6 per cent to Dh218 billion in 2014 from Dh236 billion in 2013. “Affordable” housing JLL said demand for “affordable” housing is expected to increase over the next 12 months as Dubai’s economy continues to expand and job creation grows. It states that a proposal to ensure the availability of affordable housing for the middle-income segment of the market is currently under review. “These efforts aim to create a balance between the supply of luxury and affordable housing units that cater to all residents in the emirate, as many were previously priced out of the market during the 2013/2014 price rally,” the report states. Emirates 24|7 reported earlier that Dubai developers were now focusing on launching “affordable” housing, targeting UAE residents in low- to mid-income level. Source: Emirates24/7 Back to Index

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DUBAI’S RENTAL DECLINES ARE SELECTIVE

SUNDAY 18 JANUARY 2015 No one has a problem in agreeing that Dubai’s property sales and value gains have taken a bit of a softening in the last six months. But when it comes to the pricklier issue of whether residential rentals too had gone through a sizeable dip in the same period, the consensus seems to break down. Market stakeholders insist that there are locations across the city where rental gains have come down, and where landlords have had to moderate their sky-high expectations to get a new tenant or retain an existing one. Their contention is that with so much of new ready supply coming through — in locations such as Silicon Oasis and Sports City and in Jumeirah Village for those who can afford higher rental budgets — landlords cannot get away with sticking to irrational demands. (Sure, there are still those landlords who prefer to let their properties remain vacant until such time their asking rate is met. They remain a minority.) But ask the same of residents, and the chances are they would prefer to disagree quite strongly. For them, whether the demand is a 5 per cent or 10 per cent hike is not the relevant detail. What worries them is they will have to make those payments from incomes that have not seen significant upward mobility in recent years. So, are rental declines in Dubai being very selective in where they show up? According to Ryan Mahoney, CEO of Better Homes Real Estate, the dynamics are influenced by the location … and, even more pertinently, how well that location and the ambience/infrastructure it offers is in sync with tenant expectations. AdTech Ad That is why “there is [still] a lot of demand for the more established areas — Downtown and Dubai Marina — because the amenities tend to be better,” said Mahoney. “And while there is new supply coming (there), many of those aren’t being completed in 2015 … so, while there is moderate supply, rents may remain stable or even increase over the course of the year. “Where there is a lot of supply in up-and-coming areas that don’t yet have the amenities, there may be some downward pressure on rents since there is less demand. But overall it’s unlikely there will be significant rental rate rises.” Renewals Even that would be a respite for tenants who had to submit to significant hikes at the time of their rental renewals. Sure, more landlords in Dubai are saying — formally at the very least — that they comply with the format set by the Dubai Rental Index. But it’s still a moot point whether this is being honoured in letter and spirit in practice when contracts are being negotiated. “The Index is not being followed widely in the market … as it is most new residents are not aware of the rental laws and Index and therefore depend on agents or landlords for primary information,” said Robin Teh, Country Manager — UAE at Chestertons Mena. “Another issue is that the Index does not always include current data as it is not updated frequently. “The other issue with the rental market is the general sense of euphoria related to Dubai. Landlords are buying into that and not willing to reduce rents, some are even keeping their properties vacant.” And in

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the case of luxury properties in the rental space, little has changed — their owners can ask for more and yet hope to pick up tenants who can match their expectations, Teh said.

According to MPM Properties, the realty arm of Abu Dhabi Islamic Bank, while rental values across Dubai could have grown by 10 per cent last year, in the fourth quarter it remained flat. For those residents with plans to acquire a property, they would do well to tracking what is getting built in locations such as Sports City, Jumeirah Village Circle and Al Furjan. MPM rates these as the “new growth areas” for reasonably priced housing stock. For prospective buyers, timing their entry will hold the key. Equilibrium “As supply expansion puts downward pressure, average rents will soften in most areas and, combined with upward pressure on yields, average sale prices should continue to decrease in the coming year,” said Jesse Downs, Managing Director of Phidar Advisory. “However, this is not a cause for panic, because the overall supply-demand is still near equilibrium. Softening rents will help correct the rampant rent inflation observed over the past two years, which, ultimately, improves affordability, controls labour costs and helps facilitate economic growth.” That is just the point. Dubai’s residential — and commercial — rental market mist not ignore the shift in sentiments in the broader economy. There are enough indications of a general tightening in the marketplace, related to how people are willing to spend their incomes other than on utilities. If there are major changes in the cost of living, there is no way Dubai’s residents will take kindly to arbitrary increases in their rentals outgo. Dubai’s landlords should learn to ask for more only to a point.3 Source: Emirates24/7 Back to Index

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DUBAI DEVELOPER TARGETS DH9K-

DH15K EARNERS

MONDAY 12 JANUARY 2015 Dubai developers are turning their attention to ‘affordable’ housing in 2015, with Dubai Properties (DP), the development arm of Dubai Properties Group (DPG), joining the bandwagon. The developer will be selling units in Remraam project in Dubailand to individuals earning salaries of between Dh9,000 and Dh15,000 per month, with unit prices starting Dh400,000. “Almost half of the households in Dubai earn between Dh9,000 and Dh15,000 a month, according to Colliers International. We have chosen to base our pricing model on this to bridge the affordable housing gap available in the market and target these households,” Mohammed Al Habbai, Chief of Infrastructure and Urban Planning, DPG, told ‘Emirates24|7’. Prices will vary depending on the size, specification and location of the unit, Al Habbai said, adding, investors will be offered “attractive” payment plans. The company is currently finalizing the unit sizes and layouts, which will determine the total number of units in the 18 new buildings in Remraam. The construction contract has been awarded to Engineering Contracting Company, with the buildings set for completion by end of Q4, 2016. This website had reported earlier that Danube Properties, the real estate arm of Danube Group, has launched ‘affordable’ housing units with prices ranging from Dh475,000 onwards in Glitz project in Dubai Studio City. JLL, a global real estate consultancy, has pointed out earlier the need for affordable housing in the Middle East and North Africa (Mena) region. Affordable housing in the region is focused on dwellings available for rent rather than for sale and this is particularly because low-income households do not have access to mortgages or other long-term sources of housing finance, therefore they being confined to the rental sector in most markets. Real estate experts believe government support is essential as the sector is low margin and requires incentives to be given to the private sector to ensure an optimal level of profitability. A recent report by ValuStrat, an advisory, valuation and asset divestment services company, said buying an apartment than renting made sense as the monthly outgo (mortgage) is lesser than the rent paid. Source: Emirates24/7 Back to Index

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DUBAI’S REALTY CAN NAVIGATE PAST

OIL PRICE SLIDE

SATURDAY 24 JANUARY 2015 The UAE’s real estate sector has been showing no signs of panic attacks over the collapse of oil prices in recent weeks. There have been no reports of investors suddenly trying to offload their properties fearing an imminent correction, nor are there indications that asking prices are being slashed in the hope of making a deal at any cost. In short, the current crisis oil is facing is not going to spill over into Dubai’s realty immediately. But if oil remains under pressure for an extended period, that could upset the dynamic somewhat. ‘Declining average annual oil prices could impact the GDP as soon as Q3-16, although this trend is unlikely to directly impact Dubai real estate prices’, according to a recent report from Phidar Advisory. ‘No correlation was found between oil prices and real estate prices or GDP and real estate prices, which are a function of supply, demand and market psychology. ‘However, oil prices have an indirect influence on price: GDP fluctuations impact job growth and, thereby, impact demand’. AdTech Ad For now, transactional activity is still being maintained though gap is starting to narrow what a seller is asking and what buyers are prepared to offer. But high networth investors are not as readily obliging developers and property owners by snapping up whatever is available at the higher end of the property spectrum, making for lengthier transaction times. This has meant movement of high-end villas, in the Dh15 million to Dh50 million range, have been running flat. “But the broader market is as steady as she goes ... to borrow a nautical phrase,” said Andrew Chambers, CEO of GGICO Properties. “If sellers are not getting their asking price, they prefer to hold or lease rather than sell way below their expectations. They are not heading for the exit doors.” With the oil prices expected to remain under pressure unless Opec makes a sweeping intervention, stakeholders in Dubai’s property market will prefer not to rock the boat too strenuously. As yet, there are no indications that key off-plan launches scheduled for the first half of this year are being pulled back. Moreover, master-developers will still move ahead with the major tenders on various projects earmarked for completion ahead of the Expo 2020. But private developers with ongoing projects — and a high inventory of unsold units — will have to better manage their cashflows if the buying appetite drops even further. ‘Although new supply exceeds new demand over a three-year time frame, the market remains close to equilibrium throughout, even falling below frictional vacancy in multiple years’, according to Phidar Advisory. If Dubai’s residential space can hope to withstand oil’s slide in the interim, it could be a mixed prospect for commercial. In the last two quarters, take-up rates for offices had been inching higher as more stock got delivered in key commercial zones. For the right-sized office unit with the right address, the property owner did not have to wait long to net a tenant.

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But the current oil price levels could leave that space vulnerable as businesses — those looking to enter this market or seeking a relocation — may take a wait-and-watch approach. Even otherwise, the office marke t is ripe for price/rent changes. ‘New supply will likely keep average rents stable for 2015 ... but an increase in new supply combined with unsustainable yields will lead to average sale price attrition’, Phidar reports. ‘The distribution of free zones and investment zones creates micromarkets with unique and divergent supply-demand dynamics, so actual area performance will vary’. According to Jesse Downs, Managing Director at Phidar, “From an investment perspective, the performance of an office asset in Dubai is more sensitive to location than most markets. Even though the average trends and projections may seem muted, there are interesting investment options in Dubai.” The prevailing sentiment is that Dubai’s property market has got the maturity to adjust to the new, slower, pace of demand. Developers will have to get more inventive in how they find new buyers for their off-plan ventures. Whether that extends to revising their prices lower is a moot point. “One would be surprised at the number of repeat buyers Dubai’s property can attract,” said Anand Lakhiani, Partner at Indigo Properties, the developers. “Developers don’t have to sell out everything in a week or a month of a project launch. They can always do with a bit of patience — low oil prices needn’t mean there are no takers for Dubai properties.” Source: Gulf News Back to Index

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UAE RESIDENTS: 6TH RICHEST IN WORLD, BUT WHO'LL FUND

RETIREMENT?

SUNDAY 25 JANUARY 2015 The zero income tax salary in the UAE means that, in theory, we should be able to save more each month and should be able to work out our retirement plans faster than what we would have been able to do in our home countries. The UAE’s per capita income at Dh178,351 ($48,597, 2011 estimates by International Monetary Fund), making its residents the sixth-richest in the world, which should help achieve our targets even faster. Sadly, that isn’t happening. According to a new survey by HSBC, the figures are alarming as a big percentage of residents are way off the mark when it comes to retirement savings and some blissfully are not even on the start line. HSBC’s The Future of Retirement 2015 report reveals that for nearly 9 in 10 (87 per cent) people in the country, saving for retirement is not a main priority. As a result of which, more than half (55 per cent) of the working age population feels inadequately prepared for life after work as they did not start saving early enough; the highest proportion globally to express this sentiment. This year’s research shows that people the world over are facing the prospect of a less comfortable retirement than they might have previously anticipated, with over two-thirds (71 per cent) of pre- retirees in the UAE worrying about having enough money to live day-to-day and 68 per cent fearing that they will run out of money after they stop working. Additionally, nearly one in 10 working age people (8 per cent) in the country believe that they will never be able to fully retire, says HSBC experts. Previous reports and survey have time and again underlined the fact that UAE residents are not doing enough to save when their monthly incomes do not come. An earlier poll by Emirates 24|7 shows just this. The online poll by this website revealed that residents believe they will have to continue work even when they reach the retirement age as their financial situation will not permit them to continue to live their current lifestyle. Economists believe the main problem today is that people start saving late in their life. The golden rule is to save as early as possible if one wants a comfortable life in his/her old age. The right age to start saving for retirement is as soon as you enter your career but that rarely happens when gadgets and cars get priority. The HSBC report highlights that UAE residents are stuck up juggling a number of priorities, leaving only a minimal amount that can be kept aside for retirement. Paying off debts (34 per cent) and saving for children’s education (28 per cent) are cited as more urgent financial commitments, while only 13 per cent of working age people in the UAE believe saving for retirement is their main priority.

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These attitudes are mirrored globally with a majority (85 per cent) stating that preparing for retirement is not their main concern, only adding to the financial mess.

Source: Arabian Business Back to Index

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HOME PRICES FLATLINE IN ABU DHABI AND DUBAI WITH SLOWDOWN

EXPECTED TO CONTINUE

SUNDAY 18 JANUARY 2015 House prices in Dubai and Abu Dhabi flatlined during the final quarter of 2014, studies showed yesterday. Reports from both JLL and MPM Properties, the real estate consultancy arm of Abu Dhabi Islamic Bank, revealed that house prices in the two cities did not rise at all in the three months to the end of December. Average villa prices in Dubai dipped by 1 per cent during the final three months of 2014, according to the property agent JLL as the emirate’s real estate market slowed considerably in the final quarter. Dubai apartment prices also showed zero per cent growth between October and December 2014, JLL said, as buyers continued to suffer from the introduction of mortgage caps by the Central Bank and a hike in transfer fees. Nonetheless, using data from the information company Reidin, JLL reported that villa sales in Dubai had recorded average increases of 12 per cent during the whole of 2014 and apartment sales had increased by 23 per cent. JLL reported that most of the growth was achieved during the first half of the year, when Dubai was still in the grip of a house price boom. Similarly, JLL reported that both villa and apartment rents remained flat during the final quarter of 2014 as the market stabilised during the final part of the year. In total though, apartment rents in Dubai rose by an average of 18 per cent during the year and villa rents rose 5 per cent with most of the increase again achieved during the first six months of 2014. The news comes as Dubai Land Department reported that the total volume of real estate deals fell 15 per cent in 2014 compared with the previous year. And, with oil prices falling and more new homes due to be completed in the emirate over the coming year, JLL said that it expected the housing slowdown to continue. “The residential sector is likely to remain subdued over the next 12 months as the market is expected to absorb 25,000 additional units in 2015,” said Craig Plumb, the head of research at JLL’s Dubai office. “But in reality, we remain cautious of the delivery of some of these projects within the time frame.” In Abu Dhabi it was a similar picture. According to MPM Properties, average house prices remained flat during the final quarter of the year. MPM said that according to its research, sales volumes during November and December 2014 were at a 20-month low, owing to the introduction of mortgage caps. Meanwhile, rents in the capital had not risen as quickly as prices, but the market was becoming more fragmented.

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“The Abu Dhabi market continues to be dominated by individual investors, with sale prices increasing faster than rents, eroding yields which have dampened investor demand,” said Paul Maisfield, the MPM chief executive. “This trend will continue until sellers agree to lower prices or rents rise to help investors achieve net yields within a range of 5.5 per cent - 6 per cent.” The current market is effectively a three-tier market, he said. “The mid-tier properties, which takes up most of our portfolio, are seeing a stability in rents with an average 5 per cent increase, reflecting the fact there is a ready supply of such properties and thus landlords are mindful not to push rents too high and risk occupancy levels falling.” “At the top end of the residential market there is a shortage in supply, and occupancy levels are high within the most popular developments and communities, and with the limited choice tenants now have rental increases of 15 to 20 per cent are common at lease renewal,” he added. “At the bottom end of the market with the older properties there is also a shortage of supply which is pushing up rents and in percentage terms these have been hit the hardest.” Source: The National Back to Index

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ABU DHABI PROPERTY DEVELOPER

ALDAR TO SETTLE DH1BN OF DEBT

MONDAY 19 JANUARY 2015 Aldar Properties, which built the world’s biggest indoor theme park in Abu Dhabi, will repay the remaining Dh1 billion of a Dh4bn loan before the end of this month as it cuts debt. Abu Dhabi’s largest real estate company will use scheduled cash payments from the government after selling assets to settle the loan, Aldar said in an emailed response to questions. The company repaid Dh3bn last year. Aldar, which won back its investment-grade rating from Moody’s in November, has been repaying loans and extending maturities on others. The company has Dh9.6bn in gross debt and plans to cut that to Dh6bn within a year, chief financial officer Greg Fewer said on November 13. Income from hotels, offices and retail properties is expected to climb as much as 60 per cent to Dh1.6bn a year by the end of 2015. Moody’s Investors Service cited recurring income on when it raised Aldar’s credit by two levels to Baa3, its lowest investment grade, on November 26. Shares of the Ferrari World theme park developer were unchanged at Dh2.69 as of 11.16am local time, having gained about 10 per cent in the previous four sessions. Source: The National Back to Index

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STRONG RESPONSE FOR MEYDAN

FREEHOLD VILLAS IN DUBAI

MONDAY 19 JANUARY 2015 A semi-detached freehold villa project in Meydan City, Dubai has had an “overwhelming response”. The development, called Millennium Square, will be developed by G&Co at an estimated value of Dh3 billion. The villas have a starting price of Dh4,348,750, with a handover scheduled for the last quarter of 2017. “We are once again selling the product very well, as the city’s real estate market continues to attract investors from around the world,” said Kalpesh Sampat, director of SPF Realty. “The project offers the most competitive pricing for the customers in the Meydan Community, starting at Dh1,250 per sq ft, which is almost 30 to 40 per cent less than the pricing of other projects in the same location.” A statement from SPF Realty, the broker selling the properties, said that investors of any nationality irrespective of residency status, can purchase the villas which will be registered by the Dubai Land Department allowing the owner to have full rights to the property. The semi-detached villas have four bedrooms plus a maid’s room. There is an option for making one extra bedroom on the ground floor at no extra cost the statement said. Reports from JLL and MPM Properties released yesterday said that house prices flatlined in Dubai in the final three months of 2014. Average villa prices in Dubai dipped by 1 per cent during the final three months of 2014, according to the property agent JLL, as the emirate’s real estate market slowed considerably in the final quarter. Dubai Land Department reported that the total volume of real estate deals fell 15 per cent in 2014 compared with the previous year. Source: The National Back to Index

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NAKHEEL PROFIT SOARS DESPITE FEWER HOME COMPLETIONS FOR

DUBAI DEVELOPER

WEDNESDAY 21 JANUARY 2015 Nakheel reported a 43 per cent increase in profit for last year as the developer responsible for some of Dubai’s most ambitious projects delivered more than 1,000 homes to customers. Net profit at the government-owned developer rose to Dh3.68 billion in the year to the end of December, up from Dh2.57bn a year earlier. The increase came despite a fall in revenue, which dropped by almost a quarter compared with 2013 to Dh7bn. Nakheel attributed that to the completion of fewer homes than it had the previous year – with 1,117 units finished in 2014. Nakheel handed over about 3,150 in 2013 as it pushed through a glut of stalled homes sold before the global financial crisis. The company said that the new homes handed over last year were sold off-plan after the crisis and were developed at higher margins. Nakheel reported that its handovers included 132 homes at Palm Jumeirah’s Palma Residences and Palm Views, the first new projects it has launched since its restructuring. Other handovers took place at Al Furjan, International City, Jumeirah Village, Jumeirah Park and Jumeirah Heights. Fourth-quarter profit rose 35 per cent to Dh1.08bn from Dh800 million in the same period a year earlier, according to calculations by The National. The private company is not required to post more detailed accounts. “2014 was our biggest year yet in terms of financial performance and achievements,” the Nakheel chairman Ali Rashid Lootah said yesterday. “Not only did we clear all Dh7.9bn of our outstanding bank debt four years ahead of time, we also completed and delivered our first new project – Palma Residences – since restructuring.” Nakheel was restructured and taken over by the Dubai government in 2011 after amassing total debt of Dh7.9bn. It reported last year that it had repaid all of its bank debt – four years earlier than planned. In March, the company said that it was evaluating a possible share sale once it had cleared its debt. It still retains a Dh4.4bn trade creditor sukuk that falls due next year. “Nakheel is one of the big three master developers in Dubai and so if it were to stage an IPO it would always attract investors,” said Sanyalak Manibhandu, a senior analyst at National Bank of Abu Dhabi. “The company is backed by the Dubai government, has a known track record, and even if it has had a chequered history in the past, things have revived and you can go and see its projects. “However, I think most advisers out there would say that the first half of 2015 is not the time to launch an IPO if you haven’t already got things started. With the uncertainty about the oil price and the

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slowdown in the UAE property market it would be better to wait until the second half of the year.” On Sunday, the property consultancy JLL reported that property prices and sales volumes in Dubai had flatlined during the final quarter of 2014. But Nakheel insisted that it would continue to grow this year at the same rate. “We are looking to maintain the same pace, at least, of growth in 2015 as we saw last year,” said Mr Lootah. “We will continue to build on the success of 2014 by releasing more units for lease, both on the residential and retail side.” He added that the company planned over the next three years to push up its recurrent rental income to Dh7.5bn a year from 10 million square feet of shops and 30,000 homes. In 2010 it said its recurring revenue was just Dh500m. The company also expects to award about Dh7bn worth of construction contracts this year compared with Dh5.3bn last year. Nakheel also said yesterday that its sister company Limitless had secured the agreement of 85 per cent of its creditors for a three-month extension to a US$400m debt repayment, which had been due on December 31, and for a restructuring plan. Earlier this month it was reported that Limitless had failed to secure a new restructuring on its US$1.2bn debt pile after being in talks with creditors for nearly a year. Source: The National Back to Index

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DH8M SAADIYAT ISLAND VILLA AIMED

AT THE LESS WEALTHY

THURSDAY 22 JANUARY 2015 It’s an odd set of affairs when property brokers start telling you that a four-bedroom villa on Saadiyat is “reasonably priced” at Dh8.1 million. But when you start to consider that some of the mansions on the island set to become the home of the new Louvre Abu Dhabi are on the market for around triple that, the price does start to look slightly more affordable in comparison. “It’s all about the size,” says Maria Eduarda Silveira, a senior residential and commercial consultant at Better Homes, which is marketing the property. “This villa is not cheap and it is not pricey, it is just the right price for the market. However, it is much more affordable to families than the really big villas on Saadiyat which have been selling for as much as Dh23m and are aimed at the super wealthy.” Buy despite its less lavish size, luxury is still comparative. This four-bedroom villa is located within walking distance of both the beach and the Saadiyat Island golf course and includes a balcony, off-street parking and a maid’s room. The house is just 2.4 kilometres from the St Regis Saadiyat Island resort and 2.6km from the newly opened Cranleigh School. “Over the past year prices on Saadiyat Island have increased significantly,” Ms Silveira said. “It’s because there has been no supply of new homes. Cranleigh School opening has also had an effect on the market as well as the fact that the Louvre will open later this year.” However, with the Abu Dhabi market, like that in Dubai, suffering from a slowdown in sales volumes following the introduction of mortgage caps, anyone interested in buying here might still be able to negotiate. “Over the past couple of months the market has really slowed down,” Ms Silveira added. “This is especially the case in Saadiyat, because most people buying here are expatriates and so are not able to borrow as much money as they would have been able to before the mortgage caps were introduced.” Q&A How much do homes on Saadiyat Island cost? Agents report that prices have risen sharply over the past year with townhouses which used to go for around Dh6 million last year now selling for closer to Dh7 million. According to Asteco, Saadiyat Beach Villas were the most expensive villas it surveyed in the third quarter of 2014 with prices for an average three-bedroom villa going for Dh5.5 million, a four-bedroom villa costing Dh5.8 million, and a five- bedroom villa on the market for Dh10.5 million. When will the Louvre actually open? According to Aurélie Filippetti, the French minister of culture, speaking at the opening of the Abu Dhabi Art festival last year, the long awaited Louvre museum will finally open to the public on UAE National Day, December 2, 2015. It is expected be followed by the opening of the Zayed National Museum in 2016 and the Guggenheim Abu Dhabi in 2017.

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What else is planned for Saadiyat Island?

Saadiyat Island has been divided into six separate neighbourhoods. The Cultural District, located just across the bridge from Abu Dhabi island, will contain the three museums and a performing arts centre; the Saadiyat Beach district based around nine kilometers of beach includes some luxury homes and hotels and has been earmarked for many more. There will also be a Marina district providing berthing for more than 1,000 vessels; Saadiyat Reserve which will include the island’s natural wetlands, Saadiyat Promenade which will include shops and restaurants around a boardwalk; and Saadiyat Lagoons around the island’s tidal lagoon system. How much of the masterplan has actually been built? Currently the Saadiyat Beach district is the most advanced and includes most of the island’s completed houses. New York University opened its Saadiyat Island campus in September – the same time that Cranleigh School also opened. Source: The National Back to Index

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NAKHEEL TO BUILD 4,000 NEW

RESIDENCES IN JEBEL ALI

SATURDAY 24 JANUARY 2015 Jebel Ali is set to emerge as Dubai’s latest residential quarter, with as many as 4,000 new apartments to be tendered within months. Nakheel, the palm islands developer, aims to build 80 apartment buildings on the site of its old Dubai Waterfront project, which ground to a halt after the 2008 property crash. Tenders are expected to be issued by the end of March. The development, which could take about two-and-a-half years to build, will be aimed at the middle income segment, according to Ali Rashid Lootah, the Nakheel chairman. The addition of so many new homes in a part of the city that is more associated with industrial warehousing than residences could benefit thousands of people working in Jebel Ali Free Zone and Dubai World Central, along with Abu Dhabi-bound commuters seeking a shorter drive to work. Originally conceived more than a decade ago, the Manhattan-sized Dubai Waterfront was once envisaged as a vast beachfront city developed on land reclaimed from the sea that would be home to a population of more than 400,000 people. It was the largest of Nakheel’s projects to be put on hold as the financial crisis hit. Now the developer is advancing plans to develop smaller projects around the Waterfront site. Matthew Green, the head of research and consultancy at CBRE, expects more developers to target the area as Dubai World Central expands and businesses in Jebel Ali Free Zone add more staff. “We have not seen much in terms of residential development in Jebel Ali in the past, but we will start to see a lot more development coming through,” he said. Nakheel is expected to start construction soon of another 66 villas and town houses at its Veneto community in Jebel Ali. The developer also awarded the contract for a community centre at its Badrah development. CBRE has highlighted a rising number of developer enquiries about hotel apartment projects in the area, in which visitor demand is expected to increase in the run up to Expo2020. Damac has already completed a two-tower serviced apartment development called Naia adjacent to Jebel Ali Port, while Dubai Investments is also targeting a raft of residential development in the area. JLL expects another 22,000 residential units to be delivered in Dubai this year, with completions expected to halve to about 11,000 next year. Source: The National Back to Index

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DUBAI BUILDER ARABTEC WINS

DH345M ADNOC HOUSING CONTRACT

SUNDAY 25 JANUARY 2015 Dubai’s Arabtec Holding has won a Dh345 million contract from Abu Dhabi National Oil Company (Adnoc) to expand a housing complex, the builder said on Sunday. The contract has been awarded to Target Engineering, a subsidiary of Arabtec to expand a housing complex in Ruwais, near Abu Dhabi, it said in a statement. The project is expected to be completed in February 2016. Target Engineering handles construction projects in the oil and gas sectors in the UAE, Saudi Arabia and Qatar. Source: The National Back to Index

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VALUATION & ADVISORY With 29 years of Middle East experience, Asteco’s Valuation & Advisory Services team Our professional advisory services are conducted by suitably qualified personnel all of whom have brings together a group of the Gulf’s leading had extensive real estate experience within the real estate experts. Middle East and internationally. Asteco’s network of offices in Abu Dhabi, Al Ain, Dubai, Northern Emirates, Qatar, Jordan and the Our valuations are carried out in accordance with Kingdom of Saudi Arabia not only provides a deep the Royal Institution of Chartered Surveyors understanding of the local markets but also enables (RICS) and International Valuation Standards us to undertake large instructions where we can (IVS) and are undertaken by appropriately quickly apply resources to meet clients requirements. qualified valuers with extensive local experience.

Our breadth of experience across all the main The Professional Services Asteco conducts property sectors is underpinned by our sales, leasing and investment teams transacting in the market and throughout the region include: a wealth of research that supports our decision making. • Consultancy and Advisory Services John Allen BSc MRICS • Market Research • Valuation Services Director, Valuation & Advisory +971 4 403 7777

[email protected] SALES Asteco has established a large regional property

sales division with representatives based in UAE, Julia Knibbs MSc Saudi Arabia, Qatar and Jordan. Manager – Research and Consultancy - UAE Our sales teams have extensive experience in the +971 4 403 7789 negotiation and sale of a variety of assets.

[email protected] LEASING Asteco has been instrumental in the leasing of many high-profile developments across the GCC.

ASSET MANAGEMENT

Asteco provides comprehensive asset management services to all property owners,

whether a single unit (IPM) or a regional mixed use portfolio. Our focus is on maximising value

for our Clients.

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

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