A year of maturity for the realty sector

Year 2009 was a year of "price correction" for Dubai's realty market, transforming it into a matured and favourable one for end-users.

The Land Department and Real Estate Regulatory Agency (Rera) were on the forefront to implement various laws, which were previously announced in 2008, in letter and spirit, curbing speculation.

The year started with the announcement of the first residential and commercial rental price index decree, which was aimed at curbing the increase in property prices within the emirate to maintain a balance between the interests of both landlords and tenants and to ensure stability of the real estate sector.

Real estate companies felt the impact of the global financial crisis across the Gulf Co-operation Council, as many faced funding and liquidity problems. This resulted in a number of publicly listed and private developers announcing restructuring of their plans and portfolio, primarily focusing on completion of their under-construction projects.

On February 17, Rera issued a directive to clarify its decision to freeze service charges at the 2008 rate. The freeze applies across the board unless 2009 service fees are lower than before or the current year's budget is approved.

In April, Mohammad Khalifa Ahmed bin Hammad, Director of the Real Estate Relationship Regulating Department, Rera, told this newspaper that developers had begun to submit their budgets for maintenance fees and service charges on their properties to the agency for approval.

In May, Lt-General Sheikh Saif bin Zayed Al Nahyan, Deputy Prime Minister and Minister of Interior, announced that owners of properties in the UAE could enter the country and stay for up to six months as per an entry permit (a multi-visit entry visa). Earlier, developers were assuring a residency visa with every property purchased in Dubai and Ajman. The new announcement introduced a number of clauses that had to be fulfilled in order to get a six-month renewal visa.

In June came the big announcement. Emaar Properties and Dubai Holdings announced that they were in advanced discussions on their plans to consolidate real estate businesses of Emaar, Dubai Properties, Sama Dubai and Tatweer. But in December, Emaar called off its proposed merger with Dubai Holding subsidiaries.

The first six months saw a persistent price and rent decline, but Colliers International and HC Securities released their reports in November that revealed positive indications of a recovery. Colliers said house prices in Dubai rose seven per cent in the third quarter, with average cost of under construction properties increasing 14 per cent during the same period. HC Securities said property market was showing initial signs of a turnaround with prices rebounding by nine per cent after bottoming out in April. Here are some of the major events on a monthly basis:

January 

- Decree No1 for 2009, governing rentals in Dubai was issued by His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE, in his capacity as the Ruler of Dubai.

The decree, which applies to both residential and non-residential properties, prevents increases in rents during 2009 for tenants who are renewing rental contracts signed in 2008 – as long as the rent value in 2008 was equal to or less by a maximum of 25 per cent than the average rents in the index of Rera.

- Emaar Properties announces plans to raise up to $2 billion by selling Islamic bonds. A prospectus for setting up a $2 billion trust certificate programme by a unit of Emaar was approved by the UK Listing Authority.

February

- Rera issued a directive to clarify the freeze on service charges at the 2008 rate. This directive and the freeze on charges apply across the board unless the 2009 service fees are lower or the current year's budget is approved by the agency.

- Deyaar said it will hand over seven projects in 2009, including more than 1,300 units from across its diverse project portfolio. The projects scheduled for delivery this year include The Citadel, a commercial tower, and Hamilton Residency, a residential tower, both of which are located at Business Bay. Madison Residency, a 27-storey residential project located at Tecom, is also scheduled for delivery in 2009. The other residential projects to be handed over this year are the Coral Residence, Jade Residence, Sapphire Residence, and Ruby Residence, all located at Dubai Silicon Oasis.

- Rera announced an online scheme, which will provide property buyers full information on the construction updates of their homes, whether it is on schedule, delayed or has been cancelled. The online report will be published with photographic evidence of building work and details of the stage reached and pending works.

March

- Dubai's Department of Finance director-general said the government would provide help to local real estate firms that have been affected by a decline in the construction, investment and acquisition of properties.

April

- Marwan Al Naqi, General Manager of Jumeirah Village, said about 8,196 units in the development are expected to be delivered by the end of the year. The total number of units Nakheel will hand over this year is 2,186, consisting of 576 one-bedroom townhouses, 362 two-bedroom townhouses and 1,248 two-bedroom villas. In addition to this, 6,000 units from third-party developers will come onto the market by the end of 2009.

- Omniyat Holdings said the CEO of its property group, Peter Walichnowski, will step down at the end of his contract on June 1.

- Emaar Properties issued a statement denying that any of its projects were on hold. A company spokesperson said "all the developments are progressing and in line with Emaar's strategy to complete all commenced projects".

- Markus Giebel, CEO of Deyaar, said the real estate developer will launch a series of funds of up to Dh1bn ($272.3m) to buy distressed debt, including its own.

May

- Owners of properties in the UAE can enter the country and stay for up to six months as per an entry permit (a multi-visit entry visa), a new resolution issued by Lt-General Sheikh Saif bin Zayed Al Nahyan, Deputy Prime Minister and Minister of Interior. The multi-entry permit can be renewed according to a set of specific requirements and conditions. Renewals will cost Dh2,000.

- Rera and Ajman Real Estate Regulatory Agency signed a co-operation agreement to create a unified strategy to develop the property sector. The agreement emphasises the need to create a unified strategy to develop, modernise and organise real estate-related activities including developers, real estate brokers and property management companies as well as the workforce of such companies.

- Nakheel confirmed it is receiving funds from the Dubai Government that are aimed at supporting state-linked firms suffering from the financial crisis. "The actual figure is confidential and so are all the other details, but yes Nakheel is receiving funds," Chris O'Donnell, CEO, told Emirates Business.

- Rera plans to expand throughout the Middle East and North Africa and become an international real estate reference point, known as Menares (Middle East and North Africa Real Estate Society). 

- The UAE real estate market is starting to bottom out, with agreed prices for property transactions rising four per cent and five per cent month on month in April and May 2009, according to HSBC. April and May show a range of positive indicators: agreed property sale prices are rising, volumes are holding up well, and banks have loosened their lending criteria.

June

- Abu Dhabi-based developer Sorouh and Tameer Holding Investment signed an agreement to dissolve two real estate joint ventures. The companies agreed to end the joint ventures on Shams Abu Dhabi and Al Reem Island, Sorouh said in a statement.

- A new report by Standard Chartered said Dubai's property market is beginning to stabilise as mortgages become easier to obtain. "The end of the freefall is encouraging," Philippe Dauba- Pantanacce, a senior economist at Standard Chartered, said in a report.

- Union Properties has announced that its chief executive officer for 23 years, Simon Azzam, has resigned.

- Dubai World said it has consolidated the real estate functions of a number of entities. Nakheel going forward will manage the real estate development and property management activities of Dubai Maritime City, Leisurecorp, and Dubai Multi-Commodities Centre.

- Al Mazaya Holding has decided not to proceed with a plan to purchase the shares it doesn't already own in First Dubai Real Estate Development. The company has said in a statement it would have gained "only marginal benefit" from purchasing a 33 per cent stake in First Dubai.

- Emaar Properties and Dubai Holdings have announced advanced discussions on their plans to consolidate real estate businesses of Emaar, Dubai Properties, Sama Dubai and Tatweer. According to a press statement, the companies are assisted by financial advisers Royal Bank of Scotland and Merrill Lynch International in finalising a thorough assessment of the merits of the proposed consolidation.

August

- Emcredit, UAE's first government-backed credit information services company, has announced that Dubai real estate firms Landmark Properties and New England International Real Estate have signed up to integrate Emcredit's cheque-reporting solution, emBounce into their business processes. 

- According to a JP Morgan report, a surplus of 31,000 residential units could be recorded in Dubai mainly due to the decline in the expatriate population, while the shortage of units in Abu Dhabi will rise to 28,000 by year-end.

"In the short term, we expect the non-residential sector in the UAE to remain under pressure given the global financial crisis. However, the historical shortage of both retail and commercial space in Abu Dhabi has kept falls in leasing rates well below Dubai," the bank said.

- According to Jones Lang LaSalle, the decline in Dubai home prices has slowed in the second quarter; an indication the market is showing "signs of stabilisation". Prices dropped six per cent in the second quarter from the first, slowing from a 25 per cent drop in the preceding three months, the firm has said. 

- Dubai Holding has said it is realigning its organisational structure to streamline its operations and ensure the continued delivery of projects. The firm is reorganising its businesses into Property, Business Parks, Hospitality and Investments verticals to "deliver significant efficiencies as the group prepares for the economic upturn", the company said in a statement.

- Nakheel reportedly agreed to sell all of its 172 million shares in Australian real estate company Mirvac Group for A$206.4 million (Dh670m). According to a Bloomberg report, Deutsche Bank has managed the sale of the stock at A$1.20 a share.

September

- Damac Properties announced its CEO, Peter Riddoch, will be stepping down next month after seven years as head of the organisation. 

- The 124th floor of Burj Dubai, the world's tallest building, will offer visitors a 360-degree glass observation deck and an open-air balcony. Customers will travel 65 metres along a travelator from Dubai Mall to the Burj Dubai, in which they will learn about the history of the city and of the project. 

- Rera launched a new four-tiered, colour-coded classification system for real estate broker licences. Under the system brokers will be registered with one of the four types of licences that will authorise them to sell a particular type of property within a specified area.

October 

- Mahmoud El Burai, Director, Development, Rera, confirmed that the regulating body is to issue a price index that focuses on the value of properties across the emirate. The index would be run along the same principles as Rera's rental index, which is currently available on the agency's website, and would be updated quarterly.

November 

- The Land Department of Dubai has announced a new initiative to bring in "pro bono" legal services, free of charge, to support the public in real estate-related court cases. The move follows meetings with representatives of major law firms in the emirate.

December

- Emaar Properties said it would not merge with Dubai Holding's property units. "The board of Emaar Properties said that studies showed the lack of economic feasibility of the merger project," according to a statement sent from the Ruler's Office.

- Kleindienst Group, an Austrian property developer, launched its Dh3.1 billion project on The World, the group of 300 artificial islands 4km off Dubai's shoreline. The company has bought six islands comprising Germany, Switzerland, Austria, the Netherlands, St Petersburg and Sweden and will market them as The Heart of Europe, the company's Chief Executive Officer Josef Kleindienst said. 

- Rera warned brokers against failing to comply with rules requiring them to seek approval before running any form of direct marketing campaign. The move aims at curbing unlicensed brokers sending unsolicited and often inaccurate SMS sales messages to the public.

 

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