Weekly Dubai real estate news digest. Issue 2

21.07.2013
    Bigger, better projects lined up
Welcome to the third 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 3  |  July 21, 2013

Bigger, better projects lined up

 
With the property market recovering, there has been a shift towards meeting investors’ expectations – going well above the standards that were set before the crash.

The strategy appears to be working quite well, seeing as property sales in the first six months of the year have gone up by 30% as compared to the same period in 2012. Mortgage rates have gone up globally, leaving buyers concerned in countries like the United States; however, in Dubai, mortgage lender Tamweel has, in fact, recorded increased profits this year, making Dhs26 million in just three months (a 40% increase from the previous year).

With an eye on the future, most property developers have big projects lined up. Two banks in the UAE have signed a Dhs900 million loan facility to fund construction of a three-tower real estate project in central Dubai. Nakheel announced that its current pipeline of development projects is worth between Dhs8-9 billion and it has an aim to deliver 1,500 units this year. On the luxury front, Dubai has announced plans for its first golf course condominium, overlooking Donald Trump-backed Trump International Golf Club. Prices will start at Dhs900,000 for a studio.

Commercially, the office space boom continues with an increased focus on the Business Bay area. Research by global real estate consultancy Jones Lang LaSalle revealed that almost 50% of upcoming office space in 2013-2015 will be in this central part of town.

To encourage further investment, Dubai real estate developers may issue bonds to fund projects as opposed to forcing them to rely on bank debt. Major property developers already have loans from international and local banks and in order to continue further expansion, there needs to be an additional source of funding – tens of billions of dollars. With the Gulf’s bond market becoming more liquid than during the last real estate boom, it has become a more feasible option for real estate firms.

Prices continue to skyrocket in key areas in Dubai, including the Palm Jumeirah and International City. However, JBR is losing its charm with renters and buyers, according to a new study. The area, which was one of the hottest places a few years ago, has apparently become unpopular, probably as a result of ongoing construction. Meanwhile, as further evidence of growing investor confidence, over 200 exhibitors have signed up for the three-day property event Cityscape Global, which will be held in October. 

Market Insight is aimed at examining the emirate's dynamic market and forecasting industry trends. We hope that our round-up of stories on some of the most exciting projects that have been announced this year has been insightful. Be sure to catch our next issue to find out more about the latest real estate developments that are making waves in the city.
 

Sincerely,

Pashma Manglani

Editor


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Property sales up by 30%


Property sales in Dubai have increased in the first six months of 2013 as compared to figures from the same period last year, according to data issued by the Dubai Land Department.

The total value of transactions increased by 30% with Dhs108 billion being recorded in 2013 from 30,469 transactions. Mortgages accounted for Dhs51.3 billion of sales, marking a 47% increase from the previous year. 


Read more on Property Wire


51% hike in Palm Jumeirah property prices


Prices on the Palm Jumeirah development may have gone up by over 50% in the past year, according to research carried out by Arabian Business.

Average prices for apartments on the Shoreline now cost Dhs1,200 per square foot (psf) as compared to Dhs795 psf a year ago. The biggest hike has been seen for two and three-bedroom apartments. 


Read more on Arabian Business


JBR losing its charm


Jumeirah Beach Residence is losing its popularity among renters and buyers, according to PropertyFinder.ae's Real Estate Report. 

The study revealed that JBR saw its ranking in the most searched locations fall from seventh in the first quarter to tenth place in the second quarter.

PropertyFinder.ae said that the area's loss of desirability could be due to ongoing construction projects. 


Read more on Arabian Business


More mortgages issued


Dubai mortgage lender Tamweel recorded a 40% increase in second-quarter profit on Thursday.

It made a profit of Dhs26.08 million in the three months to June 30 as compared to the Dhs18.57 million a year ago.

Read more on Emirates 24/7


Real estate bonds to attract investors


Dubai property developers may now issue bonds to fund new projects and studies of the market indicate that this would result in strong investor demand.

Previously, property and construction firms relied almost exclusively on bank finance. With major European banks having partially pulled out from the market, the bond market is set to play a bigger role in the sector, giving investors access to a wider range of credits.

According to Ambereen Jiwani, senior analyst at Securities & Investment Co in Bahrain, “From an investor’s point of view, debt instruments by government-linked property firms will be attractive based on the risk premium offered over sovereign bonds and so I think they will be taken up. The Dubai real estate market has staged a recovery and investor confidence has improved.”

 

Read more on Khaleej Times


International City more expensive
 

International City may soon move out of the “affordable” bracket if the high demand it witnessed in the first six months of this year continues.

Data by Reidin.com revealed that 1,272 apartments were sold this year, marking a 46% increase from last year. Average prices rose by 27% to Dhs499 per square feet (psf) from Dhs392 psf.

Currently, listed prices of studios range between Dhs270,000-Dhs370,000, while one-beds are being sold for Dhs380,000-Dhs500,000

 

Read more on Emirates 24/7


Office space boom in Business Bay


Dubai has witnessed a rapid growth in office space options but according to a recent report, more than half of the total upcoming projects will be in Business Bay.

Jones Lang LaSalle, a global real estate consultancy, revealed in its second quarter report on Dubai that the majority of upcoming office space in 2013-2015 will be in Business Bay (56% of total upcoming supply).

Other locations that will see new office supply are DIFC (10%), JLT (10%), Dubai World Central (7%) and Dubai Investment Park (5%).


Read more on Emirates 24/7


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