Monthly Archives: July 2014

Rent relief? Dubai likely to get 28,000 new residential units in 2014

Just 9,700 units were conveyed in Dubai in 2013, yet about 28,000 new units are relied upon to be finished in the not so distant future, as indicated by the most recent Jones Lang Lasalle (JLL) report.

“At the end of 2013, the aggregate private stock in zones checked by us remained at around 365,000 units, with an excess of 9,700 private units conveyed as the year progressed,” JLL said in its Q4 report.

Growing Overseas Dubai

Actually, the supply was 26 percent less than 2012.

The last quarter saw the giving over of around 950 private units for the most part conveyed outside Central Dubai and included Whispering Pines estates in Jumeirah Golf Estates, Cappadocia living arrangements and Dana Tower in Jumeirah Village, City Oasis in Silicon Oasis, notwithstanding various structures and manor mixes in Dubai Sports City.

In 2014, JLL appraises that around 28,000 extra units will be conveyed, an expansion of roughly 8 for every penny over the current stock. Nonetheless, it illuminates that actually some of these tasks may be deferred past their planned culmination dates.

Dubai land represents very nearly 33 for every penny of the advertised future supply, with around 16,000 private units expected before the end of 2016.

Different ranges that ought to see significant private consummations are Dubai Marina (4,200 units); Dubai Sports City (3,700 units); IMPZ (3,000 units); Business Bay (2,700 units) and Dubai Silicon Oasis (2,600 units).

Rents and Prices:

JLL expects leases and costs will keep on increasing throughout 2014, yet the rate of development will decrease from the levels saw throughout 2013.

The private part finished the year on an extremely solid note, with both costs and leases on the ascent. It got an additional support from the Dubai’s Expo 2020 win.

The Reidin deal list climbed 22 for every penny year-on-year (yoy) as of November 2013, with condo beating the manor area.

The flat deal value file expanded by 25 for every penny (yoy), however is 6 for every penny short of what the crest of August 2008.

The estate value record went up by 15 (yoy) and is 9 for every penny underneath its crest quality. Throughout the year, costs enhanced the most in Palm Jumeirah, International City and Jumeirah Lakes Towers.

On the renting front, the Reidin rent list climbed by 17 for every penny (yoy) and six for every penny quarter-on-quarter with lofts outflanking manors.

The flat rental record enhanced by 18 for every penny (yoy), yet stays 14 for every penny lower than its record estimation of Q3 2008, while the manor rental file arrived at its most elevated worth since the production of the list in January 2009, climbing by 13 for every penny (yoy).

“The Dubai private business finished the year with an expansion in both rental qualities and deal costs crosswise over just about all zones.

“Accomplishment in securing Expo 2020 has further supported notion that is creating leases and costs to expand at unsustainable levels,” JLL said.

“The fast value development, return of hypothesis and the predominance of money purchasers could interpret into intemperate value development or over advancement that, if not oversaw deliberately, could bring about an air pocket that would be destructive to the Dubai private segment in the more drawn out term,” the consultancy cautioned.

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The Mumbai Metro – A real estate game changer

By Ramesh Nair, COO – Business, JLL India

Several years after New Delhi, the country’s political capital, witnessed a transformation with the implementation of the Delhi Metro, the financial capital of Mumbai is set to experience a similar phenomenon with the imminent commissioning of the Versova Andheri-Ghatkopar (VAG) corridor of the Mumbai Metro. With equity participation from Reliance Infra and Veolia (a French transportation major), this PPP initiative has all the hallmarks of a game-changer for the city’s transportation and realty landscape.

The Mumbai Metro – A real estate game-changer

Many facts about the VAG have already been well documented : A project investment of $720 million, a fleet of 16 rakes with 4 fully air-conditioned coaches with an individual capacity of 375 passengers, travel time reduced to 21 minutes from the current 90 minutes between Versova and Ghatkopar – and of course, improved East-West connectivity. However, the impact on the Mumbai realty market is likely to be far more pronounced.

Transportation infrastructure economics have historically proven to have a positive impact on real estate values in a city like Mumbai – residential and commercial properties located close to transportation infrastructure tend to command a premium. Independent analyses of pricing reveal that proximity to a Metro station can single-handedly account for a 22 per cent variation in land values, the other factors being location, distance of the land from the central point and income groups.

On the back of the execution of a string of surface transport infrastructure projects – viz. the Jogeshwari-Vikhroli Link Road (JVLR), the Santacruz Chembur Link Road (SCLR) and the Wadala-Chembur Monorail – the VAG corridor will further stoke the already buoyant Mumbai realty market.

Each of these transportation infrastructure initiatives have had a tonic effect on the adjoining realty micro markets – for example the expected implementation of the Monorail had pumped up property prices in Chembur and Wadala by more than 100per cent in a short span of 4 to 5 years. This also applies to the SCLR, with which the Chembur micro-market again witnessed a perceptible price rise due.

The areas which will benefit from Metro connectivity have already seen price rises of 400per cent over the past eight years, and this trend is set to continue with this imminent launch.

A more detailed impact analysis follows below:

Near-Term Impact
Developers’ interest in projects near the Metro has been increasing since the start of construction. With the commencement of the project, the surrounding region will definitely experience a certain boom in terms of new offerings and price hikes. Rates on both the commercial and residential market will increase, as the properties of northern SBD, BKC and SBD central are the most preferred locations for investors.

Medium – Term Impact
Intra and inter-connectivity in SBD North and the Eastern suburbs will increase tremendously, given the capacity of 7 lakh passengers per day added by the Metro. Concurrently, East-West connectivity will benefit the maximum by this project, which will reduce the burden on JVLR and SCLR (the current East-West corridors).

Travelling to the Eastern suburbs and Navi Mumbai from the Western suburbs and SBD North and back will become faster and more convenient. Among the series of mega-projects such as the Eastern Freeway, SCLR and Monorail in the past one year, the Metro is the biggest so far. The combined effect reflect positively on Mumbai’s real estate market – the residential and retail markets in Andheri, Jogeshwari and Ghatkopar will witness tremendous growth, especially those near the Metro stations.

Long-Term Impact

Long-term value capture would be possible through increase in FSI. If the proposal of granting FSI of 4 to areas near the Metro is approved, it will have a far-reaching impact and potentially transform the entire landscape of areas surrounding the Metro.

Micro-Market Wise Impact:

CBD – Already losing out to BKC and SBD Central, SBD North will now also pose a strong contender as a business destination alternative to CBD. Absorption could reduce due to the trend of shifting away from CBD, which will lead to a correction in prices.

SBD Central – SBD North might not be able to compete with BKC, but it will pose a challenge to SBD Central. Residential and commercial spaces in SBD North may start becoming preferred over SBD Central, especially when favourable prices are found in SBD North.

SBD BKC – BKC will remain largely unaffected – even factoring in the effect of the Metro on SBD North, the advantages that BKC already has will keep it firmly in the #1 position. Absorption and prices will remain steady.

SBD North – The maximum positive effect will be seen in SBD North, as the Metro runs across its entire width, covering practically all the important destinations. Absorption and supply are set to increase rapidly along with capital and rental values. The residential market in certain key areas will see a boost in activity, especially in Andheri West.

Western Suburbs – The Metro will also have a positive impact on the Western suburbs due to the faster connectivity to the Eastern suburbs. Absorption rates and supply will increase marginally. Residential markets will also take off in areas closer to the Metro.

Eastern Suburbs – Besides SBD North, this micro-market is going to see the maximum impact from the Metro. Rental and capital values are set to increase as absorption rates move up. The residential market in areas like Ghatkopar will derive the maximum benefit.

Thane-Navi Mumbai – If at all, Thane and Navi Mumbai will see only a marginal positive impact, as commuting to the Western suburbs and SBD North and back becomes faster. Otherwise, these markets are will remain largely unaffected.

The commissioning of the VAG corridor of the Metro is like to transform the dynamics of the Mumbai transportation, as well as its realty market. In conjunction with the SCLR and the Monorail, the Metro is certainly poised to become a major game-changer for realty investments in Mumbai.

Resource : EconomicTimes

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