Weekly Dubai real estate news digest. Issue 58

10.08.2014
Dubai realty market in flux 
Welcome to the fifty-eighth 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 58 |  August 10, 2014

Dubai realty market in flux 

It's been a busy month for the real estate market in the UAE. New projects, increasing rents and added investor interest have all contributed towards creating a buzz in the sector. 

Profit-taking was particularly heavy in the UAE with Dubai's index falling 2.4%. Emaar Properties sank 3.9% after reporting strong second-quarter earnings that failed to deliver a positive surprise. Trading volumes in Dubai have been modest since the market reopened at the end of last week after the long Eid break. However, stocks have been picking up. “This was a good set of results. Emaar showed its traditional strengths – it’s good at retail, good at hospitality, and its core profitability was strong,” said Loic Pelichet, who covers Emaar for NBK Capital.

Residential rents in Dubai saw a 0.16% month-on-month hike in June, according to data issued by Reidin.com. This clearly shows a slowing down of growth, something that has been a cause for concern for industry players. In fact, the realty market is expected to peak in 2015, according to Masood Al Awar, CEO of Tasweek Real Estate Development & Marketing. "We do a lot of analytics and we do a lot of market research. We know that every eight or seven years, there are some disturbances in the market and nothing can climb so rapidly." 

Meanwhile, when it comes to new projects in the market, UAE developer Tiger Properties has announced the launch of its latest construction project in Dubai, Al Manara Tower. The residential complex is being built in Jumeirah Village Circle at a cost of AED200 million. The conglomerate Danube has also announced a presence in the sector, launching a real estate arm. One of its first projects include an AED500 million development - Dreamz - which will feature 175 townhouses within the Al Furjan community. 

Market Insight is aimed at examining the emirate's dynamic market and forecasting industry trends. It has become quite apparent that investors today have increasing demands from developers and these are being addressed in the newer projects under construction. "With the restored investor confidence in the real estate market, competition between developers is fiercer than ever and the emphasis on excellent design couldn't be higher," says Rod Stewart, property managing director of Atkins. How this will affect the direction of new projects is something we all just have to wait and see.

Sincerely,

Pashma Manglani

Editor


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Marginal rent hike in June

Residential rents in Dubai rose only by a slight 0.16% month-on-month in June, according to Reidin.com's rent index.

Emirates 24/7 reported that the June increase took the year-on-year increase to 23.7%. The apartment index saw a 0.13% monthly increase and a 26.6% annual hike. Meanwhile, the villa rental index saw a monthly increase of 0.30% and 10.7% yearly.
 
Though Dubai is expected to see a supply of 90,000 new units by 2018, as estimated by HSBC Global Research, the bank believes the market will absorb – fairly easily — the new supply even if the population grows less than 5% per year.

“We believe that we have not yet reached the peak of the cycle, and that the market can continue to absorb the expected supply additions over the next few years, even at a population growth rate below 5 per cent,” the global bank said in April.

 

Read more on Emirates 24/7

'Design, planning key to bagging investor interest'

The key to sustaining property investment lies in an emphasis on design and planning, according to industry experts.

UAE has bagged contracts worth $5.4 billion with Dubai "leading the Arab world" as a model for future cities.

International design, engineering and project management consultants Atkins told Zawya that it will use the Middle East's largest property showcase, Cityscape Global, to underline why excellent design, with a strong lifestyle emphasis, is vital to keep attracting real estate investors.

"With the restored investor confidence in the real estate market, competition between developers is fiercer than ever and the emphasis on excellent design couldn't be higher," said Rod Stewart, property managing director of Atkins.

"The level of careful planning which is going into projects to ensure they are genuinely viable in the long-term is one of the most satisfying aspects of the current real estate market resurgence. A great deal of thought is going into getting the right mix of uses, the right systems and the correct facilities. What's more, there is a keen eye on creating a vibrant public realm around buildings which encourage people to lead active, healthy lifestyles," he added.
 

Read more on Zawya

Downtown Dubai sees Q2's biggest deal

An AED35million transaction was the biggest property deal of 2014's second quarter for an apartment in The Address Downtown Hotel (Lake Hotel), Downtown Dubai.

Emirates 24/7 reported that the second costliest transaction also took place in The Address Downtown Hotel (Lake Hotel), with an apartment selling for AED23.08m.

Data provided by Reidin.com revealed that the third place was taken by a unit in Attareen Residences, Downtown Dubai, which was sold for AED17.80m. On the fourth and fifth position was an apartment sale in Kempinski Palm Jumeirah Residences and Silverene Towers A in Dubai Marina for AED17.64m and AED17m, respectively.
Four of the top 10 deals took place in Downtown Dubai, with three each in Dubai Marina and Palm Jumeirah, Reidin.com data reveals.

But in the first quarter, an apartment sold in Burj Khalifa had topped the list of the 10 biggest apartment deals completed in first quarter 2014.

 

Read more on Emirates 24/7

Realty market to peak in 2015: Expert

While the rapidly-growing Dubai property market may reach a peak in 2015, it won't suffer the same dramatic pitfall seen in 2008 and 2009, says one Dubai real estate expert.

“We do a lot of analytics and we do a lot of market research. We know that every eight or seven years there are some disturbance in the market and nothing can climb so rapidly,” Masood Al Awar, CEO of Tasweek Real Estate Development and Marketing, told Arabian Business in an interview.

“I think 2015 will be the peak but if we sustain it, [growth] can be prolonged to avoid the downturn… avoid the pitfall [of 2008],” he added.

Property prices plummeted nearly 60% in the aftermath of the Dubai property crash in 2008 and 2009, but Al Awar says that such a dramatic drop was unlikely this time and growth was likely to plateau as the market was being managed in a more strategic way this time around.

 

Read more on Arabian Business

Emaar profits on the rise

Emaar Properties reported a 29% year-on-year jump in second-quarter profit to AED868 million, according to The National newspaper.

Despite the hike, the figures slightly undershot analysts’ estimates as property development revenue fell as the estimates ranged between AED 880 million and AED960 million with the developer falling short of the median by 7.1%.

Analysts had previously forecast total profit for the Dubai developer this year of AED2.95 billion and revenue of AED10.7 billion. 

“This was a good set of results. Emaar showed its traditional strengths – it’s good at retail, good at hospitality, and its core profitability was strong,” said Loic Pelichet, who covers Emaar for NBK Capital.
 

Read more on The National

Danube launches real estate arm

Dubai-based conglomerate Danube Group has announced its foray into the real estate sector with the launch of Danube Properties. 

The developer said it will offer "luxury living at affordable prices" and will focus on the mid-market real estate segment. It officially launched its AED500 million project - Dreamz - which will feature 175 luxury townhouses within Al Furjan community.

 

Read more on Arabian Business

Indian celebs promote Dubai property

Property developers are turning to sports legends and Bollywood celebrities to attract investment in their projects. 

Former cricketer Sunil Gavaskar and movie star Shah Rukh Khan are the latest to sign up as “ambassadors” for housing developments in Dubai.

“Shah Rukh understands the business, he understands marketing and he was convinced by the project,” said Parvez Khan, chairman of Pacific Ventures, one of the developers. The Indian superstar is on billboards across the city, advertising projects such as an AED2.3 billion plan for 2,000 apartments and villas in Dubai Investment Park. 

Apartments in the development start at AED450,000 while townhouses begin from AEDh1.6m. The first 42 villas are expected to be handed over by October and another 200 town houses are scheduled for delivery in 18 months.

Meanwhile,  Gavaskar, India’s legendary former opening batsman, is the face of the Dh500m “Dreamz by Danube” development of 175 townhouses in Al Furjan.

 

Read more on The National

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