news brief 08 - asteco property managementthe “aykon city” will be feature an 80-storey aykon...

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

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RESEARCH DEPARTMENT

NEWS BRIEF 08 SUNDAY 21 February 2016





REAL ESTATE NEWS

UAE

WHY 7 IN 10 FILIPINOS IN UAE WANT TO BUY A HOUSE UAE-BASED CONTRACTOR LAUNCHES ‘REVOLUTIONARY’ MODULAR

BUILDING ARM

DUBAI

DUBAI’S OFFICE RENTALS SEE SHARP VARIATIONS

DAMAC HOMES IN ON SHAIKH ZAYED ROAD PROJECT

JORDANIANS THIRD LARGEST ARAB BUYER IN DUBAI PROPERTY MARKET

AL SALAM TOWN CENTRE OFFICIALLY OPENS AT MUDON

BUY DUBAI PROPERTY? CAPITAL GUARANTEE, MONEY BACK SCHEMES

DUBAI CONFERENCE FOR 'SMART' GLOBAL PROPERTY REGISTRATION PROCESS

RENTS IN DUBAI'S SPRINGS UP 71% FROM 2010-11

DAMAC HOMES IN ON SHAIKH ZAYED ROAD PROJECT

EMIRATES REIT SCORES ON KEY NUMBERS

DUBAI’S OFFICE RENTALS SEE SHARP VARIATIONS

LATEST ASTECO REPORT HIGHLIGHTS AFFORDABILITY OF NORTHERN EMIRATES

PHASE 2 OF MERAAS PROJECT CITY WALK OPENS WITH ROMANTIC

TOUCH

KPMG FORECASTS MORE PAIN FOR DUBAI HOUSING

NAKHEEL SIGNS DEAL FOR ALL-INCLUSIVE RESORT ON DEIRA ISLANDS

DUBAI CONTRACTOR DRAKE & SCULL REPORTS DH936 MILLION LOSS FOR 2015





KPMG FORECASTS MORE PAIN FOR DUBAI HOUSING

PHASE 2 OF MERAAS PROJECT CITY WALK OPENS WITH ROMANTIC TOUCH

DUBAI HOLDING COMMERCIAL OPERATIONS GROUP PROFIT UP 25% TO DH5.83 BILLION IN 2015

DUBAI CONTRACTOR DRAKE & SCULL REPORTS DH936 MILLION LOSS FOR 2015

THE 5 IMPORTANT THINGS IN BUSINESS RIGHT NOW

TOP-RATED DUBAI HOTELS CAST WIDER NET FOR TOURISTS

EMAAR TO OPEN A ROVE HOTEL NEXT TO DUBAI PARKS AND RESORTS

ABU DHABI

NEARLY 37% OF ABU DHABI’S RESIDENTIAL UNITS VACANT ABU DHABI-BASED MANAZEL REAL ESTATE REPORTS 29 PER CENT PROFIT

HIKE FOURTH-QUARTER PROFIT AT ABU DHABI’S ALDAR GETS BOOST FROM

PROPERTY PORTFOLIO ASTANA BLAZE UNDER CONTROL, SAYS ALDAR

NORTHERN EMIRATES

10 SHARJAH FINES ON YOUR RENT CONTRACT YOU DIDN’T KNOW OF

ONE-BEDROOM FOR DH26,000 IN SHARJAH: WILL RENTS FALL FURTHER? SHARJAH AND AJMAN PROPERTY PRICES FALL AS DUBAI DEVELOPERS

OFFER CHEAPER HOMES





DAMAC HOMES IN ON SHAIKH ZAYED

ROAD PROJECT

SATURDAY 20 FEBRUARY 2016

The “Aykon City” will be feature an 80-storey Aykon hotel and residences, a 63-storey Damac Maison

Serviced Hotel Residences, a 60-storey residential tower, a 65-storey office tower and two high-end

residential towers of around 30 levels and featuring car lifts to each unit.

The “city” will be built on the 4 million square feet land the developer acquired in the area around the

Dubai Canal extension and Safa Park on Shaikh Zayed Road.

“We are delighted to announce a project of this scale in collaboration with Meraas Holding and on such a

site in this premier location of the city,” said Hussain Sajwani, Chairman of Damac. “This area of our city

is one of the most important developments in Dubai’s expansion, opening up access to many kilometres

of the Dubai Canal.”

A limited number of the serviced residences have gone on sale at Aykon.

The project will also feature the “Aykon Dare”, dubbed as an “adrenalin experience on the 80th floor of

the hotel where guests get to walk around the outside of the tower’s roof”.

There will also be the “Aykon Plaza” with swimming pools, spa, beach club, cafés, restaurants, yoga and

Tai-chi areas, and private members club.

Source: Gulf News

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JORDANIANS THIRD LARGEST ARAB

BUYER IN DUBAI PROPERTY MARKET


Jordanians were among the top investors in Dubai's real estate market in 2015, according to official data released recently by the emirate.

Dubai Land Department (DLD) said that 1,516 Jordanians bought properties worth over 3.51 billion dirhams -- around JD677 million or $955 million ---- last year, ranking third among Arab investors after Saudis and Kuwaitis, who invested around 9.56 billion dirhams ($2.6 billion)

and 3.56 dirhams ($971 million) respectively.

Jordanians were followed by Qataris with investments worth 2.7 billion dirhams ($761 million) and investors from Egypt who bought properties valued at 2.55 billion dirhams ($695 million),

the DLD report showed.

The land department said that nearly 56,000 investors from various Arab and foreign nationalities invested over 135 billion dirhams (around $36.7 billion) in Dubai's property market last year.

Properties bought by Arabs in Dubai reached around $16.3 billion, while investments of non-Arabs were around $20 billion.

Among non-Arabs, Indians came first, followed by British nationals and Pakistanis, the DLD report indicated.

In remarks to The Jordan Times in November last year, Jordan Housing Developers Association President Fawaz Al Hassan said Jordanians' real estate investments outside the Kingdom were estimated at more than $5 billion.

He said that Jordanian investors have large investments in regional countries such as the UAE, Morocco, Egypt and Turkey, attributing the rising investments outside the Kingdom to incentives Jordanians receive in these markets.

Hassan has also said that dozens of housing companies have opened businesses in regional markets.

Source: Jordan Times

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AL SALAM TOWN CENTRE OFFICIALLY

OPENS AT MUDON

THURSDAY 18 FEBRUARY 2016

Al Salam Town Centre was officially opened this week at Mudon by Dubai Properties , the developer of the community. Located at the entrance of Mudon community, Al Salam Town

Center is a great addition for the residents of Mudon as it gives various retail options to cater to their lifestyle.

The opening event was held on Thursday 18th of February and was attended by a senior delegation from DP , community residents and the Town Centre retailers.

Al Salam Town Centre, boasting a plot of 64,000 square feet, is home to various convenient amenities including Milestone Supermarket, Blossom Nursery Mudon, BinSina Pharmacy,

Magrabi Optical, Champion Cleaners and, coming soon, a medical clinic. The community center also offers a new lifestyle destination for residents with The Loft 5th Avenue Salons and coming soon; Starbucks, cafés, an international gym and many more specialty shops.

With food and beverage outlets, community services, health care, education, sports facilities and more, Al Salam Town Centre is aimed to minimize the need for Mudon residents to leave the community for living essentials.

Mohammed Bin Essa, Executive Director of Retail and Commercial Properties, said: "Our commitment to all the residents within our communities across Dubai is to ensure delivering a sustainable infrastructure and accessible community amenities with family focused facilities.

We are pleased today to officially open Al Salam Town Centre, which is a testament to our understanding of our tenant's requirements in planning our master communities".

Source: Jordan Times

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10 SHARJAH FINES ON YOUR RENT

CONTRACT YOU DIDN’T KNOW OF

SUNDAY 21 FEBRUARY 2016

Though it’s mentioned in Sharjah rental contracts, residents hardly notice them.

These are the 10 fines that the municipality imposes on a resident of the emirate, who engages in distorting the city’s image by washing cars on streets, hanging clothes in their

balconies, smoking shisha in parks or taking a pet for a walk in the park.

“I never knew the fines were mentioned in the rent contract. I just sign the contract and then the agent gets it attested from the authorities,” says K Nair, who has been living in Sharjah for

the past five years.

In the last week of January, the municipality launched a campaign, warning residents to park their vehicles properly and not to occupy more than one parking slot. The fine was set at

Dh500 plus the cost of repair of the compounds.

Here are the 10 fines:

# 1 Washing cars on public streets is an uncivilised act and result in a fine of Dh500

#2 Keep your city clean to avoid a fine of Dh1,000

#3 Hanging clothes in balconies distorts public appearance of the city and attracts a fine of Dh500

#4 Throwing bottle cups, cigarette butts or tissues from cars to the streets leads to a fine of Dh500

#5 Playing football or cricket at undesignated areas such as green spaces results in a fine of Dh500

#6 Grill on grass or green areas attracts fine of Dh500

#7 Smoking shisha in public parks and beaches attracts fine of Dh500

#8 Causing intentional damage to municipal properties on streets and public squares leads to a fine of Dh2,000

#9 Damaging plants or grass in public parks attracts a fine of Dh500

#10 Accompanying pets to the public parks results in a fine of Dh500

Source: Emirates 24/7

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BUY DUBAI PROPERTY? CAPITAL

GUARANTEE, MONEY BACK SCHEMES


After some developers in Dubai waived off 4 per cent registration fee and offered monthly payment schemes to entice buyers, new schemes such as “capital guarantee” and “money back” have been rolled out.

Dubai-bourse listed Damac Properties has announced guaranteed annual return on advance payments during construction of three per cent per year, which it claims “is equivalent to twice

the interest on fixed deposits.”

The developer says customers will receive the payments twice a year until completion of the unit.

Another option is the “capital guarantee" which ensures the property’s value for two years after delivery. In short, it means the developer will pay the difference to the investor if the unit price has any decline between the time of delivery and the end of 2019.

“We have always maintained that Dubai shows confidence and growth in the medium and long term”, said company Senior Vice-President Niall McLoughlin.

“The company’s recently launched products provide the opportunity for those looking for safe investment and high return”.

In February 2016, Emirates 24/7 reported that Emaar Properties, the largest developer in Dubai, was waiving off the four per cent registration fee on Casa villas in Arabian Ranches. Customers were being given 12 months to make the full payment with property agents no

transfer charges (4 per cent); and the Oqood land registration charge (4 per cent), according to a real estate agent.

KPMG, a consulting and audit firm, has said that property prices in Dubai will be under pressure this year due to lower oil prices and strong US dollar, but the market will start to

recover in 2017 as infrastructure work surrounding the Dubai Expo 2020 gets under way.

In January 2016, JLL, a real estate consultancy, said the UAE remains an attractive real estate market and some buyers, especially owner-occupiers and those investors taking a long-term

perspective may well see value at current levels.

“Overall, we remain confident that while prices and rentals will soften further in the short term, they are likely to increase again, perhaps as soon as 2017, as the UAE continues on its’ path to

becoming a more mature real estate market,” it said.

Moody's Investor Service did point out in 2015 that the infrastructure spend by the government in the run-up to Expo 2020 will help sustain the property market. Besides,





Hussain Nasser Lootah, Director-General of Dubai Municipality, has said population is expected to increase to five million by 2030, which will fuel demand for houses.


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DUBAI CONFERENCE FOR 'SMART'

GLOBAL PROPERTY REGISTRATION

PROCESS


Dubai Land Department will hold the opening ceremony of the World Registry Law Congress of the International Public Relations Association (IPRA) 2016 "Cinder Dubai 2016" in Sheikh

Saeed's House on February 21, with the participation of a group of experts in the field of real estate registration.

Sultan Butti bin Mejren, Director-General of Dubai Land Department, said: "The event serves as an excellent platform for sharing our experiences with the rest of the world, and it positions

Dubai as a premium landmark for hosting an event of such caliber."

Sultan Butti bin Mejren, Director-General of Dubai Land Department.

DLD expects to receive nearly 500 guests representing more than 50 countries around the world during the three-day event, which is set to take place from February 22 to 24.

Themed "Smart Registration for a Smart City", it is set to welcome more than 60 expert speakers. The Congress aims to reach a global consensus on unified international laws for the effective governance of real estate registration, including the use of cutting-edge technological

advances such as smart registration.

Bin Mejren added: "We chose the house of Sheikh Saeed for the official launch ceremony in order to best represent our values and highlight our national identity. In addition, we are proud

to showcase the successful achievements by Dubai land Department at this level".

Nicolás Nogueroles Peiró, Secretary-General of IPRA-CINDER, said: "We are very impressed with the ability of the organizers to attract the best expertise in the field of real estate registration on an international level. We will be discussing trending topics with regards to real

estate registration in the region, and exploring the latest cutting-edge technologies designed to simplify the real estate registration process, including Smart Registration. The conference will

be a global platform for the exchange of ideas and solutions to enhance global knowledge in this field."

During the three-day event the conference will focus on 18 of the most trending topics in the real estate industry. The Congress aims to reach a global consensus on unified international

laws for the effective governance of real estate registration, including the use of cutting-edge technological advances such as smart registration.

This event is under the sponsorship of leading group of sponsors Nakheel Properties as the main sponsor of the event, while Emirates Real Estate Solutions will be the technical partner.





Dubai Media Inc. has signed on as the media partner. In addition, Meydan Sobha will also be sponsoring the event.

The official closing ceremony of the conference will held on February 24 evening alongside the much anticipated announcement of the winning country to host the 21st session of the conference in 2018.


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RENTS IN DUBAI'S SPRINGS UP 71%

FROM 2010-11

WEDNESDAY 17 FEBRUARY 2016

Rents of three-bed villas and townhouses in The Meadows and The Springs communities are still 29 per cent lower than their peak rentals in 2008, a report by Asteco, a real estate

consultancy, reveals.

However, aaverage rentals for The Meadows are up 29.44 per cent to Dh233,000 per annum (pa) in 2015 from the lows of Dh180,000 pa in 2010/11.

Units in Springs are up by a whopping 71.43 per cent to Dh180,000 pa compared to Dh105,000 pa in 2010/11.

The highest rentals for these established communities, built by Emaar Properties, were back in 2008, with rents averaging Dh325,000 pa and Dh250,000 pa, respectively.

An aerial shot of The Springs community. (Emaar)

The Meadows are detached villas offering double-storeyed units from three to seven rooms, each surrounded by a garden and garage. The Springs comprises 4,000 plus townhouses housing two to four-beds townhouses.

In the report, Asteco states 800 villas were delivered in 2015 while 7,700 new villas are expected to be completed this year.

It expects rents to fall in 2016 and 2017 if “all housing units are delivered on time”, though JLL expects the rents to probably rise in 2017.

A view of a villa in The Meadows. (Emaar)

The Phidar House Price Index for 2015 puts lease rates for villas to have dropped by 5.5 per cent, as sale prices declined 14.8 per cent in 2015, albeit pushing yields to up to 5.1 per cent.

Cavendish Maxwell, a real estate consultancy, report in its fourth quarter 2015 report said sale prices of townhouses at The Springs and villas in Meadows have dropped by 18 per cent

and 12 per cent, respectively, over the past year with prices in villas communities falling 8 per cent year-on-year.


Back to Index





BUY DUBAI PROPERTY? CAPITAL

GUARANTEE, MONEY BACK SCHEMES


After some developers in Dubai waived off 4 per cent registration fee and offered monthly payment schemes to entice buyers, new schemes such as “capital guarantee” and “money

back” have been rolled out.

Dubai-bourse listed Damac Properties has announced guaranteed annual return on advance payments during construction of three per cent per year, which it claims “is equivalent to twice

the interest on fixed deposits.”

The developer says customers will receive the payments twice a year until completion of the unit.

Another option is the “capital guarantee" which ensures the property’s value for two years after delivery. In short, it means the developer will pay the difference to the investor if the unit price has any decline between the time of delivery and the end of 2019.

“We have always maintained that Dubai shows confidence and growth in the medium and long

term”, said company Senior Vice-President Niall McLoughlin.

“The company’s recently launched products provide the opportunity for those looking for safe investment and high return”.

In February 2016, Emirates 24/7 reported that Emaar Properties, the largest developer in Dubai, was waiving off the four per cent registration fee on Casa villas in Arabian Ranches.

Customers were being given 12 months to make the full payment with property agents no transfer charges (4 per cent); and the Oqood land registration charge (4 per cent), according

to a real estate agent.

KPMG, a consulting and audit firm, has said that property prices in Dubai will be under pressure this year due to lower oil prices and strong US dollar, but the market will start to

recover in 2017 as infrastructure work surrounding the Dubai Expo 2020 gets under way.

In January 2016, JLL, a real estate consultancy, said the UAE remains an attractive real estate market and some buyers, especially owner-occupiers and those investors taking a long-term perspective may well see value at current levels.

“Overall, we remain confident that while prices and rentals will soften further in the short term, they are likely to increase again, perhaps as soon as 2017, as the UAE continues on its’ path to becoming a more mature real estate market,” it said.

Moody's Investor Service did point out in 2015 that the infrastructure spend by the government in the run-up to Expo 2020 will help sustain the property market. Besides,





Hussain Nasser Lootah, Director-General of Dubai Municipality, has said population is expected to increase to five million by 2030, which will fuel demand for houses.


Back to Index





RENTS IN DUBAI'S SPRINGS UP 71%

FROM 2010-11


Rents of three-bed villas and townhouses in The Meadows and The Springs communities are still 29 per cent lower than their peak rentals in 2008, a report by Asteco, a real estate

consultancy, reveals.

However, aaverage rentals for The Meadows are up 29.44 per cent to Dh233,000 per annum (pa) in 2015 from the lows of Dh180,000 pa in 2010/11.

Units in Springs are up by a whopping 71.43 per cent to Dh180,000 pa compared to Dh105,000 pa in 2010/11.

The highest rentals for these established communities, built by Emaar Properties, were back in 2008, with rents averaging Dh325,000 pa and Dh250,000 pa, respectively.

The Meadows are detached villas offering double-storeyed units from three to seven rooms, each surrounded by a garden and garage. The Springs comprises 4,000 plus townhouses housing two to four-beds townhouses.

In the report, Asteco states 800 villas were delivered in 2015 while 7,700 new villas are expected to be completed this year.

It expects rents to fall in 2016 and 2017 if “all housing units are delivered on time”, though JLL expects the rents to probably rise in 2017.

The Phidar House Price Index for 2015 puts lease rates for villas to have dropped by 5.5 per

cent, as sale prices declined 14.8 per cent in 2015, albeit pushing yields to up to 5.1 per cent.

Cavendish Maxwell, a real estate consultancy, report in its fourth quarter 2015 report said sale prices of townhouses at The Springs and villas in Meadows have dropped by 18 per cent and 12 per cent, respectively, over the past year with prices in villas communities falling 8 per

cent year-on-year.


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ONE-BEDROOM FOR DH26,000 IN

SHARJAH: WILL RENTS FALL FURTHER?

TUESDAY 16 FEBRUARY 2016

New supply of housing units in Sharjah coupled with a lower inflow of residents from Dubai will put downward rental pressure on lower quality apartment towers, according to Asteco.

“Rental demand is expected to be stagnant in Sharjah as a reduction in prices in neighbouring Dubai will lead to a lower than usual inflow of new residents, which may be worsened by reduced government spending and potential job cuts,” the consultancy said in its fourth

quarter report

It expects over 1,000 units to be added to the market, such as CG Mall Residences, Al Rayyan Complex and a variety of buildings in Al Nahda and Al Khan areas.

“The overall market and specifically poorer quality developments could face a downward rental pressure,” the report said.

Rents for one-bed units in Al Qasimiah fell to Dh33,000 per annum (pa) in 2015 compared to Dh38,000 pa in 2014. In Al Khan, rents were down to Dh39,000 pa from Dh42,000 pa and in

Al Nahda rose to Dh44,000 pa from Dh41,000 pa. The cheapest to rent one bed was in Al Yarmook, with rates averaging Dh26,000 pa, while the costliest was in Corniche (Dh48,000 pa).

Residential sales for the entire Northern Emirates are expected to be subdued as a bleak economic outlook will affect buyer’s sentiment.

“Only quality projects at truly affordable prices may be able to generate some traction and if proper property ownership laws and regulations are in place,” Asteco said.

In December 2015, Cluttons, a real estate consultancy, said residential rents had declined 1.6 per cent in the third quarter of 2015 - first in over two years - compared to the same period last year, but residents have told this website that they were facing rent increases of up to 30

per cent at the time of renewal.

The Law No. 2 of 2007, regulating the relations between landlords and tenants, details the rights of the parties, which are as follows:

# Article 9 stipulates that the landlord should guarantee the property is given on rent as per

the specifications mentioned in the contract and in case any amenities found lacking, the tenant has the right to claim its addition or maintenance. It also mentions that landlords should carry out maintenance of the leased properties, unless both parties agreed otherwise.

# Article 11A states that the landlord is not entitled to increase the rent under a lease prior to the expiry of 3 years from the signing of the lease.





# Article 11B provides that the increase mentioned in Article 11A shall be according to the market rent of comparable properties and once decided will be applicable to that property for 2

consecutive years.

If the revised rental value cannot be agreed upon by the landlord and tenant, they may refer it to the Rental Committee who will settle the dispute and place a rental value on the property in

question.

# Article 12 mentions the landlord will have no right to ask the tenant to vacate the property before the expiry of a period of three years from the first signing of the contract unless the

tenant is refusing to pay the rent.

# Article 15A provides for the criteria which the Rental Committee will consider in determining the rental value. These include (i) the location of the property, (ii) number of floors in the property, (iii) the level of the property within the building, (iv) the finishes to the property, (v)

services within the building, (vi) the age of the building according to the completion certificate and (vii) the area of the building.


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DAMAC HOMES IN ON SHAIKH ZAYED

ROAD PROJECT


Damac Properties did not wait long between snapping up land and launching a new mixed-use development on it. The project has an estimated “sales value” of Dh7.4 billion, with

construction due to commence before summer and with a completion date of 2021.

The “Aykon City” will be feature an 80-storey Aykon hotel and residences, a 63-storey Damac Maison Serviced Hotel Residences, a 60-storey residential tower, a 65-storey office tower and

two high-end residential towers of around 30 levels and featuring car lifts to each unit.

The “city” will be built on the 4 million square feet land the developer acquired in the area around the Dubai Canal extension and Safa Park on Shaikh Zayed Road.

“We are delighted to announce a project of this scale in collaboration with Meraas Holding and on such a site in this premier location of the city,” said Hussain Sajwani, Chairman of Damac. “This area of our city is one of the most important developments in Dubai’s expansion, opening up access to many kilometres of the Dubai Canal.”

A limited number of the serviced residences have gone on sale at Aykon.

The project will also feature the “Aykon Dare”, dubbed as an “adrenalin experience on the 80th floor of the hotel where guests get to walk around the outside of the tower’s roof”.

There will also be the “Aykon Plaza” with swimming pools, spa, beach club, cafés, restaurants, yoga and Tai-chi areas, and private members club.


Back to Index





EMIRATES REIT SCORES ON KEY

NUMBERS


Emirates REIT got itself a 26.7 per cent lift in net profits to $61.5 million against $48.6 million a year ago, while the value of its total assets were up 24.8 per cent to $741.3 million.

The value of its investment property showed a 17 per cent gain, driven in large part by the addition of Jebel Ali School ($30 million, including construction in progress), revaluation gains of $53.3 million (mainly driven by the 10 per cent increase in portfolio occupancy) and the fit-

out and leasing of some floors ($14.7 million) in Index Tower at DIFC.

“We have continued to organically grow overall occupancy and leasing rates,” said Sylvain Vieujot, Executive Deputy Chairman of Emirates REIT. “Looking ahead, while we are facing a

more volatile and challenging macroeconomic outlook, we remain optimistic of our continued ability to deliver consistent shareholder returns.

“Our focus on delivering top-quality office space for our existing and prospective tenants, the opportunity for ongoing improvements across our assets as well as a well-diversified and high-quality tenant base with an average lease expiry term of 8.5 years allows us to maintain stable income growth through market cycles. “Additionally, our borrowing capability places us in a

strong position to capitalise on cyclical market conditions for the execution of our acquisition strategy.”

Meanwhile, liabilities shot up by 67.6 per cent to $271.8 million, caused by an “increase in Islamic financing”, according to a statement.

Source: Gulf News

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NEARLY 37% OF ABU DHABI’S

RESIDENTIAL UNITS VACANT


Around 37 per cent of residential units in Abu Dhabi in 2015 were vacant, with the units not sold or leased to any investors, according to a spokesman from the emirate’s Department of

Municipal Affairs (DMA).

Abdullah Al Beloushi, executive director of the land and property management sector at the DMA, said on Tuesday there were targets to reduce the figure to 8 per cent by 2020, but

declined to elaborate further.

Rental rates and sales prices have been climbing in Abu Dhabi in the past few years as demand continued to outpace supply.

In 2015, apartment rental rates rose 5 per cent on average, with prime properties achieving up to 10 per cent growth.

Apartment sales prices also registered an increase of 3-4 per cent in 2015, according to the latest report by Asteco, a real estate services firm.

This year, prices are still not expected to drop as demand is sustained.

Al Beloushi was speaking at a seminar held by the Abu Dhabi Chamber of Commerce to discuss the emirate’s latest property law that came into effect in January 2016.

Also speaking at the event was Mubarak Al Ameri, a member of the board of directors of the Chamber, who said that the law, Number 3 of 2015 regulating the real estate sector, is

expected to boost the industry and raise investor confidence.

Officials said, however, that as the law mandates specific regulations for those working in real estate, around 75 per cent of brokers may go out of business as they fail to meet the requirements.

Source: Gulf News

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DUBAI’S OFFICE RENTALS SEE SHARP

VARIATIONS


For landlords of older office properties in Deira, there’s work to be done on makeovers.

For the first time in years, a significant gap is starting to build up between rentals — at the top end of the scale — commanded by offices in Bur Dubai and those in Deira.

Upscale office properties in Bur Dubai are commanding an average of Dh140 a square foot against the Dh120 for similar ones in Deira.

“There was always this balance between office rentals on either side of the Creek — that it’s not there now means Deira’s office buildings will need a refresh soon, more so, because there

is limited space available for new constructions on both sides,” said Faisal Durrani, head of Research at realty services firm Cluttons.

“And rents are flattening out at the upper end because they are already at the maximum — or very near what — they can attain on lease renewals. Landlords [in Deira] will need to commit to updating their properties and amenities offered to close the gap with Bur Dubai again.”

Not that landlords in Bur Dubai should be sitting pretty. With so much of strata-owned office space getting added in the Business Bay cluster, there is every incentive for businesses based in Bur Dubai to relocate to a more central address.





Small differential

As of now, the differential between what an entry-level location in Bur Dubai fetches [around

Dh60 a square foot] and one in Business Bay [at about Dh70] is not too wide to dissuade someone from moving.

“Business Bay continues to be dogged with oversupply, and that could be what can prompt some occupiers based in ‘Old Dubai’ to shift,” said Durrani. “There [are] a lot of units [with an

area of] of 1,000-1,200 square foot in Business Bay that small and mid-sized businesses might find attractive at current entry-level rents.”

Even Grade B specification offices in Jumeirah Lake Towers (JLT) are feeling the pressure of more supply being circulated.

“Our data suggests that entry-level office spaces there were down 13 per cent on asking rents,” said Durrani. “That’s been because of the heavy undercutting of rents by property

owners trying to get tenants to commit to a deal.

“The oversupply and cheaper rents are also being recorded in the tertiary schemes at Al Barsha — these have offered up cheaper alternatives for businesses.”

Cluttons’ data estimates that at JLT, both the lower and upper limit rents declined over the last

12 months, by 13 and 10 per cent respectively to Dh70 and Dh180 per square foot.

Tecom shines

And the office location showing the strongest demand and upbeat rents last year was the Tecom zone, featuring the Internet and Media cities as well as Knowledge Village. Offices there

recorded a 10 per cent average rise in lower limit rents to Dh165 a square foot, while on the upper limit it rose 13 per cent to Dh225.

Leasing demand for the Dubai Trade Centre District offices — with one of the highest quoted entry-level rates at Dh190 — is running strong and Dubai Design District continues to gain

strength.

“Both launched in the past 18 months offer opportunities for both DED- [Department of Economic Development] licensed and free zone occupiers within the same development,”

according to the Cluttons report.

“Dubai Design District’s lower- and upper-limit free zone rents have registered a 67 per cent and 28 per cent rise respectively since launch, pushing them to between Dh150-Dh165 per

square foot. This sharp rise was underpinned by the gradual fading of favourable terms offered to initial occupiers.”

At the Trade Centre District, “There is little disparity in the lower and upper rental levels. Strong take-up of Phase 1 bodes well for Phases 2 and 3, which are due to come on stream in

the next two years.”

Source: Gulf News

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WHY 7 IN 10 FILIPINOS IN UAE WANT

TO BUY A HOUSE


A growing number of Filipino expatriates in the UAE are attracted to the idea of investing their hard-earned money in real estate.

Many of them believe that acquiring a piece of property in their own country is a sound investment option, given the sizeable rental yields landlords are seeing back home.

According to data released by Jones Lang LaSalle and Colliers International, residential property prices in Manila alone, the Philippine’s capital, registered the highest growth in prices within the Asia-Pacific region during the last three months of 2014.

In a new survey among Filipinos in the UAE, nearly eight in ten said they intend to acquire either a house and lot in a gated community, a piece of land in the suburbs or a flat in the city centre within the next two years.

The number of people expressing their appetite for property investing has gone up from 43 per cent in 2014, according to the survey commissioned by the Philippine Property and Investment

Exhibition (PPIE).

Filipinos in the UAE are among the fast-growing expatriate communities in the country and contributing largely to global remittances sent to the Philippines. As of 2013, around 11 million

Filipinos abroad transferred some $26 billion to their home country.

Anna Tatlonghari, general manager at Ayala Land International Sales, said that the rise in monthly incomes of Filipinos abroad has fuelled consumption growth and investment boom in

the Philippines.

“The income created by overseas Filipinos has allowed millions of families to spend more and live better lives,” she said.

“This has contributed directly to the country’s gross domestic product, 70 per cent of which is accounted for by consumption, and remittances are estimated to comprise nearly 10 per cent of the country’s GDP – one of the highest contribution rates in the world.”

“Investing in Philippine property today is ideal for Filipino and international investors as prices are likely to soar substantially in the coming years,” added Karen Remo, manging director of

New Perspective Media, which conducted the survey among 1,000 respondents in the UAE.

“Our survey confirms a substantial increase in investment appetite and this is in response to positive forecasts of good investment returns in the Philippines, which is one of Asia’s most

steady economies.”





Source: Gulf News

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LATEST ASTECO REPORT HIGHLIGHTS

AFFORDABILITY OF NORTHERN

EMIRATES

MONDAY 15 FEBRUARY 2016

Leading real estate consultancy Asteco has released its latest Northern Emirates market update as part of its UAE-wide Real Estate Report, which includes a review of 2015 market activity as well as a 2016 outlook.

According to the report, the residential leasing picture in 2015, with the exception of Fujairah, saw rental rates across the Northern Emirates decline marginally, with Sharjah, Ajman and Ras Al Khaimah recording 2%, 0% and 2% falls, respectively.

"Market activity in Sharjah is historically interlinked with that of Dubai, with the two emirates in such close proximity that the ebb and flow of residents between them usually follows the rental market highs and lows in Dubai," said John Stevens, Managing Director, Asteco .

"But with both emirates investing heavily in infrastructure development and a growing quality-

focused residential offering, we are seeing a slow shift towards a more stable environment as investors and tenants consider the quality of life outside of Dubai." He added.

In 2015, Sharjah added a number of residential developments to its existing supply including the Diamond Tower in Al Nahda with 2,105 units, two residential buildings in Al Tawuun (798

units) and a 175-unit block in the Al Khan district. This year could see more stock delivered including 1,520 units in Al Nahda (Rayyan Complex), Al Khan (Pearl Tower) and Al Qasimiyah

(CG Mall Residences).

"It's worth noting that the swift take-up of newly handed over supply in Sharjah was in some cases, at higher rates than seen previously. This was due to the improved quality of the

properties, convenient car parking availability, better facilities and amenities," remarked Stevens.

This is being driven largely by a rapidly developing tourism product with a number of initiatives launched in 2015 such as the expansion of the Majaz waterfront and the completion of Noor

Island. In the Majaz and Al Khan areas, a 'quality' three-bedroom apartment commanded AED 95,000 and AED 105,000 respectively per annum, compared to AED 85,000 several months

earlier.

Affordable developments in Sharjah attracting investors in 2015 included Al Thuriah's Sahara Tower 4 in Al Nahda, where two-bedroom units started from AED 765,000 with 50% of

payment due post-completion, and two-bedroom apartments at the Al Rayyan complex were available for under AED 1 million.





According to Stevens, although affordability is a key USP for many entry-level investors, the sales environment in Sharjah is expected to stagnate in 2016. This is despite the opening up of

the market to foreigners, and is led by concerns about the general lack of regulatory clarity a major issue for prospective investors, further compounded by the increase of affordable and

competitive products recently launched in neighbouring Dubai.

"If we consider the bigger picture and look at the Northern Emirates as a whole, only quality projects at truly affordable prices may be able to generate any traction - and only then if

proper and transparent property ownership laws and regulations are in place," said Stevens.

Major projects set to be handed over in 2016 in Ras Al Khaimah include the 1,440-unit Pacific Beachfront development on Marjan Island from the Select Group, with 80% of the apartments already sold according to the developer.

The popular Mina Al Arab community will launch phase two of its Flamingo Villas this year, delivering an additional 68 units by the year-end, ranging in size from 2,008 to 2,334 square feet.

Currently, new RAK developments are commanding average annual rental rates of AED 60,000 for a two-bedroom apartment, down from AED 63,000 in 2014, with three-bed units achieving AED 100,000 (down from AED 110,000 in 2014).

Ajman is also working to upgrade its attractiveness with exciting initiatives such as the Al Zorah development adding a golf course to the lifestyle offering. This year will also see the launch of a five-star Oberoi hotel in mid-2016.

Source: Gulf News

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ASTANA BLAZE UNDER CONTROL, SAYS

ALDAR


Aldar said today the authorities had full control of its 500,000-square metre project in Kazak-hstan that was engulfed in a blaze.

Abu Dhabi’s largest developer confirmed this evening that fire had broken out at its Abu Dhabi Plaza project in Astana, the Kazakh capital, on Saturday. The development is planned to include the tallest building in Central Asia.

“We can confirm that a fire broke out at a development in Astana in the early hours of Saturday morning,” said he company.

“The situation was brought under control within two hours, with everyone accounted for and no injuries sustained. The relevant authorities have full control of the site and are monitoring and

undertaking regular checks of the project. All parties involved in the development are fully informed and coordinating on activity on the ground.”

Construction work on the five-tower project – comprising 566 luxury flats, 107,000 sq metres of offices, a five-star hotel and serviced apartments and 50,000 sq metres of shops – was awarded to an Arabtec led joint venture in 2013. Work is scheduled to be finished by 2017 – in

time for the economic Expo 2017, which will be held in the city.

The project was originally announced in 2007 as a strategic move for Aldar to gain a toehold in Kazakhstan, an oil-rich and quickly developing country. The development was originally expected to be completed by 2010.

At the time it was to be developed in a joint venture with Al Maabar, a company created by the Abu Dhabi developers Aldar, Al Qudra, Sorouh and Reem Investments.

Source: The National

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DUBAI HOLDING COMMERCIAL

OPERATIONS GROUP PROFIT UP 25%

TO DH5.83 BILLION IN 2015


The operating arm of Dubai Holding yesterday reported a 25 per cent increase in net profit for

2015 to Dh5.83 billion, and set a target for profit to beat Dh10bn by 2020.

Dubai Holding Commercial Operations Group (DHCOG) said 2015 revenue was also 15 per cent higher at Dh14.5bn.

DHCOG operates some of the best-known businesses in Dubai on behalf of the state-owned

investment company Dubai Holding. These include the developer Dubai Properties, the business parks operator Tecom Group (Tecom), the Jumeirah Group (Jumeirah) hospitality business and Emirates International Telecommunications, which operates the du brand.

It does not provide a breakdown of figures for each unit, but said that growth was supported by the strong performance of Tecom, Jumeirah and Dubai Properties.

Tecom, which operates 10 business communities, grew the number of companies operating from its parks by 11 per cent last year compared with 2014. It is now home to 5,100 firms

with a total of 76,000 staff.

At the end of the year, it also launched In5 Media – a new Dh60 million incubator building for media start-ups that will be housed in the International Media Production Zone. This is a

follow-up to the existing In5 incubator for IT and digital media companies housed in Dubai Knowledge Village.

DHCOG said Jumeirah was progressing with the expansion of Madinat Jumeirah and had signed four management deals to operate hotels in Dubai, Abu Dhabi and Malaysia. It also said the

operator had achieved “robust” occupancy across its 23 hotels in Europe, the Middle East and Asia.

Dubai Properties, meanwhile, launched three new projects and handed over more than 800 new homes last year. It also said occupancy levels among a residential portfolio of 15,000 leased units stood at 98 per cent, commercial units were 100 per cent occupied and retail units

83 per cent.

“Dubai Holding continues to make big strides in its successful strategy aimed at creating an innovation-driven, knowledge-based economy,” said Dubai Holding’s chairman Mohammad Abdulla Al Gergawi.





Economists are divided on the prospects for Dubai and the UAE against a background of declining oil prices. Although oil only makes up 4 per cent of Dubai’s economy and the emirate

set an expansionary budget for 2016 of Dh46.1bn – up 12 per cent on the previous year – it is still expected to be affected by global economic conditions.

Last month, the IMF cut its 2016 GDP growth forecast for the UAE to 2.6 per cent – down from 3.1 per cent in October, citing lower oil prices, government spending cuts and the global slowdown in trade.

Standard Chartered argued that the country’s GDP growth would fall to 2.9 per cent, from 3.8 per cent last year.

On the other hand, the trade insurer Coface said last week that it expects the UAE economy to grow by 3.3 per cent, arguing that it had “showed a degree of resilience” amid falling oil prices. It said non-oil trade would rise by 10 per cent year-on-year to Dh1.75 trillion, which

would reinforce its position “among the top 20 trading economies in the world”.

BMI Research was even more bullish, arguing on Thursday that the Dubai Financial Market had been oversold after dropping by 28.1 per cent in value since last July.

“We forecast Dubai to be the outperformer in the UAE, with real GDP growth of 4.2 per cent in 2016 compared with 3.8 per cent for the UAE as a whole,” it said. “This additional growth will be driven by exposure to Iran’s growing economy and the tourism and construction sectors.”


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PHASE 2 OF MERAAS PROJECT CITY

WALK OPENS WITH ROMANTIC TOUCH


Phase 2 of the Meraas developed City Walk in Dubai will open with a touch of romance today as AW Rostamani Lifestyle expands its retail portfolio into the new development.

AW Rostamani, the UAE group represented across a number of industries including car sales and service, property, retail and IT, plans to open a Georg Jensen jewellery store in the new

retail space for Valentine’s Day today and a home decor outlet, Apartment 51, in City Walk in May.

The two brands will be part of a raft of new names that the group intends to bring to the UAE over the next three years, bucking the softening trend in the retail climate.

“We will be bringing two or three new jewellery brands, 15 to 20 fashion brands and a couple of home decor lines over the next few years” said Joseph Faddoul, the general manager for AW

Rostamani Lifestyle. “While last year was challenging for many sectors, mid-market affordable brands still grew by double digits. I cannot say what our investment will be but it is not about the money, it is about the opportunities that we see around the country – and this country has

many opportunities. We may not be in all the big malls now, but that is our target.”

He continued, saying the mid-market brands that did not rely on Russian visitors and wealthy tourists still performed strongly and gave great hope for the retail environment. However,

Dubai’s private sector recorded its weakest growth in five-and-a-half years in December amid the strong US dollar and regional and global economic uncertainty. The rents demanded by

mall operators, which have pushed ever upwards for the past seven years, may taper with the tightening of disposable income.

“The strong US dollar means that the goods in the UAE are now expensive for visitors and residents alike,” said Matthew Green, the head of research and consulting at CBRE’s Dubai

office. “Even for countries that provide our biggest visitor numbers, like Saudi Arabia, there has been a tightening of the public purse, and that affects retailers first.

“I can’t say there will be a downturn in mall rents, but good malls are a collaboration between landlord and tenant, and therefore one should see an easing of rents if soft economic conditions persist.”

While a new supermall has not opened in Dubai since the opening of The Dubai Mall in

November 2008, City Walk Phase 2, the sprawling Dh919 million, 1 million square feet family entertainment and retail complex in Jumeirah, will include a bio-dome to recreate a tropical forest in an enclosed ecosystem.

Representatives of Meraas, when contacted by The National, declined to comment.





Andrew Love, the head of investment and commercial agency at property consultants Cavendish Maxwell, said: “The area will attract not only established retailers but new brand

concepts, while positively enhancing what had traditionally been a residential area.”


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KPMG FORECASTS MORE PAIN FOR

DUBAI HOUSING


House prices in Dubai will continue to suffer this year as cheap oil and the strong US dollar push properties beyond the means of many overseas investors, according to the latest report from consultants KPMG.

The low global price of oil is also depressing the Dubai housing market, KPMG added as it restricts the ability of some potential purchasers to buy and also because it is likely to prompt governments to cut budgets, which in turn means slower infrastructure growth.

Political unrest across the Middle East and economic uncertainties in China and Russia add to the factors deterring investors from entering the market, the company, one of the Big Four financial services firms, added.

However, KPMG expects the market to start to recover in 2017 as infrastructure work surrounding the Dubai Expo 2020 gets under way, jolting the economy and driving demand for housing.

“Although 2016 could be challenging in the short term, with effective regulations in place and the infrastructure investment that is committed as part of Expo 2020, we should see an upturn

in the real estate industry in 2017,” said Sidharth Mehta, partner and head of building, construction and real estate at KPMG Lower Gulf.

“When preparation for Expo 2020 picks up, we expect to see a significant amount of job creation and an increase in demand for residential real estate,” he added.

Although most property brokers agree that house prices in Dubai fell by 10 to 15 per cent in 2015, experts disagree about when the current downturn will end and the market will start to

recover.

Last month the niche agency Phidar predicted a further decline in prices of up to 20 per cent through 2016 and 2017, as declining rents weaken investor returns.

But other brokers have been more optimistic.

In January, the property data company Reidin and consultancy ValuStrat both reported signs of price declines plateauing after 18 months of declines.

“Some might suggest that this is a bottoming out of the market and the only next step is for values to go up,” said the ValuStrat research manager Haider Tuaima.

“We’re not saying that at the moment, but it seems the signs are indicating that we’ve reached a predictable stage of the market. If all other economic factors are the same, we are assuming it will stay this way for the next three to six months.”






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DUBAI CONTRACTOR DRAKE & SCULL

REPORTS DH936 MILLION LOSS FOR

2015


The Dubai-based contractor Drake & Scull International (DSI) reported a Dh936.8 million loss for 2015, blaming it on the “unprecedented measures” it had to take in the third quarter.

It was forced to make Dh984m in provisions relating to a contractual dispute in Saudi Arabia.

The company said that it had “normalised its profitability” following this, declaring a Dh14m fourth-quarter profit as revenue climbed by 27 per cent to Dh1.4 billion versus Dh1.1bn in the same period last year.

However, full-year revenue dropped by 11 per cent to Dh4.2bn from Dh4.8bn and despite winning Dh3bn worth of projects during 2015, its backlog fell by 18 per cent to Dh11.83bn from Dh14.4bn.

The company said that it would continue to pursue debts and legal claims, adding that it “expects a number of provisions to be reversed in the future”. It has also begun a cost-cutting drive, saying that it is committed to a “process of fiscal consolidation, discipline and austerity

in light of the prevailing macroeconomic environment”.

DSI said: “Despite the current challenging market conditions, the underlying long-term outlook for the regional industry presents promising opportunities for DSI, particularly in the UAE. DSI retains its optimism about the prospects for its engineering business, which is expected to

remain the key growth driver for DSI, with an additional promising potential for the rail sector in 2016.”

The company’s shares finished 2 per cent higher at Dh0.35 on the Dubai Financial Market yesterday, although they were 56 per cent lower than the Dh0.81 they were trading at 12 months ago.

The company’s stock was downgraded to “reduce” from “hold” by HSBC last week.

Allen Sandeep, head of research at the brokerage Naeem, said that it had placed its recommendation for the company under review until it produced audited results next month that clarify a number of issues.

For instance, when announcing the third-quarter results containing the large provisions, the

company said that it breached the covenants of its syndicated sukuk– a US$120m facility taken out in November 2014. It was meant to notify other lenders and to arrange to remediate the breach by December 31, 2015.





It is not yet clear whether this has been done, and Mr Sandeep said his firm’s recommendation on the stock would “await progress on negotiation with lenders/refinancing options”.

He also added that it would await an update on Drake & Scull’s working capital position. The firm’s net working capital dropped by 31 per cent in the third quarter of 2015, meaning that net working capital stood at Dh2.04bn, including trade receivables of Dh5bn.


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SHARJAH AND AJMAN PROPERTY

PRICES FALL AS DUBAI DEVELOPERS

OFFER CHEAPER HOMES


Sales of new homes in the Northern Emirates are likely to remain subdued this year as a “bleak economic outlook will affect buyers’ sentiment”, according to a report from the property

consultancy Asteco.

The Northern Emirates are typically interdependent with Dubai’s property market and with house prices and rents continuing to fall in Dubai as more developers offer affordable homes,

attracting buyers to Sharjah, Ajman and Ras Al Khaimah could be more difficult in the future.

“Only quality projects at truly affordable prices may be able to generate some traction,” said John Stevens, the managing director of Asteco.

Sale prices fell by 2 per cent in Sharjah, by 5 per cent in Ajman and 1 per cent in Ras Al Khaimah last year, while rental rates dropped by 2 per cent in Sharjah and Ras Al Khaimah but stayed flat in Ajman.

Mr Stevens said that in the past, there had been an “ebb and flow” of residents between Dubai

and Sharjah based on rents – when they go up in Dubai, people move to Sharjah and when they drop they move back.

Yet falling rents in Dubai and an unpredictable jobs market mean that there is not the usual inflow of new tenants. Moreover, rents have not dropped by enough in Dubai to tempt settled

tenants to move.

Mr Stevens said infrastructure in Sharjah has improved as a result of investments in road connectivity and new tourism attractions such as Noor Island and the Majaz waterfront.

“With both emirates investing heavily in infrastructure and a growing quality-focused residential offering, we are seeing a slow shift towards a more stable environment as investors and tenants consider the quality of life outside of Dubai,” he said.

Average rents in Sharjah are from Dh34,000 per year for a one-bed flat up to Dh58,000 for a three-be. In Ras Al Khaimah, annual costs range from Dh38,000 for a one-bed up to Dh100,000 for three-bed properties on newer projects and in Ajman, from Dh43,000 for a one-bed up to Dh64,000 for a three-bed property.

New regulations were introduced in Sharjah in 2014 to allow non-GCC nationals to buy properties under a 100-year leasehold, but Asteco said sales have been subdued – partly





because ownership rules remain unclear but also because of the new wave of affordable property launches with accompanying payment plans in D

fall in Dubai as more developers offer affordable homes, attracting buyers to Sharjah, Ajman and Ras Al Khaimah could be more difficult in the future.

“Only quality projects at truly affordable prices may be able to generate some traction,” said John Stevens, the managing director of Asteco.

Sale prices fell by 2 per cent in Sharjah, by 5 per cent in Ajman and 1 per cent in Ras Al Khaimah last year, while rental rates dropped by 2 per cent in Sharjah and Ras Al Khaimah but stayed flat in Ajman.

Mr Stevens said that in the past, there had been an “ebb and flow” of residents between Dubai and Sharjah based on rents – when they go up in Dubai, people move to Sharjah and when they drop they move back.

Yet falling rents in Dubai and an unpredictable jobs market mean that there is not the usual inflow of new tenants. Moreover, rents have not dropped by enough in Dubai to tempt settled tenants to move.

Mr Stevens said infrastructure in Sharjah has improved as a result of investments in road connectivity and new tourism attractions such as Noor Island and the Majaz waterfront.

“With both emirates investing heavily in infrastructure and a growing quality-focused residential offering, we are seeing a slow shift towards a more stable environment as investors and tenants consider the quality of life outside of Dubai,” he said.

Average rents in Sharjah are from Dh34,000 per year for a one-bed flat up to Dh58,000 for a three-be. In Ras Al Khaimah, annual costs range from Dh38,000 for a one-bed up to Dh100,000 for three-bed properties on newer projects and in Ajman, from Dh43,000 for a one-

bed up to Dh64,000 for a three-bed property.

New regulations were introduced in Sharjah in 2014 to allow non-GCC nationals to buy properties under a 100-year leasehold, but Asteco said sales have been subdued – partly

because ownership rules remain unclear but also because of the new wave of affordable property launches with accompanying payment plans in Dubai.

However, the developer of the Dh2.4 billion Tilal City project close to the Dubai border this week claimed that it had received “strong interest” from potential buyers.

Tilal City – 1,855 plots for flats and villas – is being jointly developed by Sharjah Asset Management and Eskan Real Estate Development. It said most of the interest had come from long-term Sharjah residents, Arab and non-Arab.

“The unique ownership opportunities are attracting … buyers from across the Middle East,” said Haysam Jazairi, Tilal Properties’ executive director of business development.


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FOURTH-QUARTER PROFIT AT ABU

DHABI’S ALDAR GETS BOOST FROM

PROPERTY PORTFOLIO


A jump in the value of Aldar’s investment properties boosted its fourth-quarter results on

Monday, as the company continues to position itself as Abu Dhabi’s biggest landlord.

Fourth-quarter profit rose 5.6 per cent in 2015 compared with the year-earlier period, Aldar Properties stated on Monday.

The company reported that profit attributable to its shareholders increased to Dh735 million

from Dh696m during the same period a year earlier, helped by a valuation gain of Dh568m on its vast rental portfolio, but also hampered by writedowns of Dh257m on some of its land and property costs.

Revenue for the three months to the end of December last year stood at Dh1.13 billion, down 8.8 per cent from Dh1.27bn during the same period a year ago as the company turned to its large rental portfolio, which includes Abu Dhabi’s largest shopping centre, Yas Mall, for income

rather than riskier housing developments.

Gross profit from these recurring revenue assets, which also include 4,800 rented apartments, hotels, schools and offices increased by 35 per cent to Dh447m.

In a filing to the Abu Dhabi bourse on Monday, Aldar said that net profit for the year rose 13.4 per cent to Dh2.53bn.

“Aldar’s fourth quarter bottom line beat our estimate, however, with earnings lifted by a non-cash gain,” said Harshjit Oza, an investment analyst at Naeem Brokerage in Cairo. “The balance sheet is firm with Aldar holding Dh313m net cash.”

Revenue for the year, on the other hand, was down by almost a third, tumbling to Dh4.5bn from Dh6.5bn a year earlier. Aldar said that the fall was a direct result of the change in the type of revenues it was receiving, with a far greater proportion coming from property

handovers in 2014 and more income coming from leases in 2015.

“Our focus on stabilising recurring revenue assets has significantly improved the quality of our earnings and provided clarity on long term cash flow,” said the Aldar chief executive Mohamed

Al Mubarak. “Our business remains underpinned by a healthy balance sheet, stable operating environment and strong fundamentals.”

Aldar, which is 29.7 per cent owned by Abu Dhabi government fund Mubadala, also announced

a new dividend policy further linking shareholder remuneration with its leasing portfolio.





Aldar’s board recommended a cash dividend to shareholders of 10 fils per share, up from 9 fils in 2014. The company said that from this year onwards it would recommend dividends of

between 65 and 80 per cent of the cash it makes from its investment portfolio.

Analysts said that, despite a slowdown in the Abu Dhabi property market, as the capital’s only large quoted developer and major landlord, Aldar was in a good position to ride out any market

softening.

“At first glance the results look very healthy, but when you start to strip away the various valuation gains and provisions the bottom-line numbers are not great,” said Sanyalak

Manibhandu, head of research at NBAD Securities. “However, we don’t think this is a long-term problem for Aldar and it is mostly the result of moving to a model of a company which is more reliant on recurring revenue streams than property development.”

Aldar would raise capital expenditure to about Dh2.5bn this year from about Dh1.1bn in 2015, said its chief financial officer Greg Fewer, as the company spends on six projects launched since 2014.

Most of these projects had strong order books, including its affordable housing scheme on Reem Island, which was 90 per cent sold, said chief development officer Talal Al Dhiyebi.

“We’re watching how much we’re releasing into the market,” Mr Al Dhiyebi said on a conference call. “In the last two to three months, we’ve seen a slight slowdown on demand,

but we are selling at a smaller rate.”

Aldar’s shares closed at Dh2.36 on Monday, a touch lower.


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NAKHEEL SIGNS DEAL FOR ALL-

INCLUSIVE RESORT ON DEIRA ISLANDS


Nakheel has signed a deal with Spain’s Riu Hotels & Resorts to develop a US$170 million resort at its Deira Islands project.

The joint venture deal between the Dubai developer Nakheel and family-owned Riu will involve

the opening of a 750-room, 24-hour, all-inclusive family resort on Deira Islands.

The deal was signed by the Nakheel chairman Ali Rashid Lootah and the Riu chief executive Luis Riu in Palma, Mallorca.

Mr Riu said the signing of the partnership “represents another step towards making the first

Riu project in the Middle East a reality”.

It operates more than 100 hotels in Europe, North Africa, the Caribbean and Central America and has nearly 28,000 employees.

Mr Lootah said that the deal would “introduce one of the world’s biggest, most respected names in hospitality and an entirely new concept in hotel accommodation to Dubai”.

The hotel is set to open in 2019 and is the first agreed for Deira Islands, the former Palm Deira project that was relaunched by Nakheel in 2013. It will contain four islands with facilities including a marina, a large mall, a night market with 5,300 shops and an amphitheatre.

The Dutch dredging firm Van Oord was awarded a Dh387m contract to shape two of the four islands, creating 23.5 kilometres of coastline, lastJune. Its work is due to complete in June 2017.


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ABU DHABI-BASED MANAZEL REAL

ESTATE REPORTS 29 PER CENT PROFIT

HIKE


Abu Dhabi-based developer Manazel Real Estate saw its net profit increase by 29 per cent to Dh195 million in 2015, despite posting flat revenues of Dh740m.

The company said that profit increased following a restructuring of its operations, which began in 2014, and through diversification efforts to create more recurring revenue through rental of retail, office and residential units and through district cooling charges.

On the development side, its efforts were focused on Reef 2 — a community of 860 duplex villas with retail and leisure units being built on a 465,000 sq m site in Al Samha, close to the Khalifa Port and Industrial Zone. It said that most of these villas, which are aimed at the mid-

market, have been sold. Handover of the project is due in December 2017.

The company said that the sales levels achieved “reiterate the continued demand for affordable housing and supports Manazel’s core strategy of targeting the middle income sector”.

The value of the firm’s net assets also increased by Dh500m to Dh2.6 billion.

Hassan Fahmi, the chief executive of Manazel Real Estate, said: “In the year ahead, we will focus on leveraging our well-capitalised balance sheet to grow our brand and footprint, as well as focusing on our core residential real estate business in line with our strategy of meeting the needs of the middle-income segment.”


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THE 5 IMPORTANT THINGS IN

BUSINESS RIGHT NOW


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

• Mostly positive fourth quarter results

A spate of UAE financial results have been reported during the past 24 hours from heavyweights such as Etisalat (up 2.7 per cent), RAK Ceramics (up 10 per cent), Abu Dhabi

Islamic Bank (up 16.6 per cent), Aldar Properties (up 9.1 per cent), plus others. It wasn’t so good for du, which reported an 8 per cent profit fall.

• Oil price on a downer

After a dramatic surge at the tail end of last week, Brent oil has opened down 2 per cent this morning at $32.67 with Iran prepared to ship its first consignment to Europe since sanctions were lifted, reigniting worries over a global supply glut. Is another topsy-turvy week in store?

• Dubai property to remain subdued

KPMG has added its voice to those predicting further falls in Dubai house prices this year. It

does, however, expect the market to recover in 2017 as work on Expo 2020 is ramped up.

• HSBC stays rooted to London

Europe’s largest bank has confirmed that it will continue its 23-year stay in the UK following 10 months of discussions on whether to uproot, potentially to Hong Kong. “As we evaluated jurisdictions against the specified criteria, it became clear that the combination of our strategic

focus on Asia and maintaining our hub in one of the world’s leading international financial centers, London, was not only compatible, but offered the best outcome for our customers and

shareholders,” chairman Douglas Flint said in a statement.

• China starts badly

All eyes on the Far East this morning as the Shanghai Composite resumed trading after a week-long holiday. China’s benchmark stock index has plunged 23 per cent this year and was

down 1 per cent at 1.15pm local time. Meanwhile, in Japan, the Nikkei closed up 7.16 per cent despite GDP figures showing the economy shrank 1.4 per cent last year.


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EMAAR TO OPEN A ROVE HOTEL NEXT

TO DUBAI PARKS AND RESORTS


Developer Emaar expects to open its first Rove hotel near the massive theme park under construction on the outskirts of Dubai.

The 458-room, mid-market Rove At The Park will open adjacent to Dubai Parks and Resorts in

Jebel Ali. The company did not announce an opening date.

Rove Hotels expects to operate 10 hotels in Dubai with more than 2,660 rooms ahead of Expo 2020 in partnership with Meraas Holding.

The first property, Rove Downtown Dubai, is expected to open this year with 420 rooms across

14 floors. Other locations earmarked for Rove hotels include Al Jafiliya, Oud Metha, Port Saeed and Dubai Marina.

The Rove At The Park will be close to Palm Jebel Ali, midway between Dubai and Abu Dhabi International Airports. About 30 per cent of the rooms will be interconnected to encourage

guests who come as families.

Dubai Parks and Resorts is scheduled to open the theme park complex this year. It will include Motiongate Dubai, inspired by Hollywood films, Legoland and Bollywood Parks to provide a

showcase for Bollywood films. The complex will also feature a Legoland Water Park, the Lapita Hotel and retail space.


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TOP-RATED DUBAI HOTELS CAST

WIDER NET FOR TOURISTS


Luxury hotel operators in Dubai are increasingly exploring new source markets to compensate for a drop in Russian guests.

Kerzner International’s One&Only Resorts, which manages One&Only The Palm and One&Only Royal Mirage on Al Sufouh Road in Dubai, is now marketing its properties in Poland, the Czech

Republic, Ukraine and Scandinavian countries. It is, however, not giving up on Russia, where it maintains an office.

Next month, the hotel group will go on a roadshow to Kiev, Moscow and Baku.

“The regional coverage of airlines such as flydubai and Emirates opens up different regions of Russia besides east Europe,” said Brett Armitage, a senior vice president for international sales and marketing at One&Only Resorts. “There is a significant downturn in the Russian market

but a stronger increase [in guests] out of Kiev.”

Tourist numbers from the key source market to Dubai declined last year owing to currency fluctuations and low oil prices.

According to a Bloomberg index compiled last year, Dubai was the fourth most expensive

destination in the world for a hotel stay after San Francisco, Geneva and Milan.

Last year, the number of tourists to Dubai from Russia, CIS and eastern Europe dropped by 22.5 per cent compared to the previous year, according to Dubai Tourism.

In January, Emirates deployed an A380 on its Moscow route for two weeks when demand was

high. Currently, it operates a B777-300ER on its double daily flights to Moscow. The carrier withdrew its regular A380 service in November 2014.

In October, however, it increased its seat capacity by 50 per cent to St Petersburg. The city got its seventh flight per week in December.

The large number of hotel rooms to fill in Dubai also put pressure on room rates. And the emirate has the second-highest number of hotels in the pipeline – 19,846 rooms across 63 hotels in the Middle East and Africa – after Mecca in Saudi Arabia, research company STR

Global said yesterday.

Mecca has the largest number of rooms under construction, with 21,068 rooms across 13 hotels.

One&Only Resorts expects to open its 10th property, a 175-room hotel in Bahrain, in the second half of next year. Its first European property in Montenegro is expected to open in the second half of 2018 with 120 rooms.





In the design phase are a 192-room property in Sanya, China, and two in Mexico. One&Only Resorts runs nine properties, including those in Mexico, Maldives and the Bahamas.

In 2014, the Investment Corporation of Dubai (ICD) bought a big stake in Kerzner International.

Istithmar World, a Dubai World subsidiary, already owns a 25 per cent holding in Kerzner. ICD also owns Atlantis, The Palm, which is also managed by Kerzner.

Another Atlantis is coming up in Sanya, and a Royal Atlantis Resort and Residences on the Palm Jumeirah.


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UAE-BASED CONTRACTOR LAUNCHES

‘REVOLUTIONARY’ MODULAR BUILDING

ARM TUESDAY 16 FEBRUARY 2016

UAE-based Amana Contracting & Steel Buildings has launched a new modular building arm, which founder Chebel Bsaibes, says could revolutionise the region’s construction industry.

DuBox is a manufacturer of modular construction units and comes after a four-year R&D programme and an investment of Dh50 million.

The company will build modules that can contain individual rooms, staircases or corridor units that can be used to build hotels, schools, hospitals and retail or offices. These are assembled

at its factory, then shipped out to sites and joined together. Mr Bsaibes said that this allows the owner of a school or a hotel, say, to build a smaller capacity property and then add to it –

either by extending or simply placing more units on top – if demand increases.

“With schools, the investment is big. You don’t start with 2,000 students, you start with 500. With our modularity, we can build a base size and build on to it. Every year, they can add 20

classes – plug in and play.”

He said that by doing the bulk of construction in factory conditions, then assembling and finishing on site, this can lead to a 70 per cent reduction in accidents, a 50 per cent reduction in delivery times and a 30 per cent cut in manpower requirements.

Mr Bsaibes is the founder of Amana, which is a Dh2.5 billion turnover construction firm specialising in industrial buildings.

Speaking after presenting his idea at the World Architecture Forum in Dubai last week, Mr Bsaibes told The National that DuBox is based in a 62,000-square metre manufacturing facility

in Dubai Industrial City that is capable of producing 9,000 sq metres of completed modules each month. When it began trials, it took three-and-a-half days to produce a module that now

takes three hours.

“We can produce 350 modules per month. Take a hotel, for example, that could contain 700 modules – for us, it’s a two-month process.”

The company is currently in the process of delivering eight buildings containing staff

accommodation for Adnoc in Ruwais. The 80-week contract is due for completion in July, but Mr Bsaibes said the final building will be handed over in “eight or nine weeks”.

Modular construction is growing in popularity in other parts of the world. However, its take-up in the Arabian Gulf has been limited as it is more expensive than traditional construction owing

to cheaper labour costs.





Yet Mr Bsaibes argued that the ability to deliver units quickly and with fewer defects will appeal to certain clients who need properties built quickly to gain returns from investment.

The UK contractor Laing O’Rourke recently pre-assembled 392 bathroom “pods” at an off-site factory before installing them at the new Hilton Garden Inn Dubai Mall of the Emirates, which the Laing O’Rourke strategic development director Vanessa Currie said “enabled a reduced

programme, providing greater assurance over schedule and build-quality”.

Dubai-based KEF Holding has also invested in an industrial park to create modular buildings in India and set up a joint venture in Dubai with the design consultancy Tahpi to offer modular

hospitals. These will be assembled at a factory in Jebel Ali which will open this year.

Mr Bsaibes said he would welcome more market entrants, as he knows that convincing conservative clients will take time and “persistence”.

“Through persistence, you develop acceptance and trust. Had it not been for Amana’s

credibility in the market ... Nobody’s going to accept a start-up trying this business.”


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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

Manager – Research and Consultancy - UAE

+971 4 403 7789

[email protected]

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