Weekly Dubai real estate news digest. Issue 16

20.10.2013
    Eye on the future 
Welcome to the sixteenth 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 16 |  October 20, 2013

Eye on the future 

A successful Dubai Expo 2020 bid would be a major game changer for the region's burgeoning real estate sector, according to Danube Founder and Chairman Rizwan Sajan.

He pointed out that the event would boost greater optimism and reinforce buoyant confidence. Year-to-date property sales in Dubai have grown beyond 22%, splitting industry leaders and analysts on whether a property bubble is emerging. According to Andrew Scott, a professor at economics at the London Business School, the expo would boost the local economy by as much as 1%, representing billions for the emirate. 

Dubai is already among the front-runners in prime residential property rent growth, as per an index released by Knight Frank. While globally, annual rents are 5.3% higher than they were 12 months ago, in Dubai, rents rose 15% respectively on an annual basis. 

With the conclusion of Cityscape, there has been a series of announcements of new developments. According to a new report by real estate consultancy CBRE, developers with proven track records have been at the forefront of launching new projects in Dubai over the past two years. The report attributes the change to more enforcement from the Real Estate Regulatory Agency (RERA), imposing greater requirements on developers.


Office rents in Dubai have slowed down in the third quarter, but the first six months of 2013 have seen the lease rate rising. New areas such as Business Bay, Jumeirah Lakes Towers, Jebel Ali, Dubai Silicon Oasis, Sheikh Zayed Road and Tecom continue to improve and are experiencing rental growth. 

Market Insight is aimed at examining the emirate's dynamic market and forecasting industry trends. Dubai's bid for the Expo 2020 is bound to have a significant impact on the industry and we hope that our round-up of key stories and expert opinions has helped give you an overview of some of the developments that are soon to follow. We'll be following market changes and be sure to update you on the latest realty news. 

 

Sincerely,

Pashma Manglani

Editor


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JBR records slowest growth


International City has been recorded as top performer in terms of rental values growth, followed by Jumeirah Lakes Towers, The Greens and Dubai Sports City. Jumeirah Beach Residence has recorded the slowest growth. 

The Reidin Rent Index climbed by 15% year-on-year and 6% quarter-on-quarter. 


The villa rent index went up by 14% and appeared to have reached its peak value, while the apartment rental index scored a 15% year-on-year growth, but remains 19% lower than its record level.

Quoting the Reidin Residential Sale Index, Alan Robertson, CEO, Jones Lang LaSalle MENA said: "The broad-based recovery in the residential sector is resulting in price and rent increases across most areas. Unlike last year, the fastest growth is now being experienced in mid-market and affordable projects and there are signs that the rate of increase is slowing in some high-end locations."

 

Read more on Emirates 24/7


Dubai at forefront of global rent hikes 


Prime residential property rents rose by 2.3% on average around the world in the second quarter of 2013, the strongest annual growth for three years - with Dubai and Nairobi leading the way.

The index from Knight Frank shows that on an annual basis, rents are 5.3% higher than they were 12 months ago. 

In emerging markets like Nairobi and Dubai, rents rose by 24.2% and 15% respectively on an annual basis, significantly outperforming the global financial centres of New York and London, where prime rents declined by 2.9% and 3% respectively over the same period. 

 

Read more on Property Wire


Expo 2020 to help grow economy by billions
 

Expo 2020 in Dubai would boost the local economy by as much as 1%, representing billions for the emirate, according to Andrew Scott, a professor of economics at the London Business School.

The government estimates 25 million tourists would visit Dubai for Expo 2020 if the emirate is successful in its bid. Scott said hosting the event would boost GDP by half a per cent in the lead up to and following the event. Another half per cent would be added during the Expo. 


Read more on Gulf News


Reputed developers lead new launches
 

Developers with proven track records have been at the forefront of launching new projects in Dubai over the past two years, with the majority of launches achieving high absorption of units, according to global real estate consultancy CBRE.

"As has been the trend over the last 24 months, most new projects have been launched by developers with a proven track record in the local market, highlighting a slight deviation from the previous cycle where there was greater movement from smaller scale private developers," the consultancy said in its third quarter 2013 report.

This has been primarily due to the enforcement of the Real Estate Regulatory Agency's (RERA) regulations, requiring developers to have 100% ownership of their land and an unconditional performance guarantee for 20% of construction costs if they wish to sell off plan before 20% of the construction is completed. 


Read more on Emirates 24/7


Old mortgage customers pay Dhs50,000 more interest 


Banks are charging old mortgage customers almost Dhs50,000 a year more in interest than new ones on an average apartment, despite tumbling inter-bank borrowing costs.

Homeowners who took out a floating rate mortgage in 2008 are on average paying rates of more than 7%, according to data from Pecunia.me's recently launched mortgage map.

But homeowners who took financing this year report pay average rates of about 4.5%. The average difference is more than 2.5 percentage points, the data showed. The mortgage map includes rates from about 100 homeowners countrywide.

Mortgage map data shows the practice is adding as much as Dhs4,000 a month in interest payments on a Dhs2 million mortgage. 


Read more on The National


Commercial lease rates rise


Office rents in Dubai slowed down in the third quarter 2013 though the first six months saw lease rate rising, according to a new report by Jones Lang LaSalle.

Prime rents in Business Bay have grown 28% year-on-year and 10% quarter-on-quarter. Meanwhile, JLT offers more affordable office space to companies seeking free-zone premises. Prime rents in JLT's best quality buildings, however, have seen a rise of 75% year-on-year and 14% quarter-on-quarter. 

Jebel Ali has also been filling up quickly and rental values in both its free-zone and onshore areas have been on the rise. Rental values have picked up in Barsha too. Meanwhile, older business districts such as Deira and Bur Dubai saw rents fall, with Jumeirah Beach Residence and Dubai Marina from the newer districts joining the list. 

Finally, the top open-market rent in the Dubai International Financial Centre increased marginally to Dhs2,610 per sq. metre
.

 

Read more on Emirates 24/7


UAE bank building among world's best


Dubai is home to many spectacular buildings in the world from the Burj Khalifa to Princess Tower, the tallest residential tower.

Now, it has also found a place in the list of the world's most spectacular bank buildings. The sail-shaped tower, which houses Emirates National Bank of Dubai's head office has been included in the list of top 12 bank buildings in the world by Emprois, provider of building data and construction projects worldwide.

The Bank of America Tower in New York topped the list. 

 

Read more on Emirates 24/7


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