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Fundamentals seen driving Dubai’s property rally: Report
Fundamentals seen driving Dubai’s property rally: Report (Issac John) / 5 September 2013 Driven by strong demand and much-improved economic fundamentals rather than speculation, housing prices in Dubai are on the ascent, Standard Chartered bank said. The bank said in a report released on Wednesday that over the past 12 months, residential prices have increased by 38 per cent for apartments and 24 per cent for villas, with rents increasing by 20 per cent and 17 per cent, respectively. “Slowly but steadily, confidence has returned to the market. Second quarter marks the fourth consecutive quarterly increase in residential prices,” according to a report titled ‘Dubai housing: Fundamentals not speculation.’ The report said at the moment, the market seems to be driven primarily by fundamentals rather than speculation. Although there is a risk that this could change, it is encouraging that regulators are drafting laws to curb excessive speculation in off-plan properties. Subdued mortgage growth, low off-plan sales and increasing housing regulation differentiate this price rally from the one in 2008, the report said. “We expect housing-market supply to grow at the same pace as demand, with new projects being launched in a more planned and controlled manner than in the past. Dubai’s housing market is comprised of 417,900 apartments and 62,000 villas. Residential supply has been growing at an average compound rate of around eight per cent, with apartments increasing by nine per cent and villas by four per cent,” said the report. By the end of 2013, supply should increase by 19,400 apartments and 3,400 villas, assuming there are no delays in construction schedules. The largest proportion of future stock from 2013 to 2015 will be delivered in the sub-markets of Dubailand (7,900 units); Business Bay (3,800 units); and Dubai Sports City (3,800 units). “We expect the city to expand, with a focus on new developments outside central Dubai, in areas to the south and east,” the bank said. The bank expects Expo 2020 to be a meaningful contributor to the sustainability of the housing market, in the event of a positive bid result in November 2013. According to the report, Dubai’s chances of winning have increased. “In the event it does, close to 300,000 more jobs could be created with 25 million people visiting Dubai. 90 per cent of the job opportunities would occur from 2018 to 2021, with most of the jobs created in the travel and tourism sector. This indicates a good chance that a high percentage of these will be converted into permanent jobs, which would benefit the expanded economy in the post-Expo period.” The report recalled that the sharp increases in property prices in 2008 were driven by excessive short-term speculative activity, especially on off-plan properties. “For these properties, buyers only had to put down 10 per cent deposits (rather than the full price), so the market became highly leveraged. Many buyers never had the intention (or the funds) to pay the future installments as they planned to flip the property before any payments were due. This turned the housing market into an unsustainable, highly leveraged derivatives market. We pointed out these problems in our On the Ground, ’A tale of two housing markets’, published in July 2008. It was therefore no surprise to us that in 2009 there was a sharp correction in housing prices, accompanied by a rapid decline in property transactions,” said the report. The bank observed that Dubai’s housing market is influenced by broader economic trends. “Dubai’s economy has experienced solid and sustainable rates of growth over the past three years. The key drivers are logistics, hospitality and retail. This looks set to continue, particularly when it comes to logistics, which contributes 14 per cent to the GDP. We expect trade to increase in the years to come on the back of the increased spending plans of most governments in the region, including Abu Dhabi, Qatar and Saudi Arabia.” Tourism is also expected to grow at an average of 6.5 per cent per annum between 2011 and 2021, pushing up employment growth for the sector by 4.1 per cent per year, report said quoting a Dubai Chamber of Commerce and Industry study. Dubai’s population growth is another driver of housing demand surge, said the report. The city’s population is the second largest in the country, after the capital Abu Dhabi, and is largely comprised of expatriates. “The population increased from 2.0 million in 2011 to 2.1 million in 2012, according to the Dubai Statistics Center. We expect it to reach 2.2 million in 2013,” the bank said in its report. issacjohn@khaleejtimes.com Continue reading
UAE makes steady progress on all global indices
UAE makes steady progress on all global indices Issac John / 5 September 2013 The UAE is making steady progress in terms of all global development indices issued by prestigious international corporations, His Highness Shaikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, said on Wednesday. Commenting on the UAE’s enhanced ranking on in the Global Competitiveness Report issued by the World Economic Forum for 2013-2014, Shaikh Mohammed said the nation is making steady progress under the leadership of the President His Highness Shaikh Khalifa bin Zayed Al Nahyan. In the latest WEF report, the UAE has advanced five positions in the total competitiveness of its economy in one year, from 25 th last year to the rank of 19 th this year out of 148 countries. Shaikh Mohammed said the UAE government is continually following up these indices issued by prestigious international corporations, “because retreat is not an option in our government.” “Thanks to the federal and local teams who are jointly working in line with a vision the term of which extends to the year 2021, as well as with agendas and plans that are continuously being revised and assessed as per our growing ambitions in all sectors,” Shaikh Mohammed added. “Our economy is continuously developing, and the indices for security and stability are the best globally. The welfare of our citizens is at the top of our priorities,” he said. On some key sub-indexes the UAE is among the top countries in the world. The WEF report lists 12 pillars of competitiveness as the driving factors explaining an economy’s growth potential and the UAE scores very high here. The ‘Basic Requirements’ rank of the UAE is five, with only Singapore, Switzerland, Hong Kong and Finland ahead on that scale. In ‘Infrastructure’ the UAE takes the 8 th spot and for ‘Macro-economic’ environment the Emirates is 12 th in the world. On the ‘Innovation and Sophistication’ scale the UAE is ranked 25 th in the world. For the fifth time in a row, Switzerland was named as the world’s most competitive economy, the only point of criticism being that the nation ought to improve university enrolment to become even more innovative. Singapore and Finland defended their positions at number two and three among the 148 countries analysed by the World Economic Forum, a Swiss non-profit foundation that aims to bring together business leaders and policy makers. Germany took fourth position in the WEF’s annual ranking of the world’s most competitive economies, just ahead of the US. US — the world’s largest economy — in fifth place for overall competitiveness, up from seventh last year. Among the biggest risers this year was Indonesia, which was able to climb 12 ranks to number 38. The WEF said the rapid progress was due to spending on infrastructure, a more efficient government and gains in the technology sector. India now ranks 60 th , continuing its downward trend that began in 2009. Moreover, the country has fared badly with respect to its Brics peers. Once ahead of Brazil and South Africa, it now trails them by several places and is behind China by a margin of 31 positions, while Russia (64 th ) has almost closed the gap. Some Middle East countries emerged as the biggest losers. Politically troubled Egypt, for instance, dropped 11 placed to 118, while Iran tumbled 16 ranks to come in at number 82 on the back of political instability and lack of financing in the sanctions-hit nation. issacjohn@khaleejtiems.com Continue reading
Kiosks to line up on streets of Abu Dhabi
Kiosks to line up on streets of Abu Dhabi Staff Reporter / 5 September 2013 Abu Dhabi City Municipality has issued the tender of a new project for investors to install and operate street retail kiosks, vending machines and other facilities in the City’s public spaces. The project is to focus on providing Abu Dhabi’s waterfront, the city’s parks and principal thoroughfares with a range of amenities that will improve the outdoor public environment for residents and visitors. The Municipality is aiming to provide quality food, beverage and convenience services, throughout the city’s public realm to enhance visitor experiences. Kiosks will make the parks, waterfront and thoroughfares more attractive. — Supplied photo “This project will cater for the city’s increasing number of residents and visitors and will provide quality amenities in Abu Dhabi’s primary outdoor public spaces,” said Rashed bin Ali Al Omaira, Advisor Investments and Assets for the General Manager’s Office at Abu Dhabi Municipality. The scheme follows in the wake of similar successful projects implemented in other cities around the world, and will enhance the urban experience for residents and visitors. The Municipality has identified over 300 locations, both on Abu Dhabi Island and the mainland that could benefit from the installation of kiosks. These kiosks will offer services such as, food and beverage, convenience retail, ATM’s vending machines, bike racks and waste recyclables. The provision of these amenities will ensure increased numbers of pedestrian visitors to key parts of the city, particularly during the cooler winter months, and enhanced enjoyment of the facilities. The kiosk scheme offers a fantastic opportunity to private investors able to propose the latest in design and technology for the implementation of street retail kiosks. Abu Dhabi Municipality will be looking to work with two separate parties under an agreement that will be divided by geographical region. All bidders should ensure that their proposals positively contribute to beautification of the city. A 10-year exclusivity framework agreement will be offered to finance, develop and operate kiosk concessions within Abu Dhabi Municipality’s public realm and directly lease the concessions to third parties. Abu Dhabi Municipality is now inviting tender submissions. haseeb@khaleejtimes.com Continue reading
