Real estate recovery limited to premium assets

Abu Dhabi: The real estate markets in both Abu Dhabi and Dubai have witnessed improvements in performance, a report by Jones Lang LaSalle (JLL) shows.

The report, published on Monday, predicts selective growth for Dubai’s real estate sector as rents and values continue to improve for prime properties in the hotel, retail and residential segments.

It also reveals that despite demand for high quality retail space, the Abu Dhabi market remain tenant-favourable, with rents yet to bottom out.

“Market sentiment is definitely improving and both Dubai and Abu Dhabi remain major drivers in the regional real estate market, but we are continuing to move away from one holistic model. As the market continues to mature, we will see more divergence,” Alan Robertson, CEO of JLL, Middle East and North Africa, was quoted as saying.

“Well managed, high-quality assets in prime locations will continue to perform whilst those in secondary locations will need to be ever more creative to attract and retain tenants, who now have ever more choice and are moving with their feet to source and find the best deals available,” he added.

Dubai ahead of the curve

“Dubai is generally ahead of the curve as rents are finally starting to pick up whilst indicators suggest Abu Dhabi has yet to bottom out. In terms of sectors, retail remains a driving force with significant opportunities in both emirates,” Robertson said.

“On the investment and development fronts, we expect to see more major deals announced in the weeks and months ahead, reflecting the improved economic climate. However, we also expect the market to move away from a construction-led environment to one more focused on asset management as owners look to safeguard their investment and drive rental growth.”

The report shows that the real estate investment market has been quiet over the summer months, with no major open market commercial transactions reported in this period.

Abu Dhabi’s residential market continued to see declines in both sale prices and rents.

Since the market peak in 2008, the average prime rent for a two-bedroom apartment in Abu Dhabi has fallen in excess of 48 per cent, the report shows.

No trickle down

Craig Plumb, head of research of JLL in Mena, said: “While the Dubai market is certainly starting to recover, this improvement remains largely focused on a limited number of high-quality assets and locations, and has yet to trickle down to the overall market where rents and values have remained largely unchanged during 2012.

“The overall market still faces challenges of high new supply and limited demand for secondary assets, that is providing tenants and occupiers with significant choices.” Philippo Rean, director of MIPIM and MIPIM Asia, told Gulf News: “The UAE market is improving nowadays and it is lucrative for foreign investors to invest in real estate, away from the slowdown that is being witnessed in other parts of the world. Real estate in the UAE is promising and it is now on the ramp-up state after a state of stability throughout the last few months.”

Praveen Kumar, director of the Strategic Sales Group, told Gulf News: “The UAE market is a regional hub and it has passed the most difficult phase with success. The market has stabilised and it is not upsurging.”

He called on developers to coordinate their efforts to complete suspended projects, adding no government bailout was required for developers to proceed further with their projects.

Source: http://gulfnews.com/business/property/uae/real-estate-recovery-limited-to-premium-assets-1.1084271

Dubai villa prices surge 20%

It isn't a bubble, insist experts and cite organic demand for the rise

Recent views about ‘hot money’ from troubled countries in the region pushing up house prices in Dubai has been contradicted by leading real estate brokerage firms in Dubai.

The increase in prices is purely because of demand and there are no signals about any bubble in the making, they say.

“It is premature to talk about another bubble in the making at the moment,” Charles Neil, Chief Executive Officer at Landmark Properties told Emirates 24|7.

Prices of villas in the popular Emaar community, The Springs, have gone up by 20-30 per cent in the past six months.

For example, a 4M which was going for around Dh1million is now being advertised above Dh1.3million these days and a 3E has gone up fromDh1.7million to nearly Dh2million.

The spike in prices leads us to the question of whether property is again appreciating too fast? Do these figures indicate another bubble in the making?

“No” is the answer of real estate brokers.

“We always predicted in our research that villa prices would be the first segment to recover because there was a finite supply of villas with very few deliveries of new villas taking place after 2012.

"The other reason why there is a higher demand for villas is that it is still the preferred lifestyle for the majority of families with children who come out to live in the UAE,” said Neil.

“I do not feel there is a bubble developing, but I do see signs of prices climbing due to the mechanics behind supply and demand. Dubai has a certain quantity of good stock and The Springs for the most part are good stock as are other select properties around Dubai.

"As these properties disappear from the market, those still available will appreciate in value as their quantity decreases. Prices have been appreciating over the last 12 months on select properties.

"People have now realised that prices on certain stock have dropped as far as they are going to go and now they are moving on these units,” added Tom Bunker, Investment Sales Consultant, Head Office at Better Homes.

Realtors believe that ‘hot money’ may not be the factor pushing up sale prices. A lack of trust in financial institutions and the belief that real estate gives returns overtime are drawing the attention of many investors.

“Investors are tired of trusting banks and are falling back to real estate once again. Dubai has always been an interesting real estate market and it is a market that seems to have caught the attention of investors once again,” said Bunker.

“Typically in the real estate cycle when prices bottom out (which appears to be the case with villas) sellers who were selling in the down cycle with a view to buying back in when the market picks will no longer do so and withdraw their properties from the market.

"Furthermore, those investors who have been able to hang on will also try and hold for longer if they see prices rising.

“This tightening up of supply being offered for sale has been apparent for the past six months and agents are scrambling around to find villa inventory. Owner are being emboldened because they start getting lots of calls for their villas and are now not willing to negotiate on the price.

"Thus, a good part of the increase has come from the bid/offer gap narrowing. I feel, therefore, what is happening is typical of the sharp corrections you get when prices bottom out , but once these prices have bounced back you go in for more normal levels of price increase thereafter,” explained the Landmark expert.

Source: http://www.emirates247.com/property/real-estate/dubai-villa-prices-surge-20-2012-03-21-1.449597

Merger to shore up real estate market

DUBAI: Abu Dhabi's move to merge builders Aldar Properties and Sorouh Real Estate is geared towards shoring up sovereign wealth fund Mubadala and stabilising the emirate's brittle real estate market.

Bankers say that a deal is likely to be effected through a share swap, which would dilute Mubadala's sizeable stake in Aldar, a developer hit by stagnant sales and falling asset prices, and improve its ability to tap capital markets.

"Mubadala will emerge as the winner in this merger ... the terms of the deal are not clear but it's likely that the merger will reduce Mubadala's stake and its exposure to Aldar," said an Abu Dhabi-based property sector analyst.

Aldar has swiftly become a millstone around the neck of Mubadala, a fund with $46 billion in assets and investments including stakes in Carlyle and General Electric, and a year ago, Mubadala had to come to Aldar's aid by subscribing to the developer's $2.8bn bond.

Sources have said that attempts have been made for the fund to sell its Aldar stake or set up a new holding company that could take over the equity, a move denied by Mubadala.

Talks for the merger, announced on Sunday and which would see the formation of a property firm with $15bn in assets, have been styled as having "the blessing of the Abu Dhabi government", widely seen as code for a government-enforced deal.

"Mubadala's role was that of a stop-gap entity who would shoulder the Aldar responsibility for a while. It was never the perfect solution," said a Dubai-based investment banker.

The state fund's stake is expected to go up to 60 per cent from 49pc when it converts the remaining portion of its Aldar bonds into equity.

"Any deal will be in the form of a share-swap agreement," said an Abu Dhabi-based source who is aware of the talks.

"I am sure there is no discussion of exchanging cash in the current market. Mubadala's stake will be diluted if the merger goes through but they will retain a stake in the combined entity. What the share-swap ratio will be and what percentage Mubadala will retain after the deal is all under discussion."

Mubadala, for its part, stuck to a one-line statement.

"As a long-term shareholder in Aldar, Mubadala is supportive of efforts to increase value to Aldar's stakeholders," it said.

The deterioration in Abu Dhabi property has been gradual.

The emirate has given Aldar nearly $10bn in bailout funds, almost equivalent to the amount it extended to rescue Dubai just over two years ago.

Shares of Aldar and Sorouh jumped 10pc yesterday as investors welcomed signs of consolidation in the Abu Dhabi real estate market, which is set to record a further 11pc fall in prices this year, according to a Reuters poll.

Aldar's deputy chief executive Mohammed Khalifa Al Mubarak said efforts to appoint a working group had begun but banks were not part of the committee.

"At this point, we expect the working group to only comprise representatives from both companies," he said, adding that he hoped the group would be set up this month.

Source: http://www.gulf-daily-news.com/NewsDetails.aspx?storyid=325672

Dubai records land transactions worth Dh143b

Dubai: Dubai Land Department has recorded 35,297 transactions worth Dh143 billion last year, a 20 per cent increase in value over 2010 records, a statement said.

The transactions include sales, mortgages, ijarah, mortgage portfolios, deferred sales and other transactions.

Sultan Butti bin Mejrin, Director General of the Land Department, said, "The transactions' quantity, quality and procedures reflect the recovery and growth of the real estate market in Dubai due to the direct support from the local government that spared no effort to achieve market's stability and growth, enhance the attractiveness of real estate investment along with boosting the confidence of investors."

Last year has seen an 12 per cent increase in mortgages compared to the value recorded in 2010. The mortgages represent 60 per cent of the total transactions conducted in 2011, this indicates the recovery of the property financing and the return of healthy activities.

Bin Mejren indicated that the total value of the transactions clearly reflect the unequivocal return of the real estate market to normal levels, the exit of speculators, the maturity of the real estate market, the increased investor awareness of the importance of long-term investment in this vital sector.

The research and survey section in the department showed that the real estate market in Dubai witnessed an overwhelming response from investors during the last year, say Bin Mejren.

This according to him "demonstrates the ability of Dubai to fully recover from the challenges of the international crisis and prove once again the strength of Dubai's economy" a statement said.

Bin Mejren stressed that the market saw a state of stability and increased demand from investors in buying properties and grasp investment opportunities in past two years. He expected that the market will see continued strong recovery in the coming period, which will encourages investors to increase their investments in Dubai real estate market due to the high levels of confidence, stability and commercial appeal it enjoys.

The 2011 transaction report issued by the Land Department indicates that the investors tend to invest more in flats through sales and mortgage that reflects the state of confidence and stability in the real estate market.

The total flats' sales and mortgages transactions rose to 26,465 worth Dh43 billion, including 20,426 flat sales' transactions were reported last year worth Dh27 billion, while 5,568 mortgage transaction worth Dh15 billion were registered in different parts of the Emirate of Dubai in 2011.

The plots' sales and mortgages amounted to Dh94 billion whereas plots' sale saw 2,961 transaction at the value of Dh22 billion, while 3,315 mortgage transactions worth Dh69 billion were registered in 2011.

Total transactions for villas in Dubai last year reached Dh6 billion. As many as 1,179 villa sales' transaction were reported last year worth Dh4 billion, while 655 mortgage transactions worth Dh2 billion were registered in different parts of Dubai in 2011.

The Dubai Land Department was established in January 1960 to provide a systematic method for registration of land and property and protect the rights of clients and ensure all legal aspects relating to the sale and purchase of land, which enabled the department to organise the registration process aimed primarily at protecting all relevant parties.

In order to organise and develop the real estate sector in the emirate Real Estate Regulatory Authority was officially established as a subsidiary of the Dubai Land Department in 2007.

Source: http://gulfnews.com/business/property/uae/dubai-records-land-transactions-worth-dh143b-1.959966