The Property Banks Dubai Property News
Pent-up demand is the other great unknown about Dubai property, AME Info, 05.05.2007There has been much debate recently about the actual supply of property coming up in Dubai, and some focus on true levels of demand as opposed to the levels suggested by some sellers of property. But the pent-up demand in the market is the other great unknown about Dubai real estate.
If you look at figures from the Dubai Statistics Department, and they are available online then the population of Dubai grew by just over 100,000 in 2006 with approximately half of those people earning enough to afford mid-to-high-end accommodation.
The general reckoning is an average of 2.5 persons per unit, which means that in 2006 Dubai needed 20,000 units of accommodation.
However, late delivery of new units by developers meant that 2006 was a weak year for new property in Dubai, with no more than 5,000 units handed over on some estimates. Therefore Dubai was short of some 15,000 units in 2006, which put upward pressure on rentals and people squeezed into the existing accommodation somehow.
But this also constitutes a pent-up demand for property. These 15,000 people likely still want to move to better accommodation.
Tipping point
Assuming that the Dubai population has continued to grow at the same rate in 2007 as in 2006 then the total demand for property would be 35,000 units, not so far short of the 50,000 units that analysts predict will be delivered this year, and with some delays perhaps the total demand and supply will therefore be in equilibrium.
Also we have to bear in mind that not all this completed property will actually be immediately occupied. First, new owners tend to take time to move from their existing properties, typically four to six months, and landlords take a while to rent out villas and apartments.
Second, there will be many of these units - some say half, which have been bought as second homes and for occasional use by wealthy owners. Thirdly there will be buyers who will not sell if they can not rent a property out because they paid in cash and can afford to wait without the sense of urgency of a mortgage payer.
Crunch coming
On the other hand, if the 139,000 units that the EFG Hermes report counted for scheduled delivery in 2008 do actually enter the market next year, the market will clearly be quickly saturated, and the soft patch predicted by this excellent report and Standard Chartered Bank among others, will come to pass.
Real estate agents say that April was a quieter month for the sector than April last year, particularly for property sales.
But this might not mean that Dubai's population growth is slowing, more likely potential real estate buyers are beginning to react to the series of recent reports predicting an imminent slowdown as well as just observing the massive building programs with their own eyes and asking the obvious questions about supply and demand.
Buy Dubai: Property Market Booming, Express,
May 6th 2007
Panic selling on the Spanish stock market has yet again raised the
billion dirham question: Are we headed in the same direction?
According to Hilmar Oschmann, head of Development and Finance for
Kleindienst & Partner, fears that Dubai’s property boom is about to
go bust are unfounded.
He says Dubai remains a major hub for investors from India,
Pakistan, Iran and Russia and they aren’t escaping from the emirate
anytime soon.
"There’s one area in this market that most foreigners overlook and
that’s the importance of a residence visa when you get a finished
property.
"There are so many [people] from India, Iran, Pakistan and less
stable countries than Dubai who love a place to retreat and keep
their heads low when it comes to political issues. They’re the kind
who put their money overseas and go offshore," he said.
Oschmann says it’s the Europeans who remain sceptical. "Europeans,
as well as Americans don’t believe there is a third world. People
fully overlook this area and link it only to the entire Middle East
and terrorist attacks."
Internationally, Dubai marketing has successfully attracted a
variety of international investors, says real estate expert Sunil
Jaiswal. "I was in a small town of 3,000 people in Colombia and they
had PowerPoint presentations on Dubai Marina," he says. "That’s the
reach of Dubai."
Despite this, Jaiswal says he is guarded on his predictions about
Dubai. "It all depends from what angle you look at property. From an
equity growth angle, I have to be cautious because you are seeing
property that investors bought years ago and is now available.
"You have to be careful where you are buying because anything can
make the market turn," he says.
He advises potential buyers to find out how many investors are
buying into the same development, particularly if it’s off-plan. "If
you have 100 apartments in a building and 50 per cent are bought by
investors, when those apartments are ready there will be 50 to rent
or 50 apartments to sell.
"And if you have the same competition in prices, some will be more
desperate to sell, while others will wait it out and buyers and
renters will have the choice in what they want."
But whether or not Dubai is slowly moving into an end-user market is
still up for debate. "Most end-users who buy want to avoid the
rent," says Sabid Hyder, a sales and marketing manager for AAM Real
Estate.
Having been in the business for almost a decade, he says most of his
clients come from India, Pakistan and Iran and are usually
investors.
As for Europeans, the British are the major buyers whose properties
serve as second homes. Hyder says the majority of end-users stick to
Emaar, Damac and Tamweel properties. The Palm and parts of the
Marina are also selling well.
"There’s no competition. No one is doing things like Dubai. For the
next five to six years, nothing will happen. But after that, there
will be many projects, but the rental market will remain good," he
predicts.
Study the market
Sunil Jaiswal is an international property buyer who now advises
those looking to enter the property market. He says it’s important
for a buyer to select a location within a city and study it
intensively. Do the math, crunch the numbers and keep an eye on
recognisable trends, anomalies and opportunities as they come up.
13.03.2007 Property in Dubai, still Investors Choice, courtesy of Press Releases
Woking, United
Kingdom, March 13, 2007 --(PR.COM)-- Despite reports over the
saturation of Dubai’s property market a spokesperson for Principal
International, one of the UK’s leading overseas property investment
companies, says that investors are still keen to buy in Dubai.
Enquiries continue to flood in every week for the world’s fastest
growing city said Paul Cooper, a Director of Principal
International.
The area as a whole continues to attract the seasoned investors and
with the government providing tax incentives to promote market
growth, foreign investment remains high. Some reports say that there
is a lack of affordable housing in the region but demand for luxury
apartments remains apparent so the developers continue to build, and
whilst profits can be higher at the top end of the market there is
little or no demand for the more affordable units just yet.
Principal International say that whilst the volumes of construction
taking place in the country may deter some investors, buyers should
look to the long term when considering investing in Dubai’s property
market as it is proving to be a well rounded market which will
undoubtedly show a steady growth in property price appreciation over
the next few years.
Over 50% of Britain’s wealthiest are looking to buy or live abroad
according to research carried out by a division of one of the major
high street lenders, and Dubai caters for all classes of people. Not
only that, but buying or investing overseas is no longer a privilege
for the rich and famous, with lower cost flights and property prices
in the UK putting off investors, countries like Dubai are becoming
more and more affordable.
13.03.2007, National Bank Of Dubai launches Commercial Property Mortgages, courtesy of Ameinfo.com
The launch
supplements the Bank's position as a leading provider of home
mortgages in the UAE through the hugely successful NBD Home Loans
product range.
NBD Office Loans is targeted at individuals purchasing freehold
office space in Dubai, the demand for which has been growing fast in
recent years. Under the scheme, UAE National and expatriate
residents will be eligible to avail mortgages of up to AED 4 million
for either off-plan or completed properties from an approved panel
of developers.
'NBD Office Loans presents an opportunity for individuals to
purchase commercial property of their choice either to support their
continuing business growth or as an investment for the future,' said
Suvo Sarkar, Group Head - Retail Banking at National Bank of Dubai.
'NBD is already one of leading providers of home mortgages, so this
launch is a logical product extension for us.'
Salaried and self-employed individuals are eligible to apply for the
product and the mortgage amount is based on the original sale price
or the prevailing market value of the property. Customers have the
option of choosing between variable and fixed rate pricing, as well
as the flexibility of obtaining a pre-approval to enable them to
find the right commercial property.
11.03.2007, UAE Bank Launches Property Financing, Bahrain Tribune
(MENAFN - Bahrain
Tribune) Dubai Bank has launched MULKI Property Financing, a new
Islamic Sharia'a compliant product designed to facilitate the
purchase of properties in the United Arab Emirates. The product is
available to UAE nationals and expatriates in the UAE.
Adnan Chilwan (right), head of Marketing & Product Development,
said: "With the property market booming in UAE, the need for Shari'a
compliant property financing solutions are increasingly
necessitated".
"MULKI" is an end-to-end Shari'a compliant property financing
solution, constituting financing structures based on either the
Murabaha or the Ijara.
"MULKI" is a unique property financing solution which caters to
numerous & diverse property financing needs, be it the purchase of
land; ready to own/lease properties, villas, townhouses or
apartments; or even properties that are to be constructed.
He added: "In 'MULKI' customer choice has been given the highest
priority. This is clearly evident considering that, eligible
customers have the choice to structure their own financial plan by
setting the installment that they wish to pay depending on their
individual payment capabilities. Furthermore, customers can benefit
from either a fixed profit rate Murabaha structure or a variable
profit rate Ijara structure, depending on personal preferences."
In addition to being flexible and convenient, MULKI promises a very
strong value proposition for its customers, which is witnessed
through its competitive product features. The product has high
finance-to-value ratio, long payment period and very competitive
pricing. Financing is available for all major developers and
projects.
Mohammad Al Nahdi Head of Distribution added: "Dubai Bank customer
convenience is of paramount importance to us in all our offerings,
and that is why we have employed a dedicated sales team which can
visit customers at their place of convenience and assist the
customer in completion of all formalities".
27.02.2007, Morgan Stanley
report on Dubai Property, Courtesy of Morgan Stanley
Building in Dubai is booming. There is a huge amount of new
construction going on in the Emirate, part of the United Arab
Emirates, or UAE, located along the Persian Gulf. It is estimated
the one in three of the world’s cranes are operating in Dubai. The
Emirate of Dubai has approximately 1.3 million residents, while the
city of Dubai is the largest in the UAE.
Nearly 3 million square meters of office space is expected to open
up in Dubai this year, with another 4.5 million expected in 2008.
Morgan-Stanley economist Stephen Roach notes that the building boom
in the city is not isolated, but is being accompanied by region-wide
focus on new infrastructure. “Throughout the region, it [new
construction] has been accompanied by expanded infrastructure
efforts, rapidly growing commitments to education and medicine,
increased industrialization, and the growth of domestic capital
market activity.
http://www.morganstanley.com/views/gef/archive/2007/20070223-Fri.html
In addition to the booming office market is a demand for residential
property. Dubai Marina, Jumeirah Beach Residence and the Palm
Islands are all new waterfront developments where prices are at a
premium. The Marina is really a city within a city and is a very
popular place to live. Property values have increased substantially
in recent years, particularly for the Marina and other waterfront
areas.
In addition to all of the other building going on, recreation has
also been a target of recent construction efforts. Dubai has a
number of new golf courses and resorts, some which play hosts to top
players such as Tiger Woods and Sergio Garcia annually.
For those looking for long-term investments in Dubai, the rental
market is the ideal place. It is a major business center for the
oil-rich Middle East, particularly with its tax-free trade zones.
Many of the residents and expats here are transient businessmen.
They aren’t necessarily looking to buy housing as much as rent.
Additionally, as a moderate Middle East country it is also
developing a growing tourism market. This will also help drive the
rental market in the coming years.
Facts about Alcohol in Dubai
Alcohol is available for non-Muslims at all hotels, hotel bars and
hotel restaurants in Dubai. Non-Muslim expatriate workers can also
get a liquor license to allow them to buy alcohol for home
consumption. In Dubai it is illegal to sell or offer alcoholic
drinks to Muslims. To buy alcohol to drink at home you need either a
liquor licence or you can buy duty free on your arrival in to Dubai.