UAE housing market chasing ‘affordable assets’

Mohanad Alwadiya on 'affordable assets'

Mohanad Alwadiya onTRADE ARABIA Business News Informations

Residential market activity in the UAE in the second quarter improved significantly over the previous period, driven by a flight to affordable assets, said a report.
Harbor Real Estate Brokerage, an integrated real estate service provider in Dubai, has released of the latest edition of The Harbor Report, which covers a range of the hottest real estate topics, including a special feature on the recovery of the real estate market.

Sales transactions in the UAE, especially in the latter part of the second quarter, increased when compared to rental transactions with middle to middle-lower income earners taking advantage of the new levels of affordability.

“This quarter, the Harbor Report will be focusing on the local market recovery,” said Mohanad Alwadiya, managing director of Harbor Real Estate Brokerage.
“We look at factors that are likely to drive the recovery and the influence of the global economic recovery as it impacts the local scene here in Dubai,” he added.
“Harbor’s results for the second quarter were promising. Not only did we see a 55 per cent increase in the number of viewings but we also saw sales transaction double.’’

Since April 2009 when the first Harbor Report was issued, it has already become well known for its ability to accurately portray industry developments. With in-depth analysis, insider views and trends, the report has already received positive feedback from industry professionals.
Although the report is primarily aimed at professionals in the real estate industry, it also provides valuable information for developers and contractors who want to keep abreast with the latest industry developments, said a statement.

“In our first Harbor Report, which was issued in April, the contents and subjects discussed included credit notes, mortgages and the impact of the global recession on Dubai. This quarter however, the report is focusing more on the initial stabilisation and eventual recovery of the real estate market,” added Alwadiya. – TradeArabia News Service

Improved second quarter real estate activity raises confidence of a recovery

Mohanad ALwadiya speaks on the hopes of recovery

Mohanad ALwadiya speaks on the hopes of recovery - Zawya.com

Factors effecting Real Estate recovery detailed in latest edition of The Harbor Report Dubai, August 16, 2009: Harbor Real Estate Brokerage, an integrated Real Estate Service Provider in Dubai, has announced the release of the latest edition of The Harbor Report. The quarterly report covers a range of the hottest Real Estate topics, including a special feature on the recovery of the real estate market. In addition it will give an objective assessment of where Dubai’s Real Estate industry is at present and what are the latest trends in the industry that was highly affected by the economic crisis.The findings of the Harbor Report indicate that activity in the second quarter improved significantly over the previous period with the residential market in the UAE being driven by a flight to affordable assets. Sales transactions, especially in the latter part of the second quarter, increased when compared to rental transactions with middle to middle-lower income earners taking advantage of the new levels of affordability.Managing Director, of Harbor Real Estate Brokerage, Mohanad Alwadiya said:’This quarter, the Harbor Report will be focusing on the local market recovery. We look at factors that are likely to drive the recovery and the influence of the global economic recovery as it impacts the local scene here in Dubai. Harbor’s results for the second quarter were promising. Not only did we see a 55% increase in the number of viewings but we also saw sales transaction double.’Since April 2009 when the first Harbor Report was issued, it has already become well known for its ability to accurately portray industry developments. With in-depth analysis, insider views and trends, the report has already received positive feedback from industry professionals. Although the report is primarily aimed at professionals in the real estate industry, it also provides valuable information for developers and contractors who want to keep abreast with the latest industry developments.

“In our first Harbor Report, which was issued in April 09, the contents and subjects discussed included credit notes, mortgages and the impact of the global recession on Dubai. This quarter however, the report is focusing more on the initial stabilization and eventual recovery of the real estate market,” added Alwadiya.
The Harbor Report was created at the beginning of 2009 by Mohanad Alwadiya, MD of Harbor Real Estate Brokerage and Editor in Chief. The Q2 report can be downloaded on the Harbor Real Estate Brokerage website. Visit www.harbordubai.com for more information.

About Harbor Real Estate Brokerage:
Harbor Real Estate Brokerage is a fully integrated real estate service provider based in Dubai and part of an established world class group of real estate companies since 2001. With a strong reputation and a veteran team with over 15 years of experience in the industry, Harbor Real Estate provides Real Estate Research Services, Integrated Sales & Marketing Services, Sales and Lead Conversion Management Services and Real Estate Investment Portfolio Management Services.
Having served over 5,000 satisfied customers, Harbor has an extensive clientele base that consists of public and private entities, major developers, private and institutional investors and owner-occupiers..
Harbor Real Estate brokerage has a dedicated team of realtors and consultants who are renowned for their expertise, high level of professionalism and insight into local and international markets. The company is committed to providing its customers world class service and innovative real estate solutionsIn 2009, Harbor Real Estate Brokerage established a quarterly real estate report “The Harbor Report”. This candid report covers the latest news, developments and trends in the real estate industry with an in-depth analysis of the latest topics and current affairs.

Dubai Home Prices Fall 24pc in Q2: Report

Khaleej Times article on falling property prices

Khaleej Times article on falling property prices

17 August 2009
DUBAI – Dubai residential property prices fell by 24 per cent in the second quarter compared to the first three months of the year.

However, the number of sales and rental transactions has remained steady over the two quarters, signalling a renewed confidence in the emirate’s battered real estate market, property consultancy Jones Lang LaSalle said on Sunday.

Property prices are falling more slowly, and the gap between the prices that owners are asking and buyers are offering has narrowed, LaSalle said in a statement.

A separate report by the Harbor real estate brokerage said that its sales transactions doubled in number in the second quarter compared to the first, underscoring the idea that Dubai’s over-built market might have hit bottom.

“The narrowing gap between asking prices and achieved prices is an indication that the market is beginning to stabilise, albeit at significantly lower levels of pricing than those seen earlier in the year,” said Craig Plumb, Head of Research at Jones Lang LaSalle MENA.

The Dubai property sector collapsed in the aftermath of the global credit crunch. LaSalle expects that 22,400 new residential units will be handed over this year, even though developers have cancelled or put on hold more than $24 billion worth of 
residential projects.

The downturn in Dubai’s once-booming construction industry has created a backlog of legal claims totalling almost £3 billion, The Times newspaper of London reported on Sunday. More than 180 claims have been filed this year, mostly by international 
contractors. British firms are estimated to be owed at least £400 million on contracts in the UAE, the newspaper said, citing an article in Building magazine, a British trade publication.

According to LaSalle, the volume of sales and rental deals were stable between the first and second quarters of this year. By contrast, transactions decreased in number by 58 per in the second quarter from the same period a year ago.

“The stabilisation of transactional volumes is an important indicator, which reflects improved confidence among investors,” Plumb said.

Meanwhile, the Harbor brokrage confirmed that activity in the second quarter improved significantly over the previous three months, as more properties have become affordable for more people. Harbor noted that sales transactions, especially in the latter part of the second quarter, increased when compared with rental transactions, with middle to middle-lower income earners taking advantage of the new levels of affordability to buy.

“We look at factors that are likely to drive the recovery and the influence of the global economic recovery as it impacts the local scene here in Dubai,” said Mohanad Alwadiya, the Managing Director of Harbor Real Estate Brokerage.

“Harbor’s results for the second quarter were promising. Not only did we see a 55 per cent increase in the number of viewings but we also saw sales transaction double.”

Factors affecting real estate recovery detailed in latest edition of The Harbor Report

Harbor Report Article on AMEInfo.com

Harbor Report Article on AMEInfo.com

The findings of the Harbor Report indicate that activity in the second quarter improved significantly over the previous period with the residential market in the UAE being driven by a flight to affordable assets.
Harbor Real Estate Brokerage, an integrated real estate service provider in Dubai, has announced the release of the latest edition of The Harbor Report.

The quarterly report covers a range of the hottest Real Estate topics, including a special feature on the recovery of the real estate market.

In addition it will give an objective assessment of where Dubai’s Real Estate industry is at present and what are the latest trends in the industry that was highly affected by the economic crisis.

Sales transactions, especially in the latter part of the second quarter, increased when compared to rental transactions with middle to middle-lower income earners taking advantage of the new levels of affordability.

Managing Director, of Harbor Real Estate Brokerage, Mohanad Alwadiya said:
‘This quarter, the Harbor Report will be focusing on the local market recovery. We look at factors that are likely to drive the recovery and the influence of the global economic recovery as it impacts the local scene here in Dubai. Harbor’s results for the second quarter were promising. Not only did we see a 55% increase in the number of viewings but we also saw sales transaction double.’

Since April 2009 when the first Harbor Report was issued, it has already become well known for its ability to accurately portray industry developments. With in-depth analysis, insider views and trends, the report has already received positive feedback from industry professionals.

Although the report is primarily aimed at professionals in the real estate industry, it also provides valuable information for developers and contractors who want to keep abreast with the latest industry developments.

‘In our first Harbor Report, which was issued in April 09, the contents and subjects discussed included credit notes, mortgages and the impact of the global recession on Dubai. This quarter however, the report is focusing more on the initial stabilization and eventual recovery of the real estate market,’ added Alwadiya.

Off-plan property sales are ‘dead’ and prices continue to slide.

Mohanad Alwadiya comments on property sales

Mohanad Alwadiya comments on property sales - Arabian Business.com

While he said there were signs of stablisation of completed properties in areas such as downtown Dubai and the Palm Jumeirah, Alwadiya said investors lacked confidence in the off-plan market, where prices have slid up to 50 percent since the emirate’s property collapse last September.

“In some areas, mainly in off-plan, prices continue to drop. This is natural,” he told Dubai Eye radio in an interview.
“Confidence levels in off-plan projects is very low. Off-plan sales are almost dead,” he added.

On a brighter note, Alwadiya said his company had seen 45 percent more buyer queries in the second quarter, than in the first quarter.

Property consultant Colliers International said house prices in Dubai fell 41 percent and 9 percent in the first and second quarters in 2009.

Dubai-based Harbor Real Estate offers property advisory services to individual and institutional investors.

Brokerage firms in UAE report double-digit losses


Mohanad Alwadiya on Brokerages in UAE

Mohanad Alwadiya on Brokerages in UAE - Muslim.net

Brokerage firms in the UAE have recorded significant declines in revenues in the past 12 months owing to the slowdown in the real estate sector, with losses running into high double-digits, real estate pokerage companies told Emirates Business.

Elysian Real Estate, a Dubai-based pokerage firm, said there was a 60 per cent decline in sales commission earnings as it has recorded a drop in sales volumes by almost 50 per cent.

“We were making 20 to 40 sales deals a month last year. Now we are doing about 10 to 20 in a month,” said Robert Macnair, Sales Director, Elysian Real Estate.
“Our commission earnings last year were about Dh4 million to Dh6m per month. That has dropped to a monthly earnings of Dh2m to Dh2.5m,” he said.
On the leasing front, Elysian Real Estate was concluding an average of 30 deals a month at this time last year. “Now, however, that has dropped to about an average of 15 deals a month,” said Macnair.

Harbor Real Estate said its profits dipped 38 per cent during the period between the first half of 2008 and the first half of 2009. “Our revenues dropped approximately 40 per cent over the past 12 months. Sales volumes have dropped approximately 70 per cent,” said Mohanad Alwadiya, Managing Director, Harbor Real Estate.

Peter Penhall, CEO, GowealthyGowealthy, also said due to the overall decline in investor activity within the real estate sector, his company has experienced a decline in its trading levels.

“We have seen a drop in trading levels to the tune of 40 to 50 per cent from previous averages. However, this negative trend should be viewed against the backdrop of abnormal increases in trading volumes during 2008. The real correlation would be current trading vis-à-vis 2007 levels of trading.”
Rajesh Kumar Krishna, Managing Director of UAE-based Indiana Real Estate, said his company has recorded a drop of about 70 per cent in revenues in the past 12 months.

“This includes our profits and commission earnings all together. pokerage firms are now trying to sustain themselves in as many ways as possible, since we are not recording much sales.

“We have also had to lay off a number of our estate agents in line with market conditions and our income through commissions has dropped massively by about 80 per cent in the past 12 months,” he said.

Penhall said profits are based on two factors, revenue and costs. “It has been imperative that both these elements be addressed during the first half of this year. In light of the sharp correction in the pokerage sector, there will be a heightened level of ‘interp-okerage co-operation’ reflecting a maturing real estate market. The correction in the pokerage sector will help more stable firms to naturally look towards supporting themselves in an effort not only to survive this change, but to emerge from it in a more matured manner,” he said.

pokerage companies also detailed the various measures taken by them to reduce their losses in the downturn. Many companies have adopted new policies, including developing a considerable leasing and international portfolio.

Alwadiya said one of the policies now pursued by pokerage firms is building a relationship with a network of other selective pokerages to help each other in sales. “This has helped companies to increase their reach and access different markets. The long-term partnerships, although involving profit sharing, are very effective in establishing a steady and sustainable stream of revenue for the pokerage firms,” he said.

Krishna said Indiana Real Estate was trying to sustain itself in the market by raising a leasing portfolio. “We are not going aggressive on sales at this moment, as there is no point at all. Even if pokers want to invest on the sales front, there is no business left,” he said.

Macnair said: “We have had to adapt quickly to the downturn in the real estate sector. At Elysian, we launched a Malaysian project. And we have made a conscious effort to go outside Dubai. Having said that, developing an international portfolio or a leasing portfolio has only allowed us to minimise losses, not completely remove them.

“Real estate firms, which heavily sold off-plan properties, have suffered the most. Those which quickly resorted to developing a leasing portfolio have benefited.”
Harbor Real Estate said its leasing volumes quadrupled in the past 12 months and the research and consultancy assignments doubled. “We have managed to optimise our revenue streams by focusing on specific areas of the market that emerged following the property crisis, including consultancy, research and leasing services and even consolidation transactions,” said Alwadiya.

“In 2009, our leasing division became one of the main revenue generating streams owing to the increased demand for leasing. pokerage companies have also benefited from the fact that developers and sellers started providing handsome compensation packages in return for sales results,” he said.
Penhall said the leasing sector is witnessing an enormous level of competition with very low cash takeouts.

“Further, the leasing sector is compounded with unprofessional behaviour on the part of certain independent service providers. Therefore, we have chosen to retain a lower profile in the leasing market and our exposure to this sector of the real estate market is limited,” he said.

He said like most pokerages in Dubai, GowealthyGowealthy, too, has had to adjust its trading model to suit market conditions. “Unlike most of the general pokerage companies during the past year or two, we chose to focus our business model on providing a dedicated service to a select number of developers, providing them with a full services-sales-marketing functionality,” said Penhall.

“The market correction during the latter part of 2008 has seen a significant directional change away from off-plan properties, with the current focus being on the secondary markets in completed products. Our business model has seen a significant realignment during this correction period.

“Initially our focus was on realigning our revenue model towards the areas of business where there was action. Since Fepuary and March, GowealthyGowealthy has been extremely busy in servicing the ‘open house’ concept. We have achieved a significant number of transactions from this sector, which have helped in minimising trading losses during the first six months of this year.”

According to GowealthyGowealthy, the recent months have reflected a steady increase in the number of overall deals, although current levels are at significant lows in comparison to 2007 averages.

“We are seeing a slow increase in deal values within certain high demand areas, such as the Palm Jumeirah, Downtown Burj Dubai and Dubai Marina. We anticipate a further consolidation phase during the coming two months. The year 2010 looks to be a year of stabilisation and steady yet marginal growth.”
Macnair said residential properties with good quality finishes were the ones faring well at the moment. “Prices in Tiara Residences in the Palm Jumeirah have gone up from Dh1.9m last December to Dh2.3m.”

Alwadiya said affordable living areas such as Discovery Gardens and International City were becoming more popular among the middle-class rental segment.
“Yield generating assets are becoming very popular among the investors segment, such as ready properties within well-developed and maintained communities such as the Palm Jumeirah, Dubai Marina and Downtown Burj Dubai.

“Affordable housing is expected to generate higher yields over the short-term before the lower quality of the establishment begins to be reflected in potential tenant valuations. Hence, luxury properties that offer high-quality finishes, amenities and facilities are looked at as a safer long-term investment option,” said Alwadiya.

Penhall said properties purchased before the late 2007 and 2008 boom phase should now be coming back into a net gain position.
“As the market starts to reflect a glimmer of hope in positive price changes, it is becoming more difficult to source quality properties, so we see this as a particular driver of the short-term marketplace. Finished products, particularly villas, have shown the most activity. It is periods like this that force the most dynamic businesses to adjust to market conditions and it is the businesses that have been able to do so quickly and efficiently that will come out of this challenge stronger and better equipped to handle the up-kick in the market that will inevitably follow this period of crisis,” said Penhall.

Alwadiya said the number of viewings and transactions during the second quarter of 2009 have increased dramatically compared to the first quarter of the year. “For us, viewings increased by 45 to 50 per cent in the last quarter.”

According to Macnair, however, Dubai can expect to see a further reduction in sales and lease prices.

“Only areas such as ‘The Palm’ and Downtown Burj Dubai will remain expensive. Areas such as Victory Heights and Al Farjan are all priced currently below 25 per cent of their original price. When prices reach 25 per cent below the original price, that is when people start buying in these areas,” he said.

Krishna said Dubai’s real estate has been delivered as an investment product. “Investors will only enter the market here once the world economy recovers. It is difficult to predict any revival time for Dubai as we have to wait till international markets show signs of recovery.” By Anjana Kumar © Emirates Business 24/7 2009

Property expert Mohanad Alwadiya tackles your property questions

Gulf News readers QandA Moustafa

Readers Questions answered by Mohanad Alwadiya - Gulf News.com

Q: We’re looking to buy a villa in Dubai in the coming year. How do you rate Jumeirah Village as an area to buy property in? What are the pros and cons?

A: Phase two of Jumeirah Village has just been handed over and this has created a buzz in the market, especially in the rental market for affordable two-bedroom villas. According to Nakheel, they are very confident and looking forward to completing all of the 2,200 villas by the end of this year, which is exciting news for the owners of house there. The pros are the affordable prices, a well-planned villa community, a good mix of planned retail and community facilities and the well designed villas and townhouses.

Although Jumeirah Village is strategically located, access is perceived to be inconvenient and it is in close proximity to high voltage power lines. The section that Nakheel is developing is progressing as planned. However, the Jumeirah Village Circle part, which is developed by private developers, is really behind schedule and is creating a lot of negative word of mouth in the marketplace and hence affecting the overall reputation of the Jumeirah Village development.
I would recommend buying a villa there because of the attractive prices and because the supply of villas is much lower than apartments and hence it offers a safer investment. If you are buying a villa to live in, Jumeirah Village offers an excellent community lifestyle.

Q: My wife and I have been looking at possibly buying a two-bedroom apartment at Burj Views in Downtown Burj Dubai as a buy-to-let property. Do you think this would be a reasonable option?

A: The Burj Dubai area is becoming popular with end-users because of the enjoyable living experience it offers. Having said that, and given the popularity of this area, the selling prices of units there have been inflated by the secondary market and resale activities. This has put a lot of pressure on rental yields. The rental return increase could not keep pace with sale prices as potential tenants would compare prices with other competitive areas in Dubai. High quality property consistently generates higher average yields over the long term. Affordable housing is expected to generate higher yields over the short-term before the lower quality of the establishment begins to be reflected in potential tenant valuations.

Q: There have been reports about rental increases in some areas of Dubai. In which areas do you think renters can still get good value for money?

A: Tenants can still expect to get bargain rental deals across the majority of the freehold zones in Dubai. I would recommend Jumeirah Lakes Towers as it remains very much underrated overall.
This development enjoys a very strategic location and has a fantastic master plan yet its true potential is still to be recognised. JLT has a good balance between office space and residential offerings.
The prices are at least 15% cheaper than Dubai Marina and Jumeirah Lakes Towers has the potential to achieve the same status as Dubai Marina, and in a very short time.
Do you have a property question that needs answering? Email fm@alnisrmedia.com along with your contact details

Real Estate market to start recovery in early 2010

Mohanad Alwadiya on the Property Market Recovery

Mohanad Alwadiya on the Property Market Recovery - Zawya - 06-Sep-2009

Dubai, July 21 2009: According to the quarterly Harbor Report, which will be issued at the end of July, the real estate industry will start to pick up in early 2010. The report which is issued by the Harbor Real Estate Brokerage Company, an integrated real estate service provider in Dubai, predicts that even though the market appears to have bottomed out, it will still take several more months until we see an improvement in the market.

”I believe that the market is in a phase of fragile stabilization,” said Mohanad Al Wadiya, Managing Director of Harbor Real Estate Brokerage and Editor in Chief of the Harbor Report. It is hard to say exactly when we will see an improvement but the general consensus is that this will be in 2010, although the pace and magnitude of Dubai’s economic recovery and its real estate industry will be largely dependent upon the global economic recovery and world economic events,” he added.

The report suggests that even though there have been many positive changes, with governments implementing monetary and fiscal policies, companies restructuring and improving their balance sheets and larger corporations considering mergers or acquisitions, it will still take several more months until we see solid and sustainable improvements.

”When the first Harbor Report was issued in Q1, the general mood was very somber, today, it is evident that even though the market is stressed, it is certainly not getting any worse, and that in itself is good news. We are starting to see signs that the changes made by governments and corporate institutions to combat the recession are slowly but steadily taking effect. With economists in Japan, China, USA and even Europe talking about “green shoots” or early signs that a return to economic growth is now on the horizon, it looks promising that we will see things pick up in early 2010 ,” said Mr. Al Wadiya
Whilst the broad consensus is that these major economies will bottom out in the 3rd quarter of 2009, Stock markets and consumer confidence indices around the world have risen significantly in the first 6 months of the year.
“This performance of stock markets around the world, even despite the recent dip, suggests the worst is behind us and we are more or less at rock bottom. The million dollar question is how long will remain at the bottom before we see real signs of sustainable recovery,” concluded Mr. Al Wadiya.
The Harbor report is a quarterly report that was first issued in April 2009. The second report will be issued at the end of July and will contain an in-depth analysis, insider views and trends of the real estate industry. The report has already received positive feedback from industry professionals in the region. For more information and to download the report please visit www.harbordubai.com.

-Ends-

About Harbor Real Estate Brokerage:

Harbor Real Estate Brokerage is a fully integrated real estate service provider based in Dubai and part of an established world class group of real estate companies since 2001. With a strong reputation and a veteran team with over 15 years of experience in the industry, Harbor Real Estate provides Real Estate Research Services, Integrated Sales & Marketing Services, Sales and Lead Conversion Management Services and Real Estate Investment Portfolio Management Services.

Having served over 5,000 satisfied customers, Harbor has an extensive clientele base that consists of public and private entities, major developers, private and institutional investors and owner-occupiers..

Harbor Real Estate brokerage has a dedicated team of realtors and consultants who are renowned for their expertise, high level of professionalism and insight into local and international markets. The company is committed to providing its customers world class service and innovative real estate solutions
In 2009, Harbor Real Estate Brokerage established a quarterly real estate report “The Harbor Report”. This candid report covers the latest news, developments and trends in the real estate industry with an in-depth analysis of the latest topics and current affairs.