Weekly Dubai real estate news digest. Issue 26

29.12.2013
Committed to development  
Welcome to the twenty-sixth issue of Market Insight, your weekly guide to what's happening in the Dubai real estate market.

IMEX Real Estate wishes you a Happy New Year!
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MARKET INSIGHT. Weekly guide to Dubai's property scene
Issue 26 |  December 29, 2013

Committed to development  

The year 2013 has seen a broad-based price and rental recovery across Dubai's realty market. Though the total value of property transactions for the year will be known only in early 2014, transaction value in the first nine months of the year crossed AED162 billion with the emirate now donning the cap of the best property investment destination across the globe.

UK-based Knight Frank and Global Property Guide have stated that property prices in Dubai jumped by over 20% in the past year, the pace being the fastest among the cities that the organisation tracks. The prospects for the next year look equally bright, with a predicted 10-15% price increase in the loop. 

However, the biggest debate over the last year by analysts has been whether the Dubai housing market was experiencing another bubble like that in 2008. Rising property prices have been accompanied by scenes of hundreds of people queuing in the heat 48 hours before an Emaar property launch in February and confrontations on the sidelines of the Cityscape property show in October as potential investors attempted to get their hands on off-plan flats. Investors were warned against property flipping, one of the major causes of the 2008 crash, where people invested in developments only to make a sale to pocket a quick profit. 

The government took quick measures to allay fears, setting into motion a series of controls for the market. The Dubai Land Department announced that it would be introducing seven new laws for regulating the property market and to ward off speculators. In September, the first was rolled out - doubling the property transfer fee from 2% to 4%. The next month, the Central Bank revised its mortgage regulations (which has just gone into effect), capping the amount of money homeowners were allowed to borrow.

Market growth slowed down during the third quarter of the year with the new regulations in place. However, Dubai's win to host the Expo 2020 has kicked off another surge in development and rise in property prices. For the year ahead, growth is predicted to continue full steam ahead. Whether market controls will be strong enough to avert another property bubble is yet to be determined.

Most industry players, however, believe that new regulations will help control growth. 
"2013 was a great sentimental boost for all Dubai residents," said Hamzah Abu Zannad, director of operations, Royal Star International to Gulf News. "The market has performed very well and most important, check values were placed to cool down any overheating activities. We believe that more regulations are yet to be implemented."


Market Insight is aimed at examining the emirate's dynamic market and forecasting industry trends. The year 2013 has seen Dubai's property market skyrocket, making it the fastest growing market in the world. The prospects for the next year look bright, driven by Expo 2020 developments. We hope our round-up of key stories and expert opinions have helped trace the changes that have happened over the year, while giving an idea of what the future holds for the city. In the year ahead, we will continue to track the latest developments in this rapidly growing market. From IMEX Real Estate, we would just like to wish all of you a very Happy New Year!


Sincerely,

Pashma Manglani

Editor


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Expect 10-15% rise in property prices: Report


Property price rise in Dubai will continue to be much higher than the rest of the world in 2014 though it will slow down compared to 2013, according to a new report.

Knight Frank's Prime Global Forecast report reveals that Dubai will top the list for global cities that will witness double digit price growth in 2014.

Liam Bailey, global head of residential research, states in the report that Dubai will see prices jump by 10 to 15% in 2014, driven mostly by Expo 2020 development, buyer incentives and a relaxation of cooling measures.

Property prices are almost up over 20% this year. 


Read more on Emirates 24/7

Rent hike cap in force now

In his capacity as the Ruler of Dubai, Vice-President and Prime Minister of the UAE, His Highness Sheikh Mohammed bin Rashid Al Maktoum has issued Decree No. 43 of 2013 concerning the percentages of maximum property rent increase that are allowed upon the renewal of tenancy contracts.

The Decree states that there should not be any rent increase if the rent of the property unit is less than 10% of the average rent of a similar property in the same residential area. If the rent value is between 11 and 20% less than the average rent of a similar property, the maximum rent increase shall be equal to 5% of the rent value.

Additionally, if the rental value of a unit is between 21 and 30% less than the average rent of a similar unit, the maximum rent increase shall be equal to 10% of the rental value. 

If the rental value of a property is between 31 and 40% less than the average rental of a similar property, the maximum rent increase shall be equal to 15% of the rental value. A maximum rent increase of 20% is applicable if the rental value of a property unit is less than 40% or more of the average rent of a similar unit. 

The Decree applies to landlords from the public and private sectors in the emirate of Dubai, including private development areas and free zones. 

 

Read more on Emirates 24/7

RERA to release new rental index soon


Dubai Land Department is working on introducing a new rental index that will track market rates with accuracy. 

The new index will be extensive, taking into account the view of a property unit and facilities offered in a tower. 

Currently, the Real Estate Regulatory Agency (RERA) updates the rent index every four months. The current index only gives an average range of lease rates in a locality and does not consider other features such as services or view, which play an essential role in determining rentals in localities such as Dubai Marina, Downtown Dubai and Jumeirah Beach Residence.


Read more on Emirates 24/7

Hunt on for budget realty

Tenants in the city are searching for for homes in less expensive developments as rents across Dubai continue to increase.

Areas such as Dubailand, Dubai Sports City and Jumeirah Village Circle are becoming more popular among potential tenants and buyers, according to statistics from propertyfinder.ae.

Analysing over two million hits, the website compiled a list of the most searched-for developments. The most popular was Dubai Marina. In terms of the top ten rental locations, Dubai Sports City, Jumeirah Village Circle and Dubailand were sixth, seventh and eighth, respectively. In terms of top ten buying locations, Dubailand, Jumeirah Village Circle and Dubai Sports City were fifth, sixth and eighth. In the same quarter last year, none of the three developments figured in the top ten in either category. 

 

Read more on The National

Check landlord rights before renewal

Tenants in Dubai can have an instant update on where they stand through the new rental decree by inputting their lease details into the 'Rental Increase Calculator' on the Dubai Land Department portal. Doing so will help them find out whether they are liable to pay a higher rental during the lease renewal and how much landlords are eligible to demand as per the strict range set by the decree.

The average rentals for all key neighbourhoods are provided, which will be constantly updated to ensure they are in sync with prevailing asking rates. It will also tell renters that the landlord has no right to demand an increase in the current renewal if what you are paying now is within 10% of the average rental for that area. 
 

Read more on Gulf News

Nakheel seals AED160m in land sales

Dubai developer Nakheel has announced that it has closed land sales worth more than AED162m in its Al Furjan and Jumeirah Village Triangle developments.

It said the sales posted on Thursday was evidence of heightened investor confidence in the Dubai real estate market.


Read more on Arabian Business

Salary proof must for rentals

Renters will now have to provide a statement of income from their employer to landlords before leasing a property in Dubai.

Dubai Land Department has now included an income statement in the list of documents that a tenant requires for renting an apartment in the emirate. Other documents include a passport copy, residence visa, a signed application for tenancy and a security deposit. 


Read more on Emirates 24/7

New mortgage rules in effect

The new UAE Central Bank mortgage regulations have come into effect yesterday, according to local bankers.

A senior bank official said they were told to start implementing the new mortgage caps from December 28. Pre-approval letters issued to customers will not be valid after this date. 

Another banker from a local Islamic bank said they would only process applications received for final mortgage approval till Thursday. 

 

Read more on Emirates 24/7

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