news brief 28 - asteco property managementthe dubai property developer damac has launched a new...

ASSET MANAGEMENT SALES LEASING VALUATION & ADVISORY SALES MANAGEMENT OWNER ASSOCIATION

RESEARCH DEPARTMENT

NEWS BRIEF 28 MONDAY 11 July 2016

DUBAI | ABU DHABI | AL AIN | SHARJAH | JORDAN © Asteco Property Management, 2016 asteco.com | astecoreports.com

IN THE MIDDLE EAST FOR 30 YEARS


REAL ESTATE NEWS UAE

WHY RENTS CAN BE SLOW TO FALL IN THE UAE AND ELSEWHERE

EMAAR AWARDS DH500 MILLION CONTRACT FOR OPERA GRAND TOWER IN DOWNTOWN DUBAI

THE FIVE IMPORTANT THINGS IN BUSINESS RIGHT NOW

AL NABOODAH’S CONSTRUCTION ARM ON TRACK TO HIT TURNOVER OF DH3.5BN THIS YEAR

DUBAI

BUILDING BEGINS AT SIX FLAGS THEME PARK IN DUBAI

DAMAC TARGETS YOUNGER HOME BUYERS WITH AKOYA IMAGINE LAUNCH IN DUBAI

DUBAI PROPERTIES APPOINTS NEW CEO AS ABDULLATIF ALMULLA DEPARTS

DUBAI’S EMAAR LAUNCHES IL PRIMO OPERA DISTRICT APARTMENTS AT HARRODS

SHOP FOR A DUBAI APARTMENT AT HARRODS

THE 'CITY' OPENS ITS DOOR WIDE IN DUBAI

DUBAI DEVELOPERS SCALE BACK ON HANDOVERS

ABU DHABI

RENTS AT ABU DHABI’S REEM ISLAND MAY DROP ONCE ‘DUST SETTLES’ AFTER SUMMER

LIMITED SUPPLY TELLS ON ABU DHABI PROPERTY VALUES

GCC | INTERNATIONAL

CARILLION WINS FIVE-YEAR, £240 MILLION EXTENSION TO PETROLEUM DEVELOPMENT OMAN MAINTENANCE CONTRACT

INDIA’S PROPERTY RALLY STILL HAS FUEL IN THE TANK

INVESTMENT DRIVE POWERS BIG GAINS FOR INDIA OFFICE SPACE

EXECUTIVE TRAVEL: ART DECO OPULENCE AT BUDAPEST’S FOUR SEASONS HOTEL

LONDON ADDRESS STILL DESIRABLE FOR GULF INVESTORS DESPITE BREXIT

LONDON ADDRESS STILL DESIRABLE FOR GULF INVESTORS DESPITE BREXIT



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BUILDING BEGINS AT SIX FLAGS THEME

PARK IN DUBAI

Sunday, 3 July 2016

Dubai Parks and Resorts on Sunday started work on the ¬construction of its Six Flags theme park.

The company said a ground-¬breaking ceremony was held to mark the second phase of the development of Dubai Parks and Resorts and what will be the fourth theme park on the site. The other three – a Motiongate, a Legoland Dubai and a Bollywood Parks Dubai – are due to open in October, while Six Flags is set to open in late 2019.

The Six Flags park will contain 27 rides across six themed zones: Thrillseeker Plaza, Magic Mountain, Fiesta Texas, Great Escape, Great Adventure, and Great America. It will cost Dh2.6 billion to build – Dh1.68bn of which was raised through a rights issue in May.

Raed Kajoor Al Nuaimi, the chief executive of Dubai Parks and Resorts, said: “We are delighted to announce that construction has commenced on the region’s first Six Flags branded theme park.

“This is the fourth theme park at our destination and it will help us strengthen the appeal of Dubai Parks and Resorts as a must-visit destination in the ¬region."

Dubai Parks and Resorts’ shares have climbed by 46 per cent so far this year, far outweighing the 5 per cent average gain for the Dubai Financial Market.

Ayub Ansari, senior analyst with Bahrain-based Securities and Investment Company, said that at its current level of Dh1.57 per share, or a market capitalisation of Dh12.6bn, the company is overvalued.

“It’s a great project – no doubt about it. It’s something that the region requires. It’s just that the valuation doesn’t justify [the current share price]," he said.

Its management is currently forecasting 6.7 million visits within its first full year of operation. However, Mr Ansari said that even if it achieved a best-case scenario of 10 million visits it would only achieve revenue of Dh3.5bn.

“That’s the best case. My current estimate is Dh2.4bn. Even if I look at the best case and extend our valuations to 2021 when the existing parks will operate at full capacity and Six Flags will be online … Even on that we are looking at an implied price-to-earnings of 14x, which is rich.

“To put that in perspective, a company like Disney trades at a P/E of around 17x. But that’s a company that has not just theme parks. In fact, theme parks is its least profitable business segment."

Mr Ansari believes that investors are pricing in the possibility of further development on the site.

“The market is looking too much into the future," he said. “Let the existing project come on line first before we talk about expansion. I think that right now it is very expensive."

He has set a target price of Dh1.25 on the company’s stock. The shares closed 0.6 per cent higher at Dh1.57 on Sunday.



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Last week, Dubai Parks & Resorts confirmed that it had created an exception to its GCC-wide exclusivity deal with US-based Six Flags Resorts to allow for the potential development of a Six Flags-branded resort in Saudi Arabia. It said the exception applied only to the Saudi Arabian government.

Source: The National

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EXECUTIVE TRAVEL: ART DECO OPULENCE

AT BUDAPEST’S FOUR SEASONS HOTEL

Sunday, 3 July 2016

Since Emirates and Qatar Airways started flying to Budapest, the former commercial capital of the Austro-Hungarian empire is on the map for the Middle East executive traveller.

Bang in the centre of this impressive downtown is the Four Seasons Hotel Gresham Palace Budapest, an art deco statement of municipal opulence built at the turn of the 20th century for London’s Gresham Insurance Company.

From the balconies of the Dh25,000-a-night royal and presidential suites you face directly across the famous Chain Bridge built by Scottish engineer Adam Clark to the Buda Castle on the hill across the Danube River. Location is an understatement.

When I stayed, Mercedes-Benz was holding an internal corporate event. Its lobby stuns with art deco details like stained-glass windows, mosaics and the lightest steelwork.

True, the smallest of its 160 rooms is not large – at 33 square metres – and costs Dh1,790. But the art deco marble bathroom and furnishings are stylish, even if the desk is none too big. The standard free internet is 1.5Mps. You pay Dh89-a-day for a faster service.

An ironing board and iron are available on request and the fastest laundry turnaround is four hours.

The Nespresso machine is standard but you might need to ask for a kettle for tea and fresh milk, as I did. A bottle of water from the minibar is Dh25 and a coke Dh17. Room service will deliver a club sandwich for Dh79, or burger and chips for Dh83.

You don’t wait long because service standards are outstanding. The microfibre cloth left next to my glasses was a nice touch. Other guests remarked on the concierge’s ability to sort their IT problems.

The 24-hour business centre has one Apple and two Microsoft PCs and a printer. Secretarial and translation services can be arranged. There are 10 possible boardroom meeting rooms, seating from 16 to 40 people, and three larger conference or reception areas to accommodate between 140 and 180.

Concealed within the hotel’s attic is a 12-metre swimming pool above a classy spa and well-equipped gym with five running machines and portal windows focused on famous city views.

Dining is limited to the all-day, Hungarian-French restaurant Kollazs, and while I loved its seared foie gras and venison steak, the hotel is surrounded by other Michelin-starred gastronomic options.

q&a luxury stop at Budapest

Yves Giacometti, the general manager of the Four Seasons Budapest, tells Peter Cooper about the business dynamics of modern Budapest.

How did you react to the opening of the Ritz-Carlton this year?

Before its opening, we were the only true luxury brand in Budapest. Mr Al Habtoor (Khalaf Al Habtoor of Al Habtoor Group bought it in 2012 for a reported US$80 million) has been very clever to take this hotel upmarket. Competition is good for the development of the Budapest luxury travel sector.



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Do you see more Arab investors in the city?

This hotel is owned by the sovereign wealth fund of Oman, and Saudi Arabia’s prince Al Waleed and Bill Gates are the biggest investors in the Four Seasons. Hungary is a very stable country for foreign direct investment, and open to it. It is making a bid for the 2024 Olympics. This would drive a lot more investment into hotels and other infrastructure.

What size of business convention can you handle?

Ninety to 100 rooms. Aside from our own meeting rooms we can block off our street for a corporate event or arrange other venues, such as the whole Opera House for about €50,000 (Dh203,887) for the night.

Is business good this year?

Last year, our occupancy percentage was in the 70s and it will be slightly lower for this year. Revenue per available room was up by 20-25 per cent last year while this year we are more flexible on rates.


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DAMAC TARGETS YOUNGER HOME BUYERS

WITH AKOYA IMAGINE LAUNCH IN DUBAI

Sunday, 3 July 2016

The Dubai property developer Damac has launched a new series of villas at its 55 million sq ft Akoya Oxygen project aimed at younger home buyers.

The company said that the Akoya Imagine units, which will consist of three- and five-bed villas with a starting price of Dh1.2 million, have been designed to appeal to millennials - ie those reaching adulthood since the year 2000.

The company, whose shares are listed on the Dubai Financial Market, said that the homes have been designed to appeal to young couples and families, with colourful exteriors and open, airy interiors. The homes will go on sale from Saturday, and the company said that service charges for the units will be waived for a period of up to five years. A three-year payment plan is also being offered.

Ziad El Chaar, the managing director of Damac Properties, said: “Akoya Imagine is targeted towards a new type of buyer – young, professional and savvy to the lifestyle and financial benefits of buying in an international golf course community.

“This type of community is proven to consistently yield higher returns than a purely residential one and there is a limited supply in Dubai."

The golf course at Akoya Oxygen is being operated by Donald Trump’s Trump Organization and is being designed by Tiger Woods.

In a note published last week forecasting second quarter results, the Dubai-based investment bank Arqaam Capital said that although it sees “selective strength" in UAE property stocks, investors need to price in the risk of a potential drop-off in earnings locally as a result of weakening economic conditions in the UK and Europe. Britons are the third-biggest buyers of UAE property, according to Dubai Land Department figures, behind Emiratis and Indians.

“The net impact in our view is a weaker residential demand picture, and subdued tourist flows/spend, against a backdrop of excess capacity. Aldar and DIC (Dubai Investments) are least exposed, from a buyer demographic angle, while Emaar and Damac are most likely to feel sales weakness," it said.


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DUBAI PROPERTIES APPOINTS NEW CEO AS

ABDULLATIF ALMULLA DEPARTS

Sunday, 3 July 2016

The former chief executive of Dubai’s Emaar Properties has been recruited as the new chief executive of Dubai Properties Group (DPG).

Abdullah Bin Lahej resigned as the chief executive of Emaar Properties Group in April this year. He had been the chief executive there for two years, but had been with the company since 2000, when he joined as an assistant project manager. He worked on a number of Emaar’s flagship projects including the Burj Khalifa and the Dubai Mall.

A spokesman for Dubai Properties Group confirmed Mr bin Lahej’s appointment as its new chief executive, and the departure of former chief executive Abdullatif AlMulla, whom it said was leaving to “pursue other ventures".

“In his long-standing career within Dubai Holding, Abdullatif led a number of key strategic initiatives and successful projects," the spokesman said. “DPG would like to thank him for his dedication and leadership, and wish him all the best for the future."

Mr Al Mulla was appointed as the chief executive of Dubai Properties Group last August, following an earlier restructuring of the group’s operations which led to the company creating three business units - a property development arm, a leasing company and a facilities management business. The group ran all three units.

Prior to his role as CEO of Dubai Properties Group, he had worked for a number of Dubai Holding business units and had previously been the chief executive of its Tecom Investments and Smart City businesses.

Dubai Properties Group is a unit of Dubai Holding, the investment vehicle owned by Sheikh Mohammed bin Rashid, Vice President and Ruler of Dubai.


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WHY RENTS CAN BE SLOW TO FALL IN THE

UAE AND ELSEWHERE

Sunday, 3 July 2016

Markets are complex, and consumers often struggle to understand pricing decisions, resorting to conspiracy theories. For example, in countries with floating petrol prices – the UAE is a new member of this club after subsidy reforms – consumers are convinced that retailers are far quicker to raise petrol prices when global oil prices rise than they are to lower them when global oil prices fall, a phenomenon they attribute to Machiavellian collusion between petrol stations.

Such fears are ill-founded, as petrol prices exhibit symmetric sensitivity to global oil price movements. However, the same cannot be said of property markets, as landlords are generally very slow to drop rents, even when their properties are full of vacancies, while they rapidly seize upon any opportunity to raise rents when demand is high. Many renters in the UAE are searching for an explanation for behaviour that seemingly runs counter to landlords’ interests.

There is, in fact, a logical explanation for the asymmetry and part of it relates to the interdependent nature of decision-making among residential tenants.

In the case of conventional commodities, such as apples, the enjoyment you derive from consumption is based exclusively on the amount that you consume. You do not care about how many apples your spouse, best friend, boss or accountant intend to devour. That means you can base your consumption decision on the price alone.

Housing is more complicated. The identity of your neighbours plays an important role in your rental decision. People are reluctant to live next to criminals or neighbours who play loud music. At higher rungs of the income ladder, renters seek neighbours from a similar social class and education level, in an effort to network and to convey a certain image when they host friends and colleagues. This has important implications for the relationship between price, demand and supply for housing.

In particular, the rent that a landlord can charge a prospective tenant is highly dependent upon the existing clientele. If the current tenants are educated, rich and of high social class, then new tenants will be willing to pay a significant premium to rent. The landlord will oblige by charging a high rent for two reasons: higher rents mean higher profits, as is the case in any conventional commodity; and, the desirable attributes of tenants are all correlated with ability to pay and so by charging a higher rent, the landlord is able to screen out less desirable prospective tenants, and reinforce the agglomeration of elite clients.

If the above makes charging high rents seem like an easy choice for landlords, the key hurdle is the Catch-22 of securing high status tenants: to get elites renting, you need elites renting. This is a considerable challenge and it explains property developers’ aggressive marketing campaigns when they are seeking their first batch of tenants, within the UAE and all over the world. Landlords realise that catching a big fish at the start can set them on a virtuous and self-enforcing path to a stable, elite clientele and so they invest heavily in projecting an image of luxury and pomp.



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What does this imply for rent dynamics? With normal commodities, if a seller has excess inventory, lowering the price is the logical remedy. But should demand persistently exceed what you a seller can provide, the sensible course of action is to raise the price.

Price dynamics are complicated in housing because of the interdependent nature of consumption. Raising rents has two mutually opposing effects on demand: on the one hand, as with apples, consumers can afford to buy less and alternatives become relatively cheap, meaning that demand decreases; on the other hand, low-status actual and prospective tenants drop out of the running, while elite ones enter the running, making those who value being around elite tenants increase their demand.

The net effect of these countervailing forces is uncertain, transforming rent-setting into a more complex endeavour than farmers pricing their produce. Thus, when you are wondering why your Dubai landlord is apparently stubbornly refusing to drop rents even though half the building is vacant, recall that he or she may be playing a game of cat-and-mouse with elite renters. Lowering rents may well help fill the building up in the short-term but if the new tenants are not to the liking of the high-status target clientele, then in the long-run, the landlord may permanently exit the high-rent, elite-tenant virtuous circle, hurting profits irreparably.

Analogous dynamics can be observed in many commodities where image, exclusivity and prestige are critical aspects of the enjoyment derived by consumers. For example, many luxury clothes and perfume brands, such as Prada or Chanel, use raw materials that are only marginally more expensive than those used in mainstream brands, but they are able to charge astronomical prices simply because they have locked in to an elite clientele. If Porsche halved the price of its cars, we would expect an increase in demand as many low-status consumers scramble to project an image of wealth and pomp, followed by a crash in demand once the brand ceases to signal elite status.

As Dubai witnessed in 2008, eventually, landlords realise that even the elite’s means are diminishing and so they will respond to vacancies by slashing rents. As UAE renters wait for property markets this year to correct – a process impaired by the status game landlords and tenants play – they should remind themselves of American rock star David Lee Roth’s claim that: “Money can’t buy happiness, but it can buy a huge yacht that sails right next to it."


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INDIA’S PROPERTY RALLY STILL HAS FUEL IN

THE TANK

Monday, 4 July 2016

MUMBAI // India’s residential market recovery in the top eight cities is expected to continue but at a slower pace, with sales rising 3.5 per cent in the second half after surging 6.6 per cent in the first, the property consultancy Knight Frank India said yesterday.

Sales in the top eight cities are projected at 146,336 homes in the second half of this year compared with 141,341 a year earlier, the report said.

Home sales in India took a downturn in the past couple of years, as they were hampered by factors including high interest rates.

“The real estate sector in India could be at its inflection point," said Shishir Baijal, the chairman and managing director of property consultancy Knight Frank India.

“Factors like lower interest rates and a good monsoon will further boost sentiment."

A long-awaited real estate regulatory act was approved in India earlier this year, designed to protect homebuyers and establish a regulatory authority – a move that, alongside falling prices, has helped to improve sentiment, Mr Baijal said.

The biggest markets, which are the focus of the report, are Mumbai, Delhi National Capital Region (NCR), Bangalore, Chennai, Pune, Kolkata, Hyderabad and Ahmedabad.

Sales growth has been slower in NCR and Chennai compared with markets such as Mumbai and Bangalore, according to Knight Frank.

India’s central bank over the past year and a half has steadily cut interest rates and in April it lowered them down by another 25 basis points to a five-year low of 6.50 per cent.

Oversupply in India’s property market has also eased, with figures from Knight Frank showing that launches in the top eight cities dropped by 8.6 per cent to 107,120 homes in the first half of the year, compared with 117,200 during the same period last year.

Sales rose by 6.6 per cent to 135,016 homes in the first half of this year compared with 126,616 units a year earlier.

Meanwhile, unsold inventory was down by 7 per cent to 660,000 homes in the first half this year compared with 710,000 a year earlier. Home prices have risen at rates below or at the rate of inflation growth in all cities, apart from Bangalore, according to Knight Frank.

Sushil Raheja, the chief executive of the Mumbai-based developer Raheja Homes, said that there had been a pickup in the market in the past six months.



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“Basically the pricing was not high and the loan interest rates have come down and people have tried to take advantage," said Mr Raheja. “But now the market has slowed down a bit and the conversations around deals have slowed down."

He said that he expected the rest of the year to be stable in Mumbai.

“It will be actual users that buy rather than investors," he said.

Knight Frank’s data showed that sales were up by 23 per cent year-on-year in the first half of this year in Mumbai.

“However, considering that sales are 13 per cent lower than the last five years’ average, these are early days to rejoice," said Samantak Das, the chief economist and national director at Knight Frank India. “We forecast a 16 per cent growth in sales in 2016 over 2015 [for Mumbai]."


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INVESTMENT DRIVE POWERS BIG GAINS

FOR INDIA OFFICE SPACE

Monday, 4 July 2016

MUMBAI // India’s office real estate market is set to have its best year since the global financial crisis as the country focuses on attracting more foreign investment and improving the ease of doing business.

The property consultancy Knight Frank India said transaction volumes in the country’s office market rose by 12 per cent in the six biggest markets, led by Mumbai and Hyderabad, in the first half of this year compared with a year earlier.

“I think the office market is poised to have its best year since the global financial crisis," said Shishir Baijal, the chairman and managing director of Knight Frank India.

Office vacancy levels in India have dropped to an eight-year low, according to Knight Frank’s data. Rental values in the six cities have gone up by 8 per cent in the first half of this year compared with the same period last year.

“The office market continues to grow from strength-to-strength and we believe that the office market is really doing great in all the major cities," said Samantak Das, the chief economist and national director at Knight Frank India.

New completions of offices in Mumbai rose by 115 per cent year-on-year in the first half, while transactions increased by 51 per cent during the same period in the city, figures from Knight Frank showed.

A long-term development plan for the city is very focused on office space, Mr Das said.

“This, coupled with initiatives by the government in terms of the ease of doing business, attracting foreign capital in crucial sectors and enhanced transparency and governance standards, will augur well for the office sector," he said.

Two weeks ago, India relaxed rules to allow more foreign direct investment into sectors including aviation and defence.

But there has been a “substantial fall" in transactions in the office market from e-commerce companies, Mr Das said. E-commerce companies in India have been struggling to raise funding following last year’s boom.

“In terms of e-commerce transactions, it has gone down by 78 per cent year-on-year," Mr Das said. “In the first half of 2015, 4.2 million square feet was transacted only by e-commerce [companies] in the top six cities. It’s not even a million in these first six months – it’s 0.9 million square feet."

Property brokers JLL India recently said that Kochi, which is not included in Knight Frank’s report, was set to be India’s next “real estate hotspot".

This is largely because of infrastructure development taking place in Kochi, including a metro rail and new international airport terminal.

Kochi, which was struggling to recover from oversupply, will see a massive revival because of creation of demand from these initiatives, said A Shankar, the national director and head of operations for strategic consulting at JLL India.



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“Sustainable growth in real estate prices is now assured in the city and this has incited new interests from numerous real estate developers from all over India who are keen to launch residential, commercial and hospitality projects there," he said.


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EMAAR AWARDS DH500 MILLION

CONTRACT FOR OPERA GRAND TOWER IN

DOWNTOWN DUBAI

Monday, 4 July 2016

Emaar Properties has awarded a Dh500 million contract to build the Opera Grand Tower in Downtown Dubai to Athens-based Consolidated Contractors Company, according to Meed.

Meed said the tower would be 65 to 70 storeys high and that 56 of these would be residential floors. The tower will form part of the new Opera District, which will overlook the Dubai Opera House that is set to open its doors at the end of next month.

Neither the developer nor the contractor replied to a request for comment. However, in a recent interview with Janus Rostock, the regional design director of Atkins, which designed the Opera House and masterplanned the district, he said that there was room for “eight to 10" new towers within the Opera District.

Mr Rostock said the master plan had been centred on “creating an alternative to what’s currently in the Downtown area" based on cultural attractions, with the potential for new performing arts schools, galleries and jazz clubs to be added to the 2,000-capacity Opera House and the new towers proposed for the area.

The new Opera House will have a large public plaza towards the Boulevard and an amphitheatre to the rear, which has been built by landscaping over the maintenance building for the nearby lake and fountains.

Mr Rostock also said the site would also have bridges to The Dubai Mall on one side, enhancing the size of the area for viewing Downtown’s lakes and fountains, while on the other it plugged a space between the Burj Khalifa and the remainder of Mohammed bin Rashid Boulevard’s restaurants and apartment buildings, creating a more pedestrian-friendly district.

“It closes the circle around the Boulevard. Today that part of the district is like a missing tooth, and this is filling that."

Meanwhile, the UK contractor Kier has picked up £75m (Dh366m) worth of new contracts in Dubai – £60m of which are for the affordable housing developer Nshama.

The company said that it had been chosen as preferred bidder for an £11m project to build infrastructure at Nshama’s Town Square project and a £49m accommodation project for the same developer, with the latter being funded by UK Export Finance – an export credit agency that allows contractors to offer funding lines to clients.

Kier has also secured a £15m infrastructure project for Meraas Holding.

David Clifton, the regional business development director of Faithful and Gould, said that the second half of this year “is seen as a likely accelerator in development" in the UAE construction market, as projects linked to Dubai’s Expo 2020 get off the ground.



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In a new construction intelligence report produced on the market, Mr Clifton said there was potential for several significant announcements to be made by Emaar Properties regarding projects at its Dubai Creek Harbour scheme.

These “represent a potential skew in the market if launched concurrently, as this will drive market sentiment and inflation," he said.

“However, given Abu Dhabi’s halt in awards, the market is still below levels expected to maintain the industry."


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THE FIVE IMPORTANT THINGS IN BUSINESS

RIGHT NOW

Monday, 4 July 2016

Here’s what you need to know in UAE business and globally on this Monday morning.

• NBAD will be NBAD

The bank merger of the year has moved a step closer with more details emerging of how NBAD and FGB will join forces. Some of the key points, released as the banks’ boards of directors voted in favour of the merger, include the name of the new entity: NBAD. It will be headquartered in Abu Dhabi with a presence in 19 countries, while Abdulhamid Saeed, managing director of FGB, is the chief executive designate. Find more details on the merger here.

• Oil finding its balance

The energy minister of Saudi Arabia and the secretary general of Opec agree that the global oil market is heading toward a balance and that prices are starting to settle, according to comments carried by Saudi state news agency SPA. Brent crude futures were trading at $50.31 per barrel this morning, almost unchanged from their last settlement. US crude was down 5 cents at $48.94. (Reuters)

• UK looks at post-Brexit economy

Chancellor of the exchequer George Osborne has set a goal of lowering the corporate tax rate to 15 per cent in an effort to keep businesses investing in the UK as it prepares to leave the European Union. Britain currently has a 20 per cent tax rate for business that’s scheduled to fall to 19 per cent in April and to 17 per cent in 2020. (Bloomberg)

• Kuwait turns to bonds

Kuwait plans to raise as much as $9.9 billion from international debt markets to help plug its budget deficit as lower oil price squeezes public finances. This follows Qatar raising record a $9bn in May, and a $5bn sale by Abu Dhabi. (Bloomberg)

• Six Flags waves in start of construction

Dubai Parks and Resorts confirmed that work on its Six Flags theme park is underway. Set to open in 2019, it will contain 27 rides across six themed zones: Thrillseeker Plaza, Magic Mountain, Fiesta Texas, Great Escape, Great Adventure, and Great America.

Source: GulfNews

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DUBAI’S EMAAR LAUNCHES IL PRIMO

OPERA DISTRICT APARTMENTS AT

HARRODS

Tuesday, 5 July 2016

Emaar Properties has begun selling new “lateral" apartments taking up either half or a whole floor of a new 77-storey tower at the Opera District in Downtown Dubai.

The Il Primo apartments have gone on sale at a marketing suite within the famous Harrods Department store in London, with the smallest units of around 4,979 sq ft being sold for £3.5 million (Dh17m) each.

The tower will have 119 apartments in total, and the biggest will be up to 10,842 sq ft in size, with a balcony terrace of 708 sq ft. The smaller, 4,979 sq ft properties will have 279 sq ft balconies.

The Il Primo Tower will also have a podium containing amenities including a gym, cigar lounge, a library, cinema and spa. Apartments will have full-height glazing offering views of the new Opera House, Burj Khalifa and Downtown Dubai.

Ahmad Al Matrooshi, the managing director of Emaar Properties, said: “Il Primo is situated in the centre of Dubai’s new cultural hub. The exceptional views of Dubai Opera, The Dubai Fountain and Burj Khalifa are spectacular. This, combined with the generous apartment sizes, will make Il Primo the most covetable address in Dubai."

Emaar said that prices will average at around £500 per sq ft, compared with between £1,500-£3,000 per sq ft for prime central London property. It is selling the apartments from a 2,000 sq ft marketing suite on the second floor of Harrods, which has scale models of The Opera District, as well as its Dubai Hills Estate and Dubai Creek Harbour masterplanned communities. The suite will be open until mid-August.

The company has launched the properties in London targeting investors looking for a safe haven for investments in light of the turmoil in the UK caused by the Brexit vote.

Simon Barry, a director of new developments for Emaar’s sales agent, Harrods Estates, argued that Dubai could be a big winner out of the uncertainty over Brexit.

However, it does mean that Dubai-based apartments have become much more expensive for buyers whose assets are primarily held in sterling.

Moreover, prices in Downtown Dubai have continued to decline in recent months.

According to Asteco Property Consultants, apartment sale prices dropped by 4 per cent year-on-year in the first quarter of 2016, with existing apartments generally selling at between Dh1,800-Dh2,800 per sq ft.

Faisal Durrani, the head of research at Cluttons, said that he believed the London launch was aimed more at Gulf-based buyers and other, high-net worth international investors than those based in the UK. Cluttons’ recent



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Middle East Private Capital Survey found Dubai to be the top destination for GCC investors due to “the security of the investment, the returns available and the variety of assets".

“I think the prime target is Gulf buyers," he said. “Timing-wise, it’s probably quite good. It’s after Ramadan, during the Eid holidays and as we’re all familiar with, London is a hotspot for Gulf tourists during the summer.

“Given what’s happened to sterling over the last couple of weeks, there is a significant discount for those planning to holiday [in the UK], and I suspect that will drive in a higher number of business people than normal from the Gulf this summer."


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RENTS AT ABU DHABI’S REEM ISLAND MAY

DROP ONCE ‘DUST SETTLES’ AFTER

SUMMER


Housing rents for existing tenants on Abu Dhabi’s Reem Island could fall by as much as 10 per cent by the end of the year, estate agents say.

The effect of job cuts across the oil and gas and construction industries and the fall in global oil prices could finally persuade landlords on Reem – the part of the city where most new supply is coming on stream – to lower rents for existing tenants starting by the autumn.

There are about 245,000 residential units in the newer areas of Abu Dhabi, with 4,000 more expected to enter the market this year, according to JLL.

Many of those homes will be on Reem Island, where the property broker predicts rents could dip by a 10 per cent after having rocketed up by 33 per cent between 2013 and last year.

“We expect vacancy rates to increase further in the second half of the year due to job cuts and people looking to either leave or downsize as their tenancies come up for renewal. This is expected to lead to a further discount in rents at a time-lag to vacancy increasing," said David Dudley, the head of JLL’s Abu Dhabi office.

Mr Dudley said that demand slowed during the last quarter, amid announcements of job cuts and “a continued pause in government spending", but in the short term, landlords had been holding the line on rents. “While there are signs of vacancy rates starting to increase slightly, many landlords are still able to maintain the same rental levels – with tenants often accepting this to avoid the additional costs and hassle of moving."

According to property broker Asteco, rents for flats across Abu Dhabi fell by 2 per cent during the first three months of the year compared with the previous quarter, with the biggest drops concentrated on Reem Island.

It reported that apartment rents in the island’s Shams Abu Dhabi area dropped by 6 per cent quarter-on-quarter, ranging from Dh95,000 to Dh120,000 for a one-bed unit, or Dh130,000 to Dh170,000 per year for a two-bed.

But brokers say that these reports are heavily weighted towards new tenancies rather than renewals.

Existing Reem Island tenants report that landlords are continuing to increase rents, knowing tenants would rather stay than have to pay the thousands of dirhams in agency fees for new homes.

“We are aware of reports saying that rents in Abu Dhabi are falling but realistically it is unlikely that we will see many rents fall in Abu Dhabi until after the dust settles in October," says Ben Crompton, the managing partner of Crompton Partners.

“By then, everyone who is moving out will have done so and landlords will have a better idea of the situation."



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Mr Crompton says that the large number of individual landlords on Reem Island means rent reductions are more likely there than elsewhere in the city, such as on the Corniche, where property is often owned by high-net-worth individuals and institutions better able to absorb the hit from vacancies.


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SHOP FOR A DUBAI APARTMENT AT

HARRODS


Dubai: Now you can head for the Harrods store in London to buy an apartment.

For its UK launch, Emaar Properties is offering apartments at its 77-storey Il Primo tower — located within the Opera District in Downtown Dubai — at Harrods. Each apartment takes up an entire floor or at least half of it and range from 4,974 square feet to 10,842 square feet in size. The outside terraces range from 279 square feet to 708 square feet.

The developer has a 2,000 square feet marketing suite on the second floor of the department store, featuring scale-models of The Opera District, Dubai Hills Estate and Dubai Creek Harbour. The suite will be in place until mid-August.

“Il Primo is situated in the centre of Dubai’s new cultural hub,” said Ahmad Al Matroushi, Managing Director. “The exceptional views of Dubai Opera, The Dubai Fountain and Burj Khalifa are spectacular. This combined with the generous apartment sizes will make Il Primo the most covetable address in Dubai.”

Dubai Opera with its 21,530 square feet of floor space will serve as a 2,000 seat multi-purpose performing arts venue. Movable floors enable the space to be converted into different formats — an opera house, theatre, concert hall, banquet hall or exhibition space..

Source: Gulf News

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CARILLION WINS FIVE-YEAR, £240 MILLION

EXTENSION TO PETROLEUM DEVELOPMENT

OMAN MAINTENANCE CONTRACT

Wednesday, 6 July 2016

The UK contractor Carillion has announced that it has won a five-year, £240 million (Dh1.1bn) extension to a facilities management contract being carried out for Petroleum Development Oman (PDO).

The company, which operates as Carillion Alawi in Oman, has been working for PDO for three years, providing facilities management services to an estate of 2,000 buildings over a 100,000 square kilometre area. Its contract covers engineering maintenance, cleaning and the upkeep of accommodation of non-process buildings, such as accommodation blocks. It also provides catering for up to 3,000 employees, as well as landscaping, linen and laundry services.

The company said that the new award had helped take the total amount of new and probable orders secured this year to £2.5bn (Dh11.9bn). It reported revenue of £4.6bn last year, 16 per cent of which was generated in the Middle East.

The company said that revenue and profit for its Middle East business for the first six months of this year is broadly in line with expectations. It said that its strategy for the region is to be strict over contract selection and to target work where it can support contracts with financing through the UK export finance scheme – a credit agency that helps support UK companies’ work overseas.

“Over the medium term, we are also pursuing public-private partnership opportunities, notably in Oman, where we have signed a memorandum of understanding with the Oman Investment Fund to develop a PPP programme in the health sector," it said. That deal was first announced in March.

Richard Howson, the chief executive of Carillion, said the deal “reinforces our commitment to supporting PDO through the efficient management and operation of its critical infrastructure".

Meanwhile, the Italian construction company Salini Impregilo has held a signing ceremony in Kuwait to mark the award of a US$955m contract with the country’s Public Authority for Housing Welfare to deliver the South Al Mutlaa project north-west of Kuwait City.

The company, alongside its Turkish joint venture partner, Kolin, is set to build the infrastructure for what should become the largest city in Kuwait, expected to cost about $20bn to develop and serve a population of 400,000.

The Salini/Kolin contract involves building 150km of roads as well as utilities infrastructure, including water and sewage systems, electricity, lighting and telephone networks.

“Though big, the project to develop the infrastructure of the city is expected to be implemented in record time," said Yasser Abel, Kuwait’s housing minister.



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Hill International was appointed to manage the development of South Al Mutlaa City in May under a five-year, 23.8 million dinar (Dh286m) contract.


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LONDON ADDRESS STILL DESIRABLE FOR

GULF INVESTORS DESPITE BREXIT


LONDON // Markets hate uncertainty. But for the brave, uncertain markets are a golden opportunity.

Two weeks after the UK’s historic vote to cut ties with the EU, there are quite a few overseas investors who are considering that now might be an ideal time to buy that sought-after second home in London or to add to the portfolio of property they have already been accumulating.

Admittedly, Ramadan and Eid are traditionally a quiet time for the UK property agents based in the Middle East, as people spend more time with their family but Will McKintosh, the joint head of residential at JLL’s Dubai office, thinks inquiries will accelerate after the holiday.

“We have had a number of calls from people who are asking if it might be an opportunity." At the same time, he says, demand so far is stronger from Asia than from GCC countries.

Investors who have been observing from the sideline – neither rushing to buy or sell – are expected to make their move.

In London, there has already been a rush back into the market, according to at least one estate agency.

Douglas and Gordon, the property agency that covers the most expensive postcodes, has had an 11 per cent increase in sales in its first week of post-Brexit trading.

It also reports a surge in interest from dollar buyers from the UAE, among other countries, who are looking at properties priced between £1 million (Dh4.78m) and £2m.

As of yesterday afternoon the pound was at $1.29 on the forex markets, down 13 per cent from its level before the referendum results were unleashed.

UAE investors accounted for more than a fifth of all buy-to-let sales in the UK last year, according to the estate agency Chestertons, and there seems to be little sign of this demand abating, despite the uncertainties caused by the Brexit vote.

Someone who hopes to convince hesitant investors is Naomi Heaton, the chief executive of London Central Portfolio (LCP), which has a fund that invests in one- and two-bedroom properties in prime London.

“There is every reason to anticipate an influx in investors following the unexpected ‘leave’ vote," she says. “Notwithstanding the referendum, the fundamental attractions of prime central London – Mayfair, Holland Park, Notting Hill, Belgravia, Chelsea and Westminster – as a centre of culture, excellence and education and as a beacon of democracy with absolute rule of law and unequivocal title to property are still very much in place."

LCP launched its first fund in 2009 when experts were predicting that the market would slump by 30 per cent. Ms Heaton’s fund has returned 13.5 per cent year-on-year.

“With a loose parallel to the global financial crisis when prime central London showed enormous resilience, the current weak sterling and low interest rates will be a major draw for investors," Ms Heaton says.



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Dana Salbak, who works for Knight Frank in Dubai, also says that investors are not rushing into anything.

“We’ve had a lot of calls, but investors are adopting a ‘wait-and-see’ approach. We expect that some of these inquiries will materialise in the medium-to-long term," she says.

The interest from GCC investors in London had continued during the pre-referendum period, although investors have been more wary. One trend that may emerge because of the Brexit uncertainty is for GCC investors to look outside the golden postcodes – Mayfair, Chelsea, Belgravia, Holland Park, Notting Hill – to find value. Knight Frank has predicted a 26.4 per cent growth between now and 2020 in east London with yields of about 4 per cent a year, making a foray outside Mayfair a very attractive proposition. But that prediction was predicated on a remain vote winning.

Many of the wealthier GCC families have been educated in the UK or may be in the middle of sending their children to school here, so they are often buying homes for their own use – as well as investments. Increasingly, Middle Eastern families have also been considering commercial real estate assets.

Richard Divall, the head of cross-border capital markets at Colliers International, is also seeing investors take notice, but not yet rush in. “Generally the world has paused. The core buyers are taking a breath, they want to get a bit more certainty before addressing the market," he says.

In the commercial real estate world, deals last week were put on ice by some of the major investors in the UK. One of the biggest now under review is Canada’s Oxford Properties, which was set to buy Mulberry’s flagship store on New Bond Street in London’s West End from Aberdeen Asset Management.

The German fund Union had also been set to buy Hines’ Cannon Place in the City of London for about £465m, in an off-market deal. Union has now pulled the plug, while another German fund, KanAm, is thought to have withdrawn from the £190m acquisition of 1 Wood Street, also in the City.

Mr Divall says: “At this point, Middle East and Asian investors look like they have a real advantage [because of the weakness of the pound]. We may immediately have lots of buyers, but who is going to sell?

“This time is different from the 2008 crisis because there has been more sensible lending and there is a lot more equity in transactions. There won’t be many forced sellers." The only people who might be eager to sell, says Mr Divall, are some closed-end funds that end next year or particular buyers, such as Malaysian investors, who have timed the cycle very well and are already sitting on a healthy profit.

At the time of writing, however, no fewer than three large open-ended property funds had suspended trading after investors rushed to withdraw funds as a result of the referendum vote. Standard Life suspended trading on Monday, followed by Aviva and M&G on Tuesday. Mike Prew, an analyst at Jeffries, says he expects more funds to halt trading and for the sell-off to spread to quoted property companies.

Laith Khalaf, a senior analyst at Hargreaves Lansdown, says: “Property funds are clearly under pressure as a result of the Brexit vote and we could now see a new wave of investors being unable to liquidate their property funds quickly, which we last witnessed during the financial crisis."

Underlying the presumption that commercial real estate assets may fall in price is the threat that many big banks and institutions will be forced to lay off staff and may even relocate some of their trading floors to European cities, such as Dublin, Paris and Frankfurt.

Mr Divall points out that it has actually been technology and media businesses that have been driving the performance of the City lettings market in the past 18 months. However, if technology companies suddenly decide they no longer gain an advantage by being in London, that source of demand will weaken.



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Savvy investors are likely to pause over the summer, Mr Divall says. By October, some of the UK’s leading companies will have released post-Brexit trading data. It will be easier to gauge how the corporate world is faring by then, he says.

“Ultimately, though, you can’t underestimate London as a safe haven. Especially, in this world of ultra-low interest rates, people need somewhere safe to put their money," Mr Divall adds.


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THE 'CITY' OPENS ITS DOOR WIDE IN DUBAI


Residents are starting to move into the upscale environs of MBR City

Dubai: Dubai’s latest “city” has opened its doors wide to residents and with expectations of many to come. And what’s more, it already has a bustling “downtown” even as developers keep filling up spaces within the city itself.

Welcome then to MBR (Mohammad Bin Rashid) City, set to emerge as the next hot spot for the priciest living spaces in Dubai and located within easy reach of Downtown Dubai.

“MBR City projects have had one of the fastest turnarounds from their launch to the actual delivery,” said Ranjeet Chavan, Partner at SPF Realty, which is exclusively handling the sales for a portfolio of developments launched by G&Co there. “This timespan has been averaging around two to three years, and what we have now are the first residents moving in for launches that were done in 2013.”

Other developers such as Sobha, Emaar-Meraas, Meydan and MAG too have projects in fairly advanced mode. A substantial portion of the properties Meydan is building now has been earmarked for use by senior staff at the Emirates Group.

It won’t just be prime residential options that entice buyers at MBR City. There will be one of the world’s largest shopping malls from Meydan and a ski slope, for sure. And there are the green spaces and water elements. MBR City happens to be one of the few global destinations — other than London and Mumbai — to feature both a racecourse and a golf course (both operated by Meydan) within proximity.

Because of its sheer size (MBR City will be all of 14 million square metres) and complexity (with as many as 11 “districts” making up the whole), the impression among many in real estate circles was that it the end of the decade before it becomes a full-fledged cluster (or city).



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“True, there are only a handful of developers who have mounted projects on-site at the moment and it could be a while before others start moving in,” said Chavan. “But the ones who are there have had a head start and apart from the projects, the infrastructure needs of the individual districts are getting added to.

“The big push will come when Meydan starts getting on with the Meydan One project, with its super-regional mall, the tallest residential tower, the indoor ski slope and the other attractions.”

Investors will be paying close attention to MBR City, if they haven’t done so already. Dubai’s other luxury residential attractions — the Palm, Downtown, Emirates Hills and some of the towers at Dubai Marina — don’t have too much of spare space for new projects to be put up.

That’s the reason Dubai needs to create alternate options for these buyers. In this regard, MBR City and Dubai Creek Harbour (its credentials boosted by the announcement of the next tallest structure in the world, The Tower) will be the top picks going forward.

According to Core, the property consultancy, upscale residential properties in Dubai currently are 60 per cent below what a comparable unit goes for in New York. The gap is 75 per cent for homes in prime London addresses and 86 per cent compared with Hong Kong’s.

“Aided by the current softened sales market, potential capital appreciation and higher long-term yields, Dubai’s prime residential real estate is extremely good value by global levels,” said David Godchaux, CEO at Core. “With no holding charges and comparatively lower transaction costs, Dubai stacks up favourably against other competing global cities as an investment destination for global ultra high net worth investors.”

In this regard, units at MBR City have managed to hold their own during the soft spell Dubai’s property market is going through. “We had a launch price of Dh1,375 a square foot and which dropped to Dh1,275, which is marginal against the overall market decline Dubai realty experienced,” said Chavan.

“Until more attractions come up within MBR City in the next three to five years, the biggest plus for high-end investors is the development’s proximity to the Downtown. It will be a big selling point.

“That’s what driving a lot of end-user activity into MBR — by our estimates, 60-65 per cent of those who bought into Millennium Estates (from G&Co.) are end-users. That’s an extremely high percentage for such developments going by Dubai’s realty track-record.

“But developers are also introducing a broader property mix at MBR — such as smaller ticket sizes because that’s where the market is headed. That means properties of Dh2 million plus for unit sizes of 1,000 square feet plus.”

Dubai’s luxury realty adjusts to market correction

* According to data from Core, villa sale prices at Emirates Hills have realised “stable” yields of between 3.5-3.7 per cent over the last four years. “Investors in this ultra-prime district accept a lower income yield as they view the capital security and growth prospects to be higher than the mid to lower market,” the report notes. “With limited stock and no new supply of this scale and quality in close vicinity, a central location in the Emirates Living master plan and its proximity to other prime residential and economic clusters, Emirates Hills continues to be the most sought after ultra-prime residential address in Dubai for international buyers.” (The development is made up of about 600 bespoke villas, of which a “modest” 15-20 per cent are estimated to be currently available for sale.)

* At the Palm, most owners seem to be in a “holding” pattern. Rather than sell at a lower price, they are willing to wait until the next upturn comes around to realise their anticipated price. It could be by Palm based transactions for super-premium units — of Dh10 million and above — were down 44 per cent year-on-year. However, “Sales prices per square foot remain relatively steady with only a 4 per cent year-on-year drop as landlords continue to command prices for well-maintained or refurbished properties,” says the Core report.



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* Transactions featuring super-premium apartments in Dubai Marina were down 43 per cent on a year-on-year basis. “With almost 30,000 existing units, the residential stock is largely fragmented and only limited developments truly qualify as prime,” the report notes. :Unsurprisingly, occupier decision making is principally driven by scenic sea views, thus, higher floors attract premiums from both rentals and sales transactions, some times in excess of 20-30 per cent from the marina views. The prime expected stock continues to be limited and should probably keep the sales prices buoyant for prime residential units in the midterm.”

* Downtown Dubai saw residential sale prices drop 12 per cent, buffeted by the market slowdown. This forced investors to take the longer term approach on their exit plans. Overall transaction levels are down 19 per cent within Downtown’s residential market. Existing apartment stock in Downtown approximates at 8,000 units and an additional 3,000 units are expected to be ready by 2020. “Once complete, we expect prime residential in Downtown Dubai to rise over the muted market, as the district becomes central to the financial and commercial core of Dubai,” says Core.

Source: Gulf News

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THE PERFECT BREXIT PROPERTY PURCHASE,

IF YOU HAVE DH58M – IN PICTURES

Thursday, 7 July 2016

Much has already been written on Britain’s decision to disentangle itself from Europe and the effect it will have on the UK’s property market.

Within two days of the vote to leave the European Union, about £6.9 billion (Dh32bn) had been wiped off the value of the 10 biggest house builders on the London Stock Exchange, while the value of its 10 biggest Real Estate Investment Trusts fell by £7.6bn, according to the trade title Property Week.

Although bad for current owners of UK property, Brexit is considered an opportunity for investors – especially those in Gulf countries whose dollar-pegged currencies now stretch further. At current prices, British property is 31 per cent less expensive for Gulf buyers than it was in the peak of the late 2007 boom, according to Cluttons.

One home that could appeal for practical and historical reasons is Trafalgar Park, a country house estate in Salisbury, Wiltshire, on the market for £12 million. The property stands as testament to an earlier, albeit more successful, withdrawal from Europe. The Grade I listed Georgian Country House was bought by the UK government in 1814 and gifted to the Reverend William Nelson, the older brother of Lord Horatio Nelson, in recognition of the latter’s role as Admiral of the Royal Navy, leading many battles during the French Revolutionary and Napoleonic Wars.

The house remained in the hands of the Nelson family until 1948 and has been privately owned ever since. It consists of a main house with a Baroque banquet hall, a music room painted by the artist Giovanni Battista Cipriani, a drawing room, library, a sitting room, 11 bedrooms, five bathrooms, a hall and storage rooms.

There’s also a south wing linked by a gallery hall containing a dining room, family sitting rooms, a kitchen/dining room, cloakroom and its own two-bed flat.

Another gallery hall links the north wing, which is currently disused but can be redeveloped to add new rooms. Alongside this, the estate contains extensive cellars with a laundry room, boiler rooms, stores and a cloakroom.

Externally, there are two stable blocks containing stables, garages, offices, stores and a three-bed staff flat. It even has its own private church with a memorial to Lord Nelson.

Q&A

This place looks familiar. Why?

Its traditional country house feel means it has played host to a number of period dramas, including adaptations of Jane Austen’s Sense and Sensibility, starring Emma Thompson, and of Emma, with Kate Beckinsale. More unusually, it also featured in director Danny Boyle’s zombie blockbuster 28 Days Later.

Who would live in a house like this?

A lover of the arts and culture. The current owner, Michael Wade, describes Trafalgar Park as "a wonderful family home". He has overseen a renovation of the home, enhancing its Greek Revivalist style, which he described as a "labour of love". He said: "It is a place of great fun. During my tenure we have enjoyed and recorded opera and



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instrumentalists in the Baroque Hall, had the Globe Theatre Company perform Shakespeare – not to mention film stars."

What are the gardens like?

There are 33 acres of parkland with formal gardens, a swimming pool, tennis court, parks and woods.

What else does it offer?

Crispin Holborow, the country director of Savills Private Office, describes it as "the cream of the crop of fine country houses to be marketed in 2016". It has great views, and the chance to live like a real English country gentleman. It is on the edge of the New Forest Country Park and Cranborne Chase, and close to Stonehenge. The cathedral city of Salisbury is seven miles away, from which direct trains to London Waterloo station (88 minutes away) run. Helicopters can also be safely landed within its 33 acres of grounds.

Source: GulfNews

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AL NABOODAH’S CONSTRUCTION ARM ON

TRACK TO HIT TURNOVER OF DH3.5BN THIS

YEAR

Saturday, 9 July 2016

Al Naboodah Construction Group is targeting a 75 per cent increase in turnover to Dh3.5 billion this year, despite a tough start to the year for the region’s property sector.

The Dubai company’s chief executive, Colin Timmons, said he was planning to grow the buildings division of a company best known for civil engineering, and to work on developing closer links between these and other parts of the business, such as its Trans Gulf mechanical, electrical and plumbing (MEP) contracting arm, the Arcon ready-mix concrete business, its specialist joinery operation and the National Plant and Equipment business. He said last year’s turnover was about Dh2bn.

“Getting that overlap [between divisions] is part of our shareholders’ desire … to really try to harness the power of the group, which should give us a more efficient and competitive service offering," Mr Timmons said. “You might have to suffer a little margin [compression], but it’s good for the group."

He was recently appointed as chief executive following Steve Lever’s decision to step down after 30 years with the group. Mr Lever is staying on in an advisory capacity, however, and is overseeing its Qatar business, as well as handling some key client accounts.

Mr Timmons said the company was “broadly in line" to meet its turnover target for the year. It won a package to carry out infrastructure works as part of Alec’s recent contract win for a new terminal at Al Maktoum airport, and he said it was “waiting on a few major projects to land".

“The market is tight at the moment. There is pressure on cash, liquidity is not quite what it used to be. So I think a lot of projects have been tendered and we are aware we are in pole position. That delay of a month or so is difficult to manage, but at least we know it will come."

The company took control of Trans Gulf in the final quarter last year. Although Trans Gulf has some “testing" projects that need to be closed in Qatar, which Mr Lever was overseeing, Mr Timmons said the business had “no underlying financial issues at all", and had the full backing of Al Naboodah Group Enterprises, which manages the Saeed and Mohammed Al Naboodah Group’s various businesses.

“All of the projects that they have been working on over the past 12 to 18 months are good, solid projects. I hope to drive them forward as a real asset to the construction group."

Hamed Madani, the head of consultancy and business intelligence for Aecom Middle East, said that although there were a select group of contractors capable of charging higher prices, many firms were facing pricing pressures as a result of lower material costs and the fact that there are fewer projects around.



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Project management consultancy Turner and Townsend’s Middle East director, Mike Collings, said: “There is a tight market out there and we don’t think that is going to change at least for the next 12 months."


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LIMITED SUPPLY TELLS ON ABU DHABI

PROPERTY VALUES

Sunday, 10 July 2016

Dubai: Limited vacant housing stock and tight supply has limited the price decline in Abu Dhabi, a trend that again showed itself up in the second quarter of 2016 numbers.

Only around 570 residential units were completed in the investment zones during the three month ending June, according to Cavendish Maxwell estimates. These include all apartments located in the Rawdhat area and Shams within Al Reem Island.

Other areas with project completions in the first-half were the residences on Airport Road and Mohammad Bin Zayed City, as well as villas in Najmat area of Al Reem Island.

Even then, “66 per cent of the completed units in the first half of the year were delayed from 2015, while 23 per cent were delayed from the beginning of the year to the second quarter,” the report states.

The key location for upcoming supply will be Al Reem Island, with 90 per cent of these being apartments. Nearly 11,000 units are expected to be added to the investment zones in the city in the next two years.

The muted handover schedules meant over the last 12 months, changes in apartment prices ranged from 3 to 5 per cent across the investment zones, “lower than the 6 per cent average drop in apartment prices in Dubai”.

Average residential prices in Abu Dhabi investment zones have declined nearly 7 per cent since the highs of the second quarter of 2014.

Source: Gulf News

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DUBAI DEVELOPERS SCALE BACK ON

HANDOVERS

Sunday, 10 July 2016

Buyers will have to wait awhile as only 2,800 units were delivered in the second quarter

Dubai: Property buyers in Dubai will not be moving into their new homes any time soon — developers have scaled back considerably on the pace of project completion and handover to compensate for a still tight market situation.

This meant that only about 2,800 new homes were delivered during the second quarter in Dubai, while 71 per cent of the units “initially scheduled” for this period have been delayed, according to estimates from Cavendish Maxwell, the specialist consultancy. Also, “approximately 12 per cent of initially scheduled projects were placed on hold with no definitive completion date,” the report adds.

Moreover, 22 per cent of the units that were delivered in the three months to June relate to projects delayed from the first quarter, many of these being apartments in International City and Arjan.

Industry sources had been warning for some time that developers will try and cut back on new supply to ensure it will not contribute to further price declines. The slowing down on the supply side should continue until such time there is a certain measure of balance with demand.

But a sharp demand spike could still be some months away. The summer weeks should see a marked decline in new transactions and which would follow the traditional slack during Ramadan.

New buyer enquiries

But Dubai’s estate agents haven’t lost hope. According to the Cavendish Maxwell survey, 58 per cent of respondents expect new buyer enquiries to increase during the third quarter, while — more pertinently — 48 per cent expect an increase in the number of agreed sales.

A majority of those surveyed (42 per cent) believe new seller instructions will remain the same during the third quarter.

For prospective buyers, the estate agents’ responses bring good tidings — the majority predict apartment and villa prices as well as rents to remain unchanged.

Property prices in Dubai have declined nearly 12 per cent since the highs in the second quarter of 2014.

Going by the supply levels in the first-half, it’s quite unlikely that developers will be in a rush to complete handovers in the second. Of the 34,475 units scheduled to enter the market in the second-half, “delays are likely to greatly reduce actual delivery,” the report notes.

At the end of 2015, there were around 38,000 units initially scheduled for delivery in 2016. “This figure, in addition to the 7,734 units delayed from 2015, had brought the total of additional units potentially to be delivered to 46,000,” it adds.

“Many developers delayed the delivery of their projects from 2016 to 2017 for several reasons, including tightening liquidity conditions and oil price instability.”



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In the first-half, Dubailand, Silicon Oasis and Arjan were the clusters to record the highest number of property completions. Karama was the sole non-freehold area to figure in this list.

In the second-half, Dubailand and Silicon Oasis should easily retain the top two spots in terms of upcoming deliveries, but Meydan/MBR City could see a few releases happening to figure in third spot.

Factbox: Dubai’s developers ramp up on Ramadan promotions

It’s not just retailers who were offering Ramadan-linked sales promotions … even Dubai’s developers did the same.

“Developers are promoting Ramadan-linked payment plans and the ‘affordable’ tag continues to be aimed at first-time buyers,” says the Cavendish Maxwell report. “However, it is unlikely to ramp up buying activity in the short term among this target segment given the restrictive mortgage-lending requirements and overall liquidity in the market.”

The number of transactions for apartments registered a growth of 21 per cent in May as compared to January, based on Dubai Land Department data.

Source: Gulf News

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With 30 years of Middle East experience, Asteco’s Valuation & Advisory Services

Team brings together a group of the Gulf’s leading real estate experts.

Asteco’s network of offices in Abu Dhabi, Al Ain, Dubai, Northern Emirates, Qatar, Jordan and the Kingdom of Saudi Arabia not only provides a deep understanding of the local markets but also enables us to undertake large instructions where we can quickly apply resources to meet clients requirements.

Our breadth of experience across all the main property sectors is underpinned by our sales, leasing and investment teams transacting in the market and a wealth of research that supports our decision making.

John Allen BSc MRICS Director, Valuation & Advisory +971 4 403 7777 [email protected]

Julia Knibbs MSc Associate Director – Research and Consultancy +971 4 403 7789 [email protected]

VALUATION & ADVISORY Our professional advisory services are conducted by suitably qualified personnel all of whom have had extensive real estate experience within the Middle East and internationally. Our valuations are carried out in accordance with the Royal Institution of Chartered Surveyors (RICS) and International Valuation Standards (IVS) and are undertaken by appropriately qualified valuers with extensive local experience. The Professional Services Asteco conducts throughout the region include: • Consultancy and Advisory Services • Market Research • Valuation Services SALES Asteco has established a large regional property sales division with representatives based in UAE, Saudi Arabia, Qatar and Jordan. Our sales teams have extensive experience in the negotiation and sale of a variety of assets. LEASING Asteco has been instrumental in the leasing of many high-profile developments across the GCC.

ASSET MANAGEMENT Asteco provides comprehensive asset management services to all property owners, whether a single unit (IPM) or a regional mixed use portfolio. Our focus is on maximising value for our Clients.

OWNER ASSOCIATION Asteco has the experience, systems, procedures and manuals in place to provide streamlined comprehensive Association Management and Consultancy Services to residential, commercial and mixed use communities throughout the GCC Region. SALES MANAGEMENT Our Sales Management services are comprehensive and encompass everything required for the successful completion and handover of units to individual unit owners.



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