If you wanted to make a quick buck in property, Dubai would have been the place to do it in the last couple of years. And the desert of superlatives is still going strong despite a partial slowdown.
According to CBRE Group, apartment prices increased by a more modest 3.2 percent in the second quarter of 2014, bringing gains over the last year to 21 percent. But that’s exactly the problem.
Memories of the last real estate bubble that blew up in 2009 and exposed a debt-laden Emirate are still fresh.
“In our view, the residential market is getting close to the top and we would perhaps expect growth for another 12-18 months, but certainly not at the rate we’ve been seeing. It’s been unsustainable,” Craig Plumb, Head of Research, MENA, at Jones Lang LaSalle (JLL), told CNBC.
The government has moved to cool the rally, doubling transaction fees to four percent and introducing revised caps on mortgages at the end of last year. Still, the International Monetary Fund (IMF) has warned repeatedly over the summer that more measures are needed to avoid a replay of the previous disaster.
“The threat of another period of anomalous growth as we saw in 2007-08 was curbed through the effective combination of government backed legislation and general affordability has helped to rein in growth. This is reflected in the falling number of transactions, particularly at the top end of the villa market,” Steve Morgan, Chief Executive at Cluttons Middle East, explained to CNBC.
Some of Dubai’s biggest developers have also moved on their own to ban real estate brokers from reselling off-plan properties before handover.
Plum agreed further policy action was warranted. “Yes, they’ve done more than they did last time. Whether they have done enough? There is probably a need to do more things,” he added.
Beyond the announcements of Dubai architectural grandeur is the untold story of delayed projects and those that never saw the light of day. CNBC visited several abandoned construction sites and spoke to many investors hurt by the last property crash; nobody agreed to appear on camera due to ongoing litigation or fear of retribution.
There is another fundamental difference this time round. Turmoil in the Arab World, from Libya to Syria, means wealth is often looking for a new home, and most roads lead to Dubai. If you’ve got money, there are plenty of ways to spend it here without getting asked too many questions. Case in point: An estimated 70 percent of property transactions are in cash.
Mahesh Menda, a prominent investor who came to Dubai over three decades ago and was among the first buyers at one of the Emirate’s most prestigious addresses, is no stranger to the property market’s volatility.
“Even today, if I had to buy land, or say a luxury apartment, the best price I pay in one of the best towers is a thousand dollars [per square foot], give or take 10-15 percent. I compare that to New York, to London, to Bombay…this was going for a song”.
According to the Dubai Land Department, the top foreign buyers of property in Dubai are from India, the United Kingdom, Pakistan and Iran.
A rapidly growing pipeline of projects is only fueling the “bubble talk” in the city’s offices and cafes. The government plans to build a mall bigger than the world’s biggest it already has, an entire addition to downtown Dubai with villas, hotels and residential apartments. In total, JLL forecasts more than 40,000 additional units to come online through 2016.
Strong economic growth will fill a large chunk of that space. The IMF expects expansion to average 5.5 percent until the end of the decade, underpinned by the city hosting the world’s fair, the Expo in 2020.
You have to visit Dubai to get a sense of the scale of the construction boom that is underway. And with more grandiose projects announced, the next few years will be a real test for whether the Dubai property market has actually matured.
Source : cnbc.com
New focus of Tourism authority on Sunday declared their new focus to make Emirate the most visited city in the globe.
One year into the provision of Dubai’s Tourism Vision for 2020. The tourism chiefs have set new goals and the initial steps have been taken to attain the target of enticing around 20 million visitors by 2020.
The Director General of Dubai’s Department of Tourism and Commerce Marketing (DTCM) – Helal Saeed Almarri said that the growth rate that was attained in 2013 must be followed and preserved a 10.6 percent year on year rise corresponds to 110 million hotel quests- Dubai will be giving a tough competition to London and surpass London, which presently allures 16 million tourist yearly.
He added Last year at ATM the Tourism vision for 2020 is already announced last year by His Highness Sheikh Mohammed bin Rashid Al Maktoum . The first part of the second international airport has launched at the Dubai World Central and a significant number of hotel, events and attractions were also released these progresses were mostly declared.
He further said that the visa regulation on European Unions member states being withdrawn, key legislative alterations has been made which is going to definitely influence the tourism sector positively and also empower further to entice more leisure travellers and business.
He states that the Tourism Vision for 2020 is a structure which provides us all a in the tourism sector a perfect and clear idea. Dubai is already a must visit place, an insistent focus to revolutionise will further enable to a persistent revival of visitor experience, developing one that is matchless anywhere in the globe.
He says that the cooperative commitment in the industry is what makes them self-assured that they will be able to attain the goal of enticing almost 20 million annual visitors by 2020, and motivates into the determination to ultimately develop into the worlds most visited city.
The features that are actually helps us drive further into the goal is the ever ending remarkable developments with more fascination spots, eminent yet luxury hotels, events, world’s leading infrastructure and facilities and an ultimate holiday experience which will offer a beyond expectations. Both frequent tourist and new tourist are going to distinctive experience every time.
CEO of the newly formed Dubai Corporation of Tourism and Commerce and Marketing,- Issam Kazim said that due to the spectacular and one of a kind developments Dubai becomes the must see city. It is a must see and must experience city. The incredible dimensions of experiences that will be offered and will be something beyond to expect.
Dubai Land Department (DLD) has revealed their new real estate dealings has been witnessed in the emirates throughout the first few months of this year, and these transactions exceeded AED61 billion ($16.6 billion), During the Q1 of 2013 transactions was around 38 percent.
As reported by DLD that total real estate deals rounded up to 15,694 within the first three months of this year, after March 2014 there was an increase of activity of 11 percent.
The statistics revealed that there were almost 11,567 activities which had the value of talk of AED31.5 billion and 3,482 mortgage transactions, which again has a value of AED 28 billion.
Director of DLD Sultan Butti Bin Merjen stated that as an end result in the beginning of 2014 is a sign of improved investor self assurance in Dubai and particularly in the city’s real estate sector, and this is measured as the essential element of the national economy.
He further stated that they are looking forward for the next four quarters to be as likely as the Q1 2014, particularly during the interlude of the numerous inspiring economic projects in Dubai in addition to the discovery of few measures and planning as for Dubai’s hosting Expo 2020.
Land transactions and its sales and mortgages held for the lion’s share of a sum of figure in Q1, where the land mortgage was of worth at AED24.1 billion and sales in relation to land was about AED 17. 4 billion.
Residential units and their mortgage and sales crossed up to a value of AED13 billion and AED 3.1 billion respectively.
The statistics assures increased deals in the real estate sector over the past few months; this is a direct proof and assurance that Dubai is the most alluring investment spot and ownership, weather for a longer period of investment or for short tern requirements.
Bin Mejren further added they they regard as probable in strengthening the activity to persist in over the upcoming years, and also there would be investors attaining good returns on their invest in real estate.