Confidence Growing In The Property Markets In Sharjah, Latest Report From Cluttons Suggests

esidential market landlords in Sharjah are once again moving to increase rents and restart stalled projects, indicating confidence in the market place, according to the latest outlook report from Cluttons.

However, the handover of new residential stock across the Emirate has slowed in the past six months making for a sustainable supply and demand balance.

Rents for sub prime properties have dropped, partly as a result of the new housing regulations aimed at reducing overcrowding in specific areas. However, other residential properties, both villas and apartments, in family areas such as Al Falaj, Ramia and Shargan, have maintained their rental values this year. Villa prices are expected to rise over the next six months due to limited new stock coming onto the market.

Demand for office space in 2012 has remained strongest from small and start ups with most looking for offices of approximately 2,000 square feet. The trend is for businesses to move out of residential properties and explore the increasing range of options provided by purpose built office towers, the report also says.

 

In terms of prime office space, the Al Majaz area is topping the list with its high quality offices achieving rents of AED50 to AES90 per square foot.

Trade, manufacturing and logistics are some of the best performing sectors in the Emirate, which has helped boost the industrial property market this year. This industrial sector is receiving rising demand for higher quality, more modern, purpose built premises both from new entrants to the market and companies looking to relocate.

 

Rental values range from AED16 to AES25 per square foot per annum according to location and facilities. Most of the demand is for larger, built to suit units in the free zones and in general, the most popular areas are those closest to the Sharjah CBD.

 

Warehouse rental rates have remained pretty steady at just under AED25 per square foot per annum since 2010 and are unlikely to change over the next 12 months.

Cluttons predicts that both rental values and sales prices in Sharjahs property market, will remain fairly stable throughout the coming months as there is little change in either demand or supply levels. The one caveat is the residential market which may experience some change in line with the population growth estimates for 2013, but is unlikely to be a significant change.

Emerging Asia Pacific Property Markets Likely To Remain Strong But Growth Is Polarised

India’s residential property market continued to expand in the second quarter of 2012 and the performance of the Indonesian residential real estate remained solid.

Jakarta and Bangkok were the outstanding prime residential market performers, with year on year price growth pushing 30%, the new Asia Pacific Residential Review report from Knight Frank shows.

While in Jakarta, this positive price appreciation is in parallel to the rest of the housing market, in Bangkok, this is in contrast to mass market price drops, as luxury condominiums in tight supply situated off Sukhumvit have seen their prices pushed upwards, the report says.

Indonesia’s strong performance continues and the introduction of a Loan to Value (LTV) cap of 70% in July has not held back demand as positive buyer sentiment continued to fuel price growth in the Jakarta market, it points out.

In the second quarter of 2012, house prices increased 1.2% across Indonesia, with the CBD Jakarta condominium market subjected to the strongest demand, increasing 16.7% year on year.

‘With strong fundamentals, confidence in the development market remains strong, with development activity remaining unabated,’ the report says.

In Thailand overall the market is slowing as demand plays catch-up. The years so far has seen less supply come onto the Bangkok condominium market, as existing stock is slowly absorbed.

‘Consequently, listed developers have tended to diversify towards the resort destinations of Phuket, Pattaya and Hua Hin where the demand and supply dynamics are more favourable,’ says the report.

In Bangkok, with surprisingly little difference in selling prices of condominiums in the city and city fringe areas, buyers tend to favour condominiums in the city area, while demand for luxury condominiums in the heart of Bangkok remains high, with supply tight and few projects launching this year.

The report also points to a significant polarisation in the price performance of the Indian residential market. Although average prices grew by 3.3% in the second quarter of 2012 across the whole country, this average masks difference between cities, with Bangalore, Pune and Patna notably booming, while Hyderabad, Jaipur and Indore seeing price falls during this period.

Pune saw the highest price rise, up 10% whereas Jaipur saw prices fall by 3%. The report says that macroeconomic instability over 2012 in India has meant residential markets that rely more on speculators have shown more volatility in terms of pricing, whereas markets that rely on predominantly owner occupier demand have been more stable.

Looking ahead to next year Knight Frank says that in Indonesia, with huge amounts of new supply scheduled to come to the market between now and 2014, developers will have to ensure that the concept, design and pricing is right to profit from the forecast increase in demand. 

 

In Thailand, the firm expects price performance of the Bangkok condominium market to polarise between city centre and periphery locations. ‘On the periphery, with large amounts of new supply in the market we expect more price competition leading to softening prices, whereas with more limited supply available in the city area, we expect more upward price 

Pressure,’ says the report.

In Vietnam, the huge credit growth of preceding years is coming back to haunt banks, who have record amounts of bad debt related to the real estate sector. ‘We expect the market to continue to be troubled, with the relative slowdown in the economy continuing to put downward pressure on residential prices. This does however provide opportunities for buyers 

who can secure funding,’ the report explains.

India is likely to see more polarisation across city’s performances going forward as the economy absorbs some of the significant reforms that have been implemented over the last few weeks.

US Residential Real Estate Sales Fell Slightly Last Month But Prices Rose

September existing home sales in the United States declined modestly but the national median home price recorded its seventh back to back monthly increase from a year earlier, according to the latest report from the National Association of Realtors.

Total existing home sales, which are completed transactions that include single family homes, town homes, condominiums and co-ops, fell 1.7% to a seasonally adjusted annual rate of 4.75 million in September from an upwardly revised 4.83 million in August, but are 11% above the 4.28 million unit level from a year ago.

Lawrence Yun, NAR chief economist, said the market trend is up. ‘Despite occasional month to month setbacks, we're experiencing a genuine recovery. More people are attempting to buy homes than are able to qualify for mortgages, and recent price increases are not deterring buyer interest. Rather, inventory shortages are limiting sales, notably in parts of the West,’ he explained.

The national median existing home price for all housing types was $183,900 in September, up 11.3% from a year ago. The last time there were seven consecutive monthly year on year increases was from November 2005 to May 2006.

Distressed homes, that is foreclosures and short sales sold at deep discounts, accounted for 24% of September sales of which 13% were foreclosures and 11% were short sales. This was up from 22% in August but down from the 30% recorded in September 2011. Foreclosures sold for an average discount of 21% below market value in August, while short sales were discounted 13%.

Total housing inventory at the end September fell 3.3% to 2.32 million existing homes available for sale, which represents a 5.9 month supply at the current sales pace, down from a six month supply in August. Listed inventory is 20% below a year ago when there was an 8.1 month supply.

‘The shrinkage in housing supply is supporting ongoing price growth, a pattern that could accelerate unless home builders robustly ramp up production,’ Yun said.

The median time on market was 70 days in September, unchanged from August, but down 30.7% from 101 days in September 2011. Some 32% of homes sold in September were on the market for less than a month, while 19% were on the market for six months or longer.

However, NAR president Moe Veissi said that some buyers who could easily afford a mortgage can't assume they'll get one. ‘Home buyers need to be more focused on the mortgage process in the current environment where lenders and banking regulators are being risk averse,’ he said.

‘Shopping for competitive mortgage terms is a good idea, but it may be more important to find a bank that is willing to work with you given your credit history. Realtors can often recommend lenders that may have more reasonable underwriting standards,’ he added.

The report also shows that first time buyers accounted for 32% of purchasers in September, compared with 31% in August and is at the same level as it was a year ago.

All cash sales were at 28% of transactions in September, up from 27% in August but lower than the 30% recorded in September 2011. Investors, who account for most cash sales, purchased 18% of homes in September, unchanged from August and slightly below the 19% in September 2011.

Single family home sales declined 1.9% to a seasonally adjusted annual rate of 4.21 million in September from 4.29 million in August, but are 10.8% higher than the 3.80 million unit level in September 2011. The median existing single family home price was $184,300 in September, up 11.4% from a year ago.

Existing condominium and co-op sales were unchanged at a seasonally adjusted annual rate of 540,000 in September, but are 12.5% above the 480,000 unit pace of a year ago. The median existing condo price was $181,000 in September, which is 10% higher than September 2011.

Regionally, existing home sales in the Northeast fell 6.3% to an annual level of 590,000 in September but are 7.3% above September 2011. The median price in the Northeast was $238,700, up 4.1% from a year ago.

Existing home sales in the Midwest slipped 0.9% in September to a pace of 1.10 million but are 19.6% higher than a year ago. The median price in the Midwest was $145,200, up 7% from September 2011.

In the South, existing home sales increased 0.5% to an annual level of 1.93 million in September and are 14.2% above September 2011. The median price in the region was $163,600, up 13.1% from a year ago.

Existing home sales in the West fell 3.4% to an annual pace of 1.13 million in September but are 0.9% above a year ago. With continuing inventory shortages in the region, the median price in the West was $246,300, which is 18.4% higher than September 2011.

Sales Figures Indicate That Dubai’s Real Estate Market Is Moving Towards Recovery

The total value of property transactions in Dubai reached more than AED83 billion in the first nine months of 2012, figures from the Dubai Land Department show.

‘The property transactions have become more mature and the investors are now much more aware. The market offers multiple choices and Dubai property sector showed high flexibility in dealing with investors' requirements and trends during the first nine months,’ said Sultan Butti Bin Mejrin, director general of the Dubai Land Department.

Experts believe that the emirate’s property market is on the way to recovery but the figure shows that it is still up and down. For example, land transactions in Dubai reached AED63 billion in the first half of 2012, but in the third quarter deals slowed to AED20 billion.

The transactions include sales, mortgages, mortgage portfolios, deferred sales and other transactions and first time buyers are returning to the market as prices have fallen to what is regarded as more acceptable levels well below the heights of the market in 2008 when speculators pushed values too high.

Cash sales accounted for 52% of the total transactions in the first nine months of this year while mortgages accounted for 44% of the total transactions to the value of AED36.3 billion.

The Burj Khalifa, the world's tallest building, was the most popular development with 3,305 sale transactions. In the land mortgage transactions, Al Barsha South First was the most traded areas with 203 transactions while the Burj Khalifa saw 442 apartment mortgage transactions.

Bin Mejrin also confirmed that the new Dubai Real Estate Arbitration Centre is ready to resolve property disputes using internationally recognized real estate arbitrators accredited by regional and international arbitration centres.

‘Dubai’s real estate market has become one of the most developed and sophisticated markets due to the large number of dealers and clients. Now, there is an urgent need to settle real estate disputes in a smooth and fast manner,’ he explained.

‘The new centre will enhance mutual trust between the concerned parties in the real estate market, provide real estate consultations and legal advice in terms of real estate arbitration along with providing awareness of the laws and regulations on property transactions,’ he pointed out.

‘Other benefits of the centre include easing the burden on the judiciary and the courts, settling disputes quickly and reducing the cost of lawyers and legal advisers,’ he added.

The Dubai Real Estate Arbitration Centre will include a special section of real estate reconciliation to be one of the alternative means to resolve real estate disputes and reach an amicable and fair agreement between the two parties thanks to intermediary intervention that is professional, neutral, impartial and independent.

The Royal Institution of Chartered Surveyors (RICS) has launched an initiative for Middle East markets for qualifying and training real estate personnel.

Cityscape More Positive In Dubai As Property Recovery Gets Underway

The annual Cityscape property expo and event in Dubai is more upbeat this year with developers unveiling billion dollar projects as optimism returns to the emirate’s real estate markets.

It is still a far cry from the glitz of previous events before the global economic downturn but throughout the event there is generally a more upbeat feel.

Some projects that have been put on the back burner because of the economic downturn are being revived including the Taj Arabia complex, a $1 billion replica of India's Taj Mahal that includes a 300 bedroom hotel.

The emirate has restructured billions in debt since 2009 and seen its trade and tourism sectors benefit from its safe haven status during the Arab Spring political unrest in the region.

But while the property sector has recovered in pockets of the city with prices rising, the market is facing a glut of oversupply in others.

Projects launched include the Meydan Tower, the largest new project by a Dubai developer since the property market collapsed four years ago. The tower is part of state owned Meydan's ongoing $3.8 billion residential development project, which includes man made canals, lagoons and horse riding trails, and will be financed through pre-sales.

Developer Nakheel, whose extravagant projects helped trigger Dubai's 2009 debt crisis and which has written off about $21 billion from its portfolio since the crash, believes there is demand again, especially at the high end.

;The best sign is that property worth 880 million dirhams ($239.59 million) sold in the first day of sales,’ said Ali Rashid Lootah, Nakheel chairman.

But the emirate has to be careful about repeating mistakes from the past when speculators drove up property prices which then collapsed by up to 60% in some locations. ‘You have to look at these launches and how quickly these units have been sold out and realise that there's again some speculative buying. This is a bit scary considering what the market has seen before’ Matthew Green, head of research at consultancy CBRE, told Reuters.

For potential buyers, there is more choice at Cityscape after three bleak years when few or no new projects were announced by cash strapped developers. But investors are wary advised to be wary.

Property developer Deyaar, which was badly hit by the property crash, is now predicting a profitable 2012 due to what is says its a recovery in the real estate market and increased revenues from sales.

‘Based on our results in the first six months of this year, we expect positive numbers for 2012,’ said chief executive Saeed Al Qatami. He added that the firm is currently selling around 400 units, some of which were owned by Deyaar and never sold. Around 60% were forfeited from clients who could not pay.

Number Of New Property Completions Rising In Abu Dhabi, Stats Show

The number of residential properties completed in Abu Dhabi in the second quarter of 2012 increased by 17.3%, according to the latest figures from the emirate’s Statistics Centre

A total of 3,302 residential units in 1,516 buildings were completed in the emirate of which 68% were in Abu Dhabi region, 9% in Al Ain and 23% in Al Gharbia. The SCAD research found the estimated average construction cost per square meter during the second quarter ranged between AED3013 and AED3382, depending on the total floor area, the interior finishes and intended type of use. The data showed that owners generally spent more on the units when they planned to use them for their own residence. Buildings with a total construction area of between 300 to 599 square meters had the highest construction cost of AED3382 per metre and were mostly dedicated for residential use by the landlord. The residential rental sector is likely to get a boost in the later quarters of 2012 after news at the weekend that Abu Dhabi is pressing its public sector employees who reside outside the emirate to relocate within its borders. Employees residing outside the emirate will not be eligible for the housing allowance provided to workers in state institutions, the government said in a statement. The policy takes aim at people, believed to number many thousands, who commute to work in oil rich Abu Dhabi while living in the neighbouring emirate of Dubai because of lower rents there or a lifestyle which they see as more comfortable. The new rule, which will take effect next year, will apply to citizens of the UAE as well as foreigners who are working in Abu Dhabi for the government and all its wholly owned entities and companies, the statement said. Analysts believe that the policy is designed to help absorb a large supply of new high end homes that is set to enter the market in Abu Dhabi this year. Property prices in the emirate have tumbled about 50% since the global financial crisis hit the market several years ago, analysts estimate, and the new supply threatens to undermine them further. Many new units have come up in Abu Dhabi, reaching the peak of its development cycle. The move is to create new demand and make sure the vacancy rates don't reach high levels,ђ Matthew Green, research head at consultants CBRE, told Arabian Business.

Online Property Auction Launches in UAE to Attract Foreign Buyers

Real estate consultants Asteco Property Management is to launch an online property auction website in a bid to lure more international investors to the United Arab Emirates.

Asteco, which has been operating in the UAE since 1985, said it had signed a deal with US based LFC International Real Estate Brokerage to offer the service.

‘The real estate market in the UAE, particularly Dubai, continues to draw a significant amount of interest from institutional and private investors from overseas,’ said Elaine Jones, chief executive officer of Asteco Property Management.

‘Furnishing these financiers with the opportunity to invest in local property through a safe, secure and transparent online auction will undoubtedly make it more convenient and therefore even more popular,’ she explained.

Dubai’s property sector was hit hard by the economic downturn of 2008 with properties in some locations seeing prices fall by up to 60%. The market is starting to show signs of a recovery and interest from foreign buyers, which had all but disappeared, is now returning.

Indeed, figures from the Dubai Land Department shows that foreign buyers bought real estate worth AED22 billion in the first half of 2012.

Foreign buyers are dominated by Indians who bought 2,153 properties valued at AED3.751 billion while Pakistanis came second with a total of 1,814 properties worth AED1.713 billion. British investors bought a total of 1,564 properties worth AED2.529 billion, Iranians bought 1,057 properties worth AED1.515 billion and Russians bought 694 properties at a total value of AED1.438 billion.

Saudis, Americans, Canadians and Jordanians were also prominent investors in Dubai's real estate market, the figures showed.

‘The real estate sector performance is moving from strength to strength over the past two years. The market has been attracting more foreign investors, which reflects the solid national economy and its excellent growth potentials,’ said Majida Ali Rashid, chairwoman of the Real Estate Investment Promotion and Management Centre.

Sultan Al Akraf, senior director of the real estate registration services at the Land Department, said that the figures reflect ‘an ongoing upside trend and a positive growth in the real estate market performance in the emirate’.