Weekly Dubai real estate news digest. Issue 11

15.09.2013
    Leading the way forward
Welcome to the eleventh issue of Market Insight, your weekly guide to what's happening in the Dubai real estate market.
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MARKET INSIGHT. Weekly guide to Dubai's property scene
Issue 11 |  September 15, 2013

Leading the way forward

House prices in most major cities are on the rise but while the global average is close to 2.4%, Dubai has been soaring ahead with a 5% quarterly increase. According to London real estate firm Knight Frank's global price index, Dubai is in the lead in annual rankings, recording a price growth of 21.7% in the year to the end of June. 

The emirate's housing market has been gaining momentum since 2012 and its real estate rebound will continue into 2014, a new report has said. Fitch Ratings said in its report that a "strong 2014" is to be expected, noting that residential prices and demand has shown recovery in prime locations in Dubai.

The report highlighted that secondary projects and new developments may be challenged in the short term. Other challenges include the ability of real estate companies to maintain performance in light of increasing supply and large expansion across all segments. 

While the market's recovery is evident, another thing that is clear is the lessons the industry has learnt from the recession. Market maturity and greater regulation can be witnessed in today's sector. Mortgages are harder to come by than ever before and most banks have stopped issuing financing to overseas buyers, simply because of the costs involved and the lack of authority the bank has to ensure action is taken when payments are not made. 

Another consequence has been greater financial literacy among the people and investors interested in the market. A new electronic tool has been released that allows buyers to compare mortgage rates across the Emirates, providing individuals with better access to information and promoting transparency. 


Market Insight is aimed at examining the emirate's dynamic market and forecasting industry trends. With Dubai leading the way in the global market, most experts predict an upward 2014 market. We hope that our round-up of stories and expert opinions has helped shape the direction the industry is heading towards. Be sure to catch our next issue to know more about the latest in industry trends. 

 

Sincerely,

Pashma Manglani

Editor


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Dubai property prices world's highest 


Dubai's property market recorded the largest year-on-year average price increase in the second quarter of the year, according to London-based property broker Knight Frank.

Knight Frank's Global House Price Index stated that the average property price in Dubai surged 21.7% between second quarter 2012 and second quarter 2013.

House prices in the world rose 2.4% in the second quarter of the year while Dubai recorded a 5% quarterly increase.

 

Read more on Gulf News

'Real estate rebound to continue into 2014'


Dubai's prime property sector is up for a strong 2014, following a vibrant 2013, according to a report by Fitch Ratings.

It added that there was still some uncertainty for the market, including Middle East instability, Dubai's bid for the World Expo 2020 and the impact of major new real estate projects that are in the pipeline. 

Fitch said that the sector's stable outlook is reliant on the ability of real estate companies to maintain performance in light of the increasing supply and expansion across all segments. 


Read more on Arabian Business

Banks wary of financing overseas buyers

As the Dubai property market heats up, getting a mortgage can still be tricky for international investors looking to get in on the action.

"We don't finance overseas buyers," said Suvo Sarkar, general manager of retail banking at Emirates NBD.
"At this point, we don't believe the economics stack up."

Lending to overseas buyers comes with a multitude of additional costs for banks. Documentation becomes difficult as does establishing sources of income for customers of certain nationalities. A customer default can also be problematic, as a UAE bank is likely to have little recourse over a buyer in another country.

"We've done it in the past," said Sarkar. "We used to do it pre-crisis, but post-crisis, we tightened the policy and we haven't opened it up just yet."


Read more on The National

Mortgage map initiative aims to boost transparency

The National newspaper in co-operation with Pecunia.me has launched a mortgage map initiative in an attempt to increase transparency in the home loans market.

The online interactive tool is based on Google maps technology and allows for an easy comparison of both conventional and Islamic home loan terms across all areas of the UAE. The data is provided by residents who currently hold a mortgage. The general information can be viewed by logging on to the site.

The mortgage map allows consumers to see what mortgage rates other users have reported and to share their own rates. Mortgage details can be viewed at pecunia.me/UAE/. 


Read more on The National

Surge in home loans expected


Expectations that the Central Bank will impose a mortgage cap this year are unlikely to affect a surge in the number of new home loans, according to property agents.

Agents in Dubai and Abu Dhabi are reporting an increase in the number of residents taking out mortgages. According to property valuer Cluttons, the number of mortgage valuations it has been asked to carry out over the past 12 months has increased by 40% when compared to the same period in the previous year. However, the agent added that the level still remains about 20% below than it was at the peak of the market.


Read more on The National

Uniform realty standards to benefit all

The recent announcement that 19 leading property professionals from around the world have been appointed to create the first global standard for measuring property has far-reaching implications for the local market.

If the International Property Measurement Standards Coalition (IPMSC) is successful in creating a unified measurement standard, investors and tenants in the region's real estate market will benefit from the knowledge that the alternative buildings they are looking to purchase or occupy are being measured on the same basis for the first time.

This would be a major improvement on the current practice, where there are no common standards and real estate is measured differently between countries and even between different developers in the same country. An example of a difference is on whether to include balconies in the saleable area of residential units or whether common areas such as corridors and washrooms should be included within the lettable area of an office building. However, a standardised system is sure to boost transparency in the region's marketplace.

 

Read more on Gulf News

Dhs18,660 online ad scam  


Three suspects are currently standing trial for allegedly placing an online ad, forging a flat ownership certificate and conning a potential new client of Dhs18,660. 

The victim said he contacted the suspects after reading an online ad about a flat in The Gardens at Jebel Ali. He was reportedly told to pay four installments of Dhs11,000 each in addition to fees for booking the apartment as well as for the agent commission.

 

Read more on Emirates  24/7

Dhs3.3t: GCC construction sector by 2020
 

Government-led initiatives will continue to drive growth in the GCC construction sector over the next decade as regional governments continue to focus on social infrastructure projects.

There will be an estimated Dhs3.3 trillion of construction developments underway across the GCC between now and 2020, according to a recent statement issued by building material company Danube.

Real estate projects account for an estimated Dhs1.89 trillion of the current developments across the region, the report pointed out.


Read more on Gulf News

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