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News Brief # 20 Sunday 16 th May 2010 Contracting Property Services Development Rea l Estate Ne ws UAE Limited mortgages affect property recovery Terms of tenancy agreements get tougher Demand for quality labour housing rises Regulation is challenge for FM sector Sovereign debt law by end of year Dubai Daman announces partnership with Al Habtoor Three more Dubai Metro stations open Palm Jumeirah to leave an indelible impression Not the last resort Rent drop to continue It's tee time The ABC of JLT Oceana offers fractional ownership Hotels map out future of Palm Jumeirah Municipality seeks self-verification of villas Kleindienst Group gets first licence for The World Investor finds way to 'flip' The World island Dubai's house prices jump 4% in Q1 Hotels brace for euro crisis fallout Dubai Holding in finance review Developers move to take back properties Emaar moves on non-payers Abu Dhabi Rotana plans 800 rooms for capital’s ADNEC area Northern Emirates Ajman files cases against absconding developers Property transactions decline in RAK Sharjah drafts real estate registration law Bahrain Bahrain rentals 'to drop further in 2010' Qatar Major Qatari infrastructure projects 'on-track' Office rents stabilise in Qatar QIB signs Istisna'a agreement to fund Al Khor residential project worth QR 300 million KSA Saudi Arabia's unique demographics to sustain long-term demand for residential properties Affordable housing takes top priority as KSA faces potential 1 million shortfall in residential units by 2013 Injaz begins Cluster 9 sales at Al Gamra Investment Two UAE residents buy £20m homes in posh London areas Customer Serv ice Centre: +971 4 403 77 00 www.asteco.com Contracting Property Services Development Daman announces partnership with Al Habtoor 09 May 2010 Daman Invest ments has announced that the Al Habtoor Leighton Group will be the primary contractor on its new large scale project at the Dubai International Financial Centre. The partnership will begin work on the Buildings By Daman development immediately and both companies have confirmed that the project will be completed on a phased delivery schedule, more details of which will be released in the coming weeks. Rigorous negotiations between Daman and several construction firms on tender and evaluation point s have been ongo ing since January, but Shehad Gargash, managing director of Daman, has indicated that Al Habtoor's vast project experience in the United Arab Emirates (UAE) was the deciding factor in the group's appoint ment. "We are extremely pleased to be working with a group of their quality and track record here in the UAE - work has commenced on the building and we all look forward to a rapid completion," said Mr Gargash. Meanwhile Al Habtoor chairman Riad Tawfiq Al Sadek also expressed his delight at the deal: "We a re very happy - this is a landmark location, a superb design and we are sure the building w ill be a new icon on the Dubai skyline. We are looking forward to a smooth takeover and start of operations." Source: CMIS Back to the top Bahrain rentals 'to drop further in 2010' 06 May 2010 A new report published today (May 6th) has revealed that leasing and occupancy rates in Bahrain's commercial office space are likely to see a downturn this year. In a continuation of the recent downward trend in real estate purchases and rentals throughout the Middle East in the wake of the recession, Bahrain looks set to suffer another slow year due to decreasing demand. The latest CB Richard Ellis (CBRE) Marketview on Bahrain study states "there will continue to be a general slow down in transactional activity for housing units of all types" in 2010, reports Emirates Business. Furthermore, the delivery of quality office space is also expected to slow down this year, as developers are wary of oversupplying the market during a time when occupancy and purchase rates remain low. CBRE's report adds: "It is difficult to place a timescale on the general recovery of the real estate market especially given the variances by the market sector and location. Customer Serv ice Centre: +971 4 403 77 00 www.asteco.com Contracting Property Services Development "However, Bahrain appears to be in reasonably stable condition at present with any further falls likely to be generally modest, and we anticipate signs of recovery in most sectors by the end of 2010." Source: CMIS Back to the top Major Qatari infrastructure projects 'on-track' 06 May 2010 A Qatari government official said yesterday (May 6th) that several major infrastructure projects in the country are nearing completion. According to Sheikh Abd ulrahman bin Khalifa Al Thani, the minister of municipality and urban planning, developments such as Lusail Road, the 22nd February Road intersection and several bridges intended to relieve congestion on the nation's roads, are on-track to be finished within the coming months. Qatar has allocated around QR35.5 billion ($9.7 billion), about 30 per cent, of its budget for 2010 -11 on real estate activities and projects as the country seeks to implement a widespread upgrade of its infrastructure. Al Thani added that the government is giving particular attention to encouraging private sector financing and invest ment in the real estate market. Also, Qatar has ridden the storm of the global financial crisis while managing to maintain its growth rate despite the fact that, according to Al Thani, "many countries are still suffering, especially in the real estate investment field". Source: CMIS Back to the top Three more Dubai Metro stations open 15 May 2010 Three more stations on the Red Line of the Dubai Metro were opened Saturday, bringing the total number of operational stations to 21. The new stations started receiving passengers as the metro operations started 6am. The newly opened stations include: World Trade Cent re, GGICO in Al Garhoud and Noor Islamic Bank (Al Qouz) on Shaikh Zayed Road. Some 14 feeder buses have been deployed to link the new metro stations with the surrounding areas offering bus service with 13-20 minutes frequency. This brings the total feeder buses serving the stations to 152. Customer Serv ice Centre: +971 4 403 77 00 www.asteco.com Contracting Property Services Development ―We expect the number of commuters will increase to more than 140,000 per day with the opening of new stations,‖ said Mattar Al Tayer, Chairman of the Board and Executive Director of the Dubai Roads and Transport Authority. He said the remaining eight stations on the Red Line of the Metro would open gradually in coming months. Source: Gulf News Back to the top Office rents stabilise in Qatar 06 May 2010 Rents on prime commercial office properties in Qatar have stabilised over the first quarter, but further rental reductions have been witnessed in the secondary markets with occupiers focusing on quality, according to a new report. "Rates on prime accommodation have stabilised over first quarter 2010, though further declines have been witnessed on secondary stock," DTZ, the international real estate advisory firm, said in its first - quarter report on Qatar real estate. Prime rates in the Diplomatic District reached QR 250 (Dh252.19) per sqm/month. However, it is possible to secure new accommodation from rates as low as QR180 per sqm/month. As the market continues to mature, greater levels of stock have provided potential occupiers with a choice of accommodation and resulted in the development of a two-tier office market. High-quality modern offices, designed and built to meet occupier requirements, are able to command the prime rates with secondary stock suffering from increasing levels of vacancy and reduced rentals to attract inte rest. Landlords are prepared to offer discounts from prime rentals to occupiers with larger space requirements and to those, which are prepared to commit to lease terms in excess of five years. Tenants benefiting from rent free periods of two to three months are now common place, the report added. After location and rent, availability of sufficient car parking is generally considered as the most important criteria for occupiers evaluating property options. Currently, the total office stock in Doha is est imated at 3.2 million square metres of which 50 per cent is considered as grade A stock. The Diplomatic District, which is regarded as Doha's new central business district (CBD), accounts for just more than 70 per cent of the current grade A stock. In comparative terms, all other locations are considered secondary. Office accommodation is also found in districts such as Grand Hamad Street, Airport Road, Al Sadd, Salwa Road and along the C and D Ring Roads. Ne w constructions At the end of 2008, there were 46 completed, high-rise commercial office towers within the Diplomatic District providing 680,000 sqm of leasable accommodation. That figure now stands at 1.1 million sqm, equating to a 60 per cent increase in supply over 15 months. Customer Serv ice Centre: +971 4 403 77 00 www.asteco.com Contracting Property Services Development There is currently, approximately 158,000 sqm of space being marketed as available to lease, producing a vacancy rate of 14 per cent in comparison with 22 per cent recorded in December 2009 and less than five per cent at the end of 2008. A further five developments are under construction and scheduled for completion before the end of 2010, creating an additional 192,000 sqm available to lease. These will take total office stock in the Diplomatic District up to 1.3 million sqm if construction works are carried out according to schedule without any major delays, DTZ said. First quarter 2010 has witnessed renewed occupier confidence with registered demand totalling 137,200 sqm. The highest level recorded for a single quarter since third quarter 2008. The latest research, highlights that over first quarter of 2010, government -related bodies accounted for 59 per cent of registered demand. These results are an indication that the government sector is increasingly active now that he threat of rental inf lation has receded. Government ministries leasing three towers in the Diplomatic District, equating to almost 100,000 sqm of supply, has been a key driver in the reduction of the office vacancy rates over the last three mont hs. Ne w demand falls Rental growth over 2005-2008 was one of the key factors behind Qatar's high inflation rates. These were followed by declines of 20 to 30 per cent in 2009. Demand for residential property has shown signs of improvement over first quarter 2010 with increased economic activity creating new jobs and attracting people to Qatar seeking employment. However, population growth slowed over 2009 and as a result the level of new demand for residential accommodation has reduced considerably in comparison to the previous three years, during which the population doubled, DTZ said In parallel with reduced demand, the level of supply in housing stock is increased at a faster rate as a number of developments started in response to the housing shortage reach completion. The impact of these shifts in supply and demand has seen rental levels drop 20 to 30 per cent over 2009. DTZ also estimates that there are approximately 6,100 residential apart ments in the Diplomatic District. Approximately 60 per cent of the existing residential stock consists of two and three b edroom units. The majority of demand is for one and two bedroom units with requirements for three bedroom apart ments being limited. Average rental prices for luxury apart ments in Doha have reduced further, by 10 to 15 per cent, over the first quarter of t he year with supply continuing to outstrip demand. "We expect that Doha will continue to experience relatively strong residential demand over the short to medium term as the economy remains stable and the population growth continues on a positive track," DTZ said. Source: Emirates Business 24/7 Back to the top Customer Serv ice Centre: +971 4 403 77 00 www.asteco.com Contracting Property Services Development Saudi Arabia's unique demographics to sustain long-term demand for residential properties 10 May 2010 New housing projects underway in Saudi's 'New Riyadh' as Injaz sells out Cluster 7 of Al Gamra Project Saudi Arabia has emerged as an excellent long-term invest ment destination for residential properties on account of its unique demographics wherein recent statistics show that 40 per cent of the population is under the age of 14. In addition, the Saudi property market has remained resilient and stable despite the global economic downturn, prompting analysts to conclude that the long-term outlook for Saudi's real estate sector remains extremely positive. With an eye on the long-term property demand in the country, new residential development projects are now underway in North Riyadh as Cluster 7 of the Al Gamra Project has been completely sold out with 60 per cent of all deeds already transferred. Located in what is acclaimed to be Saudi Arabia's "New Riyadh", Al Gamra Project offers nearly 2.5 million square metres of master-developed, ready-to-build housing plots that are designed to be a natural extension of Riyadh's northern suburb. Injaz Development Comp any, the Riyadh-based master developer and property invest ment firm overseeing the Al Gamra Project, has announced that it is now initiating sales of cluster 9 follow ing the successful sales results of Cluster 7. Moreover, Injaz revealed that it will be of fering promotional offers and accepting reservations for Cluster 9 and w ill be presenting other property offerings and future projects during the Riyadh Exhibition for Real Estate and Architecture Development (RESTATEX) 2010, taking place from May 9 to 12 at the Riyadh International Exhibition Centre. Omar Al Kadi, President and Managing Director, Injaz Development Company, said: "The Al Gamra Project has many distinguishing factors that make it a leading invest ment destination in North Riyadh, and one of the most important factors is the road network neighbouring the project, including Prince Salman Road, which has a noticeable effect in boosting real estate growth in that area. The project's proximity to a number of top projects being developed in North Riyadh plays a major role in enhancing the value of Al Gamra, as these projects hold massive growth potential and attract invest ments from local, regional and international companies. Another very important factor that boosts the strategic importance of Al Gamra is the fact that its land level is naturally higher than the surrounding area, providing additional value to investors." Al Gamra Project is located in the area between the north highway and King Fahad Road towards the north on Abu Bakr Al Seddig Road. The project is also in proximity to leading destinations and landmarks in Riyadh including King Khalid Airport, Princess Noura University, Al Imam University, SABIC and Security Special Force. The 13th edition of RESTATEX will be attended by senior officials in the ministry of municipal and rural affairs, council of Saudi chambers of commerce and industry, Riyadh chamber of commerce and industry, the heads of leaders' real estate companies, selected investors, and heads of banks. Injaz will be showcasing its comprehensive property portfolio and discuss expansion plans during the event. Injaz was established in 2006 to develop total solutions for the local and regional property sectors. The company's services include identification and acquisition of potential real estate investments, internal and third-party project development, property marketing, and sales support such as financing through local banks. Customer Serv ice Centre: +971 4 403 77 00 www.asteco.com Contracting Property Services Development Source: Press Release Back to the top QIB signs Istisna'a agreement to fund Al Khor residential project worth QR 300 million 08 May 2010 Qatar Islamic Bank (QIB), the world's fourth largest Islamic Bank, has announced the signing of an Istisna'a agreement for the financing of a major residential project to be built in Al Khor. Owned by Al Khor & Dakira Schemes & Services Co., construction of this signif icant real estate development in the north of Qatar is expected to be completed in just over two years. The UAE-based Construction & Reconstruction Engineering Company has been assigned as the construction contractor for the project, and Arab Consulting Bureau will deliver the consultant engineering services. This substantial new development at Al Khor, valued at QR 300 million, will provide high-quality residential accommodation comprised of 145 villas and 252 apart ments of varying configurations. Also to be constructed as part of the project are a children's nursery and a swimming pool, as well as a shopping mall and associated parking lots. Located approximately 50 kilometres north of Doha, Al Khor exhibits a well-established charm that is melding successfully with the extensive development it is currently experiencing, without jeopardizing its traditional identity as one of Qatar's original pearling and fishing villages. The burgeoning city has become a hotspot for residential and business development and is home to many employees of the oil industry because of its proximity to Qatar's northern oil and natural gas fields, as well as to Ras Laffan Industrial City. Commenting on the signing of this important financing agreement, Mr. Salah Al Jaidah, QIB's CEO, said, "Our involvement with projects such as this Al Khor development is born out of QIB's compelling and ongoing commit ment to Qatar's economic development, one of the four interrelated pillars underlying the Emir's 2030 Vision. We are both proud and excited to support such an outstanding undertaking which partners QIB w ith leading companies in construction, design and project management, and denotes our enduring support of Qatar's construction industry." Mr. Al Jaidah continued, "At QIB we are confident that the worst of the financial turmoil of the last couple of years is at an end. Qatar has demonstrated impressive resiliency during the global eco nomic crisis and remains in a very strong position, with GDP growing 11 percent in 2009 and forecasted growth of 16 per cent in 2010-2011." "Our involvement in this project at Al Khor demonstrates the major contribution that QIB makes to the growth of our country, and how we consistently provide leadership in the field of real estate development, so vital to Qatar's continued progress", observed Mr. Ahmad Meshari, General Manager of QIB's Domestic Business Group. "Further, QIB's ability to finance such signif icant construction projects using Islamic finance products enhances the wider understanding and acceptance of Islamic banking and finance as a viable alternative to conventional banking methods". General Manager of QIB's Real Estate Group, Mr. Salah A l Hail added, "This real estate project at Al Khor is one of the biggest in Qatar since the economic and financial downturn in 2008, and w ill play a key role in satisfying the high demand for quality residential developments in Qatar's northern area." Customer Serv ice Centre: +971 4 403 77 00 www.asteco.com Contracting Property Services Development In response, Mr. Moustafa Rajab Abou Zeid, General Manager of Al Khor & Dakira Schemes & Services Co., said, "This signif icant agreement is indicative of the strength of the collaboration between QIB, one of the world's leading Islamic financial institutions, and AKD Schemes & Services. Our company has a proven track record for providing commercial and residential facilities in the Al Khor, Dakira and Ras Laffan areas that meet the highest standards of quality, as will our latest real estate development project in Al Khor". Source: Press Release Back to the top Affordable housing takes top priority as KSA faces potential 1 million shortfall in residential units by 2013 05 May 2010 Residents to reach 27 million by 2011 as ‗young‘ population continues 2.9 per cent annual growth The Kingdom of Saudi Arabia is considering the implementation of a comprehensive National Strategy to augment the country‘s stock of affordable housing. Custodian of the Two Holy Mosques, Ki ng Abdullah Bin Abdulaziz, has emphasized the need to expedite measures for facilitating easier access to housing for low- to middle-income citizens. Around 80 per cent of the Saudi population, which continues to grow at an annual rate of 2.9 per cent, is under the age of 39. Many of them are married couples in search of affordable entry-level housing to start their own families. The projects and services of over 100 local property developers, investors and service -driven firms with the potential to meet the KSA‘s low-cost housing needs will be showcased in 10,000 sqm of exhibition space during the upcoming Business-to-Business Cityscape Jeddah 2010 exhibition. Saudi Arabia‘s leading real estate investment and development event will run from June 7 to 9, 2010 at the Jeddah Center for Forums and Events and will be held under the Patronage of HRH Prince Misha‘al Bin Majed Bin Abdul Aziz, Governor of Jeddah. The Ministry of Commerce and Industry have approved the event and the Jeddah Chamber of Commerce and Ind ustry is a key supporter. ―Industry analysts affirm that low-cost housing has joined business parks as the top two investment attractions of Saudi Arabia due to surging demand for residential units. The national population is expected to hit 27 million by next year, so there is a growing urgency to balance residential developments so that everyone has the opportunity to buy a house that fits their needs and their budgets. Fortunately the KSA Government has taken the lead to ensure that housing will be acce ssible for all, and so we can expect affordable housing to occupy a greater share in upcoming property projects which will be showcased at Cityscape Jeddah,‖ said Deep Marwaha, Director of Cityscape Saudi Arabia. The Kingdom of Saudi Arabia could sustain a shortfall of up to one million housing units through 2013. Aside from its rapidly rising population, the country has one of the highest housing densities in the world (6.4 per cent in 2008). Therefore there is a constant demand for units among family members who want to have their own accommodations. Moreover, the Saudi urban population is very high, with over 80 percent of the population living in urban areas. Efforts are currently underway among developers to balance the distribution, location, and target markets of projects to ensure the property sector‘s even Customer Serv ice Centre: +971 4 403 77 00 www.asteco.com Contracting Property Services Development growth. The underserved low-cost housing segment in particular is gaining greater popularity among developers and investors. ―The private sector is responding positively to the Saudi Government‘s call for more low-cost housing developments. For our part, we intend to assist in the financing side so that developers can focus more on their projects. There is a need to consolidate industry and government efforts so that we can build a property market that is strong, balanced, and Sustainable,‖ said Jamil Ghazaw i, CEO, SHADA HOMES. Although the Saudi royal family has initiated several charitable housing projects across the Kingdom to meet the needs of low income groups, a more systematic approach is needed to expedite the growth of mass housing. Government -backed initiatives such as the upcoming mortgage law and changes in municipal home construction legislation are ref lecting the movement towards a large -scale National Strategy that will improve the ability of low- and middle-income individuals to acquire their own homes. Cityscape Jeddah 2010 will also feature the 2nd annual Saudi Arabia Real Estate Investment and Development Conference, which will be held under the theme ‗Transparency, Investment M odels and Future Partnerships.‘ There will also be exclusive Investor Round Tables in addition to the 2nd Cityscape Awards for Real Estate in Saudi Arabia to be held on the opening night. Cityscape Jeddah 2010 sponsors include Sumou Real Estate (Principal Sponsor), Knowledge Economic City (Silver Sponsor), and Shuaa Capital (Conference Investment Sponsor). For more event details please visit www.cityscapejeddah.com Source: Press Release Back to the top Palm Jumeirah to leave an indelible impression 16 May 2010 The Palm Jumeirah is the first in the Palm trilogy of artificial islands in Dubai, on which major commercial and residential inf rastructures are being constructed. The island was reclaimed by Nakheel, a property developer that has hired Belgian and Dutch dredging and marine contractor Jan De Nul and Van Oord — some of the world's specialists in land reclamation — for the prestigious project. The other islands in the trilogy include Palm Jebel Ali and the Palm Deira. Each settlement in the Palm Jumeirah is set to be in the shape of a palm tree, topped with a crescent. These will have a large number of residential, leisure and entertainment centres. The first two islands' reclamation comprised approximately 100 million cubic metres of rock and sand. The creation of the Palm Jumeirah began in June 2001. Shortly after, the Palm Jebel Ali was announced and its reclamation work began too. Customer Serv ice Centre: +971 4 403 77 00 www.asteco.com Contracting Property Services Development The Palm Deira, which is planned to have a surface area of 46.35 square kilometres, was announced for development in October 2004. The construction was originally planned to take 10-15 years, but that was before the impact of the global credit crunch hit Dubai. The Palm Islands are artif icial peninsulas constructed using sand from the bottom of the Gulf. The sand is sprayed by the dredging ships onto the required area in a process know n as rainbow ing. Special e ffects The outer edge of each Palm's encircling crescent is a large rock breakwater. The breakwater of the Palm Jumeirah has over seven million tonnes of rock. Each rock was placed individually by a crane, signed off by a diver and given a GPS coordinate. The Jan De Nul Group started working on the Palm Jebel Ali in 2002 and commenced work by the end of 2006. The reclamation project for the Palm Jebel Ali included the creation of a four kilometre peninsula, protected by a 200- metre-wide, 17 kilometre circular breakwater. Around 210 million cubic metres of rock, sand and limestone were reclaimed. There are approximately 10 million cubic metres of rock in the slope protection works. The Palm Jumeirah can be seen from the International Space Station. It consists of a tree trunk, a crown with 17 fronds, and a surrounding crescent-shaped island that forms an 11 kilometre breakwater. The island itself is five kilometres by five kilometres with an additional 78 kilometres added to the Dubai coastline. The Palm Jumeirah has already created 4,000 residences in a combination of villas and apart ments. Residents began moving into their Palm Jumeirah properties at the end of 2006, five years after land reclamation began. This signalled the end of phase one of the island's construction. This includes approximately 1,400 villas on 11 of the fronds of the island and roughly 2,500 shoreline apart ments in 20 buildings on the east side of the trunk. Source: Gulf News Back to the top Customer Serv ice Centre: +971 4 403 77 00 www.asteco.com Contracting Property Services Development Not the last resort 15 May 2010 For Australian Chris Humphrey, his Tiara Residence apart ment is "the keeper". Chris has lived in Dubai for seven years and during that period has bought and sold a number of properties. The proceeds from this went towards funding his unit at Tiara Residence, which has views of the beach and the Gulf. "I'll be selling this when I'm old and grey," he says. Like other apart ment complexes on Palm Jumeirah, Tiara Residence's resort -style facilities are part of its appeal. These include an inf inity pool, private beach, gym, café and children's play centre. This style of development - most of which were sold off-plan during the property boom - originally targeted investors looking to attract top-dirham leases. But with prices falling, they now make sense for owner-occupiers. Zabeel Properties, the project's developer, says the facilit ies and units are top-notch. The apart ments, most of which have sea views, feature Bosch kitchen appliances, wooden finishings, high ceilings (2.8 - 3.2 metres) and automated home-entertainment systems. "We only use top of the range. Zabeel's philosophy is to use grade A consultants and contractors. And you can see that in the finished product," says Martin Bell, the company's COO. He adds that its facilities management team ensures capital appreciation. Situated on the Trunk, the development has an extensive landscaped area that stretches down to the beach and the pool. The gym, which has sea views, is one of the best equipped in Dubai. There are watersports, organised kids' activities plus tai chi sessions on the beach. Everything you'd expect from a resort. The good life Tiara's not alone, though. The Palm Residence, an IFA Hotel and Resorts (IFA HR) project within the Al Nabat and Al Haseer buildings at Shoreline Apart ments, also has a beach club vibe. The Palm Residence, handed over earlier than Tiara, was a prototype for resort -style projects on the Palm. Residents have access to beachfront, pools, retail, a restaurant, massage salon and the option of a gym and health club membership. IFA HR runs leasing programmes for these units and its other Palm Ju meirah project, the Golden Mile, which does not have a beach frontage. Piaras Moriarty, vice-president, client management at IFA HR, says the firm's mixed-use resort developments have been received well. "The benefit of having a range of different element s within projects - and we're seeing this at Shoreline - is that it really allows you to offer the end-user a much richer experience." Among other developments on the Trunk are Nakheel's Marina Residence, which has waterviews but no beach, as well as the upcoming Mövenpick's Oceana Hotel and Spa and IFA's Fairmont Palm Jumeirah. A few resort-style projects on the Crescent are scheduled for handover in 2010 and 2011. The Emirates Palace Group is developing the Kempinski Hotel Residences, Palm Jumeirah, of w hich 242 units are currently being delivered, and the Emerald Palace Kempinski Hotel, due for delivery in 2011. Then there are IFA HR's furnished residences at the Kingdom of Sheba, a Fairmont -managed resort, which is currently under construction. Owners will have access to a clubhouse, swimming pool, beach and concierge services. Investors will have a guaranteed several weeks of occupancy every year or the option to exchange this for time at similar Fairmont -managed residences worldwide. Also on the Customer Serv ice Centre: +971 4 403 77 00 www.asteco.com Contracting Property Services Development Crescent is Zabeel Saray, which will be launched this year. Developed by Zabeel, this palatial enterprise will consist of a hotel, restaurants, a spa and 38 residences, which will front either a beach or a lagoon - like swimming pool. To be offered in three styles, the Elissa (four bedrooms) and Zenobia villas (five bedrooms) w ill be 6,501ft² and 7,061ft² respectively, while the five -bedroom Sheba residences will be 16,684ft². Leasing schemes The option of managed short -term leasing is a carrot for investors, especially those from abroad. Sean Butler, director of sales and marketing, explains the offer. "We've started a rental guarantee scheme, in w hich clients purchasing a unit from us have the option of leasing it out with a 7.5 per cent per annum return for t wo years. This will be paid out quarterly in advance, so a prospective buyer or investor can look at purchasing a unit and not having the hassles of leasing it out." Apart ments range from 1,309ft² to 5,150ft² for the four-bedroom penthouses. Currently, one-bedroom apart ments start from about Dh1.98 million, two-beds from Dh2.6 million and three-beds from Dh3.6 million. While Chris lives in Tiara and rents out his Dubai Marina apart ment, he sees the appeal of a leasing scheme. "If you're looking to buy it as an invest ment and let it out on a short -term basis as well, this is virtually like a hotel. There are not many developments where you have such facilities." So what drew him to invest here? "The main reason I bought here was the aspect - I've got an apart ment that overlooks the pool and the beach. So just the quality of development attracted me - this is the ninth property I've bought here; this is where I've put all my winnings." With rental yields dow n in Dubai, buy-to-let is a risky option. But for prospective owner-occupiers, prices are more reasonable than during the height of 2008. Prices of completed resort -style developments in the Palm declined in 2009, says Mohanad Alwadiya, managing director of Harbor Real Estate. "Now the fundamentals of purc hasing or leasing real estate come to the fore - location, quality construction, infrastructure, return on invest ment (RoI) and yield. For these reasons, projects like the Fairmont Residence, Marina Residence, Tiara Residence and Oceana are seeing an incre ase in demand [when compared] to other projects on the Palm." As with any purchase, he recommends doing your research. "Investors should pay attention to the masterplan as a whole, as they don't want to pay a premium for a beachfront property then have a future project built in front of their own, blocking the view or access, as this will have a dramatic impact on the value." Naturally, choosing a waterfront unit reduces the chance of being boxed out of a view. "Beachfront or waterfront properties will surely perform better in the short term and long term, as demand will always be higher on these units." Source: Gulf News Back to the top Rent drop to continue 15 May 2010 Customer Serv ice Centre: +971 4 403 77 00 www.asteco.com Contracting Property Services Development With more supply entering the market, residential rents will continue to drop in most areas, according to Landmark Advisory's April 2010 Dubai Lease Guide.Jesse Downs, director of research and advisory services at Landmark Advisory, sees rents falling in most areas in the coming months, "especially for lower quality buildings in the least developed and integrated communities. However, certain residential units in key locations within established high quality developments will remain stable; this applies to specific villa developments and select apartment buildings." These include quality, well-located units in limited supply. "For example, in some larger villa developments there is a distinct unit type of which a limited number of units have been built. These typically experience price stability be cause inventory is hard to find. Palm Jumeirah villas tend to be quite stable and prices appeared to bottom out in 2009 and recovered thereafter. This is because inventory levels are manageable and there are plenty of current owners using those villas as second homes. "For the apart ment sector, this primarily refers to units in specific buildings and, most often, specific units within the building. Good examples of this are apart ments in Downtown Burj Khalifa that are well positioned around the core of the community, usually with fountain views. Overall, apart ment rates in Dubai Marina are also likely to decline. "Given the amount of new supply anticipated in the Marina, average rents for all unit types will continue to decline. For example, 13 per cent of new residential units expected to be delivered in 2010-2012 are located in the Marina. "The area as a whole will experience softening of rents. However, as always, not all assets are equal and more competition means the high quality developments with the best amenities and facilities will fare better than the rest." Villa rent ranges remained fairly stable with areas like Arabian Ranches, Victory Heights, and parts of The Lakes dropping among lower limit properties. Source: Gulf News Back to the top It's tee time 15 May 2010 Gail Thompson's love for nature is reflected in her five-bedroom villa in Victory Heights, where she lives with her kids Stuart, 21, Tom, 16 and Isabella, 6. From the backyard she has views of the fairways, greens and landscaped areas of the Els Club golf course, designed by South African golf ing legend Ernie Els. Then in the evenings she can watch the sunset fade, giving way to night skies. "I prefer views to facilities," says Gail. "Waking up in the morning and looking at something beautiful is far more important than having a gym around the corner." The move Customer Serv ice Centre: +971 4 403 77 00 www.asteco.com Contracting Property Services Development Gail, from the UK, has a small portfolio of properties in the UAE in addition to her home at Victory Heights. Prior to moving here in January, she was renting a villa in The Meadows. "My landlord in The Meadows asked me to pay rent for three years in advance. So I thought of buying that property instead of paying this sum in advance. Then he came back with a ridiculous price, which f orced me to go and look for other properties," she says. She fell in love w ith the villa after her first viewing. "The moment I saw it I knew I was going to buy it. I liked everything about it. I liked the fact that there is a golf course close by, and the access to the villa was also pretty good. I actually did not look at any other property." Gail was looking for a five-bedroom detached house with a reasonably sized garden because, she says, "I wanted toput a pool in the garden for my children." Since she often invites friends over for a party or a get-together, she also wanted a spacious house with an open layout. "As soon as I walked through the door I knew it met all of my requirements. I wanted a nice, open, airy feel to the property." She considers herself lucky to have invested after property prices had plummeted. "It was a pretty good deal actually. Also, I bought it directly from the developer and not from a real estate agent so I saved a little bit of money there as well." Although she's not prepared to disclose the sales price, a five-bedroom villa currently fetches Dh4.9 million, according to developers Arcadia and Dubai Sports City. Sporting chance While work on most of the facilities is under way, the community is relatively established, s ays Gail. "It's still developing, but what I like about it is how nice and wide the streets are and the fact that there is a lot of greenery around. The community is already quite mature. When you are driving in, you don't feel like it is a brand new development. They worked really hard on the common areas. We also have Dubai Sports City close by, which has a tennis stadium and an Irish Village coming up soon." Aside from the cricket stadium and the Els Club, most sports facilities at Dubai Sports City hav e not yet been completed. Stuart plays golf at the Els Club courses while the proposed tennis academy will be a plus for Isabella. "It will be good when it comes up, because my little girl loves playing tennis," says Gail. "She used to play tennis when we were in The Meadows." The fact that the property overlooks a golf course has two benefits, says Gail. "F irstly, there is never going to be anything built behind the house so the views will always be good. Secondly, my kids enjoy playing golf." For shopping, she usually visits Spinneys in Motor City, a five-minute drive away. Victory Heights also has a small grocery shop which offers home delivery services. "Dubai Mall, a 20- minute drive away, is another option," says Gail. "I go to the golf club at Arabian Ranches. Since you are on Emirates Road, driving Dubai bound is not an issue at all. You can get to town in 10 minutes and the airport in 25 minutes." Children's facilities are a work in progress. Of the two community pools being completed this year, one will be close to their home and is due to open in July. That said, getting into Victory Heights during rush hour is a night mare, Gail says. "Access is not that good coming into Victory Heights because you have to go up to Al Khail roundabout and take a U-turn, which is not ideal w ith all those trucks [there]. Customer Serv ice Centre: +971 4 403 77 00 www.asteco.com Contracting Property Services Development "Something that has to be addressed is the construction of a road that runs around the periphery of Victory Heights so you will have access straight on to the roundabout. When the flyover is open.. . it will make a massive difference." Family friendly From a family point of view, Victory Heights is a great option. "There are a lot of little parks in between the houses and lots of green areas. Developers also organise get -togethers for the residents which help us get to know each other very well, which, in turn, promotes the community spirit." Source: Gulf News Back to the top The ABC of JLT 15 May 2010 Natalie and Sean Calder are, more or less, your typic al western expats in Dubai. They live in Marina Residence, adjacent to Shaikh Zayed Road in Dubai Marina, and intend to work here for a few years to save some money and then return to their homeland, New Zealand. Although they're not fussed about living in an apart ment, they found that last year's decline in rents presented an opportunity to upgrade. Decline in rents "We moved over here from JLT (Jumeirah Lakes Towers) because the rents had dropped," Natalie says, looking across Shaikh Zayed Road at her former home. "We pay roughly the same rent for a one-bedroom apart ment as we did at JLT, but we now pay four cheques instead of one, and our lifestyle is so much better." On their doorstep are the Dubai Marina Yacht Club, several cafes and a supermarket. T hey are also within walking distance of hotels, the beach, and The Walk. Every evening, they enjoy a stroll along the Marina. "We would never walk in JLT," she says. "You'd have to dodge trucks, buses and bulldozers — it's a construction site." Dubai's rental decline resulted in many tenants upgrading rather than negotiating better deals with existing landlords. And there's no better example of this than the exodus from JLT to Dubai Marina. One development mostly complete, the other a work in progress - you could say JLT is the ‗poor man's Marina'. One reason for the divide is that JLT is less developed, explains Sylvia O'Connor, senior leasing consultant, Better Homes. "Until we see amenities, landscaping, shops and restaurants come online, most people w ill prefer Dubai Marina and Jumeirah Beach Residence (JBR) over JLT." She expects rents in JLT to fall even more this year, yet advises tenants looking for a larger apart ment not to rule out JLT. "Some of the buildings are better quality and larger than in Dubai Marina. People should be looking for apart ments with views." The new JLT Customer Serv ice Centre: +971 4 403 77 00 www.asteco.com Contracting Property Services Development Things change rapidly in Dubai, but nothing could prepare this writer for the changes JLT has undergone in the past seven months. Having vacated an apartment there in October, going back for this assignment revealed much progress in completed projects and retail in the area. Often unseen from the road, a number of podiums now have grocery shops, beauty salons and other retail outlets. Seven months ago, the only offering was a café and a small overpriced grocery store at the Green Lake Towers. Access has also improved. With the Marina Metro Station open, residents of the northern part of JLT have greater access to public transport and a walkway through to Dubai Marina. There's even greenery. Landscaping is edging its way around the northern lakes, and walkers and joggers can be seen burning up the tarmac. Structural inspection Build quality varies between buildings - a point of contention for residents. Gibran Bukhari, sales manager at Coldwell Banker, cautions buyers or tenants to check units and towers thoroughly. "Build quality, fittings and amenities differ substantially in JLT. Some buildings are made well and some have cut corners and cost, when it comes to finishings. In saying that, I see this in many other communities. There's good and bad everywhere." At the southern end, many towers are still shells. Yet one of the shining lights here was the opening of the Bonnington hotel, offering guests and residents restaurant s, cafes, a bar and a spa. Also in this area, the Laguna Tower will feature a Mövenpick hotel, although the developer won't commit to its completion date. Additionally, close to Bonnington is Almas Tower - the tallest building in JLT, its centrepoint and home to the Dubai Multi Commodities Centre (DMCC). Scheduled for its official launch in August, Almas is already occupied with retail planned for its ground floor. The right mix Those with gripes about JLT should bear in mind it isn't purely a residentia l development. A free zone for precious stones and metals, there are gold smelters instead of Spinneys and diamond vaults instead of boutiques. Nonetheless, Ahmad Bin Sulayem, executive chairman of DMCC, believes the location will draw both end-users and companies. "Right now, JLT is a good deal for residential and offices," he told . "You know, companies that are at the other end of Shaikh Zayed Road who want to get away from the traffic. And I think that's healthy - spread out the traffic in Dubai. Move it into other communities." Although, as Ahmad admits, there are some sub-developers at JLT still lagging, there are others - like Damac Properties - that have delivered. Damac has two towers at JLT - Lake View and Lake Terrace. Niall McLoughlin, senior vice-president of Damac, says, "We could see the potential for JLT to become a great community neighbourhood for all types of customers - from young single professionals to families, to those people who simply wished to invest in an attractive rental property." Although it has teething issues, he believes JLT has the right mix. Customer Serv ice Centre: +971 4 403 77 00 www.asteco.com Contracting Property Services Development "Any master development always takes time to mature and sometimes customers who move in at the beginning of a development may experience some disruption or shortage of facilities during the early stages. However, we believe a well-planned master development with the right mixture of retail, waterways, green spaces and walkways for residents to enjoy will always be very desirable." Location, location, location... Despite the oversupply in Dubai, offices at JLT have attracted interest in recent months. "We have seen a serious increase in enquiries recently," says Porush Jhunjhunwala, head of commercial leasing, Better Homes. "We believe the majority of these are coming from other Dubai free zones, as well as some from new companies entering the market. The advantage of setting up an office in JLT over other free zones is purely cost and location. Proximity to main Dubai and Shaikh Zayed Road is a key advantage for JLT vis-à-vis somewhere like Dubai Silicon Oasis." The fact that DMCC has speeded up the process of licensing in JLT is another factor draw ing tenants, he says. "Rents are low compared to other areas, which has created interest among tenants." It's a similar story on the residential front. "What makes an area sought -after these days, is price and accessibilit y," says Gibran. "The amenities and landscaping are an added bonus. Despite the construction, JLT has a lot to offer when it comes to the size of apartments and the location. This makes it attractive to people looking in this area. Dubai Marina w ill always be more expensive compared to JLT due to its access to the beach, restaurants and leisure it offers. JLT, however, being so close to all of this, has the added advantage of an operational metro station… for some this makes it a more attractive option." Lease peace The good news for end-users is that investors at JLT are beginning to be more realistic about their options, looking at leasing out units rather than selling them, says Gibran. "We are slow ly starting to see a drop in property that was overpriced as owners believe the market has changed for the long haul. For example, two units in the same building with identical floor plans and views may have a difference in price of about 30 per cent. Some owners who purchased during the high time still have mortgages inhibiting them from selling for less than the borrowed amount. "Financially, the best choice for them would be to rent out the unit, as they can't sell for that price now. "In my opinion, rents will see a further reduction over the next 12 months as supply increases. I believe three-bedrooms and above will see the largest drop, as rental rates are still high on these. However, niche market properties will hold higher value as supply is less." Rents have dropped. In Landmark Advisory's April Leasing Guide, one -bedroom rents range from Dh50,000-Dh90,000, compared to an upper limit of Dh110,000 in the Marina. So will JLT ever rival Dubai Marina? Gibran says, "Pr ice aside, location is a key factor that JLT offers and as such, once everything is in the right place and construction is replaced with proper roads JLT will become a highly demanded place to live and work. Once JLT becomes more aesthetically pleasing, mo re people w ill be attracted to live in the community." For Natalie, however, that time hasn't come. "It's great to hear that JLT has hotels, shops and a met ro station. But I can't see us going back." Source: Gulf News Back to the top Customer Serv ice Centre: +971 4 403 77 00 www.asteco.com Contracting Property Services Development Oceana offers fractional ownership 11 May 2010 The prospects of buying into a resort lifestyle and assured average rental returns of eight per cent are likely to attract customers to this Seven Tides development, according to Asteco, the property manager. With around 100 units out of the total 644 ending up in the rental pool, Asteco claims there is already a long waiting list of tenants. The rentals range from Dh160,000 for one -bedroom apart ments to Dh230,000 for a three-bedroom apa rt ment. It can also serve as both a short - and long-term rental option for holidaymakers. Buyers from the UK, Russia, Holland and Belgium have invested up to Dh60 million in Oceana Residence. ―Prior to the downturn, many sales were made to investors who w ere using their purchase as an invest ment vehicle. Now, investors are also end-users, buying into a family-focused resort lifestyle,‖ explains Ian Hollingdale, head of project, the Palm, Asteco. He adds that 500 apart ments have been sold to date, ranging from Dh1.8 million and Dh3.7 million. Source: Gulf News Back to the top Hotels map out future of Palm Jumeirah 16 May 2010 When Nakheel first announced its grand plans of opening 30 hotels on The Palm Jumeirah a few years ago, critics and cynics questioned the feasibility of such a mammoth project. And yes, there have been setbacks and delays. Who can forget the non-starter in the form of Trump International, which was the first company to announce a delay on its project Trump International Hotel and Tower, saying the project is "on hold". Donald Trump Jr, Vice -President of the Trump Organisation, told this newspaper in 2009 that the construction on the Trump tower could restart in "two to three years" when the real estate market in Dubai stabilises. The Palm Trump International Hotel and Tower, a joint venture between the Trump Organisation and Nakheel, was originally scheduled to open in 2009, after the project was launched in 2005. In December 2008, the company announced an indef inite delay of the project. But what can be considered as Trump's loss can only benef it the bevy of major hotel chains that are readying to open doors on the man- made island as early as Q4 2010. The One & Only Royal Mirage, the Zabeel Saray by Rixos, The Royal Amwaj by Mövenpick and maybe even the Taj Exotica Resort and Spa are just some of the luxury chains that are entering the final phase of construction. Emirates Business digs deep to bring you this interactive map showcasing the changing face and the future of The Palm Jumeirah. Customer Serv ice Centre: +971 4 403 77 00 www.asteco.com Contracting Property Services Development The Fairmont –Kingdom of Sheba Opening: Q4 2011 (Tentative) A part of the Kingdom of Sheba hotel, residence and spa complex, Fairmont Raffles Hotels International said the Fairmont Palm Jumeirah could finally open by Q4 2011. Fairmont's Executive Vice-President for Operations, Middle East, North Africa and Asia Pacific, David Roberts, said: "Fairmont is still very much involved in ongoing discussions with the ownership group and we are depending on them t o complete the hotel. We expect it to take one year." When quizzed if hotel could be operational by Q4 2011, Roberts said: "It would be wonderful if it is open by then." While the Phase I of the Kingdom of Sheba project was originally scheduled to open fo r business in 2010, Fairmont was to open in 2009/2010, according to reports. The group also has another property on the trunk of The Palm. Kempinski Palm Jumeirah Opening: Autumn 2010 and 2011 Confused with the two dates? Well, from what we understand, the five-star Kempinski Hotel & Residences Palm Jumeirah, developed by EPG Hotels & Resorts, is in the last phases of delivery, to meet a launch date in Autumn 2010. The 244 luxury suites, penthouses and villas complex will be complemented by the second hotel, the Emerald Palace Kempinski, opening 2011. Reto Wittwer, President and CEO of the group said: "Kempinski was one of the first to announce properties on Palm Jumeirah." Did you know, according to the group's MEA President, Ulrich Eckhardt, the orig inal site for the complex is where Atlantis The Palm now stands. Taj Exotica and Spa Opening date: Q4 2010/Q1 2011 Estimated at a whopping Dh1.2 billion cost, The Taj Exotica Resort and Spa and The Grandeur Residences are definitely one of the most anticipated properties on The Palm. Developed by ETA Star, both properties are being modelled as the archetypal palaces of Rajasthan. The 232-room Taj Exotica will be a five-star hotel with the largest spa in the Middle East (Jiva Spa), or so says the company statement, while the complementing residences will comprise 200 freehold fully furnished apart ments and 10 beach-front villas. The hotel was first scheduled to open in 2009, according to media reports. However, insiders now say Q4 2010 or Q1 2011. We can't wait. Atlantis The Palm Opening date: November 20, 2008 Who can forget the last great party of the decade, right before the recession knocked us on our heads and off our feet. Customer Serv ice Centre: +971 4 403 77 00 www.asteco.com Contracting Property Services Development The fireworks display stretched across the full 520 kilometres of The Pal m Jumeirah, lighting up the entire island and The Atlantis The Palm resort, creating a display that was even visible from space. And the celebrity guest list simply made everyone salivate, with pop star Kylie Minogue performing, Bollywood star Priyanka Chopra rising from the stage as The Goddess of Atlantis, and other top stars including Charlize Theron, Janet Jackson, Shah Rukh Khan, Robert DeNiro and so on. The $1.5 billion (Dh5.5bn) Atlantis has enjoyed sole status on The Palm Jumeirah for nearly two ye ars, as the only operational hotel. It will be interesting to see how this 1,539-room mammoth, which has been enjoying an average occupancy in the mid-1970s since opening, will deal with competition. Dusit Saray Opening date: Not known Two years ago, amid much fanfare Al Osaimi Invest ments and Real Estate, a Kuwait -based developer, had announced the Dusit Emirates Saray - Palm Jumeirah Hotel Resorts and Residences. The Dh1.5bn luxury resort, spa and residence project was targeting completion in 2010, an d we hope it rings true. Comprising a Dusit Devarana, a Dusit Thani and The Residence, this one million square feet mega project will be a sight to behold. Capturing the grandeur of traditional Indian architecture, the seven-star Dusit Devarana hotel will offer 116 rooms and suites with the world-renow ned Dusit Devarana Spa. Dusit Thani will be the five-star Moroccan-themed resort, which will boast 292 rooms and suites. Habtoor Grand Palm Resort & Spa Opening: Q4 2010 The Habtoor Grand Palm Resort & Spa is scheduled for opening in 2010. The hospitality property will boast 217 rooms and suites, 91 luxurious apart ments and four exclusive villas. Aside from the usual hotel facilities, it will also offer a shopping arcade and leisure facilities, stretched over 2,000 square metres. The project will also feature 10 themed and signature food and beverage outlets. Among the main attractions will be a two-tier floating seafood restaurant and a rooftop fine dining restaurant. Jumeirah Al Fattan Palm Resort Opening: Q4 2010/Q1 2011 With a prime setting at the tip of the Crescent, Jumeirah Al Fattan Palm Resort will feature 213 luxurious rooms and suites, including 10 exclusive one bedroom over-water villas. The hotel was scheduled to open late 2009 when it was f irst announced, but a Jumeirah spokesperson told Emirates Business earlier the luxury property is due for opening in end 2010 or early 2011. Mövenpic k Oceana Resort and Spa Opening: 2011 Customer Serv ice Centre: +971 4 403 77 00 www.asteco.com Contracting Property Services Development Mövenpick Oceana Hotel and Spa is one of the other delayed propert ies on The Palm, which was initially scheduled to open in 2009. Guy Epsom, Business Development Director, Mövenpick Hotel Deira, told Emirates Business last year: "Yes, Oceana Hotel and Spa has been delayed from its original opening in 2009 as have many other projects in Dubai. "We have great confidence, though, that the revised project completion dates are achievable." Epsom then announced the hotel's target was scheduled for the second quarter of 2010. However, its official website now states the 187-room property will open in 2011. One & Only The Palm Opening: October 10, 2010 "At Kerzner International, we pride ourselves on having met every opening target and the One & Only The Palm, Dubai, will be no exception," said Olivier Louis, Managing Director, One & Only Resorts, Dubai. It is four years to this date that this project took off. Considered as the only boutique beach resort located on the Palm Jumeirah, it will also be the first to feature a swift and convenient water taxi transfer from one shore to another. Blending Moorish and Andalusian architecture with contemporary, chic living environments, this low -rise resort, comprising 90 spacious guest rooms and four beach villas, will feature three dining experiences, including an exciting over-water restaurant, a DJ bar and lounge, with direct access for guests on their private yacht or boat. The hotel is also working in close collaboration with ESPA International to offer specific wellness programmes including elements such as osteopathy and acupuncture. The Royal Amwaj Opening: Q4 2010 Mövenpick Hotels and Resorts will manage the five-star Asian themed The Royal Amwaj Resort & Spa, the second Mövenpick property on The Palm Jumeirah (the first being the Oceana Resort and Spa, see below). This 296-room resort situated on the crescent of The Palm Jumeirah is now set to open in 2010, according to insiders. The project was originally scheduled for completion by Q1 2009 but was delayed due to design changes. The property will apparently also feature more than 400 condominium apart ments and high-end eating outlets, including a Brazilian restaurant and a fish and seafood market.. The Essque Palm Jume riah Opening: 2010 (unconfirmed) Initially launched as Tiara Hotels & Resorts, the Zabeel Invest ments hospitality brand adopted a new name – Essque Hotels – in 2008. The hotel was supposed to launch last year, according to a press statement issued by the developers at the time. Customer Serv ice Centre: +971 4 403 77 00 www.asteco.com Contracting Property Services Development The property will feature 309 luxury bedrooms and suites, a spa, meeting rooms and 10 food and beverage outlets. Essque will be part of the Tiara residence project. Zabeel Saray by Rixos Opening: Eid Al Fitr, approximately Sep 10, 2010 The highly anticipated Zabeel Saray by Rixos is scheduled to open by end of Q3. Once in operation, it would be the second hotel on the archipelago to welcome guests after 2008's grand opening of The Atlantis The Palm. Speaking to Emirates Business, CEO Kees Hartzuiker, said: "Zabeel Saray should open by end of Q3. We are looking at an Eid opening for the property, which falls in September this year." Will Atlantis face stiff competition? Hartzuiker's confidence provided food for thought, when he stated: "At the end of Zabeel Saray's first year of operations, we expect an average occupancy of 70 per cent at least." The 410-room hotel will open three years after ground breaking, featuring an 8,000 square metre Royal spa – one of the world's largest – with 62 treat ment rooms and four hammams. Aside from high-end boutiques, the hotel will heavily focus on the entertainment side of hospitality with show arenas and movie theatres. Source: Emirates Business 24/7 Back to the top Limited mortgages affect property recovery 16 May 2010 A limited availability of active mortgages is holding back the recovery of the property market, which has remained low for about two years now, according to sources. A few brokers Emirates Business approached said: "We have lot of enquiries coming in because the property valuation in the UAE, especially Dubai looks very attractive, but the problem is where to get a financing from." There is a real rush to buy properties in the UAE as most people view this as an opportunity which may not last long. "But banks claim they are actively into financing properties, when it comes to common man, who want the finance support to buy a property, it simply doesn't work," said Mehroz Rufi, Director – Business Development, Ruf i Group of Companies. According to a top official of a local bank, the old c ommit ments are so large that they cannot think of new financing deals. "Moreover, we have to assess the level of defaults before taking up new commit ments," he said. Two foreign banks and an Islamic bank are said to be actively lending or financing in mortgage market. On the one hand, Amlak and Tamweel, who together used to control about 60 per cent of the mortgage market, have not been lending [financing] for more than a year as the talks on their merger for close to two years now have taken them now here. Customer Serv ice Centre: +971 4 403 77 00 www.asteco.com Contracting Property Services Development As the wholesale financing avenues have dried up and with both these Islamic finance companies are disallowed to raise funds from the retail market, they are left with the choice of not making any new commit ments. In the case of Amlak, the financing book has contracted from Dh10.060 billion to Dh9bn during 2009. However, the Islamic financing and invest ment assets stayed flat at Dh10.4bn for Tamweel during the same period. In the case of banks, the case is no different. The aggregated balance sheet of the more than 50 banks shows that the real estate mortgage financing has stayed flat mostly since the end of 2008 though there had been a slight activity during the first three quarters of 2009. The total value of real estate mortgage loans which more than doubled during 2008 from Dh56.471bn to Dh125.834bn went up by about 13 per cent during the first three months in 2009 to Dh140.062bn. However, since then the loan book [mortgage] has stayed almost flat and closed at Dh143.381bn as of January end, 2010. Source: Emirates Business 24/7 Back to the top Municipality seeks self-verification of villas 16 May 2010 The Buildings Depart ment of Dubai Municipality has issued circular No179 to all building consultancy offices operating in Dubai regarding the forms for self-verification of the villas. Engineer Khalid Mohammed Saleh, Director of Buildings Depart ment said: "It asks all engineers and designers assigned for the villa projects to abide by the features mentioned, and do their own review of the plans submitted for building permits before submission to the municipality and comply with the conditions stated in the forms," he said. He added that the circular is aimed at giving more powers to consulting firms as the Buildings Depart ment has prepared a list of conditions and basic observations, which must be fulfilled in the transactions regarding the villas when applying for building permits such as verif ication forms that include the architectural, structural, thermal insulation and sewage features. Saleh noted that these forms are aimed at popularising laws and regulations through the application of a direct process, and activating the role of consulting offices in the process of facilitating and simplifying licensing procedures. Source: Emirates Business 24/7 Back to the top Regulation is challenge for FM sector 16 May 2010 Customer Serv ice Centre: +971 4 403 77 00 www.asteco.com Contracting Property Services Development Facilities Management (FM) companies are increasingly signing facilities management contracts with more developers rather than building owner associations (OA). This trend w ill continue until owners' associations become a more formalised and legal entity, according to a cross -section of property market analysts and players. In a round-table discussion with Emirates Business, organised during the FM Expo Networking Event by DMG World Media; Samer Al Qada, Managing Director, Facility Services G4S; Kyle Bashy, Business Development Director, Middle East, Honeywell; Ian Kennedy, Senior Facilities Manager, Brookf ield Multiplex Services; Abdelaziz Rihani, General Manager, Portland Middle East Facilities Management; Rohit Dalmia, Business Development Manager, Al Shirawi Facilities Management; Ravi Kumar, Service Technical Manager, Belhasa Engineering & Contracting; Sean Heckford, Senior FM Consultant, International Built Asset Consultancy, EC Harris, said they have signed up with more developers than OAs since these associations were not yet a legal entity. Overall, developers continue to influence authority on this trend and will do so until OAs become a more formalised and legal entity, said Dalmia. He added that a trend has been noted towards government developers looking at in-house FM and direct recruit ment of FM managers whereas OAs, in areas such as Dubai Marina and Jumeirah Lake Towers (JLT), are moving away from the influence of their developers. Excerpts: Are you, as an F M prov ide r, signing up with more develope rs or OAs of buildings a nd communities? Are more develope rs approaching FM players in orde r to incorporate FM into their buildings? Qada: Developers are co-operating with FM service providers for better services such as operation and maintenance, including Mechanical Electrical Plumbing (MEP), cleaning, waste management, power management, landscaping and facade cleaning. Bashy: Developers have been reluctant to sign contracts fearing that their own projects might not finish on time or within the budget. From our point of view, there is an 'out of sight, out of mind' mentality, meaning that once a developer has handed over the building and the quota of apartments or offices have been sold, no-one will invest or take responsibility for the after-care. However, we have more contracts with developers than with building associations. Even if there is a building association, they tend to be inactive rather than proactive, while we believe in preventive maintenance to ensure safety and comfort. Kennedy: At this point in time, most of our contracts are directly with the developer, although one of our contracts is in the process of being signed by an Interim Ow ners Association (IOA) where we are converting one of our service agreements for an IOA. Developers utilise FM providers if they do not have an in-house service or supplement an in-house FM team with ma intenance providers. Rihani: So far we have signed more contracts with developers than with owner associations because they are yet to become a legal entity. The FM industry has seen several international and home -grow n companies entering the market and gaining a share, but unfortunately, the majority have no clue about the FM industry. This of course gives developers a huge list to select from. Personally, I will say that developers have also become more selective and demanding about FM companies, but a majority still consider the price factor more than the quality factor. Dalmia: We are signing up more with property developers than w ith OAs because they are not yet formalised and the legal authority still rests with developers. Several large developers a re in the process of establishing OAs and, therefore, selecting an FM manager still falls within their scope. There are cases Customer Serv ice Centre: +971 4 403 77 00 www.asteco.com Contracting Property Services Development wherein we signed up directly with OAs with no involvement of the developer. Overall, developers continue to influence authority on this trend and will continue until OA becomes more formalised and structured. Government developers are looking at in-house FM and are still directly recruiting FM managers whereas OAs in areas like Marina and JLT are moving away from the inf luence of t heir developers. A key observation is the occupancy level. Buildings that are nearly occupied are acting more independently than those with 50 per cent occupancy. Kumar: Yes, indeed. More FM providers are signing up with developers in the market today. Th e financial crisis has actually helped improve the business as real estate companies and big -time developers are putting a premium on cost-efficient and high-quality maintenance and management solutions for their existing properties. With up to 80 per cent of the overall costs within a building's life cycle being attributed to operation and management, developers and building owners are now optimising business value of properties through cost-effective building management solutions of FM providers. Heckford: Developers are becoming aware of the value that can be added by effective asset and FM and some developers are setting up in-house FM operations. We have seen a steep change in asset owners and developers taking a more strategic approach to the management of their portfolios, taking a long- term view on their asset management and putting robust strategies in place for the future. We are involved with several developers in the region, assisting them w ith their asset strategy, performance and FM challenges. There is an increasing awareness of the positive impact that FM can have on asset performance and the outcomes this can deliver to businesses. This is attracting interest from other developers, asset owners and public sector organisations. What are the main challenges today be fore the FM industry? Qada: We have many challenging areas in our area of business such as the economic climate and professional manpower availability in the FM sector. Bashy: Regulation and transparency are the two main challenges for the FM sector. Better regulation will ensure that end-users are not being duped by low prices and a false economy does not enter our market. Transparency will ensure that FM providers build up a level of trust in the market so that our services become an indispensable part of buildings development. Kennedy: Lack of cash-flow is one of the main challenges the FM sector faces. Kumar: Rising employment costs and erosion in profit margins are some key challenges to the FM industry. Also, a big challenge is to find a suitable FM professional as most of them are recruited directly from MEP companies who are not aware of the full concept of FM. They think implementing FM is expensive and a financial burden, hence they employ their own maintenance team memb ers w ithout proficient and qualified FM managers. Another big challenge faced today is the global financial crisis which restricted a developer's budget. Hence, the industry has to overcome these problems and generate proper awareness among builders for longer building life and life cycle costs. Rihani: Facilities management professionals play an integral role in ensuring that their company is positioned to face the challenges that can result from cyclical growth. Today's FM professionals must confront a number of significant challenges, including maximising workplace productivity and flexibility to develop a detailed budget to operate a workplace and a team. Customer Serv ice Centre: +971 4 403 77 00 www.asteco.com Contracting Property Services Development Dalmia: The biggest challenge is that owners think they are powerless and have to settle for what they have been handed. The other challenge is that they don't understand the basics of FM and hence compromise on short-term savings for long-term losses. This issue is more signif icant in the UAE because owners don't see themselves holding on to their ass ets for too long, instead hoping to pass on the more expensive bills to the next buyer. Heckford: The main challenge is raising awareness and appreciation of the value that a well-designed approach to FM offers. Can you give us a break-down of the type of savings that develope rs/prope rty owners can make by incorporating FM into their buildings right at the design stage of a building? Qada: Property owners w ill surely make a saving as FM companies have good experience and background in all building types and this will add value to clients as they provide a programme to maintain buildings through the day that will save the cost of power, increase asset life, prevent buildings from major failure by providing preventive maintenance and record all the maintena nce activities which in the long-term, will save clients' money and time by providing FM services through a professional and well-trained team. Bashy: Every facet of a building can be assessed and subsequent cost savings made as a result, but if we are talking generically, then the biggest growth area for FM globally is in energy savings. Kennedy: Important to most building owners is reducing demand for energy not just for economic reasons, but also because energy consumption goes hand-in-hand with carbon emissions. Reducing energy during the operational phase of a facility's life similarly reduces carbon emissions. When considering that 30 per cent to 40 per cent of a country's total carbon emissions are attributable to buildings and other constructed fac ilities, it is clear that facility managers as much as the operations of the occupiers have significant roles to play in ensuring highly efficient maintenance and operations within their facilities. Rihani: Building owners have begun to realise the import ance of monitoring the overall life-cycle of their properties and its cost. For an FM company, there are many forms and ways to come up w ith a break- down on the type of savings. Dalmia: Dubai's construction boom was no different [from other areas] in the sense that buildings were constructed in such haste and with such absolute disregard for FM, that it's a challenging and costly affair to manage these several sites. It's difficult to pinpoint exactly where savings can occur because both sides have to look at the probable structure as a whole. We are not too far away from the time when potential buyers will be more interested in the practicality and technicality of a project rather than in its perceptual appeal alone. This level of understanding alone will lead to signif icant savings. Kumar: There are savings that can be incurred if during design stages, one can consider thinking of implementing green building concepts in order to ensure saving energy as well as preserving a green environment. For successful FM, it is essential at the planning stage to consider all the MEP and other selection of HVAC equipment, light fittings and plumbing installations, which will make FM possible as a whole. On a large number of projects, FM only enters after topping out and possibly after the first users have already moved in. This act of negligence is inexcusable because, many critical decisions for efficient building management have been taken at the planning stage. Customer Serv ice Centre: +971 4 403 77 00 www.asteco.com Contracting Property Services Development Heckford: By taking a long-term view on asset and FM and incorporating strategies at an early stage, owners and occupiers have the ability to create 'fit for purpose' flexible working spaces that meet business needs. This approach drives efficiency in business operations and creates added value for stakeholders and investors. Focussing on areas such as energy efficiency and maintenance at the design stage can, in the long -term, help to improve asset productivity and value. Do you believe that Strata Management will help propel the FM industry? Qada: The strata and FM companies are competing with each other to ensure providing FM services to buildings. Bashy: By empowering property owners to demand an international standard of building management, accountability and heightened competition will drive the succ ess of the FM industry. Kennedy: Strata management is normally the day-to-day management of a building while the FM sector is concerned with maintaining long-term sinking fund budgets, protecting common areas of the facilities sector and ensuring that capital assets for all owners are not diminished over time. Therefore, the influence of strata management will eventually have an effect on the FM industry and will greatly rely on the OAs' desire to maintain the asset value over a period of time. Rihani: It might take some time for all concerned to cope with and understand the strata regime, but definitely it will help in clearing up a lot of things, if laws and regulations are strong enough to protect each shareholder. Dalmia: Most definitely! Give the owners the right to decide the fate of their own equity and you will see a drastic improvement in the FM delivery across the board. Innovation and accountability are the two main ingredients of success for FM companies that will finally differentiate the best from the worst. We need it! Kumar: According to me, there is still a lack of awareness of the Strata Law. Source: Emirates Business 24/7 Back to the top Kleindienst Group gets first licence for The World 13 May 2010 The Heart of Europe w ill house private holiday homes, apart ment buildings, hotels, floating palaces and a diverse range of retail, entertainment and food and beverage outlets. (SUPPLIED) The Kleindienst Group, owner and developer of The Heart of Europe project, has received its first trade licence for business operations on The World, said the developer. A luxury holiday project, The Heart of Europe is made up of six islands that, when complete, will house private holiday homes, apart ment buildings, hotels, floating palaces and a diverse range of retail, entertainment and food and beverage outlets. Customer Serv ice Centre: +971 4 403 77 00 www.asteco.com Contracting Property Services Development "The Heart of Europe project has been a groundbreaking one – not only literally, when we became the first developer in the world to begin construction on The World, but also metaphorically now as the owners of the very first trade licence to be issued for the development. We are delighted to be part of Dubai's history," said Josef Kleindienst, CEO, Kleindienst Group. Awarded by Trakhees, the Government Depart ment for Planning and Development within the Ports, Customs and Free Zone Corporation, the trade licence was handed by Dawood Mohammed Ahmed, Commercial Registration Manager in CLD, Trakhees to Josef Kleindienst, CEO, Kleindienst Group. "The award of the first trade licence on The World is a momentous occasion for both Nakheel and, more importantly, for Kleindienst Group. We congratulate Mr Kleindienst on achieving yet another milestone," said Chris O'Donnell, CEO of Nakheel, the master developer of The World project. Construction on the first two islands began in February this year, with completion of 20 luxury villas on Germany island scheduled for the end of Q1 2011. Thirteen villas are already sold. Development of the full project will be complete in 2015. "In the true manner of Austrian hospitality [Austria is my home country], the majority of hotels and restaurants there are family-run establishments. With our licence for The Heart of Europe we can continue this tradition of owning and operating our own hotels and restaurant outlets," said Kleindienst. The Heart of Europe is a six-island, 12-site luxury holiday development by the Kleindienst Group on The World project in Dubai. Situated on the islands of Germany, Austria, Switzerland, The Nethe rlands, St Petersburg and Sweden, the first -class destination offers an unrivalled resort and leisure experience. Source: Emirates Business 24/7 Back to the top Investor finds way to 'flip' The World island 13 May 2010 Investor finds way to 'flip' The World island. (AFP) An investor in The World project may have found a way to go around the "no flipping" diktat by Nakheel as he puts an island on sale, the first time one is being sold in the secondary market. The 20,000 sqm island is up for sale for Dh42 million, according to Streamline Real Estate Brokers, the agency brokering the deal. When contacted about the 're-sale', a Nakheel spokesperson said: "Flipping is not allowed for islands on The World." A financial expert, on condition of anonymity, said if an offshore company owns the island then it can transfer shares to another person/company, thus transferring ownership. "The question is whether Nakheel will accept the new owners," he added. Shahama Ozon, consultant at Streamline, contended that while transfer of ownership is a complicated procedure, a secondary sale is possible, "subject to Nakheel's approval". He did not name which island is up for sale, but added: "We are selling it at a very marginal premi um. There have been a number of inquiries." Customer Serv ice Centre: +971 4 403 77 00 www.asteco.com Contracting Property Services Development Source: Emirates Business 24/7 Back to the top Terms of tenancy agreements get tougher 13 May 2010 Some real estate brokers in Dubai are incorporating clauses such as finding replacement tenants, or forego rent for the remaining period if a person loses his job, prospective tenants told Emirates Business. "Brokers are asking us to find a replacement in case we happen to lose our job. And if we fail to find one, then we have to forfeit the entire rent," said SP, who has been searching for an apart ment in Bur Dubai and Karama area. Generally, tenants have to give two to three months' notice, as per their contract, if they want to terminate their lease. However, brokers now say post-dated cheques will not be returned unless a replacement is found. In January, Sharjah amended its tenancy law, allowing tenants to exit their contracts for reasons beyond their control by paying 30 per cent of the amount due for the remainder of the contract. According to a prospective tenant, some brokers were also asking them to bring a company letter to verify their employment status. "I have been asked by some brokers to furnish a letter from my company, saying 'I am employed with them'," SP added. Although rent-free periods are being offered to lure tenants, most brokers ref use to incorporate lease break clauses in their residential rental contracts. "No one is willing to alter or change their contract terms and incorporate break clauses. We have no option but to sign contracts that have been prepared by them [brokers]," another prospective tenant said. Besides, brokers have shirked their responsibility of getting residential rental contracts registered with the ejari, the e-registration portal of Real Estate Regulatory Agency (Rera). "They said we [brokers] will not register the contracts with Rera and if it was required then tenants have to get it done themselves," the prospective tenant added. In April, Mohammad Khalifa Ahmed bin Hammad, Director of the Real Estate Relationship Regulating Depart ment, Rera, told this newspaper that registration of residential and commercial rental contracts was mandatory through the ejari system. Source: Emirates Business 24/7 Back to the top Customer Serv ice Centre: +971 4 403 77 00 www.asteco.com Contracting Property Services Development Two UAE residents buy £20m homes in posh London areas 12 May 2010 High-end residential properties in London's Knightsbridge, Kensington, Mayfair and Holland Park areas have seen a 45 per cent increase in sales from foreign buyers. (REUTERS) Two UAE-based individuals have purchased two residential buildings valued at £20 million (Dh109 million) in London's high-end Knightsbridge and Mayfair areas in the past three months, according to a UK-based lettings company. The buyers were not named. Marc von Grundherr, Director, Benham and Reeves Residential Lettings, told Emirates Business: "In the past three months alone, we have concluded confirmed invest ments worth £20m f rom the two clients in the UAE who have purchased the two buildings in London. Until now, we have recorded confirmed UAE investors for assets worth £80 to £100m. They are residents of the UAE." The deals were completed in partnership with its UAE-based sister company, IS Real Estate. In an interview w ith this newspaper last month, Fadi Moussalli, Regional Director, International Capital Group, Jones Lang LaSalle, said the institutional invest ment in 2009 into the UK's commercial properties from the Middle East and North Africa region touched $4.5 billion (Dh16. 5bn), of which $4.2bn went into the commercial properties. Grundherr said UAE investors have been draw n to invest into the UK due to the weakening of the pound and lower mortgage rates. "They have recognised 'good value' properties in Central London's most established areas, namely Knightsbridge, Kensington, Mayfair and Holland Park, which have recently seen an overall 45 per cent increase in sales from foreign buyers," he said. "Mortgage interest rates are running low in the UK at an average of around 2.5 per cent per annum. This makes buying property in London attractive. There are now more opportunities to buy in key central areas, some in the newer developments on the outskirts of the town such as Beaufort Park in London NW9, which are prime areas fro m a rental yield perspective." Grundherr believes investors into the UK market are mostly individuals or family -owned businesses who are looking to invest into the UK real estate market on a long-term basis. "Lots of our UAE clients are looking to buy and have been buying properties in the UK in the past three to six months. One in three of our clients are looking to buy properties in the UK w ith 50 per cent of them ending up buying there." Grundherr said average rental yields of properties in London range between 2.5 per cent and 6.5 per cent per annum. "In Central London, one-bedroom and two-bedroom properties have seen a strong rate of growth in February and March, and are now just 10 per cent below the market peak of March 2008. February saw its highest growth since August 2007 at 3.2 per cent from the previous month." Locales in Central London such as Wembley, Stratford or Elephant and Castle give a rental yield of around 6.5 per cent per annum. "A one-bedroom in Beaufort Park is currently priced £22 0,000 yielding a rental income of £1,000 a month. While, a two-bedroom apart ment in Beaufort Park is now priced £270,000 yielding a rental income of £1,600 per month." Customer Serv ice Centre: +971 4 403 77 00 www.asteco.com Contracting Property Services Development Grundherr said the average rental yields in these areas were around 6.5 per cent per annum. "This area currently attracts yields in the region of six per cent to 6.5 per cent, which is far greater than properties in Central London. However, a purchase in these prime areas offers long -term security and has an element of client recognition for the popular areas in London." In terms of capital appreciation, prime central locations in London such as Knights Bridge, South Kensington and May Fair offer rental yields of about 2.5 per cent. "A one-bedroom apart ment in Knights Bridge, is currently p riced £600,000 and a two-bedroom is around £1.2 million. Rentals for a one-bedroom range around £2,000 a month and £3,000 for a two-bedroom apart ment. Rental yields in these areas are around 2.5 per cent per annum." Grundherr said real estate prices in the UK went up around 10 per cent in the past one year due to limited supply of properties. "Over the past two years, supply of properties in the UK that people can buy has really dried up. Only people forced or keen to sell have been able to sell their prop erties indicating that prices have gone up as people do not want to sell it at reduced prices." The Centre for Economics and Business Research, a London-based group, said last week that UK house prices will extend their recovery this year as low borrowing costs and shortage of homes support the property market. Average mortgage interest rates are expected to drop by about one per cent to three per cent by the start of 2011. Bloomberg said Bank of England's first increase in its interest rate could be as much as two years away and possibly more so. UK house price gauge posts first gain in five months A UK house-price gauge posted its first increase in five months in April as warmer weather helped lift new buyer enquiries to the highest since December. The number of real-estate agents and surveyors saying prices rose in the past three months exceeded those reporting declines by 17 percentage points, compared with nine in March, the Royal Institution of Chartered Surveyors (Rics) said in a report. A separate British Retail Consortium survey showed stores posted their largest decline in sales in more than a year. The Rics gauge fell for four months as cold weather, political uncertainty before the election and an increase in properties for sale eroded momentu m in the housing market recovery. Potential homebuyers, who delayed making a purchase until after the May 6 ballot, may now return to the market, leading to a "post-election bounce", Rics said. "For much of 2010, the housing market has been under the shadow of the general election with the gap between supply and demand grow ing w ider," Rics spokesman Jeremy Leaf said in a statement. "However, the start of spring has seen renewed optimism w ith the good weather improving sentiment." More surveyors expect an increase in both sales and house prices in the next three months, Rics said. The balance of those expecting prices to gain through July exceeded those predicting decreases by seven points in April, compared w ith minus two in March. New instructions outpac ed new buyer inquiries last month, with a balance of 11 percentage points of surveyors reporting an increase in the number of homes for sale, Rics said. That was down from a reading of 21 in March, the group said. The proportion of surveyors saying new buyer enquiries increased rose to eight percentage points from one. Customer Serv ice Centre: +971 4 403 77 00 www.asteco.com Contracting Property Services Development UK house values declined last month as more people put their property on the market, Lloyds Banking Group's mortgage-lending unit Halifax said on May 7. While interest rates remain at a rec ord low, banks are still granting less than half the number of mortgages they approved at the peak of the housing boom. The Bank of England yesterday kept its benchmark interest rate unchanged at 0.5 per cent. Retail sales values fell 2.3 per cent last month from a year earlier at stores open at least 12 months, partly due to the timing of the Easter holiday, the BRC survey showed. The decline was the biggest since December 2008. Source: Emirates Business 24/7 Back to the top Injaz begins Cluster 9 sales at Al Gamra 11 May 2010 Injaz Development Company, the Riyadh-based master developer and property invest ment firm overseeing the Al Gamra Project, yesterday said it has begun sales of Cluster 9 follow ing the succ essful sales of Cluster 7. Omar Al Kadi, President and Managing Director, Injaz Development Company, said: "The Al Gamra Project has many distinguishing factors that make it a leading invest ment destination in Riyadh, and one of the most important factors is the road network near the project, including Prince Salman Road, which has a noticeable effect in boosting real estate growth in that area. The project's proximity to a number of top projects being developed in north Riyadh plays a major role in enhanc ing the value of Al Gamr a, as these projects hold massive growth potential and attract investments from local, regional and international firms. Another very important factor that boosts the strategic importance of Al Gamra is the fact that its land level is naturally higher than the surrounding area, providing additional value to investors," said the Injaz president. Al Gamra Project is located in the area between the north highway and King Fahad Road towards the north on Abu Bakr Al Seddig Road. Source: Emirates Business 24/7 Back to the top Dubai's house prices jump 4% in Q1 10 May 2010 Customer Serv ice Centre: +971 4 403 77 00 www.asteco.com Contracting Property Services Development Customer Serv ice Centre: +971 4 403 77 00 www.asteco.com Contracting Property Services Development Property prices in Dubai's residential property market rose four per cent between fourth quarter 2009 and the first quarter 2010, but demand-supply mismatch is likely to put downward pressure on prices, according to Colliers International. "Additional stock is likely to create downward pressure on property prices. However, it remains unclear whether the future supply will have a negative impact on established projects, which are typically more resilient to market conditions," the global real estate consultancy said in the first quarter House Price Index (HPI) report released yesterday. Prices moved up two per cent year-on-year in the first quarter of 2010 against the first quarter 2009. Blended average house price for first quarter stood at Dh1,061 per square foot compared to Dh1,022 per square foot in the fourth quarter 2009. The fourth quarter 2009 HPI had revealed year-on-year decline of 42 per cent between fourth quarter 2008 and fourth quarter 2009, while average prices were at Dh1,022 per square foot. "The index has shown a year-on-year increase of two per cent, the first annual increase in value since the downturn hit the property sector in Dubai. Average house prices are now on par with 2007 levels, suggesting the market has reached underlying value," Colliers said. The report estimates 41,000 residential units –both freehold and non-freehold – w ill enter the market by the end of 2010 and most of the supply will be positioned in the low to mid-income segment. "Demand is not expected to match the growth in supply, creating dow nward pressure on property prices. It remains unclear, however, if the future supply w ill have a negative impact on established projects, as they offer a greater resilience to market conditions," said the report. In a press statement, Ian Albert, Regional Director at Colliers International, said: "Despite the stability that the market appears to have achieved, a number of concerns remain. There will be significant oversupply in the market by the end of the year, so it is anticipated the index will experience fluctuations in value going forward. What will be important to watch is how much of that su pply matches the end-user demand for community-oriented developments." Projects that offer a sense of community lifestyle are anticipated to fare better with the first quarter index show ing the "liveability" aspect of a development to be a clear demand dr iver. This trend follows the change in ownership structure from speculative investors to end-users, Colliers said. Concerns over banks' end-year results and the availability of liquidity reported at the beginning of year have somewhat abated with several financial institutions reducing their interest rates and increasing their loan-to-value ratio (LTV). The LTV of leading mortgage providers has increased to 75-90 per cent with interest rates varying between 6.5 per cent and 8.5 per cent, the report said. "Access to finance will be another important factor to consider over the coming months, especially as new supply comes onto the market. While banks are lending again, they are being very selective about the types of projects they lend against and the cust omers they lend to. Low-risk invest ments are very much the focus. It is unlikely all of the forthcoming supply w ill meet the new and stricter lending criteria," Albert said. The index, compiled using actual mortgage transaction data from a consortium of f inancial institutions, continued to show marginal fluctuations in quarter-on-quarter price values for apart ments, villas and Customer Serv ice Centre: +971 4 403 77 00 www.asteco.com Contracting Property Services Development townhouses. Apart ment prices increased by six per cent in the first quarter compared to the fourth quarter in 2009. Villa prices increased by two per cent while townhouse prices decreased by four per cent in the first quarter compared to the fourth quarter of 2009. The blended average rate for apart ments in the first quarter stood at Dh1,177 per square foot as against Dh1,113 in fourth quarter 2009, while the average for villas was at Dh941 per square foot compared to Dh919. Townhouses were the only property type that registered a decrease in its values, despite the increasing number of transactions. The average blended rate per square feet for townhouses in the first quarter was at Dh859. In the fourth quarter in 2009, townhouse prices had increased by 10 per cent compared to third quarter in 2009. In response to the Colliers report, Matthew Green, Head of Research & Consultancy UAE, CB Richard Ellis Middle East, said: "Greater stability is slowly emerging w ithin the residential sector as declining unit values begin to level off. However, the handover of new supply during 2010 will continue to have an impact on price and leasing rates, most specifically within the newer freehold districts where excess supply is already a real concern." The more established and mature residential communities projects are now typically out performing general market trends, with investor focus on these safer asset types likely to drive any potential growth in transaction volumes during the second half of the year, he added. Source: Emirates Business 24/7 Back to the top Ajman files cases against absconding developers 10 May 2010 The Ajman Real Estate Regulatory Agency (Arra) has filed police cases against some absconding developers who have failed to fulfil their contractual commit ment, but emphasis is more on resolving disputes through mediation, the agency's c hief told Emirates Business. "We are opening cases against absconding developers and the ones who have failed to fulfil their contractual obligations. And a few have already been arrested," Arra Director-General Omar Al Barguthi said. "Our motive is not to file cases against developers. We give them [developers] equal opportunity and numerous options to fulfil their obligations. We only have an issue if they keep running [away] and not delivering what they have promised to investors. "We are taking action by initiating dialogue with authorities concerned of other countries. We are trying to help investors and extradition 'may be a possibility'." Although the action was initiated after giving ample time to developers, the Arra chief still believes in bringing the developer and the investor together and initiating a dialogue for resolving their problems. "We are offering solutions to the developer as well as the investor. We want both parties to resolve their dispute through mutual consent." Customer Serv ice Centre: +971 4 403 77 00 www.asteco.com Contracting Property Services Development The agency is open to helping investors who have invested in projects without they undertaking due diligence of the developer and his project. Source: Emirates Business 24/7 Back to the top Property transactions decline in RAK 10 May 2010 The number of transactions and new property listings with agents has declined in Ras Al Khaimah since the end of last year, realty agents said. Mohanad Alwadiya, Managing Director, Harbor Real Estate, said: "We have not removed any listing s for Ras Al Khaimah. However, we have not received any new listings for the past four months for the emirate. The fourth quarter of 2009 was the last time we concluded a transaction for a property in Ras Al Khaimah." He further said that the overall purc hasing appetite of buyers has been very low due to the economic crisis and most of the stakeholders involved in the RAK property market have adopted "a wait and see" approach, hoping for the economic storm to clear out. Laura Choueri, CEO, Choueri Real Estate, said: "There were many enquiries for the emirate as Ras Al Khaimah has a lot of opportunities for investors. However, the fourth quarter of 2009 was the last time we concluded a sales transaction in Ras Al Khaimah." Kosta Giannopolous, Manager-Residential Sales & Leasing, Better Homes said: "We get a few propert y enquiries for RAK each month." The real estate agents, however, expect the market to gain momentum as the emirate has some promising developments. Choueri said that while the Ras Al Khaimah market may not be as buoyant as Dubai, there are some very beautiful properties there which hold a lot of potential for investors. "As said, in the last quarter of 2009, there were lots of enquiries for one, two and three-bedroom apart ments, yet those have not translated into sales." Alwadiya said: "Slowdow n in new activities and progress announcements in the RAK property market have made it slide dow n in the investors' top of mind awareness and consideration list. Further, lack of completed projects and limited finance options in RAK have become key decision- making variables in today's market place which are hindering the ability of sellers to promote and sell their projects in the emirate." He said the market is witnessing an overall slowdow n also drive n by the migration of tenants to the more affordable areas in Sharjah and Dubai. "The rental prices have dropped by an average of seven per cent to eight per cent according to our estimates. When it comes to sale prices, we have witnessed a sharper drop mainly in the under construction/ off plan projects. Customer Serv ice Centre: +971 4 403 77 00 www.asteco.com Contracting Property Services Development "Pick-up in the real estate sector of Ras Al Khaimah can happen but this must be complemented by a steady pace of construction progress, positive completion/success stories and a solid legal, marketing and operational framework that endorses the property market in RAK." Giannopolous said: "RAK has long been a place to escape the busy pace of Dubai. The developments in the emirate offer beautiful waterfront properties, such as Al Hamra Village and The Cove , which are already popular for weekend escapes and holiday homes. Other projects of note include Mina Al Arab, developed by RAK Properties; and Bab Al Bahr, developed by Rakeen which will both become more attractive as they near their completion date; so now may be a great time to buy in RAK prior to completion and while these mega -projects and prices are affordable." Source: Emirates Business 24/7 Back to the top Demand for quality labour housing rises 10 May 10, 2010 Good quality labour camps are in demand among big hotel chains to house their staff. (XAVIER WILSON) Even though the number of labourers in the UAE has declined in recent months, there has been an increase in demand for quality accommodation for workers, Emirates Business has learnt. Companies are making use of the existing low rental rates and abundant supply of newly constructed labour camps to shift their workers to better facilities from congested and unhygienic accommodations. This also comes on the back of more stingent regulations set by the Dubai Municipality for housing workers, coupled w ith better enforcement. The civic body has even made it mandatory for companies to improve the housing standards of their labourers and to meet its new requirements in order to be elligible for the renewal of trade licences. Real estate brokers that this newspaper spoke to said labour camp rents have come dow n by 60 to 65 per cent in major bachelor accommodation areas such as Al Quoz and Jebel Ali, and now there was also an oversupply of such camps in these areas. Michael D'Souza, Managing Director of Humaid Al Suwaidi Real Estate, a company managing more than 10,000 labour accommodation rooms in Al Quoz, said: "The lease rate for labour camps in Al Quo z has seen a fall from Dh8,000 not long ago to Dh6,500 per room per month (for a six-worker room). Al Quoz has been the most preferred area for worker accommodation because most high-rise construction projects were focused mainly on the Jumeirah Lake Towers, Dubai Marina and Business Bay areas, which are all easily accessible from Al Quoz." He said rents in the "Sonapur" area are 15 to 20 per cent cheaper than Al Quoz and the rate in Jebel Ali has been 15 to 20 per cent less than Sonapur rates. "Now rooms are available at almost half their previous rates and Dubai Municipality insists that employers shift their workers living in poor quality camps to better ones," D'Souza said and added that Humaid Al Suwaidi now has 6,000 new quality rooms in Al Quoz. Customer Serv ice Centre: +971 4 403 77 00 www.asteco.com Contracting Property Services Development As per Dubai Municipality rules and Ministry of Labour specifications, each worker has to be provided 40 square feet of area and each 240 square feet room can accommodate three double bunk beds – or six people. The civic body has also made it a condition for renew ing trade licences for companies that they should change their workers' housing from poor quality accommodation to those with better facilities. Earlier, the authorities were flexible because companies were unable to find quality accommodation due to the shortage in the market and many were forced to put as many as eight to 10 workers per room. Demand for better labour camps, with more facilities, has, therefore, gone up even as supply of labour camps in general has increased in the market. As companies can now accommodate fewer people in a room, this adjust ment is creating new demand for workers' accommodation. In addition to the minimu m of 40 square feet required for every labourer in an accommodation, Dubai Municipality rules stipulate that at least one bathroom for every eight people. A circular issued by the municipality to engineers building labour camps said no temporary structures shall be allowed in labour accommodations. Any material that contains asbestos or other substances that are harmf ul to the environment or public health should not be used. The flooring should be done using non-slippery materials that are easy to clean and do not wear fast through the use of detergents. Rooms should include the necessary furniture, such as a single bed and storage cabinets for each labourer. As in all other residential buildings, there should be enough ventilation, natural or artif icial light, thermal insulation, drainage, water supply, gas, electric supply, fire-safety measures, and health and environment preconditions. All rooms, kitchens, dining rooms, and other halls should be air conditioned as per the prevailing specifications introduced by the municipality. Common services such as kitchens, multi-purpose halls for dining and watching television, accessories rooms, prayer halls, first-aid room, and other service rooms should be on the ground floor itself. If there is space left over on the ground floor after providing all of these services, it can be utilised for housing the labourers. External floors, open space and corridors outside the camp should be paved with non-slippery tiles or should be landscaped. The pavement should be paved with interlocking tiles. Toilets and bathrooms shall be furnished with clothes hangers, soap dishes, exhaust fans, hot water connections, mirrors, and cabinets. The water tanks should be covered by sunshades to ensue cool water during summer. Also, there should be enough water coolers in each camp depending on the number of labourers residing there. Market sourc e said that during the recent boom, prices of land plots dedicated for labour accommodation in Jebel Ali had gone up from Dh50 per square feet to Dh1,000. The current oversupply of labour camps is also a result of the many new big camps that have been constructed in the recent past, after the land price rise convinced many speculators that the boom would continue to grow. "We currently have 10,000 rooms in Al Quoz and Sonapur accommodating 60,000 workers, which include recreational facilities, mosques, travel desks, clinics, supermarkets and saloons," said D'Souza. He said his company was ready with deluxe labour camps and staff accommodation in Al Qouz for 3,000 workers. Each block contained 141 rooms – double rooms (18x27) and standard sized ones – (13x18) Customer Serv ice Centre: +971 4 403 77 00 www.asteco.com Contracting Property Services Development with 66 toilets and washrooms, kitchens and separate dining rooms. There was also separate ladies' accommodation available in the new camp, with an independent dedicated block. Areas have also been designated for restaurants, supermarkets, clinics, money exchanges, hair cutting saloons, travel agencies and other facilities usually needed by workers. A mosque at the premises could accommodate several hundred workers and there were separate volleyball and basketball courts for sports and leisure facilities. Sewerage clearance and regular pest control was also in place, along with the provision of 24 - hour security, fire fighting systems and assistance in identifying catering services for workers. Demand for worker housing has come down in the Jebel Ali and Dubai Invest ment Park (DIP) areas. In Sonapur, agents handling labour camps said a lot of old camps were being demolished and some ow ners were keen to upgrade the quality. A real estate agent handling labour camps, who identified himself as Jahansahab, sa id he had a number of labour camps in Sonapur, Al Qouz and DIP, and the rent depended on the customers' requirements and the quality of the camps. "We have 57 rooms in Al Qouz, 200 rooms in DIP and 250 rooms in Sonapur. The labour camp rent varies from Dh1,600 to Dh2,500. If the camp is old, you will get it for a cheaper rent and some landlords are ready to give a discount over the market rate because their camps are lying vacant." D'Souza added: "Dubai Municipality now insists that companies with registe red offices in Dubai accommodate their workers in Dubai and not in Sharjah or Ajman. A lot of companies are shifting their workers from cramped labour accommodation in Sharjah and Ajman, where the rate was lower, to Dubai where the current market rates are very attractive. "There is not much difference in the lease rate now in Dubai and Sharjah. In addition, by shifting camps to Dubai companies can save three hours of travel time and can improve workers' productivity." Some of the old and dirty camps in So napur are being demolished or upgraded. Earlier, property owners used to insist on one or two cheques for the entire year. Now landlords are ready to accept up to 12 cheques for the annual rent. Good quality labour camps are also in demand among big hotel chains to house their staff, whom they earlier used to house in residential buildings at exorbitant costs. These hotels are now prepared to pay for the luxury and high-end labour camps whose rates have fallen compared to a couple of years ago. The reason for this is that the high-end camps, while comparable in amenities to residential apart ments, still come cheaper for the companies. Another reason for the general fall in labour camp rents is that a lot of companies have sent their workers on long leave and vacated the camps in Dubai. "If previously a company occupied four blocks, they are now retaining only two. The price of land in designated labour camp areas in Jebel Ali had gone up from Dh50 per square feet in 2003 to Dh1,000 per square feet during the boom time. Now there are no takers for the land even at Dh300 per square feet," said a broker requesting annonymity. Landlords said that even families are willling to relocate to Dubai and Jebel Ali from Sharjah provided they get budget accommodation with proper facilities. One for the women Customer Serv ice Centre: +971 4 403 77 00 www.asteco.com Contracting Property Services Development Female workers account for less than one per cent of the total work force in the staff accommodation or labour camp areas and special permission is required by companies to accommodate female workers in labour camps. For ladies' accommodation, there should be a separate entrances with 100 per cent segregation from the male labour camps, accompanied by 24-hour vigil and security. Female workers who are working mainly in the hospitality, cleaning, maid services and security guard companies have separate and independent camp blocks in Al Quoz. Source: Emirates Business 24/7 Back to the top Sharjah drafts real estate registration law 09 May 2010 The Sharjah Government is working on a law to govern property registrations in the emirate. The emirate's Executive Council has prepared a draft law for property registration and forwarded it to the Consultative Council, Dr Obaid Al Hajiri, Chairman of Sharjah Consultative Council, told Emirate Business. The council's Legal and Legislative Committee will study the draft and will submit its report, said Yousef Abdul Ghaffar Abdul Rahman Al Sharif, a member of the council and head of the committee. "We have not studied the draft and not yet aware of its content and whether it tackles freehold registration and expatriate ownership issues as it was sent to us at the end of the working day of Thursday," said Al Sharif, who is also owner of Al Yousef Al Sharif Associates, Lawyers and Legal Consultants. The Executive Council will discuss the draft and the Legal and Legislative Committee's report during its next session scheduled for May 20 and will submit recommendation and notices to the Executive Council, added Al Hajiri. Source: Emirates Business 24/7 Back to the top Hotels brace for euro crisis fallout 9 May 2010 Dubai hoteliers fear improving occupancy levels could face a major reversal this year as a currency slide forces bargain-seeking euro zone tourists to stay at home. The euro fell to a 14- month low against the US dollar last week as the fallout from the Greek financial crisis extended throughout the largest source market for tourists visiting the Emirates. That means using euros to buy dirhams, which are pegged to the US dollar, has become more expensive. Customer Serv ice Centre: +971 4 403 77 00 www.asteco.com Contracting Property Services Development ―Hotels in Dubai are counting on business from Europe this summer due to an early Ramadan this year,‖ said Arshad Hussain, the director of business development at The Monarch Dubai. ―With a weak euro on the horizon, Dubai might lose business to Europe as clients will find deals more attractive in the euro zone,‖ he said. ―Destinations such as Paris, Vienna and Rome will win business away from Dubai. Hotel rates in Dubai are already at all-time low, and the falling euro rate will not help Dubai hotels.‖ Greece‘s recession-hit economy is struggling under almost US$300 billion (Dh1.1 trillion) of debt. Concerns over whether the country will be able to meet its debt obligations and fears that the credit crisis will spread through Europe have put the single currency under pressure. There are also fears that the British pound, which came under pressure after the inconclusive UK election, could fall further because a hung parliament there could hinder action to tackle the country‘s budget deficit. The UK is Dubai‘s main source of tourists. Mr Hussain said his hotel was increasingly looking to markets such as China and India to find new business and reduce its dependence on Europe and minimise the impact of currency swings. Occupancy levels in Dubai hotels have improved greatly this year, with more competitive prices attracting more tourists, hoteliers say. Average room rates fell 3.2 per cent in March to $257.22 compared w ith March last year, while occupancy levels rose 7.8 per cent to 79 per cent for the same period, according to data from the London-based research company STR Global. Tour operators also voiced concerns, but some in the tourism industry were confident that Dubai‘s deals would keep drawing business to the emirate. Others said many tourists would reduce their length of stay at a particular destination rather than choose a cheaper location for their holiday. ―Def initely the fluctuations of the currencies around the world affect the tourism and the travel industry in general, not only for Dubai as a destination,‖ said Samir Hamadeh, the director of sales and marketing at Alpha Tours in Dubai. ―For example, the drop of the pound affected UK travel massively and this came along w ith the financial crisis. So definitely the drop of the euro is affecting travel in general.‖ But, he said, the aggressive promotions that Dubai had started as the tourism sector was hit hard by the financial crisis would help attract travellers to the emi rate. He added that the industry had put much more effort into attracting tourists from the GCC after the financial crisis. The discounts, which in some cases were up to 50 per cent off peak prices, would more than counteract any change in the currency, he said. ―We have to look to alternative markets at times when we have problems with the currencies,‖ Mr Hamadeh said. For example, he said, Alpha Tours was increasingly seeking business from markets such as South America and China. But the hospitality industry is nonetheless aware of the possibility that currency fluctuations could cause problems. Customer Serv ice Centre: +971 4 403 77 00 www.asteco.com Contracting Property Services Development ―We have to be very careful because [the slide in the euro] could cut off our main feeder markets,‖ said Guy Epsom, the director of business development at Moevenpick Hotels and Resorts, which is planning to open three hotels in Dubai this year. Abu Dhabi hotels have already experienced sharp falls in occupancy levels and rates this year because of an increase in the supply of hotel rooms. A slide in the euro s eemed to be the least of hoteliers‘ concerns. ―We haven‘t taken that into consideration,‖ said Torbjorn Bodin, the general manager at the Radisson Blu Hotel on Yas Island. Source: The National Back to the top Dubai Holding in finance review 10 May 2010 Dubai Holding has hired financial consultants to review the finances of two of its largest units. This follows moves by Dubai World, another of the emirate‘s three major government -owned conglomerates, to seek fresh terms on US$24.8 billion (Dh91.09bn) of loans last year. A source familiar with the company‘s plans confirmed a report by the Financial Times that Dubai Holding had hired financial consultants to review the books of its Dubai Group unit and Dubai International Capital (DIC), which has invest ments in companies such as the Madame Tussauds waxworks museums and Travelodge hotels. DIC has appointed Deloitte while Dubai Group has hired KPMG. The accounting companies are being asked to evaluate the subsidiarie s‘ financial health and make recommendations that could include pushing for lower interest rates and delaying debt repayments. A third Dubai Holding division, the Dubai Holding Commercial Operations Group (DHCOG), has hired PricewaterhouseCoopers, another accountancy company. That move, however, relates to its efforts to refinance loans on normal commercial terms, not to restructure them, according to the source. Hiring consultants ―would make sense, given what‘s going on in the country‖, said Khalid How la dar, a vice president at Moody‘s Investors Service, a global agency that rates DHCOG‘s debt. ―These problems are not necessarily localised at Dubai World, and for the rest of the Dubai Inc companies, given the funding environment and debt maturities and general balance sheet issues, it would make sense that these guys would be talking to advisers.‖ Debt talks involving DIC and Dubai Group have yet to move beyond the first stages, but any change in terms on Dubai Holding‘s borrowings would open a major new chapter in the emirate‘s tackling of an overall debt load of about $109bn. Dubai‘s three main holding companies – Dubai World, Dubai Holding and Invest ment Corporation of Dubai – are believed to be responsible for most of that debt. Dubai World last year embarked on its restructuring of $24.8bn of debt and in March made a formal proposal to banks and trade creditors. Customer Serv ice Centre: +971 4 403 77 00 www.asteco.com Contracting Property Services Development They have yet to accept the proposed terms, which call for 30 per cent of bank debt to be repaid in five years and 70 per cent in eight years, with 1 per cent interest and an extra 1 per cent payment at the end of the eight-year term. Trade creditors and investors have been offered separate deals. A spokesman for Dubai Holding declined to comment. An asset manager in Dubai, who declined to be identified, said market participants had long expected that a reworking of debt was on the cards for Dubai Holding. The news that the conglomerate had hired accountants, along with the investment bank Lazard, was not surprising, he said. Morgan Stanley in December estimated Dubai Holding‘s debt at $19.6bn, about $15bn of which was publicly disclosed. A source close to the company, however, said that its total debt stood at about $12bn. It is unclear at this stage how much of that debt the conglomerate may seek to restructure. Through four business ―verticals‖ created in an organisational restructuring last year, Dubai Holding has interests in the property, hospitality, business parks and financial services sectors. Dubai Properties Group, its main property arm, owns Dubai‘s Jumeirah Beach Residence and is behind the emirate‘s huge Business Bay development. TECOM Invest ments, its business parks subsidiary, owns Dubai Internet City, Dubai Media City and other specialised free zones. Its hospitality division owns the Burj al Arab, and its invest ments division, which includes Dubai Group and DIC, owns a range of financial services companies. DIC, a private equity company, bought the Tussauds Group in 2005 for £800 million (Dh4.4bn). Tussauds was merged in 2007 with Merlin Entertainments Group, and DIC retains a 20 per cent stake in the combined company. DIC has also made a £675m invest ment in the UK‘s Travelodge hotel chain, and it bought Alliance Medical, a British diagnostic imaging company, for £600m in 2007. DIC is currently in a dispute in the US over the bankruptcy of Almatis, a company in its portfolio that is seeking a debt restructuring that would erode DIC‘s stake. Almatis said yesterday that 77.4 per cent of its senior debt had been voted in favour of the proposed restructuring, more than enough to move the plan forward. Dubai Group, meanw hile, owns the Dubai Insurance Group, Noor Invest ment Group and Dubai Banking Group. Dubai Banking Group last year acquired almost half of Shuaa Capital, the UA E‘s largest invest ment bank, as part of the resolution of a dispute over a convertible bond. Source: The National Back to the top Sovereign debt law by end of year 10 May 2010 UAE Government officials expect the passage this year of a public debt law aimed at controlling sovereign debt and developing local bond markets. Customer Serv ice Centre: +971 4 403 77 00 www.asteco.com Contracting Property Services Development The legislation will open the way for the establishment of a debt management unit by the Ministry of Finance to more closely regulate government debt and oversee all sovereign securities including bond issuances. No plans exist to sell Federal bonds this year, officials say. ―We are waiting for the law to be issued and as soon as it is we will work on the bylaws to execute and set up the debt management unit,‖ Obaid Humaid al Tayer, the Minister of State for Financial Affairs, said yesterday on the sidelines of an Abu Dhabi conference, International Best Practice in Public Debt Management Strategies. Concerns have emerged about levels of government debt after a rise in Dubai‘s debt burden as the emirate attempted to reverse a slowdown in its property and financial services sectors after the global financial crisis. The new law is also part of attempts by ministers to try to develop an active local currency debt market to provide low-cost funding for infrastructure projects with a prudent degree of risk. It is hoped the legislation will help to deepen debt capital markets and provide companies in the private sector with a potential alternative sourc e of funding at a time when access to liquidity from banks remains tight. It could help create a yield curve, which corporate issuers could use as a benchmark to price their own bond sales. Having been approved by the Federal National Council (F NC), the public debt law is now awaiting agreement from the Cabinet. The legislation passed by the FNC last year limits the extent to which the Federal Government can tap into international and local debt markets to 45 per cent of the UAE‘s total GDP, or Dh300bn, whichever is smaller. At an emirate level, debt is limited to 15 per cent of an emirate‘s GDP. The two limits, which together add up to as much as 60 per cent of the country‘s GDP, will ensure the UAE does not borrow excessively. The debt management unit is based on recommendations first published by the IMF and World Bank in 2001 for the establishment of government offices to regulate public debt including structuring, costs and limits. Debt management units help to minimise financial costs by encouraging go vernments to tap into bond markets for finance over a longer period rather than using short -term bank lending, the World Bank says. ―Having a robust bond market allows government to have a quicker response when there‘s a need to react to economic downturns,‖ said Anderson Silva, a senior debt specialist at the World Bank. The Federal Government has yet to issue a sovereign bond. Separately, Abu Dhabi has created its own debt management office within the Depart ment of Finance to prepare the way for new bonds from the Abu Dhabi Government and its related companies, an adviser to some of the emirate‘s largest companies said in February. It could be looking to raise more than US$20 billion (Dh73.46bn) this year, the adviser said. The Dubai Electricity and Water Authority was the first Dubai borrower to test international investors since the Dubai Government -backed Dubai World announced its restructuring plans in November. The Dubai Government said in March it would provide as much as $9.5bn for Dubai World, including $5.7bn from a loan already made by the Abu Dhabi Government, with $3.8bn from its own resources. Source: The National Back to the top Customer Serv ice Centre: +971 4 403 77 00 www.asteco.com Contracting Property Services Development An uptown life Downtown 10 May 2010 Catherine Hislop was wary at first about moving to the 27-storey The Lofts in Dubai‘s trendy Downtown development. Ms Hislop, 31, a recruit ment consultant from London, had recently seen The Towering Inferno, a 1970s film about a skyscraper going up in flames, and wondered if she would be better off renewing the lease on her shared villa in Umm Suqeim. But once she saw the stunning view of the Burj Khalifa, the tallest tower in the world, from the balcony of her one-bedroom apart ment on the 10th floor, the fear quickly subsided. Now she would not swap her apart ment for all the villas in Dubai. ―It was nice to live close to the beach for a year but I‘ve always been a city person and it‘s great having places like Dubai Mall and Souq al Bahar on your doorstep,‖ Ms Hislop says. ―There‘s also a good mix of low and high-rise buildings here so you don‘t feel as if you‘re crammed in. I hardly use my car at the weekends now.‖ With the Dubai Fountain and Burj Khalifa pulling in hundreds of tourists each day, Downtown has come into its own in the past year. The restaurants and shops that mark the waterway alongside Souq al Bahar in the Old Town throng with customers day and night, creating an urban vibe. ―Dow ntown is a hot property at the moment, with it being new and the lifestyle that it offers,‖ sa ys John Davis, the Middle East chief executive of the property consultancy Colliers International. Enjoying this lifestyle, and with an address to brag about, was once the realm of the privileged few. But a sharp decline in property prices and rents of as much as 50 per cent has made places such as Dow ntown more affordable, enabling middle-income earners such as Ms Hislop to rent her own place there. It costs between Dh70,000 (US$19,058) and Dh90,000 a year for a one -bedroom apart ment in new buildings such as The Lofts and Burj Views – almost half the rental price of Downtown two years ago. ―I‘d got to the point where I‘d had enough of sharing; prices have come dow n so much and landlords are more willing to negotiate,‖ says Ms Hislop. Up until a few years ago, Dubai tower living was mainly concentrated around the Trade Centre area of Sheikh Zayed Road. Since then, popular areas such as Dubai Marina and Jumeirah Lake Towers have mushroomed, while residential towers in Business Bay, just behind Dow ntown, are starting to come on stream. While Jumeirah Lake Towers might not be as hip as Downtown, it draws a crowd from Abu Dhabi due to its location, says Charles Neil, the chief executive of the estate agent Landmark Properties. It is also a lot cheaper, as a one-bedroom flat can be rented for as little as Dh45,000 a year. ―Jumeirah Lake Towers is popular and is filling up … price is also very important,‖ says Mr Neil. But fast-paced living in the sky is not for everyone, says Andy Dukes, who lives in a villa on Palm Jumeirah. The former ow ner of an e-greeting business from London was one of the first people to move on to The Palm in 2007, when there were few amenities. Customer Serv ice Centre: +971 4 403 77 00 www.asteco.com Contracting Property Services Development Mr Dukes owns two four-bedroom villas, one in which he lives and the other he rents out. Each has its own private beach. He lives alone and spends his spare time walking along the beach or kayaking, and has seen The Palm come to life since moving in. ―What has changed phenomenally is that the facilities here have gone from being very limited to a number of things that have opened,‖ Mr Dukes says. ―There are restaurants at the Shoreline Apart ments, three ATMs, a bakery, mini- marts, a flower shop and a 24-hour deli. All of this has happened within the last couple of years. And more facilities will open up as more buildings open.‖ But while prices have fallen on The Palm, you still need to be on a good salary to afford the rent, with the cheapest one-bedroom apart ment costing about Dh90,000 a year. Hassan Haroon and his family have the best of both worlds. They live in a three-bedroom apart ment at the plaza level of Jumeirah Beach Residences, where there is a shaded courtyard with shops and cafes. Jumeirah Beach Residences is a development of about 40 towers. Mr Haroon, a banker and father of one from Pakistan, has a short stroll dow n to The Walk on the ground level – another bustling area of street cafes – and is just across the road from the beach. ―There‘s a great sense of community living on the plaza level,‖ he says. ―We have a fountain and lots of greenery. ―It‘s away from the main road, so there are no cars or any other intrusions.‖ Mr Haroon has a partial view of the sea from his apart ment and says the development brings back memories of Montreal, Canada, where he lived before coming to Dubai in 2007. ―Jumeirah Beach Residences feels like home, whereas other areas, like Downtown, would feel more as if you‘re living in a hotel. I wouldn‘t change it,‖ he says. Whether you live in a tower or villa, it‘s a question of lifestyle choice, says Mr Ne il, with trends now being inf luenced by the drop in prices and greater availability of property. ―Places like Downtown are popular but so are villa communities like The Springs and The Meadows, and a lot of projects are opening up further out of town in places like Mirdif, where prices are very attractive,‖ he says. ―Families tend to prefer villas for the space. Previously they were forced to live in apart ments because villas were unaffordable. Amenities are also very important, some projects are less matu re than others.‖ Source: The National Back to the top Developers move to take back properties 15 May 2010 As hundreds of investors receive cancellation notices on defaulted properties across Dubai, the consolidation of the sector is approaching its endgame. The move to cancel contracts and repossess properties is a last resort for developers whose profits have dwindled since the financial crisis took hold, experts say. Customer Serv ice Centre: +971 4 403 77 00 www.asteco.com Contracting Property Services Development Property developers have come under increasing pressure to know what future income they can expect to generate from units that were sold at the peak of the market, many of which are now in default. The final notices that are now being sent to investors who have missed payments in projects that are 80 per cent or more complete marks the end of a consolidation process which, for most developers, began about 18 months ago. ―I think the auditors have come in and started to put pressure on where the receivables are coming from,‖ said Ian Albert, the regional director of Colliers International. ―At the end of the day, a developer wants to sell. It really is a last resort to go down this route.‖ Nabil Ahmed, the regional head of research at Deutsche Bank, said that after more than a year of trying to limit defaults through consolidation, some developers are now clamping dow n on the ―20 or 30 per cent of those they couldn‘t help and who are defaulting simply because they don‘t have the means to pay the remaining amount‖. Still, investors who have missed payments are standing their ground because they could lose the down payments they made on invest ments they hoped would generate lucrative returns. Some have formed groups to take class actions against developers trying to repossess properties. The stalemate is a result of the huge speculation that took place in Dubai‘s property sector in 2007 and 2008, when prices surged 78 per cent. ―It‘s basically people who were caught when the market was effectively a trade market rather than an occupier‘s one,‖ Mr Albert said. It was also a time when banks were happy to pair up with developers to offer attractive home finance deals. Abu Dhabi Commercial Bank (ADCB), for example, agreed w ith Al Fajer Properties in 2005 to offer 60 per cent financing to customers in Jumeirah Business Centre 5. The deal involved buyers making payments over 10 years from the project‘s completion, making it appealing to those who were unseasoned investors. Both Al Fajer and ADCB recently confirmed that the credit line, which was worth about D h500 million (US$136.1m), was cut towards the end of 2008 as the financial crisis took hold in the emirate‘s property sector. One British investor, who asked not to be named, bought two floors of office units in Jumeirah Business Centre 5 on the understanding that she would get a mortgage. At the height of the boom in 2008, she paid 40 per cent for one floor of office space and 50 per cent on the other at Dh1,100 a square foot. She is also among the dozens of investors in the project who recently received termination notices. ―I actually have a brochure that states we‘d get preapproved finance,‖ she said. ―We paid a big premium to get the comfort of having pre-approved finance … We weren‘t told until recently that we wouldn‘t get it. When the market and the world economy changed, we raised this issue and were told, ‗don‘t worry about it, we‘ll work something out‘ … We proposed to do a merger of the two floors and pay additional funds but were told ‗no‘.‖ Meanwhile, Jumeirah Business Centre 5, which is almost ready for handover, has a default rate of about 85 per cent. A senior source within Al Fajer, who asked not to be named, said: ―We have customers who did get financing; the developers also thought they were going to get financing for their projects and didn‘t. We barely got any financing – 80 per cent was done with cash.‖ Customer Serv ice Centre: +971 4 403 77 00 www.asteco.com Contracting Property Services Development Other property developers have also started to send cancellation notices to investors including Al Mazaya and Omniyat Properties. Mohammed Sultan Thani, the assistant director general of the Dubai Land Depart ment, concedes there is no clear-cut solution to the deadlock. Hundreds of termination letters have been sent out by the depart ment in recent months, he said, and an investor who wishes to dispute a termination notice needs to go to court. Successful sales in the auction process will also put more pressure on Dubai‘s already oversupplied property market, Mr Albert added. But the process may not be entirely smooth. ―What finance will be available for people to buy at auction? You‘d be looking at a very small pool of cash buyers, and they will seek very attractive prices in order to put cash into non-completed properties.‖ Source: The National Back to the top Emaar moves on non-payers 15 May 2010 The world‘s tallest tower is set to see its first repossessions even before finished apart ments are handed over to residents more than a year late. Emaar Properties, the country‘s largest developer, has started to send letters to owners of units in t he Burj Khalifa in Dubai, warning that they will lose their apart ments and 40 per cent of the property‘s value if they fail to pay their overdue instalments within two weeks. ―After two years of stagnancy, the market is starting to get cleaned out,‖ said M ichael Lunjevich, a partner at the law firm Hadef and Partners. ―Pressure has been building and building. Now these notices are being issued and it‘s going to take a huge amount of man hours to solve the questions that come up from these actions.‖ Dubai‘s property laws say buyers who fail to make payments on property that is under construction or has been completed are liable to have their contracts cancelled and some or all of their money confiscated by the developer. Likewise, if a developer fails to uphold its obligations, the Real Estate Regulatory Agency (RERA) can cancel the project and order refunds for buyers. The Burj Khalifa, which had apart ments priced as high as US$3,500 (Dh12,855) per square foot at the peak of the property boom, is the latest project that may soon see cancellations of some sales. But it is also the most high-profile project to be affected by repossessions. The building features an Armani hotel and soars above Dubai Mall, the world‘s largest shopping mall by total area. Other developers sending cancellation notices over the past two weeks include Omniyat Properties, Al Fajer Properties and Al Mazaya Real Estate. In a letter seen by The National, Emaar tells one of its Burj Khalifa property owners that the contract will be cancelled because ―the respondent has not paid the remaining due instalments despite frequent claims and the elapse of 30 days from the date of notice served by the claimant‖. Emaar‘s public relations company did not respond to calls and e -mails. Customer Serv ice Centre: +971 4 403 77 00 www.asteco.com Contracting Property Services Development The investor, who asked not to be named because he is seeking to negotiate with the developer, said he had paid between 40 per cent and 50 per cent on more than one apart ment in the tower. He said he bought them on the assurance from the developer that pre-approved finance would be available. ―But when the market crashed, none of the banks came forward,‖ he said. He also claims he was not compensated for late delivery of the project, part of which opened in January, more than a year late. ―If it had been delivered on t ime, we wouldn‘t be having these issues,‖ he said. The letters are being sent via the Dubai Land Depart ment, which has the power to enforce termination notices. If payments are not made, the properties w ill be auctioned by the Land Depart ment, with the f unds raised going to the developer unless the sales generate a surplus, which will be passed on to the original buyers. No apart ments in the Burj Khalifa have yet been handed over to owners. ―It was supposed to be the end of April but I‘ve heard nothing s ince,‖ said Dilip Daswani, a Burj Khalifa apart ment owner. Since late 2008, Dubai‘s property regulators have scrambled to put in place laws to handle the disputes arising from the rapid decline of the market. The release on April 15 of Executive Council Resolution 6 of 2010 has triggered a wave of cancellation letters to defaulting buyers from developers. The law sets a detailed sliding scale for refunds in the case of defaulting buyers or developers. Mohammed Sultan Thani, the assistant director general of the Dubai Land Depart ment, said hundreds of termination letters had been sent out in recent weeks, although no properties had yet been put up for auction. ―There is no easy solution … It is also painful for the developer because even if they repossess the property, it‘s very hard for them to sell it right now,‖ he said. Source: The National Back to the top Rotana plans 800 rooms for capital’s ADNEC area 15 May 2010 The growing number of hotel rooms in Abu Dhab i is about to expand further with Rotana Hotels announcing it is adding 800 rooms in the city‘s Capital Centre development. The extra capacity is coming from three properties in the mixed-use development near the Abu Dhabi National Exhibition Centre (ADNEC). ―The three new properties under our management at Capital Centre are a great opportunity for Rotana to deepen its well-established base in Abu Dhabi and will complement our existing operations,‖ said Selim el Zyr, the president and chief executive of Rotana. Customer Serv ice Centre: +971 4 403 77 00 www.asteco.com Contracting Property Services Development Two of the properties are scheduled to open next year, Rotana said. The Capital Centre Rotana was designed to be a 300-room, four-star hotel, while the Centro Capital Centre w ill be a 300-room budget hotel. The company plans to open the third property, the Capital Centre Arjaan by Rotana, in 2012. This property is expected to be a 200-room, four-star hotel and apart ment complex. These additions are likely to exacerbate price competition in Abu Dhabi. The average room rate in the capital in March fell 27.7 per cent to US$228 (Dh837.45) from March last year, according to data from STR Global, a research company in London. Average occupancy was down 24.2 per cent to 64 per cent. Total hotel guest revenue in Abu Dhabi f ell 5 per cent in the first quarter from the same period last year to Dh1.15 billion, the Abu Dhabi Tourism Authority said last month. In the first quarter of this year, the capital‘s accommodation inventory hit 17,600 rooms, up from just under 13,000 in the same period last year. Source: The National Back to the top Customer Serv ice Centre: +971 4 403 77 00 www.asteco.com Asteco Property Management LLC With over 25 years of Middle East experience, Asteco‘s Professional Services team brings together a group of the Gulf‘s leadi ng real estate experts. Property Services Asteco‘s network of offices in Abu Dhabi, Al Ain, Dubai, Northern Emirates, Qatar, Bahrain and Jordan not only provides a dee p understanding of the local markets but also enables us to undertake large instructions where we can quickly apply resource s to meet the clients requirements. Our breadth of experience across all the main property sectors is underpinned by our sales, leasing and investment teams transacting in the market and a wealth of research that supports our decision making. Resea rch Inve stme nt A gency Astec o‘s Researc h D epartment provides investors and developers with Astec o has a dedicated I nves tment A gency team, whic h ac ts for both local ess ential real es tate knowledge to ens ure clients unders tand their and international investors in inves tment and development trans actions c ompetitors , target markets and their long- term strategies . c overing the GCC and global markets . I nternationally, Asteco has developed a s trategic allianc e with Savills PL , the internationally renowned property cons ultancy group, with operations throughout the UK, E urope, U SA, Asia and Aus tralia. Consultancy Sale s a nd Lea sing Astec o‘s C ons ultanc y D epartment provides c omprehensive advic e on Astec o is the leading s ales and leasing agent in the UAE and is the s ole market trends and s olid s olutions , from projec t conc ept to c ompletion. agent for a number of key developments in the region Astec o‘s cons ultancy reports s timulate initial inves tment to financ ial ins titutions and other private equity providers . Valuat ions Property Ma nage ment T he team is fully independent in their approac h and adhere to the Royal Astec o manages s ome 45 ,000 leases or approximately 3 ,500 buildings I nstitution of C hartered Surveyors (RICS) valuation standards throughout the UAE, whic h inc lude c orporate portfolios and loc al and international funds . John Allen Paul Maisfield Judy Lam Jenny Weidling Julia Knibbs BSc MRICS BSc (Hons) MRICS Director - Research, GM & Head of Regional Research Senior Research Analyst, Senior Analyst, Abu Consultancy Professional Manager Dubai Dhabi and Valuations Services, Abu Dhabi +971 4 403 7777 +971 2 626 2660 +971 4 403 7777 +971 4 403 7777 +971 2 626 2660 JohnA@asteco.com PaulM@asteco.com JudyL@asteco.com JennyW@asteco.com JuliaK@asteco.com John Stevens Jed Wolfe Don Caslick Hussein Safadi BSc Associate Director - General Manager - Director - Property Qatar, Bahrain & Qatar General Manager - Jordan Management KSA +971 4 424 9444 +974 4113818 +974 4113818 +962 6 585 5553 JohnS@asteco.com JedW@asteco.com DonC@asteco.com HusseinAS@asteco.com For additional information call +971 4 403 77 00 or email firstname.lastname@example.org DISCLAIMER: This report contains information available to the public and has been relied upon by Asteco Property Management o n the basis that it is accurate and complete. Asteco Property Management accepts no responsibility if this should prove not to be the case. No warranty or representation, express ed or implied, is made to the accuracy or completeness of the information contained herein, and same is submitted subject to errors, omissions, change of price, rental or other conditions, withdrawal without notice, and to any special listing conditions imposed by our principals. Whenever possible, rentals and values are based on actual transacti ons; however, where no transactions were made, the data contained in this report represent our opinion of current market value. Asteco will not be held responsible for third -party contribut ions.
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