News & Updates
- 08/7/2012 Dubai property market recovers but Abu Dhabi over supplied The residential property market in Dubai is recovering with prices and rents increasing but in neighbouring Abu Dhabi it is a different story as new supply...
- 24/6/2012 Emaar prices new Ranches units Emaar Properties has priced townhouses within the Alma 2 cluster in Arabian Ranches in the range of Dh1.4 million to Dh2.2 million, Emirates 24|7 has learnt.
The latest market reports from property consultants Asteco show that it is a case of a tale of two cities as each one is experiencing very different outlooks.
In Dubai sale prices for villas in well located areas have increased by up to 16% in the last quarter with average prices up by between 6% and 8%. Apartment rents increased by 6% in the second quarter of 2012 compared to the previous quarter, and average villa rents increased by 9%.
‘After three years of declining rates and limited sales activity, the Dubai real estate market is on the way to recovery, with established quality communities showing increases in values and higher transaction volumes,’ said Elaine Jones, chief executive officer of Asteco.
Rental rates for apartments in Dubai Marina and Downtown Dubai increased 10% during the second quarter compared with the first, with the average two bedroom apartment going for around AED90,000 to AED120,000 per annum. Rents in well heeled districts such as Mirdiff and Arabian Ranches increased by 13% and 11% respectively.
‘Tenants are relocating in search of value for money. One and two bedroom apartments as well as three and four bedroom villas are the preferred unit types. In terms of rates, quality well managed developments, will continue to set the pace,’ explained Jones.
Property prices increased in Dubai Marina, the Palm Jumeirah and Downtown in the second quarter with villas on the Palm Jumeirah now the most expensive in the emirate at AED17,200 per square meter, said Asteco.
The cost of a one and two bedroom apartment in Downtown increased 9% compared to 8% for property in Dubai Marina and Palm Jumeirah. Villas in Emaar’s Arabian Ranches saw the largest increase with prices rising 16%.
‘Looking ahead to the 2012 year end, sales prices will continue to rise for quality developments, especially villas. The number of owner occupiers rose steadily in line with improved financed options offered by banks, which we expect to continue,’ said Jones.
But in Abu Dhabi residential rental rates dropped by as much as 15% in the second quarter of 2012 as 7,400 apartments and 1,675 villas were added to the city’s rapidly expanding real estate sector. ‘This has triggered a wave of internal movement as existing residents sought to upgrade to better quality and value for money accommodation,’ explained Jones.
As a result rental rates have slumped. The biggest drop was in Marina Square, which fell by 15% followed by apartment units in Mussafah and villas in Sas Al Nakhl, which both dropped by 14%. An additional 7,000 apartment units and 4,560 villas are due to come on stream in the second half of 2012, which will put further pressure on landlords and rental levels.
In the sales market, apartments in Shams Abu Dhabi, Marina Square and Raha Beach proved the most in demand, but the growing supply meant property prices also slumped in the second half of 2012. Most areas in Shams Abu Dhabi, Al Raha Beach and Marina Square saw prices decline by around 4%, averaging AED10,600 per square metre.
‘Investors have started to re-enter the market since rental return prospects have started to improve due to price reductions and more affordable mortgage options. But, sales prices are still depressed overall due to the amount of available supply and the number of distressed sellers still in the market. Increased transaction activity will continue in the second half of 2012 as more projects are handed over,’ added Jones.
The 62 units were offered exclusively to owners and renters in the master community.
“We were informed by one of the company staff that over 150 people had registered their interest in buying the property,” an Arabian Ranches owner, who attended the event, said.
“The completion date informed to us was May 2014,” he added.
Emaar did not respond to questions sent by Emirates 24|7.
Alma Townhomes 1 is a Spanish influenced single-family attached villas (townhomes) with units ranging between 2,436 square feet and 3,153 square feet.
This website had reported earlier that Emaar was poised to announce its second development this year - a townhouse project in Arabian Ranches — following the launch of its Panorama project in the Greens area.
The project will have two and three-bed townhouses, with the likelihood of the current owners of Arabian Ranches being given the first option to buy these properties, market sources said.
Emaar had not yet responded to questions at the time of publication of the article.
Data from propertyfinder.ae reveals that the average price of townhouses in Al Reem cluster is Dh2.28 million with average price per square feet being Dh807, while the average price for Alma Townhouses is Dh2.59 million and per square feet is Dh935.
In March, the website reported that Emaar was selling the 18 Golf Homes, or luxury villas, located in the Arabian Ranches Golf Course for between Dh7.3 million and Dh11 million.
The Dubai-listed developer was asking for full payment to be made in six months with the buyers having to give a Dh100,000 bank guarantee, which was to be returned after the buyer completes the villa fit-out. The time for completing the fit-out is 24 months.
In April, Better Homes said villas in Arabian Ranches had seen an appreciation of 15 per cent in the past one year.
“Prices have appreciated by 15 per cent in the Ranches. A five-bedroom villa that was selling at Dh4 million is now going for Dh4.5-4.7 million.
“There has also been a 15 per cent increase in the townhouse segment of the Ranches,” Rene D’Souza, Senior Residential Consultant, Green Community Office, Better Homes had said.
Earlier this year, Asteco, Dubai-based real estate consultancy, said property prices have stabilised with certain villa communities such as Palm Jumeirah, Arabian Ranches and Springs already witnessing price hikes of up to nine per cent.
The Arabian Ranches Golf Course, spread over 247 acres comprising 120 acres of grass land and desert vegetation, is part of the Arabian Ranches Golf Club The 18-hole, par 72-signature course was designed by Ian Baker-Finch in association with Nicklaus Design.
The development houses more than 4,000 addresses comprising one-storey and two-storey single-family homes.
A survey commissioned by propertyfinder.ae — the UAE-based property portal — confirmed on Wednesday that the previously strict one cheque requirement for renting in the emirate has diminished, with most landlords now offering two, four or even six cheque deals.
The survey, which analysed responses from a sample of 3,000 brokers registered with propertyfinder.ae, revealed that more than half of them believed four cheques to now be the benchmark for renters. Only six per cent of brokers said they still believed one cheque to be the norm. Two cheque deals were second in popularity, according to the surveyed brokers, followed interestingly, by three cheque agreements.
“The findings …. show that there has been a shift in attitude in the rental market with landlords now willing to be more flexible with prospective renters as supply outstrips demand. We feel this data will be of great interest to property hunters and real estate companies across the UAE,” said Renan Bourdeau, managing director, propertyfinder.ae.
However, some agents say that although the market may be more flexible in general, one cheque deals are here to stay. “Dubai is a free market and tenants benefit from negotiating lower annual rents by agreeing to pay in one cheque. We deal mainly with large multi-national companies and they still pay one cheque and are happy to do so,” said David McCormack, group operations director at Olive Property Group. Michael Burke, managing partner at Arabia Escapes agrees with the survey findings that the norm now is to pay with four cheques. “I would say 90 per cent of all deals are completed this way,” Burke said.
“Landlords, like tenants, over the past couple of years have matured and are better educated in the market. Their priorities have also changed somewhat — now it is not just a case of how many cheques a person can offer, but what type of person they are. Landlords want to be sure that the potential tenant will look after and care for it and will not be calling every time a light bulb needs replacing. They also want someone who is amicable to deal with,” Burke added.
Besides getting their funds back, investors will be able to ask for additional compensation, while the developer can be fined, said the director of the Dubai Land Department, Sultan Butti Bin Mujren told Gulf News.
The law, which has been in the works for some time is expected to be issued soon by the department. It is aimed at protecting investors from delays in the handing over of projects or unilateral changes in the size or other specifications of the properties.
Investors can cancel the contract if the property handover is delayed for more than a year. This applies even if there is provision for completion delays in the contract. They will be eligible for compensation if the handover is delayed for more than a month, but less than a year, according to the draft.
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The law will also offer investors recourse in case of defects in the property when it is delivered and undocumented claims and charges from developers, among other provisions.
“It is a clear legislative tool to break the contract and guarantee compensation for investors where the developer attempts to breach the contract,” Bin Mujren said. According to the new law, the Land Department will have an observatory, regulatory, technical and executive role to protect investor’s rights. The law will spell out the rights and responsibilities of the developer and the investor during the project development, the sale of units, the completion of the properties and the handover to the investor. More attention is also paid to the details of service agreements, maintenance contracts and the registration of the property.
Majida Ali Rashid, Director of the Center for Investment Management at the department said: “This law is the first of its kind on the regional and international level. It is not only to protect the investor but to put in place a transparent business relationship between investors and developers. This will be enough to increase the investment growth with the real estate sector in the emirate.”
Muhannad Al Wadiya, managing director of Harbor Real Estate said that the new law should be considered a wake-up call for developers to finish their projects – and would encourage investors to get back into the market by creating “a positive vibe”.
There is concern however that the new law may not apply to the many existing disputes between developers and investors, as it will only be applied to new contracts.
However, in an effort to ensure openness and transparency in the market going forward, the new law provides for the Land Department to track the progress of all real estate projects in Dubai.
This will also serve as a useful resource, especially for non-resident investors who have no access to monitor their investments directly, according to Dr Ahmed Belhasa, who is chairman of a large developer in the UAE.
The department will maintain a data base of projects and contracts, among others, that would be available to investors. Developers will not be allowed to promote or sell any properties unless they have the approval of the department and the units are registered in its records.
Rera has already ordered the cancellation of projects they no longer deemed viable. However, the new law also provides for the agency to pair up approved developers and banks to fund the completion of projects.
The new law will also require that all real estate agents and brokerage companies to be licensed by and registered with RERA. The brokerage is not allowed to get a commission unless the property is transferred to the investor
The new laws are a necessary part of the ongoing efforts to safeguard investors and better regulate the Dubai property market, which experienced unprecedented boom – and bust – since 2007. Dr Belhasa said transparency was required to understand the market and better regulate it. “It is important not only to protect the rights of investors, but also for the development of the country,” he said.
Areas offering an established community environment, combined with quality amenities and facilities continue to see the highest levels of growth and also remain in relatively short supply. In particular, developments such as Emirates Living and the Palm Jumeirah have shown positive growth over the last three quarters, the report noted.
"Overall lease rates in Emirates Living have increased by 6% year-on-year, with a two bedroom villa in the Springs which was achieving a lease rate of Dhs70,000 to 85,000/unit/annum in Q1,2011, currently being offered in the range of Dhs85,000 to 100,000/unit/annum - depending on the location and quality of the villa," the report said.
For apartments, the highest increase in Q1 was for one bedroom units, which grew by 2% during the quarter, while three bedroom units grew by 1%. The highest increase in lease rates took place in the Greens at 7%, followed by Downtown Dubai where rates grew by 6%.
While rental rates are rising in prime areas, emerging residential locations such as International Media Production Zone, Dubai Sports City, Dubai Silicon Oasis, Dubai Investment Park and Jumeirah Village continue to see deflationary pressures on lease and occupancy rates due to the current lack of facilities, amenities and developed infrastructure.
Lease rates in Dubai Sports City range between Dhs30,000-36,000/pa and Dhs40,000-55,000/pa for one and two bedroom units respectively, unchanged from the previous quarter. On a year on year basis, apartment lease rates in emerging locations have fallen by around 7%, with low high vacancy rates prevailing.
Looking ahead, CBRE predicts that the residential sector will see area-specific strengthening of lease, sales and occupancy rates as pipeline supply in developed locations has become increasingly scarce. The market for established villa locations such as Emirates Living, Arabian Ranches and Palm Jumeirah will remain strong during 2012 with limited new inventory expected in these locations.
However, new supply will enter from emerging areas such as Jumeirah Park, Al Furjan and Jumeirah Golf Estates, which will result in an expanding villa inventory over the next 12 to 15 months.
CBRE's findings are consistent with other recent studies by industry analysts. Real estate consultancy Asteco's first quarter report found that overall rental rates for apartments and villas in the emirate rose by one per cent on average in Q1. Downtown Dubai rents were up five per cent, followed by Jumeirah Beach Residence (JBR) at four per cent and Jumeirah Lakes Towers (JLT) at three per cent.
Rents in Meadows and Green community climbed by three per cent, respectively, while Arabian Ranches reported a two per cent jump, Asteco said.
Meanwhile, Global Investment House said recently that rents have started to increase in select areas of Dubai after the pace of rental income slowed down significantly in 2011, but will continue to fall in less desirable communities.
"The pace of decline in Dubai rents slowed down significantly in 2011 and is starting to shift gradually into selective increases in areas of higher quality and demand," GIH said. "We expect improvements in rental rates to be capped in the short term by new supply and declining rents in the outskirts of the city."
GIH estimates the Dubai market is currently 20% oversupplied, which means that 67,000 units are currently vacant. "We expect this figure to increase as an additional 20,000 units are scheduled to enter the market in 2012, representing a six per cent increase on the current stock," the report said.
In fact, they are on the incline with average lease rates for two- and three-bedroom apartments having shot up by more than 20 per cent in the first quarter compared to fourth quarter 2011.
According to data from Dubai-based Harbor Real Estate, two-bedroom apartments were being leased for Dh100,000 to Dh120,000 per annum in the first quarter compared to Dh80,000 to Dh110,000 in September 2011.
Three-bedroom units are available in the range of Dh130,000 to Dh150,000 pa (Dh105,000 to Dh150,000), while one-bed apartments were rented for Dh75,000 to Dh90,000 (Dh65,000 to Dh80,000).
Information provided by PropSquare Real Estate reveals rents for two-bed units to be in the Dh100,000 to Dh120,000 pa range as against Dh80,000 to Dh90,000 pa in Q4, 2011, while rates for three-beds ranged between Dh135,000 and Dh145,000 pa (Dh110,000 to Dh120,000 pa).
Rents for one-bed units stood at Dh70,000 to Dh80,000 pa compared to Dh60,000 to Dh70,000 pa.
According to Asteco’s first quarter report, rents in JBR rose four per cent quarter-on-quarter with one, two and three beds available for Dh70,000, Dh90,000 and Dh115,000 pa, respectively.
JBR is among the prime freehold localities in Dubai. It faces 1.7 kilometres of beach that features luxury hotels, retail outlets and restaurants and houses 36 residential towers.
Global Investment House (GIH), in a new GCC real estate sector report, said rents have started to increase in selective areas of Dubai after the pace of rental income slowed down significantly in 2011.
“The pace of decline in Dubai rents slowed down significantly in 2011 and is starting to shift gradually into selective increases in areas of higher quality and demand,” GIH said.
In Dubai, GIH estimates the market is currently 20 per cent oversupplied that means 67,000 units are currently vacant.
According to the prospectus, Dubai Land Department says that
The total number of companies now participating in the programme has reached 12.
Wasl Asset Management Group, a subsidiary of Dubai Real Estate Corporation, was the first to join the initiative in September last year.
ICD-Brookfield, a joint venture between Investment Corporation of Dubai and Canada’s Brookfield Asset Management, was formed in October 2011.
The fund’s investment strategy includes targeting opportunities currently available in Dubai’s real estate sector with focus on a wide class of assets in both freehold and non-freehold areas.
Majida Ali Rashid, Manager-Real Estate Investment Management & Promotion Center, DLD, said: “The agreement to join Tanmia will lead to further quality developments in the real estate market, especially with the ICD-Brookfield’s aim to buy existing real estate projects to distribute to beneficiaries of its programmes.”
She stated that the real estate market has become a perfect model in terms of turning challenges into opportunities.
The Tanmia initiative, launched in September 2011, aims at revitalising the real estate market by focusing on the incomplete projects under all categories.
The department has appointed a number of audit firms to undertake technical and financial audits on number of stalled projects.
“Increasing investors’ confidence in the market is our top priority, and we are sure that our initiatives will play a major role in raising investors’ confidence,” Majida asserted.
Khaled Al Bakhit, Chairman of ICD-Brookfield, said: “We believe that this initiative will promote efficient collaboration between the department and interested investors in Dubai real estate, such as ourselves as participants in the programme, and will ultimately enhance real estate investment decision making.”
In October 2011, Sultan bin Butti bin Mijren, DLD Director-General, told this website that the Tanmia will cover 100 projects in 2012 and the initiative will be continued for the next three to four years.
We reported earlier that Santevill, a Dh400 million 25-storey tower in Business Bay, was to be the first recipient of funding under Tanmia.
In July 2010, the land department had launched Tayseer initiative, which aimed at facilitating financing for purchasers in certain pre-qualified projects.
To date, only two projects have been financed under this scheme.
Earlier this month, we reported that the department would be launching Tanweer programme designed to enhance investors’ confidence and act as a reference guide aimed at setting the frameworks and general principles of the rights and duties of investors.
“Prices have appreciated by 15 per cent in the Ranches. A five-bedroom villa that was selling at Dh4 million is now going for Dh4.5-4.7 million.
Arabian Ranches fared much better than the average rate, with an appreciation of 7 per cent. “The rise is predominantly driven by increased acquisitions from owner-occupiers in areas such as Arabian Ranches,” read the Q1 2012 report.
The price of the villa can go up with the location.
The villas with a pool and park or lake view can fetch a premium.
“Real Estate is all about location. Within a community, properties with a pool/park or lake facing commands at least 5-10 per cent more than the same unit without the key view or location. Properties that lie near the Emirates Road have trouble selling due to the location,” .
According to classifieds, a two-bedroom villa of approximate size of 1889 sq/ft, is priced at Dh1.65million, making it Dh873 sq/ft.
A similar villa was going for approximately Dh1.4million in Q2 2011 and the year before a similar unit was available only for a little over Dh1million.
“We’ve been thinking of buying a small villa in the Ranches for our own use. I guess we’ve taken a long time to decide and will have to pay more if we go for a place here. The agents tell me that prices will appreciate more this year and will add up if I delay my decision,” said Anjali Dube, an Indian expat in Dubai.
Arabian Ranches prices vary owing to the villa type and size.
Townhouses offer the cheapest option here where as the highest range is occupied by bespoke mansion like villas that sit on large plots.
During the property boom time, Dubai saw 1,500 transactions, worth Dh18.70 billion, in Q1 2008. In Q1 2009, total registration declined three times to 343 with the value falling to Dh4.25 billion. In Q1 2010, sales transactions rose to 505, valued at Dh3.619 billion.
International and local real estate consultancies have said that property prices are stablising in Dubai with the new Knight Frank and Citi Private Bank Wealth Report putting Dubai as the 13th most important city in the world for the ultra-wealthy, and eighth in terms of growing in importance to the high net worth individuals (HNWIs).
“Despite its struggles in recent years, Dubai was voted the 13th most important city in the world,” the report, said.
Earlier last month, Knight Frank said that real estate in Dubai had not only stabilised, but prices went up 2.3 per cent on average in the last quarter of 2011.
Asteco, Dubai-based real estate consultancy, said recently that property prices have stablised with certain villa communities such as Palm Jumeirah, Arabian Ranches and Springs already witnessing price hikes of up to nine per cent.