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Rental income in Dubai expected up to 7%

Rents to witness ‘affordability’ adjustment due to supply of 25,000 new units

Apartment sale prices in Dubai fell 3.7 per cent, mid first-quarter, pushing rental yields to 7 per cent, reveals Phidar Advisory’s new report.

“Sale price decline is outpacing rent declines, pushing yields up to 7 per cent for apartments. Villa segment saw prices decrease 3 per cent and marginal increase in yield for villas,” the Dubai-based real estate consultancy said in its note ‘Mid-Quarter, Q1-2015 on Dubai Residential Market’.

Apartment lease rates registered a nominal decrease of 0.5 per cent, while lease rates for villas decreased 2.4 per cent.

However, the Reidin.com rent index for January 2015 showed rentals going up 0.67 per cent, showing a year-on-year (y-o-y) increase of 11.8 per cent.

Read: Expert forecast wrong for January 2015: Dubai rents rise

UK-based Global Property Guide, which collates real estate data from across the world, puts gross rental yields for apartments in the range of 5.87 per cent to 7.21 per cent, with rents averaging $21 per square metre per month for large apartments and $22 per square metre per month for small apartments. Remember, there is no tax on your rental income in the UAE.

Jesse Downs, Managing Director of Phidar Advisory, one of the author’s of the report, feels the market performance will depend on a confluence of exogenous and endogenous factors over the next 12 to 30 months.

The consultancy expects rents will continue to soften as sale price declines outpace rental declines, which will allow yields to gradually expand through 2015.

“The 2015 new supply forecast is up to 25,000 residential units, which is significantly higher than 2014, and will cause rents will undergo a gradual ‘affordability’ adjustment,” she adds.

 

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Super-rich opt for Dubai’s Palm, Downtown over Monaco

Luxury properties in emirate are 10 times cheaper than French Riviera city-state

Non-European ultra high net worth (UHNW) individuals – those with $30 million or above in assets – are investing in Dubai’s luxury property market, according to a Wealth-X and Sotheby’s International Realty.

“For decades, the markets of London, New York and Paris have been hubs for real estate investments. In the last decades, however changes have occurred, with the rise of hubs like Hong Kong, Singapore and Dubai heralding a new wave of real estate investments,” said the report, titled “The Global Luxury Residential Real Estate Report 2015.”

It further added that non-European super-rich individuals were buying in Dubai and Singapore over Monaco as it was witnessing increase in real estate prices.

Previous reports have stated Dubai to be among the world’s cities that are fastest growing in importance for high net worth individuals with UAE nationals named among list of nationalities growing in importance for the world’s prime second home buyers’ market.

The Wealth Report 2013, produced by Knight Frank, a global property company, reported that Dubai’s prime luxury properties were over 10 times lower than Monaco, the world’s most expensive residential property market.

Property experts said that Dubai’s location, tax-free and safe haven status were few reasons driving the rich to buy here.

A recent market analysis by Luxhabitat, a Dubai-based real estate brokerage firm, also found that maximum number of properties above Dh5 million were sold in Downtown Dubai last year followed by Dubai Marina and Palm Jumeirah.

Read: Rich splurge on Downtown Dubai; Burj Khalifa favourite

UK-based Knight Frank has said property prices in the emirate are much more affordable among the top global cities in the world with the country levying one of the lowest property purchase taxes worldwide.

In a report on India’s UHNI individuals, a Kotak Wealth Management and CRISIL Research said the choice of location is paramount because a luxury home is a status symbol and represents exclusivity.

Wealth-X-Sotheby report reveals that the 211,275 UHNW individuals own $2.9 trillion worth of owner-occupied residential properties, with 79 per cent of these superrich owning two or more properties and just over half of them owning three or more residences.

UHNW individuals keep their primary residences for an average of over 15 years and their secondary residences for over 10 years, while billionaires change their properties once every three years.

Over 6 per cent of the world’s UHNW population is made up of expatriates i.e. individuals who are currently based outside their home countries. These individuals are stimulating residential real estate demand in their home countries’ markets – for example, India’s non-resident population is increasing demand in Mumbai’s residential real estate market, the report adds.

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Hottest expat destinations: Where UAE ranks…

UAE ideal for expats who want to enjoy high quality of living; is safe place for raising children: Survey

By

  • Vicky Kapur

Published Sunday, March 08, 2015

Benefits reported by UAE expats include higher salaries – 58 per cent compared to a global average of 40 per cent. (File)

Rising cost of accommodation and children’s education are among primary reasons that seem to have kept the UAE from rising in position in this year’s HSBC rankings of hottest expat destinations.

The UAE has been ranked No. 15 overall in the Expat Explorer 2015 survey conducted by HSBC (same as last year), but behind GCC peer Bahrain (ranked at No. 5 this year) and also behind Qatar and Oman (ranked at No. 13 and 14, respectively).

HSBC says its Expat Explorer ranks 34 countries using a score that summarises expats’ overall impression of the different countries.

The overall score is the average of the Expat Economics, Expat Experience and Raising Children Abroad scores, covering 43 different criteria from the survey.

6 reasons why the UAE remains an expat magnet

The survey, however, notes that the UAE is a “great option” for career-focused expats who also enjoy a high quality of living, and is an extremely safe place for raising children.

“The United Arab Emirates emerges from this year’s survey as a great option for career-minded expats looking for a high quality of life, securing a solid score from expats across all criteria, but particularly for Expat Economics where it ranks 10th out of 34 countries,” says the survey.

The main attraction for expats to move to the UAE appears to be the career opportunities, with 60 per cent of expats believing that the move will improve their job prospects, well above the global average of 38 per cent.

In addition, more than a third (37 per cent) state their main motivation for moving was to pursue a higher quality of life, and over half (54 per cent) agree that this is something they continue to associate with life there after they arrive.

Among the benefits reported by UAE expats include higher salaries (58 per cent compared to a global average of 40 per cent), a better car (55 per cent), higher quality accommodation (39 per cent), and domestic help (23 per cent), all of which exceed the global averages of 31, 29, and 20 per cent, respectively.

Why expats move to the UAE

#1 Better career opportunities

60%

#2 Higher salary; disposable income

58%

#3 Better car

55%

#4 Higher quality accommodation

39%

#5 Higher quality of life

37%

#6 Ability to employ domestic help/nanny

23%

“A significant number of expats move to the Middle East looking for better job prospects and to boost their income. Indeed, the countries where expats are most likely to move abroad for these reasons are all in the Middle East,” it notes.

“These promising career prospects seem to be a reality, as over three-quarters (76 per cent) of expats in the region are in full-time employment and 70 per cent of those living in the region believe that they earn more than they would have in their home country (compared with the global average of 53 per cent),” the survey adds.

The UAE scores well on expat satisfaction with their host economy, ranking No. 10 in the world on the parameter, but the country emerges as one of the costlier expat destinations ranked by the survey, with more than half of UAE-based expat respondents saying that they would choose to leave because it is too expensive (60 per cent) or for retirement (23 per cent).

Expats report that a lot of things such as utilities (58 per cent) and household goods (53 per cent) cost more than they did at home. “Although nearly six in 10 (58 per cent) expats there say that they have more disposable income than they did at home, this is only just above the global average of 53 per cent, underlining the fact that it is far from cheap, particularly in comparison to more cost-effective options like Vietnam (75 per cent) and Thailand (72 per cent),” the survey notes.

Work and income emerge as major drivers for expats living in the UAE, but it also appears that it may not be all about the money. Expats also comment on the pleasant working conditions and enjoyable travel to and from their jobs. Well over half say that their work commute is better than it was at home (59 per cent compared with a global average of 45 per cent) and a greater proportion says that they feel welcome at work, matching the global average of 66 per cent.

The Purchasing Manager’s Index continues to show good growth for the UAE – which may prove a further draw for expats from around the world in the future. Expats there also associate the country with higher personal security (66 per cent compared to 42 per cent average).

High-rise rental concerns

Rental rates and volatile house prices are a big concern among expats in the Middle East, the survey notes. These concerns are prevalent among expats across the region, but are much more prominent among those in the UAE, according to survey stats.

As many as 44 per cent of expats in the region say fluctuations in rental prices pose a risk to their financial wellbeing – more than twice as many as the global average of 19 per cent. Within the Middle East, UAE-based expats are most likely (58 per cent) to cite changes in rental prices as a threat to their financial wealth and the sentiment is echoed among expats in Kuwait (51 per cent) and Qatar (38 per cent).

In fact, the survey refers to last year’s guidance from the International Monetary Fund (IMF), calling for places like Dubai to introduce further measures to cool the demand for property in the emirate, which grew at the fastest pace in the world in 2013.

“Looking at the regional picture, over a fifth (22 per cent) of expats in the Middle East say changes in house prices pose the greatest threat to their financial well-being with those in UAE (29 per cent), Kuwait (25 per cent) and Qatar (19 per cent) being the most likely to share these concerns,” it notes.

This is cited as one of the reasons why most expats see a stint in the Middle East as temporary, and not many plan to settle down here, especially post-retirement. “For most expats, a move to the Middle East is a short-term venture, not an opportunity to settle down,” the survey states.

“Expats currently living in the Middle East are more likely to consider moving away for retirement reasons than their counterparts in Europe and Asia – over a fifth (21 per cent) are considering doing so, compared to 17 and 18 per cent in Europe and Asia, respectively,” it highlights.

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World’s Top 5 residential hotspots: Which Dubai community makes the list?

Business Bay development finds place among elite global locations

Business Bay, a mixed-use master community in Dubai similar to New York’s Manhattan, has been rated among the top five residential hotspots in the world by the Knight Frank Wealth Report 2015.

The master development finds a place among the elite locations following work starting on the Dh7.34 billion Dubai Water Canal.

“Work has started on building a channel connecting the sea to the existing lake and this will allow access for superyachts and sailing boats to the bay.

“Construction of large towers lining the channel is under way, providing residences with the unique benefit of mooring facilities in this central location,” the UK-based consultancy said in the report.

It added that a 1,500 square feet apartment in the community could cost $680,000.

Emirates 24|7 reported earlier that $1 million (Dh3.67 million) can buy you an apartment in the emirate that is four and seven times bigger than Singapore and London.

Read: How much space will $1m buy you in Dubai or New York?

Work on the canal is progressing at a fast pace, which will stretch three kilometres in length and will have a width of 80 to 120 metres.

It will add six kilometres to Dubai’s waterfront and will provide an area of over 80,000 square metres dedicated to public places, shopping and entertainment centres, over 450 restaurants along with a wide array of luxurious marinas for yachts and four world-class hotels.

The project, expected to be completed in 2017, will attract 20 to 22 million visitors per year.

Read: Expo 2020: Watch out for these mega developments in Dubai

Top places to live

St John Street, London

According to the report, St John Street, Clerkenwell, has led the loft-living trend for over 30 years. The demand for loft accommodation is increasing and scarcity is expected to drive prices up. Besides, the Tech City association will also drive the continued growth of high-quality shopping and restaurants. A 700 square feet unit is priced at $1.3 million.

West Street, New York

West Street in Manhattan is one to watch. The street will form the new residential entrance to Brookfield Place, adjacent to the new World Trade Center complex, and will be lined with world-class restaurants and luxury retail brands. West Street is a leader for the whole downtown market, which is set for a boost over the next few years; value growth here should outpace the rest of New York by some margin. A 1,500 square feet apartment will cost $2.7 million.

Main Road, Cape Town

Main Road, Green Point, Cape Town, was initially boosted by the legacy of the World Cup, and huge investment was put into upgrading local infrastructure, such as developing parks, roads and a transport system. With world-class sports facilities, access to the waterfront, the city centre and views of Table Mountain, this is the street to watch in 2015, the report states. A 700 square feet apartment will cost $200,000.

Sai Ying Pun, Hong Kong

Sai Ying Pun neighbourhood is within close walking distance to central Hong Kong, but retains local charm. The area is near galleries, good shops and excellent local restaurants. While more residential buildings have started to be developed in the area, there are still many opportunities for redevelopment. A 700 square feet apartment costs $1.9 million.

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