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Renan Bourdeau, Managing Director
Price war is good news for buyers
After a long period of time when all we seem to have heard in the media is bad news about the global economy it seems that, in the UAE at least, things are starting to look brighter for investors and property hunters.
In my role as the managing director and partner of the leading property portal in the UAE, I speak regularly with brokers and financial experts in the country who give their insights into market changes and the latest outlooks — and the mood now seems to be upbeat.
Indeed, here at propertyfinder.ae we have observed a definite increase in enquiries which would logically translate into more transactions. And with a price increase in certain residential areas, the market appears to be back on track.
Financial reports show that the liquidity that left Dubai in the collapse of 2008 and 2009 is returning very quickly — massively helped along by a combination of Arab Spring money in search of a safe haven and record high oil revenues. In fact, experts report around $60 billion have come to the UAE since the uprisings began. The exodus of money, citizens and tourists from the nations affected by the Arab Spring protests has been enormous — and of course, Dubai is a popular destination for wealthy people who want to safeguard their cash in a secure country.
The property market was on a downward slide, hit bottom and now has started rising back up and lenders are keen to make the most of this swing — which is good news for buyers. Lots of players have moved into the market place with 19 active lenders out there, so a price war is brewing and rates are coming down.
We have seen interest rates as low as four per cent, but the typical low rate is around five per cent.
In terms of down payment the average appears to be 20 per cent, but in certain cases this is also lower with some lenders offering 10 per cent.
So, the view on all sides is that the curve has definitely turned and now is a good time to buy.
Sam Wani, the general manager of Independent Finance, says that there is no doubt there has been a revival of the mortgage market due to this influx of liquidity. However, he does issue a caution for would-be buyers that although lenders are more flexible generally this time around, underwriters are standing firm on most pre-approval criteria.
However, the salary requirement for getting a mortgage has reduced from Dh25,000 to Dh15,000 for many banks — which is a step in the right direction.
One other positive piece of news is the start of non-resident mortgages, which means that non-resident investors can now raise loan-to-values of up to 70 per cent with rates ranging between 6.5 and eight per cent.
These days it is not necessarily more expensive to buy than rent. A buyer I heard about this week was purchasing a three-bedroom property in JBR in the Marina for Dh2.5 million. He was given a rate of 4.99 per cent with a down payment of 20 per cent — leaving his monthly installment at Dh11,600. His rent for the same property would be in the region of Dh10,000 to Dh15,000.
Just two years ago interest rates were somewhere between eight and 10 per cent and now they are at around five per cent, meaning they have almost halved — which has to be a reason to be cheerful.
We are gradually returning to a situation where you don’t have to be a cash buyer to purchase property in the UAE. Rates are low and lenders are willing to assist, although we do still need banks to be more flexible in the application process and with lending criteria — which is not to say we want to return to the unrestrained environment of 2007.
I believe that second time round, if lessons have been learned, the outlook should be rosy for us all.
(Link to published article below)
A number of key UAE developers recently announced their Q1 2012 results and they paint a much healthier picture than we’ve seen in the past. Some of the key stories are below…
Emaar posts 44% rise in Q1 profit
Dubai’s Emaar Properties, builder of the world’s tallest tower, reported a 44 percent rise in first-quarter net operating profit on Saturday on increased property sales in Dubai and strong revenue from shopping malls business.
The UAE’s largest developer by market value made a net operating profit of AED606m ($165m), compared to AED421m during the same period last year, it said in an emailed statement.
Arabianbusiness.com: Dubai’s Emaar posts 44% rise in Q1 profit
Aldar builds profits with Government support
Aldar has reported a 150 per cent increase in net profit during the first quarter, as government rescue packages worth almost $10 billion continue to prop up the developer.
Abu Dhabi’s flagship property firm reported a net profit of Dh478.2 million in the first three months of this year, up 153 per cent on the same period in 2011, when it made Dh189.1 million.
Sales stood at Dh3.59 billion for the quarter, up from Dh784.7 million during the same period in 2011.
The National: Abu Dhabi’s Aldar builds profits with Government support
Sorouh makes it a profits hat-trick
Sorouh Real Estate, the Abu Dhabi developer weighing a $15 billion merger with Aldar, has capped a quarter of rising profits for the country’s big three property groups.
First-quarter profit rose 30 per cent to Dh83.59 million compared to a year earlier, Abu Dhabi’s second-largest property company said in a stock exchange filing today.
“The current flight to quality with Abu Dhabi real estate leaves us well positioned to deliver an exciting pipeline of some 7,000 units between now and the end of 2013,” said Sorouh managing director, Abubaker Seddiq Al Khouri.
The National: Sorouh makes it a hat-trick of profits for UAE developers
Deyaar Q1 net profit drops 64%
Struggling Dubai developer Deyaar posted a 64 percent drop in its first-quarter net profit and said it plans to deliver three long-pending projects by the end of this year.
Deyaar made a net profit of AED9.4m (US$2.56m) during the first-quarter, compared with AED26.3m in the prior-year period.
Dubai’s second-largest property developer by market value said its gross revenues reached AED150m in the quarter and its total assets were valued at AED6.7bn.
Arabianbusiness.com: Dubai’s Deyaar Q1 net profit drops 64%
propertyfinder.ae would like to congratulate Nikki Summers from Brix Property Partners on being named CEO of the Month for May 2012.
Each month we will be interviewing a different CEO to find out their views, projections and personal feelings about Dubai real estate market, their business and life as a whole in this fast paced city.
Question: Brix Property Partners is a highly successful company in the Dubai real estate industry. Can you tell me a bit more about yourself and the company, when you arrived in Dubai and how you started the business?
Answer: I arrived here in Dubai in 2001. I managed Brix since 2009 and in 2011 the CEO decided to pursue a different venture which is when I bought the company.
Question: How many people do you employ?
Answer: Currently eight but will be ten by the end of April.
Question: How long have you been in the market?
Answer: I left school at 17 and started working in real estate straight away – firstly in Australia and then I moved to Dubai in 1998 but there wasn’t much happening here then! I went back to Australia after nine months and then finally settled back here in 2001.
Question: Why did you choose Dubai for real estate?
Answer: It chose me! My family were here from when I was a child, real estate was what I had done for my whole life and so it was a natural progression.
Question: What one deal will you always remember?
Answer: Land sales during the boom through Dubai holding. 100’s of millions of Dirhams were being thrown around by mainly Brits, Russians and Iranians throughout 2007 and agents made a lot of money from this. Of course residency was included with purchasing a property which made the attraction even crazier!
Question: Where do you live and what do you like about the area?
Answer: I have just moved from Barsha to Tecom as it has a huge terrace for my dogs. It’s very near the office and working close to home is very important to me. The area is great as all the shops and hotels are finished and everything is really convenient. It’s a great central area to everything in Dubai.
Question: What type of services do you propose on top of the typical real estate services e.g. relocation services, interior design etc?
Answer: We work alongside both relocation services and interior design companies who we will recommend to landlords. We are currently in the process of setting up Brix maintenance which will be responsible for upgrading villas, repainting, gardening, plumming, electrical and so on. It will be there as an added benefit to the landlord. Brix International is under way as well – very excited!
Question: 2008 saw a massive downturn in the real estate market, you made it! How did you make it through the financial turmoil?
Answer: At the time I was working for the government; Sama Dubai. They closed down shortly into the crunch and I returned to brokerage. I was lucky as I did a couple of big deals early on before it got really bad and then I didn’t work for 6 months through the major part of the crisis. Thankfully those initial deals I made carried me through.
Question: What key areas have you seen significant changes in since you have worked in real estate in Dubai?
Answer: We now have a very mature and established real estate market on a par with Great Britain and Australia. Regulations have finally been imposed and this has really affected the market in a positive way.
Question: Where in Dubai do you think prices are going to rise?
Answer: I’ve seen a 15% price rise on the Palm and the Marina. We sold 5 properties alone on the Palm last week all due to supply and demand. This is only the case for certain parts of these areas though. On the Palm, due to the Nakheel issue, the shoreline apartments in less demand. At the moment you will struggle to find a Garden Home available for rent on the Palm.
Question: Where in Dubai do you think prices are going to decrease?
Answer: Discovery Gardens and international City – the less desirable areas to reside for all. Discovery Gardens also experiences huge traffic problems which makes a big issue when trying to rent or sell properties there.
Question: Which community do you think will provide the best
value for money for investors this year?
Answer: Jumeirah Park. There is a lot of activity there now that Nakheel is issuing No Objection Certificates. Prices have increased, even though half of it is still under construction, but to invest now you should see good returns in 2 to 3 years once complete.
Question: 25-30,000 new properties are expected to come on to the market in 2012. Do you think this will have an effect on price?
Answer: It really depends where they are. 3 or 4 new towers come online in the Marina and there is no effect. It totally depends on whether the area is a hot spot. They have just announced a bundle of town houses on the Palm which I don’t see affecting price. When and where are definitely the two main factors.
Question: What are the most important factors to you when selling a property?
Answer: Qualifying a client properly. Listening to their needs and understanding them. Not selling them something just to make a sale.
Question: What is your favourite restaurant in Dubai?
Answer: Trader Vics Madinat. They have the best Shredded Duck Pancakes.
Question: Where do you spend your weekends?
Answer: At the beach, friend’s houses, not out as much as I used to be
Question: Where do you first take your guests when they visit Dubai?
Answer: Madinat, Barasti and Burj Al Arab. It depends on how new they are but those three are great places to take guests. They love it.
Question: What is your favourite project in Dubai?
Answer: The Burj Khalifa is so iconic. It has really put Dubai on the map. Even through the huge ups and downs of the real estate market it is complete and successful.
Question: If money were no object, where would you live in Dubai?
Answer: Emirates Hills. It is so peaceful and you can’t feel the craziness of Dubai there. It’s a great place to escape and is so private and quiet.
Question: Which of the unfinished or proposed projects would you most like to see completed?
Answer: I would love to see Jumeirah Park up and finished properly. Also Sports City will be amazing when huge sports are being held there and all the apartments are finished around that area.
Question: When you leave Dubai, where will you go?
Answer: Eventually back to Australia, with a few stops on the way back there. I would love to live anywhere in the States, especially Miami but who knows!
Question: Who is your business icon?
Answer: Tim Boswell from Ocean View would be my icon. He is a great friend and I have really looked up to him over the years. He’s hugely successful and one of the first guys to kick off free hold brokerages in Dubai.
Question: If you could do anything to improve the real estate market in Dubai, what would it be?
Answer: Educating agents on how to be more ethical as one bad guy affects the whole industry’s reputation. The RERA course doesn’t teach you how to be an agent. There should be a training course in sales and customer services that is compulsory before entering the real estate market as an agent. We are constantly justifying ourselves for other peoples mistakes.
Question: What achievement are you most proud of in your life?
Answer: Buying this company! I am very proud of that.
Question: What is the most relevant piece of advice that you have picked up along the way?
Answer: I am a strong believer of karma. Treat others the way you want to be treated. In this industry bad news travels 10 x faster. Look after your clients and look after your staff.
Question: What are your projections for the year ahead?
Answer: I have seen a massive increase in sales enquiries in the last 2 months. We have more sales on our board currently than rentals. I predict a lot more sales happening in 2012. Occupancy in rentals are so high that it is difficult to find people properties that they are looking for. There are no 2 beds available to rent in the Marina at the moment.
propertyfinder.ae hosted their second networking event of the year in Abu Dhabi this week at the Fairmont Bab Al Bahr. The event, sponsored by Abu Dhabi Finance was a huge success, pulling in over 100 of the top real estate companies and developers in Abu Dhabi.
At the event, winners were announced for the propertyfinder.ae Q1 Abu Dhabi Real Estate Awards. The winners are;
Best Marketing Campaign: TDIC
Best Newcomer: Eastern Sands Real Estate
Best Property Portfolio: Property Shop Investment
Overall Best Broker: Asteco Abu Dhabi
Congratulations to all the winners and thank you to everyone who come to the event.
Were planning to through at least two more events before the end of the summer so we look forward to seeing you all soon.
One third of Dubai residents are currently not being charged a housing fee amid continued delays in a campaign aimed at tightening the net on those not yet being billed, an ArabianBusiness.com poll has revealed.
Up to 32 percent of residents said they are still not being charged the mandatory fee, compared to 23 percent who have been paying for the last five years or more.
The speed at which the housing fee scheme, which was introduced in 2005, has been rolled out has drawn criticism from many expats, who complain the way the charge has been applied is unfair.
The emirate’s government said in May 2010 it planned to charge all residents by January 1, 2011 but the authorities last week said they had been forced to push back plans to charge all expats the fee by June following delays in discussions with the emirate’s utilities provider DEWA.
Are you paying the fee yet? What’s your experience been of the process so far? Leave your comments below…
Arabianbusiness.com: 1 in 3 Dubai residents not charged housing fee
