Dubai real estate market will peak in 2015, says property boss

Masood Al Awar, CEO of Tasweek Real Estate Development and Marketing.

The rise of Dubai's fast-growing residential real estate market is likely to peak in 2015, but will not suffer the same dramatic pitfall seen in 2008 and 2009, a leading Dubai real estate boss has forecast.

“We do a lot of analytics and we do a lot of market research. We know that every eight or seven years there are some disturbance in the market and nothing can climb so rapidly,” Masood Al Awar, CEO of Tasweek Real Estate Development and Marketing, told Arabian Business in an interview.

“I think 2015 will be the peak but if we sustain it, [growth] can be prolonged to avoid the downturn… avoid the pitfall [of 2008],” he added.

While Property prices plummeted nearly 60 percent in the aftermath of the Dubai property crash in 2008 and 2009, Al Awar said such a dramatic drop was unlikely this time and growth was likely to plateau as the market was being managed in a more strategic way this time around.

“We have to make sure the pitfall is prohibited and we manage the cash flow and move forward. It is about sustainability and growth,” he said.

Tasweek Real Estate Development and Marketing manages a number of projects in Morocco, the UAE and Malaysia and is planning to launch a AED1 billion ($272 million) IPO in the fourth quarter of 2014.

Al Awar’s comments echo those expressed in a report last month by property consultants JLL, which claimed that growth in the Dubai residential market is slowing as government steps to curb speculative buying have an impact and higher prices start to affect demand.

Second-quarter trends in the market suggest the risks of the Dubai property market overheating and then crashing, as it did in 2008-2009, are easing, Craig Plumb, JLL's head of research for the Middle East and North Africa, told Reuters.

"It's good news that the market is slowing down," Plumb said, adding that when the market eventually reached the falling phase of its cycle, the pull-back was unlikely to be as violent as it was five years ago, when it triggered a corporate debt crisis in the emirate.

For now, the residential market is still climbing rapidly; average sale prices jumped 36 percent from a year earlier in the second quarter, compared to 33 percent in the first. Rents gained 24 percent, after 23 percent in the previous quarter.

But on a quarter-on-quarter basis, rises are slowing. Sales prices grew 6 percent in the second quarter, down from 10 percent in the previous quarter, JLL calculated. The increase in rents dropped to 3 percent from 7 percent.

Seeking to avoid another boom-bust cycle, authorities took a series of steps last year to cool the market. The United Arab Emirates central bank imposed caps on mortgage loans, and Dubai doubled its transaction fee on property deals.

Plumb said these steps were having an impact and in addition, market forces were at work as, with prices in many areas back near their pre-crash levels, some buyers started to question the affordability of prices.

While apartment prices have continued to rise, prices of existing villas in particular have started to lose steam, with anecdotal evidence of a drop in asking prices that looks set to continue in coming months, he added.

The cooling of the market can be seen in falling sales volumes for all residential sectors, with Dubai government data showing villa sales shrank almost 50 percent from a year earlier in May, JLL said.

Plumb said that while the residential market as a whole still had further growth ahead of it, and was unlikely to turn down for at least six months, it had entered a period of slowing rent rises that would precede a phase of falling rents.

Other parts of Dubai's property market - hotels, retail space and offices - are further back in the cycle and remain in phases of accelerating rental growth, the JLL report said.

High vacancy rates and plans for future supply continue to constrain the office market, even though rents have been rising modestly, the report found. Dubai remains one of the world's strongest-performing hotel markets, with average occupancy rates around 85 percent in the year to May.

India tops the number of foreign investors and investment transactions in Dubai's real estate market

DUBAI: International Property Show (IPS) beginning here this week will have a large Indian participation under the umbrella of the National Real Estate Development Council (NAREDCO), a leading real estate body in India.

The three-day event, starting on April 8, will see India reinforce its stature not only as one of the leading investors in the Dubai realty market, but also as a country that offers diverse realty offerings to investors based in the Middle East, organisers of the show said.

India tops the number of foreign investors and investment transactions in Dubai's real estate market, according to a statement released here.

Quoting figures from the Dubai Land Department (DLD), it said that more than 8,092 investors from India invested in Dubai real estate during 2013, surpassing all foreigner investors in the Emirate's property sector.

NAREDCO, a leading real estate body which works under the aegis of Ministry of Housing & Urban Poverty Alleviation (MHUPA) in India, has announced that the Indian pavilion will include properties from developers in Mumbai, Delhi, Bangalore, Goa, Noida and Gurgaon.

"Indian investors are very active in Dubai property sector. Investing nearly USD 4.9 billion in Dubai reflects the huge interest from Indian investors in the Dubai market and their confidence in the lucrative returns.

"It is obvious that the Gulf region has presented itself as a key investments player in the world. The well developed infrastructure and strategic location of Dubai will drive this sector to greater success," said Sultan Butti Bin Mejren, Director General of the Dubai Land Department.

Pointing out that for Indians in the Gulf, investing in India is a "sentimental decision" as it is driven by a need to remain connected to their roots, President NAREDCO Sunil Mantri said investment in properties in India would be a lucrative Investment option at a time when the GDP has improved and inflation has moderated.

"With definitive pick up in the economy, as the GDP has improved, inflation has moderated, growth in industrial production is seen with other positive triggers, that has driven the stock markets to the current levels, investment in properties in India would be an lucrative Investment option," he said.

International Property Show was first organised in 2001, and has since grown to become Middle East's foremost property marketplace to meet and to do business with top-tier investors and property professionals from across the globe.

India says no to Chinese high-speed rail

Beijing, March 19:   

 

India has indicated that it will not seek China's assistance in exploring the possibility of setting up its first ever high-speed rail line, dealing a blow to China Railway Corporation, which has been looking aggressively to enter the Indian market, building on its success at home. In China, the company has, in a span of five years, constructed the world’s largest high speed rail network. 

The agreed minutes of the third Strategic Economic Dialogue (SED), which was held here on Tuesday, carried no reference to high-speed rail development, unlike in the previous round. China had pushed for listing high-speed rail as one area of cooperation under the SED’s infrastructure working group – one of the five groups that meet under the umbrella of dialogue. 

The previous SED dialogue, which took place in New Delhi in November 2012, had highlighted three areas of rail cooperation: high-speed rail development programme, heavy haul and station development. 

The minutes released on Tuesday, however, referred to “raising speeds of existing routes” instead of high-speed rail. Indian railway officials said Japan had been awarded a contract to carry out a detailed project report into the feasibility of a Mumbai-Vadodara high-speed rail line. Officials denied that security concerns were a factor in leaving China out of India’s high-speed rail plans. 

“There is no such policy decision,” a senior official told Business Line, saying cooperation was possible in the future, depending on how the Japanese proposal went. Arunendra Kumar, Chairman of the Railway Board, said in an interview cost was the biggest factor. High-speed rail will involve building entirely new track, which would also require significant land acquisition, he said.

Kumar estimated the cost at ₹120 crore per km of track. India is, however, keen to get Chinese expertise in raising the speed on three railway corridors — between New Delhi and Agra, Kanpur and Chandigarh. Chinese officials said they could help raise speed from the current 130 km per hour to 160 or 200 km. 

China has rapidly modernised its rail network, which only three decades ago lagged behind India’s. Express trains run at 200 to 250 km per hour, up from the 110 km per hour speed before a massive modernisation. The Government has also revamped stations to build a network of modern, airport terminal-like rail hubs.

 

High speed network

Indian Railways officials on Wednesday got a first-hand experience of China’s impressive railway network, travelling on a 325 km per hour train between Beijing and Tianjin, from the capital’s sprawling new South Railway station.

While Japan has a far longer history in building high speed rail lines, China has rapidly developed what is now the world’s largest high-speed rail network, building 13,000 km of entirely newly laid track. Wang Mengshu, a prominent railway and tunnelling expert at Beijing Jiaotong University, who advised the Government on its high-speed rail programme, said land acquisition would not be a major factor for India, as in China, most tracks ran on elevated rails and required “minimal farm land”.

But Deputy Chairman of the Planning Commission Montek Singh Ahluwalia, who chaired Tuesday's SED and met with Chinese Premier Li Keqiang on Wednesday, said high-speed rail network may not be cost-effective for India. “In terms of cost effectiveness, we will be the lowest income country to have a high speed rail (network),” he said.

 

Cost factor

“Willingness to pay (may) not (be) that high, and a preference for air will not be easy to get rid of.” In China, however, the Government has defied naysayers: barring one deadly accident, the trains have established an impressive safety record, Wang said. In five years’ time, the high speed rail system has managed to attract twice as many passengers as the entire domestic airline industry, although leaving behind heavy debt. 

For now, India will only be seeking Chinese expertise in heavy haul and in raising speed on its existing rail network, which would require realigning track and strengthening bridges, Ahluwalia said. 

(This article was published on March 19, 2014)

Smart City Technology Investment in Asia Pacific to Total $63 Billion from 2014 through 2023, Forecasts Navigant Research

Smart city innovations are critical to meeting the challenges of rapid urbanization and driving national competitiveness, report finds

BOULDER, Colo. — The list of problems facing contemporary city dwellers and officials in Asia Pacific includes rapid urbanization, stressed city finances, inadequate infrastructure, rising energy costs, congested transportation, climate change, and competition for global investment and skilled labor, all of which place unprecedented demands on cities. Emerging intelligent systems, however, promise solutions, and cities across the region are starting to implement them. According to a new report from Navigant Research, cumulative investment in smart city technology in Asia Pacific will total $63.4 billion during the period from 2014 to 2023.

“Asia Pacific is home to most of the world’s largest and fastest-growing urban areas, and smart city technology is becoming a crucial element of their future development,” says Eric Woods, research director with Navigant Research. “Working with an evolving mix of international and regional smart city technology firms, governments in the region are piloting a variety of technologies to solve urban problems, reduce urban energy and resource use, and prepare for future growth.”
 
With its large number of densely populated megacities and rapidly growing economies, the Asia Pacific region is a primary driver of global urban development trends. It is also the home of some of the most ambitious attempts to direct and channel those trends to national development goals, such as India’s immense Delhi-Mumbai Industrial Corridor, China’s 104 nationally selected smart city demonstration projects, and South Korea’s pioneering Songdo smart city development. According to the report, these will form the laboratories for future smart city development worldwide.

The report, “Smart Cities: Asia Pacific”, provides an overview of the Asia Pacific market for smart city solutions at a crucial point in development. The study examines the demand drivers, policies, implementation challenges, and technology issues related to smart cities in Asia Pacific. Market size projections, segmented by region (Australia/New Zealand, Greater China, India, Japan, Southeast Asia, and South Korea) and sector (smart energy, smart transportation, smart water, smart buildings, and smart government), extend through 2023. The report also provides a comprehensive assessment of smart city initiatives in Asia Pacific and profiles the key industry players in the region.

Chinese Property Developers Face Downward Cycle: Deloitte

Nearly 60 percent of listed Chinese mainland real estate companies registered a decline in net profit margin in 2012, reflecting the beginning of a downward profitability cycle, according to a research report from Deloitte.

The accountancy firm compared the financial data of 174 property companies listed in Shanghai, Shenzhen and Hong Kong in 2012 against 168 companies in the previous year.

The report, published last week, said the sampled property companies achieved an average total revenue of 7.91 billion HK dollars (1.02 billion U.S. dollars) in the reported period in 2012, against 6.35 billion HK dollars in 2011.

Net profit margin dropped 2.65 percent from 2010, albeit a slight increase of 0.5 percent from 2011. A reduction pattern has emerged for returns on equity, which weakened to 9.98 percent in 2012, against 10.72 percent in 2011 and 11.5 percent in 2010, according to the report.

In 2013, the Chinese mainland property market witnessed a constant increase in volume and prices in top-tier cities, and sufficient demand also continued to provide a shelter for the housing market in tier-two cities against policy risks, said Deloitte China's Real Estate Managing Partner Richard Ho.
"Cooling measures will remain in place this year as there is no sign for any change in policy tone," Ho said.

Overall, lower profit margin will be a likely scenario for Chinese real estate companies amid cost pressures from land, financing, marketing and labor, he said.

In comparison with their counterparts in Shenzhen and Shanghai, real estate companies listed in Hong Kong fared better in terms of their market capitalization, reflecting the better performance in Hong Kong's stock market bolstered in part by global quantitative monetary easing policies, the Deloitte report said.

Meanwhile, real estate companies listed in Hong Kong also showed a better average net profit margin, which is indicative of their higher portfolio composition in investment properties and the associated tax impact.

The report also provides some forecast about the mainland's property market for the future. In particular, there is a strong likelihood for continuous integration within the industry to wipe away weaker companies.

The Chinese government will impose policies that drive the real estate industry from high and extensive growth towards more stabilized but sustainable expansion, the report said.

Also emerging as a long-term trend is the rapid development of energy efficient properties, which adopt green and environmentally friendly concepts, it said.

Dangerous trend : India a major destination for global land sharks

Dec 22, 2013 New Delhi

Following Prime Minister Manmohan Singh invitation to China to set up special economic zones and industrial parks in India, a high-level official delegation from Haryana organised a seminar at the 5th China Overseas Investment Fair held in Beijing in early December, offering land, power and other necessary infrastructure for setting up industrial parks.

While the prime minister is expecting Chinese foreign direct investment to boost manufacturing output, already sluggish because of surging cheaper imports from China, Haryana is going all out to woo Chinese companies to buy farmland. It has already taken around some potential Chinese investors and shown them sites extending to as much as 6,000 acres in Gohana. Not only Haryana, Chinese investors have also visited Uttar Pradesh, Gujarat, Maharashtra and Tamil Nadu looking for probable sites.

Haryana already has signed an agreement with the Japanese major Mitsui to set up an industrial park in the national capital region. Haryana is no exception. Foreign companies from Britain, US, Austria and Thailand have concluded 36 deals to buy agricultural land in India in the states of Gujarat, Orissa, West Bengal and Andhra Pradesh. Seven of these deals have already been completed allowing 13,105 hectares to be acquired. This much land acquisition is only for seven deals. Imagine the extent of productive and fertile land that needs to be acquired for all the 36 deals in the pipeline.

These figures are based on an excellent detailed insight provided by the website, Land Matrix. Interestingly, the Chinese investors are being offered land for ‘purchase’ and they will have the right to re-sell the land.

With more and more Chinese investments pouring in, it is time to also revisit strategic ties with China. After all, with lakhs of soldiers deployed in harsh terrain to guard the 3,380 km long Line of Control with China, of which Arunachal Pradesh alone has a common border extending to 1,463 km, the thrust is to protect every inch of land against Chinese intrusion. This policy of protecting national borders certainly needs a review considering that the Chinese are being allowed to purchase land within the country. But will Beijing ever allow Indian companies to buy such huge tracts of farmland in China?

Nevertheless, coming back to the contentious issue of farmland grab, I remember some years ago, the deputy chairman of the Planning Commission, Montek Singh Ahluwalia, had on a visit to Oman, invited Omani firms to farm in India to produce crops that can be exported. At a time when food prices have hit the roof and any measure to limit domestic production should raise concerns considering the growing food requirement for feeding the nation in the years to come, the public policy priorities  seem out of tune.

So far you had read that Indian companies were buying land in Africa, Asia and South America. Of the 848 land grab deals concluded globally since 2008, 80 involve Indian companies that have invested in 65 deals to grow foodgrains, sugarcane, oilseeds, tea and flowers. And as a news report computed, India has already bought land abroad nine times the size of Delhi.

While Indian companies are buying land abroad, foreign companies are buying land in India. That India has now turned a major destination for global land sharks has to be viewed with concern.

At this rate the day is not far off when increasingly more and more people will become landless in their own country. The US National Academy of Science calls it ‘a new form of colonialism’ while mainline economists term it as a model of economic growth. However, the fact remains that land grab has become a major investment activity over the past few years. This is frightening as it has grave human rights implications, and will impact global food security to say the least. It calls for a national debate.

Devinder Sharma is a food policy analyst

Following Prime Minister Manmohan Singh invitation to China to set up special economic zones and industrial parks in India, a high-level official delegation from Haryana organised a seminar at the 5th China Overseas Investment Fair held in Beijing in early December, offering land, power and other

necessary infrastructure for setting up industrial parks. While the prime minister is expecting Chinese foreign direct investment to boost manufacturing output, already sluggish because of surging cheaper imports from China, Haryana is going all out to woo Chinese companies to buy farmland. It has already taken around some potential Chinese investors and shown them sites extending to as much as 6,000 acres in Gohana. Not only Haryana, Chinese investors have also visited Uttar Pradesh, Gujarat, Maharashtra and Tamil Nadu looking for probable sites.
Haryana already has signed an agreement with the Japanese major Mitsui to set up an industrial park in the national capital region. Haryana is no exception. Foreign companies from Britain, US, Austria and Thailand have concluded 36 deals to buy agricultural land in India in the states of Gujarat, Orissa, West Bengal and Andhra Pradesh. Seven of these deals have already been completed allowing 13,105 hectares to be acquired. This much land acquisition is only for seven deals. Imagine the extent of productive and fertile land that needs to be acquired for all the 36 deals in the pipeline.
These figures are based on an excellent detailed insight provided by the website, Land Matrix. Interestingly, the Chinese investors are being offered land for ‘purchase’ and they will have the right to re-sell the land.
With more and more Chinese investments pouring in, it is time to also revisit strategic ties with China. After all, with lakhs of soldiers deployed in harsh terrain to guard the 3,380 km long Line of Control with China, of which Arunachal Pradesh alone has a common border extending to 1,463 km, the thrust is to protect every inch of land against Chinese intrusion. This policy of protecting national borders certainly needs a review considering that the Chinese are being allowed to purchase land within the country. But will Beijing ever allow Indian companies to buy such huge tracts of farmland in China?
Nevertheless, coming back to the contentious issue of farmland grab, I remember some years ago, the deputy chairman of the Planning Commission, Montek Singh Ahluwalia, had on a visit to Oman, invited Omani firms to farm in India to produce crops that can be exported. At a time when food prices have hit the roof and any measure to limit domestic production should raise concerns considering the growing food requirement for feeding the nation in the years to come, the public policy priorities  seem out of tune.
So far you had read that Indian companies were buying land in Africa, Asia and South America. Of the 848 land grab deals concluded globally since 2008, 80 involve Indian companies that have invested in 65 deals to grow foodgrains, sugarcane, oilseeds, tea and flowers. And as a news report computed, India has already bought land abroad nine times the size of Delhi.
While Indian companies are buying land abroad, foreign companies are buying land in India. That India has now turned a major destination for global land sharks has to be viewed with concern.
At this rate the day is not far off when increasingly more and more people will become landless in their own country. The US National Academy of Science calls it ‘a new form of colonialism’ while mainline economists term it as a model of economic growth. However, the fact remains that land grab has become a major investment activity over the past few years. This is frightening as it has grave human rights implications, and will impact global food security to say the least. It calls for a national debate. 
Devinder Sharma is a food policy analyst - See more at: http://www.hindustantimes.com/comment/analysis/dangerous-trend-india-a-major-destination-for-global-land-sharks/article1-1165488.aspx#sthash.vE8FTnGz.dpuf

China's new home prices rise at fresh record pace

China new home prices hit a fresh record growth rate in November, despite repeated measures by Beijing to cool the red-hot property sector. 

 

Prices of new homes rose 9.9 percent in the month from the year ago period, according to Reuters calculations based on data from the National Bureau of Statistics Wednesday. This compares to an annual rise of 9.6 percent in October. 

 

On a monthly basis, prices climbed 0.5 percent, compared to 0.6 percent in the previous month.

In Shanghai, new home prices rose 18.2 percent from the year-ago period, while prices in Beijing logged a 16.3 percent climb year on year.

According to Donald Han, Managing Director at property consultancy Chesterton Singapore, this adds pressure on China to do more to curb demand. 

 

"Looking at the current scheme of things, we think the government will probably keep it status quo at least in the next 3 to 6 months and potential new measures may come in the second half of 2014," he said. 

 

"New measures could include widespread property tax measures, particularly in first and second tier cities, continue releasing more land supply, which would calm markets in supplying more properties to meet demand. Third component will be through fiscal measures, curbing loans and credit." 

Home prices in China have continued to set records despite a campaign by the government in recent years to cool the market. There are concerns over the risk of social unrest if housing becomes unaffordable