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Harbor Real Estate’s first Cedre Villas open house generated great demand

Demand for Villas and Townhouses is still very strong despite the current economic situation

Harbor Real Estate’s first Cedre Villas open house generated great demand

Harbor Real Estate, an integrated Real Estate Service Provider in Dubai, promoted several fully decorated units in the exclusive Cedre Villas in Dubai Silicon Oasis last Saturday. The open house day paraded Twin villas and Townhouses for sale and rent, and welcomed a large number of clients on the premises.

Clients who visited the project were excited about the quality of the finishing, layouts and architecture, the vast spaces, the overall serenity of the community and vigorously the attractive prices.

Mohanad Alwadiya, Managing Director of Harbor Real Estate, said: “Seeing is believing, presenting an open house is a great promotional methodology to attract potential clients, especially that the advantage is for the buyer nowadays. What we are witnessing here is a sign that economy have stabilized and individuals are confident to invest in well established properties that offer them real value for money”

“The project attracted buyers due to its potential when it comes to offering stable capital gains and above average annual rental yields. The attendees of the open house event included a diverse mix of nationalities. Due to the great results and high demand, we have decided to run another open house event on the 30th of January, where we will continue to offer our special added value package to the Harbor Real Estate clients” Added Alwadiya

Open house buyers will enjoy free maintenance for the first year in addition to 90% pre-approved financing up to 25 years and the option of 1 year in-house payment plan which will be offered to owner-occupiers.

The Cedre Villas project provides its residents uncompromised quality and 40% more space than any other villa in Dubai of the same type. The units entertain all tastes with 3 and 4 bedrooms contributing to multi-vibrant lifestyle amenities and smart homes facilities that answer everyone’s wishes.

Harbor Real Estate services have evolved from traditional real estate brokerage of merely bringing buyers and sellers together to innovative world class end-to-end real estate services. The company services include, Real Estate Tailored Research Services, Integrated Marketing Services, Sales, Leasing & Conversion Management Services, Real Estate Investment Portfolio Management Services and, Holistic Real Estate Legal Services.

For More information about Harbor and the special added value offers on Cedre Villas please contact Harbor on info@harbordubai.com

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Ask the Experts

Every month we invite you to have your property questions answered by an expert. This month, Mohanad Alwadiya tackles the task.

Q I’ve been looking at a few Union Properties developments, but am unsure about buying leasehold. How does this differ to freehold property in Dubai?

A The choice between freehold and leasehold property depends mainly on your particular needs and the asset type you wish to invest in. If you wish to buy a property for a limited number of years or you are buying a property to benefit from its annual rental yield, leasehold should be your preferable option as the cost would be considerably less compared to freehold. Similarly, the cost of leasehold for 30 years will be less than that for 99 years. Leasehold is common in many established overseas markets for high-rise apartments and integrated communities. This represents a benefit for owners in Dubai particularly as certain owners may visit infrequently and ‘forget’ to pay their maintenance bills. Under leasehold tenure contracts, the landlord could apply for an eviction order after a long period of non-payment, therefore safeguarding the integrity of the whole property or community.

Q Judging from the property classifieds, rents in Dubai Marina haven’t gone down much at all. Some even seem to have risen despite more supply coming on to the market. I’d like to buy an apartment to live in at the Marina; I’m just wondering which towers and areas of the Marina are the best options for long-term appreciation?

A During Q3 2009, Dubai Marina apartments witnessed a noticeable increase in rental rates, fuelled by the increased demand from visitors and tenants from Dubai and Abu Dhabi. This factor provided sellers and landlords with room to reconsider their offered prices with the aim of maximising their return on investment. Estimating long-term capital growth requires some careful thinking. This is where certain considerations such as location, property type, views, quality of structure, fit and finish, amenities, developer reputation and an estimation of future demand are taken into account.

You should seek some professional advice from property consultants. Given your personal objective is to maximise capital appreciation, I would recommend you consider towers in the central part of the Marina next to JBR (e.g. Al Sahab or Marina Promenade towers), and minutes away from The Walk.

Q I’m thinking of leaving my job and setting up a small company in a free zone. I’ve been impressed by some commercial buildings at Jumeirah Lakes Towers (JLT) as I do a lot of work in Abu Dhabi. Should I get a multiple-year lease at a discounted rate, or opt for something more short-term?

A I believe that the recession may be the best time to start a new business as you will be able to generate great savings and benefit from the reduced inflation rates which can impact your start up costs. JLT enjoys a strategic location and has a fantastic master plan. It also has a good balance between office and residential space.

Office tenants have the tendency to relocate less frequently compared to residential tenants due to cost of relocation, interior design and building client familiarity with their location. Since you will be able to obtain a better bargain from a long-term lease, I would suggest you opt for the multiple-year lease contract at a discounted rate which will only help reduce your set up costs and overheads over time.

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Real estate legal advice a growing sector

Dubai – Real estate legal services are becoming more popular among existing investors and prospective buyers in Dubai.

Dr. Ali Al Jarman, legal partner – Harbor Real Estate and founder of Prestige Advocates, says real estate-related enquiries have increased since the 2008 financial downturn. “Many of our clients have serious concerns over the security of their real estate investments,” he says.

Prospective buyers are also seeking out legal advice prior to making transaction. “This was not the case in previous years and also contributed greatly to the problems that clients are facing as proper due diligence was not conducted prior to the sale and purchase of property. Most enquiries are usually concerned with the real estate regulations and legislations such as the date of completion of a project, delay penalties, invalidity of the contract, cancellations and payment commitments.”

RERA (Dubai’s Real Estate and Regulatory Agency) has recently proposed a free legal advice service for buyers and sellers, an initiative that Dr. Ali applauds: “We believe that this innovative policy could also assist in boosting the confidence levels in the real estate industry,” he says.

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Dubai’s properties need people

The emirate’s real estate sector can only pick up if Dubai’s population grows, says a new study. Transparency and better customer service are also essentials.

Dubai’s real estate market is facing a massive oversupply, and will need a quick growth in the emirate’s population in order to recover, according to the latest report released by property broker Harbor Real Estate.

“In 2010, oversupply will be an issue in the market. An estimated 60,000 residential units and 30 million square foot of office space are coming on stream by the end of 2011,” the report said, adding that Dubai Marina and Jumeirah Lakes Towers alone were expected to see around 10,200 new units in the next two years.
Dubai’s population declined between 5 percent and 8 percent in 2009; the city will need to see a growth in its population to increase property demand and “kick start the industry again,” the report said.

It’s also not going to be easy to attract existing investors. Demand last year was dampened by the lack of available credit and the tightening of lending rules by mortgage lenders. In 2010, investors are expected to be extremely cautious, the report said.

“Gone are the days of the easy sale to the investor. Simply put, many people have been hurt by the real estate price correction. In effect, they have developed a risk aversion, which will take some time to overcome,” it said.

One of the key things essential to increase the confidence of consumers in the market is to increase transparency, the report said. Currently, laws and regulations about disclosure are limited.

“Investors, especially those from overseas, need to feel that their rights will be protected and, in case a dispute arises, resolution will be equitable, accessible and timely,” the report said.

The timely release of economic data will also help people assess the feasibility of their intended investments.
“Buyers, particularly those with cash are the new kings. This year, real estate professionals will need to serve the customer and serve them well. The main drivers of buyer dissatisfaction have been in the areas of knowledge, consultative ability and empathy. This responsibility does not only lie with brokers but also with developers who must ensure that end-consumer needs are understood,” the report said.

Dubai’s authorities have already started taking measures to regulate the emirate’s property market. Most recently, Dubai’s Real Estate Regulatory Agency (Rera) said on Sunday that it has signed a new deal with the Ministry of Labor to officially recognize real estate brokers as a separate professional category. Labor cards and residency visas issued to brokers will now include their designation, instead of categorizing them as sales staff. The authority said that the move would help to remove bogus brokers from the market.

“This is the first step towards a complete classification of the real estate professions in Dubai,” Marwan bin Ghalita, CEO of RERA, said in a statement, adding that the move will promote “transparency and professionalism” in the property sector.

In 2009, Rera announced that property developers in Dubai will have to pay the complete land price before selling off-plan developments and will also need to inject at least 20 percent of the project’s value before beginning construction.

Late last year, the Dubai Land Department also said that it was planning to introduce a new law to protect the rights of property investors during the first quarter of 2010.

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Construction targets to be met

Dubai-A total of 32,047 residential units are expected to come online this year, providing construction targets are met, according to Colliers International. Apartments are expected to account for 77 percent of the new residential units while villas will make up the rest.

The upcoming supply is set to bring down average rents and put pressure on landlords who, besides contending with lower prices, need to cover maintenance fees through rental yields as quickly as possible.

“In certain areas the increase in supply will potentially have an impact on rent being paid,” said Elaine Jones. Chief executive of Asteco Property management.
Negotiating Power

While tenants have considerably more negotiating power than they did 18 months ago, most landlord still expect payment in three to four cheques.

“The average number of cheques is still three and this has been relatively consistent for the past six months. Of course, there are still rental contracts based on one cheque and 12 cheques, but the majority are two to four cheques,” said Jones.

“During the last quarter, we also witnessed that the distress rentals that so characterized the rental activity of the first two quarters of 2009 have all but disappeared.

“Some landlords are now sticking to their negotiating positions and are more prepared to hold on to their properties and wait for the inevitable recovery,” said Mohanad Alwadiya, managing director of Harbor Real Estate.

“There is a belief that prices have reached realistic rates and there is very little room for price negotiations. Most of the tenants now negotiate payment terms and added value elements.”

Depending on the popularity of the area, certain units lend themselves more to rent negotiation. “If there are high occupancy rate in that particular building or development then there is usually little negotiating room on the rental rate,” Jesse Downs, director of research and advisory services at Landmark Advisory, told Gulf News.

“In this case, landlords tend to prefer to negotiate with the number of cheques or with an additional one month ‘s rent at no charge. For less desirable locations, developments with lower occupancy rates, or new buildings, there is usually more room to negotiate the rental rates. Of course, negotiations depend largely on asking prices.

There is variance in pricing strategies between the different agencies. Some brokerage firms list inventory at inflated levels and bring the rents down in the negotiation stages. Others list their inventory at more realistic rates and have low bid- ask spreads.”

Relocation

A continued trend of relocation from the outer emirates such as Ajman and Sharjah to Dubai can still be seen.

“Given the decline in Dubai rents in 2009, more people who are currently working in Dubai are opting to live in Dubai. As average rents decline, we expect this trend to increase with additional relocation from areas like Sharjah,” said Downs.

The trend seen in the fourth quarter of 2009 is predicted to continue early into 2010 with only a slight change in dynamics during the second quarter, especially when there is a better outlook of recovery, the projected supply and population figures.

A further drive that will affect rental rates is population growth generated by healthy commercial activity.

“Dubai needs to ensure that as the world economy starts to recover, it has positioned itself competitively as a place to do business,” said Alwadiya.

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JLT and Marina to have 10,200 new units in two years

Nearly 10,200 units will be released in Dubai Marina and Jumeirah Lakes Towers alone in the next two years, according to Harbor Real Estate.

“In 2010, oversupply will be an issue in the market. An estimated 60,000 residential units and 30 million square foot of office space are coming on stream by the end of 2011,” the real estate consultancy said in a report.

“The property scene is facing some significant oversupply challenges. With prices in Dubai for residential properties climbing five per cent from the previous quarter, the perception of the effect of looming oversupply, common knowledge to most people, suggests that for certain investors seeking certain property types, the price is just about right. The first quarter results will bear testimony as to whether this is the beginning of a sustainable recovery trend or a minor blip in the stabilisation process.”

However, the satisfaction of demand has been hindered throughout 2009 by the lack of available credit, tightening of lending policies and the inability of potential consumers to comply with such policies, the report said.

In 2010, the increase in the flow of credit into the market place will be gradual at best. In addition to not having sufficient funds on hand for lending, mortgage providers and investment financiers are still not in a position to fully and confidently assess the level of risk they can prudently assume, mainly due to uncertainty, which surrounds the risk inherent in their current loan portfolios. One of the consequences of a recession is that industries are rationalised.

In 2010, consumers and investors will be extremely cautious, the report said.

“Gone are the days of the easy sale to the investor. Simply put, many people have been hurt by the real estate price correction. In effect, they have developed a risk aversion which will take some time to overcome.”

Confidence in overall investment opportunities will only be achieved this year with increasing levels of transparency. Industry data and laws and regulations regarding developer disclosure and developer communicaons are the bare minimum. In addition, economic data, released in a timely fashion will assist investors assess the feasibility of their intended investment activity by gaining an appreciation of the economic strategies being deployed.

“The legal framework which surrounds and supports the commercialisation of real estate in Dubai has come a long way. The challenge has been to keep pace with the rapid development of the industry. Investors, especially those from overseas need to feel that their rights will be protected and, in case a dispute arises, resolution will be equitable, accessible and timely. There has been significant progress but there is still a way to go.”

Rera has been inundated with disputes arising from project delays, cancellations and investor dissatisfaction with alterations to payment plans and has been successful in providing the facility for dispute resolution. The efficient settling of cases will be critical to restoring confidence looking forward.

The balance of power within Dubai’s real estate scene will have dramatically tipped towards the buyer, probably for a long time.

“Buyers, particularly those with cash are the new kings. This year, real estate professionals will need to serve the customer and serve them well. The main drivers of buyer dissatisfaction have been in the areas of knowledge, consultative ability and empathy. This responsibility does not only lie with brokers but also with developers who must ensure that end-consumer needs are understood,” the report said.

“In addition, they will need to be creative with regards to how they ‘package’ their product to potential consumers because, in the vast number of instances, the consumer now has a myriad of alternatives. And alternatives for investors will not just be located within the local market or even regionally.”

China, for example, is experiencing a real estate recovery of significant proportions, while other nations such as Australia are also recovering well. In the competition for the global dollar, developers need to understand where they stand in the value comparison and ensure that the mistakes made over the past five years where lack of planning, customer focus and attention to market fundamentals are not repeated, the report said.

Meanwhile, landlords and sellers of existing properties will have a role to play as well. The initial presentation of a property is the key to gaining buyer interest. They will have to understand that every potential customer who is dissatisfied results in less revenue for a landlord or seller. In 2010, the professional relationship between a broker and seller is an important one and if both parties actively contribute and collaborate in successfully selling a property, greater returns can be realised, Harbor said.

Last year has been quite challenging for anyone wanting to obtain a mortgage in Dubai. In response to the global financial turmoil, banks tightened their credit policies, reduced lending ratios and increased interest rates.

“It appers the worst may now be behind us and lenders are once again opening up their credit policies. While obtaining a mortgage is still not simple and may not be so for a while, lenders are now more willing to consider applications. Interest rates are also on the way down. The average rate is now approximately 7.5 per cent, down from about 8.5 per cent a few months ago. As the property market stabilises and banks improve their liquidity, we should see further improvements in the mortgage market,” said the report.

In 2010, Harbor expects to see further industry rationalisation and additional considerations being given to mergers and acquisitions similar to the recently abandoned venture between Emaar and Dubai Holding’s real estate subsidiaries.

“The decision not to go ahead with the merger is an interesting one as it still leaves the question as to what degree of rationalisation and restructuring is still to be undertaken within these entities and throughout the industry as a whole. Clearly, a lot of work is still to be done.

“One benefit that the merger would have provided would have been an increased ability to control supply coming into the Dubai market. It is estimated that once the merger was completed, the new entity would have controlled more than 50 per cent of the supply currently in the pipeline causing anti-monopolists to shake their head in disapproval. But the issue remains as supply in the short term will remain as a prime determinant of any progress made to restoring confidence in Dubai’s real estate industry,” said the report.

The year 2010 will be a challenging one for everybody associated with the Dubai real estate industry. The only exceptions are those who have sufficient cash to buy or invest because they will be in an enviable position to exploit the considerable opportunities arising from recession.

World economies in 2010 will emerge from the recession at different levels. And so will Dubai’s economy. Globally, competition will be intense as every country in the world will be looking to grab a lion’s share of the world’s capital as the recovery gathers momentum. Singapore, Shanghai and Hong Kong spring to mind.

However, competition within the Middle East will be just as fierce. In 2010, infrastructural spending will continue to drive the economy funded by an oil price that will annualise at a price of between $75 (Dh275.25) and $85 per barrel.

The real estate industry in Dubai will continue to be stressed as more projects are completed. The Dubai economy will be reliant upon other forms of revenue-generating activities as the economic model of the emirate is re-configured in response to the new realities. Dubai will need population growth, and fast, Harbor said.

It will be the key to economic prosperity and will be determined by the success of growth strategies in its commercial, trade and tourism sectors. With a population declining anywhere between five per cent and eight per cent in 2009, population growth is the primary factor in generating the demand needed to kick start the industry again, the report said.

CREDIT NOTES POSITIVE FOR REAL ESTATE MARKET

The introduction of property consolidations and credit notes last year by developers has been positive for the real estate market as it has helped many investors gain ownership of a property more quickly than if they had continued to remain invested in a deferred project, Harbor said.

The practice of credit notes and property consolidations has allowed developers to either cancel or delay projects without totally dissolving the investor’s capital. It has allowed investors to realise returns on their investment a lot earlier than if they had continued to remain invested in a deferred project. Even if some investors lost out on some of their investment, taking the bigger picture in view reveals that more projects are likely to be put on hold or cancelled in Dubai.

In such a scenario, property consolidations and credit notes are helping investors to remain invested in Dubai and start to gain a return on their investment. “We will need to wait and see as Rera is assessing which projects are unviable and should be cancelled,” said the report.

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New property laws help turn Dubai into global destination

Laws and regulations introduced under the directives of His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, have transformed the emirate into a more mature market and global real estate destination.

“The vision and leadership of Sheikh Mohammed has positioned Dubai as a global city and one of the most renowned business hubs in a record time. His Highness focused on attracting international investors and building a world-class infrastructure which made Dubai, as we know it today, the location of choice for residents, businesses and visitors,” said Mohanad Alwadiya, Managing Director, Harbor Real Estate.

When it comes to real estate, Dubai set a new global benchmark and has introduced iconic projects to the world that covered all kinds of asset types and interests including the Dubai Media City, Dubai Internet City, Knowledge Village, Burj Al Arab, Emirates Towers, Dubai Marina, Business Bay, Dubai Festival City, Dubai Silicon Oasis, Downtown Burj Dubai, Emirates Living, Dubai International Financial Centre (DIFC), Burj Dubai and the Palm Trilogy.

Sheikh Mohammed’s vision did not start with the real estate developments, he ensured establishing the suitable infrastructure to support the real estate boom and its sustainability. The development of the Dubai Ports Authority, the introduction of Roads and Transport Authority (RTA) and industrial and specialised business zones have contributed to setting Dubai up to become one of the main trading, tourism and culturally rich cities of the world, he added.

Dubai, under Sheikh Mohammed, became the first city in the Gulf Co-operation Council to introduce a real estate regulatory body under the auspices of the Land Department.

The Land Department has continuously strived to keep up with the development and prosperity of the emirate. Through the leadership of Sheikh Mohammed, who always strives to be the best and definitely world-class in everything he plans, guiding with an extraordinary skill, passion and intelligence, the “vision of Dubai” has become the world’s most incredible reality and yet still, there is even more to come.

Supported by Sheikh Mohammed, the Land Department is planning and implementing services to participate towards making Dubai the leading city of the world, the Department said on its website.

The Government of Dubai instituted new rules, regulations and laws in the emirate to regulate the market, to protect the rights and interests of consumers, and to ensure Dubai property investors are assured the highest possible service standards from real estate agents, brokers and property developers transacting business in Dubai and maintain the integrity of all the developments.

The Department launched a number of laws and regulations that regulate the property sector. Starting with Law No7 concerning land registration in Dubai, Law No3 concerning areas of properties that can be owned by non-UAE nationals in Dubai, Law No8 concerning property trust account in Dubai, Law No 85 concerning real ease agent regulation and the upcoming strata law.

Alwadiya said: “The young Dubai property market has come a long way with regards to regulating the real estate industry. While the efforts to protect rights, lift standards of professionalism and establish a transparent, credible and functional framework are to be applauded, there is still a long way to go before the industry can be said to be in the final stages of maturation.

“Over the past years, the government has adopted numerous legislations and regulations to protect everyone in the real estate sector, and most importantly establish a safe environment for investors. Dubai has proven to be the world’s greatest improver in terms of real estate transparency over the past two years. With the establishment of regulatory bodies such as Rera, investor representative bodies, the establishment of codes of practice for real estate practitioners combined with laws relating to freehold ownership, escrow accounts and strata titling, Dubai has reduced drastically the concerns of expatriate and foreign investors,” he added.

Transparency has also been given a boost with the introduction of the credit information law, a positive step towards transparency and risk mitigation for banks. The law will create a framework of rights and obligations for data providers, information users and individuals alike, Alwadiya said.
Saeed Mirsaeedi, Investment Manager of Sherwoods Real Estate, said: “Introduction of new laws has been a positive development and has helped Dubai’s emergence as a mature and prosperous economy.

“Clear-cut regulations and increasing transparency make Dubai property most attractive to overseas investors,” he said.
Although previously non-Gulf Co-operation Council expatriates were only permitted to rent property, or own property on a 99-year leasehold basis, all changed in 2002 when the Dubai Government took the initiative and permitted the ownership of freehold property to expatriates. This bold initiative changed the perception of the real estate industry in the Middle East and the Gulf.

The Dubai Government began the promotion in 1997 by setting up Emaar Properties. The next year, Emaar began work on Dubai Marina followed by the Emirates Living Community developments such as the Springs, the Meadows, Emirates Hills, etc. However, the major property boom in Dubai occurred in May 2002, when Sheikh Mohammed issued a decree to allow foreigners to buy and own freehold property in selected areas of the city, now referred to as New Dubai.
On March 14, 2006, Dubai’s Government issued a law legalising foreign ownership of properties in designated areas of Dubai.

“It was the adoption of freehold tenure in general, and foreign ownership in particular, that sparked the great real estate boom in the Dubai property market,” said Alwadiya.

The introduction of the freehold law by the Ruler transformed Dubai into a true success story capturing the imagination and admiration of countries worldwide. Many countries followed the Dubai model and benefited greatly from its visionary experience.

Dubai has developed several iconic real estate projects, which have acquired international recognition, marketing the emirate as a destination of choice for business and travel and for investment in real estate.

The Palm trilogy and other iconic projects such as The World have put Dubai in international limelight. Furthermore, prospective developments of creative concepts, which are likely to attract significant visitors in the coming years, continue to take shape. Burj Dubai, the tallest tower in the world, will be opens today. Although Dubai International Financial Centre formally opened as a global financial centre in 2004 with the aim to become the global hub for financial services in the Middle East, it has also emerged as one of the most expensive addresses for real estate in the emirate.

In fact, property prices on residential units in the DIFC are becoming increasingly comparable with the leading capitals of the world. Dubai’s real estate industry dynamics are firmly entrenched in Dubai Strategic Plan, which strives to achieve a medium-long term objective of diversifying the economic base of the emirate in key growth areas, which have been defined as priority sectors within the associated blue print. Of particular significance is the focus of the plan on the real estate development and the construction sector, as well as travel and tourism, with the former providing necessary infrastructure for growth of all other businesses, and the latter ensuring sustained economic buoyancy through continuous and aggressive growth in visitors to the emirate.

The investor-friendly business environment in Dubai has promoted not only businesses but also a demand for office space, and the high real incomes have ensured that the labour force is increasingly imported from abroad, thus catalysing requirements for housing and retail.

Iconic projects

Dubai has introduced some of the most iconic destinations that cater for different lifestyles and asset categories. Some of them in the business and commerce segment are the DIFC, Business Bay, Dubai Internet City, Dubai Media City, Knowledge Village, Dubai Silicon Oasis, Dubai Maritime City, Tecom, Jebel Ali Free Zone and Dubai Healthcare City.

In entertainment, lifestyle and culture segment falls the Dubai Festival City, Downtown Burj Dubai, Emirates Living, Dubai Mall, Ibn Battuta Mall, Palm Jumeirah, Burj Dubai and Dubai Marina.

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Investors confident about Dubai property market

DUBAI: Real estate industry experts say that investors have started expressing confidence in the Dubai property market in the long term, though the property prices in Dubai have not been affected by the recent Dubai World debt restructuring talks.

Speaking to The Gulf Today the CEO of Leo Sterling, Laura Martorano said that despite all the negative economic indicators, Dubai will continue to thread a bright future.

At the same time the managing director of Harbor Real Estate, Mohanad Alwadiya, also confirmed that property sales enquiries have picked up.

He believes the hike in interest is a result of the debt crisis. “Since the Dubai World announcement, we have recorded a noticeable increase in the number of queries from private and institutional investors who are interested in taking advantage of the impact that the announcement may have on the overall prices of property in Dubai and in Nakheel developments in specific.”

Martorano says that investors who bought property in Dubai not later than two years ago still stand to make a profit despite the current low prices.
She however added that people who are suffering the most are those who bought properties last year on mortgage because prices were extremely high with mortgage rates high as well.

Martorano adds that those people who bought property before 2007 have not lost, even if they sell they will still make a profit. She further says that property prices in Dubai were not much affected by the recent Dubai World debt restructuring talks.

“We were closing transactions with a few owners in JBR and they are sticking to their own price and we closed it on their price,” said Martorano.
On the other hand, Alwadiya says that although the Dubai World request caused global markets to plunge and attracted criticism in the international press, the situation he says has been overblown. However, he feels the incident has affected investor confidence.

We definitely feel that the international media is blowing this news out of proportion and a major effort will be required to reverse world opinions, he adds.
“Prices in a ready market will not change much because there is competition. In a ready market, about 60 per cent of the purchases are cash purchases. Therefore, these people may not necessarily be so desperate as opposed to the 40 per cent who have mortgages and bank loans,” explains Martorano.
Industry sources however claim that property transactions in Dubai have fallen in November compared to figures posted in the previous month.

Statistics from Dubai Land Department show the number of villa sale, have increased by 24 per cent from 88 to 109 but there was a 41 per cent decline in the value from Dh290m in October to Dh170m in November.

Flat sales saw a 4.8 per cent increase in number from 1,354 to 1,420 but values took a 7.7 per cent dive from Dh1.3bn to Dh1.2bn.
Dubai’s average monthly market index in November has also seen a 6.98 per cent contraction to 2,124.98 from 2,284.42 in the past month.
October also reported other positive indicators with average monthly market index posted at 11.25 per cent hike and trade as per issued Dubai certificates of origin rose by 10 per cent in volume and nine per cent in value.

Despite all the negative economic indicators, Martorano is convinced that Dubai will continue to thread a bright future.
She says investors with the means should shop around, “It’s a great time if you are a cash buyer, because banks are anticipated to get more tight-fisted, as they will come under pressure in a bid to keep a safety net due to their exposure to Dubai World.” Martorano thinks the debt issue is unlikely to stop the market from rebounding.

How mergers could save the property and financial sectors

Mohanad Al Wadiya, Managing Director of Harbor Real Estate Brokerage, shares his thoughts on upcoming mergers

For many players in the local market, mergers and acquisitions appear to be a logical solution to stay afloat during the global financial crisis. Opinion is divided as to whether these mergers and acquisitions will have a positive or negative impact in the short and medium terms, and it is too early at this stage to predict success or failure. Nevertheless, it seems clear that without these actions, the result would be a freeze in financing facilities and diminishing activity in the property sector, which would have an adverse effect on the overall economy.

Within the financial sector, these kinds of mergers really started as early as last year. It all began when Amlak and Tamweel announced a merger to create Emirates Development Bank in November 2008. The new bank will have access to federal funds and hopes to strengthen the UAE’s home finance sector. The merger news gained considerable media attention and created veryhigh expectations.

In terms of property development, we have seen similar mergers within the last year. Dubai World, the major property and ports conglomerate, recently consolidated its management and property operations of Leisurecorp, Dubai Maritime City, and the Dubai Multi Commodities Centre, all of which it owns. The property divisions of these companies will now be run by Nakheel, another property arm of Dubai World.

There is also continued discussion of a merger between Deyaar Development and Union Properties, with news about the latter having liquidity problems and losing its long-time chief executive recently.

While these developments are important for the sector, the most significant merger in the region is currently being discussed between Dubai Holdings’ ‘Big 3’ companies and Emaar, a most popular developer in the Middle East. Dubai Properties, Tatweer, and Sama Dubai—collectively known as ‘The Big 3’—are fully-owned subsidiariesof Dubai Holding Commercial Operations, a holding company of Dubai Holding Group with total assets of Dh126bn at the end of 2008, as quotes by Emaar.

There is a growing consensus among the officials involved that allowing healthy businesses to acquire companies in jeopardy of failing could stabilise the economy by bolstering confidence in both the financial and property sectors. For some of these companies, merging with a partner that has a strong balance sheet is a pressing and essential step in preventing dissolution. Other benefits include leveraging economies of scale and having stronger negotiation positions with regard to suppliers and contractors. The mergers will allow companies to work together to achieve long-term, strategic benefits by uniting complementary businesses into a single, sufficient and more successful operation. For the property sector, these mergers will also allow consolidated companies to have better control of the overall supply introduced into the marketplace and the quality of the products and services offered. This will definitely have a positive impact on the market in the long run.

On the other hand, there are concerns that these mergers will place heavy burdens on the stronger companies
involved. These partners are not just taking over assets, but may also be inheriting large liabilities and debts. Furthermore, these mergers are likely to generate a lot of uncertainty among the investors and shareholders involved. Investors might have to accept further delays until these mergers are finalised, and will then have to evaluate the impact of the mergers on their investment.

Whatever the impact, the number of mergers involving financial and property organisations is increasing. For these new companies, the ability to provide prompt, transparent, and practical information that guide all stakeholders through the merger process and expected outcomes could make the difference between success and failure from the public’s point of view.

Meadows, Jumeirah Islands top sales transactions

Villlas in The Meadows, Jumeirah Islands and Arabian Ranches have seen increased sales transactions in the past one month. Among apartment buildings, Dubai Marina, Jumeirah Beach Residence (JBR), Downtown Burj Dubai and Jumeirah Lake Towers (JLT) have recorded the maximum number of sales transactions.

“Among villas, Meadows, Jumeirah Islands, Arabian ranches recorded the highest transactions, while from an apartment perspective, Dubai Marina, JBR, Downtown Burj Dubai and JLT have recorded the highest transaction,” Peter Penhall, Chief Executive, Gowealthy.

Gowealthy recorded 20 per cent incremental growth in transactions for November, from October figures.

Vineet Kumar, Head of Sales, Asteco Property Management, said: “The top three residential areas, which have witnessed the most transactional activity in the month of November for apartments sales, have been The Palm Jumeirah, Dubai Marina and Downtown Burj Dubai areas. “The locations which witnessed the most transactional activity in the month of November for villa sales are The Emirates Living Area, Arabian Ranches and The Green Community.”

Kumar said the total number of transactions Asteco supported in the month of November was 48 individual sales. However, some of these transactions were single investors purchasing multiple units so the overall unit numbers were higher than this.”

Liz O’Connor, Director-Residential Sales and Leasing, said: “From a sales perspective, among the villas, Springs/Meadows, Jumeirah Village, Jumeirah Islands stood apart and in the apartments category, it were Downtown Burj Dubai, Jumeirah Beach Residence and Dubai Marina.

“From a rental perspective, Emirates Living [Springs, Meadows, JLT, Discovery Gardens, Jumeirah Village], Marina [JBR, Marina], Dubai Land [Arabian Ranches, Motor City, Sports City] have recorded high number of transactions.”

The sales were about 40 and leases are about 250, according to Better Homes.

According to Mohanad Alwadiya, Managing Director, Harbor Real Estate, Emirates Hills Third and Palm Jumeirah are the areas that have recorded maximum transactions.

According to Penhall, predominantly South Asian (Indians, followed by Pakistanis) have invested into these areas. The GCC nationals form the next largest set, followed by South East Asians/Chinese. “Most of them were end users and finance buyers,” he added.

According to Kumar, the buyer profile has been predominantly the end user. However, there were a few buyers based overseas who have bought properties for rental income purposes with a view to holding their real estate assets for the mid-term (5-7 years). “The buyers on these projects were mixture of individuals from the GCC countries, Russia, India, Pakistan and Western Europe,” he said.

O’Connor said these areas have mostly seen end-users, pre-qualified for a mortgage but those who have access to additional funds to cover the difference if the evaluation of the property was less. We deal with many cash buyers who are looking for the best priced properties in today’s market.”

With respect to price floor in these areas, Penhall said that for a higher trading areas such as well-located villas in Meadows and apartments in certain towers at Marina, expectations are being met to a large extent due to the relatively higher availability and demand parameters. “The selling prices are neither too far out of present reach-market getting more matured, buyers and sellers are getting quite pragmatic on their price expectation factors.”

He added that however, the point to be noted here is that currently, price factors are an indication of distress levels of individual sellers and should not necessarily be construed as a market price index for a particular type of property in a particular community.

Kumar said the sales activity on these projects have tended to revolve around the owners and sellers of properties who have purchased them in the years prior 2008. “Typically these properties can be sold in today’s market with some expectation of premium,” said Kumar.

Alwadiya said mixed nationalities of end-users and investors have invested into these areas. “In general, buyers are more demanding and careful nowadays compared to last year and the previous years and hence they do enough due diligence before purchasing any properties.”

According to Better Homes, the buyer is always looking for the best priced property/value for money.

“We have not seen major prices changes sine the last three month – prices have stabilized in certain areas and you can always find very well priced properties in all areas of Dubai,” she said.