Dubai Real Estate Market Q2 2015 Look Back by Roots Land

UAE is set to continue expanding its economy for a sixth consecutive year this 2015, with a forecast of gross domestic product (GDP) growth at 4.5%.

The real estate sector was a major player in the economy last year, accounting for 13.3% of GDP—good for third. While the connected Travel and Tourism sector contributed 8.4% of the UAE’s GDP, a figure that is expected to grow by 5.1% this year. The sector generated 307,000 jobs, and jobs growth in travel and tourism of 5.4% is forecast for 2015.

The Government of Dubai strongly contributes to the expansion of the travel and tourism industry, backing major developments including the new Al Maktoum International Airport and the extension of Dubai International Airport.

Dubai’s population continues to expand, growing by 5% to 3.8 million UAE nationals and expatriates by the middle of this year. These figures underline the healthiness of the labour market. The annual inflation rate currently stands at 4.3%, which is lower than the 4.6% rate forecast for this year. Here is the Dubai real estate look back for the second quarter of 2015.

Apartments

The Dubai property market softened during the second quarter of 2015, with average apartment sales prices across the city falling to the same level as in the first quarter of 2014—although not enough to ruffle some feathers. It’s just the way it goes for a market that’s maturing.

The correction comes as less of a surprise when analyzing the volume of transactions, which did not keep pace with sales price growth but instead rose at a slower rate from the first quarter of 2013. Demand declined slightly in the first quarter of 2014 and rather more steeply in the second quarter of that year.

Prime area apartments

Average sales prices in Business Bay, a prime area, have risen gradually over the past few years even though demand has remained constant. In terms of supply, the district currently has more than 40 developments currently under construction by various developers, the majority of which are expected to be finished and handed over in 2016 and 2017. Additional developments are currently on the pipeline.

In Downtown Dubai, prices were 19% lower than at the 2014 peak. During the second quarter of this year, demand has been steady and at a healthy level.

Sales prices in Dubai Marina and Jumeirah Beach Residence (JBR) are declining with buyers’ interest picking up.

Palm Jumeirah sales prices are 12.5% lower than at 2014 peak. There are 20 projects currently are under development on the island with more at planning stage.

Villas

Sales prices of villas have been falling for the third quarter in a row. Since the beginning of 2015, buyers’ sentiment has strengthened, prices have continued to fall and, as a result, the number of transactions recorded in the villa segment has started to rise again.

Following the general trend across the emirate, the volume of transactions of prime villas in high-end developments within the Jumeirah Park, Jumeirah Islands, Emirates Hills and Arabian Ranches communities has kept increasing since late 2014. Prices in the first three areas declined in the second quarter, while sales prices at Arabian Ranches’ rose by 5%.

Among these prime communities, Arabian Ranches supply is the highest with more than 4,000 villas. The community is also the fastest growing. By 2018 Emaar, the developer will deliver nearly 2,500 new homes including the Mira Oasis, Lila, Azalea and Samara Rosa, and Rasha Villas sites.

SOURCE: Roots Land Real Estate

The Latest 2015 Abu Dhabi Real Estate Market Report

The second quarter of 2015 has gone past the window. We’re already more than halfway, and in just a little more than three months, we’ll be waving goodbye to yet another year. If you’re following the trend in the real estate market in Abu Dhabi, you might be waving goodbye with yet a smile on your face. So far, during the past two years, the real estate market in Abu Dhabi has experienced a noticeable upwards trend. Last year, sales growth in real estate has seen a double digit rate increase. Villa sales prices rose by 16% and apartments up 15%. Rent rates increased by 10%, and 9% for apartments, villas respectively. So how does this year stack up?

In the latest real estate performance reports, the second quarter of 2015 continues the trend that started more than 30 months ago. However, the growth of the real estate market seems to be stabilizing, with demand slowing down, mainly because of the government’s budgeting regulations due to the sluggish performance oil sector, UAE’s primary source of national income. In the short term, supply and demand will continue to remain above the line, but national spending and sentiment has to pick up the pace in order to sustain growth in this sector.

For the Residential Sales market, while prices have remained stable over 2015, there has been a step-down in the number of transactions. However, it’s not enough to deter developers in launching new products since they are still generally successful with them. Meanwhile, residential rentals have remained stable this quarter.

Office space demand remains stagnant, again due to the slowdown in the oil sector and government infrastructure investment. In spite of this, Grade A office rentals have remained stable due to minimal vacancies in quality projects. However, office completions in tow throughout the year are expected to increase the market-wide vacancy rate.

Retail rentals remains stable this quarter and this is expected to continue in the short-term. A number of Super Regional malls are set to enter the market on 2018, which will partly be supported by new population and tourism growth.

The Hospitality market witnessed solid growth in hotel guests above 2014 levels driven by wide ranging initiatives to grow the tourism sector. ADRs have also registered an increase of 4% in YT May compared to the same period in 2014. Hotel occupancies registered 77% in YT May reaching the same levels as 2014.

SOURCE: Roots Land Real Estate

Mortgage Facts in UAE

The UAE is fast regaining its frontier market status as Expo 2020 is approaching.

This forces the banks to follow suit. And they’re doing their work by introducing non-resident and under construction finance, new products that will boost their value in this emerging market. Now you might be thinking, is it time to get that mortgage I need? Here are some things you need to know first before moving forward.

TYPES OF MORTGAGES IN THE UAE

There are three types of mortgage rates currently available in the UAE.

1. Fixed rate – is a mortgage that has a fixed interest rate for a term between 1 to a maximum of 5 years. The benefit of a fixed rate mortgage is that the home owner will not have to contend with varying loan payment amounts that fluctuate with interest rate movements. Upon expiry, the fixed rate will revert to either a bank variable rate or to an EIBOR linked rate.
2. EIBOR rates – Set by the Central Bank, the Emirates Interbank offered rate is the average interbank borrowing rate of 11 lending banks and published daily on the central bank website.
3. Variable rate – usually predetermined by the bank itself, it takes into account various factors such as internal costs, liquidity, risk, default rate among other factors.

MAXIMUM LENDABLE AMOUNT

A change in Central Bank policy regarding all lending for expats has now been valued at 75% loan-to-value for properties under 5M AED and 65% loan-to-value for properties above 5M AED. Nationals can secure a larger mortgage amount, 80% on every property. All second property and/or investment property is now capped at 60%, with off plan/under construction being capped at 50%.

Remember: To be able to apply for mortgage, your debt service ratio (DSR) should not exceed more than 50% of your monthly income. This is calculated by adding up all of your monthly liabilities, plus your projected mortgage payment.

DO BANKS FINANCE ‘UNDER CONSTRUCTION’ PROPERTIES FOR ALL DEVELOPMENTS?

Only a handful of banks will lend on certain off plan developments, usually only to the bigger developers in Dubai (Nakheel, EMAAR and Dubai Properties). However, the banks are currently re-addressing their stance because of the emergence of many projects.

NON-RESIDENT MORTGAGE IN UAE

Non-residents can now access financing up to 75% loan-to-value, with rates as low as 4.75%. But not all banks have this product in their offerings. But with the Expo 2020 spotlight looming over real estate in Dubai, there are going to be sharp increases in enquiries from non-residents who are contemplating an investment in the UAE real estate market, which might roll things to the non-residents’ favour.

THE LENGTH OF THE MORTGAGE PROCESS

The average length of most mortgage approvals is around 4-5 weeks in total. If the bank needs to clear the mortgage with the seller, another 2 weeks can be added to the overall time.

HOW TO APPLY FOR A RE-MORTGAGE

You can ask for a review of your existing facility with a view to refinance to a better rate and/or more flexible product. Some banks offer reduced or zero processing fees for clients looking to change lenders.

CAN I RELEASE SOME EQUITY FROM MY EXISTING PROPERTY?

Most banks will allow you to remortgage your existing unit to release funds, although banks will limit their loan-to-values and others would only allow an equity release for a specific purpose such as to purchase a further property in the UAE.

SHOULD I HIRE A BROKER OR CONSULTANT?

There are around 33 lending banks in the UAE with over 100 mortgage product combinations so the choices are pretty extensive. That’s an advantage, but there is a disadvantage to this. Unless you’re willing to allot hours in a day to contact banks and ask around, then you should be in touch with a mortgage broker/consultant. A good mortgage broker would have contact with many different lenders and access to discounted pricing and favourable terms that individual borrowers can’t access.

Find an established consultant like Home Matters. These institutions have some leverage to deal with banks, and from time to time, can offer clients better rates, faster turnaround times, and terms compared to applying directly to your bank.

SOURCE: Roots Land Real Estate

Dubai Property Market Update - Dubai Properties

Real estate in Dubai is pulsing with life. It has experienced wonderful progress during the past two years, something that we’ve seen happen as 2014 rode into the sunset. The real estate sector has developed in terms of best practice, regulations and laws to protect investors and developers. Improvements on the mortgage regulations have made a positive contribution to ensuring sustainable market growth.
      
The latest industry reports have seen pluses in price growth, although small. This means that these developments are effective and have positively impacted the market behaviour.

Dubai Properties, a developer and major player in the real estate market in Dubai market has been enjoying the position it has. And their strategies have allowed them to experience sustainable growth across their portfolio in 2014.

Strong demand from investors for the new residential project, Dubai Wharf that was launched at Cityscape, prompted them to release further units in Mudon and Remraam.

2014 has brought them optimism and success. Their strong sales has been a clear indication of the positive market conditions moving forward. And the strategy to develop practical, high quality, and sustainable projects in every segment and area of Dubai that offer essential amenities and facilities to enrich the lives of residents and end users has been nothing short of effective.

Dubai Property has already made over 36,000 residential units, 2.8 million sq. ft. of office space and over 1.2 million sq. ft. of retail space across key areas of Dubai. The main projects we have launched in 2014 include: Mudon, Remraam, Manazel AlKhor, and Dubai Wharf, some of which experienced successes.

Dubai Properties will continue to grow their portfolio of retail, commercial, residential, hospitality and mixed-use projects, and they have future projects planned to tailor to the needs of real estate buyers and investors in Dubai. They will continue to align their business with the current market demand by launching new projects that provide strong investment opportunities.

Collectively, the real estate in Dubai is continuously experiencing strong growth, with investors looking for ‘value for money’ projects across the city like completed infrastructure, accessibility and quality building and finishing. Their projects will continue to meet this market demand in line with Dubai’s growth across the residential, commercial & retail sectors while continuing with the strategy to develop projects in prime locations of Dubai.

Winning the Expo 2020 presented a huge opportunity for Dubai real estate industry, and as a leading developer with a wide range of projects in every segment and area of Dubai, they are indeed in a good situation to take advantage of the increasing opportunities this will bring. 

Going forward, they plan to launch more projects that cater to the increasing population expected in Dubai over the coming years, from affordable apartments to villas and townhouses and high-end luxury accommodation across key areas of Dubai.

Source: Roots Land Real Estate