Tuesday, May 20, 2014

Sharjah residential and office markets benefitting tremendously from emirate’s expanding economy

Sharjah 20 May 2014: The strong growth of the UAE economy has also been mirrored at an emirate level in Sharjah and this has boosted demand in both the residential and commercial property markets in the emirate, according to international real estate consultancy Cluttons.
The latest Spring 2014 Residential Market Outlook reports released by Cluttons point to rising rents in neighbouring Dubai, an influx of residents from troubled parts of the region as well as renewed economic activity and job creation in Sharjah, which are making the emirate an attractive option for tenants.
Average residential rents climbed by 4.5% during the first quarter of 2014, leaving them 19% higher than this time last year, further building on a 3.4% increase in Q4 2013. Average rents in Al Qassimiya have seen the strongest gains over the past 12 months, with rents now standing 36% up on Q1 2013. Villas on the other hand have registered a 13% rise in rents in the first quarter, which compares to a 25% increase throughout 2013.
According to Steve Morgan, Cluttons Middle East Chief Executive: “The strong growth in villa rates has been catalysed by rising demand for villa communities, particularly along the Sharjah Airport/Maliha Road corridor. This is being fuelled by a rising population, which in turn is being driven by the emirate’s expanding aviation sector, a growing number of international schools and the proximity to Sharjah International Airport. Sharjah International Airport, through the brisk expansion of Air Arabia is starting to extend its sphere of influence on surrounding areas and is emerging as another budding UAE aerotropolis, in much the same way that Al Maktoum International is spurring development in areas south of Jebel Ali.”

“Developers are also keen to capitalise on this strong demand and we are recording a substantial rise in the number of feasibility studies requested for master planned residential communities in this area. Not only does the Maliha Road corridor provide easy access into Dubai, but the mushrooming of these new lifestyle destinations will start to put Sharjah’s residential offerings on par with Dubai and Abu Dhabi, albeit on a smaller scale”

The report also reveals that the current political instability across parts of the Middle East has caused an influx of people setting up home in Sharjah, due to largely affordable rents and its rich Islamic heritage. The report points to these expatriates being flush with ‘refugee capital’, which is finding its way into Sharjah’s off-plan residential sales market. This has in turn encouraged some developers to return to the sales market. Although limited to a small number of instances, residential towers in locations perceived to be prime, have been sold entirely off-plan, with capital values hovering around the AED 400 psf mark.

Elsewhere in the emirate’s real estate landscape, the overarching improvement in the UAE’s economic performance is also manifesting itself in the commercial market in the form of rising levels of occupier activity, with Sharjah also clearly benefiting from the economic buoyancy, according to Cluttons Spring 2014 Sharjah Commercial Market Outlook report.
Demand for office space however remains centred on smaller units in the region of 1,000 to 1,500 sqft. Despite the slight upturn in requirements, office rents have remained relatively flat. That said, prime areas of Al Majaz have seen a slip in rates and this has been predominately a result of greater supply and reduced demand from larger, international occupiers.

Morgan added: “Some landlords with large shell and core space are moving quickly to capitalise on demand by carrying out partial fit outs in a bid to take advantage of market conditions and lease space as smaller units. Furthermore, where space is urgently required, we have seen a few instances of residential-office conversions take place, with previously abandoned residential schemes being transformed into office space.”

“The supply pipeline is expected to deliver mostly Grade B space to market and this is driving some occupiers to consider build-to-suit options, which will, to an extent, allow them to mitigate issues such as sufficient parking, which remains a major challenge in the centre of the city. It is however very encouraging to see the government making head way in this area.”
The government is ploughing investment into the upgrading of transportation infrastructure across the city. In addition, the announcement that the newly formed Sharjah Roads and Transport Authority is undertaking  feasibility studies for new road networks, a tramway system and a metro system which could be linked with Etihad Rail, further boosting the appeal of Sharjah as a more affordable alternative to Dubai and Abu Dhabi.

According to data released by Meed Projects, Sharjah is planning a $2.3 billion investment in transport infrastructure projects over the next five years. The report also states that there has been a 300% increase in the number of new projects awarded in Sharjah in 2012 and 2013, with more than 90% of the contracts for the construction and real estate sectors.

Morgan concluded: “While a Metro network in Sharjah would bring about a radical transformation in accessibility across the city, the 7% rise announced in Sharjah’s budget for 2014/15 is set to see almost 50% of the AED 15.4 billion budget allocated to further development of the economy. This will add further impetus to the rising levels of real estate activity in both the residential and commercial markets across Sharjah.” 

Wednesday, March 26, 2014

UAE industrial sector sustains momentum

According to the latest research from real estate consultancy Cluttons, momentum remains in the industrial property market with steady rates and growth throughout the UAE. According to Cluttons Q4 2013 report, the industrial market was bolstered by an improved economic climate, the successful win of Expo 2020, and the launch of passenger services at Al Maktoum International Airport, following the June 2010 inauguration of the airport as a cargo hub.
Steve Morgan, Head of Cluttons Middle East, says: “Steady growth following the win of Expo 2020 is inevitable, with a rise in demand for space surrounding the Expo 2020 site already starting to materialise. Facilitating this gravitation of business and industrial activity is the Government’s ramping up of critical infrastructure projects across the city as Dubai readies itself for the Expo in six years time. We are already seeing several players make moves to establish an early presence in the area as they position themselves to benefit from the projected upturn in overall business activity in areas south of Dubai.”
The Expo is set to play an integral role in facilitating the ongoing evolution of Dubai’s tremendous aviation and logistics infrastructure. These sectors, which form a key component of the city’s industrial capabilities, are likely to underpin requirements and growth across Dubai’s industrial landscape in the short-medium term. This will of course be in part linked to the on-going growth and expansion of the facilities at Al Maktoum International Airport. While Dubai International Airport emerged as the world’s second busiest airport by passenger traffic last year, the aggressive expansion plans being developed for Dubai World Central will increase the attractiveness of industrial areas close to the new airport, which is positioning itself as the premiere global integrated logistics hub.
Industrial market rents in both Abu Dhabi and Dubai grown steadily throughout the second half of 2013. Khalifa Industrial Zone Abu Dhabi (Kizad) is appealing to a few tenants as a place to relocate, with most attracted by the prospect of expansion. Rent free periods, in addition to 50 year (musataha agreements) leases go further to enhance Kizad’s allure. There has been particular interest from logistics companies and manufacturers, who are drawn to these factors and the low operation costs.

Back in Dubai, Cluttons latest visual data depicts that rent on average stood between AED 28 and AED 40 psf during the fourth quarter last year, throughout the emirate’s onshore submarkets, which includes Al Quoz and Ras Al Khor. However, new entrants and international companies are moving towards other submarkets, such as Dubai Investment Park and Dubai Industrial City. These areas are now been viewed as alternative onshore destinations for development. Availability of space and cheaper land values is proving to be a big draw for this group of occupiers.  We have noted a marked upturn in the demand for industrial space over the past six to twelve months, with food preparation facilities for hotels and the food and beverage sector being a key contributor to overall requirements as the emirates hospitality and leisure sector expands further.
Morgan concludes: “Occupiers across the UAE are being drawn more and more to ‘built to suit’ options, rather than existing facilities, as a result of the lack of stock that is readily available in the areas they want to be to the specification they require.
“Overall, the improved economic climate and recent accomplishments of the UAE are enabling the momentum to sustain the industrial property market.”

Monday, February 03, 2014

Pearl Dubai Sells $1.9bn Assets To Hong Kong Property Group


Property developer Pearl Dubai announced that it has sold assets valued at $1.9 billion (Dhs6.8 billion) to Hong Kong-based Chow Tai Fook Endowment Industry Investment Development (CTFE).

The sale includes high-end residences and serviced apartments and two five-star hotels, and is the largest bulk asset sale within the 20 million sq ft Dubai Pearl development, the company said in a statement.

CTFE, a diversified company, is the exclusive development partner of China’s Ministry of Civil Affairs. This transaction is part of the firm’s corporate strategy to deliver large multi-use development projects in China and other key strategic overseas markets, the statement said.

The newly-acquired assets will be used in part for the company, and partly will be resold to Chow Tai Fook Endowment high end clientele in the Far East, it added.

Jason Chen, chairman of Chow Tai Fook Endowment, said: “We selected Dubai Pearl as our destination partner to develop Chow Tai Fook District internationally starting with Dubai, because of the vision and quality of their project offering.”

Santhosh Joseph, CEO of Pearl Dubai, added: “This transaction brings us closer to making Dubai Pearl a fully funded project.”

The Dubai Pearl project, 100 per cent owned by Pearl Dubai, overlooks the Palm Jumeirah Island and is an integrated mixed-use development including five star hotels, a shopping mall, offices and branded and serviced apartments and entertainment. The development is backed by a consortium of investors led by Abu Dhabi’s Al Fahim family.

Initial handover is scheduled to commence during the end of 2017. When complete, the development is expected to house approximately 9,000 people, and offer a workplace for 12,000.

Tuesday, December 31, 2013

Burj Khalifa residential values reflect sustainable growth on building’s fourth anniversary

 Residential values have risen by 13.6% since the building’s completion in January 2010
  •     Values have risen by 87.5% since units first launched in July 2006
  •     Apartment prices rise by 25% during 2013
  •     2013 values indicate sustainable growth
  •     Values are up 50% since the market low in 2009
Dubai: 30 December 2013: As the fourth anniversary of the completion of the world’s tallest building, the Burj Khalifa, approaches on January 4th 2014, values of residential apartments are reflecting the more sustainable growth seen across the Dubai residential market.
Across the city, growing numbers of buy-to-let investors, both domestic and international, along with a growing number of owner occupiers, fuelled by affordable mortgage rates and enhanced property regulation, are helping to sustain this steady growth.
Following a review of prices over the past four years, international real estate consultancy, Cluttons has found that residential units at the Burj Khalifa have risen in price by a sustainable 13.6% since handing over units in January 2010. The value of apartments at the Burj Khalifa reached a high of AED 9,000 psf in August 2008 before dipping to a low of AED 2,500 psf in February 2009.
At present, apartment values stand at AED 3,750 psf in the Burj Khalifa which is a 50% increase on the February 2009 figure. Since off plan residential units were first sold for the development in July 2006, overall values have risen by 87.5%.  Across Dubai, average property prices currently stand at AED 1,359 PSF.
Steve Morgan, head of Cluttons Middle East said: “Looking back at market data prior to the economic downturn, there have been fluctuations in apartment values at the Burj Khalifa each quarter since its launch. They were up a staggering 44% in the second quarter of 2008. In 2013, prices for apartments in the tower have risen by 25%, which has been supported in part by continued optimism surrounding Dubai's economic buoyancy and also by on-going growth in investor interest in our city's real estate market.
“Furthermore, residential value performance in the Burj Khalifa mirrors the performance of Dubai's broader residential landscape.”
*NB: These calculations exclude the Armani apartments in the Burj Khalifa

Monday, December 23, 2013

‘Rental Increase Calculator’ Dubai Land Department facility to help residents check rent hikes

Dubai: Tenants in Dubai can have an instant update on where they stand vis-à-vis the new rental decree by inputting their lease details into the ‘Rental Increase Calculator’ on the Dubai Land Department-operated portal. Doing so will let you know immediately whether you are liable to pay a higher rental during the lease renewal and how much landlords are eligible to demand as per the strict range set by the decree.

The average rentals for all the key residential neighbourhoods are provided, which will be updated to ensure they are in sync with the prevailing asking rates. It will also tell you that the landlord has no right to demand an increase in the current renewal if what you are paying now is within 10 per cent of the average rental for that area. What the decree does is lessen the imbalance in the tenant-landlord relationship, which in this market has historically weighed in favour of the latter.

“This decree will further boost the real estate sector by introducing great deal of transparency and clarity to the tenant-owner relationship which will pay off to all stakeholders involved,” said Tanzeel Gader, CEO of Flash Properties.

Also, just as important going forward, Dubai also does not want to be saddled with a reputation of being a costly place to do business from. The latest semi-annual report from CBRE places the emirate’s commercial realty as being the 23rd most expensive in the world.

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If the increases continue, and it will as the buzz gets heavier with all the Expo 2020 preparatory works, Dubai wants to make sure that it will be confined to set ranges that can also be monitored. This is why the decree is as much about Dubai residential space as it will be about its expanding commercial realty.