Weekly Dubai real estate news digest. Issue 30

26.01.2014
A surge in development 
Welcome to the thirtieth 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 30 |  January 26, 2014

A surge in development 

There are huge expectations for the year 2014, at least on the realty front. A new research report has estimated that nearly 28,000 new residential units will be delivered this year. Even taking into account delays in timelines, this is a significant figure that will add to the ever-expanding supply of property in the emirate. 

Development is taking place across the city and not just for residential units, but increased focus has been placed on commercial property as well as retail and entertainment. In fact, Europe will be re-created as part of The World project, spanning six islands and will feature villas, hotels and marketplaces inspired by the architecture and lifestyle of the continent. It will also include snow and rain-lashed streets.

In terms of demand, the total value of real estate transactions in Dubai has gone up by 53% to AED236 billion in 2013 when compared to AED154 billion last year. Price hikes can be especially noticed in secondary residential areas or the more affordable parts of town. Rents have increased the most on a yearly basis in areas such as Sports City, International City and JLT. 

With these changes taking place in the city, there has been a warning call for risk to Dubai's competitiveness. According to Hamad Buamim, the president of Dubai's Chamber of Commerce and Industry, a huge risk in real estate prices will have a negative effect on market competitiveness. He stressed that the property market must remain an "enabler" rather than a "driver' of growth. "Real estate is not a sustainable sector in the long run, it is a very important supporting sector enabler. However, historically, it has never been a driver of the economy in the long run."

Market Insight is aimed at examining the emirate's dynamic market and forecasting industry trends. There are a lot of new developments predicted for the year ahead. However, the problem is in maintaining market competitiveness, amid all the price hikes that don't seem to be slowing down. The value of real estate transactions are up almost 53% and there is a need for stabilisation to benefit the economy. We will be sure to monitor new regulations that help curb price hikes as well as expert analyses on threats to the sector. 

Sincerely,

Pashma Manglani

Editor


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28,000 new residential units expected in 2014

Only 9,700 units were delivered in Dubai in 2013, but nearly 28,000 new units are expected to be completed this year, according to the latest Jones Lang LaSalle report.

"At the end of 2013, the total residential stock in areas monitored by us stood at around 365,000 units, with over 9,700 units delivered throughout the year," the report said. 

In 2014, Jones Lang LaSalle estimates that around 28,000 additional units will be delivered, an increase of approximately 8% of the current stock. Dubailand accounts for around 33% of these new developments, with 16,000 units expected before the end of 2016. Other areas that should see residential development include Dubai Marina, Dubai Sports City, IMPZ, Business Bay and Dubai Silicon Oasis. 

 

Read more on Emirates 24/7

Over AED200b spent on realty

The total value of real estate transactions in Dubai has gone up by 53% to AED236 billion in 2013 when compared to 2012's AED154 billion, data from the Dubai Land Department reveals.

The total number of transactions in 2013 reached 63,652 compared to 41,767 - an increase of 52%. Land transactions continued to rise, touching AED166 billion compared to AED111 billion in 2012.

Unit transactions were AED62 billion, while the remaining 4% of other activity was AED8.7 billion. Data of unit transactions in 2012 had put the value at nearly AED81 billion. 

 

Read more on Emirates 24/7

Affordable areas see greatest hikes

The sharpest gains in residential rentals are happening in secondary locations and as a consequence more affordable locations of Dubai, according to a new report from realty firm Jones Lang LaSalle. Therein lies the risk that rental increases are happening at a rate that would cut deep into the pockets of mid-income households.

Across the board, rental values have gone up 18%, according to the report. "As such, rental values have increased the most on a yearly basis in areas such as Sports City, International City and JLT while the percentage growth was lower in prime locations such as Dubai Marina or the Palm Jumeirah."


Read more on Gulf News

Fears set in for market competitiveness


As prices continue to soar, there is a greater risk to Dubai's competitiveness, according to the president of the emirate's Chamber of Commerce and Industry.

"The competitiveness of doing business was really improving the past four years and we hope to be able to continue improving this by controlling the real estate market," said Hamad Buamim, the chamber's president and chief executive and also a board member of the Central Bank.

"A huge increase in real estate prices will affect competitiveness negatively. A moderate growth or even stabilisation will be more beneficial to the overall economy." Rising rents have hit the disposable incomes of many consumers while at the same time increasing wage pressures for employers. Buamim said there was enough supply in the commercial market to help tame growth in prices.  

 

Read more on The National

Burj view commands big bucks

Serviced apartments sold by Emaar Properties in Vida Residence Downtown Dubai are up for sale in the secondary market with investors asking for premiums of up to 10%.

Meanwhile a luxury penthouse in DIFC's Index Tower is going at AED35 million, according to an article in The National. The residential unit boasts granite kitchen surfaces, ultra high-speed elevators and facilities such as a jacuzzi and gym. However, most importantly, it boasts a view of the Burj Khalifa. 

 

Read more on Emirates 24/7

New industry event targets small investors

As the Dubai property market sees high price growth kick off once again, the organisers behind Cityscape are setting up a new spin-off consumer real estate show, aimed at targeting owner occupiers and small investors.

The Next Move Live event at Dubai's Madinat Jumeirah will be held from February 20-22. It is aimed at Dubai residents looking to buy and rent in the city.  

According to the organisers, about 22 developers have signed up for the new event, including Aldar, Damac, Pacific Ventures and Flash Properties. They said they hoped the event would be a one-stop shop for consumers, who will be able to rent or buy homes at the venue. 
 

Read more on The National

Nakheel sees 27% increase in profits

Nakheel reported a 27% increase in 2013 profit to AED2.57 billion, helped by a 20% rise in revenue to AED9.4 billion.

The company, known for building the Palm islands, seems to be recovering from the impact of the global economic crisis. 

Ali Rashid Lootah, Nakheel's chairman, said the company is committed to announcing more projects and this year will launch AED6-8 billion worth of projects, including multiple hotels. It will also launch an approximately 1.5 million square foot shopping mall off the Deira coastline.  
 

Read more on Gulf News

Emaar quietly replaces CEO
 

Emaar Properties quietly replaced its Group Chief Executive Low Ping late last year, appointing Abdulla Lahej as her replacement, industry sources said.

Neither Ping's departure, which sources say happened towards the end of 2013, nor the appointment of Lahej was made public by Emaar. The company did not respond to emails seeking comment. The sources spoke on condition of anonymity and did not provide a reason for Ping's departure.

 

Read more on Emirates 24/7

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