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Although overall many cities have seen falling rents Dubai has seen the strongest prime rental market growth in the second quarter of 2014.

Indeed of the 17 cities tracked by a prime global rental index just nine saw flat or rising prime rents in the year to June.

Overall the index recorded annual growth of 2.2% in the year to June, down from 4.7% in the year to March.

The gap between the strongest and weakest performing cities over the last 12 months shrank from 32 percentage points in March to 19 points in June suggesting the performance of the world’s top luxury rental markets is converging.

Dubai holds the top spot in the quarter, having recorded a 14.1% increase in prime rents in the year to June. The emirate leap frogged Nairobi which had enjoyed four consecutive quarters at the top.

However, both cities recorded weaker growth in the last quarter which largely explains the index’s more sluggish performance over the three months to June.

Annual rental growth in Nairobi more than halved from 25.8% in March to 9.9% in June. Dubai’s step change was less stark, from 16.4% to 14.1% over the same time period.

In Nairobi, asking rents for key tenants such as the diplomatic community look to have reached their ceiling. This, combined with security concerns help explain the slowing pace of growth.

In Dubai, prime rents continue to outpace wage inflation which is raising concerns about affordability, leading some to consider buying instead of renting.

Although London, Singapore and Hong Kong saw prime rents decline in the year to June, the rate of decline is slowing.

‘As economic conditions in the world’s top financial centres improves, prime rental demand is likely to accelerate due in part to the upturn in corporate relocations,’ said a residential research expert.

They pointed out that prime rents in London began their recovery at the start of the year and recorded monthly growth of 0.9% in June, a three year record. While in Hong Kong rental demand for luxury homes picked up towards the end of the second quarter as expat families sought homes prior to the start of the new school year.

‘With interest rates likely to rise in the US and the UK in 2015, economic growth largely stagnant in Europe and stringent cooling measures still in place across much of Asia, we expect prime rental markets will benefit from quieter activity in the world’s luxury sales markets during the remainder of 2014.’

Dubai Marina continues to be the most popular location in the emirate for buyers and tenants, however Dubai Sports City is fast growing in popularity, according to recent data reports.

A review of nearly 2 million visitors by a popular real estate portal found 18.7% were searching for Dubai Marina units to buy and 18.4% were looking for rentals.

‘Whilst Dubai Marina, Downtown Dubai, Palm Jumeirah and Jumeirah Lake Towers stay as firm favourites with buyers, Dubai Sports City’s reputation as a property hotspot appears to sour,’ the report says.

‘From not figuring in the top 10 list last year, the community zoomed ahead to eighth position this quarter,’ it adds.

Also on the rise was Jumeirah Village Circle, moving up to seventh spot in the fourth quarter of 2013 from its 12th position in the second quarter. International City also saw a revival of sorts, earning a place in the top 10 list for the first time this year.

Dubai’s property market has clearly rebounded with prices increasing by over 20% this year even as new projects get launched every other week.

Real estate demand is only likely to inch higher in the years leading to the Expo 2020, so if you want to put your money into a home or office, these are the communities where owning and renting seem to make sense.

Home prices have been recorded at the highest levels since the downturn and the market has also gained a more favourable reputation for tighter regulation.

This includes a new rental decree which allows for rents to be increased by 5% if they are 11% below the market rate for the area rather than 26% as determined by RERA’s rental index.

The law will be applicable to private and public sector owned properties in Dubai, as well as those within the free zones and reaction to the new rental policy has been mixed.

‘Whilst some residents consider this a better move than the recent total removal of the rent cap in Abu Dhabi, others worry that a rise in rents too quickly could drive the market into bubble territory,’ explained an industry professional.

‘However, we can also look at the situation from the viewpoint of the landlord. For one, since 2008/2009, tenants in Dubai have enjoyed the benefits of relatively lower rents. Hence, landlords could argue that given the rebounding market, they should be able to pick up better returns,’ he said.

‘This may also work in the favour of tenants, as more landlords content with rental returns in the long run would mean fewer reasons for them to make a quick buck by evicting tenants. Also, given the huge influx of investors to Dubai in view of Expo 2020, it makes sense to realign and adjust the rental index across private and public sector and free zone owned properties in Dubai,’ he added.

Gulf-based investors who own residential properties in the UK will be hit with a new capital gains tax if they sell their assets after April 2015, British Chancellor George Osborne announced in his half-yearly budget statement to parliament on Thursday.

"From April 2015, we will introduce capital gains tax on future gains made by non residents who sell residential property here in the UK,” Osborne said.

Middle East investors have long been prolific buyers of property in the UK and in October. They were the third most active investor group in the Greater London's prime residential real estate market last year.

Buyers from the region made up 7.5 percent of the total prime sales in the English capital city during 2012.

The analysis of all £1m+ sales in London over the past year showed that 49 percent went to foreign buyers, although only 28 percent were non-resident in the UK.

It also showed that on prime London sales since June 2011, 69 percent were snapped up by foreign buyers.

However, specialists have downplayed the impact the new capital gains tax (CGT) will have on buyers.

“Tax is not the primary driver for the majority of international buyers of residential property in London. We anticipate that the removal of the CGT exemption for non-resident purchasers will have only a marginal impact on demand and pricing."

“It is important to note that the change to CGT rules brings the UK in line with other key investor markets, such as New York and Paris where equivalent taxes can approach 35 percent – 50 percent depending on the owner’s residency status.”

Source: ArabianBusiness.com

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Dubai’s successful bid to host Expo 2020, announced last night in Paris, will attract more than 25 million visitors to Dubai between October 2020 and April 2021, said Dubai’s Department of Tourism and Commerce Marketing (DTCM) director general HE Helal Almarri.

To meet the needs of this tourist boom — 70% of which will come from outside of the UAE — DTCM expects to have to double Dubai’s hotel inventory to around 164,000 hotel and hotel apartment rooms within the next seven years.

This will be in line with the tourism board’s previously announced Tourism Vision 2020, which aims to attract 20 million visitors to Dubai by 2020 — a figure that stood as a target regardless of the Expo bid outcome.

Almarri told Hotelier Middle East: “Dubai’s Expo bid is part of long-term vision that ensures sustainable national development and a prosperous future for the UAE. In May of this year, His Highness Sheikh Mohammed approved our Tourism Vision for 2020, a strategy which sets a clear path towards developing our tourism industry and furthering its contribution to Dubai’s economy. Although this Vision is separate to the Expo bid, we can now leverage the hosting of Expo 2020 and the focus it will place on Dubai as a means to attract visitors to Dubai.

“The impact on the tourism industry will be substantial – between October 2020 and April 2021, Expo will attract more than 25 million visitors, 70% of which will be from outside the UAE – the largest number of international visitors in Expo history,” continued Almarri. “A number of sectors will benefit, including construction, engineering and transportation, and of course the hospitality, retail and aviation sectors will experience a significant positive impact.

Source: Arabiantravelnews.com

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Recent regulatory measures introduced to help sustain and regulate Dubai’s property market are already starting to take effect, with a recent cooling in the rate of growth, positioning the market towards a more sustainable pace of growth.

According to the latest research by international real estate consultancy Cluttons, the steps announced by the United Arab Emirates' Central Bank in October to set limits on the size of mortgage loans for housing, along with the Dubai Land Department’s recent doubling of property registration fees from 2% to 4%, are already impacting the volume of deals being recorded in Dubai’s residential market.
The firm said it is still too early to assess whether the regulations will succeed in curtailing growth at levels perceived to be more sustainable levels over the long term, but the report highlights that buoyancy in Dubai’s residential market persisted during the third quarter of 2013.

Average capital values continued to rise by 8%, albeit more slowly than the record 23% growth experienced during the second quarter of the year. Despite the recent gains, on average, prices are still 26% below the market peak in the third quarter of 2008, although they are now 47% above the bottom of the market, which was reached in the second quarter of 2009. Year on year, values are 53% up on this time last year.

The research shows that Emirates Living and Dubai Marina continued to record increased levels of deal activity during the third quarter, with capital value growth rates between 8.5% and just over 10%, ahead of the average for Dubai.

Jumeirah Village was the strongest performing submarket this quarter, with average villa prices rising by 18.4% to AED 990 per square foot, pushing closer to the current Dubai average of AED 1,359 per square foot.
The report points to growing numbers of buy to let investors from both the UAE and abroad, plus an increase in owner occupiers, all fuelled by affordable mortgage rates of between 4% and 5%, that will sustain the upward trajectory for capital value growth.

Despite this, the market still appears to be driven by cash purchases, as highlighted in a recent analysis by Cluttons in Dubai Marina, which found that the ratio of cash to mortgage buyers was 3:2.

The findings indicate that this varies from one submarket to the next and a key driver, in addition to location and investor interest, is the willingness of banks to lend on projects. Despite loan to value (LTV) ratios of 80:20 being widely available ahead of the December  implementation of the federal mortgage cap, many only cover the high profile, low risk submarkets such as Downtown Dubai and the Palm Jumeirah, which banks perceive to be secure submarkets.

‘The vibrancy in the residential market has resulted in growing confidence in the real estate sector, but we believe concerns of the market overheating are still overly negative, especially given that despite the recent gains, average residential values remain well below the market peak,’ said Steve Morgan, head of Cluttons Middle East.

‘Although the long term effect remains to be seen, short term indicators show that recent regulation appears to be stemming further sharp increases in property prices. Rather than being fuelled by fly by dealers, current demand is primarily being driven by a growing population and rising employment levels,’ he added.
The residential rental market is also experiencing a slower pace of growth according to the latest figures. During the third quarter average residential rental values rose by 3%, following on from an 8% increase in the previous quarter. Rental value growth for villas at 3.2% outpaced apartments at 2.7%, but the report highlights that these figures mask the high performance of budget studio apartments in locations such as Discovery Gardens and International City, which registered 9.9% rise in average rents in the third quarter.

Five bedroom villas in locations such as The Lakes, The Meadows and Arabian Ranches were the best performing in the villa segment, registering average rental increases of 4.8%.

‘A slowing in the rate of rental vale growth can also be expected in the residential rental market as we appear to be nearing the threshold of relative affordability. While the economy is clearly on an upward trajectory, the pace of income growth still lags behind rental value growth, so a period of more mute growth can be expected over the next few quarters,’ Morgan explained.

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Article source: Propertywire

Both sale and rental prices of real estate properties in Dubai have continued to rise in the third quarter of the year, transforming the emirate from a buyer's market into a seller's market in the first nine months of the year, a report said.

According to Cluttons, Dubai is in no danger of any property bust and there is nothing to worry about at the present stage because of the strong demand of property in the market, noted the report released by Bayut.com, a leading real estate portal.

During Q3, price hikes were seen all across Dubai and perhaps those at Jumeirah lake Towers (JLT) were the most notable amongst all with remarkable improvement in terms of value, the report said.

The residential units in JLT are now perceived to be enjoying the same investors' footfall, which was previously experienced by the apartments in Dubai Marina.

The rents in high-end apartments of skyscrapers Dubai Marina continue to secure the best prices as compared to the other localities. Many speculations were made specifically about the said locality, but Goldman Sachs and Frank Knight have discarded these rumours as exaggerations.

According to Bayut.com's statistics, while the apartment rental rates spiked in Dubai Marina, its strongest competitor, Downtown Dubai, failed to keep up with the rising trend.

Abu Dhabi was seen to be struggling with its sister emirate and the sales prices of both the villas and apartments witnessed an adequate rise.

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Source: TradeArabia.com

New lending rules for buying property in Dubai have been issued by the UAE central banks with limits for both nationals and foreign buyers needed a mortgage.

UAE nationals seeking a mortgage for a first property will be able to buy access a loan up to a maximum of 80% of the property’s value for properties worth Dh5 million and lower and 70% for more expensive properties.

An UAE national wanting to buy a second property will be limited to a maximum of 65% of the value of the property regardless of its price.

Expats living in the UAE buying a first property will be able to borrow up to 75% of the value of the property if it costs DH5 million or less and 65% for properties worth more. For a second property the limit has been put at 60%.

However, mortgage applicants buying off plan will be limited to as maximum mortgage loan of 50%. The new rules also set a maximum loan period of 25 years and the maximum age for the borrower at the time of the last instalment will by 70 years old for UAE nationals and 65 for expats.

The central bank also said the total monthly instalments of all debt should not exceed 50% of an applicant’s monthly income. The maximum financing allowed for UAE nationals will be eight times of annual income and for expats it will be seven times of their annual income.

But the rules are not sufficient according to some in the property industry. Ziad El Chaar, managing director of DAMAC Properties, said he is disappointed that they do not include any guidelines for banks to provide a pragmatic and practical non-resident mortgage.

‘We believe this is required to attract a more international investor base. While we welcome all efforts by the UAE Central Bank to increase regulation and offer further security in the Dubai property market, we believe there is also a requirement to provide overseas clients the opportunity to purchase a home in the UAE and we call on all banks to implement such a facility with easy, straightforward application requirements,’ he explained.

Meanwhile, the property industry in Dubai is set to see more regulation, according to the Dubai Land Department. Director General Sultan Butti Bin Mejren told an investment summit that they are needed to prevent a property bubble due to rising prices.

‘Dubai will strictly enforce existing rules and if necessary set new ones to prevent another bubble from forming in its property market, while cracking down on abuses by real estate brokers,’ he explained.

He added that he does not believe there is currently a bubble forming but a sharp increase in property prices is not healthy for the market going forward.

‘What we're trying to maintain is a sustainable growth in the real estate sector over the coming five years,’ he added.

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Source: Property Wire

Damac Properties Development Co., a Dubai-based housing developer, plans to raise as much as $500 million in a U.K. initial public offering that will test appetite for the emirate’s recovering property market.

Al Firdous Holding and Sahira Co., controlled by Damac founder and chairman Hussain Sajwani, will offer global depositary receipts in a new company called Damac Real Estate Development Ltd. in the IPO. Each GDR will be worth three ordinary shares of the company.

“There will definitely be appetite because Damac is a proxy to Dubai’s real estate, which is recovering at the moment,” Taher Safieddine, an analyst at Shuaa Capital PSC. (SHUAA) “They have witnessed the boom and bust and managed to come out of the crisis relatively in a good shape.”

Damac has started projects including Hollywood-themed apartment towers and a Trump International golf course this year as Dubai’s property market recovers from a 2008 real estate crash. Damac Real Estate Development is valued by analysts at $3.9 billion to $5.4 billion in the IPO, according to three people briefed on the process.

Analysts at banks managing the IPO published research with their estimated equity-valuation range for Damac, said the people, who declined to be named as the information is private. The range is an average of the published research.

Widening Margins

Damac has assets valued at $2.3 billion and it made a first-half profit of $332 million, up from $212.1 million in all of 2012, according to the filing. Gross profit margins averaged 44 percent in the three years through 2012 and 64 percent in the first half of this year, the filing said.

“Our biggest operations will continue to be in Dubai,” Sajwani said in an interview today. “The Middle East as a territory, especially Saudi Arabia where we have already developments and operations, will continue to grow for us.”

While Damac tends to be focused on building and selling homes, investors will compare the company’s valuation to Emaar Properties PJSC (EMAAR), Shuaa’s Safieddine said. Emaar, Dubai’s biggest publicly traded developer, generates much of its income from leasing malls and operating hotels, providing a cushion in downturns, he said. Emaar’s shares surged 63 percent this year.

Citigroup Inc. and Deutsche Bank AG along with Samba Capital and Investment Management Co. and VTB Capital Plc are managing the IPO, according to the statement.

Sajwani will remain Damac’s chairman and chief operating officer, according to the filing. Dubai’s decision to increase property-sale fees to 4 percent will have little effect on sales because the rate is still below countries in Europe and Asia, Sajwani said.

Damac, which partnered with Italian fashion house Fendi SpA and Paramount Pictures Corp. is expanding outside its home market with towers in cities across the region including Abu Dhabi, Riyadh, Jeddah, Beirut, Amman and Baghdad.

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Source: Bloomberg

Prime residential property prices in Dubai have been rising since the beginning of 2012 and have increased by 11.9% in 2013 so far, according to the latest index.

But despite the resurgence, prices remain around 30% below their 2008 peak, the Dubai Residential Review from international property firm Knight Frank shows.

But prices are heading steadily upwards. On an annual basis, prices for luxury villas and prime apartments were 21.4% higher in the second quarter of 2013 and as prices have recovered, the volume of sales in the market has also started to increase.

The primary reason for the strong growth seen in Dubai’s prime residential property has been the desire for investors to place their wealth in what they perceive to be a safe haven market, says Knight Frank. In particular, property buyers from North Africa, the Middle East and Asia have pursued this strategy.

Data from the Dubai Land Department shows that, in 2012, Indians were the most active buyers of residential property in Dubai followed by Pakistanis, accounting for 19% and 15% of activity respectively. The British at 14% and Arabs at 11% were the next most important investors in the emirate.

While international buyers are a key feature of the market in Dubai, data contained within the index also shows that Gulf Corporation Council (GCC) nationals spent, on average, a significantly larger sum on residential properties in 2012 than any other nationals outside of the United Arab Emirates.

Despite prime property prices remaining below previous peak levels, concerns have been raised over the rate at which prices have recently been growing. As a result, the UAE Central Bank proposed a new mortgage cap towards the end of last year. The caps proposed were 50% on first homes and 40% on second loans for non UAE Nationals and 70% and 60% respectively for UAE Nationals.

‘While we believe that this cap would not affect the large portion of the market made up by cash buyers, it was seen as a positive move by the industry given that it’s likely to inspire more thought from those planning their exit strategy,’ the report says.

It adds that any directives are not expected to be fully implemented until later in the year and until then, banks are continuing to lend according to their own criteria.

In the rental market, an expanding expatriate population has pushed prime rents higher. In the year to June 2013, rents in the emirate increased by 15%. Recognising the increase in demand, investors are seeking out good rental investments where typically they can expect 4% to 6% net yields, says Knight Frank.

Rental rises have been noticeable in areas that appeal to young professionals and where there is good access to facilities such as Dubai Marina, Downtown Dubai and Palm Jumeirah, the report points out.

But it adds that government imposed restrictions on landlords raising the rents of their existing tenants has controlled this more than might have been the case otherwise and possibly reduced the movement between properties.

‘Prime residential property in Dubai has been a positive story over the past 18 months and we expect this narrative to continue given the low number of completions forecast up until the end of 2014 set against the strong demand for high quality luxury properties,’ said Helen Tatham, director of residential at Knight Frank Dubai.

‘On going improvements to Dubai’s already impressive infrastructure are underway and investor confidence is strengthening, we are also seeing an increasing number of professional expatriates arriving. These developments combined with the Emirates Airlines’ expanding network and the resurgence of new development releases suggest a positive outlook for Dubai’s prime residential market,’ she explained.

‘The announcement in June by MSCI that the UAE has been upgraded to emerging markets status implies a busy time ahead and this will be reinforced in November if Dubai succeeds in its bid to host Expo 2020,’ she added.

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Source: Property Wire

According to the latest data from the Dubai Land Department, the number of residential property sales realised in the first half of 2013 in Dubai increased by 41%.

The data report also showed that the total value of properties requested for valuation in Dubai increased by 70% compared to the same time last year.

Overall the department’s Valuation Committee, in cooperation with Dubai's Real Estate Appraisal Centre, valued 2,388 properties worth AED89 billion.

‘The amount of transactions that the committee sees serves as a gauge for progress of the market with growth thus far being a clear indication of a recovering market and increased investor confidence,’ said Mohammed Khodr Aldah, head of Dubai's Real Estate Appraisal Centre.

An example, the average value of land in the Burj Khalifa area reached AED1,960 per square feet, some six times higher than Mirdiff where it was just AED320 per square feet. This shows that there are considerable price variations in the emirate.

The report also showed that more than 50% of valuation requests were made for empty land plots, with the remaining percentage 49.7% on completed buildings.

‘Systemised real estate valuation plays an integral role in the growth of investments and the economy by doing away with random prices, providing a balance between supply and demand and having a direct impact on the resolution of property disputes,’ the report explained.

Sultan Butti Bin Mejren, director general of the Land Department, described Dubai's real estate market as a ‘lucrative one for its stability, diversity and promise of high return on investment’.

Mean while the latest Prime Global Cities index from international real estate firm Knight Frank shows that the price of luxury homes in Dubai increased by more than 6% in the second quarter of 2013.

The index also showed that prime real estate prices in the emirate have increased by 21.6% in the last 12 months, making it the second best performing market in the world.

‘The price of luxury villas began to rise in early 2012 and apartments are now following suit,’ the report said, adding that it attracting demand from North African, Asian and Middle Eastern buyers.

Recently the International Monetary Fund warned officials in the emirate that they might need to intervene in its property market to prevent another boom and bust cycle of the kind which saw prices fall by 60% in some locations.

The economy and the property market are now recovering, but so strongly that the IMF worries another bubble could form. The IMF said that because Dubai's debt has continued to rise, it might have difficulty coping with fresh instability.

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Source: Property Wire