Quality matters in Abu Dhabi project funding

By: Daniel Thomas, Acting Editor of Gulf News

As the year winds up, additional supplies coming online in Abu Dhabi are continuing to mount pressure on sale prices and rentals, but the greatest concern perhaps is cash flow, rather the lack of it. However, even in tight liquidity conditions, selective funding may be available for developers of quality real estate in attractive locations.
"Debt finance remains very tight with banks remaining cautious to lend on speculative, high risk development projects. However, finance is more readily available where developers are able to demonstrate a secure income stream through securing long-term pre-lets with blue chip tenants," says David Dudley, regional director and head of Abu Dhabi, Jones Lang LaSalle (JLL) - Mena.
As the supply stream brings more units in the high-end segment, the odds are placed in favour of projects that come with a competitive edge. In the current situation, these would be the ones to stay well-positioned in terms of leasing.

"In this increasingly competitive environment from the emerging over-supply, the most successful projects will be those where the developer can deliver all the key aspects of truly Grade A real estate on competitive lease terms to secure the best tenants," says Dudley.
Likewise, well located projects stand a chance. The possibility is that such developments would also stand out on quality and efficiency. "Location will remain fundamentally important but other key factors will include ensuring efficient access arrangements and car parking, delivering international grade technical specifications, ensuring efficient and functional floor-plates and building design, ensuring high quality common areas, committing to international quality asset management — as well as offering flexibility on lease terms to lock in the best tenants," contends Dudley.
JLL in a recent report highlights how additional supplies entering the market are, on the one hand, affecting rentals and sales prices but on the other are not enough to remedy the overall under-supply situation, especially in the lower to mid-market segments.

"A key trend will be for households to upgrade their housing without increasing their costs. On the other hand, housing supply for the lower-end of the market will remain limited. The government is addressing this through various housing programmes," says Dudley.
Besides, a new ruling was recently issued by the government prohibiting businesses operating from residential villas beyond December 2011. "As this law gets enforced, it will release latent demand for purpose-built office space — to help landlords — as well as freeing up more residential stock for the market," Dudley forecasts.
The total current stock of 182,000 residential units is expected to reach 251,000 units by the end of 2013, according to Jones Lang LaSalle.

Special Thanks to: Gulf News

Abu Dhabi property prices down 15% in 2010 so far, new real estate index shows

Residential property prices in Abu Dhabi have fallen by 15% in the first three quarters of 2010 compared to the same period last year, according to a new property index being launched in the emirate.
The new Reidin.com data is the first in Abu Dhabi to be based on the valuations and listings of property and follows a successful launch in neighbouring Dubai.

According to property professionals it represents a new era and shows how the emerging real estate markets in the Middle East are maturing as they provide accurate and frequent data that can be relied on.

Full details will be released when the new index is published for the first time but company chief executive officer Ahmet Kayhan said that the price decline was witnessed across all the areas of the capital.

The real estate information company has used property agents to collate data for the index since the Abu Dhabi Land Department currently doesn’t have the actual registrations from freehold areas.

Last week, Reidin.com said sale prices of apartments and villas in Dubai fell 2.3% in September compared with the previous month. The September sales price index showed a year on year decrease of 4.86% compared with September 2009.

Kayhan believes property prices in Dubai have reached the bottom, but is uncertain where the floor lies in Abu Dhabi.

‘I believe the Dubai market has already found the bottom. The numbers are showing the same thing as well as our forecast analysis. However, where is the bottom for Abu Dhabi is the question? Anyone who got in at the peak lost a lot of money, but who hasn’t got in has a great opportunity,’ he added.

Apartment prices fell by 2.435 while villa prices dropped by 2.4%, the Reidin.com index shows. However, the company said there was a sense of optimism as prices of smaller and larger apartments rose moderately during the month.

Prices for apartments of 50 square meters and under rose by 0.77% last month compared to August but they are down 13.37% year on year. Meanwhile, apartments of 151 square meters or more rose by 0.86% month on month but are still down 5.74% year on year.

Courtesy: http://www.propertywire.com/

Dubai property owners support new associations but doubt they will have major impact, study shows

Property owners in Dubai believe associations will provide more transparency and improve value and services but ultimately have little impact on the real estate industry, according to a survey.
 
Some 50% believe that owners managing their own residential communities will give them better value for money and 56% think this will lead to improved services, according to the survey by Dubai based Real Opinions.
 
But one in three say it is impossible to tell exactly what impact the introduction of owners associations will have.
 
‘These results are a strong endorsement of owner associations but this is just the beginning of the challenge they face with the transition from developers to actually prove these beliefs,’ said Jim O’Hare, the chief executive of Place Community Managers who commissioned the study.
 
The new owners associations have to be registered with the Real Estate Regulatory Authority via the developer. And the study shows that some 56% believe the transfer of these communities from developers to the owners will also increase the transparency in relation to the contentious question of actual fees charged to owners for the upkeep of their communities. There were just 16% disagreeing that it would increase transparency and 27% were not sure either way.
 
Despite the empowerment of property owners to form their own owners associations and perceived benefits, there was even greater uncertainly in terms of the impact this may have on the larger real estate industry. Just 23% believe this will encourage others to buy property while 46% were not sure. Encouragingly, 17% of those who presently don’t own property intend to buy in the United Arab Emirates, but they are cautious as 14% don’t intend to do so in the next 12 months. This is compared to 8% who are presently trying to sell.

Courtesy:  http://www.propertywire.com/

Court clarifies expat 'ownership' in non-freehold property illegal

By:  Mohamad El Sidafy

Published Sunday, November 21, 2010

The right of ownership in Dubai, in general, is confined to UAE nationals and citizens of GCC countries. However, in some areas, such as freehold property, expatriates have the right of ownership limited with time, ruled Dubai Court of Cassation.

As per the decree issued by His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of UAE and Ruler of Dubai, non-citizens, including non-GCC citizens, have the right to use property (rent or live in it) or alternatively possess right to rent for a period not exceeding 99 years.

The Ruler's decree is a command and ownership cases require immediate retroactive action, ruled the court.
The court spelt out the principles while hearing a property dispute. It rejected an appeal by an expatriate plaintiff who demanded a share in the lease of the villa in Mirdiff, Dubai, for which he had paid half the price. The villa was rented by his partner following a contract signed by the two regarding the management of the villa.
The plaintiff filed a suit asking for the appointment of an expert to inspect the villa to identify the value of his share according to the market price in order for him to sell it in an auction. He also wanted the the expert to determine the value of his partner's share.
The Civil Court had ruled the contract invalid and asked the defendant to pay Dh1 million to the plaintiff as compensation for damages.

Both the plaintiff and defendant appealed the verdict in the Court of Appeal, which modified the appellant's sentence and obliged the defendant to pay Dh103,000 to the plaintiff in recognition of the share in the rented villa.

Once again the two parties rejected the verdict and moved the Court of Cassation, which rejected the appeal, based on the text of Article 4 of Act 7 of 2006, which restricts the right to own property in the emirate of Dubai to citizens and nationals of GCC countries, with the exception of a decree issued by Sheikh Mohammed as per which a non-citizen can use or lease a property up to 99 years.

The court rejected the case as both the disputing parties are neither UAE citizens nor GCC nationals and did not have the documents of approval from the Ruler of Dubai for ownership.

The court added that though the contract was signed between the plaintiff and his partner - on November 10, 2002 - before the effectiveness of the provisions of Act 7 of 2006, as it is a public order the appeal is dismissed.

Courtesy:  http://www.emirates247.com/