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Emaar retains title of top developer in Gulf
Ratings of developers in the Gulf region fell on average by between five and 10 percent during the 2009 downturn, FutureBrand's Gulf Real Estate Study said on Tuesday.
Compared to the figures for 2008, the average grade for developers fell from a B to a C+/B-, the report noted.
The image of developers across the region was judged in 19 categories from the quality of construction to its financial standing, from pricing to environmental issues.
Emaar Properties was ranked first in 18 out of 19 categories, and joint first alongside Aldar Properties in the customer service response category.
On the key area of pricing for units, Emaar received four points out of a possible five to head Dubai Properties (3.8), Saudi's Dar Al Arkan, Qatar's Barwa and Nakheel (all 3.7).
On value for money, Emaar topped with 4.1 points, followed by Aldar and Dar Al Arkan (4), and Nakheel and Damac (3.8).
On the issue of customer service, Aldar tied with Emaar at the top, scoring 4.2 points, followed by Dar Al Arkan and Nakheel (3.8) and Damac (3.7).
The FutureBrand report said: "Perhaps not surprising, given the downturn-fuelled events of 2009, ratings of developers across measures have declined, typically by 5-10 percent."
It said the headline stories of 2009, which were reflected by the research, were the continued decline of the Nakheel brand, the dramatic fall of Damac's brand and the rise of non-Dubai developer brands including Aldar, Dar Al Arkan and Barwa.
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Buyers still keen on Gulf homes despite risks
Two-thirds of would-be home buyers see value in the Gulf real estate market and intend to purchase property in the region in the future despite being more aware of the risks involved, according to a new study released on Tuesday.
Despite growing concerns about trust among investors following the impact of the global economic crisis, the FutureBrand Gulf Real Estate Study offers some hope for regional developers.
According to the research, respondents - all of whom were recent or prospective home purchasers in Saudi Arabia, Qatar and the UAE - said they were 70 percent more likely to see value in investing right now than they were to feel less likely to buy in the region ever again.
Sixty-nine percent of people said they believed that the region's property prices, which have fallen by more than 50 percent in some parts of Dubai in the past year, offered good value for money.
Sixty-three percent said they were likely to invest in real estate in the Gulf while only 15 percent said they were unlikely to do so. Similarly, only 16 percent of respondents said they didn't believe the Gulf offered good value homes at the moment.
The confidence shown in the region's real estate market came despite the FutureBrand research showing that the principal impact of the global downturn was a lack of trust home buyers have in developers.
"Heightened awareness of risk, the potential for monetary loss, loopholes and corruption all speak to a weakening of homebuyer confidence," the report said.
"Perhaps most interesting is that this new wariness does not seem to affect homebuyer attitudes towards purchase," it added.
Nearly 57 percent of respondents said they were more aware of risk now, following the real estate downturn in 2009.
Almost 50 percent said they were now more aware of loopholes and corruption while about 53 percent of people said they believed property prices would decline further.
A further 38.6 percent of respondents said they had less trust in the developers to deliver what they promise.
Trust seen as major real estate factor in 2010
Trust will be a key focus in the Gulf region's real estate market in 2010 as developers aim to restore confidence among investors.
The FutureBrand Gulf Real Estate Study, released on Tuesday, said that the reputation of some high profile developers had been hit hard amid the global downturn.
Nakheel, the developer of The Palm and The World, continued to decline as a brand, the report said.
While it is still the second most recognised developer in the Gulf region, it has fallen to seventh in both reputation and developer preference, FutureBrand added.
Damac Properties, described in the report as the ultimate challenger brand in the region, rose dramatically over the past few years, the report said, but 2009 saw its brand take a hit.
Tied in 2008 as the second most recognisable real estate brand in the Gulf, the company has fallen to seventh in the 2009 rankings.
In 2008, Damac was second in both overall rating rating and developer preference but it fell to ninth out of nine for the two measures in 2009, FutureBrand added.
Emaar Properties remained the top developer brand in the Gulf although its lead over its rivals dropped compared to 2008.
In 2009, it still led the way for developer recognition, reputation and preference.
In fact, out of more than 20 categories ranking local developers, Emaar was only beaten in one.
The study also ranked developers on future prospects and asked respondents to say which company they saw faring best in the current economic slowdown.
Emaar again came out on top, taking 50 percent of the vote, with Aldar (10 percent) and Nakheel (7 percent) completed the top three. However Nakheel also featured in third place when people were asked which developers would fare the worst.
Jae Hwang, executive director at FutureBrand in Dubai, said: "Trust is going to be the main focus this year and beyond. After a series of delays, cancellations and poorly communicated messages, developers are going to have to overcome and manage a large degree of skepticism.
"They will have to focus on aligning their promises with their offerings and measurable results.
"Companies who can best protect and leverage their brand during these challenging times will be those best positioned to capitalise on an upturn."
Tiger Woods' Dubai project to be completed
The Tiger Woods Dubai golf course and luxury-home complex, which has been delayed by the emirate's property slump, will be completed as planned, Bloomberg has reported. 'We haven't decided yet on a date for its completion or delivery to the market, but the project is ongoing,' Dubai Properties Group Chief Executive Officer Khalid Al Malik told the news service. Work on the course, designed by Woods and originally due to be finished by September 2009, has gotten as far as the eighth hole, he said. Plans for the 55 million-square-foot Tiger Woods Dubai include 287 luxury villas and mansions, a boutique hotel and a clubhouse. 'Part of the project is sold and the other part will go to the market once it's completed because we believe it's better to do it then,' Al Malik said. 'We are moving on with that plan and we are continuing the project without a doubt.'
UAE's Aldar to shift focus to mid-range properties
Abu Dhabi's state-controlled Aldar Properties said on Monday it would rethink future projects as an oil-fuelled property boom slows and would place new emphasis on mid-range properties.
The biggest developer in the United Arab Emirates capital will go ahead with most projects it has already committed to but would shift its focus away from high-end housing for projects still on the drawing board, Sami Asad, chief operating officer, said.
"Most of our projects are going ahead but on other projects we are rethinking whether this serves today's market or not," Asad said at a construction conference organised by MEED.
"We see some change in supply and demand and we still see demand in Abu Dhabi for mid-class housing. This is one of the opportunities we are looking at in the market."
The UAE property sector is going through a sharp price correction that was triggered in the autumn by the global financial crisis, which has dried up credit markets and made banks cautious about extending new mortgage loans.
Research firm Proleads said last week some $582 billion worth of construction projects had been put on hold in the UAE as the government and private investors contend with a global crisis that brought to an end a regional economic boom.
Most selling pressure has focused on properties in the emirate of Dubai, where average residential real estate prices have fallen by at least a quarter, according to some analysts.
Even in Abu Dhabi, where Aldar is leading the government's drive to develop new residential and leisure districts, house prices have fallen an average of 20 percent since a peak last summer, Morgan Stanley said this month.
Aldar's fourth-quarter profit tumbled 85 percent due to lower sales in poor market conditions.
The UAE capital, which holds more than 90 percent of the UAE's oil reserves, allows foreigners to invest in properties at some developments on a long term-lease basis. (Reuters)
Rera to review 27 projects in Dubai
CANCELLATION DECISION BY END OF MAY
By SUZANNE FENTON Staff Reporter
Dubai A total of 27 real esstate projects are up for posssible cancellation in Dubai as the Land department reeview the status of them.
The ultimate decision to cancel will come by the end of this month, said Marwan Bin Galita, chief executive of the Real Estate Regulaatory Authority (Rera).
Bin Galita had said earliier that he expected around 25 per cent of projects in Dubai would be cancelled, a figure he said is now "allmost the same".
"Law No 9 gives Rera the power to cancel. We are studying 27 projects in the committee but no decision has been taken," Bin Galita said during an event to cellebrate the department winnning an award for best cusstomer service satisfaction.
A committee is now studying the feasibility of these 27 projects which are all third party projects, ruling out any chance that master-developed projects could go.
The committee comprisses three people for trust accounts, a legal advisor and a financial advisor.
A project can be canncelled by Rera, the develloper can request a project be cancelled if the invesstors are paid or there are no investors. A project can also be cancelled if enough investors complain.
"I have one project now where 70 per cent say they are not continuing ... They can demand the project be cancelled," Bin Galita said.
Law
Law NO.9 of 2009 came into force recently. It is deesigned to ensure that invesstors who put their money into projects which were subsequently cancelled by Dubai government, would get ftill refunds.
Refulld.s will be based on
.~~ Law No 9 gives Rera the power to _ canceL We are studying 27 projects in the committee but no decision has been taken."
Marwan Bin Galita Chief executive of the Real Estate Regulatory Authority
CLAUSES
REFUNDS
-If the developer has completed 80 per cent of the project, and the buyer defaults, the buyer must forfeit 100 per cent of the money paid.
-If the developer has completed 60 "per cent, and the buyer defaults, the developer may retain 40 per cent of the purchase price.
- But if a developer has completed less than 60 per cent, they may only keep 25 per cent.
- Where the developer has not started construction, the buyer must forfeit 30 per cent of the purchase price.
is at the time of cancellaation.
If the developer has completed 80 per cent complete, and the buyer defaults, the buyer must forfeit 100 per cent of the money paid.
If the developer has commpleted 60 per cent, and the buyer defaults, the develloper may retain 40 per cent of the purchase price.
But if a developer has completed less than 60 per cent, they may only keep 25 per cent.
Where the developer has not started construction, the buyer must forfeit 30 per cent of the purchase price.
And if a project is offiicially cancelled by Rera, the buyer will be refunded all money paid.
, ." However, the retroactive law will not become legally
binding until it is published in Dubai's official gazette.
Many developers have been having a tough year and finding it hard to atttract investors. Investors too, are also feeling the crunch and some are tryying to get out of contracts as cashflow remains a huge issue.
Three new regulations soon to be added to Law NO.9 are designed to make the issue even clearer.
Firstly, the developer will not be able to cancel a conntract without a Land Deepartment letter. Without this, the cancelled contract will have no value in court, Bin Galita stressed.
Safeguards
Secondly, the Land Deepartment must attach with the letter a technical report from the site.
And thirdly, while at the moment, investors wishhing to cancel must do so in court, the Investors Group have expressed a wish to be able to cancel in the Land Department, which is being studied.
Trust accounts are also to be opened for agents to safeguard investments.
"People should not write a cheque to the agent. A cheque should be given to this [new] trust account or to the landlord directly," Bin Galita said.
There are also plans to create a Credit Rating Agency within the Land Department, which will set criteria for both new and existing developers. Each developer will be ranked according to the criteria.
Cirrus launches fund to buy troubled assets
Dubai property company Cirrus Developments is to launch an international fund to buy distressed assets in the wake of the global real estate slump, it announced on Monday.
The fund, which will operate in Dubai, the US and the UK, will target struggling companies together with prime real estate and hospitality assets that have been hit hard by the world economic crisis.
“The fund is to take advantage of the vast opportunities in the respective sectors due to the economic downturn and liquidity crises,” the company said in a statement on Monday.
Cirrus’ CEO Behnam Eshragh added: “We believe that with our in house development expertise and reach in the market we are strategically placed to find, acquire, and manage distressed assets locally and internationally.”
The era of the end user
In January, the value of the Dubai mortgage market was down by 64%, compared to the same time last year. However, the number of actual mortgages only dropped by 4.3%. Shane McGinley reports
At the same time a report by Proleads Global found that 52.8% of construction projects in the UAE, worth US$582bn, have been put on hold. The report also observed that the rate at which projects are progressing has slowed down.
Real estate accounts for 84% of projects in the UAE, therefore the obvious slowdown in the mortgage market is having an immediate impact on the sector's growth.
The effects were felt quickly by the banks and as soon as November last year Lloyds TSB had stopped financing apartments. Later in the year, it reduced the number of staff in its mortgage department by 70%, blaming a decline in demand.
Amlak, the UAE's biggest lender, stopped lending altogether temporarily and Tamweel, its next biggest rival, cut its staff numbers by 57. Tamweel and Amlak are currently in merger talks and a decision is due soon on the outcome.
While the overall value of the mortgage market has slumped, a closer look at the figures show that people are still looking for mortgages and banks are still giving them.
The difference is that speculators looking to borrow millions and billions have disappeared from the market and have been replaced by everyday workers looking to buy a permanent home.
In 2009, this is most evident by the fact that the majority of mortgages granted have been in residentially focused developments such as Al Warqa Third, Emirates Hills Third and Arabian Ranches.
The highest mortgage so far this year, as of February 15th, was granted along Sheikh Zayed Road and was for US$35mn.
The death knoll for Dubai's speculators began in October last year says Ian Albert, regional director of Consultancy Services at Colliers International in Dubai.
Albert says that at the Burj Dubai, where prices are considerably higher than average, properties were becoming too expensive for the average end-user due to the level of speculation taking place.
"We saw banks withdrawing financing at certain levels in October as they were getting nervous at the rate of speculation in that development," says Albert.
In October, Cityscape Dubai saw many landmark projects, such as the 1km tall Nakheel Harbour and Tower, being launched onto the market. While the number of mortgages nearly doubled, jumping from 162 in October 2007 to 318, the monetary value dropped 18% from US$950mn to US$775bn.
By December, the number of mortgages was up again, by 38%, but again the overall value for the month was down by 48%. In February, the trend appears to be going in the same direction as developers, mortgage lenders and agents get used to the new era of the end-user.
Chris Green, director of Independent Finance, confirms their business is down by about 75%.
"There has been a drop, at one stage everyone was looking for a mortgage. Now those who are coming to us are serious buyers, they are typically family people who want to buy a place and live here. The other is the person who has a property and needs to raise some property. If it's not built, often they need to raise capital for the next payment for the developer."
Looking at the top five banks that Independent Finance highlights, it appears that the cost of credit between August 2008 and January 2009 has only risen by 3.58%.
"The most significant thing is that the cost of your mortgage over the period has seen the most significant amount of difference," states Green.
According to Green, if a person applied for a 25-year US$122,512 mortgage in January 2009 it would have been US$9,615 more expensive than the exact same one applied for in August 2008.
"The chances of getting one are much more difficult and the ultimate clients that banks want to see I don't think exist anymore and are few and far between. Every mortgage we work with there is a bit of deviation that needs to be done with the lenders," adds Green.
In January, Emirates NBD, the Middle East's largest bank, raised its minimum monthly salary limit for expatriates by 200% to US$6,806.
A poll by ArabianBusiness.com found that 41.6% of those surveyed believe rising minimum salary levels is dangerous and will contribute to the downturn of the UAE economy. However, somewhat surprisingly, 31.3% describe it as a prudent move.
Of the banks surveyed by Independent Finance, the minimum monthly salary required ranged from US$2,178 to US$5,444. UAE salaried nationals qualified at the lower end of the salary scales.
Colliers International report that 74% of properties mortgaged in Dubai are apartments, 10% are villas and 16% are townhouses. Green says that off-plan properties are virtually impossible to get finance for.
"If it's a completed property then they are very successful and the most successful are people who are buying a place to live in - those ones we walk through with all the time. If it is a non-resident there are few banks that will offer mortgages."
The type of industry the applicant works in is another key factor says Green and he reports that real estate and real estate related sectors, such as interior design and decorating, have been hardest hit.
.
In 2008, Dubai banks lent US$31bn in mortgages to property investors, a year-on-year increase of nearly 100%. In 2009, things have changed and liquidity and the mortgage market are the talk of the property industry.
Official figures from the Dubai Land Department show that in January 2009 the value of mortgages fell by 64% when compared to the same period last year, declining from US$1bn to US$379mn
by Shane McGinley
Deyaar offers 90% financing
Dubai-based Deyaar Development has announced continued partnerships with leading banks to offer financing options exclusively to Deyaar customers, including up to 90% financing and repayment periods of up to 25 years. Deyaar customers, subject to meeting the bank's credit approval requirements, will be able to obtain special financing schemes and favourable repayment terms and quicker approvals, the bank said.
$10b Dubai bond soon to be tapped
Dubai: The first companies seeking to draw on funds from the Dubai Government's Dh36.7 billion ($10 billion) bonds will soon be able to do so - within a week or two, according to Nasser Bin Hassan Al Shaikh, director-general of the Dubai Finance Department.
In February, the Dubai government issued a $20 billion bond, half of which was immediately snapped up by the Central Bank of the United Arab Emirates
.
Although Al Shaikh did not give details of specific companies or sectors which had shown an interest in drawing on the $10 billion the government raised last month from a bond issue, he did say that his department was in talks "with several Dubai-based companies."
The amount that companies will be able to access will depend on negotiations with those companies and an assessment of their needs on a case by case basis, Al Shaikh said.
"We understand that the cash flows of some companies have been affected, and we might need to help companies with working capital," Al Shaikh said, speaking to journalists yesterday.
The cash injection could be in the form of extended loans or through banks.
The downturn afflicting the global economy struck on the region in the last quarter of 2008, and has exposed the vulnerability, though limited, of Dubai's highly leveraged economy to developments worldwide.
The real estate sector has been hard hit in the downturn. It is likely that the first companies to benefit from available funds will be real estate firms.
Al Shaikh said that from a personal perspective, he expected to see more consolidation in sectors, including real estate, in the future.
It is widely believed that this sum should largely cover the emirate's refinancing needs this year, should the need to draw on funds occur.
Estimates vary on how much is due for refinancing this year, but the Economist Intelligence Unit puts the amount at $13 billion.
There is growing concern about the ability of some major Dubai companies to refinance maturities, with many repayments due in April.
The Dubai Electricity and Water Authority (Dewa)Dubai Electricity and Water Authority (Dewa)Dubai Electricity and Water Authority
is due to repay $2.2 billion (Dh8 billion) next month, and the Department of Civil Aviation has a $1 billion maturity also due, but according to Al Shaikh, both companies are confident of being able to finance these maturities independently of government funds.
The Finance Department said it would only negotiate with the larger companies, but added that some funds would be availed to small and medium sized companies through the Department of Economic Development (DED)Department of Economic Development (DED).
$2.2b amount to be repaid by Dewa in April
$20b bond issued in February by Dubai Government
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