Weekly Dubai real estate news digest. Issue 57

03.08.2014
Busy time for UAE market 
Welcome to the fifty-seventh 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 57 |  August 3, 2014

Busy time for UAE market 

With developer Damac preparing a Dubai listing and Emaar's retail unit's massive IPO, the fourth quarter of this year is shaping up to be a busy period for local markets.

However, a bearish sentiment is building as investors raise concerns over high valuations currently offered by UAE equities. Fund managers plan to reduce their exposure to UAE markets, according to the latest Reuters survey of 15 leading investment managers. Only 7% intend to increase equity allocations there and 47% intend to decrease them as compared to ratios of 27% and 33% a month ago. The ratio of managers bullish towards the UAE is at its lowest point since last September.

Buyers in the market have also become more aware of increasing costs, taking a stand against growth in the luxury sector. Consultancy Knight Frank found that growth has slowed down when it comes to high-end homes. Market sources also affirm that new supply will reduce the scope for sharp mark-ups in prime properties. 


“While there will always be investors interested only in trophy purchases in Dubai, the rest of the market is being driven by long-term buyers and end-users,” said the head of a brokerage firm. “Where they had few choices earlier — and those already had steep premiums attached to them — they now have the flexibility to choose from a wide selection of new projects and multiple property formats.”

While the market is undoubtedly going through a transitional period, Dubai remains a safe haven for people across the region looking to invest in property or to set up home. Industrial property especially seems to be in high demand. There also seems to be now slowing down when it comes to new projects. Nakheel recently announced its new community of 1,000 villas while Royal Estates is involved in a project that will create 2,000 homes at Dubai Investments.  


Market Insight is aimed at examining the emirate's dynamic market and forecasting industry trends. With the many changes in store for the UAE's stock market, we are bound to see numbers bounce back to their original bullish track once things have settled down. With the Expo 2020 in the city's future, UAE developers are pushing forward full steam ahead with new projects that are bound to increase supply in the emirate. Most experts agree that with this, growth will continue to slow down - providing buyers with some relief from the ever-increasing prices. To follow-up on changes in property prices, be sure to read our coming issues. 

Sincerely,

Pashma Manglani

Editor


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Average studio nearly AED1m

Studio apartments in Dubai are now priced at an average of AED959,000, according to new research by the UAE's property search website propertyfinder.ae.

ConstructionWeekOnline.com said that an average one-bedroom flat now costs about AED1.7 million while a two-bedroom apartment carries an average price tag of AED3 million.

The research carried out by the website also found that Dubai Marina is the most searched community among prospective buyers; the average apartment price there is AED2.8 million and AED8.5 million for a villa.

Dubailand is reportedly the next area growing in popularity among prospective buyers, claiming fourth spot in the second quarter of 2014 despite not figuring in the top 10 two years ago. 

 

Read more on ConstructionWeekOnline

Luxury realty loses popularity

High-end homes in Dubai saw a more toned-down growth pattern with value gains of 6.3%, according to a new report from consultancy Knight Frank.

Compared to the first three months, where gains were up 11.7%, there is undoubtedly hesitance on the part of buyers to spend asking rates on luxury property.

According to market sources, new supply — and in substantial numbers too — such as Nakheel’s recent announcement of a new community of 1,000 villas will reduce the scope for sharp mark-ups in prime properties. Another launch, the Royal Estates project involving an alliance between three private developers, will create 2,000 homes at Dubai Investments and includes townhouses priced upwards of AED1.6 million.

“While there will always be investors interested only in trophy purchases in Dubai, the rest of the market is being driven by long-term buyers and end-users,” said the head of a brokerage firm. “Where they had few choices earlier — and those already had steep premiums attached to them — they now have the flexibility to choose from a wide selection of new projects and multiple property formats.”

“With new supply at the prime level looking limited over the next 18 months we expect prices to strengthen in the remainder of 2014,” said Kate Everett-Allen, international residential research analyst at Knight Frank consultancy.
 

Read more on Gulf News

Damac to list on DFM

The UAE stock market may have been going through some hurdles but now luxury property developer Damac is to list shares on the Dubai Financial Market.
 
The listing will put Damac in the top 10 of UAE listed companies, with a market capitalisation of about US$3.5 billion, and will give regional retail investors the opportunity to participate in one of the UAE’s most successful companies.

Damac announced yesterday that it was offering investors the opportunity to convert its global depository receipts (GDRs), currently listed on the London Stock Exchange, into ordinary equity and list them on the Dubai market. The move sparked a 5.9% jump in the value of the London stock, to nearly $16.05 per GDR. They were floated in December in London at $12.25 each.

 

Read more on The National

Construction group aims to develop 26 plots

The founder of Dubai-based Goldline Contracting has bought 26 plots of land around Dubai which he intends to develop over the next three years, ConstructionWeekOnline.com reports. 

Dr Navjit Singh Anand said that the plots are in areas Cultural Village, Business Bay, Jumeirah Village South, Jumeirah Village Triangle, Dubai Sports City and at the Marina. These will be developed by a new division of his group of companies, Goldline Real Estate. 

He added: "We’re looking at apartments, with a few commercial towers. We’re doing a few co-developments, and the rest will be our own projects."

 

Read more at ConstructionWeekOnline

Demand for industrial property increasing

Industrial property seems to be in high demand in Dubai but despite this, supply is limited.
 
Rents have increased 25% year-on-year in the second quarter while rental values across seven out of nine districts tracked by Knight Frank have recorded double digit growth, the consultancy revealed. 

Gulf News reported that class 2 buildings in Dubai Investment Park (47%), Jebel Ali (39%) and Ras Al Khor (36%) all saw double digit rental growth in the April to June period. Meanwhile, class 1 buildings in Dubai Investment Park, Jebel Ali Free Zone (Jafza) and Al Quoz recorded rental growth of 29%, 12% and 9%, respectively.

 

Read more on Gulf News

Safe haven status boosts investment scope

Dubai has increasingly become a safe haven for people across the region to set up home and establish regional or global offices for their businesses. 

However, one expert points out that the country does need to check inflation and rising cost of doing business for sustainable longer term growth. 

Jahangir Aka, managing director, SEI Middle East, said, “I expect another great year for UAE in 2014 and the Expo 2020 win has taken this momentum further. My big concern on the UAE story though is unofficial inflation. The cost of living is rapidly rising again, and this means the cost of doing business from Dubai and the broader UAE is rising."

He added that in the UAE, investors can avail opportunities in key sectors such as logistics, manufacturing, hospitality, aviation services, tourism and retail through direct and private investment as most of these services are being provided through unlisted companies.

 

Read more on Khaleej Times

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