Insight #2

Welcome Global

Welcome to Insight #2. Talk of bubbles, forward guidance, central bank Ramadan Kareem. In our second edition of Insight interest rises and inflation indicates that the we once again take a look at the global economy has entered recovery mode. global economy and the Middle Preparations are now being made at macro- East markets with an outlook for the remainder of 2014. economic and political levels to prepare markets Our focus this quarter is on and enterprise for growth. residential property, a very hot topic in the UAE currently. Most recently, at the annual Mansion House dinner in London, Mark We also include our commodities Carney, the Governor of the Bank of England, mentioned that a rise price analysis to keep you up to in interest rates “could happen sooner than markets currently expect”. date with the latest prices. Janet Yellen, Chair of the US Federal Reserve, appears more dovish by maintaining her view that interest rates in the US will not rise until Page one mid-2015. She will, though, be keeping a weather eye on US Consumer / Global Price Inflation (CPI) data, equity prices, production output and unemployment. The Federal Reserve continues to taper their pace of Page three purchasing US Treasury Bonds down to USD35bn per month beginning / Qatar from July.

Page four Current forecasts indicate stronger signs of economic recovery in the / UK with GDP growth rate (compared to the same time last year) at 3.0% (The Economist). However, the impact of Mark Carney’s comment Page four triggered market speculation on interest rates with a corresponding / Kingdom of Saudi Arabia increase in the value of sterling to GBP1 : USD1.71. A stronger sterling has a direct impact on the competitiveness of UK exports, on which Page five the UK’s economic recovery has been reliant. Likewise, increased / Commodities price analysis interest rates have a direct impact on the cost of capital, whereby as companies emerge from the recession and look to invest for the future, Page seven this increase will test current market sentiment and confidence. / Focus: Residential property Further concerns have arisen over the rise in house prices in the prime Page thirteen and super-prime segments of the London and home counties market, / Currie & Brown offices fuelled by foreign investment and domestic credit. Prices in these areas have increased by an average 18.7% in the last year, compared Currie & Brown to current CPI rates of 1.5%. The average UK house price is now ten www.curriebrown.com times the UK annual salary. Given such a peak, the context of Carney’s [email protected] comment can be better understood.

Insight / Page one Insight This last quarter has seen the demographic lag that the a large component within the European eyes focused on the majority of these economies face Chinese domestic economy and annexation of Crimea and the will have a negative impact on a key driver for growth, along continued geopolitical instability sustained levels of growth. For with an increase in utility and in Ukraine. Gazprom, the Russian the majority of Western developed civil infrastructure. Largely credit gas production and supplier, economies, growth forecasts in driven, the reduction in State has since cut off gas supplies to 2014 will be tempered in 2015 to support will inevitably give rise to Ukraine, although this does not an average of 2% whilst CPI will some failures in this area of the directly impact on the onward steadily increase from current market as the continued process supply to Europe. This move levels to 2.4%. of modernisation and increased has led to continued anxiety levels of maturity are achieved. across the region and Russia’s The Chinese economy continues The level of foreign currency suspension from the G8. to play a significant role in the and commodity reserves held by recovery of western economies. China provides resilience and In an unprecedented move, the The recent visit to London by underpins their modernisation European Central Bank (ECB) China’s premier, Mr Li Keqiang, programme. recently cut deposit interest rates brought a trade delegation of over to -1.0%, effectively charging 200 Chinese companies looking Geopolitical uncertainty continues banks to deposit funds. Likewise, to invest in Britain with funds in to restrain growth in certain the ECB dropped its main lending excess of £18bn. areas of the Middle East and rate from 0.25% to 0.15% in an sub-Saharan Africa. Alongside attempt to stimulate the European China’s GDP growth, currently economic development comes economy and impact a marginal sitting at 7%, continues to demand continued expansion of the inflation rate of 0.5% in the supplies from other economies economic and social divide. eurozone. and as the second largest global Whether stoked by core religious economy, it cannot be ignored. beliefs or tribal differences, the Germany is carrying the eurozone However, on the 25th anniversary resurgence of civil and terrorist with economic growth of 3.3% of the Tiananmen Square uprising, activity in Iraq, Syria, Afghanistan at an annualised rate. With the Western leaders continue to and Kenya has had a profound majority of German exports grapple with human rights issues impact on social and economic being taken up by the rest of the within China as well as border development. In addition to the eurozone, its current account disputes with neighbouring human toll, the most recent unrest deficit (standing at 7.5% of Vietnam, Japan and Korea. As the in Iraq has had a direct effect on GDP) is being counter-balanced Chinese continue to modernise the price of oil, which will have by strong tax revenues from their economy, increased volatility an unavoidable impact on those increased employment levels. is being experienced as the oil-dependent economies around However, as with other developed State reduces its stake in the . economies, low employment market with a corresponding levels need to be matched by rise of private sector enterprise With global demand requiring high levels of productivity in increasingly responding to market increased output from the oil- order to maintain growth and demand. producing states, significant competitiveness. With an ageing investment is being made in those population and falling birth rates, Property, in particular, has been countries to maintain the supply

Insight / Page two Insight equilibrium while also delivering the global economy recovers, the the way for the possibility of a re- greater confidence to enhanced Middle East and Africa wrestle vote and subsequent withdrawal budget surpluses. with political and social reform and as a host nation. Asia begins to exert its influence. So what does this mean Regardless, like the majority of for the remainder of 2014? Qatar other countries in the Middle East, Qatar has a long-term National The global economy continues to Global attention has centred Vision 2030 plan. This plan clearly evidence signs of recovery and a on Brazil and the FIFA World sets out Qatar’s ambition to be move to growth being delivered in Cup. Once the tournament has “an advanced society capable of the more stable and predictable progressed through the group sustaining its development and mature economies. stages to the final match, to providing a high standard of living be played in Rio de Janeiro for all of its people”. Supporting Asian economies in which on Sunday 13th July, and the this objective are the four key manufacturing exports support winner's name has been engraved pillars of economic, social, human continued domestic investment on the base of the trophy, and environmental development. with a highly productive workforce attention will revert to Joseph will see greater potential for Sepp Blatter, the FIFA president. In common with other Middle East improvement in the second half countries, Qatar is significantly of 2014 and into 2015. Likewise, The hosting of the World Cup investing in civil and social the continued emergence of in 2022 was awarded to Qatar infrastructure. In synchrony with Latin America where Peru, Chile, in December 2010. As the host the requirements of Qatar 2022, Ecuador, Bolivia, Uruguay and nation, Qatar has continued to the development and design Paraguay will continue to improve develop its civil infrastructure and of internal highways and road their core economies contrasts facilities associated with Qatar connections to Bahrain continue with continued social disparity 2022 including the development along with significant domestic in Brazil, despite the World Cup of eight stadiums. In addition to road and rail transportation. effect, and Argentina, where ensuring world-class facilities, With nominal GDP forecast in credit defaults in 2001 and now the environmental challenge of 2014 to be around $200 billion a US Supreme Court ruling will staging a global football event (IMF), ensuring Qatar’s leading eliminate opportunity for access to in the Gulf summer heat has position globally as the country foreign credit markets. provided significant obstacles with the highest GDP per capita, to overcome and resulted in a it is strongly felt that domestic Geopolitical instability mixed with plethora of innovative solutions to investment to deliver the National religious fundamentalism has ensure both player and spectator Vision 2030 will occur irrespective brought uncertainty to the Middle comfort. of the FIFA World Cup 2022. East and embroiled the major western economies in further However, a recent UK press political debate to determine their investigation has heightened the own next steps to secure peace ongoing FIFA investigation into and stability within the region. alleged corrupt practices and consequently impacted on the Tensions therefore abound as global perception of Qatar, paving >>

Insight / Page three Insight United Arab Emirates BETWEEN 2013-2021 In a similar vein, ’s Expo 2020 plans will sit alongside comparable domestic 227,149 development as a direct result NEW JOBS 25 of the diversification of the 40% MILLION UAE economy away from its PEOPLE core hydrocarbon base. Dubai contributes the majority of non- TO VISIT oil GDP to the UAE economy and within this, travel, tourism, retail and hospitality are core TRAVELTOURISM AND OF EMPLOYMENT IN components. Emirates Airline and Dubai Airports alone deliver 75% FROM OVERSEAS 24% of Dubai’s GDP. The Dubai Statistics Centre reported that growth in Dubai’s GDP was 4.6% in 2013. This was driven, for the third year running, by hospitality. As Dubai continues to grow and sustain its “safe haven” status position within the Middle East, other sectors will thrive, particularly real estate. US$1.8 BILLION Measures have already been ON INFRASTRUCTURE taken to exert control in this sector to avoid overheating but while Kingdom of Saudi the population of Dubai continues Arabia to grow as a consequence of economic expansion, continued The Kingdom of Saudi Arabia, (OPEC's) ability to increase pressure will be exerted and in addition to exerting significant production accordingly, of which may be impacted by expatriate political influence on the current KSA is a leading member. At their movement from nations such crises in Iraq and Syria, continues meeting in Vienna earlier this as Qatar to satisfy market to thrive economically. As the month, OPEC agreed to maintain demand. Indeed, the IMF recently Kingdom’s petroleum sector supply levels at 30 million barrels highlighted the need for Dubai to accounts for 80% of budget per day (30.0 mb/d), which effectively phase its development revenues, 45% of GDP and 90% equates to approximately 33% of of mega-projects over the coming of export earnings, instability in global demand, while taking steps years to ensure stable economic the oil supply market is being to ensure stability in the market if growth and mitigate acute balanced by the Organisation of geopolitical matters should impact inflationary pressure. the Petroleum Export Countries on global supplies.

Insight / Page four Insight Commodities price analysis

2014 Commodities Unit Q1 Q2 Q3 Q4 Non-ferrous metals Aluminium alloy US$/tonne 1,845.00 1,926.73 Aluminium US$/tonne 1,730.83 1,794.33 Copper US$/tonne 6,927.50 6,802.00 Lead US$/tonne 2,080.67 2,807.50 Nickel US$/tonne 15,281.67 18,510.00 Tin US$/tonne 22,870.00 22,983.33 Zinc US$/tonne 2,043.83 2,087.67 Steel Reinforcing bars US$/tonne 574.17 580.00 Reinforcing bars (Dubai local) AED/tonne 2,556.33 2,354.67 Steel beams - channel US$/tonne 654.17 631.67 Hot rolled plates US$/tonne 568.33 568.33 Cold rolled coils US$/tonne 701.67 650.00 Prepainted galvanised steel, 0.35 US$/tonne 907.50 871.67 Stainless steel HR coils 304 base US$/tonne 2,408.33 2,858.33 Energy Crude oil US$/barrel 103.62 106.55 Diesel (Dubai only) AED/gallon 13.75 14.01 Cement Cement AED/bag 3.50 3.45 Concrete (local supplier) AED/m3 252.00 255.33 Cement (government cap) AED/m3 360.00 360.00 Rubber Rubber US$/kg 241.36 251.18

■ Non-ferrous metal prices derived from London Metal Exchange, whereas steel prices derived from Middle East steel price indications; all based on average prices for the month. ■ The price of rubber derived from International Rubber Board, based on average prices for the month. ■ All prices for commodities are based on bulk quantities, cash trade, US dollar. ■ Where ranges have been provided, an average price has been assumed for the purpose of comparison. ■ The rate for beams - channels has been derived from Far East/Europe/India market. ■ Cement prices derived from UAE local supplier. ■ Crude oil derived from light crude brent, US market. ■ Diesel rates are from Eppco. ■ Concrete rates AED/m3 based on the average price of concrete 45/27 from four UAE suppliers. ■ Reinforcement bars are taken from four UAE suppliers. ■ Cement rates AED/tonne based on the Dubai Government cap imposed in 2008.

Insight / Page five Insight Commodities price analysis

Crude oil (2006 - 2014) Cement (2006 - 2014)

30.00

120.00

25.00 105.00

90.00 20.00

75.00

60.00 AED/bag 15.00

US$/barrel 45.00 10.00 30.00

15.00 5.00

-

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 -

2006 2007 2008 2009 2010 2011 2012 2013 2014 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2006 2007 2008 2009 2010 2011 2012 2013 2014

Diesel (2009 - 2014) Dubai only Steel (2006 - 2014)

Reinforcing bars 16.00 5,000.00 Steel beams - channel Hot Rolled Plates 14.00 Cold Rolled Coils 4,000.00 Prepainted Galvanised Steel, 0.35 12.00 Stainless Steel HR Coils 304 Base

10.00 3,000.00 AED/gallon 8.00 US$/tonne

6.00 2,000.00

4.00

1,000.00 2.00 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2009 2010 2011 2012 2013 2014

- Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2006 2007 2008 2009 2010 2011 2012 2013 2014

Low non-ferrous metals (2006 - 2014) High non-ferrous metals (2006 - 2014) 4,500.00 50,000.00 Lead Copper 45,000.00 Nickel 4,000.00 Aluminium Alloy Tin Aluminium 40,000.00 3,500.00 Zinc

35,000.00 3,000.00 30,000.00

2,500.00 25,000.00 US$/tonne 2,000.00

US$/tonne 20,000.00

1,500.00 15,000.00

1,000.00 10,000.00

5,000.00 500.00

- - Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2006 2007 2008 2009 2010 2011 2012 2013 2014 2006 2007 2008 2009 2010 2011 2012 2013 2014

Insight / Page six Insight FOCUS: market totalling 365,000 units expatriate population of Dubai is Residential property according to JLL, anticipated maturing, with more families being additional supply will increase just based in the emirate. The last residential sector peak over 9% in the next two years, in Dubai was recorded in the equating to an additional 39,000 With economic growth third quarter of 2008. Over the units. Clearly there is a mismatch comes increased business last six years, the residential in supply and demand which will confidence. According to the market has only recently shown continue to fuel growth. Business Confidence Survey sustained signs of growth, having 2014, undertaken by Dubai’s bottomed out in 2011. However, Abu Dhabi, as the capital of the Department of Economic based on recent reports, the UAE, has a slightly different Development, business Dubai residential market has challenge with more stock in the confidence has risen 19.8% in 12 experienced growth in both sales market, currently assessed at months, with the index rising 22.4 and leasing of 33% and 23% 238,000 units with a further 1,700 points to 135.5 in the first quarter respectively. This was perhaps planned for completion in the next of 2014. Maintaining its safe- sufficient justification for both the two years with a general level of haven status within the Middle Central Bank of the UAE and over-supply. East and buoyed by securing the Dubai Land Department to Expo 2020, investment in introduce measures to cool this Interestingly, the demographics construction, real estate and the market, at the end of 2013. of the UAE are also changing, services sector will be significant particularly amongst expatriates. over the coming five to six years But what has been driving this Evidence of this movement can and Dubai continues to diversify return to growth? Firstly, the UAE be seen in the growth of junior its economy away from oil. The population is forecast to increase school (1st grade to 5th grade) demand for residential property, by approximately 200,000 in pupil population increasing whether purchased or leased, will 2014, with 50% of that population by over 16% over the last two continue to grow. anticipated to reside in Dubai. The academic years. This is combined economic growth of the emirate with an overall increase in school Knight Frank, in their Wealth in itself provides support for these pupil population of 8.68% (Dubai Report 2014, indicates that Dubai levels of population growth. With Statistics Center). The simple and Abu Dhabi are listed seventh current residential stock in the correlation is that the general and eighth respectively in the

2013 2014 100,000 TO RESIDE IN DUBAI

100,000 TO RESIDE IN THE million2.1 2.3million OTHER EMIRATES

Insight / Page seven Insight global list of fastest growing residential values. Dubai, however, still lags behind other global cities when it comes to overall value, where USD1m can buy you 146m2 of luxury residential property compared to 25.2m2 in London (third) or a mere 15.0m2 in Monaco.

But is this any different from the boom in 2007/2008? Learning the lessons and recognising the measures that need to be in place in order to avoid a property bubble, the Central Bank of the United Arab Emirates announced a series of mortgage caps in October 2013, which have now been enacted. The UAE Federal Mortgage Caps (maximum loan to value) can be summarised as:

Property over Property under AED5 million AED5 million UAE UAE Expatriate Expatriate National National First home 70% 65% 80% 75% (owner occupier) Second home or 65% 60% 65% 60% investment property

Off-plan purchase 50% 50% 50% 50%

Source: Central Bank of the United Arab Emirates

In addition to determining a more prudent debt strategy to fund property purchases, the Dubai Land Department has also increased the fee for registering property transactions from 2% to 4%.

Market conditions

Within Dubai, average sales prices in the residential sector have risen 33% year-on-year (Y-O-Y) with rental levels also increasing 23% Y-O-Y, according to JLL. These values are confirmed by REIDIN through their General Residential Sales Index, which improved 30% Y-O-Y. REIDIN indicates that apartments outperformed villas. Does the younger demographic expatriate population of Dubai prefer apartment living to more expensive out of central business district villa-style accommodation?

Asteco, another leading real estate agency in the UAE, indicates that apartment sales in Dubai top out at values around AED32,300/ m2 in , while in Discovery Gardens the purchase price of a property is more likely to be in the order of AED10,225/m2.

Insight / Page eight Insight However, high-end luxury villas appear to be in place and developments (communities can be purchased at a peak rate hopefully market dynamics will of villas) quickly taking shape of AED43,050/m2 on the Palm ensure that the competitive nature across the UAE. Each of these while the same built-up of the Dubai housing market comes with various risks and area will only cost AED 11,840/m2 will work in equilibrium with its opportunities. in the Green Community. economic growth. Unlike high-rise, villa Propertyfinder.ae reports that Vertical vs horizontal developments cover huge the three most frequently visited swathes of land. This type districts online within Dubai for In high-rise properties it is likely of development is often property purchases are Dubai only two contracts would be misconceived as more practical Marina, Downtown Dubai and entered into for construction: and quickly achievable, but . These three enabling works and main works. don’t be fooled. UAE land districts alone account for 37.43% Enabling works normally include has many unknowns, and the of areas searched. Likewise, this site clearance, excavations, more land there is the more list remains the same for those piling and shoring works and unknowns that there are that searching for leased properties commencement of dewatering. can cause devastating effects (32.47%). The same provider The main contract works include on project costs and time. Many indicates that the overwhelming the construction and installation undeveloped land banks have majority of their website users of basements, upper floors, walls, existing services running through (66.22%) are searching for MEP systems, façade, finishes, them, above and below ground, rental properties in the range of etc. It is important that clear which don’t always appear on AED60,000 – 200,000 per annum. delineation is made between historic data records. Imagine the each contract (enabling and impact of your project if you need Is the growth sustainable? main works) so as to not miss to relocate a sewerage system, any scope, or, more expensively, armoured cables, substations, or Standard Chartered Bank overlap of works that both overhead mains electrical lines. published a piece of research contractors end up undertaking. The cost and time implications in September 2013 titled ‘Dubai It is also critical to define each associated with such issues housing: fundamentals not contractor’s liability and apportion should not be underestimated. speculation’. Acknowledging the it accordingly. drivers for sustainable growth Horizontal developments, unlike – economic growth, shifting Having the design team procure vertical, can be completed demographics and business and tender the enabling works and handed over in phases. confidence – as well as improving early allows main works Sometimes more than one regulations that are in place, they design to be fully completed contractor can be contracted to see a different outcome compared (and approved), tendered and carry out the works. to the bubble of 2008. With key appointed, thereby reducing risks components of the economy for post-contract variations and It is important to understand (with and growth being ‘pulled by overruns. the help of robust contractor real demand for housing from prequalification) which contractors end-users rather than property In contrast to high-rise properties, are capable of undertaking large speculators', the ingredients there are large horizontal villa developments. Contractors

Insight / Page nine Insight must be able to demonstrate that For apartment living, building taller considerations should be factored they have the requisite labour is another approach to improving into both design and marketing, force to complete large quantities aspects as well as privacy. The such as the use of feng shui when of villas simultaneously (unlike prime districts of Downtown trying to attract Chinese buyers. a high-rise tower where limited Dubai, and Dubai resource is required to construct Marina all bear testament to that. Good architecture and clever floor-by-floor). Contractors also The increased costs of building layouts that provide flexible need to have the expertise to tall can be recovered in sales living are sought after by many manage and co-ordinate the premiums, provided that planning ultra-high net worth individuals. infrastructure works (roads, paths, obstacles can be surmounted. Generous space and volume lighting, sewerage and electrical - with a minimum 2.6m clear connections, etc) to ensure timely Floor plate size and, specifically floor:ceiling height - are key completion. in this region, external cladding factors, as are a high level of need due attention. A minimum specifications and good detailing. Phased handover of buildings floor plate of 800m2 will assist in Innovative features, such as those brings other commercial optimising development ratios of noted above, will help to push advantages to developers, such net:gross and wall:floor ratios. price levels up. as staged payments and early Likewise, optimising the horizontal income from the completed structure and service zones Establishing a marketing suite at properties as construction of other will also assist in facilitating an the earliest opportunity provides parts of the wider development additional floor of accommodation an excellent forum to test and continues. within the overall building hone layouts and specifications, envelope. Alternatively, this and catch the latest trends Design considerations additional space can be added to ahead of finalising the fit-out. In the floor:ceiling heights, creating terms of audiovisual design and Location, location, location – the a greater sense of space and specification, how far do you go mantra for any residential property volume, translating to additional with technology that advances so development is equally as valid in value and higher sales premiums. quickly from year to year? The Dubai as it is in London. As new level of home automation required districts are developed along with Marketing differs from one purchaser to the associated transportation links next. Mobility and ease of virtual and other social amenities, new Marketing needs to be carefully communication through seamless pockets of value will appear on targeted. For example, purchasers connectivity is being driven across the developing cityscape of Dubai. from South-East Asia are Dubai, as it gains momentum as a usually familiar, and therefore 'smart' city. That same expectation Adjacency to water and very comfortable, with high-rise is found within residential panoramic views all add premium living. However, some European developments. value to a development. However, purchasers may feel unconnected evidence of quality of design, from the local environment if The design of the cooling construction and specification is the apartment they are viewing systems needs to take into also starting to be required by is too high up, and might be account purchasers’ lifestyles. purchasers and tenants. dissuaded from buying, no matter As can currently be seen across how stunning the views. Cultural a number of properties in Dubai,

Insight / Page ten Insight properties may be left vacant for (or carpark) to apartment door, a negative impact both on the a number of months in a year and via landscaped gardens, main licensee and the developer and therefore boost functions should entrance, lift lobbies and corridors, diminish the overall value of the be designed into services for should mirror the opulence of development. when the occupier returns. Peak the apartment itself and can periods can occur, for example, contribute to achieving the Quality, quality and quality around Dubai Shopping Festival. sales premium. Most residential developments are expected to Across the various grades of In sustainability terms, there has provide exclusive facilities such residential development, whether been a drive to place monitoring as 24-hour security/reception, apartments or villas, both the points on each of the services to gyms, spas, swimming pools and reputation of the developer, its measure consumption. Where the small retail or food and beverage design team, construction partner services are centralised, this is facilities. and maintenance company linked back to the service charge. will determine the quality and However, where the services are Branding ongoing value. The residential not centralised, there does not market within the UAE has an appear to be a need by many Sales prices can increase existing supply of product that occupiers or tenants to monitor through association with brands, remains unoccupied or not sold. consumption beyond payment of or through the use of partners With the increased demand for the bill. Installing these monitoring such as signature architects, housing already primed and points adds to fit-out costs but is interior designers and fashion being realised, quality of design, not reflected in any enhancement houses, such as Foster + construction and maintenance to the sales premium. Partners, Armani, Bvlgari, Trump should be the new benchmark and Versace. Even celebrities for Dubai as it moves into this Sustainability measures are not such as Jade Jagger and Elle new era of development and high on the list of requirements Macpherson are dipping their expansion. So if location is of many purchasers or tenants, finely pedicured toes into this field the main driver, the flight to with the exception of those from and collaborating with developers quality should be underscored the USA. However, with a clear in establishing brands for prime and the first element of the focus on utility premiums within residential schemes. brief developed in accordance the UAE, as a consequence with the target occupier of the of the natural environment, A prime residential scheme development. education and raised awareness that has a recognised brand (in addition to competition across can provide confidence to the utility providers), such systems purchaser - especially those from could lead to a greater sense overseas - in respect of the quality of responsibility towards the and design. As a note of caution, environment. this confidence and trust needs to be translated into the finished Convenience and article and evidenced in the accessibility actual design, specification and construction quality. Using names The journey from pavement as branding rights only will have >>

Insight / Page eleven Insight Construction costs

MENA residential construction costs monitor 2014.

Residential villas

Medium specification USD/m2 GFA Low High Abu Dhabi 1,210 1,660 Dubai 1,210 1,660 KSA 1,140 1,470 Qatar 1,390 1,910

High specification USD/m2 GFA Low High Abu Dhabi 2,130 2,760 Dubai 2,130 2,760 KSA 2,020 2,620 Qatar 2,470 3,190

Residential apartments

Low-rise to mid-rise USD/m2 GFA Low High Abu Dhabi 1,180 1,620 Dubai 1,180 1,620 KSA 1,090 1,490 Qatar 1,320 1,780

Mid-rise to high-rise USD/m2 GFA Low High Abu Dhabi 1,470 1,870 Dubai 1,470 1,870 KSA 1,450 1,850 Qatar 1,720 2,200

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Insight / Page twelve Currie & Brown offices www.curriebrown.com [email protected]

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Insight / Page thirteen