With the drop in demand owing to global economic crisis, rents for office spaces in Dubai Free Zones have also dropped considerably, noted an industry analyst.
The Research Analyst at CB Richard Ellis, Mohammed Faheem, said that the average rates of privately managed buildings in the free zones have dropped from the Dh.240-380 per sq ft range, to Dh.92-180 per sq ft during the first quarter of this year, thereby indicating a 52 to 61 percent drop.
This is a clear indication of decrease in demand. The free zones included in the survey were the Media City, Internet City, Dubai Silicon Oasis, Knowledge Village and Jumeirah Lake Free Zone.
Rents within the various zones vary from one another with few zones implementing rate restrictions to stimulate demand from occupiers. The buildings managed by free zone authorities have rents in the range of Dh.170-190 per sq ft.
The Dubai International Finance Center (DIFC), the special economic zone located in the central business district of the city, has fared much better, standing out above the rest of the prime locations in Dubai, with average rents ranging from $115-123 per sq ft. This is mainly because DIFC is a popular location among companies seeking to move in to Dubai.
Although, the lower rent rates in few of the free zones in Dubai, makes it more attractive, it really depends on the motive of the free zone managers. The rents are affected within the free zones mainly because the authorities have a different agenda than the commercial landlords, says Nicholas Maclean, Managing Director, C B Richard Ellis.
Showing posts with label dubai rents. Show all posts
Showing posts with label dubai rents. Show all posts
Tuesday, 5 May 2009
Saturday, 31 January 2009
Dubai Moves to Rein in Rents
DUBAI - Tenants whose home or commercial property is less than a quarter below the average price for a similar premises will not have to pay any increase in rent, according to a decree issued on Monday by His Highness Shaikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of UAE, in his capacity as Ruler of Dubai.
Mohammed Ibrahim Al Shaibani, director of the Dubai Ruler’s Court said the decree 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, according to state news agency, Wam.
The decree, the Ruler’s first of 2009, provides for a freeze of rent prices in 2009 for tenants renewing contracts signed in 2008.
It states that the rental value of those properties must be equal to or less than 25 per cent of a corresponding rent average established by the rental index.
The guideline for the rental index was issued on Wednesday last week by Dubai’s Real Estate Regulatory Authority and is expected to replace the rent cap.
While the authority has issued a point system for evaluating the rental value of a property, the average rents for properties are yet to be ascertained.
“The evaluation process for all types of properties is based on giving each property points for various attributes such as building facilities, near-by retail outlets, age and condition of building, etc,” according to the Rera statement.
“These points are used as a statistical basis to set a minimum average and a maximum average rent price.”
The minimum average and maximum average rent price are yet to be declared and the status of the evaluation process has not been given by the authority.
However, the decree issued on Monday states that the rate would be established when the tenancy contract is renewed.
The ruling also defines a formula designed to generate lower rent values but allowing a proportional increase in 2009.
Another decree outlined the relationship between the tenant and landlord. The law, which came into effect on December 1 last year, has been amended. It includes points on the basis of which a tenant can be evicted, such as non-payment of rent or if the tenant is found subletting the property.
Mohammed Ibrahim Al Shaibani, director of the Dubai Ruler’s Court said the decree 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, according to state news agency, Wam.
The decree, the Ruler’s first of 2009, provides for a freeze of rent prices in 2009 for tenants renewing contracts signed in 2008.
It states that the rental value of those properties must be equal to or less than 25 per cent of a corresponding rent average established by the rental index.
The guideline for the rental index was issued on Wednesday last week by Dubai’s Real Estate Regulatory Authority and is expected to replace the rent cap.
While the authority has issued a point system for evaluating the rental value of a property, the average rents for properties are yet to be ascertained.
“The evaluation process for all types of properties is based on giving each property points for various attributes such as building facilities, near-by retail outlets, age and condition of building, etc,” according to the Rera statement.
“These points are used as a statistical basis to set a minimum average and a maximum average rent price.”
The minimum average and maximum average rent price are yet to be declared and the status of the evaluation process has not been given by the authority.
However, the decree issued on Monday states that the rate would be established when the tenancy contract is renewed.
The ruling also defines a formula designed to generate lower rent values but allowing a proportional increase in 2009.
Another decree outlined the relationship between the tenant and landlord. The law, which came into effect on December 1 last year, has been amended. It includes points on the basis of which a tenant can be evicted, such as non-payment of rent or if the tenant is found subletting the property.
Sunday, 15 June 2008
Global Property Recession - UAE unaffected
In the wake of a looming global recession, property markets worldwide are experiencing major shake-ups that are certain to have far-reaching consequences. As they grapple with rising inflation, oil and food prices, the UK, the US and the Asian real estate markets are increasingly showing signs of a meltdown. But the Middle East, especially the UAE seems to have bucked the prevailing trend. The UAE economy attained an overall growth of 7.4 per cent in 2007 over 2006. Oil revenues averaging US$ 69.1 billion constituted 35 per cent of the UAE GDP in 2007, but it was the non-oil sectors, mainly real estate and construction that made a major impact, accounting for 65 per cent of the Gross Domestic Product
As the UAE economy develops, its real estate sector has blossomed into an attractive investment market, offering solid returns. Dubai is currently one of the world's top ten expensive commercial property markets, according to a report by CB Richard Ellis.
In the study, Dubai debuted at number 10 with an occupancy cost of US$128.49. With a near-doubling of occupancy costs, Moscow has climbed four places to second at US$232.37. Ranked 13th worldwide, Midtown Manhattan is still the priciest market in North America at US$103.43.
As the UAE economy develops, its real estate sector has blossomed into an attractive investment market, offering solid returns. Dubai is currently one of the world's top ten expensive commercial property markets, according to a report by CB Richard Ellis.
In the study, Dubai debuted at number 10 with an occupancy cost of US$128.49. With a near-doubling of occupancy costs, Moscow has climbed four places to second at US$232.37. Ranked 13th worldwide, Midtown Manhattan is still the priciest market in North America at US$103.43.
Tuesday, 19 February 2008
Dubai Property Delays
Dubai: Property prices have quadrupled in Gulf Arab countries due to surging demand for housing and office space created by economic growth and windfall revenues from a 5-fold increase in oil prices since 2002. Dubai, the Gulf commercial hub, has already set an annual rent cap of 5% for 2008, tighter than last year's 7% cap and the 15% ceiling of 2006.
Jones Lang LaSalle expects a supply surplus in Dubai between 2010 and 2012. This adjusts the global real estate investor's previous forecast that supply would surpass demand between 2007 and 2009.
Real estate prices and rents in the Gulf Arab region, especially Dubai are most likely to rise by up to 20% in 2008, due to higher labor and construction costs and delivery delays, says market analyst, Jones Lang LaSalle.
Blair Hagkull, Regional Managing Director, Jones Lang LaSalle in Dubai, said, "With the delays in delivery, the specter of huge supply continues to be delayed and you see greater demand... there will also be an increase in labor and construction costs and land prices".
Of 57,000 residential units expected in Dubai in 2007, less than 20% were delivered by September, Cairo-based investment bank EFG-Hermes said in a report that month. It said then it expected a rise of 5-10% in property prices in 2008.
Jones Lang LaSalle expects a supply surplus in Dubai between 2010 and 2012. This adjusts the global real estate investor's previous forecast that supply would surpass demand between 2007 and 2009.
Real estate prices and rents in the Gulf Arab region, especially Dubai are most likely to rise by up to 20% in 2008, due to higher labor and construction costs and delivery delays, says market analyst, Jones Lang LaSalle.
Blair Hagkull, Regional Managing Director, Jones Lang LaSalle in Dubai, said, "With the delays in delivery, the specter of huge supply continues to be delayed and you see greater demand... there will also be an increase in labor and construction costs and land prices".
Of 57,000 residential units expected in Dubai in 2007, less than 20% were delivered by September, Cairo-based investment bank EFG-Hermes said in a report that month. It said then it expected a rise of 5-10% in property prices in 2008.
Saturday, 19 January 2008
Liquidity and supply issues drive Dubai prices higher
Waiting for a housing crash to buy a property is like hoping to win a raffle. The chances are it may never happen. And when it does you may not have the ticket to claim your raffle prize or the cash to put down on a deposit.
A word of caution to the many pundits who predict a housing crash in Dubai: one thing well known in the prediction business is that when so many people are predicting an event, it seldom happens, or it does so very much later than predicted.
Consider the UK housing market. How many people said the market was becoming overheated in 1999? And yet there was no sign of a downturn until the summer of 2004, and even now prices have barely moved from their peak levels, despite a series of interest rate rises.
The Dubai Marina factor
The same school of analysts now takes a long-look at the Dubai Marina apartment towers shooting up, and concludes that the end of the Dubai property boom is nigh, and that oversupply is clearly close. But this is not what we see in the marketplace.
It is presently very difficult to find a property to buy in Dubai, and even if you move fast the home that you like is likely to be snapped up from beneath your feet by somebody offering more money. This is an ongoing boom, though admittedly mainly for completed property.
The rental market in Dubai has soared so high this year, up 40% on some reckonings, that the Crown Prince General Sheikh Mohammed bin Rashid Al Maktoum has ordered a 15% rental rise cap until the end of 2006. This is hardly the stuff of a property market about to collapse.
Even the upcoming supply is contributing to the boom in prices and rentals by running later and later. For each month's more construction delay means higher rentals and prices in the completed housing market.
What is the base price?
With the huge liquidity in the region is it not more likely that house prices will go higher in the immediate future, before reaching a peak? It could well be that today's prices are therefore the new base price to which prices will fall in a 'housing crash', or the base price level may actually be higher than we see right now.
Meanwhile, those potential buyers who choose to carry on renting have to pay the very high current rental prices; and while the 15% rent cap protects existing tenants, it probably will not help new tenants avoiding a rent rise. Besides which, do not higher rental prices in themselves have an impact on property values?
Surely higher rents make properties worth more, not less? Around the world rental yields are often presently around 50% lower than in Dubai, and why should property investors expect to earn more in a booming city like Dubai? Yet rents have risen by more than house prices this year, can this go on much longer?
No, the immediate pressure on Dubai house prices is all upwards. No doubt supply issues will kick in later on, but this may not be for two or even three more years, assuming that oil prices do eventually come down. But will this happen? Oil supply issues suggest a different market dynamic may be in place.
If oil is now permanently higher in price then Dubai property will settle at a permanently higher level of value as Dubai will become one of the richest cities in the world, and in rich cities property is not as cheap as it currently is in Dubai.
A word of caution to the many pundits who predict a housing crash in Dubai: one thing well known in the prediction business is that when so many people are predicting an event, it seldom happens, or it does so very much later than predicted.
Consider the UK housing market. How many people said the market was becoming overheated in 1999? And yet there was no sign of a downturn until the summer of 2004, and even now prices have barely moved from their peak levels, despite a series of interest rate rises.
The Dubai Marina factor
The same school of analysts now takes a long-look at the Dubai Marina apartment towers shooting up, and concludes that the end of the Dubai property boom is nigh, and that oversupply is clearly close. But this is not what we see in the marketplace.
It is presently very difficult to find a property to buy in Dubai, and even if you move fast the home that you like is likely to be snapped up from beneath your feet by somebody offering more money. This is an ongoing boom, though admittedly mainly for completed property.
The rental market in Dubai has soared so high this year, up 40% on some reckonings, that the Crown Prince General Sheikh Mohammed bin Rashid Al Maktoum has ordered a 15% rental rise cap until the end of 2006. This is hardly the stuff of a property market about to collapse.
Even the upcoming supply is contributing to the boom in prices and rentals by running later and later. For each month's more construction delay means higher rentals and prices in the completed housing market.
What is the base price?
With the huge liquidity in the region is it not more likely that house prices will go higher in the immediate future, before reaching a peak? It could well be that today's prices are therefore the new base price to which prices will fall in a 'housing crash', or the base price level may actually be higher than we see right now.
Meanwhile, those potential buyers who choose to carry on renting have to pay the very high current rental prices; and while the 15% rent cap protects existing tenants, it probably will not help new tenants avoiding a rent rise. Besides which, do not higher rental prices in themselves have an impact on property values?
Surely higher rents make properties worth more, not less? Around the world rental yields are often presently around 50% lower than in Dubai, and why should property investors expect to earn more in a booming city like Dubai? Yet rents have risen by more than house prices this year, can this go on much longer?
No, the immediate pressure on Dubai house prices is all upwards. No doubt supply issues will kick in later on, but this may not be for two or even three more years, assuming that oil prices do eventually come down. But will this happen? Oil supply issues suggest a different market dynamic may be in place.
If oil is now permanently higher in price then Dubai property will settle at a permanently higher level of value as Dubai will become one of the richest cities in the world, and in rich cities property is not as cheap as it currently is in Dubai.
Thursday, 3 January 2008
Dubai rentals tripled during the past two years
According to reports by Asteco, a leading property consultancy, the rental rates in Dubai has almost tripled and has increased to an astounding Dh.270 to Dh.280 per square feet from Dh.90 to Dh.100 per square feet during the year 2005.
The commercial property sector in Dubai has witnessed major boost in office rents during the past few years, due to the high-demand generated by continuous influx of multinationals setting up their base in Dubai and the growth in existing businesses.
The Director -Research Valuation & Consultancy at Asteco has stated that this increase in commercial rents will continue until 2008, due to the delay in construction. But towards the year 2009, majority of new supplies will hit the market, thereby easing rental hikes.
The Asteco report reveals that rent on Shaikh Zayed Road has risen to Dh.350-Dh.375 per square foot, as against Dh.220-Dh.240 during 2006. Few other areas witnessing increased rentals are the Karama, and Bur Dhbai at Dh.265 and Dh.280 per square foot respectively. This reveals a corresponding increase of 51 and 24 percent respectively, over the rates of third quarter 2006.
The rents in Dubai apartments have increased by 25 percent from 2005 to 2006 and by 18 percent from 2006 to 2007.
The commercial property sector in Dubai has witnessed major boost in office rents during the past few years, due to the high-demand generated by continuous influx of multinationals setting up their base in Dubai and the growth in existing businesses.
The Director -Research Valuation & Consultancy at Asteco has stated that this increase in commercial rents will continue until 2008, due to the delay in construction. But towards the year 2009, majority of new supplies will hit the market, thereby easing rental hikes.
The Asteco report reveals that rent on Shaikh Zayed Road has risen to Dh.350-Dh.375 per square foot, as against Dh.220-Dh.240 during 2006. Few other areas witnessing increased rentals are the Karama, and Bur Dhbai at Dh.265 and Dh.280 per square foot respectively. This reveals a corresponding increase of 51 and 24 percent respectively, over the rates of third quarter 2006.
The rents in Dubai apartments have increased by 25 percent from 2005 to 2006 and by 18 percent from 2006 to 2007.
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