The story of grand Burj Khalifa – From completion to the date!

The super tall skyscraper, Burj Khalifa, is not only the tallest structure in the world but is also one of the luxurious and lush developments which add to the lure of Dubai. Being the centre of the mixed-use flagship development Downtown Dubai, Burj Khalifa includes 30,000 homes, 19 residential towers, nine hotels, observation deck, Parkland and man made Burj Khalifa Lake. The height of this tallest skyscraper is approximately 829m and it is expected to remain the tallest structure in the world until 2017.

Completion during bad times!

When the global final crises hit Dubai property market, Burj Khalifa was under construction. When it was completed on 4^th January, 2010, the real estate sector of Dubai was in distressed condition. Overall the rate of vacancies and foreclosures were quite high and the confidence of the investors on Dubai real estate was badly shattered. When Burj Khalifa was opened, it was thought that it would not only raise the prices of properties in Dubai Downtown but also set the track of Dubai real estate on the whole towards recovery.

After the two months of its completion, a report was issued according to which occupancy levels in Downtown Dubai were reported to be 70%. These occupancy levels were mostly of the other developments and in Burj Khalifa, vacancy rate remained high. The wave of hopelessness spread when even after ten months of the completion, the vacancy rate of the apartments in Burj Khalifa remained quite high. The rents of the apartments fell by 40% due to lack of demand. Even out of total 900 apartments, some 825 were lying vacant at that time.

Cheerful News about Burj Khalifa!

With the better price stabilization noticed in 2011, experts predicted quick start to recovery in 2012. Finally 2012 is there and as predicated, it has brought first cheerful news about the Burj Khalifa residences. The results of Q1 have clearly indicated a growth of 9% to 10% in the prices of apartments in Burj Khalifa as compared to the previous quarter. During the final quarter of 2011, prices ranged Dh2600 to Dh3200 but now the same apartments are selling at Dh2850 to Dh3600.

The apartments providing awe-inspiring views of the lake, fountain, park or the road are selling at higher prices as compared to those that don’t offer such views. Consequently the prices of apartments having great views are improving while for the rest of the units they are showing stagnancy. On the other hand, rents are also showing minimal increases.

With the better demand forecasts in Downtown Dubai in the coming months, higher occupancy levels in Burj Khalifa are also expected, since luxurious properties are now at the top of the priority list of the investors and no other development can ever beat the luxurious lifestyle of the spectacular Burj Khalifa residences.

Dubai is still playing the role of a sound trading hub

Long ago Dubai left its dependence on oil and gas reserves and turned into a trade and tourism hub. Boom in trading and tourism activities also increased the demand for its Dubai real estate sector. However, the economic crunch changed the situation and investors flew back to their home countries, abandoning their property in Dubai. Most of the businesses were closed or shifted to the neighbouring states. However passing through all the upheavals of past years, Dubai has made a comeback and reinforced its role as a stable and sound trading hub in the region. Entrepreneurs are expanding their businesses by apprehending the market situation.

This truth is supported by the stock market statistics of last month that reveal the stock market performed better than anywhere else in the world as businesses improved earnings so they paid higher dividends. The government officials claim that the city has no need to raise money from international bond markets this year.

The Viewpoint
It is expected that Dubai’s economy will expand and a few analysts have estimated that it will expand as much as five percent this year after growing more than three percent in 2011. This is one of the reasons that businesses are shifting back to Dubai and people are buying more and more commercial properties in Dubai.

The safety Factor
According to one of the analysts, Dubai is growing once again in transportation, logistics, tourism and the economy is being better managed currently from a couple of years prior to 2008. Businesses are coming back to Dubai due to political stability of the region. Therefore, economic growth and political stability both are favouring recovery in Dubai.

Decline in Costs
The decline in the cost of conducting business is also making Dubai more competitive. Dubai rent amounts have decreased around 65 percent on average as compared to the peak prices prior to 2008. Therefore, more and more businesses are shifting back to Dubai and the existing companies are expanding their businesses to take benefit from these opportunities.

Performance highlights of Office market in Dubai

If you stay at the top of the Dubai real estate news, you might now that the residential sector in Dubai has clearly outperformed its office sector through out all the consecutive quarters of 2011. Those, who are satisfied about the current performance of Dubai real estate and predicting better times ahead, should not forget the root cause of real estate collapse in Dubai.

Lack of business opportunities brought the once spectacular Dubai real estate sector to death. The overall real estate market will remain poor unless government creates better employment opportunities in Dubai. The office market seems to be in pressure in Dubai, which clearly shows that the problem of unemployment still exists in the economy.

Though office rents in Dubai remained static through out all the quarters in 2011, yet the new office space constantly being added in the market is preventing the sector to show quick recovery. The lower demand and the high supply in the market is adding pressure to the vacancy rates. Based on the performance of the market during 2011, it is expected that that office market will continue to remain in pressure during 2012.

According to a new report, the Dubai rental rates remained in the range of Dh.1080 to Dh. 1940 per square meter annually during the fourth quarter of the previous year. Since, the buyers are now looking forward to having only quality properties so the offices in the prime locations outperformed the office in the secondary locations. The rents in the secondary locations dropped by around 11% in 2011 as compared to 30% decline recorded in the previous year.

Almost 58,000 square feet of the office space was added to the market during 2011, which highly increased the vacancy rates. Despite the situation, landlords are still hesitant to offer incentives to the tenants with only few landlords considering to offer rent free periods on long term tenancy contracts.

During the year 2012, approximately 750,000 square meter of office space has been scheduled for completion without any construction delays, which is expected to keep the office market in pressure through out the year. The vacancy rates would increase but they would not affect the lease rates unless government takes in time corrective action to fix the issue of oversupply in the office market.

Though the heavy supply would be added to the secondary office market, yet this oversupply if not controlled seriously cannot only deteriorate the office market in Dubai but it can also affect the residential sector of Dubai real estate. That would be the time when there would be nothing to cheer about Dubai real estate and to avoid it, government must block the news supply scheduled to add to the market during the year.

Dubai and Abu Dhabi rental market – What to expect in 2012?

Dubai rental market trends
The higher stability observed in Dubai real estate during 2011 has led experts to predict a kick-start recovery in initial few months of 2012. Dubai rental market is expected to spring back to life because rentals of the residential units have already fallen to the maximum extent in most of the areas across Dubai. New supply of property units is expected to become part of the market during first six months of the year and this oversupply will match the rising demand and set Dubai rental market on steady recovery track.

The demand of the Dubai rental properties is expected to originate from the GCC nationals who consider Dubai the best city for enjoying quality lifestyle. Since the landowners in Dubai know that the troubled real estate has turned general investors into astute ones, therefore to increase the property demand and lure the investors to the vacant properties, they provide better amenities and facilities.
Currently the rents are showing high stability in the areas like Downtown Dubai, Al Barsha, The Greens, and Dubai Marina. Although some areas, like Discovery Gardens, Silicon Oasis and Jumeirah Lake Towers, still show rental declines of 5-15%, yet the rate of this decline is expected to slow down with the increase in demand. The recovery is expected to gain momentum gradually and as a result, the rental market may bounce back in 2012.

Abu Dhabi rental market trends
The expected trends for the Abu Dhabi real estate in 2012 are entirely different from that of Dubai real estate. Rents in Abu Dhabi are accepted to continue falling during 2012. In 2011, the supply of units in the capital remained steady, which badly affected the rental rates and thus the problem of oversupply will continue troubling the market in the following year as well.

Especially in 2011, a significant decline in rental rates was noticed in some areas outside the city due to large supply of new units. New supply of 5000 residential and commercial units will strike the market in the first quarter of the New Year. Since the sales prices and rentals have not touched the bottom level, the trend of rental declines will continue.

In order to attract tenants towards the properties, landlords are providing various incentives like grace period of one or two months in which no rent would be charged and free renovation services. Some property owners are even renting out their properties with free utility services and without setting a requirement of annual rental increases.

Things to watch when investing in off plan properties

In days before slump Dubai government successfully created the demand for the off plan properties in Dubai, which is very difficult. Investors traded off plan properties heavily before slump but when the global recession and slump covered the whole world, the off plan properties were first to get affected. The reason was that off plan properties does not physically exist and in days of recession it is really difficult to make the demand of something that physically do not exists.

Actually, off plan properties are never mend for short term profits. Off plan properties are always for the long term investment planning in which investor has no worries about the temporary phases of slump. Off plan properties have always remained attractive for buyers as the yield far greater results in long term. In here we will discuss some points which will help investors to make a well informed decision before buying.

Always keeps long term planning
Before even thinking about investing in off plan properties, keep in mind the long term planning. If you have misjudged off plan properties that they will yield good result in short time period like it does in old times then you are totally wrong. For short-term investment, try to invest in fully developed areas.

Checking the Reputation of Developer
If you are sure about investing in off plan properties then the first thing you need to do is to check the reputation of developer. Check the previous records of developer, how many projects he has delivered, and how many of them were on time.

Work on site
After recession, most of the projects in Dubai were halted, so do not forget to visit the site and check the work going on. Sometimes developers trick investors by showing them architectural drawings and other maps rather than showing them actual construction work going on. Also contact the RERA and confirm the status of the project, as all construction projects and their actual details are available on RERA.

Consider the Location
Location is also an important factor, as some projects are very far from the main city thus take too much time to get developed. Try to invest in off plan properties that are located near to the main hub of the city.

Dubai developers shifting their focus from Mega-Malls to Small Community Centres

From the last couple of decades, the city of Dubai has been known for its mega malls and big shopping centers. However, recently Dubai real estate developers realized that the trend and need of mega malls has shifted and therefore they now plan to concentrate on small scale retail centres. Shopping centres, like Mall of Emirates and Dubai Mall have used everything, such as huge aquariums and ski slopes, to attract tourists. However, only 15 – 30 percent vacancies are available in existing malls during the third quarter of 2011 and no new large malls are expected to complete till 2014.

According to a director of Dubai real estate consultancy, the residents of Dubai or UAE have decided on what kind of malls they will like to visit in future. The residents need shopping centers nearer to their homes; they need convenient and easy shopping facilities to meet their daily needs. The chairman of Nakheel properties, a government owned development company in Dubai, also confirmed that they are shifting their focus to community malls and announced to construct two local shopping malls. Emaar, one of the largest developers in UAE has also recently built 6 community centres in different areas of Dubai.

Many analysts and experts are of the view that the entity which has not been hit primarily by the global recession is the local shopper. The obvious result is that the local community centres, which aim to fulfill the daily needs of the locality, are likely to remain more profitable. From economic perspective, these mega malls are no doubt among the greatest assets of Dubai; these malls have attracted wealthy tourists from adjacent Emirates and all around the world. UAE is known for its intense heat in summer season, these mega-malls are equipped with centrally air-conditioned halls which become the oasis for people against the scorching heat of 46 °C and at the same time make spend considerable amount of money. For Dubai citizens, these mega malls are essential part of their life.

Developers of Dubai properties appear to have mixed feelings about not focusing on bigger malls right now as some are focusing on smaller community centres while others are still in the favor of mega malls. Mall of Arabia is expected to complete by the end of 2015 and is expected to be the biggest shopping centre in Dubai and one of the biggest in the world.

Widespread Subletting trend can result in Legal action

After the great recession of 2008, the conditions of the worldwide countries changed. In Dubai, this change has come in the form of high inflation rate and high unemployment level. To make ends meet, the tenants have started subletting their rented apartments and villas. In subletting actually, the tenant sublet a room or two to someone else without the consent of the owner. According to Dubai law, the tenant who has sublet the Dubai property without the consent of the landlord will have to face legal eviction. According to senior lawyers, if convicts fail to provide the letter of consent from the owner, they will face legal action that sometimes even leads to serious consequences.

As explained earlier, due to economic downturn and recession, the trend of subletting apartments in Dubai is increased in Dubai at a great extent. This trend is especially prevalent among expats working in Dubai. Law and property experts warn every resident of Dubai that if they are paying their rent to their housemates, they might be unknowingly subletting which is direct breach of Dubai laws. According to a Dubai real estate expert, most of the leases entirely prohibit subleasing or state that subleasing will be only legal if they have legal written consent of owner. The expert also stated that most of the individuals are unaware of the fact that subleasing is illegal and if in any case they are taking a sublease then they should stop it immediately as the ignorance of law is no excuse. They should better check the head lease and should confirm that whether the original tenant have the right to sublease or not.

The reason of the widespread popularity of sublease is due to its flexible renting option in Dubai. It divides the burden of utility bills among the residents. The sublease tenant also has no need to sign the contract, which bounds him for 12 months. This ultimately allows the tenants to roam freely in Emirates for jobs without any restriction of living in one place.

Things can get worse for tenants who are unaware of this law. They have no protection and the tenants can be evicted in matter of days. According to one of the expats, he has been living in an apartment and did not know the fact that the actual owner has no idea that they are living on subleasing. On a surprise visit of the owner, the whole matter was disclosed and the owner immediately took the decision that they would have to leave within one month because he (owner) has no idea that the apartment was being sublet. The expat also added that he had no knowledge of the letter of consent for the sublease of apartments in Dubai.

The lawyers have showed worry for ignorant tenants and are of the view that there can be further complications and problems if the original tenant and the sublease tenants are living in a same apartment or villa. If the original tenant leaves the city then the sublease tenants will have no right to live in the house as they are not the legal tenants. This matter becomes more serious when original tenant flees away and sublease tenants are held responsible for payments and everything.

Dubai Law No. 9 of 2009 – Bringing back buyers or scaring them away

The recent development in the ongoing tussle between developers and investors in Dubai is a new amendment made by Dubai Land Department in real estate laws, the issuance of a new law which is known as Law No. 9 of 2009. Just when a decision by Dubai Real Estate Court took the edge off the investors' misery, this law might knock them over again. On the other hand, the developers who were infuriated by the decision, would be feeling much relieved now, seeing that the buyers now can not terminate off plan contracts on their own. On the face of it, the new law explains the ratios of refunds made by a developer to buyers in different circumstances, however it is perceived as a law, which practically disables buyers from terminating an agreement.

The law states that the only way an investor will be able to opt out of the agreement, is to take their case into the court with well founded reasons. Another way out of the agreement is to request Dubai's Real Estate Regulatory Authority (RERA) to cancel the project. In a market where investors were already feeling the heat, this law will perhaps, further dampen the spirits; still such law was expected to prevent buyers from exploiting the market, which is already going through a rough phase.

Law No 09 of 2009 sets down the rate of refunds, based on the overall completion of the project. For instance, if the developer has completed 80% of the project, the developer will not be liable to pay back any of the amount paid, and in case the investor defaults on the remaining amount, the developer can request for an auction of the property. If the project was 60% completed, developer can keep 40 percent of the purchase price. Less than 60% completion means 25% deduction, while in case of no construction at all, the developer will keep 30% of the total payment made by buyer. Note, that in first three cases, the relative amount is the total purchase price of unit, while in the last scenario (where no construction took place) we are talking about the total amount that buyer has paid to the developer.

Therefore, buyers are obliged to forego some amount unless the project is canceled by Real Estate Regulatory Authority (RERA). In that case, the developer has to return all amounts with no deduction, within one year of the cancellation.

Source:
Abu Dhabi Real Estate

Dubai International Airport – Buzzing with Activity

Enough of all those doom and gloom predictions for Dubai, news is that Dubai airport has shown a seven percent increase in the overall traffic last year. In addition to that, five new airlines have started their services from Dubai airport, which now ranks at number 6 in the list of busiest airports in terms of international traffic (and 15th by overall traffic according to statistics in 2009). With the addition of new airlines, total number of airlines operating from Dubai international airport has reached to 130. Remember, this investment has came at a time when airlines from all over the world are going through a crisis like situation and desperately looking to cut down costs through downsizing and other measures. And it’s not only the outside investors, Dubai government has also been investing heavily in this airport, which is projected to accommodate a whopping 75 million passengers per annum in the year 2011, it will probably take it to the 3rd position in the world’s busiest airports.

These numbers become even more impressive, when we look at other airports appearing on top of the list, for example four of them are the central airports in United States, two in China, then we have the big names like London Heathrow Airport, Tokyo International airport, and the like. As you can see, Dubai is getting as much international traffic as the cities like London, New York or Tokyo. Apart from the passengers, 1.8 million tons of cargo also passed through this airport during 2008. The airport that started functioning from just 2 international flights, back in 1937, today has turned into a hub for passengers and freight coming from all over the world. Presently it has four terminals, while another one is under construction. Dubai government has been working on construction and expansion of this airport, upon completion; it is estimated to be one of the biggest airports in the world.

Some people must be thinking (especially those who were busy telling stories of how Dubai has faltered big time), this traffic must have been those foreigners who are trying to abandon this place as soon as possible. Well, not really, as Dubai tourism statistics show an equally healthy figure, Dubai is still getting more tourists than the cities like Paris, London or Singapore and its peak season has not even started (Dubai gets most of its tourists in the months of July, August and September).

Source:
Dubai Rent
Dubai Real Estate Agents