Category: Blogs

The reality is that Dubai’s residential market has now shifted in favour of tenants, says Danube’s Rizwan Sajan

House rents and prices of freehold properties are subject to demand-supply and other market conditions, and therefore should be left to the market forces to decide – unless things go out of hand due to unnatural or drastic changes that affect the tenants – when the regulators step in.

That’s the way mature real estate markets function across the world. In those countries, rent laws are formulated to protect the tenants, rather than the landlords. Usually, the tenants outnumber the landlords – who are perceived to be well off on their own. Therefore, the rent laws in the developed countries are seen to be tenant-friendly.

The real estate market in the UAE, especially in Dubai, has reached a certain level of maturity over the last few decades. Therefore, the regulations should reflect that.

Dubai introduced a rent cap around 2005-2006 when rents had started to jump exorbitantly due to high demand. In those days, Dubai’s economy was growing at around 14-16 per cent per annum – thousands of jobs were created every month due to an unprecedented economic boom fuelled by the real estate and construction sectors.

The influx of people far outnumbered the supply of new homes. As a result, rents had started to jump 20-40 per cent per annum – forcing middle-income families to move into cheaper neighbourhoods in Sharjah and Ajman. It was a time when investors had started to build apartments and villas for freehold sale, but the deliveries were yet to materialise on a large scale.

The rent cap, therefore, was an important market intervention needed to protect the tenants at that time. However, the market has changed quite a lot over the last 15-16 years, shifting from a sellers’ market to a buyers’ market.

The market then started to soften from 2016, silently, as supplies gradually caught up with demand. By 2018-19, the market had started to show signs of oversupply, resulting in price and rent correction. Both rents and prices continued to remain under pressure at the beginning of 2020 – when most landlords started to reduce rents in order to retain tenants.

The outbreak of the Covid-19 pandemic worsened the situation, due to losses in income, business, and job cuts. Following the relaxation of the lockdown in 2020, many families had to relocate to their home countries leaving homes vacant.

The real estate market witnessed a steep fall in prices and rents last year, forcing landlords to re-think their strategies. Rental returns dropped from 6-8 per cent down to 4-5 per cent – although still high compared to most real estate markets in the world.

While property prices are stabilizing due to an influx of foreign investors returning to the market since January this year, rents are yet to stabilise. In this context, a rent freeze law could come only to protect the interests of the landlords. However, the question is, can a law help stabilise the rents? Let’s look at the possible scenarios.

If a tenant sees that the rent demanded by the landlord is ‘high’ compared to declining rents, can the law force the tenant to continue to stay in the same premises, beyond the tenancy contract? The answer is ‘no’. The tenant can move to another apartment. And there is no shortage of units in the market.

So, if the tenant is free to leave to an apartment of his choice and his budget, can the draft rent law help the landlord? No. It will just encourage the tenant to shift to another apartment.

Contrary to many reports, the rent of a one-bedroom apartment begins from Dhs20,000 in certain neighborhoods in Sharjah and Dhs35,000 in Dubai. And it might go down further, due to the abundance in supply.

Most landlords might not realise it, but the rental income in Dubai is still higher than most developed markets. Rents of a Dhs1m two-bedroom apartment stand at around Dhs50,000 to Dhs60,000 per annum, fetching a 5-6 per cent return on investment, which is still better than most markets.

While landlords are used to increasing rents when the demand was high, they need to adjust their mindset to the low-demand scenario and the new norm. We are at the lower part of the real estate market cycle. Until demand picks up, we need to accept the current market reality. From a landlords’ market, it has now become a tenants’ market. This is the reality. Let’s face it.

Rizwan Sajan is the founder and chairman of Danube Group

The UAE has proved its resilience against all challenges in the past as it has a history of recovering faster from the global financial and health crises, says an industry veteran.

“If you look back, the UAE and Dubai recovered faster than any other economies from all the previous crises it faced in the last three decades, be it the Gulf War, Sars, the global financial crisis, bird flu, etc. It recovered fast, breaking all predictions. Whatever the depth of the crisis might be, Dubai has emerged stronger. So, there is a pattern and history of fasterrecovery from crises,” said Rizwan Sajan, chairman of Danube Group.

Dubai’s ability to quickly adapt and promptly respond to crisis led by the leadership as well as its status as an open economy helps the emirate to quickly overcome any challenge.
Sajan said coronavirus will not affect the long-term competitive advantage of the UAE.

“In all likelihood, it is a stress test for various economic sectors and businesses. Those who have attained economic sustainability will come back strongly. This is a wake-up call for businesses that did not attain sustainability,” he said.

“The UAE, especially Dubai, will see a massive growth in business activities and the country’s economy is poised for a sharp V-shaped recovery in the fourth quarter of the year. Looking back, the Covid-19 pandemic will be remembered as a short-lived nightmare,” the chairman said.

Danube Properties is one of the few private Dubai developers who successfully launched a new project earlier this year at a time when new launches had slowed down due to oversupply in the market. The developer has been one of the first players to launch affordable homes as well as an industry-setting one per cent monthly payment scheme and rent-to-own schemes.

“While many countries are witnessing a second wave in the coronavirus’ spread, the UAE appears to be out of danger. If the UAE becomes a Covid-19-free country, we will witness a massive influx of tourists returning to enjoy the country’s world-class facilities. This will make the UAE an attractive destination for living, working, doing business, tourism and investment.”

Sajan stressed that Covid-19 is a short-term public health crisis, which will soon become part of history.

UAE – A few years ago, Jatin and Sherry Gupta, a young millennial couple, he a banker in his early 30s, she a PR consultant (and founder of Excel Comms) in her late 20s, moved to Dubai from Doha. It was a transfer they had actively sought because they both felt Dubai would be a “good place” to be in — not least because it is “a two-and-a-half-hour flight away from home [in north India]”. In a year’s time, both had fallen in love with the city, and decided this was where they want to be in the foreseeable future: at least for the next 5 to 10 years.

That year was also the time when they lived in a rented accommodation in the bustling community of Jumeirah Lakes Towers (JLT), and, over the course of socialising on weekends, discovered that six of Jatin’s classmates from his college in India, all in their early 30s, scattered in various freehold parts of Dubai, had purchased properties of their own in the city.

“It made perfect sense,” says Jatin, sitting next to one of the many green lakes in JLT — on an evening when the weather still permits al fresco seating — and sipping a cup of tea from one of the innumerable eateries dotting the expanse of glass-façaded residential (and a few commercial) towers. “Instead of paying money on rentals, you’re better off owning a place… for sure, property prices will go up and down, but — worst-case scenario — even if you assume that the value of what you bought remains the same at the end of 5 or 10 years, you would still have saved on rent.”

Sometime before Covid gripped the world, Jatin and Sherry bought a 2-bedroom apartment in JLT. One of Jatin’s friends — from his alma mater — who owned a place in the same JLT cluster was instrumental in showing them the ropes.

It needed “courage” to put up a substantial sum of money, the couple points out; the down payment itself almost wiped out their entire savings. “Our parents back in India kept asking us to do — and redo — the math so we didn’t end up cash-crunched and in debt,” Sherry remembers. “But finally, when we sealed the deal, they were very proud of us… It was a big moment, pretty emotional.” Helped greatly by the fact that home was, literally, where their heart was. In Dubai.

SALIENCE OF BRICK-AND-MORTAR

It’s important to note the bedrock of this trend. Earlier, it used to be said the Dubai dream lasts only as long as you have a job — or a profit-making business. The day the rug is pulled from below your feet, you have to wake up and smell the coffee.

But not anymore.

With the UAE loosening up visa and residency regulations, you don’t need to pack your bags and get ready to exit the country in case you lose your job — or your business folds up. In fact, you can even enter the country and live here as a digital nomad, while being employed elsewhere.

While Jatin and Sherry fetched up in Dubai as ‘newcomers’, there are catchments of young people who were raised here, and whose families were wary of investing in real estate because of the lack of a sense of brick-and-mortar-like permanence. The new gen-ers are now buying their own homes, instead of living in rented quarters like their parents did, points out Aleli D Alo, a property advisor in Dubai. “If you live in a rented place for, say, 10 years, then it’s basically money lost,” she says, echoing Jatin’s sentiments. “Instead, if you had bought the property, you could have paid it [your mortgage] off in a decade… and even sold your place at a higher price… and then maybe bought some place bigger.”

Overall, there’s been a surge in the number of younger, first-time buyers, who are “motivated to buy because the market is going up”. Many younger folks, she adds, “who have earned good money on, say, [investing in] cryptocurrency often want to diversify their funds to a more tangible/stable asset — a first home”.

Aleli also avers “many millennials are becoming digital nomads and moving here because they believe Dubai is very stable… a very safe market.”

Anis Sahyoun, a Lebanese entrepreneur, born and raised in Dubai (and partly in Saudi Arabia), is a firm believer in immovable assets. “No stocks and bonds for me, give me real estate,” he says. And as someone who’s been in the entrepreneurial/startup ecosystem and who’s observed it closely, Anis feels there’s no turning back the “huge influx of businesses here” which is leading to a further spike in the number of home purchases. “There are conflicts and uncertainties around the world [including his home country, Lebanon], but the UAE is a safe, tax-free haven.” People, especially younger people, will continue to pour in. And invest in properties here rather than in their home countries.

Having said that, his reasons for buying property here is also emotional. “This is home, this is a city with a vision, my family and I are here to stay… at least for the foreseeable future.” He’s comfortable in the security the outlook offers.

When Anis’s brother-in-law (who’s French) and his family wanted to move out of France, they zeroed in on Dubai, and have now picked up properties here. “My brother-in-law saw exactly what I did.” Maximum city. Not just architecturally.

WHY IT IS EASY TO BE HOUSE-PROUD

In March 2020, the Central Bank of the UAE issued a decree enabling banks to increase the loan-to-value (LTV) for first-time buyers by 5 per cent — for both expats and UAE nationals. Which means, expats can now borrow up to 80 per cent of purchase prices from banks here. According to

Lewis Allsopp, CEO of Allsopp & Allsopp, one of Dubai’s most premier property services agencies, this increase in LTV encouraged many first-time buyers “to take the plunge”. “From then on, the legislations and visas that have been introduced by the UAE government have been extremely helpful for expats looking to set up a life in the city and have definitely made an impact on the property market.”

In his interactions and his company’s dealings with first-time buyers, he notices something: they are confident about their intent to buy. “A lot of them have done their due diligence and have been living in Dubai for some time before making the decision to buy… once they are at the stage of viewing properties, their mind has been made about buying their first property here.”

It’s a confidence bolstered by a careful curation of policies and mandates that have made home-buying a compelling option. Other than banks offering competitive rates to prospective buyers, in cases where one buys a place and then suddenly decides to leave, “they can always rent out the place very easily — or convert your place into a holiday home — and earn money from it”, says Aleli.

There’s another magic ingredient thrown into the mix: how almost everything can be done online, intuitively. “You don’t even have to be present in person in order to purchase.”

The kind of property management you get here, Aleli continues, “is something you will not find anywhere else in the world… everything can be managed on your smartphone. There’s an excess of service providers here in Dubai, who can be accessed even if you are not around in person.”

These are all concerns that have been laid to rest for younger buyers who are looking for a hassle-free experience, with technology being used as a great enabler. Anis seconds the observation: “They’ve just made it so easy.”

MAKING ‘AFFORDABLE LUXURY’ A REALTY TREND FOR MILLENNIALS

Rizwan Sajan, founder and chairman of the Danube Group, may not be a millennial, but the building blocks of Danube Properties have been put in place riding on a strategy to tap into the young, first-time buyer segment.

“Our propositions were formulated keeping in mind the younger target group — those in their early- to mid-30s, buying their first home, who wouldn’t need to be intimidated by the prospect of very expensive properties — for which you need to have wealth passed on to you by your family — and yet would not need to compromise on aspirations like a ‘luxurious’ lifestyle,” says Rizwan. The Danube residences, for instance, are usually furnished, and they are furnished keeping in mind younger, millennial sensibilities.

He adds that at the Danube offices, on any given day, there’s a steady stream of first-time buyers — who usually step out

after signing on the dotted line.

It’s reflective of the same mindset that Lewis Allsopp spoke about: confidence in the market — and an intent to purchase.

Rizwan also tells us how Danube zoomed in on the tagline of ‘stop renting, start owning’ while conceptualising the value propositions of their offerings. There are pure plays such as the 10 per cent down payment scheme and 1 per cent payment per month from thereon among others.

After how the government handled Covid and Dubai Expo, investors are flowing in, market confidence is at an all-time high, and loads of young people — salaried professionals, startup entrepreneurs, digital nomads — from around the world want to move to Dubai. “They will be investing in properties,” Rizwan affirms. “No two ways about it.”

The future, he is super sanguine, “is super bright”.

HOME IS WHERE THE HEART IS

It all has to come down to the first-time buyer and what they feel will be most beneficial in the coming years, says Lewis Allsopp: “If you feel that Dubai is home and moving back to your home country is not on your radar, then it’s time to stop paying rent and subsequently paying someone else’s mortgage — and start paying into your own.”

Even if one were to point out that all this sounds notional, the flip side can only be that the market remains volatile. During the pandemic, there was a blip in the property market when prices in Dubai suddenly nosedived. Jatin — he’s the sort who goes to Dubizzle every other day to check on the likely valuation of his property — was most miffed when he saw he could have bought his apartment for an obscene percentage lesser if only he had waited.

But that’s when Sherry gave him the ‘realty check’. “Why are you putting a monetary value to the place we call home?”

And the penny suddenly dropped.

https://www.zawya.com/en/business/real-estate/millennials-home-in-on-dubai-pi9zy965

Dubai’s Expo 2020 spurs real estate growth as real estate companies report record sales.

The upsurge in Dubai’s real estate market seems to be coming, as the years of policy reforms by the kingdom finally seems to be bringing back investors’ confidence in the sector. Long-term visas for investors and professionals, favorable payment plans and increased flexibility in debt repayment by financial institutions are some of the initiatives that have changed this mood.

“Investors’ confidence has been very high since the announcement that Dubai would host the expo in October,” says Atif Rahman, Partner & Director, Danube Properties. Rahman, this year, has special reason to feel elated because Danube Properties recently delivered a massive AED 300 million luxury residential community project.

“The good news is that we have already delivered this project and the bad news is that we are 100% sold out,” quips Rahman, who believes that delivery of a project is actually the real report card for any builder.

That apart, the last quarter of 2019 had recorded close to 5,000 real estate transactions, the highest number of property sales since 2008, and Dubai’s residential stock that is projected to reach 6,37,000 this year.

Expo 2020 – which the government calls “the largest event ever staged in the Arab world will host 190 countries, and millions of visitors from across the globe. The Expo will stretch for 173 days with several themes ranging from promoting innovation and sustainability in the Arab region.

Rahman thinks that Expo in the past has changed the economy of countries that have hosted such events, “You will see a dramatic growth in local economy and rise in real estate prices. That is the power of Expo,” he says.

Dubai, is betting billions of dollars in its efforts to showcase the Expo as the world’s biggest event ever. The organizers expect 11 million visits by people living in the UAE and 14 million from overseas visitors. A recently published economic impact assessment by consultancy firm EY noted that the Expo is expected to provide an AED 122.6 billion boost to the local economy, besides creating 49,700 full-time jobs a year.

Rahman is confident that the expo will spur further development of Dubai and encourage business.

The investment in Expo and the government spending in the infrastructure around it is one key factor that has been keeping the Dubai economy on track in the recent quarters – a view further endorsed by London-based Capital Economics which predicts that helped by the Expo, Dubai’s economic growth should range between 3.8% and 4.5% over the next few years.

Expo 2020 is expected to create a large number of job opportunities across various sectors including service industries, architecture, infrastructure development and engineering, travels and tourism sectors.

There is no doubt that Dubai’s real estate sector buoyed by the expo is on an upswing now. Developers like Rahman are expecting that post Expo, investors would like to have their base in the country, as he believes the regulatory and infrastructure that it provides is as attractive as any other global city like New York, London or Paris.

Despite the local Emiratis and emergence of Chinese as the leading investors in real estate in the region, real estate developers feel Indians have started looking at Dubai for their real estate investments. Considering the soaring real estate prices back home, the luxury factor has added to Indians interest in Dubai property.
The average price of residential properties in Dubai is in the range of AED 1,000 to 12,000 per sq ft which translates to Rs 20,000 to 24,000.

Rahman says it is the right time to invest in Dubai property market because it is not just about the conventional buying and selling. When you look at the average returns that you are able to clock anywhere else in the world it is still struggling between 5% and 6%. “Sometimes in a very glamorous situation it will be about 7% to 8%. But, in Dubai I can confidently say it is easy to make 10% to 12% all day long,” says Rahman.

Moving to Dubai has been a very enticing dream for many Indians – a luxurious lifestyle, the temptation of living tax-free, plentiful malls and beaches, several high-end shopping complexes, and a bustling employment market are some of the many advantages that the middle eastern city offers. If you’re someone looking to move to Dubai and probably considered buying a home there, here’s a piece of amazing news – realty giants. Danube Properties has just completed 454 units and pre-completion of 426 residences in Glamz – its fifth and sixth residential projects in record time!

The celebration was marked by a glittering ceremony with a series of laser shows and fireworks lighting up the sky. The fifth and sixth residential projects by the brand were launched and sold out in 2016 and reflect the developer’s strong commitment to customers. Once the planned hand-over of 880 units in Starz and Glamz are completed, Danube Properties will have delivered 1,711 residential units, worth Dh1.69 billion, part of its portfolio of 5,019 residences, worth Dh3.82 billion, in less than five years after it launched its maiden project – Dreamz in June 2014.

Homes with state-of-the-art facilities

Built with the latest green and sustainable building technologies, the smart homes within both the projects are fitted with the latest state-of-the-art facilities and amenities including built-in wardrobes, the latest modular home furnishings with upgraded materials used during the construction phase – more advanced than those promised during the launch of the projects.

The 880 homes come with the best-in-class lifestyle amenities, including fully-fitted gymnasium, health club, swimming pool, large reception area, community areas with landscaped greenery, ample car parking and other facilities – all offered at a very affordable price and with one percent monthly payment plan. In picture: Starz & Glamz projects by Danube Properties at the completion celebration

Accessibility like no other Once handed over, the residents will also enjoy easy access to Dubai’s public transport with a metro station within 2-minutes of walking distance from Glamz and three minutes from Starz. Residents will be able to reach the Expo 2020 site in just 7-10 minutes through metro and catch a flight at Al Maktoum International Airport – which can be reached in 15 minutes from the nearest metro station.

“As we move closer to the Expo 2020, we see renewed confidence in the UAE real estate market. The complete sell-out of our projects reflects strong investor confidence in not only the Dubai real estate market but also in Danube Properties,” says Rizwan Sajan, Founder and Chairman of Danube Group. “Today we are not only delivering homes but delivering promises we made to home buyers who have put their faith in us,” he adds.

A sturdy market leader
Danube Properties’ new home deliveries come at the backdrop of its stellar performance in 2018 – its best year so far – when a whopping 78.5 percent jump in sales of the number of residential units has boosted Danube Properties’ market share of off-plan sales to 10.6 percent in 2018, compared to the 5 percent in 2017. In picture: The Chairman of Danube Mr. Rizwan Sajan and Mr. Atif Rahman – Director & Partner at Danube Properties, along with Masdar Official, Mr. Fahem Al Tamimi.

The company last year sold a total of 1,869 residential units, according to its annual report. Among the total number of properties sold by Danube Properties, 89 were ready-to-move-in while the rest 1,780 units were off-plan properties. The sales price of 1,869 units increased by 19.26 percent to Dh978 million last year, compared to the sales price of 1,047 units worth Dh820 million in 2017, the report shows.

Atif Rahman, Director and Partner of Danube Properties, says, “A developer’s strength of character and commitment reflects on the quality of construction and the number of project deliveries. Our record of continuous development and timely delivery of properties speaks volumes about our strong commitment to quality, timely delivery and our solid commitment to our home buyers.

“With the launch of Starz in 2016, we pioneered in introducing specially designed modular furniture. This will help the residents maximise the use of available space by converting the living room into a bedroom at night. We remain committed to delivering happy communities with phenomenal value addition. I am confident, buyers of properties in Starz and Glamz will be extremely delighted with the quality of finishing and timely delivery,” Atif Rahman concludes.

Recommended By Colombia In picture: Mr. Rizwan Sajan – Chairman at Danube – and Mr. Atif Rahman, Director & Partner at Danube Properties, along with VIP officials from Dubai Land Department, Masdar, and dignitaries. Danube Properties has so far awarded Dh1.6 billion worth of construction contracts involving 10 of the 12 projects launched so far. In 2018, Danube completed construction of 358 residential units while it awarded construction contracts for 926 units. Disclaimer: This article has been produced on behalf of Danube Properties by Times Internet’s Spotlight team.

Link: https://timesofindia.indiatimes.com/spotlight/heres-why-you-could-be-a-step-closer-to-your-dream-of-owning-a-home-in-dubai/articleshow/69446056.cms

Real estate market is witnessing green shoots, with senior Dubai Land Department officials signalling increased transactions year-on-year in the first two months of 2019

By Waheed Abbas, Khaleej Times

UAE – Led by Burj Khalifa developer, Emaar, several big players continued to dominate the sales of new properties in Dubai’s oversupplied market in early 2019, new data revealed.Dubai Hills Estate, Nakheel, Meraas, Damac Properties, Dubai Holding, Seven Tides International, Azizi Developments, and Danube Properties were the other major developers, who registered positive residential sales in the first two months of this year, according to Property Finder, an online real estate marketplace.Emaar Properties sold 1,374 homes in the first two months of 2019, accounting for 24 per cent of the total share, while Dubai Hills Estate sold 601 units, contributing 10 per cent to the total sales. The Palm developer, Nakheel, sold 359 homes, accounting for six per cent of the total market share.As reported previously by Khaleej Times, the emirate’s real estate market is witnessing green shoots, with senior Dubai Land Department officials signalling increased transactions year-on-year in the first two months of 2019. Property Finder’s results revealed that Emaar led in terms of sales value with Dh3.56 billion followed by Dh1.078 billion by Dubai Hills Estate and Dh66 million by Dubai Holding.

“In Dubai last year, we saw a number of long-time renters who converted to homeowners, in part due to attractive prices and payment plans in newly handed over projects. The combined effect is a healthy trend where off-plan investors are profiting from affordable housing and the number of homeowners are also increasing,” said Lynnette Abad, director of Data and Research at Property Finder.

In terms off-plan sales during January-February 2019, Emaar sold 1,043 off-plan homes, commanding 34 per cent market share while Dubai Hills Estate sold 539 homes, accounting for 18 per cent, and Dubai Holding clinched 163 off-plan sales, contributing five per cent of the share.

Emaar’s off-plan sales totalled Dh2.45 billion while Dubai Hills Estate and Dubai Holding came second and third with Dh688,200 and Dh308,242 sales, respectively.

In another development Danube Properties on Wednesday released its 2018 results, recording a whopping 78.5 per cent jump in residential units, increasing its share of off-plan sales to 10.6 per cent in 2018 from five per cent in the previous year.

Last year, Danube sold 1,869 residential units for Dh978 million while 1,047 properties worth Dh820 million were sold in the previous year as prices are substantially lower than the peak witnessed in 2014. Global ratings agency S&P had said that property prices in Dubai have fallen 25 per cent to 33 per cent in nominal terms since 2014.

Atif Rahman, director and partner of Danube Properties, said the market is the best regulated real estate market not just in the region, but globally and it is an amazing time to do business.

“Danube Properties‘ stellar performance reflects our firm belief in the affordable housing market. Despite challenging market conditions, we have recorded 78.5 percent growth in volumes and 19.27 percent growth in the sales transaction value,” he said.

Most areas in Dubai have seen modest declines in sale prices in Q1 2019 of under six per cent with the exception of Business Bay and Jumeirah Beach Residence (JBR).

Apartment sales in Business Bay recorded the highest decline in prices in the first quarter of 2019, while prices for the same in JBR have declined by 6.7 per cent, revealed Bayut data released on Wednesday.

For villa sales, Damac Hills saw the biggest decline as prices for 4-bedroom units fell 9.7 per cent with prices falling from Dh2.88 million to Dh2.6 million. This could be attributed to the handover of more units, creating a larger portfolio of units with smaller square footage than what was available in Q4 of 2018. ? ?

Bayut data revealed that Dubai Marina was the most popular area for apartment sales as the upscale apartments in the area offer 6.4 per cent an average rate-of-return. While Arabian Ranches took the top spot for villa sales with a 5.8 per cent RoI. But the sub-community of Al Reem is predictably the most popular with potential investors, Bayut said.

However, affordable communities such as International City and Dubai Sports City have witnessed an uptick in prices for 2-bedroom units.

Prices for these units in International City have risen from Dh690k to Dh700k, while in Dubai Sports City, prices have jumped from Dh875k to Dh900k. Interestingly, both areas also boast the highest RoI in Q1 2019 for apartments. The average ROI in International City stands at an impressive 9.7 per cent while Dubai Sports City’s apartments deliver an ROI of 7.9 per cent.

Copyright © 2019 Khaleej Times. All Rights Reserved.

Dubai’s property market is witnessing signs of green shoots as the number of transactions increased in the first two month of 2019 while developers also report good numbers as lower prices attract new buyers despite oversupply in the market.

“In the first two months of 2019, there is increase in number of transactions. There are more buyers in the market. The government’s initiatives like 100 per cent foreign ownership and 10-year visa are the privilege that the investors are looking for. We are targeting new markets like Africa, the US and Canada to enhance foreign investments into Dubai,” said Majida Ali Rashid, assistant director-general of Dubai Land Department (DLD).

“Dubai’s property, real estate infrastructure as well as investors are pretty matured now,” she said on the sidelines of the first day of the 3-day International Property Show, which began at the Dubai International and Exhibition Centre on Tuesday.

In the first 11 months of 2018, the total value of transactions reached Dh194 billion while Investors pumped in Dh62 billion investments during January to November 2018.

Atif Rahman, director and partner of Danube Properties, sees current inventories will be absorbed by the market by winter when demand will pick up and there might not be enough supplies left for buyers. “That’s why, it is the right time to buy for end-users, who can get the best from bargain.

He noted that Dubai’s real estate market will continue to attract investment, regardless of the demand-supply situation and how it changes based on the market conditions. “Right now, off-plan sales might grow at a slow pace and sale of ready-to-move-in homes might be an attractive proposition, depending on how the developers attract the home buyers.”

According to Property Finder, off-plan properties accounted for 55 per cent of Dubai market transactions in the first 2 months of 2019 while secondary market deals made up the remaining 45 per cent of the share. This is a far cry from the earlier cycles in the Dubai property market when off-plan sales dominated and secondary home transactions trailed by a huge margin. This unusual balance suggests that Dubai is no longer a purely investor-driven market.

In terms of volume, 3,069 off-plan homes exchanged hands while 2,463 secondary market deals were clinched in January and February 2019.

“Robust activity in the secondary market denotes that end-users are still active and purchasing homes in Dubai. When compared to the first two months of 2018, off-plan property transactions have declined by 7.8 per cent this year,” according to Property Finder research.

“Prices in the secondary market continue to be more attractive and affordable, while sellers have been much more motivated, one reason due to their competition with off-plan, ready stock,” said Lynnette Abad, director of research and data at Property Finder. Secondary market transactions in January and February 2019 are down only by a marginal 1.4 per cent in a year-on-year comparison, it added.

For apartments, the Palm Jumeirah, Dubai Marina and International City accounted for the most secondary market transactions in the first two months; while Dubai Hills Estate, Downtown Dubai and Dubai Creek Harbour (The Lagoons) took the lion’s share of off-plan deals.

Farhad Azizi, CEO, Azizi Developments, also echoed Majida’s views, saying there is an uptick since December 2018 and the first quarter of 2019 have been better than the same quarter last year.

“The first quarter of 2019 is much better than 2018; things had started to improve from December 2018, not just for us, but for other developers as well. Momentum is picking up and there is a lot of excitement ahead of Expo 2020 Dubai. I believe it is good time to buy because prices are low,” he said.

“The good thing is that new demand is coming from new buyers. Majority of them are end-user and non-residents from China, GCC, Africa, India and Pakistan.”

Azizi pointed out that some developers are also giving business licence on buying a new home as an added incentives to new buyers coming to this market. “We like those things so we have done it as well. Dubai has that ‘wow’ effect and when the ‘wow’ effect is there the trend will pick up. I still think that it is a good time to buy.”

Taimur Khan, research manager, Knight Frank, also acknowledged that demand is there provided the developer is building the right product.

He noted that Dubai’s real estate market will take a couple of years before it gets past the supply glut.

“People are looking at Dubai as a long-term play. A lot of residents are thinking that it is a time to go for a property buy. If you’re here longer than 2 years and 3 months, it makes a lot of sense to buy property with the kind of payment plans being offered in the market,” he added.

Outlook

Azizi predicted that the price of an apartment that now costs Dh1 million will increase to about Dh1.1 million by December 2019. “Prices will be 10 per cent more expensive, provided it is a good location project.”

Going forward, Azizi believes that those properties that are closer to Sheikh Zayed Road such as Downtown, Dubai Marina, JBR etc. will continue to witness good demand in the next 5 to 10 years.

Taimur Khan of Knight Frank sees Downtown extension, DIFC 2.0, Business Bay and Jumeirah an interesting developments that will perform well in the next five to 10 years.

“If developers can rightfully match demand with the supply, then there is no reason why we can’t see prices rising at slow but stable rate in the coming years. In 10-years, if we can get CAGR of 3-4 per cent, we would be happy,” he added.

Dubai’s property market is witnessing signs of green shoots as the number of transactions increased in the first two month of 2019 while developers also report good numbers as lower prices attract new buyers despite oversupply in the market.

“In the first two months of 2019, there is increase in number of transactions. There are more buyers in the market. The government’s initiatives like 100 per cent foreign ownership and 10-year visa are the privilege that the investors are looking for. We are targeting new markets like Africa, the US and Canada to enhance foreign investments into Dubai,” said Majida Ali Rashid, assistant director-general of Dubai Land Department(DLD).

“Dubai’s property, real estate infrastructure as well as investors are pretty matured now,” she said on the sidelines of the first day of the 3-day International Property Show, which began at the Dubai International and Exhibition Centre on Tuesday.

In the first 11 months of 2018, the total value of transactions reached Dh194 billion while Investors pumped in Dh62 billion investments during January to November 2018.

Farhad Azizi, CEO, Azizi Developments, also echoed Majida’s views, saying there is an uptick since December 2018 and the first quarter of 2019 have been better than the same quarter last year.

“The first quarter of 2019 is much better than 2018; things had started to improve from December 2018, not just for us, but for other developers as well. Momentum is picking up and there is a lot of excitement ahead of Expo 2020 Dubai. I believe it is good time to buy because prices are low,” he said.

“The good thing is that new demand is coming from new buyers. Majority of them are end-user and non-residents from China, GCC, Africa, India and Pakistan.”

Azizi pointed out that some developers are also giving business licence on buying a new home as an added incentives to new buyers coming to this market. “We like those things so we have done it as well. Dubai has that ‘wow’ effect and when the ‘wow’ effect is there the trend will pick up. I still think that it is a good time to buy.”

Taimur Khan, research manager, Knight Frank, also acknowledged that demand is there provided the developer is building the right product.

He noted that Dubai’s real estate market will take a couple of years before it gets past the supply glut.

“People are looking at Dubai as a long-term play. A lot of residents are thinking that it is a time to go for a property buy. If you’re here longer than 2 years and 3 months, it makes a lot of sense to buy property with the kind of payment plans being offered in the market,” he added.

Atif Rahman, director and partner of Danube Properties, sees current inventories will be absorbed by the market by winter when demand will pick up and there might not be enough supplies left for buyers. “That’s why, it is the right time to buy for end-users, who can get the best from bargain.”

He noted that Dubai’s real estate market will continue to attract investment, regardless of the demand-supply situation and how it changes based on the market conditions. “Right now, off-plan sales might grow at a slow pace and sale of ready-to-move-in homes might be an attractive proposition, depending on how the developers attract the home buyers.”

According to Property Finder, off-plan properties accounted for 55 per cent of Dubai market transactions in the first 2 months of 2019 while secondary market deals made up the remaining 45 per cent of the share. This is a far cry from the earlier cycles in the Dubai property market when off-plan sales dominated and secondary home transactions trailed by a huge margin. This unusual balance suggests that Dubai is no longer a purely investor-driven market.

In terms of volume, 3,069 off-plan homes exchanged hands while 2,463 secondary market deals were clinched in January and February 2019.

“Robust activity in the secondary market denotes that end-users are still active and purchasing homes in Dubai. When compared to the first two months of 2018, off-plan property transactions have declined by 7.8 per cent this year,” according to Property Finder research.

“Prices in the secondary market continue to be more attractive and affordable, while sellers have been much more motivated, one reason due to their competition with off-plan, ready stock,” said Lynnette Abad, director of research and data at Property Finder. Secondary market transactions in January and February 2019 are down only by a marginal 1.4 per cent in a year-on-year comparison, it added.

For apartments, the Palm Jumeirah, Dubai Marina and International City accounted for the most secondary market transactions in the first two months; while Dubai Hills Estate, Downtown Dubai and Dubai Creek Harbour (The Lagoons) took the lion’s share of off-plan deals.

Outlook

Azizi predicted that the price of an apartment that now costs Dh1 million will increase to about Dh1.1 million by December 2019. “Prices will be 10 per cent more expensive, provided it is a good location project.”

Going forward, Azizi believes that those properties that are closer to Sheikh Zayed Road such as Downtown, Dubai Marina, JBR etc. will continue to witness good demand in the next 5 to 10 years.

Taimur Khan of Knight Frank sees Downtown extension, DIFC 2.0, Business Bay and Jumeirah an interesting developments that will perform well in the next five to 10 years.

“If developers can rightfully match demand with the supply, then there is no reason why we can’t see prices rising at slow but stable rate in the coming years. In 10-years, if we can get CAGR of 3-4 per cent, we would be happy,” he added.

 

Copyright © 2019 Khaleej Times. All Rights Reserved. Provided by SyndiGate Media Inc. (Syndigate.info).

Dubai’s property market is witnessing signs of green shoots as the number of transactions increased in the first two month of 2019 while developers also report good numbers as lower prices attract new buyers despite oversupply in the market.

“In the first two months of 2019, there is increase in the number of transactions. There are more buyers in the market. The government’s initiatives like 100 per cent foreign ownership and 10-year visa are the privilege that the investors are looking for. We are targeting new markets like Africa, the US and Canada to enhance foreign investments into Dubai,” said Majida Ali Rashid, assistant director-general of Dubai Land Department (DLD).

“Dubai’s property, real estate infrastructure as well as investors are pretty matured now,” she said on the sidelines of the first day of the 3-day International Property Show, which began at the Dubai International and Exhibition Centre on Tuesday.

In the first 11 months of 2018, the total value of transactions reached Dh194 billion while Investors pumped in Dh62 billion investments during January to November 2018.

Farhad Azizi, CEO, Azizi Developments, also echoed Majida’s views, saying there is an uptick since December 2018 and the first quarter of 2019 have been better than the same quarter last year.

“The first quarter of 2019 is much better than 2018; things had started to improve from December 2018, not just for us, but for other developers as well. Momentum is picking up and there is a lot of excitement ahead of Expo 2020 Dubai. I believe it is good time to buy because prices are low,” he said.

“The good thing is that new demand is coming from new buyers. Majority of them are end-user and non-residents from China, GCC, Africa, India and Pakistan.”

Azizi pointed out that some developers are also giving business licence on buying a new home as an added incentives to new buyers coming to this market. “We like those things so we have done it as well. Dubai has that ‘wow’ effect and when the ‘wow’ effect is there the trend will pick up. I still think that it is a good time to buy.”

Taimur Khan, research manager, Knight Frank, also acknowledged that demand is there provided the developer is building the right product.

He noted that Dubai’s real estate market will take a couple of years before it gets past the supply glut.

“People are looking at Dubai as a long-term play. A lot of residents are thinking that it is a time to go for a property buy. If you’re here longer than 2 years and 3 months, it makes a lot of sense to buy property with the kind of payment plans being offered in the market,” he added.

Atif Rahman, director and partner of Danube Properties, sees current inventories will be absorbed by the market by winter when demand will pick up and there might not be enough supplies left for buyers. “That’s why, it is the right time to buy for end-users, who can get the best from bargain.”

He noted that Dubai’s real estate market will continue to attract investment, regardless of the demand-supply situation and how it changes based on the market conditions. “Right now, off-plan sales might grow at a slow pace and sale of ready-to-move-in homes might be an attractive proposition, depending on how the developers attract the home buyers.”

According to Property Finder, off-plan properties accounted for 55 per cent of Dubai market transactions in the first 2 months of 2019 while secondary market deals made up the remaining 45 per cent of the share. This is a far cry from the earlier cycles in the Dubai property market when off-plan sales dominated and secondary home transactions trailed by a huge margin. This unusual balance suggests that Dubai is no longer a purely investor-driven market.

In terms of volume, 3,069 off-plan homes exchanged hands while 2,463 secondary market deals were clinched in January and February 2019.

“Robust activity in the secondary market denotes that end-users are still active and purchasing homes in Dubai. When compared to the first two months of 2018, off-plan property transactions have declined by 7.8 per cent this year,” according to Property Finder research.

“Prices in the secondary market continue to be more attractive and affordable, while sellers have been much more motivated, one reason due to their competition with off-plan, ready stock,” said Lynnette Abad, director of research and data at Property Finder. Secondary market transactions in January and February 2019 are down only by a marginal 1.4 per cent in a year-on-year comparison, it added.

For apartments, the Palm Jumeirah, Dubai Marina and International City accounted for the most secondary market transactions in the first two months; while Dubai Hills Estate, Downtown Dubai and Dubai Creek Harbour (The Lagoons) took the lion’s share of off-plan deals.

Outlook

Azizi predicted that the price of an apartment that now costs Dh1 million will increase to about Dh1.1 million by December 2019. “Prices will be 10 per cent more expensive, provided it is a good location project.”

Going forward, Azizi believes that those properties that are closer to Sheikh Zayed Road such as Downtown, Dubai Marina, JBR etc. will continue to witness good demand in the next 5 to 10 years.

Taimur Khan of Knight Frank sees Downtown extension, DIFC 2.0, Business Bay and Jumeirah an interesting developments that will perform well in the next five to 10 years.

“If developers can rightfully match demand with the supply, then there is no reason why we can’t see prices rising at slow but stable rate in the coming years. In 10-years, if we can get CAGR of 3-4 per cent, we would be happy,” he added.

– waheedabbas@khaleejtimes.com

Developers fast completing residential projects ahead of Expo 2020 Dubai

Residents will be able to buy or rent properties on more flexible terms and conditions as record 41,000 residential units are expected to come online this year due to higher materialisation rate of projects ahead of Expo 2020.

The latest data issued by Property Finder Group indicates that the up-and-coming communities in Dubai are likely to see more homes completed this year while the established neighbourhoods will see only a few additions to their inventory.

The real estate portal said 30 per cent of the 41,000 residential units under construction in Dubai this year are 96 per cent to 99 per cent complete with Jumeirah Village Circle is expected to deliver 3,400 homes, the highest in Dubai.

Lynnette Abad, director of Research and Data at Property Finder, said this is an excellent time for those who are looking to purchase property.

“Considering more than 70 per cent of expats rent, this new supply is very much welcomed as residents are benefiting by upgrading the community in which they reside. As the Dubai property market matures, residents are finally seeing rents reduced to a level that is considered affordable and, in turn, their cost of living is going down,” she added.

Shaher Mousli, chairman and CEO of Arthur Mackenzy Properties Group, said 2018 was a slow year in comparison to 2017 and 2016, which caused some projects to slow down. However, last year, there was an influx of investors who came in and pumped money into these projects that were offered to them at good price points by owners and landlords.

“Usually, opportunities arise for investors when there is a slowdown in the market. During a crunch time Dubai has always presented lucrative opportunities to external investors which enables project completion,” he said.

“I believe that a main reason for many projects heading towards completion now is to meet the expected demand during Expo 2020,” Mousl told Khaleej Times.

Over 28,000 homes were handed over in Dubai in 2018, which has been more than the number of units handed over in the past few years, according to Property Finder report.

“I believe Dubai’s real estate market has been extremely resilient in a cloudy weather and continues to remain one of the highest yielding internationally. There are several projects anticipated to complete this year, which in turn will offer the consumer a wider choice in location, price and quality,” said Atif Rahman, director and partner of Danube Properties.

Due to the delivery of these projects, he said a bit of pressure will be felt, but should not be considered a sign for worry. Like it has happened historically in every global market, it will even out over a period of time with the increase in demand through growth in population, he said.

“I expect the demand to catch up from Q3, which shall create the upward momentum for sale price and rentals. It’s a great time for end users and investors to take advantage and be ready to reap the results,” he said.

Higher materialisation rate

Although, over 41,000 homes are scheduled to be completed in Dubai in 2019, there is usually a considerable gap in what is announced and what enters the market. Actual deliveries have been 30 per cent to 50 per cent lower than developer projections. This is because developers usually adjust supply to match actual demand, the report said.

Referring to JLL report, Abad said traditionally materialisation rate has been 40 per cent to 50 per cent. “Supply hit a peak in 2018, however that doesn’t mean the materialisation rate changed due to the number of projects under construction and new project launches,” Abad said.

As of February 2019, the 41,000 units slated for completion in Dubai, 30 per cent are 96 per cent to 99 per cent ready, according to Property Finder. Moreover, 32 per cent of under-construction projects are 91 per cent to 95 per cent complete while 29 per cent of projects being built are 85 per cent to 90 per cent complete. This may result in a higher materialisation rate of projects this year, the report said.

“One of the key reasons behind higher materialisation rate of projects is partly due to the Expo 2020 factor, as most of the projects were planned to support the growth, which is expected from the Expo,” Rahman of Danube Properties said.

He attributed the credit to strong regulatory environment that ensures healthy project delivery and high investor confidence. “The support and control from the regulators has made every Property developers more responsible towards their obligations to complete projects on time.”

Referring to Core latest report on Dubai property market, its head of Research and Advisory Prathyusha Gurrapu said majority of the deliveries are in the affordable to mid-market segment, with Dubailand and Jumeirah Village Circle and Triangle accounting for one-third of all handovers.

“Although the pace of price softening has relatively slowed, we expect a lag in sales and rental price recovery as existing vacant stock and future supply over the next couple of years is expected to outpace steady demand,” he said.

He said many of these developments were planned during the 2014-15 peak.

“We also foresee developers aligning deliveries in the run up to Expo 2020. We have seen handovers increase over the last year, with over 21,700 units delivered in 2018 and expect a higher number of deliveries over 2019 and 2020, despite taking into account conservative realisation rates,” he said.

A good start

A total of 4,441 residential units have been completed in Dubai in the first two months of 2019, of which 4,184 were apartments and 257 were villas and townhouses, according to Property Finder research.

Jumeirah Village Circle will see the highest number of homes completed this year (3,408) and accounts for 8.19 per cent of the upcoming supply in 2019. Business Bay is next up, with 3,152 homes slated for completion in 2019 and accounting for 7.57 per cent of the supply. Third is Dubai Sports City with 3,098 homes to be ready in 2019 and contributing to 7.44 per cent of total supply.

In the areas where new supply will be released, sales and rental prices will continue to adjust based on market demand,” Abad said.

“Over the last year, this has given opportunity to a new market trend where we have seen a significant amount of renters converting into home owners and we believe 2019 will be the year for end-users,” she said.

“For those continuing to rent, we will continue to see the trend where many will upgrade to bigger units or move to more desirable areas with sought after amenities in addition to retaining negotiating power. Both of these trends have increased the amount of disposable income which contributes to the overall economy,” she explained.

New developments such as Mohammed Bin Rashid City, Al Furjan and Town Square will each add over 2,000 homes to Dubai’s residential market this year. Other new projects like Akoya Oxygen, Mirdif Hills, Dubai South and Damac Hills will each add over 1,000 units to Dubai’s residential market across 2019.

Established communities such as International City (512), the Palm Jumeirah (289), Dubai Motor City (276), Dubailand (188) and Jumeirah Golf Estates (95) will only contribute a small portion of the supply pie in 2019.

Bucking this trend are communities such as Downtown Dubai (1,772) and Dubai Marina (944), where considerable construction activity is still on and therefore will see more home completions.

To a question about affordable share in estimated 41,000 units to be completed this year, she said: “If we look at the areas where majority of the supply will be completed, we can expect to see affordable stock in quite a few areas including JVC, Sports City, DSO, Dubailand, Arjan and Dubai South which account for about 33 per cnet of the 41,000 to be completed.”