Latest Property News

October 20 2017, 03:28

Are you a retired expat? Here’s how you can continue living in UAE

I have been living in the UAE for the past 42 years and will retire from my banking job in November after I turn 60. I bought a property in Dubai Lagoon in 2007 as it was known then that I will be provided with a visa for owning a property in Dubai, a rule which was changed later.

Is there any rule to provide visa for a senior resident who has been staying in the country for 43 years? Can you give some suggestions to continue living here with my family?

Pursuant to the first part of your question, it may be noted that upon cancellation of your employment visa, you will have a grace period of 30 days to exit the country. And, in order to continue to reside in the country, your visa will have to be sponsored by a legal entity, as a partner if you become a partner in any legal entity incorporated in the UAE. Apart from this there are no specific rules of either the Federal Government of UAE or the Government of Dubai, by which a senior resident may be provided with a visa to reside in the UAE.

You have mentioned that you had purchased a property in Dubai Lagoon. Pursuant to this it may be noted that you still may explore the possibility of obtaining a property related residence visa upon its completion, subject to the regulations of the General Directorate of the Residency and Foreigners Affairs.

Alternatively, you may consider establishing or incorporating a corporate entity in the UAE. Pursuant to the same, the entity may sponsor visas for you and your family members. In view of this, you may either consider to incorporate a limited liability company or a professional licence. Otherwise you may also consider incorporating a company in any of the free zones in the UAE.

Ban can be lifted

I have been working as business analyst with an entity in Dubai drawing a monthly salary of Dh10,000 for the last four months. My employment contract is of limited duration and the company does not belong to free-zone. I hold a post-graduate diploma equivalent to Master of Business Administration. Will I be banned if I switch over to a new company before completing my employment contract? How can I avoid the ban?

Pursuant to your question, it may be noted that an employment ban may get imposed on an employee who may terminate his employment with his employer and thereafter seek to take up employment with another mainland entity, before the completion of the employment contract period with his first employer. During the pendency of the labour ban, a new work permit may not be issued to the employee by the Ministry of Labour of UAE for a period of up to six months.

Since you are working under a limited period contract, it may be noted that should you try to take up another employment before the completion of two years of continuous service or before the completion of your employment contract, a labour ban may be imposed on you.

However, it may be noted that if a labour ban gets imposed on an individual, the same may also be lifted in accordance with the provisions of Ministerial Order No. 1186 of 2010 on “Rules and Conditions of Granting a New Work Permit to an Employee after Termination of the Work Relationship in Order to Move from One Establishment to Another” (the “Ministerial Order”).

In view of the provisions of the Ministerial Order, it may be noted that after the completion of two years of continuous service, an employee may not have to face an employment ban in accordance with Article 2 of the Ministerial Order, which states:

“The following two conditions must be met in order to grant the work permit mentioned in Article (1) of this resolution:

1. Agreement between the employee and the employer to conclude the work relationship.

2. The employee must have spent at least two years with the employer.”

Pursuant to the foregoing, if you may secure a no-objection letter from your current employer, no employment ban should be imposed on you.

Further, it may also be noted that employment bans are not imposed, if after termination of an existing employment contract, one is subsequently offered a salary prescribed for one’s professional qualifications. Since you are holding a post-graduate qualification equivalent to the degree of ‘Masters of Business Administration’, the minimum salary that should be offered by your new employer must be at least Dh12,000, so as to lift the employment ban, should it be imposed on you.

Further, it may be noted that employment ban issued by the Ministry of Labour may not be applicable for entities established and operating in free zones of UAE. Also it may be noted that individuals holding certain professional qualifications may not be imposed an employment ban. This is in accordance with the provisions of Article 2 of the “Ministerial Order No (13) of 1991 Resolution: The organisation of the transfer of sponsorships of non-national labours the rules governing same” which states as follows:

“Non-national labourers may be allowed to transfer one job to another and hence the transfer of their sponsorship if they fall under the following categories:

(a) Engineers

(b) Doctors, pharmacists, nurses (male and female)

(c) Agricultural guides

(d) Qualified accountants and account auditors

(e) Qualified administrative officials

(f) Technician operating on electronic equipment and laboratories

(g) Drivers who are licensed to drive heavy vehicles and buses

(in case of transfer of sponsorship from a private firm to another or from a private firm to another or to a government department).”

Among the other professions mentioned above, you may take note of ‘qualified administrative officials’. And pursuant to the same, you may contact the Ministry of Labour, and enquire if your professional and academic qualifications would qualify you as a qualified administrative official. And based on this, you may also enquire if this would suffice to have a labour ban lifted in the event a labour ban is imposed on you.

14 Oct 2017

Checking the pulse of the Dubai real estate market

It would be fair to say that this year’s Cityscape Global, the Gulf region’s largest real estate show, approached amid a mixed forecast.

On the one hand, developers had some reason for optimism. First half figures from Dubai Land Department showed a 16.8 per cent increase in the total value of real estate transactions conducted during the first half of 2017 compared to the same period last year. On the other hand there was the continued pressure on the market highlighted by real estate consultancy firms.

In a second quarter report released days before the conference, Cluttons said residential values in Dubai were down 1.5 per cent in the second quarter and 5.8 per cent year-on-year, marking the 12th consecutive quarter of price declines.

Elsewhere, an annual sentiment survey by Core Savills revealed that only 34 per cent of respondents believed the Dubai property market had shown signs of recovery compared to 50 per cent last year.

Despite this apparent negative outlook there was some degree of optimism among developers, even if Dubai’s biggest name – Emaar Properties – had decided to abandon the conference entirely in favour of digital channels.

Even before the event started, Nakheel announced Dhs4bn ($1.08bn) of projects ranging from the 2,500-apartment Jenan Heights community in Discovery Gardens to a new mall, the 250-unit Palm Beach Residences, 170 villas in Jumeirah Park and a 252-room hotel in Jumeirah Village Circle.

And the launches only continued in the build-up to the show.

The authority behind Dubai Expo 2020 unveiled plans for a district utilising the event site featuring 65,000 square metres of residential space, 10km of bike paths, 44,900 square metres of parkland and 135,000sqm of office space. This was followed by Dubai-based real estate joint venture RKM Durar Properties’ unveiling of the pearl-inspired Dhs650m ($176.9m) J One towers development, and announcements only seemed to get more extravagant as the show entered its first day.

Among the largest was unveiled by Union Properties, which announced a new Dhs8bn ($2.18bn) master plan for MotorCity and a development and construction deal with China State Construction Engineering Corporation.

Union Properties chairman Nasser Butti Omair bin Yousef told Gulf Business the intention was for the community to be a “fully smart city” that has everything including villas right next to the track of Dubai Autodrome.

“If you go to Melbourne, Australia, the most expensive mansions are around the track. “We have to take advantage, you’ll find it not relaxing to be beside the track but other people will love it,” he said.

Then there was of course the unveiling of what was claimed to be the world’s first underwater luxury vessel resort by property developer Kleindienst Group.

Valued at Dhs2.5bn ($680m), The Floating Venice will be located in The World islands, 4km offshore from Dubai and close to the company’s other Heart of Europe Project where it will handover the first three islands next year.

venice-aerial

Josef Kleindienst, CEO of the Kleindienst Group, told Gulf Business that the project was in part inspired by the success of the developer’s Floating Seahorse villas and 180 of the 414 units would be underwater.

He said the project had a “realistic chance” of being ready before in time for Expo 2020 but the company would need to engage boat builders to promply start work on the different sections to be put together on location.

“The Heart of Europe is big enough to stay as a standalone project independent of what neighbours are doing,” he said of the lack of progress by other
owners on the World Islands.

“Now we are already building a second project on the World Islands and if there is demand it will not be the last one.”

Off-plan dominates

Among the drivers of many of these new projects has been optimism in the off-plan segment, where attractive sales plans have driven interest.

“There is a bit of a disconnect between how the sales market performs and how the rental market performs,” says Mat Green, head of research and consulting at CBRE Middle East.

“There is a lot of off-plan property still being launched, there is still an appetite for investors for those types of properties. But again there are different mentalities. These kinds of investors, as opposed to up the risk curve, they’re looking for future growth within capital values.”

This interest was clearly on display at Cityscape where developers were allowed to make sales for UAE-based projects on the show floor for the first time in years.

Consultant firm Cavendish Maxwell estimated that there were 107 off-plan units sold on the first day of Cityscape this year from 36 last year thanks in part to attractive payment plans and low starting price points.

Several developers announced significant transactions during the show including Abu Dhabi’s Aldar, which generated Dhs400m ($108.8m) of sales for its Water’s Edge development and sold out the first phase at Cityscape.

Azizi Developments also sold out phase one of its Dhs12bn ($3.26bn) waterfront project Azizi Riviera and said 50 per cent of phase two was also snapped up by investors.

Azizi is an example of one of the newer kids on the block in the Dubai property market that are now competing for sales with the traditional players.

“We have seen a lot of supply of new off-plan products and we’ve seen also good momentum of sales happening. Now, the little bit of challenge or the thing we didn’t see before is having more and more players into the market and more and more supply,” Deyaar CEO Saeed Al Qatami told Gulf Business.

But the CEO insisted the major launches announced at the event, like the company’s Dhs1bn ($272.2m) South Bay tower in Business Bay, would continue so long as there was buyer interest.

“People are buying and believe me we will stop, you will see some of the deliveries stop, only if they don’t get sales. But as long sales are still going you’ll see new products coming up.”

Other developers too appeared to agree with this conclusion.

“Overall we are doing fine,” said Dubai Properties’ executive director for sales Marwan Al Kindi.

“The kids are back to school and people are also back to work and we are very optimistic for this quarter. This year is that chance for all the developers to bring the best and push the market up.”

With this said though, few are expecting a major upturn in conditions next year.

“I think things will stay at the same level, I don’t think it will lower more and I don’t think it will get worse or reduce,” says Deyaar’s Al Qatami.

CBRE’s Green also suggests sale prices are unlikely to show much sign of movement until wider economic conditions improve.

“Honestly, I don’t expect a lot of variation in sales performance over the next 12 months reflective of overall investor sentiment and the health of the regional economy. Any big major event like a sudden increase in oil prices or equivalent positive or negative outlook could obviously swing that.”

But one potential change on the horizon could be a shift back towards the secondary market from a current emphasis on off-plan sales.

motor-city-project

The Motorcity Project

Murray Strang, head of Cluttons Dubai, suggested that even if the headline sales and rentals numbers are contracting there are positive signs ahead, with average apartment prices expected to end the year almost flat on 2016 compared to a 10 per cent decline for villas.

Of the 32 markets the company tracks in Dubai, 25 have seen no change in values in the first six months of the year. Some markets, like Jumeirah Islands and MotorCity are also only a few percentage points off of their previous highs in 2008 even if others like the Palm Jumeirah are still more than 30 per cent lower.

“There are positive signs that softening is reducing and we’re talking about a move back towards the secondary market from what has been a very strong off-plan sales market over the last two to three years,” Strang said.

Cluttons predicts the market will flatten out or see some growth next year but much will depend on expectations for Expo 2020 and whether it will match the hype built up in recent years.

Ahead of the mega event, developers and agents will have other factors to contend with including value added tax, which comes into effect on January 1, 2018.

Much of the impact is expected to be in the commercial segment, where the 5 per cent rate will be paid on all sales and leasing, and Strang believes net sales prices and rents “will need to come down” to match.

Less clear is the forecast for the residential market.

“It will not affect us,” said Union Properties’ Yousef of a potential increase in inflation. “It will not harm the market.”

But others argue there could be consequences for developers making off-plan sales, as they will be able to claim a rebate on construction costs only if they are able to sell the development three years after completion.

“If they fail to do so they can’t claim a rebate so you might see better payment plans coming through extended well into handover,” said Faisal Durrani, head of research at Cluttons.

“It’s a challenging market and convincing people to buy off-plan is difficult and so I expect we’ll see more focus on providing property perceived to be a bit more affordable and developers will have to do better due diligence to understand the market before bringing schemes through.”

Digital dilemma

Another change for developers moving forwards will be an increasing emphasis on digital processes and sales.

Dubai Land Department used this year’s conference to launch a multi-platform application that helps investors and developers track the progress of all real estate development projects in the emirate.

A number of panel sessions also focussed on the use cases for bitcoin database technology blockchain in real estate transactions. Not forgetting of
course Emaar’s absence from the conference altogether “as part of the strategy to move the complete marketing strategy on digital platforms”.

Although the developer does not appear to be encouraging a movement as of yet, with Dubai Properties’ Al Kindi insistent the firm remained committed to the event due to the “good sales, good numbers” it receives, others wondered what the impact would be for the market going forward.

“The way I see it is over time lets face it everything will be digital, everything is moving to binary code,” said Ann Boothelo, senior product marketing manager at listings site dubizzle.com.

“When something gets digitised it grows exponentially but the need for physical interaction will always be there. It just depends at what stage of the purchase process or rent process.”

These and other predictions will be tested as Cityscape returns next year.

 

14 Oct 2017

Solar Cities

Nestled along the waterfront in the Nordhavn neighbourhood of Denmark’s capital city sits a very special building. The Copenhagen International School is coated from top to toe with solar photovoltaic (PV) cells, making it one of the largest buildings of its kind anywhere in the world. Seamlessly integrated into the building’s 6,000 square metre glass facade, the cells produce around 300 megawatt hours per year of electricity, around half the school’s annual power demand. And this in a Northern European city not noted for its sunny climate.

Somewhat surprisingly, while the solar component was made in Switzerland, the 12,000 KromatixTM coloured glass panels used in the building’s construction were manufactured and supplied by Emirates Insolaire, a subsidiary of Dubai Investments in joint venture with SwissINSO Holding. And yet, even though a significant portion of this innovative technology is manufactured in Dubai, Building Integrated Photovoltaic (BIPV) has yet to be deployed on a single major project in the emirate despite the optimal solar considtions in this part of the world.

While Dubai Electricity and Water Authority (DEWA) allows solar panels to be installed on building rooftops under its Shams Dubai initiative, authorities here have yet to finalise the regulations governing the use of BIPV technology. But with the Dubai government’s strong track record of backing sustainability initiatives, experts predict it is only a matter of time before it gets the green light. In fact a number of high profile projects announced over the past year have already been earmarked to pioneer BIPV technology in the region.

Anoop Babu is a BIPV solar expert with Intec, part of Germanybased GOPA -International Energy


“THIS IS GOING TO BE A VERY FAST MOVING INDUSTRY IN THE COMING YEARS”


Consultants. Anoop is also a local representative for the Association of Solar Architects (ASA), an advocacy group for the worldwide deployment of BIPV technology, who has been advising local authorities currently drafting a set of BIPV regulations.

Though DEWA is the main entity charged with forming the regulations, they must also meet requirements laid down by Dubai Municipality and Dubai Civil Defence (DCD).

Meanwhile, other parts of the world, mainly in North America and Europe, have been forging ahead with the deployment of BIPV, even in heavily congested urban environments like New York City. In Europe, by 2020 every building will be mandated to generate some energy of its own, with BIPV offering one obvious solution to that challenge.

IDEAL FOR THE MIDDLE EAST

You might assume that using BIPV technology would multiply the cost of a building facade by a factor of two or three but this is not the case, says Anoop. Integrating the cells into a building’s windows and facades adds around 30-40% to the cost and can pay for itself in as little as two to three years, depending on the electricity tariff system used.

“There’s a misconception that BIPV is more expensive than it really is,” says Anoop. “In the UAE if you go for a normal glass façade the EPC price would be around AED 1,500 – 2,000 per square metre. BIPV will cost around 2,000 – 3,000 per square metre so that’s an additional 30-40%. Many people still assume it is even more expensive, double or triple the cost.”

In some parts of the world, for example in North America, the Feed in Tariff (FiT) for BIPV is higher than for regular rooftop solar in order to encourage developers to roll out the technology. Anoop believes the authorities here should also consider offering incentives to help speed up deployment.

“Next year VAT is coming in and companies might start holding back on investing in solar,” he says. “Solar is exempt from VAT in some parts of the world so we’ve suggested to DEWA implementing a tax benefit that might


“THERE’S A MISCONCEPTION THAT BIPV IS MORE EXPENSIVE THAN IT REALLY IS”


encourage people to invest.”

Architects need to be involved in BIPV projects from the very start which is why using the technology is more practical for buildings at the design stage rather than a retrofitting job, Anoop says. In terms of maintenance BIPV is just like any other window or façade. However building owners opting for integrated PV will need to consider how they keep their facades clean as desert dust can hinder the solar cells from operating at maximum efficiency.

“There are technologies nowadays that have the ability to keep off the soiling, for example pv panels which prevent dust from clinging to the surface,” Anoop says.

THE TIME IS NOW

The region is very much ready for BIPV, Anoop says. There has already been plenty of interest in its potential but developers are waiting for regulations to be announced.

“They have to do this if they want to really get the benefit of alternative energy and renewables because they have so much facade space,” he says. “Tall buildings don’t have much roof space but they have lots of facade space.”

The suitability of a building for BIPV depends on how much sun the west, east and south facades of the building receive. For example, a high rise building in a densely packed city might have other nearby buildings blocking out the sun. For smaller buildings this can also be a problem if there are high rise buildings nearby.

“We do analysis and irradiance mapping and identify which areas of a building should have BIPV,” Anoop says. “In general, it works best for buildings with large areas that can be covered with BIPV. Malls work well because many of them, Mall of the Emirates for example, don’t have any high rise buildings around them.” So how long might it take before BIPV technology is used as standard in this part of the world?

“Once the first two or three projects are live and have proven to be successful it might well become mandated,” Anoop says. “Shams Dubai plays very well with warehouses and carports but many building developers get minimal benefit from Shams Dubai because most of them don’t have that kind of rooftop or parking area. Property developers will get more benefit from BIPV.”

He adds: “This is going to be a very fast moving industry in the coming years. There are many companies with their eyes on this market. They’re just waiting for the regulations.”

11 Oct 2017

In pursuit of perfection

Stephen Atherton, design director at Sobha Group goes back a long way with the company’s founder and chairman, PNC Menon. Based at the time in Muscat overseeing his interior fit out company, Menon recruited the Englishman in 1991 to set up his first office in Dubai. An interior designer by profession, Atherton eventually left to set up his own design studio, but after the pair bumped into each other again in 2012 the entrepreneur persuaded him to return to the fold and help set up a new design outfit.

“When I joined in 2013 the original idea was to set up an interiors company,” says Atherton. “The chairman is very interiors driven, he tends to design things from the inside out. What I do now is work for him at corporate level looking at developing the brief and working with the design teams and the marketing teams, so I’m basically a trouble shooter across all aspects of design within the group.”

PNC Menon’s rags to riches story is well known. He arrived in Oman from Kerala, India in 1976 with pennies in his pocket but eventually succeeded in setting up an interior decoration company, growing it into one of the top contractors in Oman. In the 1990s he saw an opportunity to start up a property development business that today is the third largest in India. Not content with standing still, in 2013 he launched in the Dubai market with two major developments – Sobha Hartland and Mohammed Bin Rashid Al Maktoum City – District One, a joint venture with Meydan.

A vertically integrated company, Sobha does more or less everything in house. It has its own architecture practice, its own structural and mechanical engineering departments, as well as a huge team of landscape, interior, furniture and graphic designers. Though it sells its units unfurnished, for some of its higher ticket villas the company designed much of the furniture and had it made in Italy. Sobha is currently in the process of setting up a new furniture division that will offer a complete end-to-end interior solution, Atherton reveals. The company expects to open a 1 million sq ft factory in Abu Dhabi’s Kizad freezone in the third quarter of 2019.

“We want to control most things in our world and there’s a very good reason for that,” Atherton says. “We can only pin our flag to the quality of our product if we control it from end to end. That’s why we are a vertically integrated organisation.”


“WE CAN ONLY PIN OUR FLAG TO THE QUALITY OF OUR PRODUCT IF WE CONTROL IT FROM END TO END”


The evolution of Sobha Group into a vertically integrated entity was born out of necessity, Atherton explains. “When the chairman set up the business in India in 1993/94 he wanted to build to international standards. But, for example, the quality of the concrete available wasn’t very good so he decided to set up a concrete company. He couldn’t get materials of the right quality so decided to make them himself. It was really born out of the need to deliver on the promise of quality.”

The quality and attention to detail that Sobha has become known for stems from the company’s origin as in the interior fit out business in Oman.

“We used to do palaces all over the world for people like the Sultan of Brunei, rulers in Turkmenistan, his highness Sultan Qaboos of Oman and the Dubai ruling family, so he’s at the top of the tree when it comes down to doing quality fit out,” Atherton says.

At the 8 million sq ft Sobha Hartland development, quality is assured by a team of 17 German master craftsmen who meticulously check every detail of every job done by the in house contracting teams. “We maintain standards in the business through each and every process,” Atherton says. “For example Sobha Hartland is the first development to have a push fit plumbing system. It’s a Japanese system that doesn’t involve any compression fittings or welding, you just literally push the fittings together and it creates almost a homogenous seal on the pipe so we are going to be leak free.


“THE CHAIRMAN IS VERY INTERIORS DRIVEN, HE TENDS TO DESIGN THINGS FROM THE INSIDE OUT”


It’s expensive but as the chairman says, as property developers water can be our biggest enemy.”

A HIGH-END FINISH

Though Sobha Hartland is a huge project made up of apartments, townhouses and villas of different sizes and price tags, Atherton says the development manages to achieve an overarching design style.

“There’s no theming or pastiche architecture here,” he says. “It’s a very contemporary development by nature. You’ve got third party developers on site, like Gemini and others who are buying tracts of land but we issue very stringent design guidelines. So it does have a strong design identity to it.”

Quality is not a something Sobha compromises on. Whether it’s a studio apartment or a six bedroom mansion, the approach to the project is exactly the same, Atherton says.

“Our smallest and cheapest product has the same detailed checks and quality of installation going into it as our largest product. There are variances in terms of materials because of the size and ticket price, but that’s mainly in the finish. In terms of approach it’s one and the same. There’s only one way to build for us and that’s the best way you can.”

All units at Sobha Hartland are equipped with smart home technology. Buyers have the option of a basic home automation system that enables them to control lighting and air conditioning or they can go for a complete smart home technology system.

“We brought in a team of experts that worked with us for a year to scour the earth to find something that would do what we wanted it to,” says Atherton. “It’s effectively a brain that controls the audio visual, lighting, air conditioning and curtains and it all runs off your iPad or you’re iPhone,” says Atherton. It comes at a cost however. The full package for a two bedroom apartment will set owners back a cool AED 250,000.

One of the striking design features of the Sobha Hartland development is undoubtedly the amount of green space it provides residents. Around 30% of the development has been given back to green areas.


“I WOULD CHALLENGE ANYBODY TO SAY THAT THE LANDSCAPING HERE AT HARTLAND CAN BE TOUCHED”


“I would challenge anybody to say that the landscaping here at Hartland can be touched,” says Atherton. “We have our own in house landscape architects and we work with external landscape architects who we bring in to brainstorm just to make sure we’re getting the best out of our land. We even have our own horticulturalist and an onsite plant nursery.”

He continues: “The spaces in between our buildings are as important as the places we build. I’ve had numerous meetings with our design team and our chairman and we show him landscape designs and he says, ‘not enough trees’. We want greenery, we want the lushness and we’re constantly looking at managing that from a water consumption perspective and how we recycle grey water. We are constantly balancing our responsibility as developers with the environment versus the commercial side.”

When it comes to sustainability Sobha tries to deliver above and beyond minimum requirements, but as Atherton says those efforts must be balanced with the commercial demands of a project.

“As a developer we look at what we must do and what we’re compelled to do by law,” he says. “Things like LED lighting as standard was something that I implemented with Mr Menon early on. Incandescent lights are of the past and not what we want to see moving forward, so we try very hard in terms of our engineering to be as green as we can so we’re probably ahead of the market.

“Are we LEED platinum? No. We’re looking at a signature development at the moment and we’re looking to go LEED platinum with that, but it doesn’t apply itself to every project. So sustainability is considered as much as possible but at the end of the day we’re a commercial entity and it’s got to make sense.”

11 Oct 2017

A maturing market

This time last year many observers predicted that a recovery in Dubai’s property market would be in full swing
by the time we entered the closing stretch of 2017. With less than four months to go before the end of the year,
it’s fair to say we are now in the home straight. So has the widely anticipated rebound materialised?

“A clear direction on recovery is yet to emerge, with only a few locations consistently marking an upward movement on prices, primarily in the mid-market segment in established locations,” says David Godchaux, CEO of real estate firm Core Savills.

“We are cautiously optimistic on midmarket sales prices for the next three years, with some districts that have seen a price recovery of 5-10% over a span of 12-18 months since January 2016. As we had predicted, the prime market performance is still lagging behind with further marginal room for price softening, although we are close to stabilisation.”


17,800 UNITS ARE EXPECTED TO BE DELIVERED THIS YEAR, LESS THAN
HALF THE 36,000 UNITS ANNOUNCED BY DEVELOPERS


Some communities in the lower market segment have witnessed the beginning of stabilisation over the past six months, Godchaux says – although he attributes this more to a mechanical rebound, than the beginning of a healthy recovery.

Rental depreciation since early 2016 is yet to have a significant negative
influence on the sales market, however it does slow the recovery of sale prices. Core Savills concludes that rentals
would need to soften by another 25%- 40% to have a significant negative impact on buyer demand from both investors and end users.

“We are not yet there,” Godchaux says.

“We had predicted further rental drops throughout the summer months, but expect rents to start stabilising in core locations by next year, while predicting potential room for softening in the secondary locations.”

ARE WE BUILDING TOO MUCH?
With new projects announced on a weekly basis, anyone keeping an eye on the Dubai property market might conclude there is an ongoing surge in supply in the residential market. If true this spells good news for the  onstruction sector. But is it really the case? And, if so, is it likely to last or is there a danger of oversupply as
some commentators have predicted, potentially leading to another downturn?

Well, not quite. There are two important elements to remember when discussing this question, Godchaux says. Firstly, actual delivery numbers have typically been very far from the announced numbers, consistently over the past few years. Secondly, there is no single residential market in Dubai. On the contrary, there are different market segments which are reacting to different demand drivers and seeing very different supply figures, he says.

Over 6,600 units were delivered in first half of 2017 while 11,200 units are expected in the second half of the year, making a total of 17,800 units expected to be delivered this year. However this figure is only around half the 36,000 units that were announced by developers for the full year.

“This large discrepancy between the announced and delivered stock has been a historical trend in Dubai,” Godchaux says. “This has in fact helped developers to address oversupply concerns by aligning demand and delivering products at realistic prices, aiding absorption – albeit in the mid and prime segments.


“THE LARGE DISCREPANCY BETWEEN THE ANNOUNCED AND DELIVERED STOCK HAS BEEN A HISTORICAL TREND IN DUBAI”


We expect deliveries to slow down in Q3 and pick up pace again after September.”

The vast majority of units anticipated to be delivered by 2020 will be below the AED 1.2mn ($326.7mn) price point, Godchaux says. While he expects some of these units to be well absorbed, he is concerned about a large share of this stock being acquired primarily by investors looking at achieving high yields and short-term profits on the back of difficult mortgage access for the lower income bracket end users – who are forced to stay in the rental market, and hence contribute to yields that are ‘artificially high’.

“This is paradoxical because this large pool of end users should be the primary target demand for these more affordable units, and would constitute a much healthier and more stable longterm
ownership,” he says.

Another factor that has driven some to comment on oversupply affecting sale prices is the detrimental effect on secondary sales for a few apartment districts. However, this is less an oversupply issue and more the fact that the offplan property market is cannibalising market share from the resale segment.

“Existing owners trying to sell their ready-properties, contend with highly competitive and attractive payment


“WE MAY BE CREATING THE PREMISE FOR SIGNIFICANT PROBLEMS IN A FEW YEARS, IF END USERS ARE BEING KEPT AWAY FROM THE MARKET AND FORCED TO RENT”


plans offered by master developers (for instance, in Downtown Dubai and few properties in Dubai Marina). On the bright side, it demonstrates the market’s high appetite for quality new stock, provided that it is well priced.”

Nevertheless, two other effects could soon become detrimental, Godchaux says. Firstly, attractive entry prices (sometimes below resale values) are decreasing the district average, leading some commentators to misinterpret this statistical bias as a market trend of price drop. Secondly, existing owners have sometimes found themselves having to reduce the asking price in order to compete with cheaper off-plan stock. This effect does actually create a trend of decreasing prices, across the district, in a price war scenario and a no-win situation for developers too in the midterm.

WHERE WILL THE DEMAND COMING FROM?

Clearly there’s no lack of investor appetite for off plan real estate in Dubai right now. But who is going to live in these properties? Is the current tepid level of economic growth really going to attract enough people to live in Dubai and therefore substantially increase the pool of potential occupiers?

The short answer is yes, says Godchaux, because most of the stock is coming in the lower price segment, which appeals to the largest pool of existing (or new as the economy continues to expand) pool of occupiers. Although this also potentially represents a higher systemic risk, as lower income demand is structurally more volatile and likely to overreact to external shocks.

“I think the question is not only about the total size of the occupiers’ pool, but also the structure of it, or the proportion of investors versus owner-occupiers,” he says. “A balance is essential for this more volatile lowerend of the market to be healthy in the long term. And we may potentially be creating the premise for significant problems in a few years, if end users are being kept away from the market and forced to rent.”

The situation has improved since 2016, with more attractive payment plans allowing a portion of occupiers to switch to ownership. But for many renters, switching to ownership still remains a out of reach – and this is illustrated by the paradoxically low level of yield compression in the past 12 months in more affordable districts (coupled with unique rental level resilience in these locations). Although yields have contracted, they are still northwards of 7.5% for most apartment neighbourhoods, and up to 9-10% for some lower-end districts, illustrating that these units are still primarily today investors’ products. Solutions could potentially come from adjusting mortgage regulations to mitigate these effects or creative paths to ownership, like rent-to-own programmes, Godchaux says.

THE EXPO 2020 EFFECT

In anticipation of the event, outer areas of Dubai are seeing the most number of supply deliveries, although only a few buildings in Jumeirah Village Circle, Dubailand and Al Furjan gained traction from price conscious buyers. With the city expanding south/southeastwards toward the Expo 2020 site and the extension of the Dubai Metro, we will continue to see more developments emerge, Godchaux says. However, these may require more time to be established and to reach higher levels of absorption.

Core Savills anticipates a gradual split of the investors market into two main strands. On the one hand there will be longer term investors, looking at core locations such as Dubai Marina, Downtown Dubai, the Palm and Emirates Living, on the back of yields that are still relatively high but likely to continue compressing. On the other side, a growing pool of investors appears to be emerging, one that is looking at less expensive outer areas offering higher short-term returns, particularly in the lower mid-market and affordable segments.

11 Oct 2017

Projects Update

Abu Dhabi-based developer Aldar Properties launched Water’s Edge – a new waterfront residential project on Yas
Island. The AED 2.4bn ($653mn) master planned development will include 2,255 homes across 13 apartment buildings. Early works will commence this December, with the aim of beginning phased handovers between June and December 2020.

RKM Durar Properties plans to build a luxury residential project on the banks of the Dubai Water Canal close to the new Marasi Business Bay project. The striking design for J One consists of a distinct U shape formed by two towers and a curved base. Tower A is made up of 19 floors with 257 units while Tower B is 18 floors with 90 units.

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Emaar Properties launched its latest residential project in the heart of Dubai Creek Harbour. The 43-storey 17 Icon Bay will contain 300 apartments featuring 1, 2 and 3 bedrooms. The
project will be located by the Central Park neighbourhood and close to the 4.5 km-long Creek Boardwalk with its retail and leisure options.

Marriott International and Khamas Group of Investment will build a pair of hotels in the Jumeirah Village Circle (JVC) area of Dubai. Scheduled to open in 2020, the 150-room Courtyard by Marriott JVC and 100-room Residence Inn by Marriott JVC will form an interconnected complex and will share facilities. WSW Architects will lead the project and WA International will manage the interior design.

Construction work on the main structure of all buildings at Abu Dhabi’s Mamsha Al Saadiyat waterfront residential project is complete. Situated close to the Saadiyat Cultural District, the project will feature nine medium-rise residential towers with a total of 461 units. A joint venture of San Jose Contracting and Pivot Engineering & General Contracting signed a AED 1.25bn ($340mn) building contract in April 2016.

Al Naboodah Construction Group (ANCG) clinched the contract to build the Creekside 18 residential project for Emaar in Dubai Creek Harbour. Construction on the two 37-storey towers started earlier this year with substructure and concrete superstructure progressing on track.

Bahrain’s stalled Amwaj Gateway development project is to be publicly auctioned, a government committee ruled. Real estate consultant, Cluttons, and Mazad, the Bahrainbased public auction specialist, have been appointed to manage the sale. Amwaj Gateway consists of 20-storey twin towers comprising 384 apartments, a 143-room hotel tower and 93 townhouses.

Invest Group Overseas (IGO) announced plans to build a AED 500mn ($136mn) tower in Dubai that will rise close to 200 metres. Dubbed IGO 101, the project in Jumeirah Lakes Towers (JLT) will comprise G+39 floors. Construction is due to begin in December 2017 and scheduled for completion in Q4 2020. Located in
Cluster K of JLT, IGO 101 will have 449 apartments.

wasl Asset Management Group appointed Kele Contracting to build the first phase of wasl1, the developer’s freehold master development near Zabeel Park, Dubai. Enabling works
are now underway while Hills & Fort Construction is also on site managing the infrastructure for the development. Phase 1 of the project includes the Park Gate Residences, which comprises 746 units in four residential towers.

Emaar Properties will build a new mall in Dubai Hills Estate with its joint venture partner, Meraas. Scheduled to open in late 2019, Dubai Hills Mall will have a gross leasable area (GLA) of over 2 million sq ft (187,500 sq m) with more than 750 outlets.

Masdar awarded the EPC contract to build the GCC’s first large-scale wind farm. GE will supply 13 wind turbines for the Dhofar Wind Power Project in Oman while Spain’s TSK will handle construction of the plant.

Construction works on the Gate Avenue project at Dubai International Financial Centre (DIFC) is on track to be ready for an opening in the first half of next year. Thirty five percent of the overall construction is complete, with 85% of the structural concrete work and 75% of the concrete blockwork complete. Critical MEP activities are underway.
KEO International Consultants announced it is providing design and construction supervision services for Expo Village, the residential community being developed by Dubai World Trade Centre (DWTC) to host visitors and participants for Expo 2020 Dubai. The project, which is expected to be delivered by the fourth quarter of 2019, consists of 11 buildings with 2,273 apartments to be delivered in two phases.

Danube Properties completed construction and commenced handover of its first projects. The developer launched the AED 350mn ($95mn) Glitz I and II in Dubai Studio City two years ago, appointing Naresco General Contracting as the main contractor.

Since 2014, Danube has announced eight projects with a combined development value exceeding AED 3bn.

Developer Miral appointed Currie & Brown as cost manager for its Yas Bay development on Yas Island, Abu Dhabi.
The mixed-use scheme comprises two hotels, a multi-purpose arena and a recreational pier. Phase 1 will open in 2019.

Master developer Nakheel is assessing five proposals, with bids starting at AED 900mn ($245mn), for the construction of Dragon Towers, a twin-building residential complex at Dragon City in Dubai. The project will have 1,140 apartments and be directly linked to Dragon Mart. Nakheel expects to award the contract by the end of 2017, with a view to completing construction by 2020.

Azizi Developments completed construction of the AED 350mn ($95mn) Azizi Royal Bay residential project on Palm Jumeirah. This is the first project on Palm Jumeirah and the sixth in total Azizi has delivered to date. The Dubaibased developer has a huge pipeline of 80 projects due to be handed over by 2020, including the AED 12bn Azizi Riviera development in Meydan One.

Emaar Hospitality announced a new hotel and serviced residence project in Downtown Dubai with a direct link to the Dubai Mall. The development comprises a pair of towers sharing a seven storey podium. A 55-storey tower will have a 195 room hotel and 380 residences and a 38 storey tower will hold 234 residences.

Construction of the three residential towers at Dubai’s Al Habtoor City is more than 70% complete and on track for delivery by the end of the year. The freehold property on the banks of the Dubai Water Canal and Sheikh Zayed Road has 1,427 apartments. The luxury residences consist of two 73-storey towers and one 52-storey tower.

Ellington Properties launched its fourth residential project in Dubai’s Jumeirah Village Circle (JVC) neighbourhood. Construction of Belgravia III is underway with handover scheduled for mid-2019. Ellington’s fifth project comprises two L-shaped buildings, with 224 units overlooking a central courtyard and swimming pool.

Bloom Properties awarded the enabling works contract for Bloom Towers, a residential development located in Jumeirah Village Circle (JVC) in Dubai. National Piling will execute the enabling works for the project which is set to have three towers comprising 944 units. Construction is scheduled for completion in Q4 2020.

11 Oct 2017

Healthcare the next boom real estate market?

LONDON. — A recent report by JLL has cast a very interesting light on the issue of real estate investment in hospitals and clinics going forward. The report covered what is known as Mena countries (Middle East and North Africa) where the population profile is very different to the OECD. Mena countries currently have around 1,9 hospital beds per 1 000 population which does not compare favourably to OECD countries where the figure is 4,8 beds. This would suggest that countries such as Dubai, while often seen as rich and decadent, have been under investing in health care of late.

We are starting to see the emergence of Public Private Partnerships (PPPs) which we have seen in countries such as the UK for many years. So, what does this mean for real estate investors in Mena countries?

Reduction in oil income

Historically areas such as Dubai would have funded infrastructure spending internally using the mountains of oil income which they have enjoyed for many years. The situation has changed dramatically over the last few years with the price of oil dropping as low as $30 although now hovering around the $50 a barrel level. This is nowhere near the level of $100 a barrel seen over the last decade but now seemingly many years away from re-emerging.

This means that governments across the UAE, for example, are more proactive when it comes to PPPs as they take away the financial stresses of funding hospitals and clinics and switch them to the private sector. There will always need to be a return for those taking the risk in the private sector which can come in many forms such as long-term rental agreements as well as servicing arrangements.

Growing market

When you bear a mind that the number of people in Mena countries aged over 65 will increase by 4,4 percent per annum over the next five years, against 1,9 percent in OECD countries, this shows the opportunities available.

The number of people aged over 65 in Mena countries will increase from 21 million to 26 million by the year 2020. The report from JLL suggests that an additional 10,000 hospital beds are required across the five major cities of Mena countries (Dubai, Abu Dhabi, Riyadh, Jeddah and Cairo). This is the equivalent of 70 new hospitals which would be an enormous investment by the corresponding governments, which is why the PPP option is now coming to the fore.

For the Mena countries to come up to the same level as OECD countries would require a mind blowing 470 000 additional hospital beds which is the equivalent of 3 130 new hospitals. So, perhaps the real estate opportunities in the Mena healthcare sector are a little clearer?

The future

Real estate investors are always looking for different angles/opportunities and it seems that healthcare, although not for everybody, could be a very interesting alternative to the traditional real estate market. While the JLL report is a little light on investment returns for the PPPs likely to be on offer it is well-known that Dubai has been extremely investor friendly in years gone by.

So, could this be a new opportunity for those looking at real estate investment?

A long-term income stream supported by ever increasing demand for healthcare, both domestic and healthcare tourists, sounds just the ticket? — Property Forum.

10 Oct 2017

Dubai Land Department Creates Blockchain Real Estate Platform

The Dubai Land Department (DLD) has created a new blockchain database system allowing tenants to rent a property without handing over checks or physical documentation.

The initiative, developed in cooperation with the Smart Dubai initiative under the slogan “Simple, Secure, Fast.” was announced ahead of GITEX Technology Week, which is running from October 8 to October 12 at the Dubai World Trade Center.

The government entity has created the blockchain system using a smart and secure database that records all real estate contracts, including lease registrations, and links them with the Dubai Electricity & Water Authority (DEWA), the telecommunications system, and various property related bills.

The blockchain real estate platform incorporates personal tenant databases, including Emirates Identity Cards and the validity of residency visas. The platform allows tenants to make payments electronically without the need to write checks or physical documentation. The entire process can be completed within a few minutes at any time and from anywhere in the world, eliminating the need to visit any government entity.

DLD Director-General Sultan Butti bin Mejren said their adoption of this system is aligned with their commitment to make Dubai the smartest city in the world.

“Following the launch of the Dubai Blockchain Strategy by H.H. Sheikh Hamdan bin Mohammed in October 2016, which aims to make Dubai the first government in the world to apply all transactions through this network by 2020, DLD created a smart and secure database that records all real estate contracts,” said Mejren. “This makes DLD the first government entity in the world to implement all of its transactions through the blockchain network.”

Mejren also said the initiative will be followed by further efforts to utilize blockchain technology.

“This initiative is still in a stage of infancy,” said Mejren. “In the near future, we will see many partners joining blockchain to improve their client services, including banking, mortgages, and utilities and maintenance operations. Our aim is to unite all real estate and department services on a single platform. We hope to complete our project in the year 2019-2020 and we are keen to attract parties from the private sector, particularly those that are already partners or currently work with Dubai governmental institutions.”

9 Oct 2017

When investing in real estate, think long term

Renting an apartment can be a hassle-free experience, more so if it is furnished. You can live in a house of your dreams, while the landlord is responsible for maintenance and repairs. The rationale for renting an apartment is compelling. It costs a lot less in terms of time, effort and money. Additionally, getting out of a tenancy contract is significantly easier than getting out of a purchase contract. Furthermore, with the UAE residential rental market stabilising and the influx of new inventory, there are several good offers for buyers.

This is emphasised by figures from the Dubai Land Department (DLD): 68 real estate projects were launched and registered during the first half of the year, accounting for 8,000 transactions worth Dh21 billion. Additionally, CBRE, a commercial property and real estate services adviser, noted that Dubai tenants were able to negotiate cheaper deals during the previous year. Apartment rents have gone down nearly 10 per cent in some areas and will remain under pressure with 31,500 apartments and 12,500 villas planned this year.

Long-term benefit

While renting seems attractive, buying property in the current market can actually benefit you in the long term. It usually makes sense to buy only if you plan to stay here for five to seven years and can afford the up-front and back-end costs. Up-front costs include a 25 per cent down payment if it is your first home, 4 per cent in DLD fee, 2 per cent broker’s commission and various financing processing and admin overheads. For off-plan, buyers usually need to secure 50 per cent of the property value.

However, developers are introducing attractive payment plans upon handover or post handover, which amounts to 75-80 per cent of the purchase price. This makes off-plan attractive, considering capital appreciation usually occurs during handover. Many investors are seeing such avenues for growth; the DLD recently noted an increase in property handovers and off-plan projects. Over an 18-month period ending in July, the DLD recorded Dh86 billion from 63,903 transactions.

An attractive market

Expatriates are attracted to UAE real estate as it is significantly cheaper than cities such as New York, Hong Kong or London. The average price in Dubai is Dh1,000 per square foot, while in other global centres, it could go as high as $1,000 (Dh3,670). Here, every property class can be a good investment. Studios in key areas such as Palm Jumeirah, Downtown Dubai, Dubai Marina, Jumeirah Beach Residence, Business Bay and Reem Island in Abu Dhabi are easy to rent out and can be sold quickly as well. There is also rising demand for affordable housing. As companies cut housing allowances, people are looking at affordable accommodation in Abu Dhabi and Dubai.

Nearly half of realty transactions in Dubai last year were priced less than Dh1 million, with an 8 per cent rise in “affordable housing” business.

This Cityscape offers a good opportunity for investors to keep an eye out for attractive real estate deals, as developers are expected to offer exclusive bundles and discounts at the event, for the first time.

9 Oct 2017

When buildings are smart, cities automatically get smarter

Sougata Nandi, founder of 3e Advisory, told MEP Middle East that “smart MEP” is not only about energy efficiency. He said: “Its focus needs to shift towards healthy and productive buildings. MEP systems are designed for maximum capacity – peak occupancy and peak cooling load – which rarely occur for more than a few countable hours in a year.

“A smart MEP system should neither be designed for extreme conditions, nor should it be limited by its controls to be compelled to operate at full load. A truly smart MEP system should be designed to deliver the optimal indoor environmental quality (IEQ), making occupants most productive, at the lowest environmental and economic footprint.”

Nandi added that while the MEP industry will have to actively participate in this evolution. He believed that three simultaneous shifts need to happen to help make smart MEP a reality.

He said: “First and foremost, developers need to become more informed and mature in their decision-making, providing equal support to MEP, as much as they do to architecture and interiors.

“Second, a rapid convergence of the MEP industry with the telco industry needs to happen. There should be only one communication backbone over which all telco, security, surveillance, access and MEP systems must communicate and operate.

“Third, the MEP industry, and particularly the HVAC industry, need to embed intelligence in every device that is manufactured. And this covers every valve, damper, sensor, meter etc., to be intelligent and able to communicate as soon as they are installed and commissioned. The communication needs to happen seamlessly and this is where the telco backbone becomes an integral component in smart MEP.”

Nandi concluded by saying: “With devices getting smarter, we need to collect and manage ever-increasing data for intelligent decision-making. Smart MEP needs to remove silos like chilled water system, air-side equipment, building automation systems, access controls etc. and integrate all systems into one strategy. After all, if we can get our buildings to become smart, our cities will automatically become smarter.”

3 Oct 2017

The Gulf’s top 50 real estate developers of 2017

The following video contains details of the individuals who made the cut this year, and their respective rankings within the 2017 list.

CW’s Top 50 GCC Developers list is designed to recognise the people who are driving construction activities in the Gulf, delivering projects and planning communities for future generations.

To compile this list, CW’s editorial team has contacted developers from across the region to find out about the projects on which they’re currently working, and their long-term growth strategies. In deciding the final rankings, we also considered publicly available information about project launches and deliveries from the past 12 months.

3 Oct 2017

Richard Branson to turn 50 Saudi islands into luxury tourism destinations

Virgin airlines founder Richard Branson will invest in a Red Sea project that aims to turn 50 Saudi Arabian islands into luxury tourism destinations, the Saudi government announced on Sunday.

Branson is the first international investor to commit to the project, Saudi Arabia’s information ministry said, in what officials called “a clear sign that Saudi Arabia is opening its doors to international tourism”.

Branson also visited the tombs at Madain Saleh – an UNESCO World Heritage site located near a string of new hotels – in a trip to the Gulf kingdom that appears to be aimed at attracting further international attention, both investment and tourism.

“This is an incredibly exciting time in the country’s history and I’ve always felt that there’s nothing like getting a firsthand impression,” Branson said in a statement released by the information ministry.

Saudi Arabia is one of the most conservative countries in the world, only last week passing a decree allowing women to drive.

But since the shock appointment of powerful Prince Mohammed bin Salman as successor to his father’s throne in June, the oil-rich state has launched a media offensive aimed at promoting the country’s image.

Prince Mohammed, who sidelined his cousin Mohammed bin Nayef to be appointed the royal heir, is also the champion of Saudi Arabia’s ambitious Vision 2030 economic plan.

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The scheme aims to pull the region’s biggest economy out of its dependence on oil and diversify the country’s economic revenue model.

On August 1, Saudi Arabia announced plans to turn 34,000 square kilometres (13,127 square miles) of its Red Sea coastline into luxury resorts.

The project is aimed at attracting international tourists to a country where alcohol is prohibited and the mobility and dress of women restricted.

Saudi authorities however have long turned a blind eye to compounds in which foreigners live, such as the Aramco headquarters in Dahran.

The Saudi Public Investment Fund, which is headed by Prince Mohammed, will provide the initial investment into the Red Sea project, with construction slated to start in 2019.

The Red Sea project is expected to generate 35,000 jobs, according to the Saudi government.

 

1 Oct 2017

Is the ‘Hawaii of China’ taking design cues from Dubai?

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Hainan, China (CNN) — The dancing begins almost as soon as the sun sets on Sanya, in southern Hainan.

Dozens of locals — some in costume, some without — set up in the wide paved areas beneath the palm trees, along the famous long white shoreline of Sanya Bay.
Then, to the beat of an electronic boombox or traditional Chinese performers holding drums and cymbals, the synchronized movements begin.

Watching the dancing as the waves break on the shore, on a balmy summer evening, it’s easy to see why Hainan, an island and the southern-most province in China, has long been known in advertising campaigns as the “Hawaii of China.”

Traditional Chinese dance performed on the shores of Sanya Bay, Hainan. pic.twitter.com/uFKZYrC4Uy
— Ben Westcott (@Ben_Westcott) September 14, 2017
But only a few hundred meters down Sanya Bay, a different side of Hainan is glittering and glowing in the growing dark.

On a newly reclaimed island on one edge of the bay, the imposing towers of Phoenix Island are projecting a light show.

Giant diamonds sparkle on the sides of the massive hotel, followed by hundred-meter high dolphins splashing across an animated sea.

It’s just one of a growing number of extravagant Hainan resorts and hotels, each trying to out do each other in novelty and grandeur.

‘A little dream to go to Hainan’
The next day, dressed in full suits and glamorous dresses beneath the beating tropical sun, couples pose to have their wedding photos taken beneath the palm trees and beside the white sand.

Around them, dozens of tiny white crabs scuttle from hole to hole along the beach, an example of the natural beauty which has lured the couples here to make Hainan a permanent part of their memories together.

Wei Kailei, dean of the College of Tourism at Hainan University, tells CNN the island is a “world-class attraction.”

“It is well known as an island of leisure, vacation and longevity,” he says. “The blue sky and pure water in Hainan are even more precious, contrasted with the rest of the nation plagued by smog.”

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Father and son play on Sanya Bay beach in southern Hainan Island, China.

Sichuan native Thomas Liu brought his wife and his son to Hainan all the way from their central China hometown of Chengdu.

“For (my son) to see how broad the sea is and have a beach where he can play? It’s great for him,” he says, while walking along Yalong Bay.

“I think many people, when we are young, we know that Hainan is a very beautiful place, so I think for many people they have a little dream to go to Hainan.”

Despite the island’s natural beauty, however, Liu says it’s becoming a little too popular.

“There’s too many people here, from now I think all over the world and all over China,” he says.

According to the provincial statistics bureau, more than 60 million tourists made trips to Hainan in 2016, up 12.9% compared to the previous year.

But the island and its main cities of Haikou and Sanya are popular tourist destinations not just for Chinese but also for many Europeans.

Valter Julia, a Russian citizen from the city of Norilsk, says she and her partner came to Hainan nine years ago for the first time and, after they had a son, they’d wanted to return.

“I think it is a good place to have a rest … Very special and very pleasurable place,” she says.

‘Oriental Dubai’

Increasingly, rather than Hawaii, parts of Hainan bring to mind the unashamed extravagance of Dubai, the wealthy United Arab Emirates city state that once built a man-made island in the shape of a map of the world.

The huge, curved towers of Phoenix Island catch the eye the moment you walk down to Sanya Bay.

The futuristic hotel has changed the skyline of Sanya Bay dramatically. Connected to the city by a long bridge, which only guests can cross, the artificial island gives off the air of outrageous opulence.

In the lead up to the launch of Phoenix Island, it was even described in promotional literature as the “Oriental Dubai.”

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A birds-eye view of the vista of Sanya Bay, taken in June, featuring the new Phoenix Island in the top right.

Phoenix Island isn’t the only artificial land mass being constructed in Hainan. In the north, off the coast of Haikou, a massive island the shape of a yin-yang symbol is being built, according to the local government’s website.

Once finished it’ll feature a new hotel, a yacht club, a cruise port and a waters sports area.

In Sanya city, away from beach, an ambitious new hotel has been built in the shape of nine enormous green trees.
“Hainan is the largest special economic zone, the only international tourist island and the first tourist model construction zone in China,” says Wei.

“Everyone in the province puts great effort into infrastructure and environment, aiming to provide tourists high quality attractions, facilities, environment and services.”

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Beauty Crown Hotel in Sanya features nine enormous tree-like structures, which hold dozens of hotel rooms.

108-meter Buddha
It isn’t just apartments and hotels anxious to steal the limelight on Hainan.

In the island’s south, an enormous white statue of the Bodhisattva Guanyin stands on an artificial island at the center of a sprawling temple complex.

Finished in 2005, the 108-meter high statue was reportedly consecrated by 108 Buddhist monks from across China. It’s an appropriate choice, as she is sometimes known as “Guanyin of the Southern Seas.”

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A woman poses for a photo in front of a 108-meter statue of Guanyin, the Buddha of the Southern Seas.

Some 15% of the Chinese population consider themselves to be Buddhist, according to 2014 stats, so it’s no surprise this is a popular landmark.

Even on a weekday, hundreds of predominantly Chinese tourists pour into the temple grounds to see the sights and pray to Guanyin. At the altar leading to bridge to the statue, the air is thick with incense and pilgrims wrestle for kneeling space.

As you walk towards the enormous Buddha, the path on both sides is cluttered with stores selling memorabilia and expensive tea.

Even once you get inside the enormous statue, surrounded by the piped sounds of Buddhist chanting, the interior has half a dozen more opportunities to buy merchandize and commemorations.

At the very foot of the statue, up a lift and then hundreds of steps, one woman grips the Bodhisattva’s enormous toe and implores her loudly, “Ah! Guanyin Buddha!”

A uniformed guard shushes her and encourages passersby to move on.

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A woman prays to the Bodhisattva Guanyin at her huge statue in southern Sanya, Hainan.

No slowing down
Back in Sanya Bay, the sun is beginning to set again and locals on dozens of motorbikes are pulling up to the shoreline to watch the imminent entertainment.

As with so much of Hainan, the dancing is a combination of the old and the new. Some women and men, dressed in full costume, are performing a traditional square dance or guangchang wu. Next to them, other performers dressed in leotards are moving in time to modern pop songs.

This contradiction, a combination of Hawaii and Dubai, appears here to stay — for now at least.

As the dancing begins again in the sweltering heat, the giant diamonds of Phoenix Island light up and begin to spin.

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Getting to Hainan: Sanya International Airport services flights from a number of cities in the region including Hong Kong, Shanghai and Singapore.

20 Sep 2017

Bespoke home finance to boost Dubai realty

For Mohamed Farah, it sounded like a great deal.

A Dubai resident since 1992, the Syrian business owner was able to buy an off-plan studio flat in Damac Heights for Dh700,000 without putting down any new money as a deposit.

“I have two flats in Dubai Silicon Oasis where I had completed the repayments,” he says. “My businesses have been very strong over the past ten years. All of the flats I own, I had paid for in cash.”

Farah is one of a number of property investors taking advantage of a new generation of more accessible home finance products in Dubai.

These are the result of competition among financers to provide finance facility to a reluctant pool of end users and investors during a slow market.

Tailored finance

Under the terms of the “Double Your Property” product offered by Amlak Finance PJSC, a leading specialised real estate financier in the Middle East, purchasers who already own at least one property in Dubai without an existing finance can leverage their first home as collateral in order to acquire another property.

This second property may be either a ready or under construction property. The idea is that rental payments on the second property will eventually pay off the finance payments.

The product, which is open to both residents and non-residents of the UAE who own property in Dubai, effectively allows investors with a minimum salary of Dh10,000 a month to double their property portfolio by leveraging the equity release on first property to own one or more properties.

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As Dubai enters the run-up to Expo 2020, many are predicting another mini boom

“The existence of this product opens up possibilities for investors to have easy access to finance,” says Jonathan Rawling, Chief Finance Officer at Yallacompare, a financial comparison site in the Middle East.

“The real benefit is that it allows you to make the finance payments on your second property through the rental income on that property. Some home finance products in the market will not take account of rental income when calculating your eligibility for a home finance.”

Refreshing change

“Amlak is recognising that, where individuals already own one property, there is additional collateral available for the finance on the second property,” Rawling adds. “This is perhaps a refreshing change to the more blinkered approach where banks look at property financing on an asset-by-asset rather than a portfolio basis.”

Property analysts say that, after stalling over the past two years following a 2014 oil shock, Dubai’s sales market showed some signs of recovery during the spring.

According to the Dubai Land Department (DLD), the value of deals transacted between January and June this year stood at Dh132 billion, 16.8 per cent higher compared with the Dh113bn recorded over the same period in 2016.

The DLD said the total value of new home finance increased 24.2 per cent to Dh60 billion, up from Dh48.3 billion.

Stimulate market

For Amlak Finance, this is an attempt to stimulate the market as sales of completed and under-construction properties in Dubai start picking up.

Arif Alharmi, Managing Director and CEO of Amlak Finance, (pictured right), says, “The product is primarily focused at existing investors who already own property in Dubai. We want to boost the Dubai real estate market, and have therefore developed a product that helps investors grow their portfolio without putting in any additional contribution.”

Nonetheless, analysts still say that a glut of new supply coming to the market is dampening the sales market.

Research from Dubai-based property data company Reidin and property consultancy Global Capital estimates that 13,991 new off-plan homes were launched in the six months between January and June 2017.

“The growing off-plan supply continues to negatively affect ready property sales,” says David Godchaux, Chief Executive of Core Savills.

“Existing owners try and attract the same pool of investors and end users as they attempt to sell their ready properties. They contend with highly competitive and attractive payment plans offered by master developers.”

Niranjan Mendonca, Head of Marketing and Business Development at Dubai-based property broker Homes4Life, says he is currently negotiating with three customers about signing a deal on Amlak’s product, which only came on the market a couple of months ago.

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The DLD said the total value of new mortgages increased 24.2 per cent to Dh60 billion, up from Dh48.3 billion

He explains that investors are being drawn to off-plan property launches rather than buying completed properties because they expect far higher resale prices in the wake of Expo 2020.

This is compounded by the fact that the down payments required for developers on off-plan properties are attractive now.

Property developers are also offering generous payment terms on off-plan property deals, some of which can extend for as many as five years after the construction period.

Win-win proposition

More than competition, it is a win-win situation for all, says Arif Alharmi. “Developer payment plans are still restricted in terms of repayment to between two and five years.”

“Our proposition is to extend that plan to 15-20 years for the consumer. [They] get a longer payment plan, the developer gets to sell stock and we can facilitate the whole process.”

Expo 2020

Whether Amlak’s innovative home finance product will succeed in helping lift the Dubai property market from a two-year lull remains to be seen, but the initial signs are promising.

As Dubai enters the run-up to Expo 2020, many are predicting another mini boom.

Arif Alharmi further commented: “We have already seen market conditions improving in the UAE and this momentum is expected to continue. As we move closer to hosting the Dubai Expo, we have witnessed significant investment in diversifying the local economy, in line with the UAE’s economic growth strategy.

“There has been improvement in key sectors such as tourism, aviation, and real estate, and it is expected that we will see this increase even further as we approach 2020.”

20 Sep 2017

Dubai Is Building a Floating Miniature Replica of Venice

Dubai may be known for modern, soaring skyscrapers and eccentric innovations—we’re talking drone taxis here—but its newest project aims to bring in some old world Italian flair. By 2020, a miniature version of Venice will be floating 2.5 miles off the city’s coast. Complete with 12 restaurants, an underwater spa, and gondolas imported straight from the famous Italian city, the resort claims to be the world’s “first five-star floating destination.”

Overseen by Dubai developer Cityscape Global, The Floating Venice, as it’s been dubbed, will be able to accommodate up to 3,000 guests daily. In true Dubai fashion, visitors will have to travel by seaplane, boat, or helicopter in order to reach the resort. Upon arrival, they’ll check in at the underwater lobby before being transported to one of the mini-city’s 414 cabins—and 180 of those cabins, along with the hotel’s spa, restaurants, and bars, will be submerged, offering an immersive view of the Arabian Sea. Of course, it’s no ordinary ocean view: The on-site coral nursery, with over 400,000 square feet of coral and marine life, will be the focal point of the subterranean rooms. More claustrophobic guests will be able to come up for air at one of the complex’s 12 floating beaches, and sample Venetian delicacies as they tan.
In keeping with the project’s ode to Venetian tradition, visitors will also be able to participate in some of Venice’s popular festivals. The Carnevale di Venezia—Italy’s famed festival of masks—will be celebrated, along with the Regata Stoica di Venezia and the Festa del Redentore. Even operas will be performed on-site at the resort.

Read More : No place like Dubai for GCC home buyers

The extravagant hotel isn’t the first replica of its kind. China unveiled plans to remake Shakespeare’s hometown of Stratford-Upon-Avon late last year, with Tudor streets and a winding Avon River. And Titanic fans will be able to flock to a full-scale replica of the famous ship in Sichuan (80 miles from the provincial capital of Chengdu) once the project is complete, “iceberg experience” and all.

11 Sep 2017
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