News Brief 03

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NEWS BRIEF 03

SUN DAY 15 JANUARY 2017

RESEARCH DEPARTMENT

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REAL ESTATE NEWS

UAE NO ’SUPER-TALL’ TOWERS IN MIDDLE EAST LAST YEAR THERE ARE GOOD DEALS TO BE HAD FOR UAE’S HOTEL ASSETS DUBAI DIRC UNVEILS EASY PAYMENT PLANS FOR ‘MIRDIF HILLS’ DUBAI LAND PRESENTS ITS REAL ESTATE PROMOTIONAL PLAN TO DEVELOPERS NAKHEEL AND CENTARA TO BUILD DH500M BEACHFRONT RESORT WITH WATERPARK ON DUBAI’S DEIRA ISLANDS DUBAI LAND DEPARTMENT CUTS LICENSING TIME FURTHER VILLA SALES IN DUBAI SHOW A Q4-16 REBOUND DUBAILAND TO SEE MOST NEW HOME HANDOVERS IN 2017 DUBAI REAL ESTATE HAD A SLUGGISH YEAR OF FEWER TRADES AND TURNOVER DUBAI PROPERTY AGENTS REMAIN OPTIMISTIC AS PIPELINE SWELLS HOMEGROWN HOTEL BRAND ROYAL CONTINENTAL BANKING ON DUBAI CANAL APPEAL DAMAC CONFIRMS TRUMP TURNED DOWN DH7.3BN OF NEW DEALS DUBAI LANDLORD PERPLEXED AT CROWD OF BACHELORS LIVING ILLEGALLY WITH TENANT MAJID AL FUTTAIM PLANS TO OPEN MASDAR CITY MALL IN 2018 DUBAI RETAIL SPACE RISE MAY BRING RENTS DOWN TO KEEP UNITS FULL, SAYS JLL VILLA SALES IN DUBAI SHOW A Q4-16 REBOUND DUBAI LAND DEPARTMENT CUTS LICENSING TIME FURTHER A CENTRAL STATION IS CORE TO THIS JUMEIRAH DEVELOPMENT DUBAI REAL ESTATE HAD A SLUGGISH YEAR OF FEWER TRADES AND TURNOVER

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REAL ESTATE NEWS

ABU DHABI DUBAI HOUSING MARKET CLOSE TO THE BOTTOM, BUT ABU DHABI HAS FURTHER TO FALL, SAYS EXPERT INTERNATIONAL EGYPTIAN STATE HAS NO BUSINESS IN THE PROPERTY MARKET

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N AKHEEL AND CENTARA TO BUILD DH500M BEACHFRONT RESORT WITH

WATERPARK ON DUBAI’S DEIRA ISLANDS

Tuesday, 10 January, 2017

Dubai-based developer Nakheel and Thai hotel group, Centara Hotels and Resorts, today signed a joined venture agreement to create a 550-room, Dh500 million beachfront resort with waterpark on Deira Islands in Dubai.

Under the agreement, signed in Bangkok by Nakheel Chairman, Ali Rashid Lootah, and Centara Chairman, Suthikiati Chirathivat, the two companies will deliver an upscale resort on a prime stretch of beach on Deira Islands, Nakheel’s new, 15.3 sq. km., world-class tourism, leisure, retail and entertainment hub that will contribute significantly to the Government of Dubai’s tourism vision.

Nakheel’s joint venture with Centara is the latest development in the company’s expansion into Dubai’s hospitality sector and its second international joint venture for Deira Islands.

The first, an 800-room, Dh900 million all-inclusive resort and waterpark with Spain’s RIU Hotels and Resorts, was confirmed in February last year.

As the first Centara establishment in the UAE, the new resort will cover an area of 295,900 sq. ft. Features include a waterpark, dining facilities, business centre, children's club, spa and fitness centre. The resort is anticipated to have a soft opening in 2019 and its grand opening in 2020.

Nakheel Chairman, Ali Rashid Lootah, said, "Our joint venture with Centara cements our commitment to partnering with successful, reputable international hotel brands to bring new tourism concepts to Dubai in line with the Government of Dubai’s tourism vision. Today’s signing is a key milestone in hospitality expansion, and the beginning of a long-term strategic partnership between Nakheel and one of Thailand’s biggest, most popular hotel operators. We look forward to seeing this exciting project come to fruition by delivering a new and unique offering at Deira Islands."

Suthikiati Chirathivat, Chairman of Centara Hotels and Resorts, said, "We are thrilled and proud to be partnering with Nakheel on this joint venture hotel investment that will see Centara Hotels and Resorts operate and manage a distinguished new resort in an exciting new destination. This partnership is a ground-breaking move for Centara as we continue to extend our upscale resort portfolio internationally. This is Centara’s first hotel in Dubai, and the UAE, and represents our arrival in a key gateway city in the Middle East. As we look forward to an even stronger and meaningful business partnership with Nakheel in the near future, we believe that Centara Deira Island Beach Resort Dubai will offer unforgettable holiday experiences to guests through our unique Centara hospitality and service." Source: Emirates 24/7 Back to Index

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DUBAI LAND PRESENTS ITS REAL ESTATE

PROMOTIONAL PLAN TO DEVELOPERS

Monday, 09 January, 2017

Dubai Land Department (DLD) recently shared its latest real estate promotion plan for the current and upcoming year to all of the Emirate’s real estate development institutions at DLD’s headquarter. The performance and achievements of the real estate sector were uncovered through outlining a series of statistics, during a meeting headed up by His Excellency Sultan Butti bin Mejren, Director General of Dubai Land Department and attended by Her Excellency Majida Ali Rashid, Assistant Director General, Head of Real Estate Investment Management and Promotion Center and joined by a number of DLD department heads.

Her Excellency Majida Ali Rashid, Assistant Director General and Head of Real Estate Investment Management and Promotion Center said: “We have an extensive agenda that includes several periodic meetings, held in collaboration with a number of real estate development companies across the Emirate. Every year, we hold a number of forums and workshops for our partners, to inform them of our future real estate promotional plans, gain insights from their respective areas of expertise and to align our efforts with their expectations. These meetings are beneficial to the local real estate sector, as they contribute towards real estate sustainability and improve the attractiveness of offers made by these companies to clients and investors around the world.”

The real estate promotional plans for the current and upcoming years were presented to the attendees who learned about DLD’s achievements based on statistics from the previous year.

DLD believes in the importance of involving developers in real estate promotional activities, including local and international exhibits and specialised workshops, coordinating with them to deliver central DLD objectives.

The purpose of these periodic meetings is to present details of various promotional events, such as exhibits and workshops, to the industry’s developers and partners.

The meeting also addressed the subject of upcoming exhibits in India, China and other countries, with responses provided to all enquiries about future exhibits. Source: Emirates 24/7 Back to Index

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DIRC UNVEILS EASY PAYMENT PLANS FOR

‘MIRDIF HILLS’

Thursday, 12 January, 2017

Dubai Investments Real Estate Company (DIRC), the real estate arm of Dubai Investments PJSC [DFM: DIC], has announced easy and flexible payment plans for property purchases in its ‘Mirdif Hills’ project.

The payment plan includes 30% payment during the construction phase of the project, and the balance 70% payment on handover in Q4 of 2018, making the process easier for buyers with extended payment terms.

As per the plan, a 10 percent down payment is to be made on booking, followed by 5% payment on signing the sale and purchase agreement within the next 30 days, 5% within six months of the booking date, 5% within a year of booking, and 5% within 18 months of the booking date.

The balance 70% payment can be made on handover.

Obaid Mohammed Al Salami, General Manager of DIRC, said: “The payment plan for Mirdif Hills is aimed at offering customers added flexibility and a result of feedback from prospective buyers for ease in payment terms. The demand for Mirdif Hills has been very encouraging and the flexible payment plans are expected to make the buying process even more seamless.”

The Dh3 billion Mirdif Hills, the only freehold project in Mirdif now, is a mixed-use residential, commercial and retail development spread across 3.9 million square feet and equipped with 1,054 apartments – a mix of studio, one, two, three-bedroom apartments and duplex units, a four-star hotel with 116 rooms and 128 serviced apartments and a 230-bed hospital.

Mirdif Hills, being constructed in two phases, is expected to be completed starting Q4 of 2018. Source: Emirates 24/7 Back to Index

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DUBAILAND TO SEE MOST NEW HOME HANDOVERS IN 2017

Wednesday, 11 January, 2017

The mini-communities in Dubailand should see the maximum number of home handovers this year — more than 7,000 units — and with a majority of them in the mid-tier pricing range, according to a new UAE realty update from Cavendish Maxwell. The consultancy reckons it will be followed by Business Bay and Dubai Sports City, both accounting for more than 4,000 units apiece. Dubailand was the leader last year, too, accounting for between 2,800-3,200 units. In all, if developers were to stick to their schedules, a massive 61,000 homes are scheduled for completion this year, although the actuals would be much lower than that. (Of these, 13,000 units were from projects delayed being completed in 2016.) Last year, in Cavendish Maxwell’s estimates, 16,000 units were handed over, slightly higher than the 14,000 plus JLL reckoned was the case.

“Nearly 84 per cent of the total number of units completed in Q4-16 were apartments, with the majority of them located in Silicon Oasis and Dubailand,” states the Cavendish Maxwell report. And, “58 per cent of the units delivered in Q4-16 were projects delayed from the first three quarters of 2016.” (Residential property prices in Dubai declined by over 15 per cent since the highs last recorded in Q2-14.) The sense of optimism permeating the property market in the final weeks of 2016 will need sustenance. Dubai’s estate agents seem to suggest they are seeing enough to hope 2017 can see the momentum being sustained.

According to the survey, 63 per cent of estate agents polled by Cavendish Maxwell believe the property market is going to see an increase in potential enquiries this year, while 55 per cent insist they could see a sale as well.

In terms of where they see prices headed this year, 16 per cent believe it could rise by more than 5 per cent while 52 per cent suggest values would remained unchanged from end-2016 levels.

But for things to pan out in the way they — and the rest of the market — hope, other factors need to play along. That would mean the economy and the job situation seeing marked improvements.

“Residential demand is primarily driven by job growth for expats and redundancies in the high income jobs have kept net job growth at low levels,” said Sofia Underabi, Head of Residential Valuation. “In comparison, residential supply continues to expand, albeit at slower rates than pre-2009 and 2013-14 levels.

“A turnaround will be largely dependent on oil prices and US dollar movement.”

Even in Abu Dhabi, where the property market faced the brunt of the hits the oil-related economy received, the second-half of 2016 saw a slowing down in the rate of decline. “The residential market is expected to remain under pressure from redundancies in the oil and gas sector as well as those likely to result from the mergers of NBAD-FGB and Mubadala-IPIC,” says the report.

“Average apartment prices in Abu Dhabi investment zones have declined nearly 7 per cent since the highs in Q2- 14, and weakened investor demand as a result of global economic trends, uncertainty over policies under the new US President and oil price slump will also impact residential market in the emirate.”

Recent value gains come amid lower transactions in 2016

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According to official data, transaction volumes in Dubai declined nearly 19 per cent in comparison to 2015. But building transactions for November 2016 were higher than those during all other months of 2016 and 2015, suggesting the possible return of investors in sizeable enough numbers.

• In the year to mid-December, there were about 2,361 transactions for completed buildings, with more than 300 transactions in Dubai Marina and International City. Source: Gulf News Back to Index

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A CENTRAL STATION IS CORE TO THIS

JUMEIRAH DEVELOPMENT

Wednesday, 11 January, 2017

For Dubai’s next-generation master-development, connectivity matters as much as the buildings that need to be built. The developer helming the massive multiphase Jumeirah Central will not have it any other way.

“If you look at what makes great real estate value, one of the cornerstones is accessibility,” said Morgan Parker, Chief Operating Officer. “We will enable this part of the city become the most accessible and reduce the need to use a vehicle when coming — or leaving — the location.”

And making Jumeirah Central — with its planned 47 million square feet of gross floor area — accessible, will be no easy ride. The entire site sits within an area bounded by the Burj Al Arab stretch across one length and Shaikh Zayed Road on the other. The shorter bounds on either side are just as densely built.

It is into this urban mix that Jumeirah Central — marked as freehold — is bringing in the city’s future Central Station. “The aim of the Central Station is to alleviate vehicular traffic by promoting public transport ... and public transport is what makes for a successful city,” said Parker. “Take any major railway station in the world, you will see around that enormous activity, which should not be confused with traffic congestion. They inherently create a lot of pedestrian traffic.

“The idea of sacrificing land [for the station] that some other developer might have used as a prime place to build a building is how we are creating value for the entire Jumeirah Central precinct.”

The development was unveiled last September on a site that was earlier marked for the Mall of the World, conceived as the largest ever. (The mall project has now been shifted to the city’s outskirts, and details of its size and scale have not been announced.)

But replacing it with Jumeirah Central only adds to the complexity — the new one is as good as being a mini-city of its own, with its own self-contained residential, commercial, retail and entertainment trappings. The transport elements — crystallised around the Central Station — just makes even more fully functional.

And rather than having the station right at the centre of the development — to feed both sides equally — the master plan has it fronting the side looking onto Shaikh Zayed Road.

“A normal commercial developer would have put it in the middle,” said Parker. “But Dubai Holding is thinking as a city builder rather than a commercial developer — that’s a big difference. We have stopped thinking of Jumeirah Central in the context of its boundaries and instead as new city centre for Dubai.

“When you wear the cap of a city builder, you realise the best place for the station to be is as near to the Metro line. The Metro line is on the eastern side of Shaikh Zayed Road.

“What we are trying to do is leverage the already successful metro stations the emirate has and double down on what is already an established transport node.

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“When we see the plans for the Pink line — that comes from the Arabian Ranches parallel to Umm Suqeim Street and right to the corner where Mall of the Emirates is — we see this wonderful convergence of two metro lines [the existing Red line being the other] in one location.

“That’s what drove us to place the station on that side. Then we said we have to connect our master plan with the Central Station. That’s where you see two tram lines weaving their way through the master plan from the Marina on one side and the flagpole in Jumeirah on the other. They too terminate at the Central Station.”

The station will feed of a populace — resident and transient — that will occupy the development’s 11,000 residences, 8 million square feet of office space, 1 million square feet of retail offerings, and 7,200 hotel rooms. In all, there will be 278 individual residential projects, including three on top of the central station.

Down the line, there could be more. “When we set out to plan, we were very focused on the land beyond the boundary,” the COO said. “The road grid and user profile is premised in a way that one day we could expand the boundary. Every single road of Jumeirah Central could be expanded into the area around it.”

The master plan combines 25 entries and exits into the main grid. “Previous developments came with a big entrance and a huge highway that comes to the front and say, ‘We’ve arrived!’,” said Parker. “But we don’t think that way.

“A city centre does not have any boundaries. A good developer will think about a future beyond boundaries. The whole land economics in all directions beyond us will evolve.”

There will also be a different sort of change to how the city and its denizens move about — Jumeirah Central’s development wants to stretch the envelope on how parking bays are used.

There are 42,000 approved parking bays, with 30,000 being below ground. The 12,000 spaces above ground will be spread across community parking hubs or shared parking facilities. “This can be utilised by multiple user groups,” Parker said. “No longer do we think of car parking as being for one user group, say an office building ... because on Friday and Saturdays that space is not being used.

“Jumeirah Central will provide much needed secondary and tertiary road networks to enable people to take the most direct route to their specific destination, whilst at the same time ensuring there are always multiple ways to access that location.

“Dubai Government is focused on shifting people away from private vehicles and moving them to other forms of transport. To us, public transport is the backbone of a great city.

“The cities that invested in public transport early as a form of infrastructure have benefited. Public transport levels the playing field — they can access jobs and recreation on a democratic basis.” Source: Gulf News Back to Index

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DUBAI LAND DEPARTMENT CUTS

LICENSING TIME FURTHER

Wednesday, 18 January, 2017

The Dubai Land Department has gone in for a serious upgrade to its “Trakheesi” smart system, which will ease procedures for real estate-related businesses to acquire licenses, special permits and brokers’ cards.

The smart card system will be available to eligible staff in brokerage companies, as well as those involved in other sectoral activities at developers, property management companies and timeshare service providers. “The new system provides brokers with smart cards — enabling operations to run more smoothly than ever before, particularly as the cards reduce the need for brokers to visit the Land Department, “said Ali Abdullah Al Ali, Director of the Real Estate Licensing Department.

The benefits provided include special card transactions for brokers, property evaluators and property management companies. These have reduced the processing time from two working days to five minutes, as approval comes directly from the system rather than from Land Department staff.

Customers are able to check and verify the broker card data via the Land Department’s smart application or website. Brokers can complete their transactions through the official website as the system serves all licensing management departments. Source: Gulf News

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VILLA SALES IN DUBAI SHOW A Q4-16 REBOUND

Wednesday, 11 January, 2017

Villa sales in Dubai recorded a bit of a spike during the fourth quarter, suggesting that worst affected residential format could be up for a more sustained turnaround. Villa specific transactions were up 22 per cent in the final three months of 2016, according to ValuStrat data, while apartments gained 35 per cent.

“Transacted sale prices were 4.2 per cent higher than in the second quarter,” said Haider Tuaima, Research Manager.

But yields on residential yields in Dubai continue to be under pressure — they “compressed by 0.1 per cent, as median asking rents were 6.5 per cent lower than Q4-15,” Tuaima added. “But on a quarter-on-quarter basis, they remained broadly flat.”

Based on ValuStrat data, the highest net yields were registered in mid-affordable locations of 6.3 per cent to 6.9.

According to the consultancy, Dubai saw 11,000 units were delivered last year — the second study that has come out this week talking about a plus 10,000 supply during the year. This equates to “33 per cent of the initial estimate at the start of the year”.

As for this year, the pipeline is expected to churn out 75 per cent of projected residential supply, especially in the mid-tier locations of Silicon Oasis, Dubailand, Jumeirah Village Circle, Al Quoz, Dubai Sports City, International City, Production City (formerly IMPZ) and Al Furjan. Thirteen off-plan residential projects were launched in Q4-16, adding more than 2,800 units to the residential pipeline by 2020.

Meanwhile, among prime locations in the city, Downtown Dubai apartment prices continue to show signs of heading back from their lows. They recovered 3 per cent of their value last year. Some potential buyers of ready properties seemed hesitant in closing sales last year, anticipating further drops in prices this year,” said Tuaima. “Not surprisingly, other buyers preferred to go the off-plan route, with a choice of several Emaar projects currently under construction in the area.”

Transactions on ready properties at the Downtown were down 11 per cent annually to 444 units totaling Dh1.04 billion, which is 24.6 per cent lower than in 2015. Asking rents have declined between 3-10 per cent since 2015, with studios averaging Dh78,000 and one-bedroom units at Dh120,000, down from Dh81,000 and Dh125,000, respectively. Source: Gulf News

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THERE ARE GOOD DEALS TO BE HAD FOR

UAE’S HOTEL ASSETS

Wednesday, 11 January, 2017

Now could be an opportune moment for investors to pick up hotel assets in the UAE ... at prices they could be comfortable with.

“The recent performance decline for income producing assets has impacted hotel values negatively,” said Marko Vucinic, Senior Vice-President — Middle East & Africa, Hotels and Hospitality at the consultancy JLL. “There’s been a 10 per cent decline in RevPar [revenue per available room] in Dubai during 2016.

“But owners’ sales-price expectations have remained aligned to previous performance levels, creating a larger bid- ask spread for income-generating assets. Therefore, we expect the investment market to remain highly opportunistic for the medium term.”

Even as the deal-making negotiations on existing hotel properties get prolonged, those with ready plots keep adding to the pipeline. More than ever before, master-developers/private developers holding substantial land banks have taken it upon themselves to build up hotel assets and retain them for their leasing income. This way, they get to “make the most of the well-established developer model,” said Vucinic. “As a result, development projects will continue to remain at the forefront of investment activity in the coming years.

“As such, the pace of new development depends highly on the cost of construction and the availability of financing. The current dip in hotel performance in Dubai, coupled with the low price of oil has triggered developers/investors — those with capital to deploy — to develop hotel projects that are aligned to future market expectations.

“Since the quality mid-market segment is a relatively untapped market compared to the 5-star segment, there is certainly more focus on developing such projects.”

According to JLL’s 2016 UAE real estate review, Dubai saw around 7,000 new rooms being added, which took the total hotel stock to 79,000 keys. The current estimates account for another 14,000 rooms to open up for business before the end of this year.

“The commitment by the government for development of several large-scale tourism projects in the UAE remains on track as the country looks to strengthen its position as a one global destination with multiple ‘mini- destinations’,” said Vucinic.

“Within the private sector, committed projects that have been funded are likely to continue. However, those in conceptual stages are undergoing reviews and rigorous stress-testing to ensure feasibility. Developers and investors are increasingly looking at alternative forms of financing as traditional banks are scrutinising the viability of future development projects.

“As we come closer to Expo 2020, there will be a marked increase in investment sentiment [development projects and income-producing assets] as opportunistic investors look to capitalise on the compressed demand over the six-month period.”

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Source: Gulf News

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DUBAI HOUSING MARKET CLOSE TO THE BOTTOM, BUT ABU DHABI HAS FURTHER

TO FALL, SAYS EXPERT

Monday, 09 January, 2017

The market for residential property in Dubai is now "close to its cyclical trough", but in Abu Dhabi prices and rents may have much further to fall, according to a new report by consultancy JLL.

The firm’s new "2016 Year in Review" report for the UAE property markets argues that the market faced short- term challenges in 2016 as it adjusted to a "new normal" of lower oil revenues, with the rate of growth of GDP dropping from 4.5 per cent in 2015 to just 2.3 per cent last year, and employment growth remaining constant at 1.5 per cent as companies in sectors like banking and oil & gas consolidated staff numbers.

However, it said the medium-term outlook for the UAE economy is much more positive.

"The real estate market in the two largest emirates of Dubai and Abu Dhabi reflect their relative economic strengths," said Craig Plumb, the head of research at JLL Mena.

He said that Dubai’s more diversified economy, and the fact that prices started to fall in the emirate earlier than Abu Dhabi, meant that it is closer to the bottom of the property cycle than Abu Dhabi, where prices may continue to fall further.

Apartment sale prices in Dubai fell by just 1 per cent year-on-year, JLL said, citing figures provided by Reidin. Villa prices actually increased by 2 per cent. In Abu Dhabi, prices of both apartments and villas fell by 11 per cent year- on-year, while apartment rents dropped by 7 per cent and villa rents by 4 per cent.

The report found that 14,600 new homes were completed in Dubai last year – the highest number since 2012, when 16,000 new homes were delivered. These figures included more than 1,500 villas for Emirates staff in Meydan, over 1,000 new homes at Mira in Emaar Properties’ Reem Community and 1,200 apartments at Meraas Holding’s City Walk project.

There are 35,000 units currently scheduled for completion this year, which would bring the -total amount of residential units on the market to 502,000. As in past years, though, JLL said that it expects the actual number to be handed over to be much lower, with deliveries in recent years typically equating to about 35 per cent of forecasted numbers.

In Abu Dhabi, only 3,100 new units were completed, bringing the total stock to 248,000. Some 5,000 units are due for completion this year, but as in Dubai, the actual number delivered is likely to be lower as projects are delayed.

In the office market, supply increases in both Dubai and Abu Dhabi were fairly limited, with rents remaining flat in the former and declining by 5 per cent in the latter. The report said the office market in the capital is facing softening demand, because of a fall in demand from oil firms, a reduction in government spending and mergers between major organisations such as Mubadala and Ipic as well as banks NBAD and FGB.

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Source: The National

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DUBAI RETAIL SPACE RISE MAY BRING RENTS DOWN TO KEEP UNITS FULL, SAYS

JLL

Monday, 09 January, 2017

The Dubai retail sector could be facing oversupply, a leading broker has warned.

The continued construction of new shop space at a time when many retailers are reporting flat sales could lead to a potential oversupply in the Dubai market, JLL said.

The company’s UAE 2016 Year in Review publication stated that 260,000 square metres of retail space was completed in Dubai last year, which is the highest volume handed over since 2010.

This is expected to be exceeded both this year and next, with 350,000 square metres due for completion in 2017 and 367,000 sq metres in 2018.

This would bring the amount of retail space in Dubai up from 3.4 million sq metres currently to more than 4.15 million sq metres.

Craig Plumb, the head of research for JLL Mena, said: "I think the retail market is due for a correction. There’s a lot of potential supply and sales are under pressure."

He said that although it is difficult to gain accurate retail sales data, anecdotal evidence from retailers suggests that many had either experienced a decline in sales or had very slow growth.

"We would suggest the retail market will see some deterioration over the next year or so. What that would look like is hard to know.

"It could just be more vacant shops, or it could be declines in rents as malls try to compete to retain tenants."

He said that more retailers were benefiting from rent-free periods and contributions to fit-outs from landlords, with some willing to negotiate rental deals based on shop sales.

"Outside of the very top malls, the bargaining power is with the tenants."

Retail rents in Dubai and Abi Dhabi remained flat last year, but the amount of vacant space in Dubai edged up from 8 to 9 per cent. In Abu Dhabi, vacant space remained low, at 2 per cent, and no major new space was added – but about 85,000 sq metres is forecast for this year and 382,000 sq metres in 2018.

Meanwhile, the number of new homes completed in Dubai last year also hit a multi-year high of 14,600 – the highest level since 2012.

There are 35,000 homes currently scheduled for completion this year, but Mr Plumb said that, as in previous years, the amount actually delivered will be much lower.

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"The reality is that we’re unlikely to see more than 15,000 delivered this year."

Apartment sale prices in Dubai fell by just 1 per cent year-on-year, while villa prices increased by 2 per cent.

In Abu Dhabi, prices of both apartments and villas fell by 11 per cent year-on-year, while apartment rents dropped by 7 per cent and villa rents by 4 per cent.

In the hotels sector, supply increased by 6,600 rooms in Dubai last year. A further 28,900 rooms are predicted to be delivered in Dubai over the next two years as capacity expands in the run-up to Expo 2020.

Mr. Plumb said that Dubai’s hotels market had performed reasonably well, with occupancy levels remaining flat despite the increase in supply.

"I think there will be a decline in performance but it’s probably not as serious as could happen in retail. The number of visitors is still going up."

David Clifton, the business development director of Faithful + Gould, said that he had concerns about tightening liquidity affecting new projects in the UAE, "especially around real estate and hotels".

"You have declining real estate prices, toughening credit terms and increasing costs of borrowing," he said. "It will drive feasibility of some of these schemes. It won’t necessarily cancel them, but it might kick them down the road for a few years.” Source: The National

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MAJID AL FUTTAIM PLANS TO OPEN

MASDAR CITY MALL IN 2018

Tuesday, 10 January, 2017

Majid Al Futtaim Group intends to open its new My City Centre Masdar mall in Masdar City by the end of next year.

The company, which announced that it was building the mall as part of a proposed Dh30 billion worth of investments in June last year, has said that the new mall will cost Dh300 million to build and will be based right in the heart of Masdar City, with easy access to public transport options including local buses, group rapid transport and, when they are finally built, Abu Dhabi’s proposed light rail and metro systems.

The development will have 18,000 square metres of gross leasable area, including a 5,760 square metres anchor Carrefour hypermarket, a Magic Planet family entertainment centre and a community healthcare clinic. In total, it will have 60 shops.

The single-level mall will also have shaded parking for 430 vehicles on its roof, which will be covered by photovoltaic panels. It has been designed to consume 40 per cent less energy and water than comparable buildings, to meet the Estidama 3 Pearl and Leed Gold sustainability standards.

Yousef Baselaib, the executive director for sustainable real estate at Masdar City, said: "Masdar City offers a ‘greenprint’ for the future, embracing economic, social and environmental principles of sustainability. The new mall is a testament to the emergence of Masdar City as a compelling destination for residents, business tenants and visitors."

Ghaith Shocair, the chief executive of Majid Al Futtaim Properties’ shopping malls business, said: "We are honoured to partner with Masdar City and salute their vision which is aligned with Majid Al Futtaim’s commitment to sustainability." Source: The National

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EGYPTIAN STATE HAS NO BUSINESS IN THE PROPERTY MARKET

Wednesday, 11 January, 2017

The announcement last month that Cairo’s historic Continental Hotel will be demolished should be a wake-up call to ask why the government is in the real estate business to begin with. Does government ownership of so much of the country’s property really serve Egypt?

According to news reports, the Cairo governorate gave the state-owned Egyptian General Company for Tourism and Hotels, or Egoth, its final permission to demolish the hotel last month. The governorate’s secretary general, General Mohamed Al Sheikh, told Al Youm Al Saabi newspaper that Egoth would be required to preserve the hotel’s facade and other original architectural elements.

This demolition order in my mind demolishes one of the main arguments this and other state real estate holders have used to justify their presence in the property market, that by owning historic buildings they are somehow protecting the country’s national heritage.

The Continental Hotel is probably Egypt’s oldest hotel still standing. It was built in 1869 by the Oriental Hotels Company on land just across from the Ezbekiya garden, at the time Cairo’s most upscale neighbourhood. It opened just in time to lodge the dignitaries who Ismail Pasha, the Khedive of Egypt, invited for the inauguration of the Suez Canal.

Originally called the New Hotel, it had three storeys and was surrounded by arcades, gardens and verandas. Across the square from the hotel lay the new opera house, also built for the canal’s inauguration.

At the end of the 19th century the hotel was given an extensive makeover, with the addition of a fourth floor and side arms that extended outwards from either end. A glass canopy was erected over the main entrance and terraces overlooking the street were added on either side, according to The Grand Hotels of Egypt, the book by Andrew Humphreys. When it reopened in December 1899 it was given a new name, the Grand Continental.

The hotel was soon second only to the Shepheard’s Hotel just down the street, attracting some major world personalities. T E Lawrence stayed there in December 1915, not long before he left for the Hejaz to rally Arab fighters against the Ottoman Empire. Lord Carnarvon, who financed the search for King Tut’s tomb, was a regular guest.

He died in one of the rooms, allegedly of Pharaoh’s revenge, in April 1923, four months after he and Howard Carter became the first people to enter the tomb in more than 3,000 years.

The hotel’s demise came after the government took it over in a great wave of nationalisation in the early 1960s. The terraces at the front of the hotel were filled in with shops and the extensive gardens in the back were replaced by an unspeakably ugly shopping arcade.

I had the opportunity of eating dinner in the hotel when I was a student in the late 1970s. The restaurant still had an air of past elegance, with white tablecloths and waiters in white shirts and black bow ties.

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A few years later I had the misfortune of spending a night there. The rooms were filthy and the staff surly. Not too long afterwards the hotel stopped taking guests entirely.

In the 1990s, Egoth did undertake a nice renovation of a portion of the hotel – as chic offices for its own top management. Management eventually moved, leaving the hotel to crumble.

Egoth, and its state-owned parent, the Holding Company for Tourism, Hotels and Cinema (Hotac), own a host of hotels and partial stakes in many others. It has turned management of some over to international chains. Others have been shuttered up, such as Shepheard’s, which was built in a new spot on the Nile after the original burnt down in 1952.

Other state companies with extensive real estate holdings include Misr Real Estate Assets, which owns nearly 700 properties across the country, including 180 of a historic nature.

Many of these are disintegrating for lack of maintenance. Holding companies under the ministry of public enterprises control dozens of department stores and other properties. Ministries, the central bank and the ministry of religious endowments have their own portfolios, as does the army, which owns the bulk of Egypt’s desert.

The government is desperate for money. It is hoping for a boost towards the end of the year as new natural gasfields begin production, as tourism recovers and investments flow into the country after the IMF agreement signed in November.

The sale of property holdings could help to tide it over. But more importantly, the sale of these assets would attract dynamic private sector investors, helping to revitalise Egypt’s main cities.

Perhaps the successful sale starting in 2004 of the government’s stakes in 38 "joint venture" banks could be a model. The sales streamlined the entire industry, putting Egyptian banks back on the map. Source: The National

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DUBAI LANDLORD PERPLEXED AT CROWD OF BACHELORS LIVING ILLEGALLY WITH TENANT

Wednesday, 11 January, 2017

I have an apartment in International City, which I rented out to a family. I clearly mentioned in the tenancy contract that the apartment is only for the use of a family and I also spoke directly to the tenant on this matter. He agreed and signed the contract. After only a week, I found out there are eight bachelors living in the apartment. So I called the tenant and gave him a warning letter, and again he signed in agreement. But he remained living there with the bachelors. After that I sent him a one-month eviction notice from notary public. Despite receiving the letter he stayed in the apartment. The one-year tenancy contract finished on November 30 and still he has not vacated the apartment or renewed the tenancy contract. He is staying without paying anything. What can I do? I am at a big loss and he is enjoying an illegal, free stay in my apartment. AM, Dubai

Up until now, you have done everything in the correct manner. If the tenant has not paid the rent, the correct procedure now would be to send a final 30-day notice of payment to the tenant. After this time has elapsed, if the tenant has still not paid what is owed to you, you must immediately file a case at the rental dispute committee informing them that you have also sent the 30-day notice to pay. They will then take the necessary steps to sort this out.

I bought a flat in Ajman last year and, when purchasing, the owner of the building told me that I have to pay Dh6,000 for the maintenance of the flat and if anything happens they will repair it. They are now saying that the maintenance fee is for the lift and corridor. Until now I have not paid the maintenance fee because a lot of things need to be repaired in my flat. Now they are putting pressure on me to pay the fee. KS, Ajman

As an owner, you are responsible to pay maintenance charges for the day-to-day running of the building. In addition, there should also be a fund (reserve or sinking) for future expenditure to maintain the fabric of the tower for years to come. Presumably you have read through your sale and purchase agreement, which would have outlined the service charges.

My advice would be to call a meeting with the building owner or Management Company that is responsible for the upkeep of the building to explain how unhappy you are at the level of maintenance or lack thereof in your specific apartment.

Not paying your maintenance dues is also not advisable because if everyone did what you are doing the building would quickly fall into disrepair and that would be in nobody’s interest. Perhaps you can request sight of the building’s expenses report with reference to the lift and corridor so that you can get an understanding on the current charges.

I joined my company five months ago and rented an apartment for one year. However, my company has told me that my employment will be terminated within a month. I have paid my rent until next month but I have to give three months’ notice for the tenancy agreement. My landlord will not agree to the short notice. I also have an

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outstanding credit card balance of Dh20,000 that I will not be able to settle. Can I speak to a bank to come up with a better solution? I’m currently struggling to leave with my family. MS, Dubai

In this and other situations, it is always best to face up to the problem head on. I therefore suggest you arrange a meeting with your bank to see if they can arrange some sort of short-term credit for you. Alternatively, seek out a loan from a friend. I would also try to speak with the landlord again, as I’m sure he must have some compassion inside him somewhere. The most important next step is to find alternative employment quickly, otherwise this situation will only get worse for you. Source: The National

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NO ’SUPER-TALL’ TOWERS IN MIDDLE EAST LAST YEAR

Wednesday, 11 January, 2017

For the first time in a decade, the wider Middle East region failed to deliver a "super-tall" tower of more than 300 metres in height, but projections for this year look bright, according to the Council on Tall Buildings and Urban Habitat (CTBUH).

Moreover, in the UAE, which usually leads the region in super-tall buildings, there were only two skyscrapers handed over last year, compared with four in Qatar.

The 2016 Year in Review report by Chicago-based CTBUH highlighted the 235 metre-high Regent Emirates Pearl in Abu Dhabi as the tallest building in the Middle East to be completed last year, but it ranked only joint 27th worldwide. The 212 metre-high The 118 Tower in Dubai was the only other 200 metres-plus building finished in the UAE.

Nine towers above 200 metres were completed across the Gulf last year, which is the same number as in 2015, but "pales in comparison" to the 23 skyscrapers that were built in 2011, according to CTBUH.

Yet the report cautioned against reading that this was "indicative of a swing away" from a desire for skyscrapers in the region.

"Optimistic projections show as many as nine super-tall buildings completing in the Middle East in 2017," it said.

Of these, there are four Dubai towers that are set to be within the 20 tallest buildings in the world when completed this year. These are the long-delayed Ahmed Abdul Rahim Al Attar and Marina 101 towers, as well as Emaar’s The Address the BLVD and Damac Heights.

Chris Seymour, the regional development director for consulting engineer Mott McDonald, said the "flush" of super-tall completions in the region from 2011-13 was projects launched before the 2008 financial crisis that were too advanced to be abandoned.

The subsequent lack of super-talls is due to them becoming more difficult to fund.

"Previously, this region hadn’t been quite so sensitive as to whether numbers stacked up. It’s been a case of build it and they will come, but as liquidity tightened the numbers needed to work."

He said super-tall towers were often not viable as stand-alone projects and need to be in the centre of a much larger land mass to create value around a site, with Burj Khalifa and Downtown Dubai an example. This will limit super-tall sites for developers who can assemble major plots in the future.

Ian Williamson, the managing director of programme management for engineering company Arcadis Middle East, said "we are starting to see a greater maturity" around tall tower projects in the region.

"In a low-price oil world, there is naturally a sharper focus on the business case, economic return and environment effect, which may determine the height of future assets that are built," Mr Williamson said. "In some cases, tall rather than super-tall will make better commercial sense."

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Worldwide, last year was another record-breaking year for the completion of tall towers, with a total of 128 skyscrapers. More than half (66) of these, including 14 of the 20 tallest towers, were built in China.

Despite this, Mr Seymour said he did not expect the UAE to lose its crown as the home of the world’s tallest building any time soon.

"We may see more modest volumes of towers, but in terms of height, the aspiration to be the tallest will always be here. Even if, at some time a taller building is built, I think it would be rapidly followed by a response here. Source: The National

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DAMAC CONFIRMS TRUMP TURNED DOWN

DH7.3BN OF NEW DEALS

Thursday, 12 January, 2017

Dubai-based developer Damac has confirmed that it had a US$2 billion offer to extend its working relationship with The Trump Organization rebuffed by US president-elect Donald Trump.

A spokesman for Damac confirmed that "discussions took place as stated in the media briefing [given by Mr. Trump on Wednesday] but the proposals were declined by the Trump Organization".

"These proposals were for a variety of different properties deals," the spokesman added.

In his first press briefing for 167 days ahead of his inauguration ceremony next week, Mr. Trump announced that his business interests would be held in a trust run by his sons Don and Eric, and added there would be no new foreign deals for the duration of his presidency.

Mr. Trump said that he understood the dangers of a conflict of interest and had rejected a potential deal with Hussein Sajwani, the Damac chairman, whom he described as a good friend.

"Over the weekend, I was offered $2bn to do a deal in Dubai ... a number of deals. And I turned it down," he said.

Mr. Trump also sought to place distance between his organisation and Russia, stating that he had "no dealings … no deals … and I have no loans with Russia.

"I thought that was important to point out," said Mr. Trump. "We could make deals in Russia very easily, if we wanted to, I just don’t want to because I think that would be a conflict."

Mr. Trump has agreed several licensing deals with Damac over the past few years, and had previously agreed a joint venture with Nakheel for a tower on Palm Jumeirah that was never built.

Damac announced its first deal with the Trump Organization in May 2013, when Mr Trump and his daughter Ivanka attended a launch event in Dubai to announce a Trump International Golf Club would be built at the 28 million square feet Akoya by Damac masterplanned community. Work on the course is almost complete and it is set to open in February.

Subsequent extensions have involved Trump-branded villas also being built at Akoya by Damac, and in December 2014 a second Trump World Golf Club venture was agreed at the 55 million Akoya Oxygen development, featuring a course designed by Tiger Woods.

The partnership became slightly more controversial during Mr. Trump’s run for the presidency, when in December 2015 he gave an interview with Fox News stating that he would consider closing down mosques in the wake of terrorist attacks in France a month earlier. In the same week, he also threatened a "total and complete shutdown" of US borders on security grounds to Muslims attempting to enter the country.

However, even at the height of the controversy, Trump-branded signs were reinstated 24 hours after being taken down and Damac chairman Mr. Sajwani has remained on good terms with the president-elect, earning praise from Mr. Trump at a private New Year’s Eve function held at Trump’s Mar-A-Lago resort in Florida two weeks ago."

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Source: The National

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HOMEGROWN HOTEL BRAND ROYAL CONTINENTAL BANKING ON DUBAI CANAL

APPEAL

Thursday, 12 January, 2017

The Home-grown Emirati hotel brand Royal Continental plans to increase its visibility in the country with a property along Dubai Canal ahead of Expo 2020 despite increasing pressure on room rates.

Its first property, the 168-room Royal Continental Hotel Deira opened yesterday. The Sharia-compliant, four-star hotel, plans to focus on guests from Saudi Arabia, India, China, Russia and the UK.

"Dubai is being promoted as a family destination, so it wants to be feasible for families to come, and mid-range hotels are a part of this strategy," said Wajeed Bagwan, the general manager of Royal Continental Hotel Deira.

In December, a peak season for the hospitality sector, the average room rate in Dubai fell 8.4 per cent year-on- year to touch Dh824.58 as new properties continued to come on stream, according to the data firm STR. Occupancy rates, however, edged up 3.2 per cent to 79.7 per cent.

The Royal Continental Deira will be followed be a five-star property on the Dubai Canal waterfront next year. Currently under construction, it will have 133 rooms. When open, it will compete with hotels that are expected to come up in the area that already features the Al Habtoor hotel complex comprising the W, Westin and Ritz- Carlton.

Royal Continental is also developing a 425-room, five-star property in Jeddah and hotel apartments in Al Mafraq, Abu Dhabi, with about 150 units.

Analysts, meanwhile, expect investment in hotels in Dubai to continue despite pressure on room rates in the past year.

"Due to availability of land holdings and an established development model by major players, development projects will continue to remain the forefront of investment activity," said Marko Vucinic, the senior vice president for Middle East and Africa for the hotels division at JLL.

Revenue per average room (Revpar), a measure of a hotel’s profitability, is expected to fall in Dubai, according to Colliers International yesterday.

Properties along Sheikh Zayed Road and near Festival City, Dubai Creek, are expected to record the steepest declines at 10 per cent year-on-year in Revpar. These will be followed by hotels in Dubai Marina at 8 per cent decline. The Palm Jumeirah properties with their waterfront locations are expected to experience 2 per cent declines in Revpar this year.

Royal Continental is among several companies owned by Mohammad Al Menhali, a stakeholder in Abu Dhabi Business Hub and Gulf Resources Development and Investment.

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Source: The National

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DUBAI PROPERTY AGENTS REMAIN OPTIMISTIC AS PIPELINE SWELLS

Thursday, 12 January, 2017

The pipeline of new properties due for completion in Dubai this year continues to swell, while agents are confident that the low volumes experienced for house sales over the past two years is about to pick up, according to Cavendish Maxwell.

The property consultancy’s fourth-quarter residential survey states that 61,000 homes are scheduled for completion this year, with this number swelled by the fact that 13,000 units that were anticipated to be completed last year slipping over into 2017. It also added that "delays are likely to greatly reduce activity" this year.

The company said that 16,400 new homes were handed over last year, with the bulk of these in Dubailand and Dubai Silicon Oasis. It said transaction volumes for sales dropped by 19 per cent year-on-year, citing 14,500 deals between January and mid-December. Average apartment prices dropped by 3.4 per cent year-on-year and villas fell by 3.6 per cent, but the rate of decline slowed towards the end of the year.

"Marginal declines are expected to continue in 2017 and a turnaround will be largely dependent on oil prices and US dollar movement," said Sofia Underabi, the head of residential valuation at Cavendish Maxwell.

She said that residential demand is driven by expat employment growth, but recent red-undancies have kept net jobs growth fairly low.

"In comparison, residential supply continues to expand, albeit at slower rates than pre-2009 and 2013-14 levels."

A poll of agents carried out by Cavendish Maxwell found that 55 per cent expect agreed sales volumes would increase during the first three quarters of this year, while 11 per cent predict a decline and 34 per cent forecast a flat market.

In Abu Dhabi, meanwhile, apartment prices in investment zones dropped by 2 per cent year-on-year, while villa prices dropped by 2.5 per cent. Again, the pace of price falls slowed at the end of the year.

"While the rate of decline in Q4 2016 has slowed in comparison to the first half of the year, the residential market in Abu Dhabi is expected to remain under pressure from redundancies in the oil and gas sector, cuts at key employers such as Etihad and job losses likely to result from the mergers of NBAD-FGB and Mubadala-Ipic," said research manager Manika Dhama.

About 1,900 new homes were handed over in investment zones in the emirate last year, and a pipeline of 8,300 are due for completion this year.

A survey published this week by Al Masah Capital stated that it expects 57,000 new homes to be completed in Dubai between the last quarter of 2016 and the end of 2018, with 53 per cent of those due for handover this year.

"Going forward, this supply is expected to be absorbed as the economy gains momentum and the city sees an increase in its expatriate workforce due to upcoming events such as Expo 2020," it said.

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Source: The National

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DUBAI REAL ESTATE HAD A SLUGGISH YEAR OF FEWER TRADES AND TURNOVER

Thursday, 14 January, 2017

Dubai’s real estate sector experienced a slowdown in 2016 as fewer transactions took place during a year of sluggish property prices.

Figures from Dubai Land Department on Saturday showed that overall transaction value in the city fell by nearly 3 per cent, to Dh259 billion from Dh267bn in 2015, even as the number of transactions fell to 60,595 last year compared with 63,719 deals a year earlier.

A report from the property consultants Cavendish Maxwell last week showed that transaction volumes for sales in Dubai dropped by 19 per cent year-on-year, citing 14,500 deals between January and mid-December.

Average apartment prices dropped by 3.4 per cent year-on-year and villas fell by 3.6 per cent but the rate of decline slowed towards the end of the year. But brokers are confident that sales are about to pick up following two years of declines.

DLD’s report showed that land sales and mortgage transactions were valued at Dh193bn from 15,994 transactions, a level similar to last year’s Dh194bn, but from 16,751 transactions.

Dubai’s real estate sector attracted 22,834 investors from 136 countries, who poured in close to Dh44bn. Indians ranked the highest in terms of volume and value – 6,263 investors bought Dh12bn worth of property. Buyers from the UK funnelled in Dh5.8bn and Pakistani nationals contributed Dh4.4bn. GCC investors, meanwhile, contributed Dh35bn.

Sultan Butti bin Merjen, the director general of DLD, said that Dubai’s real estate market was moving towards sustainable growth and that the market will "gain further momentum in 2017, signalling an upward trend for sustained growth in the run-up to Expo 2020".

The report also showed that that the number of brokers had increased to 5,933 during the past year and that 2,285 brokerages were active in 2016. Source: The National

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With over 30 years of Middle East experience, VALUATION & ADVISORY Asteco’s Valuation & Advisory services team Our professional Advisory services are conducted by brings together a group of the Gulf’s leading suitably qualified personnel all of whom have had extensive Real Estate experience within the Middle real estate experts. East and internationally.

Asteco’s network of offices in Abu Dhabi, Al Ain, Dubai, Our valuations are carried out in accordance with the Northern Emirates, Jordan and the Kingdom of Saudi Royal Institution of Chartered Surveyors (RICS) and Arabia not only provides a deep understanding of the local International Valuation Standards (IVS) and are markets but also enables us to undertake large undertaken by appropriately qualified Valuers with instructions where we can quickly apply resources to meet extensive local experience. Clients requirements.

Our breadth of experience across all the main property The Professional Services Asteco conducts throughout sectors is underpinned by our Sales, Leasing and the region include: Investment teams transacting in the market and a wealth of research that supports our decision making. • Consultancy and Advisory services John Allen - BSc, MRICS • Market research Director - Valuation & Advisory • Valuation services

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