The degree of passion in Dubai's real estate market, which should be understood as the fast pace of price growth and activity of developers, has declined markedly in the last two quarters of the year. And this means that the new wave of the "gold" rush in real estate, which so worried experts, was asleep, leaving the real estate market in a relatively healthy and promising state.
Ups and downs
If the main news of the whole previous year and the beginning of the current year was the numbers of analysts announcing vyingly announcing a new sky-high spiral in prices on the real estate market in Dubai, today it is already possible to observe that all warnings of authoritative world organizations about the danger of overheating of the market and the emergence of a new “financial bubble” are not were in vain, and the measures taken by the government of Dubai in response to these warnings were very effective. Already in the first of the autumn reports of international consulting agencies, the annual report on the state of the real estate market "UAE Real Estate 2014" from Cluttons, one could say that a consistent and, apparently, long-term slowdown in price growth both in the sales segment and in the rental segment. Statistics on the Dubai real estate market indicate that housing rental prices most significantly slowed down their growth in the segment of expensive real estate, primarily due to lower demand. And in the UAE capital, Abu Dhabi, a decline in rental growth rates will soon equalize local prices with Dubai, Cluttons experts warn.
Other companies are echoing Cluttons' analysts. The agency Colliers International in its last September report on real estate prices in the UAE indicates that the growth in property prices in Dubai in the second quarter of the year fell by almost half compared to the previous quarter and amounted to only 3%. The report says that such a stabilization of the situation with prices on the real estate market in Dubai had three main reasons: firstly, this is an increase in the cost of rent, and secondly, in fact, a sound policy of the emirate’s regulatory authorities, in particular, the introduction of restrictions on the size of loans , and thirdly, doubling the registration fee for the sale of housing. Now the growth in demand is constrained by the size of the loan, limited by the order of the Central Bank of the UAE to 75% of the value of real estate for expatriates and up to 80% for citizens of the UAE, as well as an increased percentage of registration fee for the sale of real estate, which increased from 2% to 4%.
On the other hand, Dubai is still the undisputed world leader in terms of annual price growth for the fifth quarter in a row. However, according to all the same reputable agencies, this situation is unlikely to persist for a long time. Of course, the emirate has taken a good start, and now it will be difficult for other emerging markets to catch up with it in terms of price growth, but the good news is that this high indicator has at least stopped its dangerous rapid growth quarterly. Another analytical agency Knight Frank notes that the Global House Price Index for Dubai in the third quarter of the year dropped to 24% from 27.7% according to the data at the time the previous index was compiled in March, but still remains the most high among 53 countries presented in the report. Also, according to Knight Frank, for the period of six months from the fourth quarter of 2013 to the second quarter of 2014, housing prices in Dubai increased by 7.4%, and for the period of the last three months, from the first to the second quarter of this year - by 3, 9%. The middle-class housing segment in Dubai, however, as in other emirates, is developing most actively, outstripping the luxury elite real estate segment in terms of price growth. This is largely due to the restriction on the size of the loan, according to which buyers who want to purchase housing worth up to US $ 1.5 million have more freedom in obtaining mortgages. Knight Frank experts predict that housing prices in the middle price segment and beyond over the next 12-18 months, will continue to grow faster than anyone. In general, in the world on the real estate markets there is a slight upward trend in prices: an increase in the cost of housing was recorded in 40 of the 53 countries considered in the report. However, the difference in the rate of price growth between the upper and lower positions of the rating from Knight Frank remains the same, on average 30-35%.
The boom of new projects
However, despite the slowdown in property prices in the UAE as a whole, the activity of local and foreign developers has only intensified since the beginning of autumn. This was greatly facilitated by the Cityscape Global 2014, the largest international real estate exhibition held in Dubai in September, which brought together almost 50 thousand visitors and participants from different countries in its pavilions. It is not surprising, however, that before and after the three-day event both in Dubai itself and in the UAE as a whole, there was some lull in the launch of new projects.
But on the other hand, the exhibition itself more than compensated for the subsequent market calm: during the three days of the event, 27 new real estate projects were announced for a record amount of US $ 10.8 billion. Among the most active and prominent participants of Cityscape Global, such companies as Meraas, Dubai Holding, Emaar, Union Properties, Damac and Meydan Group. According to the organizer of the Informa exhibition, the total number of visitors this year was 42% higher than last year, so at the next event next year, it is planned to increase the area of exhibition halls by 25%, which this year placed 208 exhibitors' stands.
In general, if we talk about the activity of both developers and buyers in the real estate market, it is worth noting that neither of them is going to stop, and there are good reasons for this. The more real estate will be built in the UAE, the less pressure there will be on the existing fund, and the more affordable prices will be, especially if developers concentrate their activities in the segment of mid-priced housing, which is already making serious progress. According to the Dubai Land Department today, over the past six months, the Dubai Real Estate Fund has replenished with 42 new projects from leading developers, including 17 major projects for the construction of villas and townhouses. Upon completion of their implementation, 11,250 new housing units will appear on the market, of which 3,041 will be villas in 17 real estate projects, and 8,209 objects will be apartments in the remaining 25 projects. According to most experts, the region’s strong economic position, improving investor expectations regarding further market development, as well as the expectation of the EXPO2020 World Exhibition in Dubai will become the main determining factors for pricing, demand for real estate in the UAE, as well as for the activity of developers and increase the number of new projects coming soon. And for the growing confidence of investors today there are all the necessary reasons. Growth in the volume of investments The Government and governing bodies of Dubai do not get tired to improve and hone the instruments of management and regulation of the real estate market, so that the appetites of investors grow in proportion to their interest. Investor confidence is expected to be significantly enhanced by a new law called Tanweer, which will be the first of its kind not only in Dubai, but also in world practice. It will provide real estate investors with the opportunity to get back 100% of their investments if the developer fails to complete the construction of the real estate project on time.
Also, the investor will be able to sue and demand compensation for his investments if the developer intentionally misleads the investor or changes the nuances of the project without prior approval from the investor and regulatory authorities. Any new actions of the developer or broker that lead to violation of the guarantee obligations by him, as well as violation of any clauses of the contract between the seller or broker and the buyer or investor, as well as misleading the investor regarding the appearance of the object, can also be a reason for legal proceedings under the new law. real estate and its properties. However, all of the above violations will still need to be proved with the help of an expert assessment, the Department notes.
In addition, the Dubai Real Estate Market Regulatory Agency (RERA) will also take on brokerage agencies - the main methods for monitoring the activities of such organizations will be slightly changed in the direction of tightening. Market stabilization measures, combined with other important factors, have not slowed down on the growth in investment in the UAE economy, which this year was not just impressive, but without exaggeration, stunning. The growth of investments in the economy of Dubai for the year amounted to 2174.3%, while other leading cities of the world, included in the ranking of the most popular cities for investors from the C&W analytical bureau, can boast only double-digit growth in investment over the year. Thanks to this indicator, Dubai was able to rise in this list immediately from the 186th position to 39th place.
Attractions and rides
The interest of investors is all the more great because, in addition to favorable conditions in the UAE as a whole and in Dubai in particular, there are plenty of things that are really worth investing in when it comes to the real estate sector. Dubai today can be safely called one of the champions in terms of the amount of what is commonly called the attraction word, that is, objects that are especially attractive not only to tourists, but also to investors. The pavilions of the aforementioned Cityscape Global exhibition turned out to be especially rich in this fall season. Most of these construction projects have not yet started pending permits. However, now you can highlight, for example, the new, second in a row 46-story legendary Royal Atlantis hotel on The Palm Jumeirah, which will become the second largest hotel on the island after Atlantis The Palm itself. The construction of this "attraction" will cost Dubai Investment Corporation (ICD) US $ 1.4 billion. As for the attractions, they will be surprised at Dubai Parks & Resorts, whose cost in total is about US $ 10 billion. This entertainment complex, located in the Jebel Ali area, there will be three theme parks: Motiongate Dubai, Bollywood Parks Dubai and Legoland Dubai. And if all miracles and world records cannot attract new residents and investors here, then perhaps they will be convinced by a Savills report called the World Research Report, which indicates that today life in Dubai has become 16% cheaper than in the pre-crisis 2008 . Thus, we can say that now is the time to become a resident of the "city of the future" in order to be able to personally witness all of his further amazing transformations.
You can get any additional information about the acquisition and management of your property in Dubai from the specialists of IMEX Real Estate by tel. in Moscow +7 495 5100008, toll-free number in the UAE 800-IMEX (800-4639) or by sending a request by e-mail [email protected]
