The market for residential property in Dubai is now "close to its cyclical trough", but in Abu Dhabi prices and rents may have much further to fall, according to a new report by consultancy JLL.
The firm’s new “2016 Year in Review” report for the UAE property markets argues that the market faced short-term challenges in 2016 as it adjusted to a “new normal” of lower oil revenues, with the rate of growth of GDP dropping from 4.5 per cent in 2015 to just 2.3 per cent last year, and employment growth remaining constant at 1.5 per cent as companies in sectors like banking and oil & gas consolidated staff numbers.
However, it said the medium-term outlook for the UAE economy is much more positive.
“The real estate market in the two largest emirates of Dubai and Abu Dhabi reflect their relative economic strengths,” said Craig Plumb, the head of research at JLL Mena.
He said that Dubai’s more diversified economy, and the fact that prices started to fall in the emirate earlier than Abu Dhabi, meant that it is closer to the bottom of the property cycle than Abu Dhabi, where prices may continue to fall further.
Apartment sale prices in Dubai fell by just 1 per cent year-on-year, JLL said, citing figures provided by Reidin. Villa prices actually increased by 2 per cent. In Abu Dhabi, prices of both apartments and villas fell by 11 per cent year-on-year, while apartment rents dropped by 7 per cent and villa rents by 4 per cent.
The report found that 14,600 new homes were completed in Dubai last year – the highest number since 2012, when 16,000 new homes were delivered. These figures included more than 1,500 villas for Emirates staff in Meydan, over 1,000 new homes at Mira in Emaar Properties’ Reem Community and 1,200 apartments at Meraas Holding’s City Walk project.
There are 35,000 units currently scheduled for completion this year, which would bring the total amount of residential units on the market to 502,000. As in past years, though, JLL said that it expects the actual number to be handed over to be much lower, with deliveries in recent years typically equating to about 35 per cent of forecasted numbers.
In Abu Dhabi, only 3,100 new units were completed, brining the total stock to 248,000. Some 5,000 units are due for completion this year, but as in Dubai, the actual number delivered is likely to be lower as projects are delayed.
In the office market, supply increases in both Dubai and Abu Dhabi were fairly limited, with rents remaining flat in the former and declining by 5 per cent in the latter. The report said the office market in the capital is facing softening demand, because of a fall in demand from oil firms, a reduction in government spending and mergers between major organisations such as Mubadala and Ipic as well as banks NBAD and FGB.
mfahy@thenational.ae
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The specs
Price: From Dh180,000 (estimate)
Engine: 2.0-litre turbocharged and supercharged in-line four-cylinder
Transmission: Eight-speed automatic
Power: 320hp @ 5,700rpm
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Fuel economy, combined: 9.7L / 100km
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6.20pm: West Acre
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Specs
Engine: Duel electric motors
Power: 659hp
Torque: 1075Nm
On sale: Available for pre-order now
Price: On request
Test
Director: S Sashikanth
Cast: Nayanthara, Siddharth, Meera Jasmine, R Madhavan
Star rating: 2/5
Results
STAGE
1 . Filippo Ganna (Ineos) - 0:13:56
2. Stefan Bissegger (Education-Nippo) - 0:00:14
3. Mikkel Bjerg (UAE Team Emirates) - 0:00:21
4. Tadej Pogacar (UAE Team Emirates) - 0:00:24
5. Luis Leon Sanchez (Astana) - 0:00:30
GENERAL CLASSIFICATION
1. Tadej Pogacar (UAE Team Emirates) - 4:00:05
2. Joao Almeida (QuickStep) - 0:00:05
3. Mattia Cattaneo (QuickStep) - 0:00:18
4. Chris Harper (Jumbo-Visma) - 0:00:33
5. Adam Yates (Ineos) - 0:00:39
Tax authority targets shisha levy evasion
The Federal Tax Authority will track shisha imports with electronic markers to protect customers and ensure levies have been paid.
Khalid Ali Al Bustani, director of the tax authority, on Sunday said the move is to "prevent tax evasion and support the authority’s tax collection efforts".
The scheme’s first phase, which came into effect on 1st January, 2019, covers all types of imported and domestically produced and distributed cigarettes. As of May 1, importing any type of cigarettes without the digital marks will be prohibited.
He said the latest phase will see imported and locally produced shisha tobacco tracked by the final quarter of this year.
"The FTA also maintains ongoing communication with concerned companies, to help them adapt their systems to meet our requirements and coordinate between all parties involved," he said.
As with cigarettes, shisha was hit with a 100 per cent tax in October 2017, though manufacturers and cafes absorbed some of the costs to prevent prices doubling.
COMPANY%20PROFILE
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
Specs
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COMPANY PROFILE
Name: Qyubic
Started: October 2023
Founder: Namrata Raina
Based: Dubai
Sector: E-commerce
Current number of staff: 10
Investment stage: Pre-seed
Initial investment: Undisclosed
Formula Middle East Calendar (Formula Regional and Formula 4)
Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
Round 3: February 7-9, Dubai Autodrome – Dubai
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia
The White Lotus: Season three
Creator: Mike White
Starring: Walton Goggins, Jason Isaacs, Natasha Rothwell
Rating: 4.5/5
THE SPECS
GMC Sierra Denali 1500
Engine: 6.2-litre V8
Transmission: 10-speed automatic
Power: 420hp
Torque: 623Nm
Price: Dh232,500
The specs: 2018 Nissan 370Z Nismo
The specs: 2018 Nissan 370Z Nismo
Price, base / as tested: Dh182,178
Engine: 3.7-litre V6
Power: 350hp @ 7,400rpm
Torque: 374Nm @ 5,200rpm
Transmission: Seven-speed automatic
Fuel consumption, combined: 10.5L / 100km
