UAE property market ready to restore

According to estimates from Shuaa Capital, the UAE property market has lost approx. Dh734 billion (US$199.9bn) in value since the market saw its peak in 2008.

However an essential move towards rebuilding the market is clearly in place, however in order for it to bounce back in full force, industry participants will have to comprehend the basic changes in the market.

Industry analysts have indicated that the Emirates property industry does not involve convincing wealthy businessmen from all over the globe to buy property with the main objective of reselling them or to generate rental yields. Now more than ever will require people living and working in the UAE to spur the market.

Craig Plumb the head of research for Jones Lang LaSalle said, "Fundamentally we are moving from an investor's market to an end user's market,"

According to Economists the UAE property markets supply and demand equivalence will be out of sync for the next couple of years.

Just looking into the past three years, the home prices in Dubai have dropped 50 to 60 per cent, and yet there are another 10,000 homes scheduled for completion 2012, though over 40 per cent of office space in Dubai is vacant.

Abu Dhabi, have scheduled 50,000 homes to be completed by 2013, which represents a 27 per cent increase from the present supply.

The demand side of the property market will need to be increased in order to strengthen the market. For most of the property executives the visa policy initiative that was broadcasted by the government in June 2011, will prove to be just this incentive to reach buyers. The policy offers an extension on the visas of buyers to 3 years.

 "That policy is important," says Gurjit Singh, the chief operating officer for Sorouh, the Abu Dhabi developer. "Now what needs to be fleshed out are the rules that go with it."

An approach to enhancing the market is by entering the global competition arena to appeal to retirees, as numerous countries in Central America and also Asia have already implemented policies, which simplifies activities such as buying property, transferring of funds and settling in their countries.

"This is not uncommon," says Mr Singh. "They allow people to stay for a substantial period of time."

Making financing more available to potential buyers is a key recovery factor. In addition by focusing on more than just low interest rates and adding seriously needed liquidity in the market, lenders will be able to recoup their investment if a buyer defaults. Implying a speedy process to foreclose, reliable valuations and an active resale market, without a conceivable foreclosure market, lenders had until recently felt the housing sector too risky for their shareholders.

Developers have been vigorously lobbying for the Central Bank to apply these factors, as buyers are turning away due to interest rates that are over 6 to 7 per cent and loan-to-value ratios that are far above international levels.

"We need to see greater availability of financing," says Ian Albert, a regional director for Colliers International.

The Land Department auctioned eight repossessed homes in Dubai during the month of November 2011, this is just the initial sign that the system was working.

The mortgage market also needs a couple of adjustments that will raise the appeal for international buyers, as foreign investors continue to be stunned by the possibility that if a cheque bounces and they default on their mortgage they can go to jail.

The shift at the beginning of 2011finally allowed companies outside of the Dubai International Financial Centre to be able to settle disputes in the DIFC courts, which use international law standards. This shows that the continued advances in the legal system are definitely playing a role.

"It's good for Dubai," Richard Briggs, the executive partner at Hadef & Partners, told The National when the change was announced. "It will change the nature of litigation in Dubai as more claims work their way through the DIFC."

Developers will also need to be ready to counter the negative publicity that exists in the international industry related to the UAE property market.

The quality and management of projects will increasingly become as important as price and location. "Developers need to step up to the plate and deliver good products that are well managed," says Mr Singh.

But on a basic level the above approaches will not change anything if the economy does not achieve growth, thus initiatives that will increase the logistics, trade, shipping and aviation industries have a direct influence on the property market.

"One of the things we've learned is that we are not decoupled from the global environment," says Mr Plumb

Dubai property market will begin recovery in 2012

 International real estate specialist, Cluttons, has valiantly announced that they predict the Dubai property market to make its recovery in 2012 with a “brisk” start to the year.

 

The company is so assertive in their prediction that they have employed 10 new employees to handle the demand for January 2012.

Their audacious position is surprising as the Eurozone appears to worsen with each passing day. However, with talks of the Euro crumbling, certain analysts believe the outcome will lean to the positive. According to Cluttons, the high-end residential sector has actually benefited from the capital shifts that resulted as a consequence of the Arab spring and hence Dubai will end on a positive note in 2011.

From a realistic point of view, Dubai does not have much to lose from the political turmoil in the region, or the status of the Eurozone debt crisis and the continued weakness of the global economy. In fact Dubai has much to gain, as the metropolis is a captivating market with significant attributes only the UAE has to offer and none of the troubles currently afflicting the surrounding region.

Cluttons also said that due to the flexibility of landlords and tenants, Dubai has developed into a more mature market.

Cluttons review provides clarity

As we are moving towards the final weeks of 2011, Cluttons, the real estate specialist and a steadfast presence in the Middle East since 1976 has now released its property review for 2011.

According to this review, the Dubai real estate market is forecasting “selective stabilisation”, which is the overall exhortation for the commercial, hospitality and residential markets and a passage towards market maturity.

“Transactions levels are rising as job security and increased market confidence results in people seeking tenancy upgrades and home ownership,” said Elaine Jones, CEO of Asteco.

It is predicted that Cluttons will have brisk start to business in January 2012, as the real estate company said in a statement that it has recently engaged 10 new staff members in order to meet the demand in the New Year.  As a result of the Arab Spring capital shifts in the region benefits have arose for the high end residential sector, whilst due to the consequence of the cost savings that are available the commercial occupiers interest is gradually improving and its seems to remain a tenants or buyer’s market.

The statement said "Despite the negativity arising from the on-going economic turmoil in Europe and the US, Cluttons notes that the Dubai real estate market ends the year with more positivity than seen in the previous three years,"

Clutton also said that even though prices are still declining, the rate at which it’s falling has decelerated throughout 2011, which establishes the feeling that they are close to “bottoming out”. It has been determined that demand originates from variables namely; specification, finish, location, amenities and a sense of community, which compared to three or four years ago, is much more dominant in the mind of today’s buyers. The market place of 2011 have shown definite signs of maturing, which has resulted from landlords becoming more flexible in their terms and identifying the value of dropping vacancy levels instead of  holding a higher rent and reducing the deviations of securing a good tenant.

"We are encouraged by the stabilization seen in certain areas of the UAE's residential and commercial real estate market and have staffed our team accordingly for 2012." Steven Morgan, head of Cluttons in the UAE

Dubai Real Estate Recovery Insight

2011 has proven to be a year of recovery for the Dubai economy, which has found its salvation through aviation, hospitality, retailing, oil prices and real estate.

During the 40 years since the establishment of the United Arab Emirates, the nation's real estate sector emerged as a key driver of growth for the economy. The city opened its real estate sector to foreign investors in 2002, granting them the rights to freehold ownership of numerous property developments; this resulted in a substantial increase in Dubai’s house prices.

According to Morgan Stanley the prices in the Emirates increased between 2007 to mid-2008 by
80 per cent.

In 2009 as the Global downturn continued, Dubai proclaimed a $25 billion debt restructuring of conglomerate Dubai World. This resulted in the collapse of the real estate market, putting an end to a historic building spree in Dubai. The House prices in Dubai hit rock bottom when the market saw the biggest regional collapse in the start of the financial crisis, with house prices dropping 60 per cent from the 2008-peak.

During the 40th Anniversary Year 2011, the UAE government and real estate market regulators in Dubai have been actively taking strides in recapturing the confidence among property investors.

“I believe overall prices have stabilised; I think they are still holding reasonable value to, say, two years ago, so I believe the worst is behind us,” he said on the side-lines of the Arabian Business
Achievement Awards.

A significant step was taken by the UAE federal government in June 2011 to aid the real estate market, when they extended all visa’s for real estate investors from six months to three years. Experts and developers have faith that this will play a pivotal role in improving investors’ confidence and help in the recovery of the Real Estate market.

Another highpoint is Dubai’s plan to implement the Real Estate Investor Protection Law. The anticipation is that the law will offer greater clarity to investors on various topics, such as what steps an investor should take in case a project delays, what procedure the investor must implement in order to cancel the contract when the developer fails to fulfill their contractual obligation etc.

The Dubai Land Department data has also showed that the Emirate signed off 1.603 deals in the 10 months before October 2011, down from the 5.363 deals made during the same period in 2008. When compared to the data from 2009, a clear increase of 37 per cent is reflected, which suggests signs of recovery, this may also be connected with the Arab Spring unrest that has affected economies in the region. Due to this many tourists have been coming to Dubai and some rich Arabs have also chosen to move their business and make Dubai their home.

“We want them all to prosper, we don't want anyone to have a disaster but it’s a fact that it’s affecting the region and investors are looking for safe-haven buys” said by the chairman of Emaar Properties.

South Africa moving towards renewable energy

South Africa is ready to make its mark in the renewable energy sector. The World Bank has recently granted a $250-million (R1.5- billion) loan through its Clean Technology Fund to South African power utility names Eskom;

the companies’ goal is to help the country to reduce its reliance on coal-based power generation and depend more on renewable energy. Eskom will be developing a wind and solar plant, namely; a 100 megawatt solar power plant in Upington with is in the North Cape Province and also a 100-megwatt wind power project, which is in the Western Cape just north of Cape Town.


These two renewable energy projects will be the largest that have ever been attempted in the entire African continent. Eskom predicts that the construction of the 100-megawatt wind power project will start early in 2012.

Elbrahim Khan from Wesgro, the Western Cape Investment and Trade Promotion Agency said “These investments are a breath of fresh air and it shows that South Africa is no longer just talking about renewable energy,”

He also added “The good news for South Africa is that there are serious ambitions to get our energy mix right and there are more renewable energy power projects in the pipeline that are to be funded by private investors.”

It is evident that for both the private and public, South Africa is fast becoming a preferred renewable energy investments destination; this is very good news for South Africa’s increasing electricity demands, emerging clean energy sector and the economy.

There are also certain key investment areas in the country; these are the Eastern Cape, Western Cape where investments are predominantly into wind and photovoltaic (PV) solar power and the Northern Cape Province which has been recognised as the best area for concentrated solar power (CSP) technology, this technology uses mirrors or lenses to concentrate a large area of sunlight, or solar thermal energy onto a small area, this usually takes place with rotating panels.

South Africa certainly has the potential to develop itself into a major player in the clean energy sector. This is clear by the substantial amount of interest that has been shown by investors in recent months.

“We are going for renewable energy in a big way,” Khan said

U.S. passenger's first biofuel flight with United

The first commercial passengers’ biofuel flight flew on Monday with United Airlines Boeing 737-824, powered partly with petroleum-based jet fuel and Honeywell aviation biofuel made from algal-oil.

Flight 1403 from Continental Airlines made history when it landed at Chicago’s O’Hare International Airport at 1pm CST from Houston.   Jim Reskoske, Honeywell’s vice president and general manager said, “What we have is an evolving product, this is a kind of boutique fuel, priced four times that of regular jet fuel, because it’s not yet widely available.”  He expects this will change as companies secure funding to build plants to produce it on a massive scale.
 
The new environmental “eco-skies” painted Boeing was flown by Continental pilots and the completion of the Continental flight from Houstan, placed parent company United Continental Holdings Inc. in the lead by two days in the competition to launch the first biofuel-power air service in the U.S.

Alaska Airlines has two biofuel-powered passenger flights planned for this week from Seattle, Wash bound for Washington, D.C., and the other for Portland, Ore.   Officials from Alaska Airlines said the 20 percent biofuel blend its planes will use will reduce carbon dioxide emissions by 10 percent.

Rekoske commented, “Our Green Jet Fuel also offers as much as an 85% net reduction in greenhouse gas emissions compared to petroleum-based jet fuel.  We received Defence Department funding from 2006 to 2008 for its initial research to develop military-grade jet fuel from organic waste.” 

President Obama called on the Department of Energy, the Department of Agriculture and the Navy to each put in $170 million of existing funds to build plants that can make this fuel for the Navy.

Honeywell's Green Jet Fuel has powered 24 commercial and military biofuel test flights so far, including a transatlantic flight on a Honeywell-operated G 450 business aircraft and a supersonic one on a Navy F/A-18 Hornet.

Rekoske said today's flight was the first commercial U.S. one carrying passengers, whom he says United notified in advance about the unique but approved fuel.
In 2000 the aviation sector was responsible for 2 percent of total carbon dioxide emissions.

Italy funds Mozambique's agricultural activities

The Italian government signed a financing agreement with Mozambique worth 16 million euros to enhance the agricultural projects combating poverty in the provinces of Manica and Sofala, in the centre of the country. 

The two governments approved the first operational plan while attending a meeting of the joint commission in Chimoio, the capital of Manica.  The Programme to support Rural Development (PADR) will be carried out in eight districts of the two provinces and will be managed by the Italian Development Cooperation.  (Dondo, Nhamatanda, Chibabava, and Gorongosa in Sofala, and Gondola, Manica, Barue and Sussundenga in Manica)

Marina Karagianis, the spokesperson for the government of Sofala told the Beira newspaper, “Diario de Mocambique” that the programme was one of the themes discussed at a session of the provincial government that ended last Friday. 

The programme’s general objective will be to improve the income and the socio economic condition of the rural population, focussing on the eight districts and will be operational from 2011 until 2013.

According to the newspaper, 500 euros of the 13 million euros under Mozambican management had been set aside for two new passenger vehicles for each district.  The nine vehicles were handed over in the Sofala province and the governor Carvalho Muária said, “The technical assistance to agricultural operators in the family sector would be increasingly dynamic and the noose would be tightened on wildlife smugglers and illegal loggers.”
The program, which has a lifetime of three years, will further strengthen micro, small and medium sized businesses that operate in the agricultural sector.   The program will increase competitiveness and productivity and contribute to the reduction of poverty in rural areas through the sustainable management and exploitation of natural resources. .