Weekly Dubai real estate news digest. Issue 20

17.11.2013
    Steep hikes in Dubai rents  
Welcome to the twentieth 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 20 |  November 17, 2013

Steep hikes in Dubai rents  

The UAE is currently ranked among the fastest growing real estate markets in the world. Rents are on the rise, new developments are underway and investors are more than interested in the luxury projects that Dubai boasts.

By 2015, it is expected that the UAE will have 192 skyscrapers rising over 150 metres in height, a new report has revealed. Dubai's skyline will be home to 149 of these hi-rises while Abu Dhabi will have 32, the Council on Tall Building and Urban Habitat has said. Overall, the Middle East will have 289 towers by 2015. 

The emirate's rapid development can also been seen in the latest announcement by property developer Damac, which has launched the book-building process for its initial public offer of shares in London, the first IPO by a Dubai property firm since the emirate's real estate crash four years ago.


Additionally, Emirates 24/7 has found that villas in Emirates Hills and Palm Jumeirah top the list of villa prices, renting out at Dhs1 million. 

With soaring rents, some landlords seek to evict tenants to benefit from surging rents. Landlord-tenant legal disputes have jumped by as much as half, fuelled by rent increases of over 40% over the last year in some locations. 

However, with rapid progress comes the warning to take caution. A senior official at the International Monetary Fund (IMF) has said that the Dubai government has to make sure its property market is driven by fundamental factors, not speculation, and be ready to act if it sees very rapid increases in asset prices. It acknowledges that the Dubai government has started to take steps in this direction. 

Market Insight is aimed at examining the emirate's dynamic market and forecasting industry trends. With rents skyrocketing across the emirate (jumping over 20% in the last year alone), Dubai's government has taken steps to regulate the market, including enforcing a new regulation regarding mortgages. We hope our round-up of key stories and expert opinions have helped in understanding the changing nature of the realty sector in Dubai. We'll be following up on the latest developments and will continue to update our readers on the changes that are currently underway. 
 

Sincerely,

Pashma Manglani

Editor


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Villas renting out for Dhs1m


Listing agents have the rents of villas in Emirates Hills at Dhs2 million a year, offering tenants a seven-bedroom with a golf course view or a six-bed, furnished with antiques.

In the Dhs1 million category, the Al Qusais area - normally not associated with high-end housing - has a villa going at Dhs1m on propertyfinder.ae. According to the listing, the two-storey twin villa has 22 rooms, is spread out over 21,000 sq ft and has six parking bays. 

Emirates Hills and Palm Jumeirah top the list of the Dhs1 million rent category market. Real estate agents say companies mostly rent these villas for senior-level management with some corporates even paying the rent in just two cheques.

 

Read more on Emirates 24/7

Nearly 200 skyscrapers by 2015: Report

The UAE, currently ranked among the fastest growing real estate markets in the world, will have 192 skyscrapers, rising over 150 metres in height by end of 2015, says a new report.

Dubai's skyline will be home to 149 of these hi-rises while Abu Dhabi will have 32 skyscrapers, the Council on Tall Buildings and Urban Habitat (CTBUH) said.

Sharjah will have eight towers, Fujairah two towers and Ajman one tower, it added. The first 150-metre plus skyscraper built in Dubai was Burj Al Arab, completed in 1999. The emirate, however, currently has only two 100-storey plus towers: Burj Khalifa (160) and Princess Tower (101)
.
 

Read more on Emirates 24/7

IMF warns of property exuberance 

Dubai's government has to make sure its property market is driven by fundamental factors not speculation, and be ready to act if it sees very rapid increases in asset prices, a senior International Monetary Fund (IMF) official said.

"When you begin to see very rapid increases in any asset prices then you just need to be prepared to act," said Masood Ahmed, the IMF's director for the Middle East and North Africa. "The government of Dubai is already beginning to act."

House prices in Dubai have jumped over 20% in the last year, prompting the IMF to warn in July of the risk of another bubble forming after a crash of Dubai's inflated property market in 2008-2010 nearly caused state-linked companies to default.

 

Read more on Gulf Business

Disputes surge as landlords seek to evict tenants  


Rent rows are on the rise in Dubai as landlords seek to evict tenants to benefit from surging rents across the emirate.

Halim Samir Kanaan, an attorney at Kanaan Advocates & Legal Consultants in Deira, says his firm has seen a 50% increase in the number of rent disputes it has been handling over the past year as landlords attempt to circumvent rent rise caps designed to protect tenants.

"Volumes have increased significantly because it is more in the interests of some landlords to evict tenants and find someone new to rent at a higher rent," he says. "We deal with landlords in the old part of Dubai as well as individuals in the newer areas. This is something we are seeing across the board."


Read more on The National

New housing fees shock freehold owners


More freehold owners in Dubai are getting a jolt along with their utility charge bills. Some of them found an additional charge - under the heading of 'housing fees' - along with their October statements, and these were quite substantial.

"The additional charge is a percentage of the value of the freehold property - initially it used to be that only some freehold owners were getting DEWA statements with this surcharge, but now I believe it's going to be mandatory for all owners," said Mohammad Arif Rangari, who owns apartments in Jumeirah Lakes Towers and now has a Dhs461 charge on a 374 sq ft studio bought at Dhs500,000 two years ago.


Read more on Gulf News

Sustainability practices gain popularity


Operating costs for buildings in Dubai have escalated over the past few years and have been source of much discontent between landlords and tenants. It is estimated that on an average, building owners spend 22% of their operating costs on energy and water while corporate facilities typically spend slightly more on utilities.

Globally, green buildings have been introduced as a solution to control operating costs. Green buildings have been shown to save money through reduced energy and water consumption and lower long-term operations and maintenance costs. The energy savings alone typically exceed any cost premiums associated with their design and construction within a reasonable payback period.

Conducting detailed energy audits of facilities has shown that buildings can save approximately 20% of their energy bill through low to no-cost measures alone, that all pay back within 12 to 18 months with an internal rate of return upwards of 40%.

Dubai is targeting a 30% reduction in carbon emissions by 2030, according to its Integrated Energy Strategy. The plan says solar will contribute 1% of Dubai's power by 2020, when it reaches 1 Giga Watt capacity and 5% by 2030. 

 

Read more on Gulf News

New mortgage rule in effect from Dec 1


Mortgage pre-approval letters issued by UAE banks with home finance value of 85% will not be valid from December 1 onwards, a banker told Emirates 24/7.

"We have urged our clients to complete their transactions before the month-end," a senior mortgage consultant with a top local bank said on conditions of anonymity.

"Thereafter we will be following the UAE Central Bank new guidelines on mortgages," he added. The validity of mortgage letters varies from bank to bank, but generally they are valid for 45 to 60 days from the date of issuance. 

The UAE Central Bank issued new mortgage lending regulations late last month, which allows banks to provide loans of up to 80% of the property value to Emiratis and 75% to expatriates. 


Read more on Emirates 24/7

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