The fu­ture of prop­erty de­vel­op­ment in Mid­dle East

Oman Daily Observer - - PERSPECTIVE -

n the be­gin­ning of 2018, it was an­nounced that the two largest real es­tate com­pa­nies in the coun­try Emaar Prop­er­ties and Al­dar Prop­er­ties, they may have ac­cel­er­ated the mar­ket in the short term, but the re­cov­ery in real es­tate prices in UAE re­mains a long way off.

De­spite fore­casts at the end of 2017 that the mar­ket will be bot­tom out this year, most ex­perts have changed their tune, as prices con­tin­ued to fall in the first quar­ter of 2018. Ac­cord­ing to sev­eral re­ports pub­lished this year, the ren­o­va­tion is now not ex­pected un­til 2019.

“Chal­lenges of ex­ces­sive sup­ply, sup­ply and de­mand mis­matches, weak­en­ing de­mand in sec­tors such as of­fice and re­tail and a rel­a­tively lower level of house­hold in­come growth tes­tify to mar­ket pres­sure,” an­nounced real es­tate con­sul­tant for Core Sav­ills in Dubai.

The in­dus­try faced a num­ber of chal­lenges in 2017, in­clud­ing low oil prices, a pop­u­la­tion aware­ness of the bud­get for ac­ces­si­bil­ity and wide­spread con­sol­i­da­tion of busi­nesses, lead­ing to a re­duc­tion in of­fice and hous­ing needs, this forced land­lords to lower rent, cre­at­ing “ten­ant’s mar­ket”.

The de­mand for an “af­ford­able” off plan flat has re­mained rel­a­tively strong, with a to­tal of 6,000 hous­ing units de­liv­ered in Dubai in 2018, and an­other 15,500 units are ex­pected for the rest of the year, Core Sav­ills said.

How­ever, in Dubai’s sales mar­ket, this “cas­cade” of new stocks pushed de­mand far from tra­di­tion­ally soughtafter ar­eas such as Down­town and Dubai Ma­rina, this post­poned the re­cov­ery in sales prices.

In these two ar­eas, sales prices for the year last year fell by 7.5 per cent and 6.6 per cent in the first quar­ter.

In Abu Dhabi, sales prices fell 7.9 per cent year-on-year in Fe­bru­ary and 1 per cent com­pared to month-on-month, while oil prices fell 10 per cent yearon-year, mar­ket an­a­lyst Rei­din said in March hous­ing stock in­dex.

As for new projects, de­vel­op­ers con­tinue to fo­cus on the mid­dle in­come sec­tor. The com­pen­sa­tion for hous­ing re­sources is di­rected in line with the change in busi­ness ac­tiv­ity, and there­fore the de­sire of the pop­u­la­tion for larger tick­ets are still low.

The largest avail­able scheme this year was Al­dar’s Dh10 bil­lion Al­ghadeer Mas­ter plan, a com­mu­nity of 3 mil­lion square me­tres with 611 homes in the first phase. Al­dar es­ti­mated Al­ghadeer units “ag­gres­sively” in re­sponse to mar­ket con­di­tions, his chief ex­ec­u­tive Talal al Dhiyebi said in April.

One of the prop­er­ties to be pur­chased is Saadiyat Grove, one of the first two projects be­ing devel­oped through Al­dar’s part­ner­ship with Emaar lo­cated in Dubai, whose goal is to de­velop po­ten­tial projects worth Dh 30 bil­lion in UAE in the com­ing years.

The sit­u­a­tion does not look good as well for an­other con­trac­tor in Dubai, Da­mac Prop­er­ties, whose net profit fell by 45 per cent in the first three months of 2018, this is at­trib­uted to ris­ing sales costs out­side the plan, which fell 27 per cent year-on-year.

In the mean­time, the Depart­ment of Land in Dubai is tak­ing steps to stream­line real es­tate trans­fer pro­ce­dures in or­der to re­duce costs for in­vestors. It has plans to cre­ate a “smart” digi­tised plat­form called “Real Es­tate Self Trans­ac­tion” (Rest), which will elim­i­nate the need for pa­per doc­u­men­ta­tion for a sale and rental trans­ac­tion by 2020.

Al­dar Prop­er­ties in Abu Dhabi and Emaar Prop­er­ties in Dubai, two of the UAE’S largest real es­tate de­vel­op­ers an­nounced a strate­gic al­liance and cre­ated a joint ven­ture (JV) worth AED30BN ($8.1bn).

An agree­ment was signed be­tween Al­dar chair­man, HE Mo­hamed Khal­ifa al Mubarak and Emaar chair­man, HE Mo­hamed Alab­bar to for­malise the part­ner­ship.

Two de­vel­op­ers will ini­tially jointly de­velop the Emaar Beach Front in Dubai and Saadiyat Grove on the Saadiyat Is­land in Abu Dhabi. This is the largest joint par­tic­i­pa­tion in the real es­tate sec­tor in the United Arab Emi­rates that will trans­form the


hori­zon of the United Arab Emi­rates and fur­ther strengthen UAE’S sta­tus as a ma­jor tourist des­ti­na­tion.

The al­liance is in­tended to in­crease in­vestor con­fi­dence, an­a­lysts said at the time. “

Such part­ner­ships will con­tinue to show real es­tate mar­ket ris­ing in UAE, and in­vest­ment growth from recog­nised de­vel­op­ers is well suited to fu­ture prospects, as it pro­vides a de­gree of con­fi­dence for in­vestors,” said Taimur Khan, an­a­lyst in Dubai.

The Al­liance will ini­tially fo­cus on two projects in UAE, Saadiyat Grove in Abu Dhabi and Emaar Beach­front in Dubai. Saadiyat Grove, a mixed use, will be lo­cated in three mu­se­ums, 2,000 res­i­den­tial units, two ho­tels, 400 ser­viced apart­ments and 130,000 square me­tres of ex­pe­ri­en­tial life­style and sales space. It opens in 2021.

An­other mega project — Emaar Beach­front — in Dubai is a pri­vate is­land that will have 7,000 res­i­den­tial units with ac­cess to a 1.5km pri­vate sandy beach. Si­t­u­ated be­tween Jumeirah Beach Res­i­dence (JBR) and Palm Jumeirah, the project has di­rect ac­cess to the road by Sheikh Zayed and Ma­rina Dubai.

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