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August 22 2017, 16:50

Why the firm underpins a modern economy

Published : 3 Aug 2017 ,      Source : The National

Companies such as those at Abu Dhabi's Khalifa Industrial Zone, and around the world, exist in order to ensure efficient markets but they shouldn't get too big. Courtesy Abu Dhabi Ports Company

We need companies to exist in order to ensure efficient markets but they shouldn't get too big

Markets versus firms

The whole point of free market capitalism is that actions are directed by market prices and that this in turn ensures an efficient economy. But consider this: when a business firm instructs an employee to transfer from one department to another the employee is not obeying market prices, he transfers because he is told to. This is not free market capitalism. So why does it happen?

This question was asked by the British economist Ronald Coase who won the Nobel prize in economics in 1991 based on his research on the matter. I first read about this fascinating idea in last week’s The Economist magazine. I found it fascinating, not least because it gave me some insights into the perennial question of whether large state owned enterprises (SOEs) and government related entities (GREs) should exist, at least at their current sizes, in an efficient economy. Here I am talking simply about the economics and efficiency of the market and not about any other policy matters. These ideas are based on Mr Coase’s work but do not necessarily reflect his thinking.

The idea of an efficient market was introduced by Adam Smith, the Scottish philosopher considered to be the father of modern economics. Smith used the phrase “invisible hand” to describe the theory that if each consumer is allowed to buy whatever they want and each producer is allowed to sell whatever they want then this would result in an optimal allocation of resources and setting of prices that would benefit the economy as a whole. This optimality is what is now known as Pareto optimal, ie any reallocation of resources that makes one market participant better off would necessarily make at least one other participant worse off.

From this definition we see that for each consumer to buy what they want and each producer to sell what they want it would imply that each person works as an individual contractor and that they would contract with other market participants whenever they needed a good or service. This leads to Mr Coase’s question: why, then, do firms exist?

His answer is that firms exist when there are high costs to using the market. For example, in many countries it is legal and common for taxi drivers to be self-employed. The quality of the service is clear before a client gets in the car, indeed most markets require standardised cars. The fares are standardised and clear, visible on a meter. Client acquisition is simple, drive around until someone hails you. There might be benefits from collective bargaining, say on insurance, but there is no reason to believe that if there are enough self-employed taxi drivers then there won’t be competition amongst insurers to provide for this client segment. The costs of using this market are therefore low.

But what happens if we remove standardisation? At its most basic level, what happens if instead of employing people full time we employ them for specific jobs? If you’ve ever had to hire a consultant, individual or firm, you will understand the concept of the scope of work which outlines in detail what is required from the contractor. This has to be developed and negotiated on a case by case basis. There is also a listing of legal rights and responsibilities, with remedies and indemnification if anyone’s rights are breached. This also has to be negotiated on a case by case basis.

These costs would simply take up all of a person’s time. They would not be able to actually do productive work. This is why employment contracts do not specify in full detail all of these points, it would be exhausting to renegotiate every time an employee’s job changes. This is where markets fail, when there is no standardisation or there is uncertainty. An employment contract has to therefore be relatively vague if it is to be efficient and both employee and employer have to trust the contract. This is why a firm exists, to regulate non market compliant but nevertheless efficient transactions.

Consider a large endowment, fictional for this exercise. This endowment is managed by a sophisticated investment office (IO) and overseen by a board of trustees (BoT). The IO has previously submitted a plan to the BoT which was to develop a multi-strategy multi-asset class portfolio via allocations to investment managers (IMs) globally. Over the years the portfolio has done well, but the IO realises that they are paying away large amounts of fees, often 2 per cent of assets and 20 per cent of profits. These are high transaction costs. So why not expand the firm to internalise the investment managers and therefore reduce these high transaction costs?

The IO submits a plan to the BoT, who approve, and the IO starts to hire in IM teams to directly invest in the global markets. As the years pass, the performance of the portfolio starts to deteriorate. There are more and more internal portfolio blowups. What is happening?

Well, although the firm can reduce transaction costs, remember that it is the market that imposes efficiency. When an IM is external, they have to compete with other IMs for allocation. This incentivises them to keep innovating and to remain efficient. Once the IMs are internalised then they no longer have an incentive to innovate, the money is locked in. So the portfolio performance deteriorates. Perhaps one way to motivate the internal IMs is to pay them 2/20 again. It invariably always happens.

The more frightening issue is why are there portfolio blowups in which large amounts of money are lost in a short amount of time. An internal audit and review highlights something that was completely missed by the IO’s plan: governance. When the IMs where external then the IO acted in a governance capacity, performing regular due diligence on the IMs and holding them accountable. In addition, other investors are performing due diligence on the external IMs so there is an even higher probability of negative issues being highlighted.

When the IMs are internalised the IO becomes the IM. The IO attempted to create a risk function, but you know how it is. The IMs kept complaining that the risk function is holding them back. You see, the chief executive does not control the investment portfolio, the chief investment officer (CIO) does. I should know, I’ve been CIO three times in my life.

The BoT, who are supposed to only be responsible for the corporate governance of the IO, are now also responsible for the investment governance since the IO forgot that its responsibility was to protect the portfolio and not enrich themselves.

Thankfully this is an account of a completely fictional endowment.

The lesson here is that as the size of a firm increases, its transaction costs increase but its innovation and efficiency decrease. There is a happy equilibrium at some point. For an economy of our size, I’d be guessing wildly if I said that this equilibrium is probably well south of US$10 billion for a directly managed balance sheet, although the amounts managed externally can be unlimited.

Importantly, a firm should either be a manager of managers or a single, direct operator. The corporate governance and risk management can otherwise be weakened, severely.

Related News

Dubai’s Damac records $1bn booked sales in H1 2017

The developer recorded $435.5m (AED1.6bn) in net profit, with booked sales valued at $1.1bn (AED4bn).

Total cash and bank balances during the first-half amounted to $2.3bn (AED8.6bn), while gross debt amounted to $1.5bn (AED5.4bn), the company stated in a filing to Dubai Financial Market.

Up to 1,071 units were handed over by the company at the Damac Hills master-development in H1 2017, bringing the project’s total number of delivered units to 3,100.

The company’s Trump International Golf Club Dubai (pictured) was unveiled this February.

Meanwhile, construction of 5,000 villas is underway at Damac’s Akoya Oxygen master community in Dubailand, with works for an additional 1,300 villas scheduled to begin this September.

 

Remarking on Damac’s financial results, Hussain Sajwani, chairman of the company, said: ““The property market in Dubai continues to demonstrate further stabilisation, and our medium- to long-term outlook remains positive as Damac continues to develop innovative products that appeal to both end-users and investors.

“Damac’s strong H1 sales performance can be attributed to continued demand for a number of our projects, including Aykon City, Damac Hills, and Akoya Oxygen.”

14 Aug 2017

Dubai says 88 property projects launched in the first half

DUBAI: The Dubai Land Department (DLD) on Saturday said that a total of 88 property projects were launched during the first six months of the year.
The agency also said that 68 real estate projects were registered with the government, amounting to an investment value worth Dh21 billion (SR21.44 billion).
“Dubai is currently witnessing increasing interest from international investors, which has reinforced confidence in our real estate sector and its future prospects,” Sultan Butti bin Mejren, the director-general of DLD, said in a statement.
Bin Mejren also said that 713 developers are registered in agency’s database, alongside a total of 483 projects.
DLD earlier reported that property transactions in Dubai rose by 16.8 percent in the first half to Dh132 billion from Dh113 billion a year ago, with Dubai Marina the top choice in terms of number of transactions, followed by Business Bay, Al Barsha South 4 and Jebel Ali.
The number of total transactions also rose to 35,571 or 25.9 percent higher than 28,251 sales recorded in the year-earlier period.
The first half also saw the completion of 24 projects that had been initiated in previous years, bin Mejren said.
“The figures reaffirm the momentum and sustainability of Dubai’s real estate market, which is following an upward growth trajectory,” he said, aided by the development of big-ticket infrastructure projects and the positive investment climate.

12 Aug 2017

Dubai a ‘rising giant’ of hotel real estate

Dubai: Dubai ranks alongside Beijing, Shanghai, Bangkok and Guangzhou as a rising giant of the global hotel real estate sector, according to a new report from professional services firm JLL.
The report — The Changing Global Landscape of Hospitality — identifies five groups of major markets offering different risks and opportunities for hotel investors and operators.

“The global hotel industry is being reshaped by technological disruption, changing consumer behaviour and new market players,” said Lauro Ferroni, Global Head of Hotels and Hospitality Research at JLL. “This structural shift has encouraged us to rethink how we assess market opportunity and risk, which was one of the driving forces behind this report.”
Global giants account for half of all hotel real estate investment. They have deep concentrations of business and leisure activities and support a large and diverse leisure industry. The list of 9 cities includes London and New York, which together account for 30 per cent of global investment — more than $23 billion over the last three years.
Rising giants such as Dubai are maturing quickly and rival the global giants in size and prestige, but are yet to attract the same level of investor interest. The report notes that Dubai’s supply pipeline “continues to be among the largest in the world, representing 50 per cent of an already substantial market”, but that the pace of supply is having in impact on hotel performance despite increasing demand.

The report suggests Shenzhen, Moscow and Seoul could soon join the rising giants, but that geopolitical tensions and economic headwinds have knocked Istanbul and Sao Paulo out of the group.
Gateway cities such as Amsterdam, Berlin and San Francisco have strong investor interest but smaller scale markets than the giants. They account for about 25 per cent of total global investment. US cities dominate the list of 15 gateways.
JLL defines new world cities as mid-sized, liveable cities with robust infrastructure and economic specialities that allow them to punch above their weight. They include Dublin, Copenhagen, Edinburgh and Seattle.
Finally, emerging hotspots such as Jeddah, Riyadh, Mumbai and Chennai are among the most dynamic hotel markets in the Middle East and South and Southeast Asia.
Hotel market groups
Global Giants: Hong Kong, Las Vegas, London, Los Angeles, New York, Orlando, Paris, Tokyo, Washington DC.
Rising Giants: Bangkok, Beijing, Dubai, Guangzhou, Shanghai.
Gateways: Amsterdam, Atlanta, Berlin, Boston, Chicago, Dallas, Houston, Miami, Munich, Osaka, Phoenix, San Diego, San Francisco, Singapore, Sydney.
New World Cities: Copenhagen, Denver, Dublin, Edinburgh, Melbourne, Seattle, Vancouver.
Emerging Hotspots: Bengaluru, Chengdu, Chennai, Delhi, Hanoi, Ho Chi Minh City, Hyderabad, Jeddah, Kolkata, Manila, Mumbai, Riyadh.

31 Jul 2017

Come build! Dubai eases rules to boost growth

Dubai is a city known for its beautiful skyscrapers and now investors looking to add their touch to the city’s skyline will soon be able to do so, quickly and easily, thanks to a new initiative streamlining access to building permits here.

His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, has approved a new strategy for Building Permit Procedures Development in the city.

Providing a “one-stop shop”, where all the procedures and building permits processes can be completed under one roof, the strategy will help speed up the process of acquiring building permits from government entities concerned.

The main aim of the strategy is to assist investors in the real estate sector and promote Dubai’s booming investment climate and boost growth.

Set up by Dubai’s Committee for Building Permit Procedures Development, the new strategy will further add to the appeal of Dubai, and will no doubt enhance its prominent position as a city where the active building and construction sector plays an important role as a key component of the economic development.

Comprising of three pillars, the first step will relate to developing and streamlining building permit procedures.

The second will hone in on practices related to unifying systems and requirements, while the third will provide a service where all the processes can be completed in one place.

Assistant director-general of Dubai Municipality of engineering and planning, and head of the committee Daoud AbdulRahman Al Hajri said the new strategy reflects the vision of Sheikh Mohammed in aiming to enhance customers’ happiness and save them time and effort to create a stimulating environment.

As for the strategy preparation process, Al Hajri noted that since its formation in February 2017, the committee held several meetings and workshops with the concerned stakeholders to discuss the various details of acquiring building permits.
The committee also formed four teams to conduct detailed researches and studies.

Minimising the Permits steps and timing

The first pillar of the strategy aims to minimise the required time to acquire permits through a new set of integrated steps.

The committee has simplified the procedure to just five steps, through which the involved public authorities can conduct all the inspection tasks through unified teams, while all the concerted departments are required to reply to all the submitted applications within three days for each of the five steps if the consultant and the contractor meet all the requirements.

This is a record time to complete the permit procedures, which will provide a unique customer service.

Unifying building systems and requirements

In order to provide a set of aligned procedures that will be a pillar for the process of acquiring permits during the next stage, the committee is currently working on putting a unified building regulation for Dubai to provide a comprehensive guideline for the customers.

The committee will also register the contracting and consulting companies, after the meeting that it held with the key stakeholders to discuss the features of the new strategy and the benefits it provides to the building and construction sector.

One stop shop for all permit procedures

The strategy focuses on digital and electronic advancement to develop the permitting process though keeping up-to-date with the smart transformation in all Dubai Government entities and departments.

Therefore, it will develop a set of smart electronic systems to build a central unified scheme to provide smart services through one window and on the phone, where customers (consultants, contractors, owners and developers) can follow up on the status of their permit request, pay fees and insurance and book appointments.

The one stop shop will be linked to Dubai Building Permit System, which will be developed to include the requirements of all the authorities involved in the permitting process in Dubai.

12 Aug 2017

Five steps and as little as three days to grab a building permit in Dubai

Sheikh Mohammed bin Rashid, Vice President of UAE and Ruler of Dubai, has ratified a shortened building permit process, helping to further enhance the emirate’s real estate sector.

The strategy, initially announced in February, has five steps requiring all the involved public authorities to reply to submitted applications within three days for each step, dependent upon the consultant and contractor meeting all requirements. The assistant director general of Dubai Municipality of Engineering and Planning, Daoud Al Hajri, said that the committee overseeing the process has formed four teams to revise the process as needed.

One team will work on developing the new building regulations based on customer and company feedback. The other teams will look into licensing of consultancies and contractors, ensuring compliance of building materials, and analysing bids from IT firms to develop an electronic payment system.

The Emirate’s strategy on building permit procedures is based on three pillars: the development and streamlining of permit procedures, bringing together systems and requirements, and providing a “one-stop shop” where the complete permit process from A to Z can be completed.

In the future, contractors and consultancies will have a streamlined building regulatory framework in place providing a comprehensive guideline. This will be executed via an advanced electronic platform, in line with the Smart Dubai initiative.

Part of the emirate’s Smart Dubai initiative is to increase digitisation within government offices. The government released a Dubai data economic impact report earlier this year that said open and shared data had the potential to add more than Dh10 billion to the economy annually. “This estimate includes the impact of publishing and sharing both private and government sector data. That’s an additional Dh4,000 per person added to the economy,” the report said.

 

The government said that by opening government data alone, the added value would be Dh4.3 bn to Dh6.6bn annually as of 2021. “It is clear that the big value drivers of impact for Dubai are the transport, storage and communication sector; the public administration sector; wholesale, retail trade, restaurants and hotels sector; and the real estate sector,” the report said.

12 Aug 2017

VP move to speed up construction in Dubai

DUBAI: Vice President and Prime Minister of the UAE and Ruler of Dubai His Highness Sheikh Mohammed Bin Rashid Al Maktoum approved the new strategy for Building Permit Procedures Development in Dubai. The strategy will ensure speeding up the process of acquiring building permits from concerned government entities to assist investors in the real estate sector.

The new strategy, set up by Dubai’s Committee for Building Permit Procedures Development, aims to enhance Dubai’s prominent positioning as a city where the active building and construction sector plays an important role as key component of the economic development.

The strategy is built upon three pillars, first developing and streamlining building permit procedures, then unifying systems and requirement, while the last one provides a “one stop shop” where all the procedures and building permits processes in Dubai can be completed. The three pillars represent a comprehensive scheme that will ensure speeding the process of acquiring permits in all its stages.

Assistant Director General of Dubai Municipality of Engineering and Planning, and Head of the Committee Daoud AbdulRahman Al Hajri said that the new strategy reflects the vision of His Highness Sheikh Mohammed Bin Rashid Al Maktoum, aiming to enhance customers’ happiness and save them time and effort to create a stimulating environment that promotes Dubai’s infamous investment climate.

As for the strategy preparation process, Al Hajri noted that since its formation in February 2017, the Committee held several meetings and workshops with the concerned stakeholders to discuss the various details of acquiring building permits. The Committee also formed four teams to conduct detailed researches and studies, where the first team works on developing the new building regulations based on the feedback gathered from customers, contractors and consultancies.

The second team’s scope of work includes licensing the consultancy and contracting companies based on standards that will ensure considering the permit’s conditions and requirements, while the third team is concerned with selecting building materials to study its technical specifications and ensure its compliance with the standard specifications then register them. The fourth team will study and analyze the bids submitted by IT companies to develop the intended electronic payment system.

EFFICIENCY

The first pillar of the strategy aims to minimise the required time to acquire permits through a new set of integrated steps. the committee has simplified the procedure to just five steps, through which the involved public authorities can conduct all the inspection tasks through unified teams, while all the concerted departments are required to reply to all the submitted applications within three days for each of the five steps if the consultant and the contactor meet all the requirements. This is a record time to complete the permit procedures, which will provide a unique customer-service.

In order to provide a set of aligned procedures that will be a pillar for the process of acquiring permits during the next stage, the Committee is currently working on putting a unified building regulation for Dubai to provide a comprehensive guideline for the customers. The Committee will also register the contracting and consulting companies, after the meeting that it held with the key stakeholders to discuss the features of the new strategy and the benefits it provides to the building and construction sector.

SINGLE-WINDOW SYSTEM

The strategy focuses on digital and electronic advancement to develop the permitting process though keeping up to date with the smart transformation in all Dubai Government’s entities and departments. Therefore, it will develop a set of smart electronic systems to build a central unified scheme to provide smart services through one window and on the phone, where customers (consultants, contractors, owners and developers) to follow up on the status of their permit request, pay fees and insurance and book appointments. The one stop shop will be linked to Dubai Building Permit System, which will be developed to include the requirements of all the authorities involved in the permitting process in Dubai.

Dubai’s Committee for Building Permit Procedures Development was formed earlier this year in order to leverage the level of customer satisfaction though providing high quality services in building permit requests, and insure speedy processing of building permitting procedures, and enhance Dubai’s competitiveness in the related international reports.

The Committee includes Dubai Municipality, Roads and Transport Authority, Dubai Electricity and Water Authority, The Department of Economic Development, Dubai Civil Aviation Authority, Directorate General of Civil Defence-Dubai, Investment Corporation of Dubai, Meraas Holding, Etisalat, Du, Dubai International Financial Centre, Dubai Creative Clusters Authority, Ports, and Customs and Free Zone Corporation.

13 Aug 2017

Dubai real estate projects worth AED21 billion launched in H1 2017

Dubai Land Department, DLD, has announced that a total of 88 real estate projects have been launched from the beginning of 2016 until H1 2017.

In a statement, DLD confirmed that 68 real estate projects were registered during H1 2017, representing a value of AED 21 billion.

Sultan Butti bin Mejren, Director-General of DLD, said, “Dubai is currently witnessing increasing interest from international investors, which has reinforced confidence in our real estate sector and its future prospects.”

Bin Mejren added that 713 developers are registered in DLD’s database, alongside a total of 483 projects.

Emphasising the vitality of Dubai’s real estate market, bin Mejren explained that since the establishment of the Real Estate Regulatory Agency, RERA, ten years ago, 535 projects of various sizes have been completed, supporting a variety of economic activities in Dubai.

The first half of this year also witnessed the completion of 24 projects that had been initiated in previous years.

The figures reaffirm the momentum and sustainability of Dubai’s real estate market, which is following an upward growth trajectory.

Contributing local factors include the development of ambitious infrastructure projects, and the atmosphere of security and tranquility that continues to define Dubai and the wider United Arab Emirates.

 

12 Aug 2017

Why live in a town house?

Living in a town houses is becoming popular among couples and families, as well as investors, in Dubai. Affordable housing rates, low service charges, attractive returns, home and land ownership and ease of maintenance all make town houses an attractive purchase option. The rising demand has directed master developers to develop a good range of town houses within their projects.
Mario Volpi, chief sales officer of Kensington Luxury Real Estate Brokers, says town houses are popular because the built-up areas are larger than some independent villas. “Ground plus one is the most popular type as there is only one set of stairs as compared to G+2,” says Volpi. “The one-bedroom town houses in Jumeirah Village Triangle [JVT] offer returns of 7.5 per cent and, similarly, Springs return rates are approximately 7-7.5 per cent. Jumeirah Village Circle [JVC] and JVT offer a good selection of town houses, whereas Arabian Ranches 2 Mira, Akoya and Warsan in Dubailand are new projects that are about to be or have just been handed over.”

Mini cities
Fintan Flannelly, client manager at Exclusive Links Real Estate, says communities along Al Khalil Road such as Meydan, Dubai Hills, JVC, JVT and Jumeirah Golf Estates offer town houses at different price points. Along Al Quadra Road, there is Mudon and Mira, which have been delivered over the past 18 months. Flannelly says Arabella and Serena in Mudon have been popular among buyers since they were launched last year.
“Established town house developments like Springs, Arabian Ranches, JVC and JVT continue to be popular, while the new kids on the block, Mira, Nshama, Arabella and Serena in Dubailand have sold well where off-plan prices are attractive,” says Flannelly.

Attractive investment
Indian investor Akash Gandhi points out that a town house is a better choice than an apartment because of the size; apartments can go up to Dh1,000-Dh1,500 per square foot, while town houses are in the range of Dh600-Dh900. Also, a town house gives the buyer independent ownership of the land, so it’s suitable for a long-term investor. The maintenance charges are also much lower.
“I have rented the unit and returns are good,” says Akash Gandhi on a three-bedroom plus maid’s room town house her purchased in JVC in 2013. “I make a 9 per cent net return on investment [ROI] and with the current market price, it is still a 7 per cent net income, which is also attractive. Even if you are a finance buyer paying interest at 4.5-5 per cent, it is still a positive ROI, with the added possibility of capital appreciation.”

Market trends
Flannelly says investors typically have been dominant players in town house developments. “Now the developers are becoming more flexible in their payment plans that open off-plan at favourable prices to end users,” he says. “We are now seeing Dubai Properties [DP] offering 40-60 payment plans over three years with a 10 per cent down payment, and several other developers offering 25-75 payment plans in fast-developing areas like JVC with a construction timeline of 18 months.
“Investor’s driven by ROI pursue town houses with low service fees in proven locations, while investors looking for capital appreciation will look at proven developers in newer areas with good payment plans. The net ROI can vary from 6.2-8.75 per cent if you get in early with a good off-plan price. However, location is still paramount for end users who want better quality, more choices in floor plans and space.”
He notes that three-bedroom town houses are the most popular type. As far as off-plan is concerned, DP’s Serena and Arabella, with good payment plans, are attractive, says Flannelly. For those looking for variety, he points to JVC, which has one-, two-, three- and four-bedroom options over two and three floors, in a variety of styles from modern to Mediterranean and prices starting from Dh1.35 million to Dh3.1 million.
“I have recently seen a few town house projects in JVC that are pretty amazing regarding layout and finishes, and you have your elevator,” says Flannelly. He believes town houses offer less risk as an investment because of the strong demand from families, be it for rent or sale. Families are also less likely to change homes too often, while the service fees are also lower, he adds.

Unit options
Rajiv Ghanekar, senior real estate broker at Keller Williams Real Estate Dubai, says town houses are typically built in clusters of two to six units, with prices varying based on the positioning of the house, proximity to amenities and plot size.
“A middle unit is built on an average 2,250 sq ft of plot and offers around 600 sq ft of usable backyard space, while a corner unit is built on a 3,000-4,000 sq ft plot and can provide a huge usable back-side yard space of nearly 2,000 sq ft,” explains Ghanekar. “On average, the yearly outgoings on a three-bedroom plus maid’s room town house in established communities such as The Springs and Al Reem is between Dh6,000 and Dh10,000 per year, whereas it is Dh15,000-Dh25,000 for a three- to five-bedroom independent villa and approximate Dh35,000-Dh50,000 for a three-bedroom apartment.
“Thus, town houses are more realistic, easy to manage and offer huge savings in yearly outgoings.”
He also points out that the segment has generated a significant momentum since a number of affordable housing projects were announced in 2013. “Clients who invested in early 2013 in Emaar’s Mira Townhouses are today witnessing a 40-50 per cent capital appreciation and a rental return of close to 8 per cent net,” says Ghanekar. “While it is difficult to say whether a similar capital appreciation can be expected for the current off-plan offerings, but even then, these would make good investment purely from a rental yield perspective.
“I would estimate that a three-bedroom plus maid’s room town house purchased today at a price of circa Dh1.5 million, with an estimated completion of 2019-2020, would still rent at a conservative figure of Dh120,000 per annum. Take away Dh10,000 per year in community charges, the projected net return of Dh110,000 would be over 7 per cent. And, this is a good enough reason to invest in town houses.”

Town house projects

Town house projectsHousing developments with shared walls are generally called town houses. These are also often multistory homes.
Some developments that offer off-plan options include:
* Serena by Dubai Properties (Bella Casa and Casa Dora), close to Arabian Ranches 2
* Villanova by Dubai Properties, adjacent to The Villa project
* Town Square by Nshama, opposite Mira by Emaar
* Reem Townhouses by Emaar, part of Arabian Ranches 2
* Maple Townhouses by Emaar, part of MBR City
* Akoya Oxygen by Damac

9 Aug 2017

Office tenants, landlords navigate a slow market

Office tenants, landlords navigate a slow market
Dubai rent rates may remain flat in the second half, but better than the previous year
Image Credit: Shutterstock
Sales prices in Barsha Heights remained unchanged
Published: 00:00 August 9, 2017 Property Weekly
By Syed Ameen Kader

Following the subdued results at the start of the year, Dubai’s office sector continued to display little momentum in the second quarter, in the midst of bearish market sentiment, low oil prices and regional uncertainties.
“Although quoted rental rates were broadly unchanged over the last quarter, transaction evidence indicated marginal declines of 2 per cent, while landlords continued to show increased flexibility during negotiations to secure new tenants and retain existing ones,” says John Stevens, managing director of Asteco.

In the first half, there was very little change in demand and activity from occupiers compared with the second half last year, but the market still witnessed a high level of activity from occupiers reviewing options, considering relocations or reducing their footprint by increasing efficiencies. “More recently, there has been an increased flow of transactions with occupiers prepared to commit to new offices,” says Dana Williamson, head of agency and occupier services at JLL Middle East and North Africa (Mena).
Industry experts tracking the sector say they observed an increasing number of enquiries as occupiers witnessed greater market certainty. Although there was a drop in enquiries during Ramadan, Knight Frank says it has since seen a pick-up — a positive sign for the traditionally quite summer months.
“Landlords were still heavily pressured to keep rents low to combat greater market competition and, therefore, we witnessed no change,” says Matthew Reason, senior surveyor, commercial leasing at Knight Frank.

Reason says landlords offered greater incentives in the form of rent-free periods and fit-out contributions as bargaining chips to incentivise tenants.
However, the market continues to face added pressure due to oversupply. Around 4 million sq ft was completed last year, with a further 200,000 sq ft in the first half this year. A total of 2.5 million sq ft is expected to be delivered this year. “With the current oversupply, increased pressure has been placed on annual sales and rentals, resulting in rates to soften by 6 per cent and 3 per cent respectively,” says Stevens.
While enquiries in the second quarter were predominantly for smaller-sized units, Stevens says tenants were increasingly looking for grade A office space from single-building owners rather than leasing strata title property.

Top locations
From a location perspective, grade A projects under single ownership on Shaikh Zayed Road and in the Dubai International Financial Centre (DIFC) area performed well. “Rental rates for offices in Dubai Investments Park and Dubai Silicon Oasis remained flat both year-on-year and quarter-on-quarter, mainly due to limited activity in these locations,” says Stevens. “There was a quarterly drop of 3 per cent on Shaikh Zayed Road, which translated to an annual rental decrease of 6 per cent. While Barsha Heights, Bur Dubai and Business Bay all witnessed a 5 per cent fall in rents.”
Asteco also reports that sales prices in Barsha Heights, Dubai Silicon Oasis and Jumeirah Lakes Towers (JLT) showed no quarterly change, compared to an 8 per cent drop in prices in DIFC and 5 per cent in Business Bay.
Preleasing of commercial offices continues to be subdued, but Reason says companies are still looking at the long term when investing in real estate in Dubai, noting that grade A fitted office spaces have performed significantly better than shell and core, as occupiers are still constrained on their ability to expend capex.
According to JLL, office buildings in onshore areas and free zones with direct access to Metro stations, ample parking and amenities and large floor plates remain in high demand. “Furthermore, dual-licensed buildings offering both offshore and onshore licensing options continue to gain traction,” says Dana. “Challenges, however, continued for office product on the periphery of the city, in older areas and in strata-titled buildings for which there is less demand.”
Chestertons, meanwhile, reports that office sales in areas it monitors decreased by an average of 5 per cent during the second quarter, with the highest decline recorded in JLT at 15 per cent. “Despite the growth of sales values, rents were still under pressure and dropped by 3 per cent on average,” says Ivana Gazivoda Vucinic, head of advisory and research at Chestertons Mena.
Compared to the previous quarter, Vucinic says that office sales declined by 7 per cent on average in terms of volume and 17 per cent in value, which she says is a sign of a correction.

Key sectors
Outside of DIFC, Knight Frank points to pharmaceutical and health care organisations as key drivers of demand in the first half, with engineering and architectural firms also seeing significant movement.
“Moving forward, we expect movement of audit companies, law firms and consultancies to take advantage of the DIFC dual licensing as the blue chip firms look to consolidate to a central headquarters,” says Reason.
Meanwhile, technology, IT and media companies, as well as legal and consultancy firms, remain either stable or in growth mode. “They often seek space in established free zones or in Dubai’s central business district. We believe this trend will continue in the medium term,” says Dana.
Demand from the financial services sector remains subdued and while there has been relatively little demand from oil and gas companies, Dana says this is a relatively small sector in Dubai.
A raft of international companies are expected to set up businesses in Dubai in preparation for the World Expo 2020, potentially increasing orders and demand. “The macroeconomic environment should become less of an issue as businesses adapt to a new pricing strategy to overcome the drop and knock-on effect of low oil prices,” says Stevens.

New supply
With 2.5 million sq ft to be delivered this year, the total supply could reach 3.2 million sq ft, according to Asteco. Much of the supply will be from Dubai World Trade Centre’s new dual licensed buildings.
“In some areas, we have seen oversupply have an adverse impact on sales and rental prices,” says Stevens. “Business Bay, for example, which has a significant amount of existing and upcoming office space, saw a year-on-year rental decrease of 5 per cent, while from a sales perspective, prices dropped by 16 per cent during the same period.”
However, Dana says future supply levels do not represent a significant threat of oversupply.

Outlook
JLL predicts rental rates in Dubai for the remainder of the year to remain relatively flat. “There are many established companies in the UAE looking to optimise their occupancy strategies as part of their plans in Mena,” says Dana. “As landlords are willing to provide additional attractive terms in return for long-term commitments, we expect the high level of activity to continue for the remainder of the year.”
Industry observers note that weakened oil prices have caused businesses to either consolidate their operations or downsize, leaving notable vacancy levels in the market. “We expect the market to remain flat in the coming months with recovery expected in the latter months of 2018,” says Vucinic.
Knight Frank also anticipates minimal improvement for the remainder of the year, but still expects the market to be better than the previous year. “In the run-up to Expo 2020, we would look to expect greater performance from areas such as Dubai South, as the residential communities and overall infrastructure improve,” says Reason.
The second half of 2017 is expected to hold many possibilities for tenants, but is likely to be a challenging year for landlords, according to a Knight Frank report. The growth of REITs as a commercial investment vehicle is also expected to bring further liquidity and is likely to attract more investors as it signals market maturity.
The emirate’s expanding landscape is also set to support future demand for office space with demand being likely from the FMCG, Islamic banking and financial technology sectors. Demand for commercial office space in and around Dubai South, meanwhile, is expected to gain traction with the expansion of Al Maktoum International Airport and the Dubai Metro Red line.

9 Aug 2017

Latest News


Dubai’s Damac records $1bn booked sales in H1 2017

The developer recorded $435.5m (AED1.6bn) in net profit, with booked sales valued at $1.1bn (AED4bn).

Total cash and bank balances during the first-half amounted to $2.3bn (AED8.6bn), while gross debt amounted to $1.5bn (AED5.4bn), the company stated in a filing to Dubai Financial Market.

Up to 1,071 units were handed over by the company at the Damac Hills master-development in H1 2017, bringing the project’s total number of delivered units to 3,100.

The company’s Trump International Golf Club Dubai (pictured) was unveiled this February.

Meanwhile, construction of 5,000 villas is underway at Damac’s Akoya Oxygen master community in Dubailand, with works for an additional 1,300 villas scheduled to begin this September.

 

Remarking on Damac’s financial results, Hussain Sajwani, chairman of the company, said: ““The property market in Dubai continues to demonstrate further stabilisation, and our medium- to long-term outlook remains positive as Damac continues to develop innovative products that appeal to both end-users and investors.

“Damac’s strong H1 sales performance can be attributed to continued demand for a number of our projects, including Aykon City, Damac Hills, and Akoya Oxygen.”

14 Aug 2017

Dubai says 88 property projects launched in the first half

DUBAI: The Dubai Land Department (DLD) on Saturday said that a total of 88 property projects were launched during the first six months of the year.
The agency also said that 68 real estate projects were registered with the government, amounting to an investment value worth Dh21 billion (SR21.44 billion).
“Dubai is currently witnessing increasing interest from international investors, which has reinforced confidence in our real estate sector and its future prospects,” Sultan Butti bin Mejren, the director-general of DLD, said in a statement.
Bin Mejren also said that 713 developers are registered in agency’s database, alongside a total of 483 projects.
DLD earlier reported that property transactions in Dubai rose by 16.8 percent in the first half to Dh132 billion from Dh113 billion a year ago, with Dubai Marina the top choice in terms of number of transactions, followed by Business Bay, Al Barsha South 4 and Jebel Ali.
The number of total transactions also rose to 35,571 or 25.9 percent higher than 28,251 sales recorded in the year-earlier period.
The first half also saw the completion of 24 projects that had been initiated in previous years, bin Mejren said.
“The figures reaffirm the momentum and sustainability of Dubai’s real estate market, which is following an upward growth trajectory,” he said, aided by the development of big-ticket infrastructure projects and the positive investment climate.

12 Aug 2017

Dubai a ‘rising giant’ of hotel real estate

Dubai: Dubai ranks alongside Beijing, Shanghai, Bangkok and Guangzhou as a rising giant of the global hotel real estate sector, according to a new report from professional services firm JLL.
The report — The Changing Global Landscape of Hospitality — identifies five groups of major markets offering different risks and opportunities for hotel investors and operators.

“The global hotel industry is being reshaped by technological disruption, changing consumer behaviour and new market players,” said Lauro Ferroni, Global Head of Hotels and Hospitality Research at JLL. “This structural shift has encouraged us to rethink how we assess market opportunity and risk, which was one of the driving forces behind this report.”
Global giants account for half of all hotel real estate investment. They have deep concentrations of business and leisure activities and support a large and diverse leisure industry. The list of 9 cities includes London and New York, which together account for 30 per cent of global investment — more than $23 billion over the last three years.
Rising giants such as Dubai are maturing quickly and rival the global giants in size and prestige, but are yet to attract the same level of investor interest. The report notes that Dubai’s supply pipeline “continues to be among the largest in the world, representing 50 per cent of an already substantial market”, but that the pace of supply is having in impact on hotel performance despite increasing demand.

The report suggests Shenzhen, Moscow and Seoul could soon join the rising giants, but that geopolitical tensions and economic headwinds have knocked Istanbul and Sao Paulo out of the group.
Gateway cities such as Amsterdam, Berlin and San Francisco have strong investor interest but smaller scale markets than the giants. They account for about 25 per cent of total global investment. US cities dominate the list of 15 gateways.
JLL defines new world cities as mid-sized, liveable cities with robust infrastructure and economic specialities that allow them to punch above their weight. They include Dublin, Copenhagen, Edinburgh and Seattle.
Finally, emerging hotspots such as Jeddah, Riyadh, Mumbai and Chennai are among the most dynamic hotel markets in the Middle East and South and Southeast Asia.
Hotel market groups
Global Giants: Hong Kong, Las Vegas, London, Los Angeles, New York, Orlando, Paris, Tokyo, Washington DC.
Rising Giants: Bangkok, Beijing, Dubai, Guangzhou, Shanghai.
Gateways: Amsterdam, Atlanta, Berlin, Boston, Chicago, Dallas, Houston, Miami, Munich, Osaka, Phoenix, San Diego, San Francisco, Singapore, Sydney.
New World Cities: Copenhagen, Denver, Dublin, Edinburgh, Melbourne, Seattle, Vancouver.
Emerging Hotspots: Bengaluru, Chengdu, Chennai, Delhi, Hanoi, Ho Chi Minh City, Hyderabad, Jeddah, Kolkata, Manila, Mumbai, Riyadh.

31 Jul 2017

Come build! Dubai eases rules to boost growth

Dubai is a city known for its beautiful skyscrapers and now investors looking to add their touch to the city’s skyline will soon be able to do so, quickly and easily, thanks to a new initiative streamlining access to building permits here.

His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, has approved a new strategy for Building Permit Procedures Development in the city.

Providing a “one-stop shop”, where all the procedures and building permits processes can be completed under one roof, the strategy will help speed up the process of acquiring building permits from government entities concerned.

The main aim of the strategy is to assist investors in the real estate sector and promote Dubai’s booming investment climate and boost growth.

Set up by Dubai’s Committee for Building Permit Procedures Development, the new strategy will further add to the appeal of Dubai, and will no doubt enhance its prominent position as a city where the active building and construction sector plays an important role as a key component of the economic development.

Comprising of three pillars, the first step will relate to developing and streamlining building permit procedures.

The second will hone in on practices related to unifying systems and requirements, while the third will provide a service where all the processes can be completed in one place.

Assistant director-general of Dubai Municipality of engineering and planning, and head of the committee Daoud AbdulRahman Al Hajri said the new strategy reflects the vision of Sheikh Mohammed in aiming to enhance customers’ happiness and save them time and effort to create a stimulating environment.

As for the strategy preparation process, Al Hajri noted that since its formation in February 2017, the committee held several meetings and workshops with the concerned stakeholders to discuss the various details of acquiring building permits.
The committee also formed four teams to conduct detailed researches and studies.

Minimising the Permits steps and timing

The first pillar of the strategy aims to minimise the required time to acquire permits through a new set of integrated steps.

The committee has simplified the procedure to just five steps, through which the involved public authorities can conduct all the inspection tasks through unified teams, while all the concerted departments are required to reply to all the submitted applications within three days for each of the five steps if the consultant and the contractor meet all the requirements.

This is a record time to complete the permit procedures, which will provide a unique customer service.

Unifying building systems and requirements

In order to provide a set of aligned procedures that will be a pillar for the process of acquiring permits during the next stage, the committee is currently working on putting a unified building regulation for Dubai to provide a comprehensive guideline for the customers.

The committee will also register the contracting and consulting companies, after the meeting that it held with the key stakeholders to discuss the features of the new strategy and the benefits it provides to the building and construction sector.

One stop shop for all permit procedures

The strategy focuses on digital and electronic advancement to develop the permitting process though keeping up-to-date with the smart transformation in all Dubai Government entities and departments.

Therefore, it will develop a set of smart electronic systems to build a central unified scheme to provide smart services through one window and on the phone, where customers (consultants, contractors, owners and developers) can follow up on the status of their permit request, pay fees and insurance and book appointments.

The one stop shop will be linked to Dubai Building Permit System, which will be developed to include the requirements of all the authorities involved in the permitting process in Dubai.

12 Aug 2017

Five steps and as little as three days to grab a building permit in Dubai

Sheikh Mohammed bin Rashid, Vice President of UAE and Ruler of Dubai, has ratified a shortened building permit process, helping to further enhance the emirate’s real estate sector.

The strategy, initially announced in February, has five steps requiring all the involved public authorities to reply to submitted applications within three days for each step, dependent upon the consultant and contractor meeting all requirements. The assistant director general of Dubai Municipality of Engineering and Planning, Daoud Al Hajri, said that the committee overseeing the process has formed four teams to revise the process as needed.

One team will work on developing the new building regulations based on customer and company feedback. The other teams will look into licensing of consultancies and contractors, ensuring compliance of building materials, and analysing bids from IT firms to develop an electronic payment system.

The Emirate’s strategy on building permit procedures is based on three pillars: the development and streamlining of permit procedures, bringing together systems and requirements, and providing a “one-stop shop” where the complete permit process from A to Z can be completed.

In the future, contractors and consultancies will have a streamlined building regulatory framework in place providing a comprehensive guideline. This will be executed via an advanced electronic platform, in line with the Smart Dubai initiative.

Part of the emirate’s Smart Dubai initiative is to increase digitisation within government offices. The government released a Dubai data economic impact report earlier this year that said open and shared data had the potential to add more than Dh10 billion to the economy annually. “This estimate includes the impact of publishing and sharing both private and government sector data. That’s an additional Dh4,000 per person added to the economy,” the report said.

 

The government said that by opening government data alone, the added value would be Dh4.3 bn to Dh6.6bn annually as of 2021. “It is clear that the big value drivers of impact for Dubai are the transport, storage and communication sector; the public administration sector; wholesale, retail trade, restaurants and hotels sector; and the real estate sector,” the report said.

12 Aug 2017

VP move to speed up construction in Dubai

DUBAI: Vice President and Prime Minister of the UAE and Ruler of Dubai His Highness Sheikh Mohammed Bin Rashid Al Maktoum approved the new strategy for Building Permit Procedures Development in Dubai. The strategy will ensure speeding up the process of acquiring building permits from concerned government entities to assist investors in the real estate sector.

The new strategy, set up by Dubai’s Committee for Building Permit Procedures Development, aims to enhance Dubai’s prominent positioning as a city where the active building and construction sector plays an important role as key component of the economic development.

The strategy is built upon three pillars, first developing and streamlining building permit procedures, then unifying systems and requirement, while the last one provides a “one stop shop” where all the procedures and building permits processes in Dubai can be completed. The three pillars represent a comprehensive scheme that will ensure speeding the process of acquiring permits in all its stages.

Assistant Director General of Dubai Municipality of Engineering and Planning, and Head of the Committee Daoud AbdulRahman Al Hajri said that the new strategy reflects the vision of His Highness Sheikh Mohammed Bin Rashid Al Maktoum, aiming to enhance customers’ happiness and save them time and effort to create a stimulating environment that promotes Dubai’s infamous investment climate.

As for the strategy preparation process, Al Hajri noted that since its formation in February 2017, the Committee held several meetings and workshops with the concerned stakeholders to discuss the various details of acquiring building permits. The Committee also formed four teams to conduct detailed researches and studies, where the first team works on developing the new building regulations based on the feedback gathered from customers, contractors and consultancies.

The second team’s scope of work includes licensing the consultancy and contracting companies based on standards that will ensure considering the permit’s conditions and requirements, while the third team is concerned with selecting building materials to study its technical specifications and ensure its compliance with the standard specifications then register them. The fourth team will study and analyze the bids submitted by IT companies to develop the intended electronic payment system.

EFFICIENCY

The first pillar of the strategy aims to minimise the required time to acquire permits through a new set of integrated steps. the committee has simplified the procedure to just five steps, through which the involved public authorities can conduct all the inspection tasks through unified teams, while all the concerted departments are required to reply to all the submitted applications within three days for each of the five steps if the consultant and the contactor meet all the requirements. This is a record time to complete the permit procedures, which will provide a unique customer-service.

In order to provide a set of aligned procedures that will be a pillar for the process of acquiring permits during the next stage, the Committee is currently working on putting a unified building regulation for Dubai to provide a comprehensive guideline for the customers. The Committee will also register the contracting and consulting companies, after the meeting that it held with the key stakeholders to discuss the features of the new strategy and the benefits it provides to the building and construction sector.

SINGLE-WINDOW SYSTEM

The strategy focuses on digital and electronic advancement to develop the permitting process though keeping up to date with the smart transformation in all Dubai Government’s entities and departments. Therefore, it will develop a set of smart electronic systems to build a central unified scheme to provide smart services through one window and on the phone, where customers (consultants, contractors, owners and developers) to follow up on the status of their permit request, pay fees and insurance and book appointments. The one stop shop will be linked to Dubai Building Permit System, which will be developed to include the requirements of all the authorities involved in the permitting process in Dubai.

Dubai’s Committee for Building Permit Procedures Development was formed earlier this year in order to leverage the level of customer satisfaction though providing high quality services in building permit requests, and insure speedy processing of building permitting procedures, and enhance Dubai’s competitiveness in the related international reports.

The Committee includes Dubai Municipality, Roads and Transport Authority, Dubai Electricity and Water Authority, The Department of Economic Development, Dubai Civil Aviation Authority, Directorate General of Civil Defence-Dubai, Investment Corporation of Dubai, Meraas Holding, Etisalat, Du, Dubai International Financial Centre, Dubai Creative Clusters Authority, Ports, and Customs and Free Zone Corporation.

13 Aug 2017

Dubai real estate projects worth AED21 billion launched in H1 2017

Dubai Land Department, DLD, has announced that a total of 88 real estate projects have been launched from the beginning of 2016 until H1 2017.

In a statement, DLD confirmed that 68 real estate projects were registered during H1 2017, representing a value of AED 21 billion.

Sultan Butti bin Mejren, Director-General of DLD, said, “Dubai is currently witnessing increasing interest from international investors, which has reinforced confidence in our real estate sector and its future prospects.”

Bin Mejren added that 713 developers are registered in DLD’s database, alongside a total of 483 projects.

Emphasising the vitality of Dubai’s real estate market, bin Mejren explained that since the establishment of the Real Estate Regulatory Agency, RERA, ten years ago, 535 projects of various sizes have been completed, supporting a variety of economic activities in Dubai.

The first half of this year also witnessed the completion of 24 projects that had been initiated in previous years.

The figures reaffirm the momentum and sustainability of Dubai’s real estate market, which is following an upward growth trajectory.

Contributing local factors include the development of ambitious infrastructure projects, and the atmosphere of security and tranquility that continues to define Dubai and the wider United Arab Emirates.

 

12 Aug 2017

Why live in a town house?

Living in a town houses is becoming popular among couples and families, as well as investors, in Dubai. Affordable housing rates, low service charges, attractive returns, home and land ownership and ease of maintenance all make town houses an attractive purchase option. The rising demand has directed master developers to develop a good range of town houses within their projects.
Mario Volpi, chief sales officer of Kensington Luxury Real Estate Brokers, says town houses are popular because the built-up areas are larger than some independent villas. “Ground plus one is the most popular type as there is only one set of stairs as compared to G+2,” says Volpi. “The one-bedroom town houses in Jumeirah Village Triangle [JVT] offer returns of 7.5 per cent and, similarly, Springs return rates are approximately 7-7.5 per cent. Jumeirah Village Circle [JVC] and JVT offer a good selection of town houses, whereas Arabian Ranches 2 Mira, Akoya and Warsan in Dubailand are new projects that are about to be or have just been handed over.”

Mini cities
Fintan Flannelly, client manager at Exclusive Links Real Estate, says communities along Al Khalil Road such as Meydan, Dubai Hills, JVC, JVT and Jumeirah Golf Estates offer town houses at different price points. Along Al Quadra Road, there is Mudon and Mira, which have been delivered over the past 18 months. Flannelly says Arabella and Serena in Mudon have been popular among buyers since they were launched last year.
“Established town house developments like Springs, Arabian Ranches, JVC and JVT continue to be popular, while the new kids on the block, Mira, Nshama, Arabella and Serena in Dubailand have sold well where off-plan prices are attractive,” says Flannelly.

Attractive investment
Indian investor Akash Gandhi points out that a town house is a better choice than an apartment because of the size; apartments can go up to Dh1,000-Dh1,500 per square foot, while town houses are in the range of Dh600-Dh900. Also, a town house gives the buyer independent ownership of the land, so it’s suitable for a long-term investor. The maintenance charges are also much lower.
“I have rented the unit and returns are good,” says Akash Gandhi on a three-bedroom plus maid’s room town house her purchased in JVC in 2013. “I make a 9 per cent net return on investment [ROI] and with the current market price, it is still a 7 per cent net income, which is also attractive. Even if you are a finance buyer paying interest at 4.5-5 per cent, it is still a positive ROI, with the added possibility of capital appreciation.”

Market trends
Flannelly says investors typically have been dominant players in town house developments. “Now the developers are becoming more flexible in their payment plans that open off-plan at favourable prices to end users,” he says. “We are now seeing Dubai Properties [DP] offering 40-60 payment plans over three years with a 10 per cent down payment, and several other developers offering 25-75 payment plans in fast-developing areas like JVC with a construction timeline of 18 months.
“Investor’s driven by ROI pursue town houses with low service fees in proven locations, while investors looking for capital appreciation will look at proven developers in newer areas with good payment plans. The net ROI can vary from 6.2-8.75 per cent if you get in early with a good off-plan price. However, location is still paramount for end users who want better quality, more choices in floor plans and space.”
He notes that three-bedroom town houses are the most popular type. As far as off-plan is concerned, DP’s Serena and Arabella, with good payment plans, are attractive, says Flannelly. For those looking for variety, he points to JVC, which has one-, two-, three- and four-bedroom options over two and three floors, in a variety of styles from modern to Mediterranean and prices starting from Dh1.35 million to Dh3.1 million.
“I have recently seen a few town house projects in JVC that are pretty amazing regarding layout and finishes, and you have your elevator,” says Flannelly. He believes town houses offer less risk as an investment because of the strong demand from families, be it for rent or sale. Families are also less likely to change homes too often, while the service fees are also lower, he adds.

Unit options
Rajiv Ghanekar, senior real estate broker at Keller Williams Real Estate Dubai, says town houses are typically built in clusters of two to six units, with prices varying based on the positioning of the house, proximity to amenities and plot size.
“A middle unit is built on an average 2,250 sq ft of plot and offers around 600 sq ft of usable backyard space, while a corner unit is built on a 3,000-4,000 sq ft plot and can provide a huge usable back-side yard space of nearly 2,000 sq ft,” explains Ghanekar. “On average, the yearly outgoings on a three-bedroom plus maid’s room town house in established communities such as The Springs and Al Reem is between Dh6,000 and Dh10,000 per year, whereas it is Dh15,000-Dh25,000 for a three- to five-bedroom independent villa and approximate Dh35,000-Dh50,000 for a three-bedroom apartment.
“Thus, town houses are more realistic, easy to manage and offer huge savings in yearly outgoings.”
He also points out that the segment has generated a significant momentum since a number of affordable housing projects were announced in 2013. “Clients who invested in early 2013 in Emaar’s Mira Townhouses are today witnessing a 40-50 per cent capital appreciation and a rental return of close to 8 per cent net,” says Ghanekar. “While it is difficult to say whether a similar capital appreciation can be expected for the current off-plan offerings, but even then, these would make good investment purely from a rental yield perspective.
“I would estimate that a three-bedroom plus maid’s room town house purchased today at a price of circa Dh1.5 million, with an estimated completion of 2019-2020, would still rent at a conservative figure of Dh120,000 per annum. Take away Dh10,000 per year in community charges, the projected net return of Dh110,000 would be over 7 per cent. And, this is a good enough reason to invest in town houses.”

Town house projects

Town house projectsHousing developments with shared walls are generally called town houses. These are also often multistory homes.
Some developments that offer off-plan options include:
* Serena by Dubai Properties (Bella Casa and Casa Dora), close to Arabian Ranches 2
* Villanova by Dubai Properties, adjacent to The Villa project
* Town Square by Nshama, opposite Mira by Emaar
* Reem Townhouses by Emaar, part of Arabian Ranches 2
* Maple Townhouses by Emaar, part of MBR City
* Akoya Oxygen by Damac

9 Aug 2017

Articles

Arabtec bounces back as earnings top expectations

Arabtec announced its second consecutive profitable quarter on Wednesday, as falling costs offset a slight decline in revenues.

The construction firm, which has undergone a recapitalisation programme following heavy losses in 2016, posted a net income of Dh40 million for the quarter, compared with a loss of Dh186m for the same period last year, and a Dh18m profit for the first three months of this year.

Net profit for the quarter came in well ahead of a forecast of Dh23m from NBAD Securities.

The firm’s revenue however slipped 6 per cent year-on-year to Dh2.06 billion during the second quarter, coming in below analyst expectations.

Arabtec completed its recapitalisation in June, raising Dh1.5bn via a rights issue to extinguish nearly Dh5bn worth of accumulated losses.

“The recapitalisation programme was the key deliverable for us in phase one of our strategic roadmap, which we successfully concluded in June, leaving us to focus on risk management and business transformation,” said Arabtec’s group chief executive Hamish Tyrwhitt.

“We will also remain on track to optimise the delivery of our Dh17.4bn backlog and continue to work on turning risks into opportunities through the resolution of legacy claims and collecting receivables.”

9 Aug 2017

Tax in the UAE: Everything you need to know about VAT and a little bit more

Tax; such a small, unassuming word – with the power to strike fear into the hearts of everyone who hears it. But what’s the reason behind the madness? Many people loathe the word because they don’t understand it – or have never dared try. So we’re going to do it for you.

The Tax Procedures Law issued this week laid down the foundation for the planned UAE tax system, regulating the collection of taxes and defining the role of the Federal Tax Authority.

It paves the way for the collection of taxes, mainly VAT, which will be introduced at a rate of 5 per cent on January 1 next year and excise taxes, which will be brought in, in the fourth quarter of this year. The formal tax document plus executive regulations setting out exactly what will be taxable and exempt is expected in the coming months. The UAE introducing VAT (albeit in a very small increment) is a turning point in the country’s glory years of completely tax-free living.

But what exactly does it mean for you, the future taxpayer living and buying things here? Let us tell you…

What is VAT?

Value-added tax (known in some countries as goods and services tax, or GST). This is a consumption tax imposed on a product at each stage of production, before the final sale. Take, for instance a computer manufacturer: the company is taxed on all the supplies it purchased to make and produce the computer before it reaches the shelf. Then you, the customer pays the VAT (the tax the company had been liable for during the production process) as a percentage of the total price. VAT is not usually an extra or add-on to the sale price. In the UAE, the tax will be calculated as a percentage of the retail sale price of a product.

What is excise tax?

While commonly referred to as a tax, excise is for all intents and purposes, a levy. It’s imposed on the manufacturer, not the customer, during the creation of a product. It often comes in the form of customs duties (if goods needed to produce the product cross a border). But as with VAT, the manufacturer again passes the buck on to the consumer by including it in the product’s price. Aside from that, the main differentiating factor that sets excise tax apart from VAT is that it’s only imposed on certain goods. In fact, it’s sometimes dubbed the “sin tax”, because it’s generally placed on products deemed ‘bad for society’ – such as tobacco, alcohol, confectionery, soft drinks and fast food. It explains why those commodities cost so much in other countries (one cigarette in Australia is said to cost around Dh4).

What will be taxed?

Non-essential consumer items. Namely, anything other than basic food and essential commodities, such as medicines or hospital and school bills. There is a list of just under 100 items or categories of goods and services that will not be subject to tax. Planning on buying a brand-new television Dh8000? That will be another Dh400.

Experts said this could lead to some items being withdrawn from the market or altered, to substitute the products for similar but untaxed products.

When will it come into effect?

VAT: January 1 2018 in the UAE. Businesses can register for VAT three months before the launch date (October 1, 2017).

Excise tax: The fourth quarter of 2017.

Who will be taxed?

Companies: Businesses which provide taxable goods or services with annual revenue of more than Dh375,000 will be required to register for VAT. Businesses with tax­able supplies below Dh375,000 but over Dh187,500 will have the option to register for it. Companies that provide health and education services can reclaim value added tax from the Government

Consumers: If you’re buying any non-essential commodity, you’re going to pay more – but at 5 per cent, you might not notice it so much. However, if you’re a regular customer of sugary drinks, soft drinks, or tobacco, you’ll inevitably feel the pinch – with these being subject to the highest price hikes.

Homebuyers: Property developers and the first sale of new homes will not be taxed. This means property developers will be able to claim back any VAT they have to pay from the Government.

Tenants: Residential tenants’ leases will not be taxed, but commercial tenants can expect to pay VAT. Offices, shops and other commercial property will be subject to it.

Home sellers: All sales of commercial property by VAT payers will attract VAT at a standard rate.

Importers/ re-exporters: As the GCC is a customs union, duties are only paid once at the point of entry to the area. As long as the goods are moved to their final destination within a defined period of time, duties are not payable. But this is where things get tricky. If goods are imported into the UAE, and set for re-exportation (with paperwork to prove it), they would be subject to customs duties in the UAE, but only attract VAT in their final destination. But, if the goods coming into the UAE have an uncertain final destination, VAT is also payable in the UAE. This is supposed to be reclaimable.

What exactly is the tax law?

Well, we don’t actually know yet. The draft UAE VAT Law is yet to be published, together with the Executive Regulations that are expected to accompany it. The Tax Procedures Law will also have its own Executive Regulations, to be issued by the UAE Cabinet within six months of the issuance of the Law. Experts are warning people to study up on all of them.

Why is the UAE bringing in tax? Why now?

The UAE, along with the other five Arabian Gulf states, agreed to slap VAT and excise taxes GCC-wide as part of measures aimed at shoring up government income, diversifying government revenues as economies adjust to lower oil prices and ensuring more efficiency in the economy. The IMF said in October 2015 that the Gulf states would have a combined fiscal deficit of between 2015 and 2019 that would exceed US$700 billion if they did not undertake reforms.

VAT is expected to yield Dh12bn in the first year of its implementation and up to Dh20bn during the second year.

Will my income be taxed?

Not yet, at least there’s been no indication to the contrary. The was no reference made to personal income tax in the Tax Procedures Law, and government officials have previously said there are no plans to tax individuals on their earnings.

VAT could generate Dh12billion in its first year and Dh20bn in its second year, according to Sultan Al Mansouri, the Minister of Economy. Mona Al Marzooqi/ The National

The arguments:

The for:

While VAT means more cash out of certain people’s pockets, plenty of residents in the UAE believe it’s a good idea – and one that’s been a long time coming.

More than two-thirds of senior business figures in the UAE believe reforms such as cutting fuel subsidies and the introduction of duties such as VAT are necessary to boost development in the region.

Research conducted exclusively for The National by Borderless Access found that 69 per cent of respondents in the UAE felt that subsidy cuts and the introduction of VAT would help regional development.

Mathias Angonin, lead analyst for the UAE at Moody’s, said the ratings agency views both moves as “credit positive”.

“The UAE is a pretty mature economy but you have informal businesses existing and the informal sector is still sizeable,” said Jeremy Cape, a London-based tax and public policy partner at law firm Squire Patton Boggs.
“More businesses will now have to operate above the radar rather than below it.”
Gurdeep Randhay, the head of tax and VAT in the UAE at advisory Grant Thornton said: “Businesses will be required to provide essential information to the FTA, as part of the compliance audit procedure, additionally, it will be essential to maintain financial and accounting details for five years.”

The against:

The most common arguments against the introduction of VAT are consumers worried about an increase in their expenses. In a story by The National from earlier this year, consumers voiced their concerns over already-high living expenses in the UAE.

“My worry is that my monthly grocery bill should not go up,” said Carla Stephenson, a housewife.

“School fees are already expensive and rents have not come down by much so if other prices move up, of course it will affect people.

“I understand that basic food will not be taxed but will cheese, cake, ice creams and juice cost more? That will affect families.”

Others have responded with an air of nonchalance, or hopefulness the extra cost will be able to be managed. Some businesses admitted they have yet to look at the issue, but are aware it is looming.

What is the Tax Procedures Law? Here are some key points:

– Take records: anyone conducting any business must keep accounting records and commercial books of their business.

– Learn Arabic (or make friends with someone who does): any material related to tax must be submitted to the FTA in Arabic. It’s not a catch all rule – the FTA can accept material in any language but they can request a translation.

– Learn the definition for “taxable persons”: there’s no specific definition yet, but this will be a crucial one to learn. The same goes for Legal Representatives and Tax Agents. The latter must be listed in a Register and licensed for the purpose.

– Be wary of Tax Audits: the Law allows the FTA to perform an audit on anyone to see how well they are complying with the Federal Tax Legislation. More details will follow on what exactly this audit will entail, but you are expected to fully co-operate.

– Penalties can and will be imposed: tax evasion, not paying tax, or an unentitled refund of tax will be taken seriously. Expect a prison sentence and a monetary penalty not exceeding five times the amount of tax evaded.

– You can challenge a decision of the FTA (within reason): You can ask for an internal FTA administrative review, and if you’re still unhappy, you can escalate it to a Tax Disputes Resolution Committee. However, you’ll have to pay whatever tax you’re disputing first, because the Committee cannot accept an objection “if the Tax and Penalties subject of the objection have not been settled”. If the sum in dispute is less than Dh100,000 – that’s the end of the road. If it’s more than that, you can then challenge the decision before the federal court within whose jurisdiction the FTA’s head office or relevant branch is located. There are strict time-limits for taking these steps.

Money-VAT-SaudiFemale shoppers browse watches at a luxury concession stand inside the Kingdom Centre shopping mall in Riyadh, Saudi Arabia. The kingdom will introduce value-added tax on January 1, 2018. Simon Dawson/Bloomberg

What is the GCC UVAT?

The Unified Agreement for Value Added Tax, known as GCC/UVAT, is an agreement signed by the six GCC members to ensure the arrival of VAT at a flat rate of five per cent by 2018.

VAT elsewhere in the world:

The UK became a pioneer in income tax as long ago as 1799, to raise money to fight against France. The US introduced income tax in 1861, to pay for its civil war against secessionist southern states. Canada’s was born in 1917. In some areas of the world, governments charge more than 20 per cent for VAT. Saudi Arabia is the first of the five GCC countries to implement VAT. It’s quite the turnaround for the country who attempted to bring it in in 1988, before swiftly cancelling it sixteen days before its launch.

How often do business-owners have to file VAT returns?

For most businesses, every three months and it can be done online.

Where can I get more information?

The Ministry of Finance (MoF) has a dedicated section on its website which explains VAT and provides practical guidance on how it applies. The MoF has also begun to roll out a VAT and Excise Awareness Campaign. Phase 1 of that campaign, involving an extensive series of workshops, ended in mid-May.

Or, you can attend a VAT training course. However, these aren’t cheap – a couple of days will set you back up to US$2,000.

Saudi Arabia recently published its draft VAT legislation and it is being seen as setting precedence.

7 Aug 2017

What are a tenant’s rights after a residential fire?

“Although there was no loss of human lives, the property damage by the fires cannot be disregarded,” says the legal team at BSA Ahmad Bin Hezeem & Associates of the spate of tower fires in Dubai in the past few years – from Tamweel Tower in JLT to The Torch in February 2015 and then again just this week (pictured above).

“The reason for the rapid spread of each fire was the non-fire retardant cladding that was used in Dubai and in the rest of UAE for a long period, but which has been restricted from use for buildings exceeding 15 metres in height since 2013.”

They point out that most tenants only look into compensation and liability after an accident has occurred – and so here’s some legal advice from them that you’ll need if your apartment’s been struck by a fire (or if you just want to know where you stand in case it does happen to you)…

DAMAGES COMPENSATION

After the fire, questions regarding liability for damages caused by the fire to tenants’ possessions will arise, regarding the possibility to receive compensation for the said damages.

In the UAE, the responsibilities of the property owner and the property developer are mostly poorly understood, and the tenants expect to be covered by the insurance policy held by either the property owner or of the property developer. Generally, the property developer and the owner’s association, which represents the property owner, remain responsible for the areas in the property over which they maintain control, such as public areas. In most events, the property owner’s insurance policy will cover only the property itself and will not extend to tenant’s furniture or personal possessions. Therefore, in order to provide adequate cover, a tenant should take out his own insurance policy with individual cover.

According to a survey commissioned by Zurich insurance company in 2013, only 6 per cent of UAE residents had adequate home insurance cover. As a result, in an event of a fire, storm or flood most tenants will have to bear the costs for any incurred damages.

“The UAE Civil Transaction Law, issued by way of Federal Law No. 5 of 1985 (“Civil Code”) regulates fire insurance coverage and the duties and liabilities of the insurance provider. According to the law, the insurer shall cover all damages caused by the fire notwithstanding the reason of the fire, provided that the damages are a direct result of the fire and have not been caused by deliberate or fraudulent actions of the insured or the beneficiary. The scope of insurance and therefore the compensation will vary, depending on the policy and the insurance company.”

THE COST OF EMERGENCY ACCOMMODATION

Many people from the Torch Tower have been put up in hotels in Dubai over the past few nights and are not having to pay for it (the developer has covered it), however…

There is no legal obligation for the property owner or the property developer to provide the tenant with emergency accommodation in the event of fire or to compensate the costs for such accommodation. Generally, the costs for emergency accommodation shall be covered by the fire insurance. However, the level of the cover will depend on the type of the insurance policy taken out and the insurance company.

A tenant will however be entitled to a reduction in the rental for the period that the property is unable to be occupied, if so declared by the relevant authorities, which is dealt with below…

CANCELLATION OF THE LEASE

One of the most important things the tenant will have to deal with when the apartment has been damaged by fire is the possibility to cancel the lease agreement and to claim back the post-dated cheques, or already paid rent and security deposit.

In the event that the occupancy of the apartment has been affected by the damages, the Civil Code refers to the affected occupancy as a partial or permanent loss of enjoyment. One of the challenges for the tenant will be determination of the degree of loss and the definition of the loss as being of either a partial or permanent nature in order to determine their rights to cancel the lease.

In the event of total demolition, and therefore inhabitancy of the property, the proof of permanent loss of enjoyment shall be easy and the tenant shall be able to execute his right to cancel the lease agreement. However, in the event of partial loss of enjoyment it is important to determine the range of destruction and the level of the loss of “intended enjoyment”, which can range between partial inhabitancy of the unit to a defective satellite dish. In the event of the latter, the tenant will hardly be able to cancel the lease agreement on the grounds of the loss of enjoyment.

Where there is a total loss of enjoyment, the tenant shall not be liable to pay rent from the date of when the total loss has occurred, and shall be entitled to cancel the lease agreement, provided that the tenant’s situation falls within the scope of the provisions of the Civil Code. Generally, the cancellation of the lease agreement in UAE shall take place by a mutual agreement between the landlord (property owner) and the tenant or by a court order.

Provided the requirements for cancellation of the lease agreement are met, the cancellation shall be made in writing by a cancellation letter addressed to the landlord and include the following details: A description of the situation which has occurred; the grounds for cancellation and the date of the loss of enjoyment; a request for the return of all post-dated cheques and refund of prepaid rent from the date of the loss and a request for the return of the security deposit. Furthermore, the cancellation letter should include an undertaking clause containing acceptance of the listed conditions, to be signed by the landlord and returned to the tenant.

If the landlord refuses to comply or does not respond to the cancellation letter, the tenant may approach the court and ask for cancellation of the lease agreement. The rules and procedures are established by the Dubai Rental Dispute Settlement Centre, also known as Dubai Rental Committee, which has the authority of the Dubai Courts regarding all tenancy issues. The Dubai Rental committee may be approached directly by the tenant in order to cancel the lease agreement or to resolve any tenancy matter.

The tenant may file a complaint with the Dubai Rental Committee, which shall include a request for the landlord to pay the costs incurred by the tenant and the costs of the proceedings. Should the landlord remedy the loss, the lease agreement will not be cancelled and the tenant can only claim for compensation, such as rent reduction, for the period of the loss of enjoyment.

After filing the complaint by the tenant, the Committee will try to obtain an amicable resolution. If this is not possible, the Committee will render a judgement which will state the decision, stipulate the terms of the cancellation such as repayments, return of the post-dated cheques and any further costs awarded. The judgement will be subject to an appeal within 15 days and will become final and executable thereafter.

CONCLUSION

It is advisable for the tenant to deal with insurance cover as early as possible, especially if the apartment is located in one of the towers completed prior to 2013. When the tenant does not have sufficient insurance cover, he might end up bearing the costs for all damages in addition to continuous rent and the costs for emergency accommodation. Irrespective of any self-assessment of the tenant’s situation, it is always advisable to get advice from a lawyer in order to proceed with the situation efficiently and on legally safe ground.

12 Aug 2017

These ultra-luxurious underwater homes are being built in Dubai

In the clear-blue waters off the coast of Dubai lies a chain of islands known as The Heart of Europe. They’re manmade reconstructions of actual European nations, just on a smaller scale — part of an even larger chain of islands known as “The World.”

Richard Branson, fittingly, owns the island representing Great Britain.

The Heart of Europe rolled out its first $2.8 million floating home, the aptly named “Floating Seahorse,” in early 2016. Since then, development firm Kleindienst has been rolling out even larger homes that will cost roughly $3.3 million.

Keep scrolling to see the gorgeous renderings.

The $2.8 million Floating Seahorse is the product of more than 5,000 hours of research and 13,000 hours of design and engineering, according to design firm Kleindienst Group.

The first models went on sale in 2015, before any Seahorses were even completed. Kleindienst told Business Insider it sold approximately 60 Seahorses in 2015.

The underwater portion, composed of a master bedroom and bathroom, will make up approximately 270 square feet on the interior. Just outside the walls is a 500-square-foot coral garden.

From the home, residents will be able to see actual seahorses dance through the Arabian Gulf — the animal’s natural habitat.

The floating homes will have a massive floating bed as well as an observation deck above water.

If you want to take a swim, a convenient step-ladder offers a safe entry and exit. Or you could just dive right in.

Since the structures are located about two and a half miles from Dubai’s shores, inhabitants can reach their Seahorse via boat or seaplane.

It’s not exactly the most accessible way to get to and from home, but once they’re out there, they can cross between the islands via floating jetties.

The company says it hopes the structure can set a new standard for what it means to live lavishly.

Kleindienst also hopes it can make some headway in restoring the endangered seahorse population in the area.

“We will create an artificial coral reef beneath the luxury retreats which will be a protected area in which seahorses can safely live and breed,” Kleindienst said at an unveiling even in May 2015.

The firm completed the rollout of its Signature Edition line of villas in fall of 2016. At 4,000 square feet and $3.3 million, they are a major upgrade from the original model.

The Signature Edition will have four designated bedrooms and several rooms that can transform into sleeping quarters, meaning the Seahorse can accommodate up to eight adults and eight children, according to Kleindienst.

These bigger structures will feature complete smart home automation, even down to the blinds.

underwater-homes-03

The underwater views are just as impressive, with marine life on full display in the master bedroom.

Below the water’s surface there are actually two bedrooms, one bathroom, and a viewing area for the coral garden.

There will be nearly 900 square feet of living space and 600 square feet on the outside of the Seahorse for the garden.

Kleindienst said it has already sold out of its first three editions, the most recent being the Tzar Edition for the island being built in the St. Petersburg portion of The World.

More than 200 designers, engineers, and architects from 25 countries have been working to make the underwater fantasy a reality.

Once the homes hit the water, they’ll be a breathtaking sight to behold — for humans and marine life alike.

 

7 Aug 2017

The Magical Gardens of Dubai

I’ve recently read a lot of stories about Dubai. People who lived there and had wonderful experiences in this magical city, people who consider that Dubai is a cold (pun intended) and materialistic place, and tourists mesmerized by its beauty. I’ve been in the city a couple of nights in the last year, and I am in love with it. Yes, it’s hot and has different rules, yes, it’s demanding, and yes, it’s powerful, diverse, abundant, and beautiful.

 

So, every time I land in Dubai, I am ready to discover more and more. Last month, I was astonished by some out-of-this-world gardens – something that I haven’t believed to be possible in the fiery Dubai.

It was late when my plane landed and a car was waiting for us at the arrivals. I felt blessed, because the weather in the mid-July is torrid. And to see the shiny city from a luxury ride is magnificent!

After 15 minutes, we have entered a magical space. Everything was soft pink, with candles and diffuse lights, and everyone was smiling and welcoming us after the long flight. The check-in is fast, and here I am – in my beautiful club room, with a balcony over the gardens.

In the distance, I can gaze at the tranquil sea and I can smell the divine scent of the frangipani flowers.

The bed is magical, soft and comfortable, and I can sleep in here forever. The last cigarette in my balcony made me dream of this amazing part of the world, a city rich in possibilities, lights, and bold architecture.

In the next two days, I went out just for 10 minutes, because the city is boiling and the streets are empty and wrapped in a silver light. Everything in Dubai’s summer is like a story from One Thousand and One Nights – smoke and mirrors, soft gaze, and translucent air. And the heat is like a thick blanket that protects you and carries you on its arms.

I was blown away by the beauty of the surroundings: flowers and water, fires on the beach, restaurants in the sand, transcendental spa scents, candles and Oriental lanterns on the hallways, delicious food, smiles, a pink beach in the twilight, restaurants with wooden ceilings, crystal chandeliers and piano music, an intimate club with people from all over the world, and soft conversations in English, French, German and Arabic.

How can you not fall in love with this city?!

If I could take with me just one experience, one memory, it would be the magical inside & outside gardens. And I let the pictures tell you this story!

 

I will always love Dubai. I understand its power and beauty. I met amazing people in here, who really appreciate the possibilities, the diversity and the magic of this city. Yes, you have to play by its rules, but they are fair, futuristic and abundant rules. I think this city will be The Future one day. It deserves to be!

If you want to have unforgettable memories in Dubai, I recommend you with all my heart The Ritz-Carlton Universe:

* the magical gardens

* the Plam Grill on the beach

* the beds!!

* the club and the delicious dishes served with champagne and prosecco

* the lights and the flowers

* the spa

* the people from all over the world

* the nights full of dreams.

And if you want to see more pictures, you can follow me on Instagram 🙂 Thank you!

30 Jul 2017

More on ‘Meydan One’ – Dubai’s most ambitious project ever?

At Cityscape this week Meydan released more info on the mega mall that will be part of the project. Here’s what we know…
Dubai doesn’t do small. It’s a place that likes things bigger and bolder.

Already home to the world’s largest dancing fountain; tallest building (Burj Khalifa); largest artificial islands (the Palm Islands); and biggest natural flower garden (the Miracle Garden), then there’s Meydan One, which features even more superlatives and is arguably the emirate’s most ambitious project ever planned.

Developer Meydan has announced the launch of Meydan One featuring a 711m-high residential tower, a huge new mall complete with a retractable roof, the world’s largest indoor ski slope, a 25,000 sq metres indoor sports facility, the biggest dancing fountains in the world, and a beach.

Located between the Meydan Hotel and Al Khail Road, the project is scheduled to be completed “before 2020”, according to statement from the developer.

The mall will be made up of 30,000 square metres of indoor and outdoor space – with 529 retail stores, including two major department stores.

The huge shopping centre will have a retractable roof (as will the new and improved Ibn Battuta) that will be opened in the winter months to create an alfresco space. In fact, there’s a sample model of the roof at Cityscape this week if you want to check it out.

mall

There will also be 25,000 square metres of indoor sports facilities with sports fields and courts for football, basketball, volleyball, squash, racquetball, paddle ball, table tennis, badminton, indoor cricket, mixed martial arts, boxing, jogging, softball and baseball (so basically everything).

There will also be a golf driving range and the chance to ski and snowboard on the one-kilometre-long ski slope, which you can see in the picture above. It will be the world’s longest too: Ski Dubai is 400-metres-long.

Outside there will be football pitches, mountain biking trials (fake mountains we’re guessing?) and running tracks. There will also be a skateboard park, a BMX spot and what looks like a kayakable lake:

Oh, and the mall will be home to the world’s largest dancing water fountain, which will be 400 metres wide and 100 metres high (Dubai Fountain shoots water 152 metres into the air but is only 275 metres wide).

Meydan-One-Mall-Fountain

The Mall will also have 90 food outlets, a 20-screen cinema and a 400-metre Central Canyon (we’re not sure exactly what that is but we’re imagining it’s a trough of some sort) flanked by luxury stores.

WHAT ELSE YOU’LL FIND THERE

Tallest residential tower

The Dubai One, expected to be the world’s tallest residential tower, and its connected podium will include almost 900 residential apartments and a five-star hotel.

Sports and leisure

There will also be a yacht club and an indoor multi-purpose sport facility with a 5.3 kilometes of bicycle and jogging trails. Meanwhile outdoors, you’ll find tennis, football, basketball, volleyball, a baseball batting cage, lacrosse, and hockey facilities.

City beach

There’s even plans for a beach in the heart of the city. The 300m long beach will offer visitors swimming, paddle boats, sea kayaking, beach volleyball as well as direct access to a new waterpark.

“This development is a forward thinking, interactive enterprise geared towards the Dubai of tomorrow. The encouragement and support we have received in the past from our trusted partners will now help the Meydan One development come to life. The first phase will be completed as Dubai prepares to host the World Expo 2020,” said Saeed Humaid Al Tayer, Meydan’s Chairman.

7 Sep 2016
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