Moody's cites vast supply in pipeline, scarce lending
(DUBAI) Persian Gulf real estate markets will probably worsen in the coming months as a 'vast' supply of properties becomes available and lending remains scarce, Moody's Investors Service said.
Moody's gave the industry a negative outlook for the next 12 months to 18 months and has downgraded the ratings of all Gulf Cooperation Council-based companies affected by real estate, analyst Martin Kohlhase said in a report yesterday.
'The supply-demand imbalance in commercial property, and to some degree in residential units, is likely to grow worse as vast supply meets slack demand,' he said.
Gulf property companies are struggling after the global financial crisis choked off lending, making it more difficult for them to finance developments and depriving the market of homebuyers.
The average long-term debt rating for the companies is Ba1, one step below investment grade. In April 2009, the average was A2, five steps above 'junk' status, according to the report.
The GCC is made up of Saudi Arabia, the United Arab Emirates, Qatar, Bahrain, Oman and Kuwait.
The market in Dubai, part of the UAE, has worsened the most, with house prices falling by 50 per cent, according to the report. Emaar Properties PJSC, Dubai's largest developer, is rated B1, four levels below investment grade, and is on watch for further downgrade, according to the report.
Government intervention could improve prospects in the region, Mr Kohlhase wrote. Moody's is unlikely to give the GCC countries a 'stable' outlook in the near term, he said.
Saudi Arabia is the 'brightest spot' in the region, with a young and growing population bolstering the residential market, Moody's said.
The peak year for debt coming due will be 2012, meaning companies will have to address refinancing over the next 18 months, Mr Kohlhase wrote.
Saudi Arabia's Dar Al-Arkan Real Estate Development Co, for example, has US$1 billion of Islamic bonds, or sukuk, due to be repaid in July 2012, according to data compiled by Bloomberg. -- Bloomberg
Source: Business Times, 25 May 2010
Showing posts with label Overseas Property - UAE. Show all posts
Showing posts with label Overseas Property - UAE. Show all posts
Tuesday, May 25, 2010
Arabtec sees Nakheel cash by next month
It is to be used to pay Arabtec's UAE suppliers and subcontractors
(ABU DHABI) Dubai builder Arabtec expects cash from developer Nakheel's debt restructuring by end-June, while payment in the form of bonds could take several months, its chief executive said yesterday.
Riad Kamal declined to say how much money Arabtec, the UAE's largest builder by market value, would get from Nakheel, a unit of state-owned conglomerate Dubai World, which announced last week that its core creditor banks had accepted proposals to restructure US$23.5 billion in debt. As part of the proposals, Nakheel's trade creditors have been offered full repayment, with 40 per cent in cash and 60 per cent in the form of an Islamic bond, or sukuk, which has a 10 per cent annual return. 'The 40 per cent (cash) will come probably in June, and the 60 per cent bonds in three to four months,' Mr Kamal told reporters, adding that the repayment offer was a 'fair deal'.
Mr Kamal said that Nakheel's cash would be circulated to pay Arabtec's suppliers and subcontractors in the United Arab Emirates, adding that the firm would not need to raise additional cash for its projects outside the Gulf state.
'Our investments outside the UAE don't need cash. They are self-financed, more or less.'
Arabtec last week said that it had signed on to Nakheel's debt repayment offer and urged others to follow suit. Mr Kamal also said that the 'door is still open' for future co-operation with Abu Dhabi's Aabar Investments after both firms called off their US$1.7 billion merger in April.
Analysts said that the deal, which would have seen Aabar take over Arabtec, was no longer necessary for Arabtec in the wake of Dubai's debt repayment plan.
Earlier yesterday, Mr Kamal said that Arabtec expects to have 10,000 employees in Saudi Arabia - up from 6,000 now - by the end of the year as the property company seeks to diversify its operations away from crisis-hit Dubai.
Arabtec is expanding overseas to diversify its portfolio away from Dubai's once-booming property sector, which has been hit hard by the global financial crisis as developers slow or cancel projects and jobs are slashed.
Property prices have been under pressure since the financial crisis and a slump in oil prices ended a six-year economic boom in the Gulf region.
'We are not willing to cut down on margins; we are looking at markets outside the UAE,' Mr Kamal said.
'We are moving into Angola and Turkmenistan and North Africa, where margins are healthier.'
The builder reported a 17 per cent slide in net attributable profit to 134.5 million dirhams (S$51.4 million) in the first three months of this year. -- Reuters
Source: Business Times, 25 May 2010
(ABU DHABI) Dubai builder Arabtec expects cash from developer Nakheel's debt restructuring by end-June, while payment in the form of bonds could take several months, its chief executive said yesterday.
Riad Kamal declined to say how much money Arabtec, the UAE's largest builder by market value, would get from Nakheel, a unit of state-owned conglomerate Dubai World, which announced last week that its core creditor banks had accepted proposals to restructure US$23.5 billion in debt. As part of the proposals, Nakheel's trade creditors have been offered full repayment, with 40 per cent in cash and 60 per cent in the form of an Islamic bond, or sukuk, which has a 10 per cent annual return. 'The 40 per cent (cash) will come probably in June, and the 60 per cent bonds in three to four months,' Mr Kamal told reporters, adding that the repayment offer was a 'fair deal'.
Mr Kamal said that Nakheel's cash would be circulated to pay Arabtec's suppliers and subcontractors in the United Arab Emirates, adding that the firm would not need to raise additional cash for its projects outside the Gulf state.
'Our investments outside the UAE don't need cash. They are self-financed, more or less.'
Arabtec last week said that it had signed on to Nakheel's debt repayment offer and urged others to follow suit. Mr Kamal also said that the 'door is still open' for future co-operation with Abu Dhabi's Aabar Investments after both firms called off their US$1.7 billion merger in April.
Analysts said that the deal, which would have seen Aabar take over Arabtec, was no longer necessary for Arabtec in the wake of Dubai's debt repayment plan.
Earlier yesterday, Mr Kamal said that Arabtec expects to have 10,000 employees in Saudi Arabia - up from 6,000 now - by the end of the year as the property company seeks to diversify its operations away from crisis-hit Dubai.
Arabtec is expanding overseas to diversify its portfolio away from Dubai's once-booming property sector, which has been hit hard by the global financial crisis as developers slow or cancel projects and jobs are slashed.
Property prices have been under pressure since the financial crisis and a slump in oil prices ended a six-year economic boom in the Gulf region.
'We are not willing to cut down on margins; we are looking at markets outside the UAE,' Mr Kamal said.
'We are moving into Angola and Turkmenistan and North Africa, where margins are healthier.'
The builder reported a 17 per cent slide in net attributable profit to 134.5 million dirhams (S$51.4 million) in the first three months of this year. -- Reuters
Source: Business Times, 25 May 2010
Thursday, February 11, 2010
UAE hotels hope money can buy love
But there are few takers for luxury Valentine packages
It may not be possible to buy love. But at least you can spend a fortune trying to do so in the United Arab Emirates, where luxury hotels are offering Valentine’s Day specials for mega-rich romantics.
Lovey dovey in Abu Dhabi? The Emirates Palace, which bills itself as a seven-star hotel, has the priciest Valentine offer – a seven-day stay for a cool million bucks.
‘Time to show your love to your love,’ the hotel says. Takers will have a private butler and a chauffeur-driven Maybach luxury car at their disposal, which can be ‘tailor-made to your design’.
Also included in the million-dollar deal are a romantic dinner in-suite or on a yacht at sea, helicopter flights, use of the Abu Dhabi golf course, horse riding, watching camel racing, and even making your own perfume.
A private jet is also on call for a quick shopping trip to other countries in the region during the week.
The daily Gulf News quoted sources close to the hotel as saying that a Russian businessman had expressed interest in the package.
But an employee told AFP that variations on the deal had been offered for some time, and ‘we didn’t expect to sell any of the packages’ because of the world economic crisis.
The hotel does offer a more modest three-day Valentine’s deal for about 500,000 dirhams (S$193,000). This includes in-suite dinner with live music – and a diamond necklace for the lady.
East along the coast in Dubai the prices may be lower, but opportunities to lavish largesse on one’s loved one are not hard to find.
The Palace hotel – near Burj Khalifa, the world’s tallest building – offers a deal entitled the ‘Sweet Suite Package’ for 9,999 dirhams.
The couple stays in one of the hotel’s Royal Suites, where they are treated to a candlelit dinner, French champagne and a chocolate fountain.
Spa treatment included to massage away some of those extra acquired calories.
However, there there have been few takers so far, with one hotel employee telling AFP that there has not been much interest because ‘it costs too much’.
The Kempinski Hotel in Dubai’s Mall of the Emirates has a 5,600 dirham offer, which includes a night in a suite, a four-course candlelit dinner, ‘pampering at the spa’, and breakfast for two.
And the Atlantis hotel, on the Jumeirah Palm artificial island, is offering Valentine’s packages ranging from 3,840 dirhams to 6,114 dirhams, depending on the suite.
The offer includes spa treatment, champagne, a platter of chocolate-covered fruit and access to watery attractions – including a swim with the hotel’s dolphins.
Source: Business Times, 11 Feb 2010
It may not be possible to buy love. But at least you can spend a fortune trying to do so in the United Arab Emirates, where luxury hotels are offering Valentine’s Day specials for mega-rich romantics.
Lovey dovey in Abu Dhabi? The Emirates Palace, which bills itself as a seven-star hotel, has the priciest Valentine offer – a seven-day stay for a cool million bucks.
‘Time to show your love to your love,’ the hotel says. Takers will have a private butler and a chauffeur-driven Maybach luxury car at their disposal, which can be ‘tailor-made to your design’.
Also included in the million-dollar deal are a romantic dinner in-suite or on a yacht at sea, helicopter flights, use of the Abu Dhabi golf course, horse riding, watching camel racing, and even making your own perfume.
A private jet is also on call for a quick shopping trip to other countries in the region during the week.
The daily Gulf News quoted sources close to the hotel as saying that a Russian businessman had expressed interest in the package.
But an employee told AFP that variations on the deal had been offered for some time, and ‘we didn’t expect to sell any of the packages’ because of the world economic crisis.
The hotel does offer a more modest three-day Valentine’s deal for about 500,000 dirhams (S$193,000). This includes in-suite dinner with live music – and a diamond necklace for the lady.
East along the coast in Dubai the prices may be lower, but opportunities to lavish largesse on one’s loved one are not hard to find.
The Palace hotel – near Burj Khalifa, the world’s tallest building – offers a deal entitled the ‘Sweet Suite Package’ for 9,999 dirhams.
The couple stays in one of the hotel’s Royal Suites, where they are treated to a candlelit dinner, French champagne and a chocolate fountain.
Spa treatment included to massage away some of those extra acquired calories.
However, there there have been few takers so far, with one hotel employee telling AFP that there has not been much interest because ‘it costs too much’.
The Kempinski Hotel in Dubai’s Mall of the Emirates has a 5,600 dirham offer, which includes a night in a suite, a four-course candlelit dinner, ‘pampering at the spa’, and breakfast for two.
And the Atlantis hotel, on the Jumeirah Palm artificial island, is offering Valentine’s packages ranging from 3,840 dirhams to 6,114 dirhams, depending on the suite.
The offer includes spa treatment, champagne, a platter of chocolate-covered fruit and access to watery attractions – including a swim with the hotel’s dolphins.
Source: Business Times, 11 Feb 2010
Tuesday, January 26, 2010
Saudi Arabia to introduce mortgage law soon: official
Saudi Arabian central bank governor Muhammad al-Jasser said that the kingdom would issue its first mortgage law in the next few months, boosting the real estate industry and allowing banks to diversify their balance sheets.
‘I’m optimistic that in the next few months, the law will be issued,’ said Mr al-Jasser yesterday.
‘It will be a qualitative jump in the way we finance housing in the country and in the way we use financial instruments that are linked to the housing market.’
Saudi Arabia’s property market is suffering from a shortage of housing units, shielding the kingdom from corrections in the real estate markets of other Gulf Arab states such as the United Arab Emirates, Banque Saudi Fransi said in a report on Jan 13.
Real estate prices in Dubai, the second-largest emirate in the UAE, plummeted around 50 per cent from their peak, according to Deutsche Bank estimates.
The Syariah-compliant legislation which has been discussed for the past two years will consist of five parts, Mr al-Jasser said. It will define the terms of mortgages, how they are designed, how they are granted, how companies are licensed and how procedures will be enforced.
The law is on the way to the council of ministers before going to the Shura Council, the country’s consultative assembly, for final approval, he said.
‘We expect demand for new housing will continue, steered by the indigenous population,’ John Sfakianakis, Riyadh-based chief economist at Banque Saudi Fransi, said in the report.
‘In most areas of the kingdom, a shortfall in the number of housing units available persists, which has placed upward pressure on consumer price inflation in the past two years.’
Bank lending in the world’s largest oil exporter slowed following the global credit crisis and the default of two Saudi family conglomerates: Ahmad Hamad Algosaibi & Brothers Co and Saad Group.
Eighty banks, including BNP Paribas and Citigroup Inc, are owed at least US$15.7 billion, sparking a flurry of litigation.
‘Hopefully, the mortgage law will ensure the production of sufficient sukuk and corporate bonds that will be held by banks in lieu of government bonds,’ Mr al-Jasser said, when asked if the government planned to issue longer maturity bonds.
Islamic bonds, or sukuk, are asset-based securities that pay profit distributions to investors as Syariah law forbids interest payments.
Source: Business Times, 26 Jan 2010
‘I’m optimistic that in the next few months, the law will be issued,’ said Mr al-Jasser yesterday.
‘It will be a qualitative jump in the way we finance housing in the country and in the way we use financial instruments that are linked to the housing market.’
Saudi Arabia’s property market is suffering from a shortage of housing units, shielding the kingdom from corrections in the real estate markets of other Gulf Arab states such as the United Arab Emirates, Banque Saudi Fransi said in a report on Jan 13.
Real estate prices in Dubai, the second-largest emirate in the UAE, plummeted around 50 per cent from their peak, according to Deutsche Bank estimates.
The Syariah-compliant legislation which has been discussed for the past two years will consist of five parts, Mr al-Jasser said. It will define the terms of mortgages, how they are designed, how they are granted, how companies are licensed and how procedures will be enforced.
The law is on the way to the council of ministers before going to the Shura Council, the country’s consultative assembly, for final approval, he said.
‘We expect demand for new housing will continue, steered by the indigenous population,’ John Sfakianakis, Riyadh-based chief economist at Banque Saudi Fransi, said in the report.
‘In most areas of the kingdom, a shortfall in the number of housing units available persists, which has placed upward pressure on consumer price inflation in the past two years.’
Bank lending in the world’s largest oil exporter slowed following the global credit crisis and the default of two Saudi family conglomerates: Ahmad Hamad Algosaibi & Brothers Co and Saad Group.
Eighty banks, including BNP Paribas and Citigroup Inc, are owed at least US$15.7 billion, sparking a flurry of litigation.
‘Hopefully, the mortgage law will ensure the production of sufficient sukuk and corporate bonds that will be held by banks in lieu of government bonds,’ Mr al-Jasser said, when asked if the government planned to issue longer maturity bonds.
Islamic bonds, or sukuk, are asset-based securities that pay profit distributions to investors as Syariah law forbids interest payments.
Source: Business Times, 26 Jan 2010
Tuesday, December 1, 2009
Keppel, SembCorp not hit by Dubai fallout
(SINGAPORE) Singapore's two major conglomerates with interests in the Middle East yesterday allayed fears of any fallout from Dubai World's credit woes.
'Keppel Corp does not have any exposure to Dubai World from its projects in the Middle East,' said a Keppel spokesman.
Keppel, through its infrastructure arm Keppel Integrated Engineering, is involved in Qatar's $1.5 billion Doha North Sewage Treatment Works - the largest greenfield wastewater treatment, water reuse and sludge treatment plant in the Middle East.
Keppel also has a $1.7 billion domestic solid waste management centre in Qatar, which is due to come on stream soon.
Major utilities and infrastructure player Sembcorp is also seen as unlikely to suffer any problems as a result of Dubai World's troubles.
Sembcorp's contracts are not with Dubai World, and its plants in the Middle East are for power generation and water treatment - both essential utilities.
Sembcorp has a 40 per cent stake in the US$1.7 billion 887 megawatt Fujairah 1 independent water and power project (IWPP) in Fujairah, another of the UAE's seven emirates, which are all separately run entities.
Sembcorp also recently secured finance from a consortium of international banks - none of them Dubai-linked - for the US$1 billion Salalah IWPP in Oman. This is scheduled to start operating in the first half of 2012.
Township development, building and infrastructure consultancy Surbana also said yesterday it will see little effect on its Middle Eastern operations.
'We do not really have projects in Dubai,' said a spokesman. 'Most of our Middle East projects are in Abu Dhabi.
'Because of the economic situation, some of our Middle East projects are facing some slight delays but they are still on-going.'
Surbana is lead consultant for the US$109 million Abu Dhabi Tourism Authority Headquarters, the US$110 million Abu Dhabi Corniche Waterfront Hotel and the US$230 million Emirates Morocco Hotel, among other projects.
The consultancy is also involved in the US$435 million redevelopment of Abu Dhabi's Al Bateen district.
Keppel shares closed 28 cents lower at $8.10, while Sembcorp shares ended the day 10 cents lower at $3.70.
Source: Business Times, 1 Dec 2009
'Keppel Corp does not have any exposure to Dubai World from its projects in the Middle East,' said a Keppel spokesman.
Keppel, through its infrastructure arm Keppel Integrated Engineering, is involved in Qatar's $1.5 billion Doha North Sewage Treatment Works - the largest greenfield wastewater treatment, water reuse and sludge treatment plant in the Middle East.
Keppel also has a $1.7 billion domestic solid waste management centre in Qatar, which is due to come on stream soon.
Major utilities and infrastructure player Sembcorp is also seen as unlikely to suffer any problems as a result of Dubai World's troubles.
Sembcorp's contracts are not with Dubai World, and its plants in the Middle East are for power generation and water treatment - both essential utilities.
Sembcorp has a 40 per cent stake in the US$1.7 billion 887 megawatt Fujairah 1 independent water and power project (IWPP) in Fujairah, another of the UAE's seven emirates, which are all separately run entities.
Sembcorp also recently secured finance from a consortium of international banks - none of them Dubai-linked - for the US$1 billion Salalah IWPP in Oman. This is scheduled to start operating in the first half of 2012.
Township development, building and infrastructure consultancy Surbana also said yesterday it will see little effect on its Middle Eastern operations.
'We do not really have projects in Dubai,' said a spokesman. 'Most of our Middle East projects are in Abu Dhabi.
'Because of the economic situation, some of our Middle East projects are facing some slight delays but they are still on-going.'
Surbana is lead consultant for the US$109 million Abu Dhabi Tourism Authority Headquarters, the US$110 million Abu Dhabi Corniche Waterfront Hotel and the US$230 million Emirates Morocco Hotel, among other projects.
The consultancy is also involved in the US$435 million redevelopment of Abu Dhabi's Al Bateen district.
Keppel shares closed 28 cents lower at $8.10, while Sembcorp shares ended the day 10 cents lower at $3.70.
Source: Business Times, 1 Dec 2009
CDL open to raising South Beach stake
(SINGAPORE) City Developments Ltd (CDL) says it is open to exploring the possibility to raise its stake in the South Beach project - in which Dubai World also has a share - if such an opportunity arises.
'South Beach is an iconic development and one which has excellent potential,' a CDL spokesperson noted.
She added that the joint venture company that owns the South Beach site may also choose to issue further notes if more funds are required in due course and it is open to any note holder and/or shareholder to subscribe for the notes.
CDL bought the South Beach site in 2007 jointly with Dubai World and El-Ad Group for $1.69 billion. In June this year, the JV company refinanced an earlier $1.2 billion land loan through an $800 million two-year secured bank loan and $400 million five-year secured convertible notes. Hong Kong's Nan Fung group subscribed for $205 million of the notes while CDL mopped up the remaining $195 million.
Dubai World is now asking all providers of financing to itself and its unit Nakheel to 'standstill' and extend debt maturities until at least May 30, 2010.
South Beach will have offices, hotels, residences and and retail space. Some market watchers suggest that in addition to the options outlined by CDL yesterday, another avenue for the JV company to fund the site's development would be to sell all or part of the project. If the apartments are launched and sold, sales proceeds would help to fund part of the development's construction. The hotels could also be divested to CDL's hotel units Millennium & Copthorne Hotels plc and CDL Hospitality Trusts, or a third-party buyer. Alternatively, the entire development, when completed, could be spun off into a real estate investment trust. Rough calculations show that Dubai World and El-Ad would have pumped in about $200 million each of equity in the project. As at Sept 30, 2009, CDL had cash and cash equivalents of about $979.5 million at group level. Market watchers reckon the South Beach consortium partners may have received offers for their stakes from potential buyers.
CDL said in August that South Beach's construction is likely to begin around Q3 2010, with CDL and Nan Fung probably the ones that will pump in further money. El-Ad and Dubai World are likely to be passive investors who may see their share in the project diluted.
Source: Business Time, 1 Dec 2009
'South Beach is an iconic development and one which has excellent potential,' a CDL spokesperson noted.
She added that the joint venture company that owns the South Beach site may also choose to issue further notes if more funds are required in due course and it is open to any note holder and/or shareholder to subscribe for the notes.
CDL bought the South Beach site in 2007 jointly with Dubai World and El-Ad Group for $1.69 billion. In June this year, the JV company refinanced an earlier $1.2 billion land loan through an $800 million two-year secured bank loan and $400 million five-year secured convertible notes. Hong Kong's Nan Fung group subscribed for $205 million of the notes while CDL mopped up the remaining $195 million.
Dubai World is now asking all providers of financing to itself and its unit Nakheel to 'standstill' and extend debt maturities until at least May 30, 2010.
South Beach will have offices, hotels, residences and and retail space. Some market watchers suggest that in addition to the options outlined by CDL yesterday, another avenue for the JV company to fund the site's development would be to sell all or part of the project. If the apartments are launched and sold, sales proceeds would help to fund part of the development's construction. The hotels could also be divested to CDL's hotel units Millennium & Copthorne Hotels plc and CDL Hospitality Trusts, or a third-party buyer. Alternatively, the entire development, when completed, could be spun off into a real estate investment trust. Rough calculations show that Dubai World and El-Ad would have pumped in about $200 million each of equity in the project. As at Sept 30, 2009, CDL had cash and cash equivalents of about $979.5 million at group level. Market watchers reckon the South Beach consortium partners may have received offers for their stakes from potential buyers.
CDL said in August that South Beach's construction is likely to begin around Q3 2010, with CDL and Nan Fung probably the ones that will pump in further money. El-Ad and Dubai World are likely to be passive investors who may see their share in the project diluted.
Source: Business Time, 1 Dec 2009
Tuesday, November 10, 2009
Saudi to face ’substantial’ housing shortage by 2015
Saudi Arabia will face a ’substantial’ housing shortage by 2015 as a growing population and rising employment fuel demand, Deutsche Bank said.
The kingdom will require an estimated 1.2 million additional homes by 2015, compared with a projected supply of just 900,000, the German bank said in a report yesterday. That amounts to a shortfall of 25 per cent.
‘Government initiatives to enhance living standards and improve mortgage access will boost affordability and unlock huge latent demand,’ Dubai-based analysts Nabil Ahmed and Athmane Benzerroug wrote. The kingdom’s market ‘is the strongest in the Gulf’ and has remained relatively resilient.
Saudi property prices were down 15 per cent year-on-year as of the third quarter, compared with an average slump of 40 per cent in other Gulf markets, the report showed.
Source: Business Times, 10 Nov 2009
The kingdom will require an estimated 1.2 million additional homes by 2015, compared with a projected supply of just 900,000, the German bank said in a report yesterday. That amounts to a shortfall of 25 per cent.
‘Government initiatives to enhance living standards and improve mortgage access will boost affordability and unlock huge latent demand,’ Dubai-based analysts Nabil Ahmed and Athmane Benzerroug wrote. The kingdom’s market ‘is the strongest in the Gulf’ and has remained relatively resilient.
Saudi property prices were down 15 per cent year-on-year as of the third quarter, compared with an average slump of 40 per cent in other Gulf markets, the report showed.
Source: Business Times, 10 Nov 2009
Tuesday, October 6, 2009
Dubai home prices poised for further fall
Analysts expect 50% drop in 2009 from their peaks last year
(DUBAI) Dubai house prices appear poised to fall another 10 per cent in 2009 as financial woes linger, a Reuters poll showed, in stark contrast to more mature markets in Britain and the United States which are showing signs of life.
Residential property prices in the former boomtown have yet to reach a bottom and have a 20 per cent chance of picking up before 2011, according to the median forecast of nine analysts at banks, investment firms and research institutions.
The two respondents who said they thought there was more than a 50 per cent chance of prices picking up before then expected a rise in the third and fourth quarters of 2010.
Prices in the Gulf emirate, which boasts the world's tallest building and man-made islands in the shape of palm fronds, are seen falling 50 per cent in 2009 from their peaks late last year, and likely a total of 60 per cent by 2010, which would amount to a 20 per cent fall from current levels, if realised.
'The real estate market remains subdued as oversupply concerns and lacklustre demand continue to characterise the marketplace,' said Matthew Green, head of research and consultancy at property services firm CB Richard Ellis in Dubai.
Dubai is expected to be oversupplied by 32,000 new homes by end 2010, according to recent Deutsche Bank figures.
'Sales and lease rate declines are starting to abate but further nominal declines could be realised before year end,' Mr Green said.
Two out of nine respondents said they expected Dubai property prices to hit a bottom in the fourth quarter of 2009, four predicted the first half of 2010 and two in the second half. One expected prices to reach a bottom in 2011 or later.
'We have been consistent with our view that the market will bottom out substantially in the fourth quarter of 2009, but there will be some tail off into the new year,' said Chet Riley, an analyst at Nomura Investment Bank.
Property prices in the emirate have fallen sharply since late last year, when the global financial crisis and a drop in oil prices ended an economic boom in the Gulf Arab region.
Prices suffered the biggest 12-month fall among global property markets, but declines are easing as global markets recover, real estate brokerage Knight Frank said in September.
The United Arab Emirates's construction sector has been hardest hit by the downturn, with more than 500 projects on hold or cancelled, and Dubai has been the most severely affected emirate, Dubai-based research firm Proleads said in September.
Dubai, the Gulf's trade and tourism hub, is one of seven members in the UAE federation. Abu Dhabi is the capital emirate.
The Reuters poll found that residential rents in Dubai are seen falling by 45 per cent for full year 2009 and a further 10 per cent in 2010.
Three out of seven respondents expected rents to fall as much as 50 per cent in 2009 and one by 30 per cent in 2010.
'Relative to more established markets rents have normalised but may come under some pressure again in 2010 after the 'mini rally' we are currently seeing,' said Nomura's Mr Riley.
House prices in neighbouring Abu Dhabi, the UAE capital and home to most of the country's oil, are expected to fall 33 per cent during full year 2009 and are expected to decline 3 per cent in 2010, the Reuters poll showed.
One analyst expected prices in the capital to fall as much as 40 per cent in 2009.
Both figures have declined from the last poll, published in June, when analysts forecast a fall of 25 per cent in 2009 and prices to remain flat in 2010. -- Reuters
Source: Business Times, 6 Oct 2009
(DUBAI) Dubai house prices appear poised to fall another 10 per cent in 2009 as financial woes linger, a Reuters poll showed, in stark contrast to more mature markets in Britain and the United States which are showing signs of life.
Residential property prices in the former boomtown have yet to reach a bottom and have a 20 per cent chance of picking up before 2011, according to the median forecast of nine analysts at banks, investment firms and research institutions.
The two respondents who said they thought there was more than a 50 per cent chance of prices picking up before then expected a rise in the third and fourth quarters of 2010.
Prices in the Gulf emirate, which boasts the world's tallest building and man-made islands in the shape of palm fronds, are seen falling 50 per cent in 2009 from their peaks late last year, and likely a total of 60 per cent by 2010, which would amount to a 20 per cent fall from current levels, if realised.
'The real estate market remains subdued as oversupply concerns and lacklustre demand continue to characterise the marketplace,' said Matthew Green, head of research and consultancy at property services firm CB Richard Ellis in Dubai.
Dubai is expected to be oversupplied by 32,000 new homes by end 2010, according to recent Deutsche Bank figures.
'Sales and lease rate declines are starting to abate but further nominal declines could be realised before year end,' Mr Green said.
Two out of nine respondents said they expected Dubai property prices to hit a bottom in the fourth quarter of 2009, four predicted the first half of 2010 and two in the second half. One expected prices to reach a bottom in 2011 or later.
'We have been consistent with our view that the market will bottom out substantially in the fourth quarter of 2009, but there will be some tail off into the new year,' said Chet Riley, an analyst at Nomura Investment Bank.
Property prices in the emirate have fallen sharply since late last year, when the global financial crisis and a drop in oil prices ended an economic boom in the Gulf Arab region.
Prices suffered the biggest 12-month fall among global property markets, but declines are easing as global markets recover, real estate brokerage Knight Frank said in September.
The United Arab Emirates's construction sector has been hardest hit by the downturn, with more than 500 projects on hold or cancelled, and Dubai has been the most severely affected emirate, Dubai-based research firm Proleads said in September.
Dubai, the Gulf's trade and tourism hub, is one of seven members in the UAE federation. Abu Dhabi is the capital emirate.
The Reuters poll found that residential rents in Dubai are seen falling by 45 per cent for full year 2009 and a further 10 per cent in 2010.
Three out of seven respondents expected rents to fall as much as 50 per cent in 2009 and one by 30 per cent in 2010.
'Relative to more established markets rents have normalised but may come under some pressure again in 2010 after the 'mini rally' we are currently seeing,' said Nomura's Mr Riley.
House prices in neighbouring Abu Dhabi, the UAE capital and home to most of the country's oil, are expected to fall 33 per cent during full year 2009 and are expected to decline 3 per cent in 2010, the Reuters poll showed.
One analyst expected prices in the capital to fall as much as 40 per cent in 2009.
Both figures have declined from the last poll, published in June, when analysts forecast a fall of 25 per cent in 2009 and prices to remain flat in 2010. -- Reuters
Source: Business Times, 6 Oct 2009
Tuesday, August 18, 2009
Dubai housing slump nears bottom: Jones Lang LaSalle
(DUBAI) A downturn in Dubai's residential properties market appeared to be nearing a bottom in the second quarter as the rate of price declines eased and transaction volumes stabilised, a Jones Lang LaSalle researcher said.
Dubai's once-booming property sector has been hit hard by the global financial crisis, but the pick-up in more mature markets such as the US and Britain, is starting to boost investor confidence.
'The stabilisation is showing that the market is reaching the bottom and sales activity is starting to come back in,' Craig Plumb, head of research at Jones Lang LaSalle Middle East and North America told Reuters on Sunday.
'Prices are reaching a level where people think they are willing to buy,' said Mr Plumb, adding that sales activity was expected to increase in the next six months. Average asking sale prices fell by about 24 per cent in the second quarter from the first quarter, but the rate of decline slowed, he said in a report published on Sunday. This signalled the gap between asking price and selling price was narrowing, he added.
The decline in average housing prices has slowed down to 6 per cent in the second quarter compared to the previous three months, according to the report. Transaction volumes declines by 13 per cent compared to the first quarter and 58 per cent from their level in the second quarter of 2008. The gap between achieved and asked prices narrowed to 7 per cent in the second quarter of 2009, after achieved prices were 20 per cent lower than asking prices since the second quarter of 2008, it said.
The decline rate in rental prices also slowed, Jones Lang LaSalle said.
The average rent for two bedroom apartments fell by 15 per cent in the second quarter, compared with a 22 per cent decline in the first quarter of this year.
Additionally, new residential supply will continue to enter the market as 22,400 units are expected to be handed over this year, despite the cancellation or delay of more than US$24 billion worth of housing projects, it said. -- Reuters
Source: Business Times, 18 Aug 2009
Dubai's once-booming property sector has been hit hard by the global financial crisis, but the pick-up in more mature markets such as the US and Britain, is starting to boost investor confidence.
'The stabilisation is showing that the market is reaching the bottom and sales activity is starting to come back in,' Craig Plumb, head of research at Jones Lang LaSalle Middle East and North America told Reuters on Sunday.
'Prices are reaching a level where people think they are willing to buy,' said Mr Plumb, adding that sales activity was expected to increase in the next six months. Average asking sale prices fell by about 24 per cent in the second quarter from the first quarter, but the rate of decline slowed, he said in a report published on Sunday. This signalled the gap between asking price and selling price was narrowing, he added.
The decline in average housing prices has slowed down to 6 per cent in the second quarter compared to the previous three months, according to the report. Transaction volumes declines by 13 per cent compared to the first quarter and 58 per cent from their level in the second quarter of 2008. The gap between achieved and asked prices narrowed to 7 per cent in the second quarter of 2009, after achieved prices were 20 per cent lower than asking prices since the second quarter of 2008, it said.
The decline rate in rental prices also slowed, Jones Lang LaSalle said.
The average rent for two bedroom apartments fell by 15 per cent in the second quarter, compared with a 22 per cent decline in the first quarter of this year.
Additionally, new residential supply will continue to enter the market as 22,400 units are expected to be handed over this year, despite the cancellation or delay of more than US$24 billion worth of housing projects, it said. -- Reuters
Source: Business Times, 18 Aug 2009
Tuesday, August 11, 2009
Dubai home prices drop further
(DUBAI) Dubai house prices fell by 24 per cent in the second quarter from the prior quarter but the pace of decline slowed, in line with improving global property markets, Landmark Advisory said on Sunday.
Prices fell less in the same period in Abu Dhabi, as the United Arab Emirates' (UAE) capital, home to most of the country's oil, continues to weather the global downturn better than its neighbour.
The average sale price for villas in Dubai fell 24 per cent while apartments declined 17 per cent, Landmark said.
Prices for villas and apartments fell 32 per cent and 23 per cent respectively in the first quarter from the fourth quarter, the firm said in its May report.
Dubai's once-booming real estate sector has been hit hard by the global financial crisis, but the pick-up in more mature markets such as the United States and Britain is starting to cheer investors.
Prices in the US rose in May for the first time in three years while prices in Britain gained for a third month running in July.
House prices in Dubai are likely to stabilise by the fourth quarter, after falling 9 per cent in the second quarter from the previous quarter, Colliers International said last week.
Rents for villas in Dubai fell 19 per cent to 220,350 dirhams (S$86,480) in the second quarter, while apartment rents dropped 23 per cent to 129,900 dirhams, Landmark said.
Transaction volumes rose 25 per cent and 20 per cent respectively as more people relocated to Dubai from the neighbouring emirates of Abu Dhabi and Sharjah, it said.
In Abu Dhabi, sale prices fell by up to 11 per cent for apartments in the second quarter and 8 per cent for villas compared with the previous quarter, but prices are unlikely to suffer further significant declines, the report said.
The rate of decline also slowed as prices for both categories fell 20 per cent and 30 per cent respectively in the first quarter from the fourth quarter, Landmark said in May.
Rents for both apartments and villas fell by roughly 10 per cent in the second quarter, it said, adding average rents would likely fall significantly as more supply enters the market.
Seven emirates make up the UAE federation.
Landmark Advisory is part of real estate brokerage and consultancy Landmark Properties, which has offices in the UAE and London. -- Reuters
Source: Business Times, 11 Aug 2009
Prices fell less in the same period in Abu Dhabi, as the United Arab Emirates' (UAE) capital, home to most of the country's oil, continues to weather the global downturn better than its neighbour.
The average sale price for villas in Dubai fell 24 per cent while apartments declined 17 per cent, Landmark said.
Prices for villas and apartments fell 32 per cent and 23 per cent respectively in the first quarter from the fourth quarter, the firm said in its May report.
Dubai's once-booming real estate sector has been hit hard by the global financial crisis, but the pick-up in more mature markets such as the United States and Britain is starting to cheer investors.
Prices in the US rose in May for the first time in three years while prices in Britain gained for a third month running in July.
House prices in Dubai are likely to stabilise by the fourth quarter, after falling 9 per cent in the second quarter from the previous quarter, Colliers International said last week.
Rents for villas in Dubai fell 19 per cent to 220,350 dirhams (S$86,480) in the second quarter, while apartment rents dropped 23 per cent to 129,900 dirhams, Landmark said.
Transaction volumes rose 25 per cent and 20 per cent respectively as more people relocated to Dubai from the neighbouring emirates of Abu Dhabi and Sharjah, it said.
In Abu Dhabi, sale prices fell by up to 11 per cent for apartments in the second quarter and 8 per cent for villas compared with the previous quarter, but prices are unlikely to suffer further significant declines, the report said.
The rate of decline also slowed as prices for both categories fell 20 per cent and 30 per cent respectively in the first quarter from the fourth quarter, Landmark said in May.
Rents for both apartments and villas fell by roughly 10 per cent in the second quarter, it said, adding average rents would likely fall significantly as more supply enters the market.
Seven emirates make up the UAE federation.
Landmark Advisory is part of real estate brokerage and consultancy Landmark Properties, which has offices in the UAE and London. -- Reuters
Source: Business Times, 11 Aug 2009
Saturday, August 1, 2009
Property rents in Dubai seen falling less
(Dubai) RENTS for residential and commercial properties in Dubai will fall for the rest of this year, but declines will be marginal compared with the first half of the year, CB Richard Ellis said on Thursday.
The Gulf emirate's once-booming property sector has suffered sharply as a result of the global financial crisis, as prices fall, developers slow or cancel projects and jobs are cut.
'A period of minimal negative growth over the next 3-6 months could see some stability achieved and the market bottom called before year-end,' said Matt Green, associate director, Research & Consultancy at the real estate services firm.
Rents in Dubai are seen declining by 40 per cent for the whole of this year, and a further 10 per cent in 2010, before recovering in 2011, a Reuters poll showed in June.
Expats leaving Dubai, coupled with an increase in property supply, has led to a sharp drop in apartment prices.
Newer residential areas have been the worst affected with rents for one-bedroom apartments falling as much as 40 per cent year-on-year to 60,000 dirhams (S$23,608), the report said.
Office supply will increase substantially over the next six months with many projects in the latter stages of completion, it said.
Several projects expected to enter the market in the first half of the year are being pushed back further, while slowdown in business activity has led to a slump in demand for office space.
In neighbouring Abu Dhabi, weak demand and low levels of sales activity are expected to shape the market in the second half of the year, the report said.
The property sector of the United Arab Emirates' capital, home to most of the country's oil, has been more resilient than Dubai to the global economic downturn.
Sales prices declines are likely to level off as more investors choose to hold property due to low prices while rents are expected to fall further as more supply enters the market.
'Distressed sales are starting to clear with more investors choosing to hold on to units.'
Prime office rents in Abu Dhabi have fallen as much as 40 per cent to as low as 3,000 dirhams per square metre over the last three quarters, the report said.
'Despite comparatively sound macro fundamentals, slowdown in rents is inevitable as demand weakened markedly. The outlook remains uncertain.' -- Reuters
The Gulf emirate's once-booming property sector has suffered sharply as a result of the global financial crisis, as prices fall, developers slow or cancel projects and jobs are cut.
'A period of minimal negative growth over the next 3-6 months could see some stability achieved and the market bottom called before year-end,' said Matt Green, associate director, Research & Consultancy at the real estate services firm.
Rents in Dubai are seen declining by 40 per cent for the whole of this year, and a further 10 per cent in 2010, before recovering in 2011, a Reuters poll showed in June.
Expats leaving Dubai, coupled with an increase in property supply, has led to a sharp drop in apartment prices.
Newer residential areas have been the worst affected with rents for one-bedroom apartments falling as much as 40 per cent year-on-year to 60,000 dirhams (S$23,608), the report said.
Office supply will increase substantially over the next six months with many projects in the latter stages of completion, it said.
Several projects expected to enter the market in the first half of the year are being pushed back further, while slowdown in business activity has led to a slump in demand for office space.
In neighbouring Abu Dhabi, weak demand and low levels of sales activity are expected to shape the market in the second half of the year, the report said.
The property sector of the United Arab Emirates' capital, home to most of the country's oil, has been more resilient than Dubai to the global economic downturn.
Sales prices declines are likely to level off as more investors choose to hold property due to low prices while rents are expected to fall further as more supply enters the market.
'Distressed sales are starting to clear with more investors choosing to hold on to units.'
Prime office rents in Abu Dhabi have fallen as much as 40 per cent to as low as 3,000 dirhams per square metre over the last three quarters, the report said.
'Despite comparatively sound macro fundamentals, slowdown in rents is inevitable as demand weakened markedly. The outlook remains uncertain.' -- Reuters
Source: Business Times, 1 Aug 2009
Tuesday, June 16, 2009
Dubai house prices to fall another 20%
Half of the UAE's construction projects put on hold
(DUBAI) Dubai house prices will fall another 20 per cent this year, as the former boomtown continues to suffer a sharp economic downturn, a Reuters poll showed.
Residential real estate prices in Dubai - home to man-made islands in the shape of palm trees and the world's tallest building - have a less than 20 per cent chance of picking up before 2011, according to the median forecast of 10 analysts at banks, investment firms and research institutions.
Three of 10 forecasters said that they expected prices to hit a bottom in the second half of 2009 and three predicted that it would happen in the first half of 2010. One forecaster said that prices would rise by 10 per cent from now in 2010.
Five analysts expected prices to fall a further 20 per cent or more this year, and prices could fall an additional 15 per cent next year before stabilising in 2011, the poll showed.
'We may see a further drop in prices as the magnitude of the problem in the sector is still high and the recovery of the sector may take some more time,' said Sajeer Babu, an equity analyst at National Bank of Abu Dhabi, which participated in the June 2-9 poll.
Property prices in the seaside emirate have slumped since late last year, when the global financial crisis and a drop in oil prices ended an economic boom in the Gulf Arab region.
Hundreds of billions of dollars of projects have been cancelled in the United Arab Emirates, Dubai firms have laid off thousands of employees and UAE banks have been loathe to extend new mortgage loans.
More than half of the construction projects in the UAE, worth US$582 billion, have been put on hold, Dubai-based market research firm Proleads said in February.
Rents in Dubai are seen declining by 40 per cent for the full year 2009 and a further 10 per cent in 2010 before recovering in 2011, the poll showed.
While it indicated that house prices for 2009 will fall an average of 50 per cent from a peak in the third quarter, it is likely that prices for off-plan properties, or properties still under construction, will fall in excess of that.
Liquidity problems, job losses and additional supply to the market are expected to delay the recovery in Dubai's property sector.
'We believe a recovery is likely in late 2010 or early 2011, with this based on a series of factors which include a decline in demand for buying property,' said Sana Kapadia, vice-president of equity research at EFG-Hermes in Dubai.
'Our house view is that lower or potentially negative population growth is likely to put a strain on demand,' she said, adding that more clarity regarding the legal framework for property ownership and greater confidence were also needed.
Dubai's population is set to fall 17 per cent this year, the bank said in a report in March.
In a previous Reuters poll in March, Shuaa Capital said that it expected 80,000 units of supply for the next two years.
Dubai property prices had soared sharply after the emirate opened its real estate sector to foreign investors in 2002, granting them freehold ownership rights at many developments.
From the beginning of 2007 to mid-2008, property prices jumped almost 80 per cent, according to Morgan Stanley estimates.
As buying properties became more expensive, Dubai's mainly expatriate population opted to rent instead, causing prices to spiral upwards.
Three of the analysts said that rents in Dubai could fall as much as 50 per cent during 2009.
Meanwhile, Abu Dhabi, the UAE capital and home to most of the country's oil, has fared better during the global economic downturn.
House prices there are expected to fall 25 per cent on average for the full year, with two out of eight analysts saying that prices would slump as much as 45 per cent.
Prices would remain flat in 2010 and pick up in 2011, the poll showed. -- Reuters
Source: Business Times, 16 June 2009
(DUBAI) Dubai house prices will fall another 20 per cent this year, as the former boomtown continues to suffer a sharp economic downturn, a Reuters poll showed.
Residential real estate prices in Dubai - home to man-made islands in the shape of palm trees and the world's tallest building - have a less than 20 per cent chance of picking up before 2011, according to the median forecast of 10 analysts at banks, investment firms and research institutions.
Three of 10 forecasters said that they expected prices to hit a bottom in the second half of 2009 and three predicted that it would happen in the first half of 2010. One forecaster said that prices would rise by 10 per cent from now in 2010.
Five analysts expected prices to fall a further 20 per cent or more this year, and prices could fall an additional 15 per cent next year before stabilising in 2011, the poll showed.
'We may see a further drop in prices as the magnitude of the problem in the sector is still high and the recovery of the sector may take some more time,' said Sajeer Babu, an equity analyst at National Bank of Abu Dhabi, which participated in the June 2-9 poll.
Property prices in the seaside emirate have slumped since late last year, when the global financial crisis and a drop in oil prices ended an economic boom in the Gulf Arab region.
Hundreds of billions of dollars of projects have been cancelled in the United Arab Emirates, Dubai firms have laid off thousands of employees and UAE banks have been loathe to extend new mortgage loans.
More than half of the construction projects in the UAE, worth US$582 billion, have been put on hold, Dubai-based market research firm Proleads said in February.
Rents in Dubai are seen declining by 40 per cent for the full year 2009 and a further 10 per cent in 2010 before recovering in 2011, the poll showed.
While it indicated that house prices for 2009 will fall an average of 50 per cent from a peak in the third quarter, it is likely that prices for off-plan properties, or properties still under construction, will fall in excess of that.
Liquidity problems, job losses and additional supply to the market are expected to delay the recovery in Dubai's property sector.
'We believe a recovery is likely in late 2010 or early 2011, with this based on a series of factors which include a decline in demand for buying property,' said Sana Kapadia, vice-president of equity research at EFG-Hermes in Dubai.
'Our house view is that lower or potentially negative population growth is likely to put a strain on demand,' she said, adding that more clarity regarding the legal framework for property ownership and greater confidence were also needed.
Dubai's population is set to fall 17 per cent this year, the bank said in a report in March.
In a previous Reuters poll in March, Shuaa Capital said that it expected 80,000 units of supply for the next two years.
Dubai property prices had soared sharply after the emirate opened its real estate sector to foreign investors in 2002, granting them freehold ownership rights at many developments.
From the beginning of 2007 to mid-2008, property prices jumped almost 80 per cent, according to Morgan Stanley estimates.
As buying properties became more expensive, Dubai's mainly expatriate population opted to rent instead, causing prices to spiral upwards.
Three of the analysts said that rents in Dubai could fall as much as 50 per cent during 2009.
Meanwhile, Abu Dhabi, the UAE capital and home to most of the country's oil, has fared better during the global economic downturn.
House prices there are expected to fall 25 per cent on average for the full year, with two out of eight analysts saying that prices would slump as much as 45 per cent.
Prices would remain flat in 2010 and pick up in 2011, the poll showed. -- Reuters
Source: Business Times, 16 June 2009
Tuesday, May 26, 2009
Gulf builds hotels worth US$140b amid crisis: study
Just 19% of 893 projects surveyed have been cancelled or suspended
(DUBAI) Gulf Arab countries have more than US$140 billion worth of hotel projects under construction, with just 19 per cent being suspended or cancelled as the industry faces a global slowdown, a survey showed on Sunday.
Of 893 hotel projects surveyed in the Gulf, 5 per cent had been cancelled, 14 per cent put on hold, and 42 per cent were under execution, showed the survey by research house Preloads Global. The rest were under study, planning, bidding, design, or had been completed.
The Gulf Arab region had 306 new hotels, with 108,600 rooms under development, and cash flow is expected to recover in most of the region next year after falling this year, it said.
The United Arab Emirates (UAE), which includes Dubai and Abu Dhabi, hosted 62 per cent of the projects. The country saw the cancellation of almost 5,000 planned rooms during the month of May, and 6,500 since the beginning of this year.
Dubai, the Gulf's trade and tourism hub, faces a sharp slowdown in its property sector, with real estate prices tumbling 41 per cent in the first three months of 2009, according to property consultant Colliers. The slowdown has led to project cancellations worth billions of dollars.
Active cash flow, or money available for project construction, in the Gulf is estimated at US$30.4 billion for 2009, and is projected to increase to US$31.6 billion in 2010, the survey showed. But cash flow in the UAE is expected to fall to US$18.4 billion in 2010, from US$19.9 billion in 2009.
The economic downturn had impacted the region's cash flow negatively, said the survey, resulting in 'much more cash flowing out of the hotel construction sector than into it'.
This has led to a fall in cash flow in 2009, compared with 2008, it said, without giving a figure for last year. A recovery is expected by late 2010, and more cash flowing into the industry than out of it by 2011.
Hotel occupancy levels have remained relatively stable throughout the Gulf since 2003, but the economic slowdown has had a negative impact and 2009 is expected to be a 'challenging' period for the hotel industry, the study said.
UAE hotel occupancy levels are expected to drop to 61 per cent in 2009 from 79 per cent in 2008, while the rest of the Gulf could see 45 per cent to 55 per cent occupancy levels in 2009. A pick-up in occupancy levels, to 2008 levels, will occur by the end of 2010, followed by accelerated 'real growth' by 2013.
'Given projected increases in demand from 2013 onwards, more hotels will be required if relatively high occupancy levels are to be maintained,' Emil Rademeyer, director of Preloads, told reporters. 'With an average completion period of two to three years, 108,600 rooms should come online by 2011.'
The region will need to increase its construction activity starting in 2010 in order to satisfy the projected growth in demand to follow, the paper said, especially with the area's population and visitors expected to grow. Visitors to the Gulf region are expected to reach just below 40 million in 2010, Mr Rademeyer told Reuters by telephone. -- Reuters
Source: Business Times, 26 May 2009
(DUBAI) Gulf Arab countries have more than US$140 billion worth of hotel projects under construction, with just 19 per cent being suspended or cancelled as the industry faces a global slowdown, a survey showed on Sunday.
Of 893 hotel projects surveyed in the Gulf, 5 per cent had been cancelled, 14 per cent put on hold, and 42 per cent were under execution, showed the survey by research house Preloads Global. The rest were under study, planning, bidding, design, or had been completed.
The Gulf Arab region had 306 new hotels, with 108,600 rooms under development, and cash flow is expected to recover in most of the region next year after falling this year, it said.
The United Arab Emirates (UAE), which includes Dubai and Abu Dhabi, hosted 62 per cent of the projects. The country saw the cancellation of almost 5,000 planned rooms during the month of May, and 6,500 since the beginning of this year.
Dubai, the Gulf's trade and tourism hub, faces a sharp slowdown in its property sector, with real estate prices tumbling 41 per cent in the first three months of 2009, according to property consultant Colliers. The slowdown has led to project cancellations worth billions of dollars.
Active cash flow, or money available for project construction, in the Gulf is estimated at US$30.4 billion for 2009, and is projected to increase to US$31.6 billion in 2010, the survey showed. But cash flow in the UAE is expected to fall to US$18.4 billion in 2010, from US$19.9 billion in 2009.
The economic downturn had impacted the region's cash flow negatively, said the survey, resulting in 'much more cash flowing out of the hotel construction sector than into it'.
This has led to a fall in cash flow in 2009, compared with 2008, it said, without giving a figure for last year. A recovery is expected by late 2010, and more cash flowing into the industry than out of it by 2011.
Hotel occupancy levels have remained relatively stable throughout the Gulf since 2003, but the economic slowdown has had a negative impact and 2009 is expected to be a 'challenging' period for the hotel industry, the study said.
UAE hotel occupancy levels are expected to drop to 61 per cent in 2009 from 79 per cent in 2008, while the rest of the Gulf could see 45 per cent to 55 per cent occupancy levels in 2009. A pick-up in occupancy levels, to 2008 levels, will occur by the end of 2010, followed by accelerated 'real growth' by 2013.
'Given projected increases in demand from 2013 onwards, more hotels will be required if relatively high occupancy levels are to be maintained,' Emil Rademeyer, director of Preloads, told reporters. 'With an average completion period of two to three years, 108,600 rooms should come online by 2011.'
The region will need to increase its construction activity starting in 2010 in order to satisfy the projected growth in demand to follow, the paper said, especially with the area's population and visitors expected to grow. Visitors to the Gulf region are expected to reach just below 40 million in 2010, Mr Rademeyer told Reuters by telephone. -- Reuters
Source: Business Times, 26 May 2009
Tuesday, May 5, 2009
UAE grants multi-entry visas to foreign homeowners
(DUBAI) The United Arab Emirates (UAE) said it would grant expatriate homeowners multiple-entry visit visas enabling them to stay six months at a time if they own properties worth at least one million dirhams (S$402,061).
Property buyers had been waiting for legislation for years to clarify their residency rights in the second-largest Arab economy after many of the country's seven emirates allowed foreign investment in property in recent years.
Still, analysts said the government decree, issued on Saturday, needed more details on which properties would be eligible amid a real estate downturn that dragged Dubai property prices down 41 per cent in the first quarter.
'Greater clarity regarding visa and ownership rights of property owners would help to increase transparency and hence confidence in the market, perhaps providing a positive trigger for demand,' EFG-Hermes said in a research note.
Some developers in Dubai - home to the world's tallest tower and man-made islands shaped as palm fronds - had been offering foreign property buyers promises of residency visas if they bought properties.
But, according to a decree issued by UAE Minister of Interior Sheikh Saif bin Zayed al-Nahayan, 'owners of built-up properties can stay for six months from the date of entry into the country.'
After six months, owners would have to leave the country and would be granted re-entry only if they meet certain conditions, including that their property be wholly owned, built, worth least one million dirhams and fit for accommodation by a family.
The owner should also have a fixed income of no less than 10,000 dirhams a month, or the equivalent in a foreign currency.
The visit visa does not give the owner the right to work in the UAE, the decree said.
The UAE, the world's third-largest oil exporter, is a federation of seven emirates including Abu Dhabi and Dubai, each of which has adopted separate rules regarding foreign ownership of real estate.
'More clarity is needed,' said Sana Kapadia, vice-president, equity research at EFG-Hermes in Dubai. 'It depends whether it means one million dirhams at the time of purchase or if it is the current selling price.'
Real estate prices in Dubai, for instance, have tumbled 41 per cent in the first three months of 2009, according to property consultants Colliers.
Home prices rallied during a six-year boom spurred by Dubai's decision in 2002 to allow
foreigners to invest in some properties on a freehold basis.
Now, many units are now selling for less than one million dirhams, according to real estate brokers.
'You'll find an apartment in Discovery Gardens, International City and Jumeirah Lake Towers for less,' said Vincent Easton, an independent property analyst.
Prices are even lower in smaller emirates such as Ajman and Ras al-Khaimah, he said, adding that the one million dirham benchmark could refer to a country-wide average price. -- Reuters
Source: Business Times, 5 May 2009
Property buyers had been waiting for legislation for years to clarify their residency rights in the second-largest Arab economy after many of the country's seven emirates allowed foreign investment in property in recent years.
Still, analysts said the government decree, issued on Saturday, needed more details on which properties would be eligible amid a real estate downturn that dragged Dubai property prices down 41 per cent in the first quarter.
'Greater clarity regarding visa and ownership rights of property owners would help to increase transparency and hence confidence in the market, perhaps providing a positive trigger for demand,' EFG-Hermes said in a research note.
Some developers in Dubai - home to the world's tallest tower and man-made islands shaped as palm fronds - had been offering foreign property buyers promises of residency visas if they bought properties.
But, according to a decree issued by UAE Minister of Interior Sheikh Saif bin Zayed al-Nahayan, 'owners of built-up properties can stay for six months from the date of entry into the country.'
After six months, owners would have to leave the country and would be granted re-entry only if they meet certain conditions, including that their property be wholly owned, built, worth least one million dirhams and fit for accommodation by a family.
The owner should also have a fixed income of no less than 10,000 dirhams a month, or the equivalent in a foreign currency.
The visit visa does not give the owner the right to work in the UAE, the decree said.
The UAE, the world's third-largest oil exporter, is a federation of seven emirates including Abu Dhabi and Dubai, each of which has adopted separate rules regarding foreign ownership of real estate.
'More clarity is needed,' said Sana Kapadia, vice-president, equity research at EFG-Hermes in Dubai. 'It depends whether it means one million dirhams at the time of purchase or if it is the current selling price.'
Real estate prices in Dubai, for instance, have tumbled 41 per cent in the first three months of 2009, according to property consultants Colliers.
Home prices rallied during a six-year boom spurred by Dubai's decision in 2002 to allow
foreigners to invest in some properties on a freehold basis.
Now, many units are now selling for less than one million dirhams, according to real estate brokers.
'You'll find an apartment in Discovery Gardens, International City and Jumeirah Lake Towers for less,' said Vincent Easton, an independent property analyst.
Prices are even lower in smaller emirates such as Ajman and Ras al-Khaimah, he said, adding that the one million dirham benchmark could refer to a country-wide average price. -- Reuters
Source: Business Times, 5 May 2009
Dubai developer posts 87% fall in Q1 profit
Union Properties nets 30m dirhams as sales fall, projects get delayed
(DUBAI) Union Properties PJSC, the Dubai-based developer that suspended work on a Formula One-themed park, said that first-quarter profit plunged 87 per cent as the global financial crisis hurt real-estate sales and caused projects to be delayed.
Net income fell to 30 million dirhams (S$12 million), or one fil a share, from 238 million dirhams, or 7.8 fils, a year earlier, the company said in a statement yesterday. Sales dropped 40 per cent to 572 million dirhams.
The worst financial crisis since the 1930s has weakened the property market in Persian Gulf states as banks curtailed mortgage lending and speculators sold assets.
Union Properties was hurt by lower revenue at its largest business segment, contracting to build projects for other developers, it said.
Union Properties declined two fils, or 2.7 per cent, to 73 fils at 1.02pm in Dubai trading. The shares have gained 12 per cent this year, while the six-member Dubai Financial Market Real Estate Index has risen 4.6 per cent.
'The drop today isn't severe, which suggests the market is bottoming out,' said Samer Al-Jaouni, general manager at Middle East Financial Brokerage Co in Dubai, referring to Union Properties stock.
Emaar Properties PJSC, the largest developer in the United Arab Emirates, last week said that first-quarter profit dropped 74 per cent as the liquidity crunch and falling house prices cut off growth in Dubai's real estate market.
Emaar is reducing costs and delaying projects after demand fell in Dubai.
Dubai house prices may slump as much as 70 per cent from their peak late last year as demand drops and banks fail to resume mortgage lending, prompting mergers, UBS AG said in a report on April 22.
Union Properties suspended its planned Dubai Formula One theme park because of the financial crisis, it said on Feb 26.
The company had 6.2 billion dirhams in bank debt at the end of the quarter, giving it a debt-to-equity ratio of 34 to 66, according to yesterday's statement. Union Properties agreed to refinance 1.1 billion dirhams of short-term debt this quarter.
The company started handing over properties in the MotorCity development at the start of the current quarter and will book revenue as the properties are delivered to clients. -- Bloomberg
Source: Business Times, 5 May 2009
(DUBAI) Union Properties PJSC, the Dubai-based developer that suspended work on a Formula One-themed park, said that first-quarter profit plunged 87 per cent as the global financial crisis hurt real-estate sales and caused projects to be delayed.
Net income fell to 30 million dirhams (S$12 million), or one fil a share, from 238 million dirhams, or 7.8 fils, a year earlier, the company said in a statement yesterday. Sales dropped 40 per cent to 572 million dirhams.
The worst financial crisis since the 1930s has weakened the property market in Persian Gulf states as banks curtailed mortgage lending and speculators sold assets.
Union Properties was hurt by lower revenue at its largest business segment, contracting to build projects for other developers, it said.
Union Properties declined two fils, or 2.7 per cent, to 73 fils at 1.02pm in Dubai trading. The shares have gained 12 per cent this year, while the six-member Dubai Financial Market Real Estate Index has risen 4.6 per cent.
'The drop today isn't severe, which suggests the market is bottoming out,' said Samer Al-Jaouni, general manager at Middle East Financial Brokerage Co in Dubai, referring to Union Properties stock.
Emaar Properties PJSC, the largest developer in the United Arab Emirates, last week said that first-quarter profit dropped 74 per cent as the liquidity crunch and falling house prices cut off growth in Dubai's real estate market.
Emaar is reducing costs and delaying projects after demand fell in Dubai.
Dubai house prices may slump as much as 70 per cent from their peak late last year as demand drops and banks fail to resume mortgage lending, prompting mergers, UBS AG said in a report on April 22.
Union Properties suspended its planned Dubai Formula One theme park because of the financial crisis, it said on Feb 26.
The company had 6.2 billion dirhams in bank debt at the end of the quarter, giving it a debt-to-equity ratio of 34 to 66, according to yesterday's statement. Union Properties agreed to refinance 1.1 billion dirhams of short-term debt this quarter.
The company started handing over properties in the MotorCity development at the start of the current quarter and will book revenue as the properties are delivered to clients. -- Bloomberg
Source: Business Times, 5 May 2009
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