NEWS BRIEF 29 SUN DAY 26 July 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

DUBAI

REVERSE RELOCATION TO DUBAI MAKING SHARJAH MORE AFFORDABLE FOR TENANTS STUDIOS, 1-BED APARTMENTS IN WHICH DUBAI AREAS OFFER BETTER YIELDS? FROM MECHANIC TO OWNER OF 22 BURJ KHALIFA UNITS IN DUBAI WHICH OF DUBAI'S HIGH-END AREAS MORE AFFORDABLE TO RENT IN Q2? DOWNTOWN DUBAI TOPS CHART FOR BIGGEST OFFICE DEALS IN Q2 SIX DEALS CROSS DH195 MILLION ON DUBAI'S PALM JUMEIRAH WHICH METRO STATION BUSIEST: CITY CENTRE OR BURJ KHALIFA – DUBAI MALL? ENSHAA BEGINS HANDOVER OF 169 PALAZZO VERSACE APARTMENTS IN DUBAI LULU TO OPEN FIVE-STAR HOTEL IN DUBAI’S BUSINESS BAY WASL PLANS TO OPEN 14 HOTELS IN DUBAI BY 2020 WASL TO BEGIN WORK ON FOUR MAJOR PROJECTS WORTH DH40BN RAMADAN SLOWDOWN FOR DUBAI HOTELS AS OCCUPANCY AND ROOM RATES DECLINE

ABU DHABI ARCAPITA BUYS 285 LUXURY APARTMENTS AT ABU DHABI’S SAADIYAT BEACH RESIDENCES COMPLEX NEW ALDAR PROPERTIES ACCOUNTING METHOD ALLOWS OFF-PLAN SALES TO APPEAR EARLIER IN RESULTS OFF-PLAN DEVELOPERS IN THE UAE LAUNCH MORE ‘BUY NOW, PAY LATER’ OFFERS

NORTHERN EMIRATES MAJOR SHARJAH HIGHWAY CLOSED UNTIL END OF YEAR; DUBAI-BOUND TRAFFIC DIVERTED R HOTELS TO INVEST DH150M IN AJMAN AS EMIRATE AIMS TO BOOST TOURISM SHARJAH RENTS FALL AS RESIDENTS EYE RETURN TO DUBAI

OTHERS EMAAR IN TALKS OVER SEPARATION FROM INDIAN PARTNER, SAYS REPORT DUBAI’S DAMAC PLANS MORE LONDON PROJECTS TO FOLLOW LAUNCH OF VERSACE-THEMED DEVELOPMENT

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REVERSE RELOCATION TO DUBAI MAKING SHARJAH MORE AFFORDABLE

FOR TENANTS

THURSDAY 23 JULY 2015 Rents in Sharjah, Ajman and other Northern Emirates are declining following the decline in Dubai rentals, which is prompting many tenants to move back to Dubai. According to the latest Asteco Northern Emirates Q2 2015 real estate report, rents in Sharjah and Ajman declined by 3 per cent quarter-on-quarter during the April-June quarter. This decline, the report states, is prompted by a rise in vacancy levels as new supply was handed over and the reverse relocation trend to Dubai, which has started to gain momentum. The report noted that enquiry levels were also lower compared with the previous quarter, supporting the theory that more people are keen to move back to Dubai now that rents have been cooling in the UAE’s second largest emirate. However, rental levels in the Northern Emirates remain much more affordable than Dubai. The report maintains that tenants can currently rent a two-bedroom apartment on the Sharjah Corniche between Dh48,000 and Dh80,000 per annum, or between Dh32,000 and Dh40,000 pa in Ajman. Compare that with the average rents for one-bed units in the ‘affordable’ Dubai developments – Dh52,000 pa in International City and Dh70,000 pa in Discovery Gardens. Asteco reports that although residential rental rates declined in Q2 2015, they were still higher in comparison with the previous year in Fujairah, Ras Al Khaimah and Umm Al Quwain. “Another reason for the decline in Ajman has been the handover of new supply in recent months. We've seen a large amount of new stock entering the market, at a time when newcomers to the city were fewer. This resulted in an internal movement, away from older buildings to newer properties, particularly one and two-bed units, as tenants upgrade,” said John Stevens, Managing Director, Asteco. Rental rates in high-end Fujairah buildings put a two-bedroom unit at an annual figure of Dh55,000- Dh62,000; in newer Ras Al Khaimah developments at Dh50,000-Dh65,000 pa; with Umm Al Quwain the most affordable at Dh28,000-Dh30,000 pa, albeit with lesser quality stock. Source: Emirates 24/7 Back to Index

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STUDIOS, 1-BED APARTMENTS IN WHICH DUBAI AREAS OFFER BETTER

YIELDS?

MONDAY 20 JULY 2015 Apartment sales in Dubai during the second quarter of 2015 were marked by a shift towards more affordable properties, says a new report by Asteco. Locations such as IMPZ, Dubai Silicon Oasis, International City, and the recently handed over Queue Point and Sky Courts developments in Dubailand witnessed sustained demand in Q2 as yields for studio and one-bedroom apartments in particular, remained attractive, the report notes. Affordability was also a priority for villa investors with Jumeirah Village recording a high number of transactions for some of the townhouse properties by Nakheel and in Indigo Ville, priced at Dh700,000 up to Dh1.2 million. In comparison, larger properties, including five and six-bedroom villas, saw minimal transactions completing in communities such as The Villa or Dubai Sports City, despite strong rental demand, the report said. “However, despite strong transaction levels, the increasingly competitive market environment, with a lot of new supply, means that the two per cent quarter-on-quarter decline is not going to be a temporary blip, with more pressure on owners to review their selling price, still to come,” John Stevens, Managing Director, Asteco. Off-plan properties at negative premiums Asteco also noted an emerging trend by a limited number of purchasers, who were advertising off-plan properties, not yet in the construction phase, at negative premiums, in an attempt to relinquish financial obligations. This quarter, it was the office sector that saw the most gains, with an average two per cent growth in rental rates, dependent on area, although average sales prices declined by one per cent. Leasing-wise, DIFC witnessed an 11 per cent quarter-on-quarter growth with existing stock almost fully occupied and companies eyeing expansion forced to seek space in nearby buildings, which has benefited development such as Central Park Towers, which attained rates of Dh180 and Dh250 per square foot for shell and core and fitted space respectively. Index Tower’s leasing rates also increased up to Dh350 per square foot, as full floors were subdivided to offer small, fitted space to companies looking to set up at the DIFC free zone. However, previous star performer Business Bay saw a 10 per cent quarter-on-quarter decline in leasing prices, affected by the handover of a substantial amount of office space, with Asteco predicting more pain to follow with a further 1.3 million square feet of new supply to be delivered in the next few years. “The office sales market has essentially moved away from investment buyers to one where end-users are the most common buyers for completed buildings.

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“In the future we expect sales prices to come under pressure in areas where significant supply is due to be handed over,” said Stevens.

Source: Emirates 24/7 Back to Index

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FROM MECHANIC TO OWNER OF 22

BURJ KHALIFA UNITS IN DUBAI

MONDAY 20 JULY 2015 Friends teased him about his height. He replied by purchasing 23 flats in the tallest tower in the world, Burj Khalifa. “How can a short man like you even see the Burj Khalifa fully, let alone enter the world’s tallest tower? Can you enter this building?” a friend of George joked. Since then George decided to buy a flat in the world’s tallest tower and within a short period, he is the owner of 22 apartments, on different floors of Burj Khalifa. He recollects the apartment numbers for us: “10406, 90004, 8903 … I have recently completed a deal to purchase my 22nd flat in Burj Khalifa. “Now I own 22 flats in the tower and I will purchase more if I think the deal is good. My friend teased me once saying I cannot enter this prestigious building but I took it as a challenge. For me nothing is impossible,” George told 'Emirates24|7'. Hailing from a business family in Trichur, George came to Sharjah four decades ago and started working as an automobile mechanic. “A man’s mind is where his wealth is. My mind is in my family and the property and business that belongs to me,” he muses. “I began living in the Burj Khalifa as a tenant. Then I purchased my first flat investing some money I made from doing a project for Dubai Metro. Then I bought the second, third, fourth, fifth …and now 22nd apartment. “Because I have businesses in Dubai generating profit, I have found Burj Khalifa an ideal investment option,” he said, adding that he does not rent out his apartments because the first tenant left some scratches on the wall. “Every year I spend about Dh3 million to maintain my properties in Burj Khalifa. I have full faith in the visionary leadership of UAE and the long-term vision behind the creation of this world class icon in Dubai,” George asserts, adding that the real estate prices here may go up further, and as a businessman, he is never scared of slowdown or recession. “Every day I take at least 10 new visitors to Burj Khalifa because many people want to see the apartments. When I brought 10 Indian labourers to stay in the world’s tallest tower for a day, they felt like they reached heaven. “The labourers were living in a camp one day and then staying in the such a tower was a great experience,” George explains. Flying high George is quite familiar to Keralites, as he is the single largest shareholder in CIAL, the company that owns the Kochi International Airport. “I could not attend my father’s funeral because there was no direct flight from Dubai to Kochi to reach my home- town Thrissur,” he says.

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“For millions of overseas Keralites an airport was needed. When the Kochi International Airport Project was launched initially, there was no keen interest from investors.

“The company faced a severe financial strain and the staff were facing lack of funds. “I went to the company office and offered to invest in the project. Now CIAL is a very successful company running the international airport in Kerala,” ‘Georgetta’, as he is proudly called by his friends and family, says. “I am trying to rebuild the Georgettans Raagam Theatre in Kerala. Whatever money I earn in the UAE can be profitably invested in such assets,” George adds. About 1,000 people work in companies run by George. Geo Electricals Trading and Contracting Co LLC started in 1984 and today, there are 16 companies under the Geo Group in the UAE employing nearly 1,000 people. George today has also properties in Meydan and Ras Al Khaimah, and factories in Sharjah and Ajman. Source: Emirates 24/7 Back to Index

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WHICH OF DUBAI'S HIGH-END AREAS

MORE AFFORDABLE TO RENT IN Q2?

WEDNESDAY 15 JULY 2015 Rents in some of Dubai’s high-end areas declined during the second quarter even as certain mid-market locations saw rentals increase while rental levels remained unchanged in old Dubai areas, according to two research reports published on Tuesday. According to real estate consultancy Asteco’s Q2 2015 report, the highest quarter-on-quarter apartment rental declines were recorded on Sheikh Zayed Road (seven per cent), Palm Jumeirah (six per cent) and Jumeirah Beach Residences (seven per cent). Conversely, IMPZ, Dubai Sports City and Dubai Silicon Oasis recorded higher rentals compared with 2014, of between 6 and 13 per cent, due to the completion of community infrastructure and increased occupancy levels making them popular mid-market residential areas. Apartment rents across the city declined by an average of twi per cent in 2015 and five per cent for villas, with marked declines at the higher priced end of the market, Asteco said. CBRE, another real estate consultancy, said Dubai’s rental market recorded marginal deflation during Q2, posting its first quarterly drop since 2011. Rentals within the villa market saw the steeper decline, falling by an average of 3 per cent as compared to a 2 per cent dip in apartment rentals. “Higher-end areas, including Dubai Marina, JBR, Palm Jumeirah, Greens and JLT, have actually suffered some of the heaviest declines with rental rates falling between one and four per cent,” CBRE said, adding that rates in many secondary locations remained unchanged, including Al Nahda, Hor Al Anz and Discovery Gardens, reflecting the continued flight to affordability. “As the pace of rental declines picks up pace, we would expect to see a gradual reversal of this trend as occupiers start to focus on quality, although this is unlikely to emerge until 2016,” CBRE analyst said in the note. John Stevens, Managing Director, Asteco, said: “The softening in Dubai’s residential rental market appeared earlier than we originally anticipated, offering tenants in the emirate an opportunity to recoup somewhat after several tough years of high rents. The decrease was felt throughout the market and areas with a significant amount of completed new supply were the most affected. Additionally, some buyers of nearly completed buildings were keen to sell at negative premiums due to the imminent completion of the building, which required final payment.” In the villa segment, the handover of projects like Casa Villas at Arabian Ranches brought rental rates for the area down by seven per cent quarter-on-quarter, and 15 per cent year-on-year. “We even saw a six per cent decline for Palm Jumeirah, with the handover of the lower specification Palma Residences’ townhouses impacting rental rates due to their lower price band. So we are seeing a similar tenant-friendly trend in the broader villa market, with more flexible instalment plans for example, and this is set to continue as areas like Dubailand continue to deliver new supply,” noted Stevens.

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Source: Emirates 24/7

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DOWNTOWN DUBAI TOPS CHART FOR

BIGGEST OFFICE DEALS IN Q2

THURSDAY 14 JULY 2015 Dubai’s commercial space continued to register big ticket deals in the second quarter of 2015, with Downtown Dubai recording six of the top 10 office deals. The biggest transaction registered with Dubai Land Department (DLD) was worth Dh19.19 million in Control Tower in Business Park Motor City, reveals data shared exclusively by Reidin.com with Emirates 24|7. The second biggest was in the same tower worth Dh17.62 million, followed by Vision Tower in Business Bay with a transaction value of Dh17 million. A transaction registered for Dh12.60 in Boulevard Plaza Tower 1 in Downtown Dubai took the fourth place, followed by two transactions of Dh11.25 million each in Boulevard Plaza Tower 1 in Downtown Dubai. Vision Tower in Business Bay, was again in seventh position with a transaction valued at Dh10.54 million. Two transactions of Dh10.13 million and Dh9.92 million in Boulevard Plaza Tower 1 in Downtown Dubai took eighth and ninth positions, with the final spot going to Boulevard Plaza Tower 2 deal, which was closed at Dh9.32 million. In its second quarter 2015 report, Land Sterling, a UAE-based chartered surveyor and property consultancy firm, said office sales market remained robust due to steady demand, despite a drop of 30 per cent in transaction volume during the quarter. Total value of office sales transactions registered with DLD stood at about Dh695 million in the second quarter 2015 with nearly 80 per cent generated by sales in Business Bay and Jumeirah Lakes Towers, it added. Source: Emirates 24/7 Back to Index

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SIX DEALS CROSS DH195 MILLION ON

DUBAI'S PALM JUMEIRAH

WEDNESDAY 13 JULY 2015 A Dh60-million deal in the plush Emirates Hills, a master development by Emaar Properties, has topped the list of the top 10 villa deals for the second quarter 2015 in Dubai, reveals data shared exclusively by Reidin.com with Emirates 24|7. The deal, closed in May 2015, saw the buyer paying Dh2,325 per square foot (psf) for the 19,784 square feet spacious house, according to the data. This website reported in April 2015 that the biggest deal of the first quarter 2015 was also worth Dh60 million in the same master development. The second costliest deal during the period between April and June 2015 was again in Emirates Hills, with the transaction closing at Dh45 million. Two villas in Palm Jumeirah and Emirates Hills took third place. The Dh42-million deals translated into the buyers paying Dh5,198 psf for the former and Dh1,716 psf for the latter. Fifth to eighth places on the list were occupied by transactions on the Palm, which were valued at Dh40 million, Dh34 million, Dh33 million and Dh26.275 million, respectively. In the quarter, Palm registered six of the biggest deals, with total spend at Dh195.48 million. The Lakes took ninth place with a Dh26.12 million deal followed by a Dh20.20 million villa sale on the Palm taking the final slot. Source: Emirates 24/7 Back to Index

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MAJOR SHARJAH HIGHWAY CLOSED UNTIL END OF YEAR; DUBAI-BOUND

TRAFFIC DIVERTED

SUNDAY 26 JULY 2015 A part of King Faisal Street has been closed for traffic since yesterday (Saturday), and shall remain closed for the rest of the year as part of a maintenance work project, the Sharjah Roads and Traffic Authority (SRTA) has announced. On Saturday, a 2km-stretch of King Faisal Street connecting King Faisal Bridge and Union Square in the areas Abu Shagara and Al Qasmiyeh were closed in one direction, commencing the first phase of the project.

A 2km-stretch of King Faisal Street connecting King Faisal Bridge and Union Square in the areas Abu Shagara and Al Qasmiyeh were closed in one direction. (File) Traffic heading towards Dubai along the iconic Al Majaz Lake has been diverted whereas commuters heading into Sharjah will be impacted in a few months. When the maintenance work in this direction has been completed, the Dubai-bound road will be re- opened and the Ajman-bound part of King Faisal will be closed for maintenance, explained an SRTA official.

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During the first phase of the project, motorists in the direction of Dubai will be diverted to the three-lane service road towards King Faisal Bridge, passing along Al Majaz community.

The road has a total of six lanes in each direction, which will be refurbished in a project costing Dh11,004,000. Damaged parts of the road will be restored and the sidewalk in each direction will be restored. New road signage will also be placed along the road. This same weekend, maintenance work commenced on Sheikh Khalifa bin Zayed Road, another main road in Sharjah, leading to a partial closure between Thursday night and Monday . Last year, the Sharjah authority carried out similar maintenance work on Corniche Street, which forms an extension of King Faisal Street. Al Majaz area is known for its vicinity to the sea leg shaping Al Majaz lake and Al Majaz Waterfront, which is increasingly becoming a popular leisure destination. Source: Emirates 24/7 Back to Index

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WHICH METRO STATION BUSIEST: CITY CENTRE OR BURJ KHALIFA –

DUBAI MALL?

SUNDAY 26 JULY 2015 Mattar Al Tayer, Chairman of the Roads and Transport Authority (RTA), has revealed a growth in the number of riders using mass transit means (Metro, public buses, marine transit means and taxis) in Dubai during the first half of this year. Al Tayer stated that the total public transport during this period hit 271.302 million users compared with 262.569 million users during the same period of 2014. Metro, Tram The number of Metro riders on both the Red and Green Lines over the last six months topped 88,252,034 riders; compared with 81,403,876 riders during the same period last year. The number of riders using the Red Line during the first half of this year clocked 55,783,626 riders, up from the figure recorded during the same period last year which was 51,799,232 riders. Equally the ridership of the Green Line jumped from 29,604,644 riders in the first half of 2014 to 32,468,408 riders in the first half of this year. Deira City Center, Al Rigga, Union, Burjuman and Burj Khalifa-Dubai Mall stations have accounted for the lion share in the ridership of the Red Line. Deira City Center Station has been used by 3,640,354 riders, followed by Al Rigga Station which served 3,614,141 riders. Next came the Union Station recording 3,557,000 riders, ahead of Burjuman Station which received 3,500,000 riders and Burj Khalifa – Dubai Mall Station which was used by 3,392,219 riders. On the Green Line of the Dubai Metro, Al Fahidi and Baniyas Stations accounted for the largest number of Metro riders where Al Fahidi Station was used by 3,600,000 riders, Baniyas Station was used by 3,200,600 riders, and Al Ghubaiba Station was used by 2,452,000 riders. The Dubai Tram was used by 1,552,756 riders during the first half of this year. Public bus Modern buses contributed to raising public transport users. (Supplied) The number of public bus riders during the first half of this year amounted to 66,500,269 riders and the Dubai Bus service accounted for the largest number of riders recording 44,089,924 riders, followed by the Metro Stations Feeder Service which lifted 13,440,291 riders, and third came the Intercity Bus Service which was used by 5,962,217 riders. Remaining riders were served by Bus Rental Service to public and private entities. Marine transport

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Traditional abras and marine transit modes capture the attention of Dubai commuters.(Supplied)The marine transit modes, comprising abras, water bus, water taxi and Dubai Ferry, have lifted during the first half of this year 7,492,529 riders where the number of Abra riders alone clocked 7,171,509 riders, whereas the Water Bus lifted 249,911 rider, Dubai Ferry served 56,568 riders and the Water Taxi offered services to 14,541 riders. Taxis Taxicabs operating in Dubai (Dubai Taxi and franchise taxi companies) have made 53,572,397 trips during the first six months of this year lifting 107,504,794 riders. The Dubai Taxi Corporation has lifted the biggest chunk of these riders by operating about 23,172,122 trips serving about 46,344,244 riders/ Al Tayer noted that the RTA was endeavoring to raise the share of public transport means to as much as 30 per cent by 2030, and had succeeded in raising this share from 6% in 2006 to 14 per cent in 2014, and anticipated such rate would hit 15 per cent by the end of 2015. Source: Emirates 24/7 Back to Index

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ENSHAA BEGINS HANDOVER OF 169 PALAZZO VERSACE APARTMENTS IN

DUBAI

TUESDAY 14 JULY 2015 The Dubai-based developer Enshaa has started handing over 169 apartments in the Residences at Palazzo Versace in Dubai Creek to their buyers. Enshaa built the serviced apartments alongside the new 217-room Palazzo Versace Hotel as part of a US$626 million development. The apartments range in size from one to five bedrooms and are housed in two buildings. The developer’s shareholders include Emirates Investments Group, Majid Al Futtaim Group and Abraaj Capital. A deal to build the Palazzo Versace complex was first agreed between Emirates Investments Group and the Australian developer Sunland Group in 2004. In 2005, Emirates International Holdings, a unit of Enshaa, acquired the land to begin development in 2006 with a view to completing it by 2008. However, there were a series of delays, and Enshaa took control of the project in 2011, aiming to complete it by the end of 2013. In announcing the start of the handover of the apartments, Raza Jafar, Enshaa’s chief executive, expressed his gratitude to customers. “I am confident that it [the project] will set new standards of luxury living in the region,” he said. Source: The National Back to Index

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ARCAPITA BUYS 285 LUXURY APARTMENTS AT ABU DHABI’S SAADIYAT BEACH RESIDENCES

COMPLEX

TUESDAY 14 JULY 2015 Mubadala Development has sold the first phase of its Saadiyat Beach Residences apartment complex on Saadiyat Island to Bahrain-based alternative investment fund Arcapita. The complex of three low-rise residential buildings containing 285 apartments is situated within a gated community and is currently leased to Saadiyat Island’s master developer, Tourism Development & Investment Company. Mohammed Chowdhury, the managing director at Arcapita, declined to comment on a reported sale price of $200 million, citing confidentiality agreements signed with Mubadala. However, he said that the deal was an off-market transaction which had been generated as a result of an existing relationship between the organisations. Arcapita already owns property investments in the UAE, including a joint venture at Dubai Sports City that has developed about 1,000 villas at Victory Heights overlooking the Ernie Els golf course, but this is its first property investment in Abu Dhabi. Mr Chowdhury said that Saadiyat Beach Residences appealed for a number of factors. “It’s at the high end of the market in Abu Dhabi, and there is a limited supply at Saadiyat. “It’s been master-planned, and it’s hard for people to build similar properties in that area. So rents should hold up.” He also said that Abu Dhabi offered more secure long-term rental prospects than Dubai, where the market is more volatile. Saadiyat is a 27 square kilometre island that already features a number of five-star hotels and resorts, a beach club, golf course and leisure and retail development. The first of three museums within the island’s cultural district, the Louvre Abu Dhabi, is scheduled for completion by the end of this year. Since the first phase of Saadiyat Beach Residences was completed in 2013, TDIC has launched two further phases of development. The second phase contains 82 villas and townhouses. The third phase, which was due to complete last month, contains 77 four- and five-bed villas. Source: The National Back to Index

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R HOTELS TO INVEST DH150M IN AJMAN AS EMIRATE AIMS TO BOOST TOURISM

SUNDAY 19 JULY 2015 The Ajman-based R Hotels plans to invest Dh150 million on a mid-markethotel as the emirate seeks to draw 5 million tourists a year by 2021. Construction on the 182-room property, located alongside Ramada Beach Hotel Ajman, is expected to start this quarter. It is set to open in the first quarter of 2017. “The real estate sector is getting busy with the Ajman City Centre mall expanding and areas near Hamriya Free Zone getting developed,” said Iftikhar Hamdani, the vice president for acquisition and development at R Hotels and general manager of Ramada Ajman hotels. “The corniche projects are coming along fast and there is confidence in the market.” In May, Majid Al Futtaim Investments said it would invest Dh500m to expand Ajman City Centre by 51,000 square ¬metres. Construction work is expected to start towards the end of next year and end in 2017. “We kept around 80 per cent occupancy rate during Ramadan and we run out of rooms during the October to May period,” said Mr Hamdani. “There is a constant demand from the tour operators and it was clear we needed another property in Ajman.” Work on several property projects in Ajman slowed during the global financial crisis but has recently picked up pace. That includes the Ajman Marina project that was announced in 2007. The Dh100m project was completed last year, according to the Department of Municipality and Planning. In May, Ajman’s tourism department said it was aiming to attract 5 million tourists a year by 2021. The total number of guests who checked into the emirate’s hotels and hotel apartments last year was 850,000. The new R Hotels property would join Ajman’s two mid-market properties, both by R Hotels, and four luxury properties. There are nine one and two-star hotels in the emirate. Oberoi, an Indian hotel operator, and the Mauritius-based Lux Resorts & Hotels group are expected to open hotels in Al Zorah in the next two years. The area is run by the master developer Solidere International.

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“[Ajman Tourism Development Department] has been actively tapping different markets like China, and our hotels are also beefing up our nationality mix with arrivals from Turkey, Germany, Oman and Eastern Europe,” said Sumair Tariq, the managing director of R Hotels. “We are expecting higher room demands in the next couple of years, as confirmed by the opening and announcements of new hotels in Ajman.” Tourists from the Middle East, excluding those from the UAE and the Arabian Gulf, form Ajman’s largest source market, followed by Russia and the CIS states last year, according to the department. Although traffic congestion is among the top challenges for Ajman’s tourism sector, the emirate has signed a deal with Whitelake Consortium to develop an airport in its Al Manama enclave, 52 kilometres east of Ajman city. The Dh2.1 billion Ajman International Airport is expected to be completed in 2018, and it will be capable of handling more than 2 million passengers a year. Source: The National Back to Index

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EMAAR IN TALKS OVER SEPARATION

FROM INDIAN PARTNER, SAYS REPORT

TUESDAY 21 JULY 2015 Emaar Properties is in talks with its Indian partner MGF Development about winding down its 10-year- old joint venture in the country. India’s Economic Times reported that both sides were thrashing out a deal to separate assets owned by the joint venture, which was set up in February 2005 with an investment of about US$1.5 billion by Emaar Properties. The report quoted a source stating that MGF Development’s head Shravan Gupta was “no longer keen to actively participate” in the joint venture. Emaar Properties declined to comment on the newspaper report. “As a matter of policy, we do not comment on market rumours or speculation,” a spokesman said. “India is one of our key markets and we are committed to our projects in the country.” Emaar shares in Dubai did not react to the report, closing unchanged at Dh8.10. Emaar MGF is said to have a land bank of 3,035 hectares and 55 projects under development with a saleable area of 6 million square metres. These have a combined value of about $5bn. According to its most recent financial statement for the three months to March 30, Emaar MGF and its related parties owe $722 million to Emaar Properties. About $513m of this is secured against existing developments. Emaar MGF has faced a number of troubles since its formation. The company had announced plans to float in 2008 with a view to raising $1.7bn through the sale of a 10 per cent stake, but this never materialised. It was also criticised for the late delivery of a $240m athlete’s village that was used for the 2010 Commonwealth Games in Delhi. According to the Economic Times, the joint venture has racked up combined losses of $206m over the past three years, including a loss of $60.3m in 2014. Source: The National Back to Index

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NEW ALDAR PROPERTIES ACCOUNTING METHOD ALLOWS OFF-PLAN SALES TO

APPEAR EARLIER IN RESULTS

TUESDAY 21 JULY 2015 Aldar Properties says it is adopting a new accounting system that will allow it to book revenues from the sales of off-plan developments at an earlier stage. It has adopted IFRS 15, the newest set of reporting standards introduced by the International Accounting Standards Board (IASB). IFRS 15 allows developers to recognise partial revenues and profits from the sale of off-plan properties when contractual targets are achieved. Under the previous accounting standards, revenues and profits from a property sale can only be booked when the transfer of substantial risks and benefits – the handover of the property, that is – to the buyer has taken place. Under IFRS 15, however, Aldar can stagger the revenue recognition from the sale of an off-plan unit over a longer period of time, based on when it completes agreed milestones. For instance, if a contract stipulates that the buyer will pay 10 per cent of the purchase price when a building’s foundations are in place, then it can declare this portion of revenue once the work is done. The adoption of IFRS 15 by January 2017 is compulsory, according to an Aldar spokesman. “However, we have the opportunity to early adopt and believe we are ready to do so now,” he said. Being able to book off-plan sales of properties during the course of their completion would “better reflect the financial performance of the group to the underlying activities”, said the spokesman. “The result is that revenue recognition under IFRS 15 is smoothed out over the construction period.” Sanyalaksna Manibhandu, the head of equities research at NBAD Securities, described the move as “positive news for ¬Aldar”. Under the current system, “developers have lean years and fat years” depending on their position in the property cycle, he said. For instance, Aldar launched three projects worth US$1.36 billion last year, and under the previous accounting regime it would have to pay for the building costs of all the projects before booking sales and profits only when they are handed to the buyers in 2017. “This is not a free-for-all and you have to refer back to the contract,” said Mr Manibhandu. “But depending on what you deliver and what you agree with your counter-party, you can declare some of the revenues before completion.” Last week, Aldar said it had generated sales of Dh1.9bn for new projects in the first half of the year. The developer, which has assets exceeding $10bn, said it began looking at the new accounting standards last November, but it is not the first UAE developer to adopt them.

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Emaar Properties used IFRS 15 when announcing its first-quarter results in May.

Other developers such as Deyaar Development, Union Properties and Damac Properties have yet to adopt the new rules. Source: The National Back to Index

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SHARJAH RENTS FALL AS RESIDENTS

EYE RETURN TO DUBAI

WEDNESDAY 22 JULY 2015 The increased availability of affordable housing in Dubai is reversing a recent trend of people moving to Sharjah and Ajman for cheaper rents. According to Asteco’s second-quarter report for the Northern Emirates, rents in Sharjah and Ajman fell 3 per cent from the previous quarter as vacancy levels rose because of new housing supply and more people found affordable rents in Dubai. Annual rents for a two-bedroom flat on Sharjah’s Corniche range between Dh48,000 and Dh80,000, while a similar property in Ajman would lease for between Dh32,000 and Dh40,000. In Ajman, more new properties have been leased to tenants, which has led to people relocating within the emirate, according to John Stevens, Asteco’s managing director. “We’ve seen a large amount of new stock entering the market, at a time when newcomers to the city were fewer. This resulted in an internal movement, away from older buildings to newer properties, particularly one and two-bed units, as tenants upgrade,” he said. Rental costs in Fujairah, Umm Al Quwain and Ras Al Khaimah remained flat. Although the market for property sales to foreigners has opened up in Sharjah in recent months, apart from the Tilal City development, “few properties have actually been sold due to the high asking prices”, said Mr Stevens. “Where Sharjah is also losing out is that Dubai’s more established real estate market has more transparent, pro-buyer legislation in place,” he said. Tilal City is a Dh2 billion development of 1,855 land plots that have been made available to UAE resident expatriates under 100-year leaseholds. It is a joint venture between Sharjah Asset Management and Eskan Real Estate Development, and features a central mall, 11 schools and kindergartens, and several leisure and healthcare centres. The land plots are being developed in five zones. Heysham Jaziri, the business development director of Tilal Properties, voiced confidence that the master plan would “ensure a huge demand – both rental and sale – that delivers high returns to investors”. Mr Stevens said that the 45,470 square metre Al Noor Island, currently being built by Sharjah Investment and Development Authority, also had the ability to generate interest among potential buyers. The island, due to be handed over this year, will have a butterfly house, a literature pavilion and an egg- shaped arts sculpture. It will be linked via boats to points along Sharjah’s waterfront. “New project announcements and the timetabled completion of developments such as Al Noor Island are vital elements in securing investor interest and confidence in the months to come,” said Mr Stevens. Source: The National Back to Index

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OFF -PLAN DEVELOPERS IN THE UAE LAUNCH MORE ‘BUY NOW, PAY LATER’

OFFERS

THURSDAY 23 JULY 2015 Property developers are slashing deposits and offering deferred-payment plans to attract buyers amid fierce competition for investors as demand weakens. The decline in property prices is encouraging developers to offer payment plans that require smaller upfront sums, with the bulk then being handed over on completion. Aldar Properties recently announced an offer of a 30-70 payment plan on its 400-unit Meera Shams apartment towers on Reem Island, in which customers pay a 10 per cent deposit, followed by four instalments of 5 per cent each in the run-up to handover, when the final 70 per cent has to be paid. Danube Properties has also marketed its latest Glitz3 project with a plan that allows buyers to pay 10 per cent upfront, a further 15 per cent within 60 days and the remainder at 1 per cent per month throughout the construction period. The developer G&Co has announced an even more generous payment plan at its new Dh1 billion Jade at the Fields project in Mohammed Bin Rashid City, which was launched this week. The company, which is owned by the former Menacom chief Joseph Ghossoub, asks investors to pay just 5 per cent of the value of a property, followed by a further 6 per cent every six months over the three- year building programme. A further 15 per cent is payable on completion, totalling just half of the building’s overall value. The rest can be paid in quarterly instalments for three years after the handover. Manish Khatri, the vice president of sales and business development at SPF Realty, which handles sales for G&Co’s projects, said that it had taken “a different approach” with its marketing of Jade at The Fields when compared with G&Co’s recent Dh1.5bn Millennium Estates and the Dh2.7bn Grand Views projects – both of which are in the nearby Meydan masterplanned site and were aimed at the premium end of the market. Mr Khatri said this was a result of market conditions, and that the starting price of Dh2.26m was within the most active segment of the current Dubai market – homes priced between Dh1.5m and Dh3m. “Aside from the fact that you are getting homes at this price, in this location, the key selling point is the payment plan. Effectively, you have six years to pay. This is unheard of, especially for a villa project,” he said. Payment plans have become an increasingly important driver of off-plan properties as the market has cooled over the past year, according to Matthew Green, CBRE’s UAE head of research and consultancy. “The key thing is it allows more end-users to get on to the ladder,” he said. “OK, so you still need to have that 10 per cent [deposit], but it allows you a bit more time to come up with the rest of the money you will need. Most banks will only lend 50 per cent of the value of an off- plan property, so that excludes the majority of end-users.

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“In some ways, it outweighs price per square foot. You can offer something at, say, Dh1,000 per sq ft, but that doesn’t make a difference if you don’t have the equity to get on to the ladder.”

Jonathan Brown, the head of the property consultant Cavendish Maxwell’s Abu Dhabi office, said that developers “are having to make their payment plans more attractive because investors are no longer willing to accept all the risk [of development] being transferred to them”. He added: “Investors are cautious because of uncertainty over future values, the potential negative effects on government spending of low oil prices, and the legacy of what happened in 2009.” He pointed out that the payment plan for Meera Shams was originally a 50-50 split – with half of the consideration due on completion – when the project launched last month.“Aldar has a proven track record of delivering a quality product, so if it has to offer more flexible payment plans, other developers will need to think seriously about how they are to attract investors,” said Mr Brown. Meanwhile, Mr Green said that not every developer was in a position to offer payment plans, as it involved extra funding costs and administration of phased payments. Source: The National Back to Index

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LULU TO OPEN FIVE-STAR HOTEL IN

DUBAI’S BUSINESS BAY

THURSDAY 23 JULY 2015 The hospitality unit of Abu Dhabi’s LuLu Group plans to open a five-star hotel in Dubai’s Business Bay area in October. The 365-room property will be operated by Germany’s Steigenberger Hotels. Twenty14 Holdings will own the property. This will also be its first foray into the hotels sector. The LuLu unit has more than Dh1 billion worth of assets under management in the Middle East, the UK and India. The Frankfurt-headquartered Steigenberger said it would manage a second property in Dubai for another developer, InterCityHotel Culture Village, in 2017 as well as the Steigenberger Hotel Doha Airport Road set to open in Qatar next year. Despite the fluctuations in the hotel sector, with falling average daily room rates across Dubai and a decline in tourists from traditional source markets such as Russia, the emirate is still an attractive destination in the long run, analysts say. “Dubai continues to attract active interest for entrants into the Middle East, and that is unlikely to change any time soon,” said John Podaras, a partner at Hotel Development Resources, a consultancy in Dubai. While the retail industry has been at the core of LuLu Group’s expansions into emerging markets such as Malaysia, Indonesia and India, it has realised that retail and hospitality services complement each other, said Adeeb Ahamed, the managing director of Twenty14 Holdings. The LuLu Mall campus in Kochi, India, for instance, partnered with Marriott Group to open a 274-room hotel. “While the mall-hotel model will be replicated wherever it is feasible, Twenty14 Holdings is looking at partnering with leading hotel groups to introduce world-class properties in key markets like the [Arabian Gulf], Europe and South East Asia,” Mr Ahamed said. “The financial model and investment opportunities in this sector are in line with our capabilities, and we look forward to making key acquisitions in cities across the globe.” The hospitality investment arm of LuLu recently acquired a share in the Sheraton Oman in Muscat, a 230-room, five-star hotel under renovation. Steigenberger, which has a presence in Hurghada on Egypt’s Red Sea Coast, Beijing and Berlin, is also expanding to Istanbul, Munich, Cairo and Mallorca, according to Puneet Chhatwal, the chief executive. While much of its new openings are focused on China, next year it expects a property in Cairo’s Tahrir Square. In 2013, it reported revenue of €502.5 million (Dh2.02bn). In 2009, Egyptian hotel and tour operator Travco Group acquired a 99.6 per cent stake in the 1930- founded Steigenberger Hotels for an undisclosed sum. Source: The National Back to Index

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WASL PLANS TO OPEN 14 HOTELS IN

DUBAI BY 2020

SATURDAY 25 JULY 2015 Wasl Hospitality and Leisure plans to open 14 hotels between now and 2020, and more than double its room capacity to 10,000. The company will focus on the three and four-star hospitality sector, according to Hesham Al Qassim, the chief executive of its parent, the Wasl Asset Management Group, which manages the Dubai government’s property assets. Wasl Hospitality expects to have a total of 29 hotels open by 2020. “We’re trying to balance the market,” said Mr Al Qassim. “We need to make Dubai more affordable. Expo 2020 is coming. People coming to Dubai are still complaining about the accommodation cost. “We need to offer them the right product. I cannot give them a five-star product at three-star rates. I have to offer them the right three-star.” Wasl Properties opened its first three-star hotel, a Hyatt Place at the Wasl Trio project at Al Rigga in Deira, last year. A second Hyatt Place opened on Friday at Baniyas Square in Deira, bringing its total number of hotels in operation to 15. Following this, two four-star Hilton Garden Inn properties – at Al Mina near Port Rashid in Bur Dubai and at Al Muraqabat in Deira – are due to open in October. Wasl Hospitality has deals with the hotel groups Hyatt, Hilton and Starwood, and will continue to develop some five-star hotel sites. The company is building Dubai’s first Mandarin Oriental hotel in the Jumeirah district, and has another flagship hotel lined up for Wasl Tower – the 60-storey building planned for the Toyota Building site on Sheikh Zayed Road opposite the Downtown Dubai district. The tower, which Mr Al Qassim described as a “vertical city” with landscaped park areas, will house 100,000 square feet of offices, including Wasl’s new headquarters, an unspecified number of apartments and a five-star hotel. The tower has been designed by the Dutch architect Ben van Berkel and the German sustainability specialist Werner Sobek. “We have signed the contract already [with the hotel operator],” said Mr Al Qassim, without revealing the brand. “It is a hotel which is very popular worldwide, but it is not really well spread out. They don’t do them in many cities in the world and they only do them in famous cities.” He said Wasl Hospitality would have six new hotels with Hilton in the coming years. “We’re doing the largest Hampton by Hilton in the world – more than 400 rooms – facing Dubai airport terminal two,” Mr Al Qassim said. A four-star and a five-star hotel are also planned for its Wasl Park 1 site between Zabeel Park and the Al Jafiliya metro station in Dubai.

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Mr Al Qassim said Wasl Asset Management would continue to build its two other business arms – Wasl Properties, which has more than 30,000 residential and retail units under lease, and an industrial zones management arm that holds 5,200 plots of land – alongside its hotels business to balance risks. “I come from an accounting background, I am a finance guy,” he said. “I always want to see every pot equal the other one.” According to the hotel consultancy STR Global, hotel occupancy last month fell 15.4 per cent to 63.2 per cent from the same period last year, and revenue per available room dropped 22.9 per cent to Dh365, largely because of Ramadan. Compared with Ramadan last year, occupancy levels this year remained steady despite a 6.2 per cent increase in the supply of rooms. Source: The National Back to Index

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WASL TO BEGIN WORK ON FOUR

MAJOR PROJECTS WORTH DH40BN

SATURDAY 25 JULY 2015 Wasl Asset Management will start work on four major projects with a combined value of Dh40 billion within the next 12 months, says its chief executive, Hesham Al Qassim. The company has completed most of the infrastructure at Nad Al Hammar Gardens – a 6 million square feet site of 115 vacant plots facing Mohammed bin Zayed Road – and will begin work on Wasl Tower, Wasl Park 1 and Wasl Gate in the first half of next year. Wasl Tower will house offices, a hotel, apartments, vertical gardens and a light museum. “This will start in early 2016. It’s a very complicated building. We could have done a normal tower like everyone, but we wanted the vertical city,” said Mr Al Qassim. At Wasl Park 1, which will have 12 towers on a 1.3 million sq ft site next to Al Jafiliya metro station, work on the first phase for four residential towers will begin in the first half of next year. Two of the towers will be 27 storeys high and two will be 21 storeys high. At Wasl Gate near Jebel Ali, the first phase of development of a 15 million sq ft site with its own dedicated metro station will also get under way. The project will house a park the size of the remodelled Al Safa Park, an innovation centre aimed at helping start-up businesses, offices, hotels, apartments, villas and retail units. Work on the first phase, comprising infrastructure works and more than 200 villas, will start at the end of the second quarter of next year. Source: The National Back to Index

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RAMADA N SLOWDOWN FOR DUBAI HOTELS AS OCCUPANCY AND ROOM

RATES DECLINE

SATURDAY 19 JULY 2015 Occupancy and room rates at hotels in Dubai declined last month because of slower demand during Ramadan and an increase in room supply. The occupancy rate fell 15.4 per cent from the year-earlier period to 63 per cent, pushing the average daily room rate down by 8.6 per cent to Dh592.69, according to STR Global. Revenue per available room, a measure of a hotel’s profitability, fell 22.7 per cent to Dh373.53. The supply of hotel rooms last month rose 4.6 per cent from the same period last year, while demand fell 11.6 per cent. Hotels in the region typically come under pressure during Ramadan and look to boost revenues from food and beverage sales. The business slowdown at hotels last month maintained the down trend since January, with room rates failing to keep pace with last year’s average prices. Nevertheless, hotel operators remain upbeat about Dubai. The US-based Wyndham Hotel Group expects to open the 497-room Wyndham Dubai Marina in the last quarter of this year. The world’s largest Tryp by Wyndham hotel, with 672 rooms, is expected to open in the Tecom area late next year. “There is always the potential for increased supply to drive down average room rates. However, this can successfully be offset where the destination is able to generate more demand,” said Michael Zager, the group’s regional vice president for the Middle East and Africa. Mr Zager said: “The UAE has historically been successful in this regard due to the continuous expansion of infrastructure and its transport network, with airlines adding new routes and connectivity. It continues to add new demand drivers such as sports venues, shopping centres and events.” The US operator of mid-market and high-end hotels says demand has been growing for more mid- market hotels with the rise of new source markets such as India and China, as well as other parts of Europe. In March, Wyndham Hotel Group opened a 146-room Tryp property in Abu Dhabi. “Historically, some developers were primarily focused on prestige when it came to their property assets,” said Mr Zager. Today, investors might be looking at optimising returns, or opportunities which offer lower construction costs.” Source: The National Back to Index

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DUBAI’S DAMAC PLANS MORE LONDON PROJECTS TO FOLLOW LAUNCH OF VERSACE-THEMED DEVELOPMENT

MONDAY 20 JULY 2015 Damac Properties says its international arm, in which it holds a 20 per cent stake, is planning “more than one” project in London, where the Dubai-listed firm yesterday launched its first development outside the Middle East. Hussain Sajwani, Damac’s founder and chairman, said he was meeting planning officials in London following yesterday’s launch of the Aykon Nine Elms development. It will feature the interior designs of Italian fashion brand Versace. “We’ll be looking at more projects in London,” said Mr Sajwani. “This is our first, but it’s not going to be the last project that we’re looking at.” This week, Mr Sajwani will visit the office of the mayor of London, as well as local councils and planning officials. “The London market is extremely competitive when it comes to acquiring a site. It is not a simple process,” said Mr Sajwani, adding that Damac was not eyeing any site in particular, although it was always looking for one. Damac would finance the building of the 50-storey Aykon Nine Elms tower with its shares and loans from banks, with which talks were at “early stages of discussion”, said Mr Sajwani. The 360-unit project, overlooking the River Thames, will include a gym, indoor swimming pool and spa. Due for completion in 2020, the development is located in a regeneration area, adjacent to Battersea, which will include the new US embassy in London, which is set to open late next year. Prices at Aykon Nine Elms – which include one, two and three-bedroom units – range from £700,000 (Dh4 million) to £4m. The penthouse units have yet to be priced, while the 90 “affordable” and intermediate-priced units were not included in yesterday’s launch. The units are initially being sold to UK investors, but the developer expects interest from prospective buyers from the Middle East and Asia. However, there are doubts as to whether they are sufficiently affordable for UK buyers. “Demand for units in large-scale developments like Akyon and generally in the new development heartland of Nine Elms is almost 100 per cent international,” said Naomi Heaton, the chief executive of London Central Portfolio, a London-based residential property fund manager. “Despite any UK government mandate for new-builds to be marketed in the UK before being offered out overseas, the price point in these developments is too high to be attractive to UK buyers.” The launch of Aykon Nine Elms comes a week after UK government figures showed that London house prices grew by 4.7 per cent in the year to May, below the national average of 5.7 per cent.

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Niall McLoughlin, a senior vice-president at Damac Properties, said such “sustainable” growth in London property prices indicated the market’s maturity.

“That’s the draw of London for us – a healthy, mature, regulated market,” he said. Aykon Nine Elms is being developed by Dico UK Property Holdings, a unit of Damac International. Damac Properties owns 20 per cent of Damac International, while Mr Sajwani holds 80 per cent. Mr Sajwani said there were further opportunities outside the Middle East, but he had “no plans” to undertake property ventures unconnected to Damac. Property prices in Damac’s home market of Dubai were stabilising, he said, adding that was a healthy sign after two years of double-digit growth. On the currency front, the strengthening of the US dollar, to which the UAE dirham is pegged, has not had a big impact on his business, he says. That could even prompt, for instance, more Indian investors to pump more money into Dubai’s property market. “When they see that [the rupee] is going to go down, they take their money out quicker and put it in dollars, or a currency-pegged property like Dubai,” he said. Damac has worked previously with Versace on a property project in Jeddah, and a collaboration in Beirut is due for completion by year-end. Gian Giacomo Ferraris, Versace’s chief executive, said the partnership with Damac was helping to build Versace’s interior design credibility in international markets. This was important because of Versace’s plan for an international stock market listing. “We want to enter the stock exchange in the next year,” said Mr Ferraris. “It could be London, absolutely. Why not?” 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

+971 4 403 7777 SALES [email protected] Asteco has established a large regional property

sales division with representatives based in UAE, Saudi Arabia, Qatar and Jordan. Julia Knibbs MSc Our sales teams have extensive experience in the Manager – Research and Consultancy - UAE negotiation and sale of a variety of assets. +971 4 403 7789 [email protected] LEASING Asteco has been instrumental in the leasing of many high-profile developments across the GCC.

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Asteco provides comprehensive asset management services to all property owners,

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