Emirates Rising

Around 15 years ago it was a dream for the people in Dubai to make it a tourist place. Currently Dubai receives 6 million tourists annually and 2010 estimates have revealed the figure increasing to 15 million.
Dubai was once known only for its oil reserves. But after the speedy development in real estate area with powerful multinationals investing in the sector has transformed Dubai into a beautiful tourist spot. Through tourism Dubai’s GDP has seen a hike of 33% whereas through oil the GDP rise is 5 %. Dubai has followed the footsteps of Singapore. The prosperity of Singapore is beyond words. It houses some of the best and tallest skyscrapers, richest malls and highly sophisticated offices, and so does Dubai property.
In 1991, there were just 700,000 hotel guests in his Emirate. Last year, there were 6.1 million. The number of inflow of passengers has crawled from some 18 million passengers to 28 million and by 2010 is expected to touch 60 million. It is proving itself to be a snow city in the middle of the hot arid desert.
Following the prosperity of Dubai, Abu Dhabi, the largest and richest of the emirates with 11 per cent of the world's oil reserves, is now rushing to reinvent itself as a tourist destination. While Dubai displays itself in a cluster of 300 man-made islands in the shape of the world map, each resembling the country it represents, with homes selling for between US$10 million and US$50 million.
One of these islands, 2,500 hectare in area, Al Habel Al Abbyad, will see the proposed development of Ferrari World theme park. This would feature exciting rides and the development of a glamorous Monaco-style waterfront racing track which could be the venue for a world-class motor race. After Abu Dhabi, one delegate to Global Entrepolis, dreams to build a zoo along the lines of the one in Singapore. The zoo is fabulous entertainment place for the kids and family vacation. Neighboring emirate Ras Al Khaimah (RAK) has included in it’s tourism drive a space port, similar to the one that is being planned for Singapore. The projects in both RAK and Singapore, expected to take off in three years time. It will thrust passengers on sub-orbital rides into space at $100,000 or so each time. Even tiny Umm Al Quwain, whose population numbers just tens of thousands, is also determined not to be left out. It is now building a huge $6 billion waterfront housing and marina project with investment from Dubai and Saudi Arabia.
These emirates have not forgotten to carve a niche in the hospitality sector in the area of air travel. Abu Dhabi has launched Etihad Airways, RAK has RAK Airways, and Sharjah, another emirate, has Air Arabia. The tremendous success of Dubai's Emirates airline has acted as a catalyst for the new projects; they face a stiff competition from well established gulf airways and Qatar airways. Qatar has earlier marked itself with huge oil reserves and hosting of the controversial Al Jazeera television station.
Earlier this year, Dubai's big three companies – Emaar, Dubai Holdings and Dubai World, all controlled by the ruling Maktoum family – announced plans to spend $64 billion on luxury projects in Pakistan, including two giant man-made island resorts off Karachi, reports Newsweek magazine in its latest issue. Dubai has also made a $30 billion commitment to develop the Morcoccan town of Oukaimedan, into a haven for golf and skiing in the Atlas Mountains and it will play the lead role in constructing the $45 billion King Abdullah City on the Red Sea coast of Saudi Arabia.
But then the man who is the original link between Singapore and Dubai, Mr Mohammed Al Abbar, who worked five years in Singapore, before heading Dubai's Department of Economic Development, was in his 30s while supervising the massive billion-dollar development that has taken Dubai to its glittering zenith. He wanted Dubai to become the Singapore of the Gulf. Today, it is giving Singapore a run for its money.

Nakheel goes Flying

The esteemed property developer Nakheel is flying the ‘Spirit of Dubai’ from London to Dubai over some of the world's exquisite landmarks, including the awe-inspiring and pre-historic Stonehenge, the Acropolis (popularly the pre-historic ‘Sacred Rock’ reminiscence of the Greek past) and over the imposing grandeur of the Great Pyramids of Egypt. The aircraft is specially appointed for the first handover of residences on the Palm Jumeirah to its allotters before the end of the year.

The Dubai Property Law

In the backdrop of sale and purchase of so called ‘affordable’ properties in the ‘wonder’ Dubai being announced on every other day, it will be an fruitful exercise for the potential buyer to be aware of certain do’s and don’ts while investing in this cherished venture.
According to the Dubai Property Law (Law No. 7 of 2006; effective from April 1st, 2006), the Lands Department is the only authorized body to register Real Properties Rights in Dubai.
Real Properties Rights capable of registration includes rights of
Freehold Ownership
Rights of Usufruct i.e. long leases up to 99 years
Rights of Musataha
Collateral rights such as easements, restrictions and mortgages over real property.
Right to Purchase
UAE and GCC nationals have the unbridled right to own any property interest in Dubai and register such rights at the Lands Department (Article 4 of the Dubai Property Law). The law also extends to companies wholly owned by such nationals.
For nationalities other than UAE and GCC, are granted the right to hold a freehold interest, right of usufruct i.e. a long lease of up to 99 years in ‘designated areas of Dubai’ as authorized and approved by the Ruler.
Non-Designated Areas
Long leased properties in areas which are not covered under the ambit of the ‘designated areas’ are not covered by the Dubai Property Law. But at the same time such a property can not be held as illegal.
Such unregistered leases are treated as follows:
Unregistered leases remain personal rights
Unregistered leases are still capable of being inherited
In the event of any dispute arising between a landlord and a tenant of an unregistered long lease, the Rents Committee shall take care of the adjudication.
Additional Information
Article 26(1): “Any agreement or disposal made in violation to the provisions of this law or with the intent to circumvent its provisions shall be null and void”.
Article 26(2): gives any interested third party which here is the Lands Department and Public Prosecution, the right to request the court to declare such a transaction void. This is directed at so called ‘sham arrangements’.
These provisions are applicable to those agreements that purport to give property ownership rights to someone who is not entitled to own it and is not entitled to register it.
According to articles 5, 22 and 24
A contract or other agreement by which a purchaser acquires the property ownership is not sufficient to prove it. It is mandatory for the purchaser to take the contract to the Lands Department and apply for ownership to be registered in his name. If the application is in order, the Lands Department will register the ownership in the property Register and issue a ‘Title Certificate’.

Burlington –the Saga of Towering Sale Success

Deyaar, a rapidly upcoming Dubai real estate company established in 2002 as wholly owned subsidiary of the cash rich Dubai Islamic Bank is suitably positioned in the Dubai’s plush Business Bay, an area fast evolving as the regional business hub gaining parity with the key international cities. Deyaar’s innovative business policies coupled with new initiatives to be rolled out in 2007 are expected to place this real estate company in row of finest ‘one stop of real estate solutions providers’ in the region. Aside the development and management of property assets, Deyaar managed by a panel of acclaimed personalities and experts, offers additional services as brokerage, marketing and investment council.
Deyaar is a leading concern in developing Dubai’s real estate with several noteworthy projects like the Seef Towers I in Dubai Marina, Seef Tower II in Jumeirah Lake, Madison Residency on Sheikh Zayed Road, Citadel and Churchill in Business Bay and Al Dana in Sharjah. The over $ 3 billion worth organization presently has 16,000 commercial and residential properties under its belt.
The unparallel success that the organization has achieved in such a short span in terms of earning trust and confidence of the investors can be deciphered from the fact that with in a month of the launch of its worthwhile property “The Burlington Towers”, already 85 percent of it is already sold off. The Tower is a gorgeous 35-floor commercial tower planted in the Business Bay area. Its construction is due to begin in January 2007 and will see completion by December 2009. Elaborating on its overwhelming sales response, Deyaar executive vice-president John D’ Cunha has correctly remarked that The Burlington Towers property with its hi-end luxurious design and right investment value will maximize returns to the investors in times to come.
Deyaar CEO Zack Shahin, expressing his views on the changing dynamics of Dubai’s property market said “ The property market in Dubai mirrors many interesting trends, the most important being the new breed of investors that is showing interest in buying or trading in property in the Emirate and the sale of The Burlington reflects just that”.
Currently with the up swinging economy of Dubai, a strong back up infrastructure, thriving business hub, a prime tourist destination, dense working population and free trading zones with low/no taxes makes Dubai an attractive investment destination surging up the demand for commercial space. The Burlington with its strategic location amidst the Bay Business region serves as an appropriate business address. The tower houses ranging from minimum of 530 to a maximum of 2,019 sq. feet 476 luxurious offices, a chic designer lobby, a 19,750 sq. feet shopping arcade, a panoramic gym and sporting facilities at its 20th Floor. There is a dining plaza with a spectacular view and a number of coffee shops. The Burlington is complete with a business center with conference and training rooms and a stunningly created business lounge. The property is well facilitated with a strong security systems and podium parking.

Eco-tourism amidst the Arabian Desert

The mysteriously whistling and softly whispering air resonating in the never ending sand spreads across the Arabian Desert originally inhabited by the native Bedouins is all set to enthrall the hearts of tourists from all corners of the globe to come and see for them selves the unexplored wilderness of the Middle East and Dubai property.
The Al Maha Desert Resort owned by the Emirates Airlines and comfortably sitting atop the large dune inside a desert conservation reserve of 230sq km taking up about five percent of Dubai is in itself a kingdom with 40 luxurious all amenity endowed palatial Bedouin tents each for $ 1320 a night with discounts for frequent fliers on Emirates Airlines and summer discounts. Each of the tent bungalows is provided with an exclusive swimming pool and is stocked with the expensive items such as Bulgari soaps, crystal decanters flowing with free sherry, the cushy menus are all set to get go the revenue fetching eco-tourism amidst the mystical Arabian desert in its distinctive and elegant Dubai style. One can frequently find the presence of its native as well as exotic wild such as its rare Arabian gazelle casually flocking into the bungalows to the sheer amazement of its residents. The resort perched amidst the melting long stretches of undulating sand dunes change its colors with the reflection of the sun that gradually dips in the horizon as the day comes to an end. The Al Maha may be very expensive but it is instrumental in playing a significant role in the conservation of the precious wild and the raw unexplored land of the Arabian Desert home to its tribal that could easily have fallen prey and disappeared without trace in the rapacious development of the Middle East.
The tourism sponsored by the Al Maha, promoted as eco-tourism is ecologically friendly but with its own share of hunches. The artificial resources employed to create an aura of all green and environment savvy conditions is a rather a progenitor of undesirable elements unheard of before, percolating into the eco-system of this sandy land. The resort’s air conditioned bungalows consume plenty of water and electricity. The introduction of non native, exotic plant varieties to beautify the resort and piling of double the number of animals that the land can support to give the wilderness look to the resort is actually an eco-threat and not eco-friendly at all. If not taken care of in time the arrangement will show its negative spills in times to come. Yet the sight of various animals willingly strolling by and the birds flying down the artificially watering hole to quench their thirst in the 42 degree centigrade afternoon in the vicinity of the bungalow tents thrill the tourists who anxiously watch them with their hotel provided binoculars.
The biggest success attributed to the Al Maha is its significant role in swelling up the size of its native and rare Arabian Oryx, a big white antelope which was at the verge of diminishing in the 60s but are now thriving rather flourishing, and can be seen happily munching the irrigated greenery amidst the peach colored dunes of the resort and its bungalow lawns. Other protected and saved animals include the three species of breathtakingly spontaneous and attractive springing gazelles, two species of desert foxes and the awe inspiring rapaciously moving 20cm long lizard with porcelain like skin. Steps were taken to revive the dying herd of scimitar-horned Oryx once native to the Sahara and can now be seen hopping in the vicinity of the resort. Timely elimination of camel, an animal that had covertly robbed this desert land off its natural greenery, from the premises of the resort has sprung long awaited life to the land after years of overgrazing turning the already denuded part of this earth into a barren entity.
Another memorable eco-tourism option to be cherished can be tried with the entourage arranged by the company called Mountain Extreme in the northern emirate of Ras al-Khaimah which provides for an overnight trek in the sun-shattered rock climbing of the Hajjar Mountains.
Watching fascinating displays of early morning owl hunting and an occasional falcon-hunting is a life time sight, worth experiencing. The mighty bird obeys to the brilliant commands of its trainer. It comes down in circular movements and whisks away the pieces of bird carcass in a flash while the people are still facing up unable to comprehend for a few seconds as to what happened.
Enchanting evenings spent at the backdrop of the setting sun melting gradually in the dusty horizon with a flute of champagne and fresh strawberries in our hands and lazing with fellow trotters from all across the globe is a soulful experience.
For the ones wanting more adventure, there are treks beyond the unexplored mountain villages of the Shihhi tribes in the northern emirate of Ras al –Khaimah and in Oman to delve into the lives of these natives of the ancient civilization.
John Falchetto, a Canadian mountaineer and entrepreneur is an ardent desert fan. He takes hardy hikers for an overnight adventure into the rugged Wadi Bih canyon and peaks of the Hijjar Mountains. He has redeveloped the otherwise rusty Shihhi villages to be used as base camps. He is presently working in conjunction with the emirate’s ruler towards developing a nature reserve around this region.
A few villages are accessible only by foot and are fantastically located very near to the mighty and dashy Indian Ocean. Sun is already set ablaze even at 5:30 in the morning, we sit atop the peak of the mountain looking over the serpentine ridges of the mighty canyon with layers after layers of limestone spread as sheets of magical vistas only seen to believe in this ultimate tourist destination.

Emaar Properties goes Hamptons International

In August 2006 Dubai based Emaar Properties joined hands with Hamptons International the UK based premier retailer with over 130 years of real estate expertise thereby bringing its entire property management services portfolio under the globally recognized Hamptons International fold. This strategic alliance has far reaching benefits for both the biggies in the international map. It is an opportunity for this Middle East Corporation now functional as Hampton International to benefit from the brand name of the esteemed Hamptons International and expand its wings across the to the west in terms of its operations, service support and product sales much faster and in the wider markets including those of Europe in a more effective way. Mr. Mohamed Ali Alabbar, the Chairman of the Emaar Properties feels the integration as a giant step forward for his company and in consonance with its Vision 2010 plan for expanding their bases to the non Emaar properties as well in Dubai by offering them property management services and strengthening up the real estate sector by its quality backed services. With this acquisition the Emaar becomes a pioneer in bringing international color to buying, selling, leasing and mortgaging and other superior services already observed by the Hamptons into Dubai. Emaar will also avail the benefits of Hamptons globally accepted best practices in property valuation, management and development services into its system not to forget its strong global sales network.

Emaar has already diversified its operations in Saudi Arabia, Morocco, Egypt, Tunisia, Jordan, Turkey, Syria, India, Pakistan, and Libya. In tune with its Vision 2010, the Emaar earlier had horizontal integration with middle-east based The Turner Corporation, a leading building services provider to form Turner International Middle East Ltd. It had also strategic amalgamation with the John Laing Homes, the second largest private home builders in the US to affirm its global footing. With the entire Emaar Properties now under the folds, Hamptons International, the global giant in the real estate, further strengths and consolidates as a brand.
Hamptons International comprising of Hamptons’ UK Offices, CB Richard Ellis Hamptons International in UK and Oman sells, lets and manages over 15,000 properties every year in the UK and overseas while the Emaar has hold over 14,500 homes, making the property portfolio of the Hamptons double the original number. The association facilitates two way information exchanges. Interested investors in the west can pick valuable information regarding their potential investments in the Middle East from its now 60 but due to be raised to 120 Hamptons offices spread all across the globe by 2009 while residents here can know which properties are patron by the Hamptons International. With this marriage Hamptons International affirms its footing as an undisputed leader in the entire region in terms of brand name and a major global player in the international real estate sector.

Is Dubai still the Wonderland?

There is a often a widely acknowledged speculation and murmurs amongst the real estate market consultants and experts whether the soaring prices of the Dubai property are an indicator of its maturity and as per any cycle destined for its eventual collapse.
Daniel Husain, vice president of Dubai Lagoon, one of the emirate’s largest private sector real estate projects under development differs from this traditional point of view. He optimistically predicts the Dubai property prices to go fifty percent higher than its present market value. His prediction is not about throwing words in the air, he has strongly grounded facts and experience to support his statement. His company situated in the Dubai Investment Park has Dh 3 billion project under its belt constituting 53 residential buildings spread across 40 acres of land which means space covered by 40 football fields. The project launched in two phases is due its completion by June 2008 has already sold off 80 percent of its work; the overwhelming buyer’s response reflecting their faith in investments in the real estate Dubai assets. Reciting his own personal experience he says that initially they too had their moments of doubt when warned by the industry experts which were soon melted when the project sold all its Phase 1 apartments-1,752 of them in 52 days making an average sale of 31 apartments per day contrary to the warning of only 3 apartments per day. Elaborating his view point Daniel Husain further adds that with the average salary of Dubai income earners ranging between Dh 8,000 and Dh 10,000 there is still scope for genuine need for affordable housing amongst the salaried class which would be always on the up rise along with the foreign companies considering the lucrative facilities and superior standards Dubai has to offer. This would always appeal the individuals and companies alike to test their fortunes in Dubai and a floating its property prices by at least fifteen percent. He is also upbeat about Dubai Lagoon’s prospects: “I believe, on a conservative estimate, that on completion, its prices will go 30-35 per cent higher from where they are today.”
The demand for housing and commercial property will also stay strong to the advantage of the property owner considering the constant influx of the expatriates to this ‘wonder’ land. The property owner can always reap on the rental yield which in Dubai is eight to fifteen per cent, tax free and is much higher than anywhere in the world
Daniel also clarified that rising prices is a problem for the developers as well. The rising prices directly imply the construction prices also go up. According to the report by the industry consultant EC Harris, the construction costs including that of raw material and labour jumped by 28 per cent in the first eight months of 2006. Dubai Lagoon prefers the foreign contractors notably from Thailand and Myanmar to the local one for their superior negotiation skills and experience in begetting their supplies of steel, cement and other raw materials from global markets at competitive rates and quality.
Concluding his view point he affirms “Dubai still remains a great place to invest in” and this is one of the great reasons that Dubai will always remain the ‘happening’ city for the real estate investors and second-home buyers for now and in times to come’.

About Trusting Dubai Holding

Dubai Holding LLC (DH) supported by His Highness Shaikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of UAE and the Ruler of Dubai, is one of the three premier real estate organizations of repute in Dubai. The company envisages active role in developing and diversifying the vibrant and already thriving economy of Dubai and seeks to identify existing and future projects in Dubai property and expand its wings internationally. It aims to create a strong foothold across a diverse range of industries to execute its vision of a diversified, knowledge-based economy and export this knowledge to the benefit of the region.
The job of large scale development and managing real estate projects in Dubai has been given to three companies to ensure quality through healthy competition and mitigate government monopoly. The Emirate’s other companies with similar business interests in the real estate sector are Emaar Properties PJSC and Nakheel of the Dubai World.
In consonance with this mission, the group has attuned its strategies and grouped them under three core objectives:
Creating Value for its shareholders,
Diversifying Group’s Portfolio, and
Human Resource and Economic development of the people of Dubai.
The group’s activities shall focus on the gentle mix of social welfare and infrastructural development with an active thrust upon their economic viability on the lines of commercial justification.
Its large scale undertakings and ambitious projects include Dubailand and Al Bawadi, a magnificent and bewitching tourism complex containing the largest hotel in the world.
The A1 accredited Dubai Holding Commercial Operations Group LLC (DHCOG) of the parent company Dubai Holding LLC (DH) takes care of the non-financial investment businesses of the Group.
The DHCOG has five subsidiary companies dealing essentially in the real estate and hospitality business. The two companies under Dubai Holding Investments Group (DHIG) incorporate its international investment (in more than $ 4 billion net worth Dubai Investments) and private equity business (as Dubai International Capital) and have 51 percent share holding in the group. Dubai Investments owns the leisure group Tussaud, UK engineering company Doncasters and budget hotel operator Travelodge. DHCOG’s renowned and very exclusive Jumeirah brand undertakes care of the hospitality business and manages several expensive and noteworthy properties in Dubai like the Burj Al Arab and a few selected international properties in London and New York.
Of the subsidiaries, the Tecom Investments deals with developing and managing businesses related with the knowledge economies. This encompasses Emirates’ core free zones such as the Dubai Internet City, Dubai Media City and Dubai Knowledge Village. Its future investments in energy sector through EMPOWER is also likely.
Dubai Properties is the main subsidiary that takes care of the real estate business and manages the development of both residential as well as commercial infrastructure development in Dubai. The luxurious and the enchanting Jumeirah Beach Residence with 1200 rooms, Amwaj Rotana Resort in its circumference and the Business Bay downtown business district are the constructive genius of Dubai Properties.
Tatweer, the second subsidiary of the DHCOG group deals exclusively with developing and managing the domestic real estate sector and its focus is on life improving set ups like the Dubai Healthcare City and Dubailand.
Sama Dubai the fifth subsidiary of the group taking care of the remarkable ‘The Lagoons’ complex in Dubai intends to export some of its expertise to international key projects extending as far as Qatar, Oman, Bahrain, Morocco and Turkey.
Acquiring 35 percent stake in Tunisie Telecom in 2006, the premier telecom company of Tunisia for $2.25 billion and a 60 percent stake in Malta Com for $280 million through Tecom and Dubai Investments is another feather to its cap.
The DH launched the second mobile operator under the ‘du’ brand in which it has 20 percent stake.
Risk Profile:
The companies with the Dubai Holding are relatively young. It has the IFRS complaint numbers which are audited but are not yet public. The revenue generated by the DH as per 2005 year end is from the brand Jumeirah and rental revenues from the existing free zones and are expected to grow in future. DHCOG had managed to raise $2.7 billion in 2006 to fund its recently acquired Tunisia Telecom and MaltaCom.
and will require refinancing in 2007 as well. Being relatively new the group will finance its domestic real estate properties from land sales and advance payments. The international projects at Sama Dubai will have to resort to moderate debt financing for sometime.
Capital market debts are raised at DHCOG yet it does not support its subsidiaries other than as stipulated in the group’s stated dividend policy. Some debt is maintained at Tecom and Jumeirah considering the current pricing corrections and tenor.

Trading Property

With the speculative nature of market now in favor of borrower, more and more finance institutions and banks are coming with easy loans like never before. Hoardings displaying easy loans can be seen splashed anywhere and everywhere. The conditions sound too good and too simple to be true. Property has never such an easy ball from as far as one can recall. The lenders are devising innovative more accurately drooling strategies and competitive rates obviously based on realistic valuations to make the Loan to Value (LTV) immensely attractive to the prospective borrowers.
The good thing about Banks offering finance to buy property in Dubai is that laws here are in favor of the customer and the repossession of property in the event of nonpayment of next installment is not so easy, making only those lenders with consolidated positions to enter this market.
With the rapidly diminishing breed of cash down payment buyers’ developers are frantically arranging bank /lender-borrower link to sell their properties. Unless the finance option is sought available it would be a tedious task to sell the property. Many real estate developers have them selves taken on self-financing and loans can be down paid in easy installments within a few years time. In the absence of bank’s intervention as in private lending, the buyer should carefully study the T&C’s and try to find the loopholes and discrepancies it is capable of causing in future.
This is paradoxical, where banks do not want to lend too much considering the dwindling profits amidst stiff competition and softening of valuations crossing swords with their need to secure a market share in the sunshine business of lending. Currently all the financers are hiking their LTV on the golden hope that self corrective market forces will care of everything sooner or later. Banks are smart finance operators, they never like to loose and till the end deem to ensure that they recover their last penny back.
Dubai real estate investors are also seeking finances from overseas lenders or begetting cash from other property income, portfolios or any other way by leveraging on property assets. It is strongly recommended for those having Created Capital Gains (CCG) in the UK not to leverage the foreign property to secure a loan at favorable rates for their Dubai purchase to save them selves from the headaches of the Inheritances (IHT) and Death Taxes. In the event of insufficient rentals, you are risking both your properties at one go. A non –domicile property holder in the UK regardless of his nationality is anyway liable for the Death Tax while the ITH can be solved with the help of a good mortgage broker so keep the two deals separate and no need to risk the UK property to finance loans on the property in Dubai.
The prospective property buyer should ensure that he has a sufficiently good pocket to finance the property in event of changes in interest rate or the lending criterion. Parallel to this the Developer/ Retailer generate active tie up with the local banks to be able to secure best deal for the customer or exploring the possibility of financing 100 percent using international lending solutions. This will not only consolidate his present position in the real estate sector but also help him stay ahead of his competitors in the property market. The interested buyers can also write to Property World ME to get unbiased property finance solutions.

Rent Cap on 2007 Property

The new rent cap rule in Dubai does not allow Landlords to raise the stipulated seven percent yearly increases in rents on their properties in the year 2007. The mandatory decree issued on behalf of His Highness Shaikh Mohammad Bin Rashid Al Maktoum, Vice-President and Prime Minister of UAE and the ruler of Dubai, extends it to tenants who have signed their property Dubai contracts last year for the first time or whose contracts’ renewal was due for renewal on the 1st January this year as per the contractual agreement signed before provided they have already paid the rent that was due for 2006. In the event of any discrepancy the aggrieved tenants can contact the Rent Committee if it has already paid the money in advance and get the money refunded. If the landlord does not comply with the new rule, the tenant can file the case to the same body. He has requested any kind of dispute between the land lord and the tenant to be resolved and settled by amicable bilateral negotiations within the ambit of the new law amongst themselves else they can approach the tribunal under the Rent Committee appointed for the same. This rule has been communicated in public interest by Mohammad Al Sheikh, Secretary General of the Dubai Rent Committee.
The rule also implies that tenants whose rents had been hiked in 2006 will not face another hike in 2007 but the ones who did not face the hike of rent last year will have to pay now but in tune of seven percent of their annual rent only.
Article 2 of the new decree says that for properties whose contracts had already been signed in 2006 with a new tenant will be free of any rent increase in 2007.
The Dubai Rent Committee’s office is located at ground floor of the Dubai Municipality headquarters at Baniyas Road. It can be contacted on telephone at 04-2232766 and 04-2215555
Ploys used by the landlords to evict tenants
The building needs maintenance
Need the house for my relatives
Building will be demolished
The house will be sold
The flat is being sublet
Bachelors are living in the house

Fabulous Desert Resorts of Dubai

Margham, United Arab Emirates, another unit of Dubai property is a dream destination for many travelers to this part of the world. One can enjoy complete privacy with benefits of pool and a private bungalow in an exquisite desert environment. The Al Maha desert resort for e.g. allows its visitors a pleasured stay in midst of eco-tourism, Dubai style. It has 40 magnificent bungalows architectured like Bedouin Tents stocked with pillow menus where visitors can pick their favorite pillow heads. They also provide Bulgari soaps and crystal decanters of free sherry. Al Maha occupies the slope of a dune inside the desert conservation reserve, which is a small part of a huge block, approximately 5 percent the entire landmass of Dubai.
An overnight trek to northern Emirates of Ras Al Khaimah, gives visitors an advantage of climbing the sun-shattered rocks of Hajjar Mountains; this region is also known as middle-east’s epicenter of luxury tourism.
Al Maha is an expensive eco-tourism resort in Dubai compared to other hotels in this region; however, it doesn’t always follow the eco-friendly rules. It uses Air conditioned bungalows and huge loads of electricity to give the best to its visitors. The resort owners and Emirates Airlines have together introduced many non-native plants here along with more than twice as many animals the desert can support. Although this move was to promote tourism in this land, but on the down-side it has led to an ecological imbalance. Al Maha is working towards ways for preservation of natural habitat form the growing development race in the region. The resort is comfortably placed with a scintillating view of sand dunes meeting rocks at Hajjar Mountains at the horizon. The valley has an artificial watering hole at the bottom making it a centre of attraction for visitors as well as the animal population. Tourists can use binoculars to get an eye-shot of these animals from the resort itself. The more frequent ones in a 108 degree May environment are Arabian Oryx and big white Antelopes, which suffered extreme poaching during 1960’s reducing their numbers to less than 50 then. From subsequent efforts by the Al Maha even the declining numbers for Arabian Oryx have now climbed to more than 300. The region also has a small population of desert foxes and sand skinks, which is an 8 inch long lizard with skin much like Porcelain. The non-natives of this place are, the Scimitar Horned-Oryx, initially of Sahara it is now extinct in the wild. Its reducing numbers in this region has sent alarm signals to conservationists; these have declined from 35 to 18. Another misplaced race is that of Thomson’s gazelles, native of East-Africa. Also the most destruction-friendly is the Camel which is banned from most resorts due to efforts towards building up natural vegetation in the region. Camels which were initially bred for racing purpose in Emirati desert have almost stripped of the natural vegetation there, turning it into a large waste land. Still many powerful sheiks have kept a few herds despite disapproval from resort owners.
Staying here can be very expensive, the resort charges about $1000 per night prompting visitors to spend every hour in best way possible. The rates however are discounted for frequent fliers on Emirates Airlines. For Leisure one can spend a lot of time exploring the desert and if lucky, even watch a display of falcon hunting as well as owl hunting along with delightful shows from owl-tamers. Tourists can also enjoy camel treks to the summit of tall dunes or have champagne and fresh strawberries to enjoy their evening. Al Maha also organizes treks to the remote mountain villages of Shihhi tribes of northern Emirates of Ras Al Khaimah and neighboring Oman; a casual climb however can lead to Jebel Qiwi at a height of 5,900 feet. One can also hike to stone villages crossing Machu Picchu with Grand Canyon.
John Falchetto is a 33 year old successful hiker known to this region. He is a Canadian mountaineer and entrepreneur and is experienced with hikes into the deep rugged Wadi Bih canyon or even to peaks of Hajjars for overnight hikes rigging through two of the tallest mountains here. Falchetto has been making investments towards re-development of abandoned Shihhi villages and even turning them to base camps for hikers. Many villages here are accessible only through foot, being placed at remote locations even at cliff-side edges over looking the Indian Ocean. Dusty and barren during the day, these villages are cool and silent during the night coupled with breezing mountain air.
How to get there:
There are 110 airlines serving Dubai’s airport. Daily there are two non-stop services by Emirate Airlines from New York to Dubai and vice versa. A 40 minute driv from Dubai leads to Al Maha. The hotel can arrange transportation for $250, but visitors can rent a car or hail a taxi for less. One can also get to the Mountain Extreme’s base with a little more than an hour by road. Mountain Extreme is a prominent mountaineering and hiking company of this region. The cost of journey here is $55 on each way.
Information for Al Maha: The night rates for two persons range to $1000 with summer discount schemes. As an example the Emirate Airlines frequent flier club members were offered discounted rated of $490 per person. These rates also include the meals and private guides.

Dubai to contain rent increase by 7 percent

His Highness Shaikh Mohammad bin Rashid Al Maktoum, vice president and prime minster of UAE and ruler of Dubai yesterday announced to set a cap of seven percent on rent increase in Dubai property for the year 2007. This move comes through to downsize the increasing rents, which have been fueling inflation in Emirates.
The rent allowance was based on a consideration of two decrees; Decree no. 2 of 1993 and its modifications that gave a go ahead to establish special committees for settlement of disputes between tenants and landlords, and Decree No. 14 of 2005, where an upper level was set for any rent increase throughout Emirates. In accordance of the new decree, no rent allowance can exceed 7 percent the annual charge of property. This rule would apply to all new rent contracts about to renew in 2007 with a condition that no increment in rent was made on same property in 2006. Article 2 of the new decree states that rent on those properties whose contract has already been signed in 2006 cannot be reviewed or raised in 2007. The decree takes effect from the date of its issue January 1, 2007 and is to appear in official Gazette.
According to a recent survey more than 44 percent of people in Dubai spend half their salaries on house rent each year. The recent move is being hugely applauded by residents all across Dubai as it comes as a boon for many middle-class families.
Asgar Hussain, a resident of Jebel Ali said, “I was personally under a lot of stress after the 15 percent rent cap ended on December 31st. We were expectind sudden and massive jump in rent any time, but this is the best New Year gift the government could have given us. Another resident of Dubai Kundan Singh exclaimed it as being fantastic news for middle class families. On the other side, the landlords were still uncertain about the decision. Officials at rent committee in Dubai municipality claimed they would make sure landlords abruptly follow the decree. An official quoted “we will see to it that they abide by the new decree”.
Dissatisfaction towards the new rule seemed evident amongst landlords like Amir Ahsan Alam who has rented several apartments in Bur Dubai and Deira areas. He expressed his dissatisfaction towards the decision by saying “the 7 percent cap will affect us badly”.

Health insurance moves over to the second phase

The second phase of health insurance policy materialized yesterday providing benefit to nearly 1.5 million expatriates working here. The president Shaikh Khalifa bin Zayed Al Nahyan issued a law stating the responsibilities of employers towards providing health insurance to his employee and his family including wife and three children below 18 years of age. The law is set to provide quality and cost effective health care and medication services to expatriates residing in Emirates with rented property in Dubai. The only official regulatory body responsible for execution of this project is the General Health Authority for the Emirate of Abu Dhabi (GAHS). This scheme can be availed by the valid GAHS health card holders or those covered under insurance programs apart from one provided by GAHS before 1st January up till card expiry period. These health insurance policies would be valid up to 1 year and have to be renewed annually. Also, all authorized insurance companies have to extend these facilities to all individuals, and cannot refrain for any reason. The first phase of the project was implemented on 1st July last year, but was confined to companies sponsoring over 1000 employees.
The National Health Insurance Company, Daman, has four branches set up to look after transactions of the new scheme. These branches are located in Bateen (near central Bank), Musaffah (opposite Abu Dhabi Islamic bank), Al Ain (post office building) and Madinat Zayed in the western region. To further the process, additional service points have been set up by Daman at department of preventive medicine facilities at Abu Dhabi Island, Al Ain City and Madinat Zayed.
These facilities are inclined towards certain sections of society such as nannies, housemaids, taxi and other transportation drivers, agricultural and maintenance workers, helpers, cleaners, security guards along with residents n=not permitted to work such as sponsored individuals, spouse, children.

Demand divides Villas:

Many real estate agents in Dubai have engaged in illegal partitioning of villas into small units that helps them rent them out to large number of people.
The demand for these arrangements has risen in regions like Hor Al Anz, Qusais and Al Quoz. This is generally caused due to an increase in the numbers of illegal expatriates belonging to lower or middle income group, who are forced to thrive in uneasy and unsafe conditions to save some money.
Wahid Abdul Karim an engineer in Building inspection department of Dubai municipality added, “We are aware of the fact that one room of a villa gets divided into two or three parts. This is illegal.”
He said that the municipality has sent notices to many residents there asking them to remove the partitions. He also added that continued violation would result in disconnection of power and water supply.
Another agent who works with lower income groups said that there is a huge demand for studios and one bed room units from families unable to afford better facilitated apartments in residential buildings.
There are many Dubai real estate agents like these in Dubai who cater to the needs of such sections and also arrange in open compounds to accommodate more of these families.
A one room apartment with a small kitchen and bathroom is available for Dh 2,000-3,000 per month and many families can live comfortably in these apartments. However many families often complain about being harassed by agents. The residents add that even though they pay off hugely, the villa owners are reluctant towards providing any maintenance. These families have to live in poor conditions like no electricity, improper hygiene etc. Joseph a tenant living with his family in a shared villa in Hor Al Anz says that their house lacks proper drainage facilities and he is constantly worried about the health of his wife and children”. Many tenants live in similar unhealthy conditions because of rent. To add to their trouble a villa having 6-7 rooms gets shared by 20-25 families. These conditions worsen during summer months as the plywood partitions get unbearable. To add to this many tenants complain of being harassed by land lords who ask them to pay more rent on electricity. They say that the meter installed there shows erratic readings and they can’t complain due to fears of being thrown out.

Recent fare increase doesn’t bother Abra users

The Already speculating commuters for Abra between Bur Dubai and Diera weren’t surprised from the recent hike in fares. They said that they were already expecting it and Abra drivers were talking about it for a long time. However, Abra is still cheapest means of travel between Bur Dubai and Diera despite this hike.
R. Shridharan an employee in ABN Amro bank who has been using Abra for six years now says he is unperturbed by this increase and Abra still remains the cheapest and fastest means of travel here.
For the Abra drivers however this hike comes in as a big relief. They say that the cost of diesel has gone up by 50 fils was hardly enough, although the drivers feel that the fares should have been hiked by at least Dh 2. The executive council recently announced a hike in fares from 50fils to Dh1. People hiring a boat for an hour would have to give out Dh 100 instead of Dh 50 from now on. The Abra services are used by around 60,000 people every day. On holidays these figures touch almost 100,000.

Two-fold rise in income expected

Dubai Jan 02: The recent fee hike for Abra users from 50 fils to Dh 1 and the commercial use for Abra shelters will now give almost double revenues for Abra owners and operators. This new alternative will help them increase revenues from Dh 70,881 to more than Dh 141,000.
The CEO of Marine Transport department at the roads and transport authority (RTA), Engineer Issa Abdulrahman Al Dossari, asserted, that RTA has placed a strategic plan for development of marine transport system in Emirates costing more than Dh 1 billion. This project also includes the development of marine transport system in Dubai creek.
This plan is placed after exploring views from 149 low income UAE nationals and 300 Abra operators after examining their trade aspects. The implementation of the plan would be done in stages in accordance to a timetable aimed at ensuring quick, safe and integrated marine transport system.
A staff group is allotted to supervise the process of Abra registration and license representative by inland water transport department and further, to train the staff to serve the users and operators of Abra focused on major areas of security, safety and use of facilities and customer service.
To simplify the procedures for operators and owners technical systems and programs have been introduced. These procedures include the issuance of licenses, following up to operational obstacles, emergency maintenance and licensing periodic maintenance along with preparing studies to improve, develop, service and measure the customer satisfaction.
Al Dossari said that the Authority is aiming towards development of marine transportation services by using means like water bus, water taxi and boats for group transports. These services would also be integrated with services such as metro, buses and taxis.
The first step has been initialized by RTA aimed at achieving integration and interdependence amongst various means and transport patterns in Emirates by connecting bus transport line no 19 to Al Seef Abra, giving greater comfort to Abra users. Al Dossari exclaimed that the distance between public busses and Al Seef Abra stations would take about a minute by foot and from line no 3 to Baniyas station opposite Dubai municipality in three minutes.
Al Dossari added that there are six centres for RTA customer service along-side two shores of Dubai Creek, in addition to main centre in RTA building.

Tanmiyat signs a deal to clinch 30 percent stakes in Dh250 m Stargate Project:

Tanmiyat a leading Dubai property developer has bought 30 percent stakes in Dh 250 million stargate project. This project is based on a spaceship- style children’s theme park and is presently developed by Osus in Zabeel Park.
Tanmiyat issued a company statement highlighting the partnership agreement between Osus, Tanmiyat and Saudi First Company, which is a key partner of Osus. Tanmiyat will have a 30 percent share in this project.
The Dubai municipality earlier authorized Osus to develop and manage upon a 30-year old build, operate and transfer concession. Hence, through this agreement the Dubai municipality would be transferred the ownership of this project after the agreement matures.
Stargate project is a mid-sized high tech family themed entertainment centre covering an area of 260,000 sq. feet and situated in 52 hectare Zabeel Park. This location is strategically placed near Dubai international convention centre in Bur Dubai and Karama, which are some of Dubai’s largest neighborhoods. At present 65 percent construction work has been completed and the entire project is scheduled to complete by 2007.
Faisal Abdullah Al Khaldi the chief executive of Osus exclaimed that this spaceship like project will not compete with any other family entertainment centre as this project is unique.
Stargate is the first of its kind high-tech project in Middle East with a family and recreational theme. Abdullah also added that this project would add stars to the growing portfolio of activities for Dubai.

Land Department to establish three new laws

December 10th, 2006
The Dubai land department is in a process to establish three new laws giving election rights to owners of property Dubai. This law would bring out a proper electing body for Dubai property owners thereby establishing transparency to the property sector of Emirates.
The three laws are; condominium law, Trust account law and owner’s association law.
The Condominium law is expected to take shape within the next two or three months, whereas, the other two would be following soon within a year.
Dubai land department would also be coming out with a detailed guide book and map for all freehold areas and respective procedures for their registration. The relationship between investors and developers would be the prime focus in condominium law. This relationship would extend from freehold apartment buildings, arrangements for maintenance, services and utilities along with covering rights and owner’s association.
Trust account law on the other hand focuses on regulation of ‘off plan’ sales and would make sure when an apartment is booked via ‘off plan’. Here the amount cannot be used by the developer. This law would determine when the amount can be released.
The formational aspects of general body would be determined by ‘owner’s association law’. Here the owner of a building would have the right to elect representatives to form an association.

Are there two different markets for Dubai Property?

The pressure on rental prices and cost of houses would be mounting till the supply of completed property in Dubai falls short of demand from arriving as well as existing residents. The reasons for supply shortage also include the contractors who have fallen short of their supply schedules.
The supply chain conditions in general have an absurd view due to flexible delivery dates penned into sales agreements for off-plan buyers. Therefore it makes it hard to predict when the supply of property will catch up with its demand.
Adel Al Shirawi the CEO of Tamweel laid out his plan for 30,000 unit completion for 2007 in front of cityscape conference last week. This forecast comfortably overlooks the demand for 5,000 households for new affluent arrivals per month suggested by immigration authorities. The Dubai property however is a two way market; one for existing completed properties and the other for undefined off-plan property development.
Although it seems simple to confuse them as similar, in reality they differ a lot from each other. The existing completed properties have an immediate value for the end-user as well they offer an income form rent. However the off-plan property is more of a capital investment for buyers. Unless this property can be quickly sold out it is like dead money for the buyers. The developers at cityscape projects confirm these as huge development where an early investor purchases 50 units and earns a good profit from re-sale after two months. However it is a worst kind of speculation where buying takes place based on assumptions in a risk governed market and buyers have no intention to pay more than a deposit.
Weakness can perhaps emerge in off-plan market of Dubai Property with market running out of buyers for ‘off-plan’ units, even before market runs short of completed units of property.
How to save the existing house owners?
The weakness in the market can surely come to the rescue for existing property market, putting a cap on the new supply, whereas, the demand remains strong for completed units.
Further, if the off-plan market is not affected by the speculative correction, the natural forces of construction delays would still be there with contractors having tough time finding building material costs rising to unimaginable levels.
A huge expansion plan is being mobilized for Abu Dhabi’s real estate sector calling scarce human and physical resources. Here the off-plan developers would soon find themselves in midst of deep trouble due to the prevalent scarcity.
It just might mean that the Dubai property could rebalance itself without a crash in existing prices for completed property owners. Dubai has proved the doubters wrong on many occasions.

Dubai property market at a glance

Many observers and potential investors have doubts regarding investment in Dubai property. Even though the property market is rapidly expanding by its fifth a year investors are still skeptical with the safety of their investments. The Cityscape Dubai event which presented both current and future projects gave a reassurance with an increasing scale of activities an enthusiasm. The event undoubtedly showed the strong developmental aim of property market in Dubai and the Gulf.
However hyped the situation is there are still many questions awaiting an answer:
Will the property construction reach its final stages?
Will the promised quality standards be achieved?
Will there be delays in the projects?
Is there a guarantee of one’s investments till the time of hand-over and beyond?

A short answer for these questions is that it would differ from project to the developers. The broader picture is that the situation still remains uncertain with some projects never making it to completion and less attention paid towards the issue by media and government.
The Gulf news archive presents anecdotal evidence with other local publications paying attention to specific queries bringing out news good or bad. There are many other websites presenting great deal of insights to real news on the property scene. Some of the project descriptions are given below:

Emaar: This is amongst some of large developments. The project was built in time and there was no compromise with the quality. Although the records pacify those complaining of bad quality and higher purchase costs.
Nakheel: has a mixed record having some disasters. In a highly anticipated move the verdict on Nakheel remains pending till the handover of Jumeirah palm properties.
Dubai Properties, Sama Dubai, Damac are still yet to prove to the market, more than Nakeel. Reassuringly, the record for Dubai properties the builder of 40-tower Jumeirah Beach residences complex holds good.
Mid and small size developers are very hard to categorize since they are numerous, although they have many projects yet to be completed. For e.g. Tameer a 107-story tower along with a 91-story tower in process at Dubai Marina are still in the pipeline. This project is basically a master plan of Emaar and contains numerous Emaar properties, yet it has the stakes of many small developers arising needs to be re-examined. To generalize, apart from the JBR project, less than half of Marina towers have been built whereas the larger ones are yet not started or are in primary stages.
To present a bigger picture:
The workforce is largely unskilled, poorly trained and poorly paid.
There is a huge competition for skilled and experienced consultants, managers or contractors.
The supply of materials and equipment isn’t free flowing.
To add up, powerful like Emaar have more leverage, but are less accountable for individual clients. Small players on the other hand struggle to get the work completed. The work carried out in the past 5 years shows the industry has entered the middle stages with large levels of expertise locally. Even the overexploited and underpaid workers display significant skill on job promoting higher success rates for achievement of targets.

What is your property portfolio?

The real estate investment trusts (REITs) are very popular investment vehicles in US having laws that were enacted in 1960. Although the name seems less familiar but these have become popular in the Far East.
These tax-privilege entities have been introduced by many countries. The investors in UK and Germany have this option since the start of the year. According to young’s global REIT report 2006 and Ernst, the market capitalization for REITs stands at $608 billion making its presence felt in global economy.
The investment trust law was passed in Dubai last August due to which many REITs are expected to be listed this year forming liquidity pools for property market.
Australia’s Macquarie bank and Abu Dhabi commercial Bank were supposed to launch a $2 billion DIFC REIT last month, to be listed on DIFX. It is yet to materialize.
The standard structure for REIT was conceived to create investments for Dubai real estate in a securitized form i.e. in investment units rather than a piece of real estate itself. Therefore it is a collective investment scheme designed in a unitized structure.
Investment perspectives:
Compared to equities, REITs give higher yields, often as much as five percent. They are considered more desirable due to required transparency and disclosure as compared to other property development schemes.
But awareness is required about the inverse relationship of REITs with interest rates. The prices of REITs shoot up when rates decline leading to a drop in yield. But yield rises when rates rise, allowing prices of REITs to go down.
For assets like real estate, the REITs or so called closed-end funds are better investments unlike open-ended or mutual real estate funds which are prone to redemption and money issues.
The director supervision at Dubai Financial services Authority (DFSA), Simon Gray expressed the rationale for the institute by saying that the investment objective in income generating real estate is engineered to distribute 80 percent of the income generated amongst the unit holders. He confirmed that tax advantages that are one of the drivers of REITs across the world are just an academic point here. He also added that providing facilities to investors for investing in these trusts and thereby getting advantages of professional management, higher liquidity, diversified portfolio and reduced risk also allows individuals to make small investments to create a stable income stream for themselves.
How should a local investor go about receiving REITs?
REIT must be a public fund in Dubai distributing 80 percent of annual income and should not be invested only in a single property. The CEO of Emirates financial services Suresh Kumar points out the challenges in store for REITs. He says that these have taken a long time to come here and are still not a specific example. Therefore to host this new comer, some adjustments have to be made in the ongoing investment culture.
For small investors looking at short term capital gains it may hold as challenge to present something with a stable and long term bond like structure. It would be of benefit to institutional investors or for instance pension funds, i.e. for those looking at mixed income type investment; however the risk friendly investors may not find it very appealing.
The head of research at Shuaa Capital, Walid Shihabi considers it very appropriate to introduce the REITs in the market. He believes that these are a means for opening up the Real estate sector as an investment avenue without small investors involving with specific risks. He described this as having nothing to do with the current real estate cycle in terms of prices, although it has a lot to do with market’s development and maturity status. He exclaims that property owner laws are much clear these days. According to Shihabi the right time to invest in REITs would depend on their property portfolio, expected yields and track records along with the expectations of performance.
Gray from DFSA refers to the stock market which had drastically declined last year. He feels that the demand-price regime would reinforce the investment scenario here. He adds that people want to see diversity which can come with a degree of flexibility along with avoiding the concentration of risk.

Is Dubai on similar lines to Singapore or Hong Kong?

The EFG Herms report on Dubai Property was published last month establishing 2007 a year of transition for the local market here. A gentle decline pattern observed in Singapore from 2000-03 was highlighted as being the likely scenario for future here. Hong Kong saw a huge boom in property sector pre British handover in1997 which rose to a peak position in 1998. Since then the prices fell down hugely by 70 percent till 2003 before they started their recovery coarse. By the end of 2006 the property prices in Hong Kong were greatly recovered and are expected to rise further by 20 percent in 2007. Therefore the investors in Hong Kong followed an unstable path till now.
The property prices in Singapore went up by 37 percent in two years after 1998. After millennium these prices fell by 30 percent till 2003 but have improved by 10 percent since then.
The Scenario in Singapore:
According to EFG Herms the present day demand and supply situation in Dubai is much like that of Singapore in 2000. With the Launch of $140 billion cityscape project, it looks parallel to the over development situation that existed in Singapore. However the EFG does not negate the potential corrections in Dubai Property. The Hong Kong scenario would be an extreme possibility, but as Hong Kong experienced, great periods can be followed by tough times!
Hong Kong’s Trouble:
The Asian financial crisis wreaked Hong Kong during 1997-98; later, the 2000 dotcom crash hit hard on local investors; and more blows were given to the economy by Acute Respiratory Syndrome crisis in 2003. However Hong Kong proved to be a strong regional hub that recovered from these situations paving way for some of world’s highest real estate prices. Although it is hard to imagine Dubai share the same rounds of misfortunes, but it is still strong enough.
The most important point that EFG Herms raises is whether the property schemes would actually materialize or not. Many projects scheduled to be completed are worked upon by small developers and not government or quasi-government. The Report figures that many projects might just not reach completion stage due to inexperience and small size of developers. Therefore the market adjustment for supply in a slowdown situation could by much larger than estimated.

Property prices make banks vulnerable:

Dubai Property: Seeing tremendous growth of assets in economy, the Leading banks in UAE are providing exceptional financial services. However, this growth remains overshadowed by asset and oil price volatility. This statement was provided by standard and poor in its credit risk analysis of banks based in UAE.
The credit analyst of standard & Poor’s, Emmanuel Volland expressed that although banks had the capacity to absorb sharp drops in 2006 local equity prices, the real estate prices may have much severe consequences. With total asset worth of Dh714.1 billion ($194.3 billion), the UAE banking system is second largest amongst others in GCC.
The S & P analysis state that there are likely to be two serious consequences pertaining to last year’s market correction for UAE banks. The business volumes are low, particularly personal for share trading and consumption both. There is also a pressure on household disposable income, whereas indicators for asset quality are set either to plateau or reverse.
According to reports the asset quality could show deterioration if oil or real estate prices fall, even though the asset quality is showing an improvement. The bigger banks would still be less affected as compared to smaller ones in the real estate Dubai market. These large banks have been well prepared through implementation of strict policies of margin lending. They have set aside additional provisions and have even strengthened their capital base.
Standard & Poor’s have a major source of concern for UAE banks i.e. the rapid price increase in the past few years for real property. It is furthered by increasing population due to rise in expatriate worker numbers, along with permission for non-nationals to own property in some areas.
The report examined that real estate market fall-down would severely impact the banking industry since this sector is capped by a 15 percent of banks lending limits as per domestic regulation. The overall economy is further based along property development and trading having a skeptical behavior. This can indirectly affect the less diversified banks.
Banking industry of UAE has seen some high-end growth in past few years in loan and deposit areas. The huge non-current profits from IPO’s and brokerage transactions have given good financial performances for domestic players, an attribute which is hard to duplicate in 2007. Volland added that there has been an increase in price competitions in recent years that has put pressure on along with tempting fewer risk-averse participants to ease on underwriting procedures.
UAE economy is highly dependent on hydrocarbon sector, although much less than other in GCC. Almost 40 percent of the GDP comes from oil giving 70 percent for government revenues. Since public sector is the main stay of economy, it tends to have effects on bank performances. However, according to S & P report UAE is better structured to handle fluctuations and shocks than other GCC countries due to diversification of its economy. Further, large foreign assets generate good revenues giving some cushion to the economy. The current economic momentum has given Dubai an advantage to increase diversification immunizing both government revenues and GDP from fluctuations in oil prices.
Mohamed Damak who works as a credit analyst for S & P believes that concentration of risk is a major weakness that could pave way for credit issues for less capitalized and vulnerable institutions. He adds that their assessment for banking system in Dubai includes UAE’s interventionist policy, which is leaving the industry more prone to bigger problems.

Principal International considers the growth biz in Dubai property secure

Newswire today Of United Kingdom reported saying “despite predictions, the Dubai property market is not set to burst yet!”
The doubts regarding the outburst in property prices have increased speculation in the market for a future down trend. However, experts say that these prices haven’t reached their peak yet. Over the next two years Dubai would see 200,000 new units, clearly indicating promising future for property market in Dubai. The demand from overseas investors and new expatriate arrivals is also a cause for this up trend. Ten years hence, prices are expected to increase by 50 percent from the current level with a 10-15 percent average price increase each year. This situation would prompt an increase in demand for affordable housing for the lay man.
Mortgage prices in property Dubai are expected to come down from their current higher level as the mortgage market matures. Dubai is one of most profitable markets in the world with a tax free environment promoting high rental yields as much as 15 percent. Dubai market also provides a high standard of living along with crime free environment attracting investors and second home buyers here.
Recently it was announced that world’s only sports city would be built here, adding another feather to its cap. It would cover an area of 50 million square feet incorporating 4 multi sport stadiums and a championship golf course. Not far behind in the race, Manchester United is opening a training school and International cricket council is looking forward to setting up its head quarters here.
Capitalizing on the high-end growth, principal international is keen to offer a section of off-plan property at Palm Jumeria along golden mile. The rate starts from £240,000.

More prosperity in store from India-UAE ties

Bangalore, Karnataka 19th January, 2007: Sheikh Saud Bin Saqr Al Qasimi, the crown prince and deputy ruler of Dubai said that there is more prosperity in store form association between India and UAE; Qasimi was addressing a valedictory function held by CII (confederation of Indian industries). He exclaimed that in accordance with a four decade old view of real estate Dubai becoming a hub to global investment, this region has seen a dramatic change in tahat direction emerging as a major economic power in the Gulf.
He said that it is essential never to be satisfied with what has been achieved, instead, there should be a constant effort towards further improvements on it. He also expressed that progress and improvement is only possible when people having similar visions join hands. Qasimi said that Ras Al Khaimah, an emirate of UAE, is on a new course to development. For the Indian scenario he commented that positive changes measured over past few years in Indian economy were a result of far-sightedness of their leaders and entrepreneurs. He further added that India and UAE have a long history of business and trade and this alliance would be profitable for both.
Khater Massad, the investment authority chairman as well as an advisor to crown prince, made a presentation at this session. He said that RAK was like a gateway to Gulf countries being one of the seven Emirates in that region. He explained the attractive investment opportunities in hospitality and manufacturing industry with free trade zones in RAK. He said that many Indian companies are successfully operating in RAK, as is evident from growth in business and investment in the region.
R. Seshasayee the managing director of Ashok Leyland and president of CII thanked Qasimi’s leadership and its pragmatism that has helped India successfully increase trade relations with the Gulf.
Parallel to this session, Fouad Issa al-Jouni the Syrian industry minister invited investment from India and expressed that conditions were favorable and stable for enterprises in this west Asian country. He said that Syria presents a unique geographical location along with diversified economy and ongoing trade liberalization process, much favorable for investment options. He further added that free trade zones in Syria provide a fantastic environment to investors.

Investing Real Estate in Dubai

There is a perpetual speculation amongst the Dubai real estate observers whether or not this fast upcoming business and tourist destination in the world map will ever come up at par with the fortunes of mature real estate markets of London or Hong Kong. Factors have been examined that could be instrumental in ripening of the property markets of Dubai making them high returning and sustainable for the long term land investors.
The current trend of buying off stock plans and realizing capital gains from them as soon as possible makes the real estate in Dubai very ephemeral and is not sustainable at all.
Dubai is the land of immigrants coming here on work permits with no long term plans to stay back. They have no intensions investing in real estate here and prefer to rent the property in Dubai for the fixed time they have to stay here. Hence the future of demand for real estate is definitely high here as in Hong Kong or London but it is for rental. The property owner rides on the income from the rent of the property stock, the cost of which keeps multiplying with the typical real estate cycle which restarts as the market matures.
The present short term crisis in the real estate markets in Dubai is healthy and is rather much required considering the long term economics. There is a desperate need for elimination of shaky speculators and developers who are financing their projects on the back of the proposed stock sold and those in the weak financial situation to clear the market which could be then rebuilt on the dynamics of the real demand –supply equation with genuine and long term players entering the real estate business.
Currently Dubai is fast being geared up as keen business player in the global market on the lines of Honk Kong, New York and other world class cities. With the completion of its esteemed project of Dubai land it will come up as one of the prime tourist destinations although it is already the undisputed business capital of the region and will remain so in times to come considering its up market and remarkable free trade zones and low/no tax policies. The concessions and facilities extended by the UAE government will go a long way in facilitating the establishment of Dubai as the leading financial hub and a global player in the world markets. This should see Dubai through higher in demand in its real estate with global biggies setting up their offices and business in Dubai and the demand coming from its affluent public simultaneously. The prices will substantiate strongly with the ever multiplying rental yields from the property assets and the resale options over the years, an aspect of income recovery inherent in the Dubai’s economics considering its transit population structure.

Dubai and Hong Kong

Frequent parallels are drawn between Dubai and Hong Kong on account of striking similarities between them. It is a cherished desire amongst the real estate investors interested in Dubai as to whether it will ever raise up to the standards reached by the rolling and booming economy of Hong Kong and become a location par excellence in terms of high value real estate amidst the entire Arab land. Dubai like Hong Kong is a highly developed trade and commerce hub, sophisticated free trading zones with low/no taxes in its ambit and a logistics centre for the wider region.
It is equipped with skilled and hardworking expatriate population which is based here for work. In the backdrop of these similarities Dubai has drawn ambitious plans to come on the likes of Hong Kong and has already developed it’s financial, business and tourism sector. Hong Kong has its Disneyland while Dubai land is under construction.
If Hong Kong is a gateway to big wiz China, Dubai is to the petrol rich Middle East with greater US trade deficit. Hong Kong is world’s most populous city with mature real estate sector; Dubai is fast geared up to meet its destination.
The observers are confident that the boom in the Dubai economy is here to stay considering the high petrol prices which will serve as magnet for investment. Hong Kong till date retains premier position in terms of its commercial and residential properties in spite of the Asian Financial Crisis in the late 90s saw the collapsing of the erstwhile mighty Asian tigers and the situation of ambiguity during the handing over of Hong Kong to the Chinese government. This clearly indicates hub cities all over the world will have expensive real estate even if there is short time downslide and this parallel can be drawn for Dubai as well.
In the event of any crisis as fall in the property rates worldwide or decline in prices of oil following US recession the viability of the off-plan real state projects will depend upon the strength of the balance sheet of its developer to be able to carry it out through completion. However the developers relying on the future sales alone to finance construction will be eliminated. This is one of the self corrective market forces that help the survival of the genuine players and helps preserve the value of the existing Dubai property market.

What’s the new face of Dubai property market

Dubai property and its rental yields of 7-10% may be high as per the global property market standards, but this surely elucidates the immaturity in the Dubai property market. If we consider a long run effect, the rental yields should equalize with international property rates very soon. As a result either the property Dubai prices would shoot up or rentals would fall.
A supreme example of a similar property market scenario is that of London. However, here the rental yield (i.e. the total capital value divided by yearly rental income) is barely 2-3 percent. This clearly illustrates that at a higher price level than Dubai property, properties in London have nearly the same rent rate.
A question may be put up here as how can such low property rental rates in the UK support these outstandingly high prices of property?
Some might argue that property prices in the UK are governed by a speculative trend, however, that actual readiness of the buyer can be seen as a prime reason why property mortgage finance is available at lower costs. This is what maintains the high property prices in the UK property market.
If we compare the present day scenario to what existed a decade ago we would find a huge gap with rental yields nearly 16 percent in 1996. However, a continuous upward sloping graph of property prices and decreasing mortgage rates combined with a near national obsession to own a property, a new market trend has been set in the property market since then.
The trend gripping the UK property market which is referred to as mature market for property and real estate, might replicate in Dubai property also.
Many experts believe that Dubai property market may face a downward correction with respect to the Dubai property prices as well as the capital. It is believed that in 2008-09, the market might face an over supply situation which might unleash the adjustment mechanism.
In wake of this speculation it might be difficult for landlords to swallow a sharp cut in rental prices since people manage to somehow cope with rental rates subdued on them. They might repeat a 1999 situation when landlords preferred leaving the apartments unoccupied rather than putting a scissor to the rent rates. However, there may be many amongst the landlords with reasonable financial commitments giving them no choice but the slash the rental rates.

More contributions to Dubai property from Nakheel

Builder of Palm-Islands property in Dubai, one of the biggest of Dubai real estate market, the Nakheel of property Dubai has layed out a plan to start of with construction of 2,300 houses over a plot between Jumeirah Lake Towers and Jumeirah Islands. This project, one of the majors of property Dubai, is named Jumeirah Heights.
This property Dubai project would start of towards the end of this year and would finish up by 2010. There would be three main phases to the development of this property project. First phase would deal with the village centre property, second phase would encompass the fronds and the last phase would