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    2018-12-18 - The house UAE millennials will buy

    Millennials, otherwise known as Generation Y or those born between 1981 and 1997, make up 36 per cent of the UAE population and represent the biggest demographic segment worldwide. Developers are now delivering communities that incorporate “live, work and play” elements, designed to appeal to this relatively young population. Affordability, eco-friendliness and a preference towards renting are among the common trends witnessed globally. However, is the millennial buyer’s profile any different in the UAE?

    In the current market, millennials tend to be careful with their spending and liabilities. They are also less financially stable than their Generation X predecessors and, therefore, need and want an affordable place to live. When it comes to buying property, they prefer flexible payment options with instalments, and as tenants, they are more inclined to pay their rent in multiple cheques. Unlike their parents, they don’t consider buying a house a top priority — due to their relaxed lifestyle, they are colloquially known as “generation rent”. Research has shown that millennials spend 30-50 per cent of their income on indulgences, such as entertainment, dining out and travel, which leaves little room for saving up for a deposit on a home. Also, with the relatively high cost of property in the UAE, the down payment often proves to be a problem.

    An HSBC study revealed that only a quarter of millennials in the UAE own a home. Most expats don’t plan to stay for the long term, and many don’t want to be burdened with the financial commitment of buying a house.

    Digital experience

    Millennials are tech-savvy researchers and, therefore, a comprehensive digital experience is fundamental to their purchasing journey. According to research by the US-based National Association of Realtors, 99 per cent of millennials look for a home online. Most of them feel that a real estate website that is attractive, easy to navigate and features professional photos is very important when deciding to buy or rent a house.

    Location, location, location

    Millennials worldwide desire to live close to work, and this is especially true in Dubai. According to a 2017 report by UBS, Dubai placed sixth in the global ranking of cities with the longest working hours — registering a whopping average of 2,323 hours per person per year. Proximity to work allows millennials to commute with ease and save precious time and money on fuel.

    In addition, they prefer to live near the Metro and other modes of public transport so that they can eliminate the extra costs of owning a car and don’t have to worry about traffic. This also enables easy access to malls, restaurants and entertainment hotspots around the city.

    Design and amenities

    Studies by Asteco in the region have shown that millennials prefer to live in newer properties equipped with all the necessary facilities, such as allocated parking, a swimming pool and a gym. Whether buying or renting, they tend to opt for units with an upgraded kitchen and bathroom.

    When it comes to layout, millennials tend to favour a large and modern open-plan set-up with a kitchen that opens directly into the living room, as this is optimal for entertaining guests. The presence of a home office is also a plus.

    With the UAE population growing each year and more millennials relocating here, developers need to incorporate these elements in their projects if they want to come out on top and keep attracting buyers. It’s likely that key trends such as affordability, convenient location and stylish, modern design will continue to dominate the millennial property market for the foreseeable future.

    2018-11-13 - The cost of managing property

    As Dubai’s property developments mature, the need for quality building management also increases. According to property management firms, it is common for many owners’ associations (OA) to seek advice on best practice and bring more professional expertise on-board.

    “There is also a growing emphasis on maintaining investments through planning, implementing sustainable energy savings and ensuring that sufficient reserves are in place for future remedial work and replacements,” says John Stevens, managing director of Asteco.

    Craig Ross, partner and head of project and building consultancy at Cavendish Maxwell, concurs that residents now expect more from management firms.

    “I have met many owners that feel their voices can go unheard when facing defects in their building,” he remarks.

    The firm often conducts technical and condition studies that are mandatory for service charge approval at Dubai’s Real Estate Regulatory Agency (Rera), or to advise on how to correct defects in their buildings. Ross calls for transparency in service fees to ensure owners pay only what they are using and avoid typical disputes over the matter.

    “The risk is that this decision is made on a purely cost basis, but as like many things in life the cheapest option is not always best, and quality of management may suffer,” he adds.

    Ross lauds Rera for its instrumental role in reforming many making OAs. “Rera is aware that sometimes OA boards will not act in the best way for the longevity of the building if they are unwilling to spend money on critical items, which can have a negative effect on other owners,” he says. “It is for this reason that they are likely to change the OA laws soon, giving both Rera and developers additional powers in management.”

    It’s everyone’s responsibility

    Keeping a building well maintained was no easy task, especially where due regard for life cycle costing has not been considered in the original build specification, Ross says. “Assets, materials and components that have a long life are generally more expensive, and to save money in construction, developers may use cheaper alternatives to make their product more affordable,” he says, adding that quality developments suffered less, but affordable housing projects tended to have “affordable maintenance” as well.

    “We can estimate that for every dirham spent in construction, Dh60-Dh80 can be spent operating a building over its life,” Ross explains, insisting that facilities management (FM) firms should not cut corners to save costs and win bids. “Cutting costs can have disastrous effects on a building and its assets, especially in the ‘back of house’ areas that residents typically don’t see.”

    Fires and cladding conundrum

    In 2012, 70 per cent of the UAE’s high-rise buildings were estimated to have utilised flammable panelling. However, the use of such materials has dropped significantly since, thanks mainly to the introduction of the UAE Fire and Life Safety code, which includes a significantly enhanced section on façade materials, according to Andy Dean, head of facades in the Middle East at WSP Parsons Brinckerhoff.

    “A great deal has changed, and materials going onto new buildings are now fundamentally different as a result,” he adds, remarking there were design challenges. “It isn’t innovation in safety, but in using robust and verified methods of evaluating new and innovative buildings, construction materials and techniques. Crucially, developers have started looking at their existing building stock as well as new design and this is the next important step the entire construction industry must take. UAE high-rise buildings present several unique challenges, including complex evacuation strategies, fire department accessibility, smoke movement and fire control.”

    Asteco was awaiting the update of the code when considering restoration plans after a fire broke out at one of the Oceana development’s buildings in 2016. “The updated UAE Fire and Life Safety Code of Practice has pushed the industry to use the highest-grade cladding material, even higher than previously used,” says Stevens. “However, at that time, as an approved and updated panel cladding still had not announced, Asteco decided to replace the cladding with concrete renders.”

    Residents of Oceana have been very appreciative of Asteco’s involvement in managing the development, and the aftermath of the fire.

    “Thank you for the great remedial works executed on the Adriatic Building as a result of the unfortunate fire. The new building looks extremely good, safe and very professionally executed,” says Suhail Matlub.

    The cost

    According to Ross, the reserve fund typically wouldn’t account for replacing cladding. “If there is insufficient funding in reserve, then the owners would have to contribute through a special levy – they own the building and it’s their decision to replace it or not, or consider fitting some other mitigation measures, for example additional external fire suppression systems, sprinklers or only replacing some of the cladding at interval,” he suggests.

    Ross also reckons one may as well make other improvements at the same time, such as retrofitting for sustainability or changing cladding to one that provides better insulation, thus offsetting capital costs in the long run.

    “Personally, I think direction and incentives have to come from the local authority, as otherwise not much is likely to happen,” he remarks.

    In the case of Oceana, the OA has taken the route of caution and quality over trying to save on the initial outlay, recognising it is saving them money today in insurance, as well as future expenses. Thus it is financing the replacement of cladding on its six other buildings within Oceana.

    “Oceana is a premium product on the Palm, and the board decided to make the most practical and sustainable solution. Instead of replacing the panels with more cladding that is up to standard, the cladding will also be replaced with concrete renders, a material that won’t burn,” says Stevens.

    Good advice and insurance paramount

    Unit owners above all have to understand why they are asked to spend on improvements, making communication a vital component of management, according to Ross. “Unless improvements are mandatory or vital to the overall longevity of the building, then decisions on operational investments are likely to be made on a financial basis,” he says. “However, only considering options in terms of capex can have major implications for operating expenditure of the building further down the road.”

    If the individual OA manager is not skilled in this area, a third-party building consultant is vital to avoid exacerbating existing problems, Ross adds.

    In the case of Oceana, the OA was able to finance the Dh50-million fire safety improvements on the Adriatic building through the home owners insurance.

    “One of Asteco’s roles as professional OA consultant and manager is to ensure they have sufficient funds to continue to function seamlessly. Dh14 million was put away in reserve funds, the money for the project was borrowed from this fund and decreased service charges were required,” says Stevens.

    Residents also benefitted from coverage of loss of rent, alternative accommodation, furniture storage and even some service charges.

    “An important point to note is that after the fire incident, the insurance premium increased from Dh860,000 to Dh3.67 million. The premium dropped to Dh2,572,500 after the render works proposal, and risk strategy on the remaining six buildings had been presented to the insurance company, and is expected to drop further after the re-cladding work is completed,” Stevens says.

    2018-11-04 - Asteco Launches Direct Debit System for Property Payments in UAE

    Asteco, the leading property services company in the UAE, has launched a digital payment service that allows its tenants to pay their rent through direct debit. Eliminating the need for post-dated rent cheques, the move is expected to boost efficiencies, enhance ease of doing business and save time and positively impact the real estate market.

    Asteco has partnered with National Bank of Fujairah and Direct Debit System FZ LLE, a UAE-based provider of alternative low-cost payment systems, to leverage direct debit as an easy-to-use digital solution for all parties involved in a real estate transaction. As the sponsoring bank, National Bank of Fujairah is facilitating the process and ensuring seamless account reconciliation. Integrated into Asteco’s property management software, the direct debit system is currently operational and has been welcomed by landlords.

    As per the system, the tenant signs a Direct Debit Authority (DDA) document with Asteco as a one-time step. Payments are then debited from the tenant’s current or savings account or credit card at the agreed date and frequency, and deposited into the landlord’s account.

    Speaking on the initiative, Elaine Jones, Executive Chairman of Asteco, said: “As our world becomes increasingly digital, Asteco is working closely with its partners to embrace innovation and contribute to creating an efficient and secure financial environment in Dubai for long-term residents and newcomers alike.”

    She added: “In line with the Smart Dubai 2021 strategy, we aim to become a paperless entity by the end of 2019 and this initiative is the first step in the journey. Through doing so, we believe we will maximise efficiency and seamlessly integrate this service into our operations to create the most enriched business experience possible for our clients, and immediately positively impact the real estate sector in the UAE.”

    In the UAE, issuing post-dated cheques for rent is commonplace and, Asteco believes, outdated. Direct debit is the solution to most problems related to rent cheques. Allowing tenants, especially those who are new to the UAE or have an outstanding bank loan, to pay their rent in multiple installments makes the process simple, convenient and safe. Smaller and more frequent rent payments also ease the cash flow for tenants that currently often resort to taking out loans to meet their rent commitments.

    Meanwhile, landlords benefit from increased assurance of a regular and stable income. A steady stream of frequent payments assists the landlord or developer in meeting bank repayment schedules. Developers are now commonly offering monthly payment terms or one percent per month buying schemes.

    Vince Cook, Chief Executive Officer of National Bank of Fujairah, said: “We are delighted to partner with Asteco and Direct Debit System FZ LLE to create what we believe is a critical milestone in the real estate sector. The move to paperless rental payments benefits all parties involved and helps ease the significant burden of the cheque payment structure. We seek to partner with other industries to develop similar systems in the coming months.”

    Protected by robust security technology, direct debit is a secure, convenient and fully automated payment method that saves time and money, and is well-established in European countries as well as the US, Brazil and South Africa. The Central Bank of the UAE introduced this alternative payment method in 2013. According to Worldpay, a leading global payment processing company, alternative payments accounted for approximately 59 percent of settlement activity in 2017, up from 43 percent in 2012.
    2018-10-17 - Asteco Reaffirms Commitment to Talent Development with Asteco Academy, Senior Management Promotions

    Asteco, the UAE’s largest property services company, has reinforced its commitment to its ‘People First’ initiative with a series of senior management promotions. As part of the drive, the company seeks to recognize the importance of its employees and grow its franchisee network to long-term commercial success.

    Building on almost four decades of market-leading experience, Asteco has also strengthened its senior executive team with a string of promotions.

    The company has appointed John Allen as Executive Director, James Joughin of the Valuations and Advisory Department and Nick White of the Owners Association Management Services Department as Senior Associate Directors, and Jobby Zacharia as Associate Director of the Valuations and Advisory Department. All new senior directors will have greater autonomy over budgets and act as the spokespersons for their respective departments.

    In addition, John Allen has joined Elaine Jones, Executive Chairman and Founder, and John Stevens, Managing Director, on Asteco’s Board of Directors.

    Speaking on the new developments, John Stevens said: “Supporting its employees and recognizing their contributions to business growth are integral to Asteco’s DNA as a customer-centric organization. In line with Dubai’s vision of becoming home to a happy, empowered and creative population, we are dedicated to investing in our greatest asset – our people.”

    In early 2016, the company launched the Asteco Academy, an internationally recognized and unique real estate training facility, with the aim of developing the growing number of franchisees under the Asteco banner and aligning their deliverables with the company’s business goals. Since then, 150 franchisees received training under the guidance of Andrew Brookes, Learning and Development Manager at the academy.

    Stevens added: “Asteco considers its teams and franchisees indispensable to its long-term commercial viability, and aspires to consolidate its position as a preferred employer and partner. With a team of highly skilled and like-minded individuals led by a strategic vision for the future, we seek to reinforce our company’s status as the Middle East’s largest real estate consultancy practice.”

    List of few publications of this article

    Al Bayan

    DotEmirates

    MENAHerald

    MSN.com

    2018-10-09 - Residents of Adriatic Building Return Following Restoration Works

    Asteco Property Management today announced that the owners of residential units in the Adriatic building have started moving back following the restoration works that took place on the 15-storey tower after a fire broke out in December 2016. The building remained uninhabitable, as the water used to douse the fire damaged the main electrical system.

    The restoration, that commenced in April 2017 after receiving the police and fire investigation reports and confirmation from the insurers, lasted 16 months. During the works, the Oceana Owners Association also took the opportunity to repair damaged building systems including the access control system.

    Six units were sold in Adriatic Building during the restoration, and new tenants also expressed interest in leasing apartments in the newly restored tower, located within Oceana Residences, a mixed-use luxury beachfront residential complex consisting of seven buildings comprising 644 units, located at the trunk of Palm Jumeirah.

    Asteco Property Management offered advice to the Oceana Owners Association through one of the leading insurance companies, Orient Insurance, part of the Al-Futtaim Group, rated A by S&P Global. The Strata Insurance policy taken out by the association exceeded the minimum requirement stipulated by the local regulators and so the owners could not live in their units or rent them out. However, during the restoration period, they were not financially disadvantaged with the insurance policy paying for loss of rent or alternative accommodation, furniture storage and some service charges, dependent upon the individual situation.

    Young Engineering Consultancy Services was awarded the project after the Oceana Owners Association board members completed the tender process. The board members, managers from Asteco Property Management, and the resident Emrill FM team and management were also on site following the fire incident. Asteco Property Management has supervised the entire restoration and handover of the project on site.

    During the works, the Oceana Owners Association Board developed a risk strategy to replace the existing cladding on the building’s façade with new Dubai Civil Defense (DCD)-approved grade cladding in a bid to prevent similar accidents from occurring and to ensure the Oceana Residences community conforms to the highest international standards. The proposal was presented to the owners at the annual general meeting in 2017.

    The cladding has been replaced with render in some areas of the Adriatic building. Work is shortly set to commence on replacing the cladding on the remaining six buildings – a project that is being funded by the Oceana Owners Association. This will see a substantial drop in the insurance premium, which had increased from AED860,000 to AED3,670,000 after the fire incident. Earlier in 2018, the premium dropped to AED2,572,500 after the render works proposal and the risk strategy had been presented to the insurance company.

    Speaking on the restoration project, John Stevens, Managing Director of Asteco, said: “As one of the leading property services companies in the UAE, we take pride in our high level of customer care, always ensuring that the comfort and well-being of our residents comes first. While the incident that took place in December 2016 was very unfortunate, we were able to manage the fire effectively with support from DCD, and from the contractors during the subsequent restoration works. In line with the latest regulations set by Real Estate Regulatory Agency (RERA), the cladding has been replaced with render within some sections of the Adriatic building’s facade, and the Oceana Owners Association is planning to do the same for the other buildings at Oceana Residences.”

    In addition to the Adriatic building, Oceana Residences consists of six towers – Pacific, Caribbean and Atlantic on the north side of the trunk of Palm Jumeirah, and Southern, Baltic and Aegean on the east side of the enclave. With superior-quality finishes evident in the detailing of the ceiling, stone flooring and tiling, all bedrooms within the units of the luxury complex offer expansive and breath-taking panoramic views of Dubai Marina or Palm Jumeirah.

    Furthermore, the mixed-use development includes DUKES DUBAI hotel that boasts a gigantic pool overlooking the beach and is home to the popular West 14th steakhouse, a New York-style grill and bar with loft-inspired layout and views of the Arabian Gulf from its floor-to-ceiling windows.

    Residents of the community also enjoy exclusive access to a gym, children’s play areas, a private beach and an infinity swimming pool. Each building has round-the-clock security services and CCTV monitoring of public areas.

    Stevens added: “Asteco Property Management is honored to have collaborated with the Oceana Owners Association Board and the project team to ensure the completion of the works within 16 months.”

    List of few publications of this article

    Al Bayan

    The National

    Arabian Business

    Gulf Business

    2018-09-26 - Asteco’s UAE Real Estate Report Q3 2018 Indicates Continued Cautious Optimism

    Asteco, the UAE’s largest property services company, has released the UAE Real Estate Report Q3 2018 just ahead of Cityscape Global, the premier property exhibition for emerging markets worldwide. The quarterly report highlights key market trends and major project announcements across Dubai, Abu Dhabi, Al Ain and the Northern Emirates, and offers an outlook for the remainder of the year and early 2019.

    Dubai Market Outlook

    In Dubai, villa and apartment rental rates maintained the downward trajectory observed over the past quarters, decreasing by 3% and 2% since Q2 2018, while the decline of residential sales prices has been more pronounced at 4%. Following a period of relative stability, office rental rates decreased 5% over the last three months as a result of new supply and limited, if not negative, business and employment growth.

    Neighborhoods with high handover volumes, both within the city as well as across surrounding developments, recorded the sharpest rental rate downturn and a significant rise in tenant turnover.

    John Stevens, Managing Director of Asteco, said: “Rental rates across all asset classes are expected to come under further pressure this year, and this trend is likely to spill over into early 2019.”

    Abu Dhabi Market Outlook

    In Abu Dhabi, apartment sales prices witnessed a marginal decline of 1% over Q3 2018, mainly due to the limited demand for completed units available within the secondary market, translating into low transactional volumes. However, off-plan and newly completed properties fared better and continued to generate interest.

    Apartment rental rates fell by an average of 3% since Q2 2018, with the highest drop reported for mid- and lower-end properties. Villa rental rates followed a similar trend with a quarterly decrease of 1%. The demand for office space remained limited. While the average rental rates softened by 1% over the last three months, some mid- to low-end commercial buildings recorded significant annual declines of up to 10%.

    Speaking on the capital’s market outlook, Stevens said: “Residential rents continued to soften over the third quarter due to new supply and reduced levels of demand, largely attributed to a bearish business outlook. These conditions led to an increase in vacancies, particularly in buildings with lower-quality specifications.”

    In Al Ain, the overall subdued market activity has resulted in relatively static rental rates in Q3 2018 across most asset classes, with moderate annual drops of 6% for apartments, and 5% for office and retail rents. Meanwhile, villa rental rates recorded a marginal decrease of 2% over the quarter.

    Northern Emirates Market Outlook

    In the Northern Emirates, apartment rental rates reported an average quarterly decline of 4%, with Ras Al Khaimah and Ajman taking the lead with 6%, followed by Sharjah and Fujairah with 3%, while Umm Al Quwain rates softened marginally by 1%. In Sharjah, office rental rates continued their downward trend with quarterly and annual reductions of 3% and 8% on the back of low demand.

    Stevens said: “Developers, particularly in Sharjah, have been sharing statements of ambitious project launches, progress reports and completion updates despite the tepid market outlook. Due to the rise of master-planned communities and large-scale developments, concerns about a possible oversupply scenario in the future are starting to emerge.”

    Dubai Market Sentiment

    Overall, the market has seen a substantial delay in project handovers, mainly resulting from project delays and overly ambitious handover schedules. Therefore, a sizeable number of units previously forecasted for completion in H2 2018, will only be ready in 2019. Dubai’s new inventory added in Q3 2018 comprises 3,850 apartments and 570 villas and townhouses, bringing the total for the year to date to just over 12,000 residences, with projections for the final quarter in line with these figures.

    With a slowdown in new project launches, demand in Q3 2018 focused on completed properties available directly from developers or in the secondary market.

    The real estate sector has also welcomed the introduction of new initiatives, such as rent-to-own schemes and crowdfunding. Speaking on the topic, Stevens said: “We believe these developments have the potential to absorb some of the pent-up demand from end users and first-time buyers.”

    General Market Sentiment

    Summing up the overall outlook for the UAE property landscape, John added: “Real estate professionals and participants have been increasingly vocal in urging the Central Bank of the UAE to lower existing loan-to-value (LTV) ratios to facilitate home ownership for those unable to afford the current mortgage deposit requirements. Although no such changes have been announced at the time of compiling the report, there appears to be a consensus that such a reform would provide a much-needed stimulus to the property market.”

    Outlining the trends dominating the rental segment, Stevens said: "We have observed several behavior patterns among residents accross the country, such as downsizing rental units, seeking value-for-money properties and moving into less-established areas. On the other hand, we have also noticed many tenants taking advantage of the sustained rental rate downturn and using this opportunity to upgard to larger units with better-quality specifications, located in popular areas."

    List of few publications of this article

    MenaHerald

    The National

    Khaleej Times

    Al Bayan

    2018-07-25 - Asteco’s Q2 UAE Real Estate Report Indicates Bullish Trends for Renters

    Asteco’sUAE Real Estate Report Q2 2018’ has indicated an annual decline in villa and apartment sales and rental rates across the country. The quarterly report also highlighted key market trends, major project announcements and offered an outlook for the remainder of the year across Abu Dhabi, Al Ain, Dubai and the Northern Emirates.

    In the Northern Emirates, apartment rental rates continued to soften with an average drop of 2% since Q1 2018 and registered a decrease of 11% over the year. High-end properties in Ajman recorded the highest annual decline of 13%, putting the average rent for a three-bedroom unit between AED40,000 and AED53,000. However, the drop for the same unit type in Ras Al Khaimah was less pronounced at 7%, with rental rates averaging AED95,000 per year.

    In Sharjah, rental rates continued their downward trend dropping on average by 2% in the last quarter and 11% annually, with the most prominent drops recorded in Al Butina and Corniche (4%). While Sharjah office rental rates recorded quarterly and annual reductions of 3% and 14% respectively.

    John Stevens, Managing Director of Asteco, said: “While the Northern Emirates continue to attract both tourists and expatriates, rental rates are not likely to recover in 2018 due to increasing supply. However, the Northern Emirates will remain popular among residents looking to invest in more affordable accommodation and in holiday destinations.”

    A first-of-its-kind mixed-use business centre project in Fujairah spanning an area of more than one million square feet, comprising an office, a hotel and serviced apartments along with a shopping mall and retail center is set for handover by 2020.

    Some of the much-anticipated prominent leisure destinations and hospitality projects for residents and tourists include the Fossil Rock Lodge, a luxurious resort in Sharjah that is set for completion in 2018.

    On the residential front, several projects were launched this quarter including the Sapphire Beach Residence on Al Marjan Island in Ras Al Khaimah that is anticipated to be ready by 2020. In Sharjah, phase 4 of Nasma Residences and the East Village within Aljada development were launched.

    Stevens said: “Ongoing infrastructure works, advancements in the legislative framework and government-backed, large-scale development projects, as well as the launch of exciting hospitality projects are expected to propel investments and tourism growth in the Northern Emirates.”

    In Abu Dhabi, the capital of the UAE, apartment sale prices in the secondary market remained relatively stable over the quarter, despite registering an average decline of 8% year-on-year. The Gate area recorded the highest drop of 18% since 2017, followed by Al Bandar with a drop of 14%.

    While apartment and villa rental rates witnessed annual declinesof 10% and 9% respectively, showing comparable patterns to the last quarter. Rental declines for studios to three-bedroom apartments ranged from 5% to 18% over the course of the year. The highest drops in the villa rental market since Q2 2017 were seen at Golf Gardens (14%) and Al Raha Gardens (13%).

    In Al Ain, villa rental rates fell by an average of 7% since Q1 2018 and 12% annually, with a more pronounced drop recorded for larger four- and five-bedroom units, particularly on properties where rates and incentives were not aligned with the market.

    Stevens pointed out: “We are witnessing a shift in rental trends among residents in the Garden City. They now appear to be taking advantage of the decline in prices to move to high-quality, self-sustained communities with supporting facilities. Such communities recorded high occupancy levels, in contrast to stand-alone buildings and villas that reported minimal uptake and high vacancy levels. To attract and retain tenants, landlords continue to offer incentives of up to one month of free rent and flexible payment terms of up to 12 cheques.”

    In Dubai, villa and apartment sales prices declined by 4% over the quarter, with an annual drop of 11%. The decline in apartment sales was most prominent in Dubai International Financial Centre (DIFC), Discovery Gardens and Dubai Sports City that registered a 6% decline since Q1 2018. Meanwhile, the highest quarterly drops in villa sales prices were observed in Jumeirah Park (8%), Arabian Ranches (5%) and The Springs (5%).

    Despite a lower number of anticipated handovers, a significant volume of new supply was delivered in Dubai in Q2 2018, contributing to an overall quarterly drop in apartment and villa rental rates of 3% and 2%, with annual declines of 12% and 10% respectively.

    Speaking on the overall outlook for UAE’s real estate landscape, Stevens said: “Proactive government initiatives and ongoing infrastructure development are expected to further boost market sentiment and drive investment in the UAE. The latest positive announcements include the freezing of school fees for the academic year 2018-2019, as well as the introduction of a 10-year residency visa for investors and specialists, and 100% foreign ownership of companies outside free zones. The UAE is continuing to live up to its reputation of being a real estate investment haven, and the new laws will attract an untapped pool of international investors seeking a tolerant country with deep-rooted values to call home.”


    List of few publications of this article

    Property Watch

    Al Bayan

    Gulf News

    2018-07-18 - Asteco Reports Further Decrease in Rental Rates, Sales Prices across Dubai

    Asteco, a leading property services company in the UAE, has recorded a continued decline in villa and apartment rental rates and sales prices in its Dubai Real Estate Report Q2 2018. The quarterly report also highlights the current and anticipated handovers of key projects across the emirate.

    Villa and apartment sales prices fell by 4% over the quarter, with an annual drop of 11%. The decline in apartment sales was most prominent in the Dubai International Financial Centre (DIFC), Discovery Gardens and Dubai Sports City, with a 6% fall since Q1 2018. Meanwhile, the highest quarterly drops in villa sales prices were observed in Jumeirah Park (8%), Arabian Ranches (5%) and The Springs (5%).

    Sales activity remained steady, despite an overall bearish outlook from investors and end users. The stable trend is mainly attributed to further project launches, often with increasingly attractive incentives, competitive rates and extended payment terms.

    Q2 2018 saw the launch of several new residential developments, including Amaranta 3 and Tilal Al Ghaf Phase 1 in Dubailand, as well as Zawaya – a mixed-use community in Motor City, and Belgravia Heights I & II in Jumeirah Village Circle (JVC).

    John Stevens, Managing Director of Asteco, said: “Generally, new developments focused on the affordable segment, resulting in a marginally more noticeable quarterly drop in sales prices at 5%, compared to 3% for mid- and high-end properties.”

    Despite a lower number of anticipated handovers, the volume of new supply remained significant. This contributed to an overall quarterly decrease in apartment and villa rental rates of 3% and 2%, while annual declines were more prominent at 12% and 10% respectively.

    Stevens added: “Vacancy levels across multiple projects rose due to the supply of additional inventory. Properties with proactive management and maintenance teams succeeded in maintaining steady occupancy rates, while landlords offering discounts and additional incentives also achieved solid tenant retention. Over the next quarter, we expect further gradual but consistent softening in rental rates for all asset classes.”

    Compared to 2017, the highest apartment rental rate drops were recorded in Jumeirah Village (16%), followed by Jumeirah Beach Residence (JBR) with 15%, and Jumeirah Lakes Towers, Deira and Discovery Gardens with 14% each.

    As for villa rental rates, Jumeirah Park and Jumeirah Village showed the most pronounced annual decrease at 15%, followed by Arabian Ranches with 11%.

    Approximately 3,400 residential units were handed over in Q2 2018, closely matching the first quarter with the majority of new supply located along the new growth corridors of Sheikh Mohammed Bin Zayed Road (E311) and Emirates Road (E611).

    An estimated total of 25,000 additional units is slated for delivery by end-2018. Asteco has revised its 2018 supply projections for both residential units and office space downwards by 17% and 20% respectively, based on a combination of factors including lower handover volumes in the first half of the year and anticipated project delays.

    Completed office inventory rose significantly compared to Q1 2018, with the addition of more than 760,000 sq ft across two developments – the 320,000 sq ft HSBC headquarters in Downtown Dubai and the 440,000 sq ft third building of the One Central project in the Trade Centre area.

    Speaking on the overall outlook for Dubai’s real estate landscape, Stevens said: “Proactive government initiatives and ongoing infrastructure development are expected to boost market sentiment and drive investment in the UAE. The latest positive announcements include the freezing of school fees for the academic year 2018-2019, as well as the introduction of a 10-year residency visa for investors and specialists, and 100% foreign ownership of companies outside free zones. The UAE has always been a real estate investment haven, and the new laws will attract an untapped pool of international investors seeking a tolerant country with deep-rooted values to call home.”

    For more details, please visit www.asteco.com


    List of few publications of this article

    Zawya

    ME Construction News

    AlKhaleej

    2018-07-11 - Asteco Reports Further Declines in Rental Rates across Abu Dhabi, Al Ain

    Abu Dhabi Real Estate Report Q2 2018 by Asteco, a leading property services company in the UAE, has recorded a continued decline in villa and apartment rental rates across all asset classes in Abu Dhabi and Al Ain. The quarterly report also highlights the current and anticipated handovers of key projects across the emirate.

    In Abu Dhabi, apartment and villa rental rates decreased by 2% and 4% in Q2 2018, and witnessed an annual drop of 10% and 9% respectively, showing comparable patterns to last quarter.

    Rental declines for studios to three-bedroom apartments ranged from 1% to 5% over the quarter and 5% to 18% over the course of the year.

    The highest drops in the villa rental market since Q2 2017 were registered for Golf Gardens (14%) and Al Raha Gardens (13%).

    Apartment sales prices in the secondary market remained relatively stable over the quarter, however, they recorded an average annual decline of 8%. Al Raha Gardens led the softening in villa sales prices, reporting an average fall of 4% in Q2 2018 – compared to 2% in Abu Dhabi overall.

    Speaking on residential sales, John Stevens, Managing Director of Asteco, said: “Sales in Abu Dhabi remained sluggish, with noticeably low uptake of larger high-end properties. However, off-plan projects with attractive rates and flexible payment plans continued to generate interest, including the newly launched second phase of Al Ghadeer that attracted significant demand.”

    Approximately 1,000 residential units were completed in Q2 2018, with the majority of the supply concentrated on Al Reem Island. By end-2018, 5,800 additional residential units are scheduled for handover, mainly in locations such as Al Reem Island, Yas Island, Saadiyat Island, Al Raha Beach and Rawdhat, as well as across mainland Abu Dhabi.

    Demand for office space remained tepid, with generally low levels of uptake, while certain free zone areas performed better, achieving occupancy levels of up to 95%. The anticipated ADIB headquarters on Airport Road is due for handover by end-2018, while the completion of the Omega Tower on Al Reem Island has been postponed to 2019.

    In Al Ain, villa rental rates fell by an average of 7% since Q1 2018 and 12% annually, with a more pronounced drop for larger four- and five-bedroom units, particularly where rates and incentives were not aligned with the market.

    Rents for prime compounds, which benefitted from close-to-full occupancy rates, remained relatively stable. Similarly, apartment rental rates decreased by 2% on average in Q2 2018, although established communities bucked that trend.

    Stevens said: “We are witnessing a shift among residents in Al Ain towards high-quality, self-sustained communities with supporting facilities, as they recorded high occupancy rates, in contrast to stand-alone buildings and villas that reported minimal interest and high vacancy levels. To attract and retain tenants, landlords continue to offer incentives including up to one month of free rent and flexible payment terms of up to 12 cheques.”

    Several projects in the Town Centre and Asharej areas of Al Ain were slated for handover in Q2 2018, but have been delayed and are now expected to be completed by end-2018.

    Retail rental rates remained broadly stable in Q2 2018 after declining last quarter due to a drop in consumer spending. This, however, is more a result of limited demand rather than an indication of a stable market. Headline office rents were also unchanged over the quarter owing to the limited number of newcomers to the market.

    For more details, please visit www.asteco.com

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    2018-05-22 - Asteco’s Q1 UAE Real Estate Report affirms leading renters’ market trend

    TheUAE Real Estate Report Q1 2018’ by Asteco has recorded an annual decline in villa and apartment sales and rental rates across the country. The quarterly report also highlights key market trends, major project announcements and outlook for the remainder of the year across Abu Dhabi, Al Ain, Dubai and Northern Emirates.

    John Stevens, Managing Director of Asteco, said: “Tenants are increasingly taking advantage of the declining rents across the board, and choose to upgrade from apartments to villas or to better-quality and larger units. However, many remain cautious due to economic uncertainties or are waiting for further reductions. People are also moving from older to newer buildings, as these often include parking and other facilities that are non-existent or come at an extra charge in mature buildings.”

    In Abu Dhabi, approximately 1,600 residential units were delivered in Q1 2018, with over 75% located within the city’s investment zones including Yas Island, Al Reem Island and Al Raha Beach. More than 7,300 residential units and 100,000 square metres of office space are earmarked for completion before end-2018. However, previous delivery patterns suggest a number of these are likely to be delayed, spilling over to 2019.

    Among the key projects handed over in Abu Dhabi in Q1 2018 were Ansam on Yas Island, Al Hadeel in Al Raha Beach and Al Muhaimat Tower on Al Reem Island, in addition to several stand-alone buildings in various locations. The most noteworthy announcement was Saadiyat Grove by Aldar and Emaar that falls within the framework of a strategic alliance between the two companies to develop local and international projects worth AED30 billion.

    Apartment and villa rental rates declined on average by 3% and 2% since Q4 2017, while recording annual decreases of 11% and 9% respectively. Apartment sales prices remained broadly unchanged over the quarter, except for Marina Square (-5%), Al Reef Downtown (-6%) and Sun & Sky Towers (-6%). Villa sales prices were stagnant throughout the first quarter, with a slight decrease in Al Reef (-2%). Annually, the highest decline in sales prices was recorded in Hydra Village (-8%), followed by Al Reef villas (-5%) and Raha Gardens (-4%).

    Stevens said: “The changes reported in these areas are a result of increased competition from new off-plan developments offered at attractive rates and favorable payment plans. Although healthy demand for high-quality, off-plan and newly delivered projects continued, lower-end residential units remained under pressure.”

    In Al Ain, although apartment rental rates remained broadly stable, villa rents decreased by an average of 2% since Q4 2017 and 5% annually. Annually, rental rates in Al Ain dropped the most in mature buildings (-7%), followed by prime compounds (-5%) and new buildings (-3%).

    Several buildings in the Town Centre and Asharej areas are planned for completion in Q2 2018. In addition, around 8,000 square metres of office space were handed over in the Senaya area, while no significant amount of residential supply was delivered in Q1 2018.

    Stevens said: “Al Ain saw an increase in vacancies in the residential and office segments, mainly due to the reduction in staff housing allowances. This first occurred in 2016 and continues to have an adverse effect on the real estate market in the region.”

    Following a period of relative stability (despite the overall subdued market sentiment), Al Ain’s retail rental rates have finally come under pressure due to reduced consumer spending, and limited business and employment growth, recording an average decline of 5% in Q1 2018.

    Speaking on the market outlook in Dubai, Stevens said: “In 2018, we anticipate the delivery of approximately 30,000 residential units, however, as with Abu Dhabi, past evidence has shown that the actual completion rate is often significantly lower due to delays. Only 3,650 properties (12%) have so far been handed over in the first quarter of the year.”

    Most of the recent inventory is concentrated in the new investment areas along the Sheikh Mohammed Bin Zayed Road (E311) and Emirates Road (E611) corridors. Among established communities, Dubai Marina also recorded additional supply with the completion of the first of three residential towers at The Residences at Marina Gate.

    New additions to the office market included the handover of The Exchange at Dubai International Financial Centre (DIFC) and one building within the One Central project in the neighboring Trade Centre district. This marks an important development for Grade A office supply, which had previously been undersupplied.

    The annual rental declines in Dubai have been consistent in each quarter over the past year, averaging 10% for both apartments and villas. Areas where apartment rental rates recorded the highest decline since Q1 2017 include Jumeirah Beach Residence (-15%), Downtown Dubai, Dubai Marina and Deira (-14%), followed by The Greens and Dubai Sports City (-13%). Similarly, villa locations that recorded highest drop in rental rates include Jumeirah Village (-15%), Jumeirah Park (-13%) and Arabian Ranches (-11%).

    The Emirate’s real estate market is becoming increasingly fragmented, resulting in a considerable widening of the rental rate ranges. Incentives such as multiple cheques, rent-free periods, and the absorption of utility, maintenance or agent fees are becoming the norm.

    While on the whole, the residential sector has witnessed only a minimal quarter-on-quarter decline at 1%, newly handed-over lower-end buildings in areas with significant supply potential have struggled with occupancy, particularly where rates and incentives were not aligned with the market.

    Similarly, the average apartment and villa sales prices softened by around 1% in Q1 2018. While the annual decline for villas (6%) was less pronounced than for apartments (9%), particularly large villas with high price points generated limited interest, mainly due to the lower investment yields attached to this type of unit.

    Stevens said: “We recorded a moderate increase in enquiries and transactions for high-end residential units, suggesting that albeit at a conservative level, there is still appetite for this product.”

    Affordable housing options remained at the forefront of buyers’ interest, with the majority of banks and developers stipulating a minimum monthly salary of AED15,000 in order to purchase property in the Emirate.

    Stevens said: “Despite the boost in luxury project launches, we believe developers will continue to focus on affordable and mid-market housing because there remains a substantial supply gap. Other factors bolstering the trend include the growing young population (over 60% are aged 25 to 44) and the rising popularity of home ownership (investment or owner occupation.”

    Although enquiry levels for office space have remained low for the overall market, an interest in Grade A stock in established office locations such as DIFC was recorded.

    In the Northern Emirates, infrastructure development remained on top of the list for governments. In addition, large-scale developments have started to materialise, including three projects worth AED 2.7 billion, initially announced in 2016 by Eagle Hills and the Sharjah Investment and Development Authority (Shurooq), a strategic alliance to develop Sharjah’s real estate market and attract investment to the Emirate. Construction on the master plan is expected to start later in 2018, and the first units are earmarked for handover by end-2019.

    The project comprises Maryam Island in Sharjah – a mixed-use destination featuring 1,890 freehold residences as well as a hotel component, Palace Al Khan – a luxury waterfront resort with 87 rooms, and Kalba Waterfront – a master-planned retail development within the Kalba Eco-Tourism Project with 183,000 square feet of gross leasable area.

    While no major residential and office supply was delivered in Q1 2018, Sharjah expects additional residential stock on completion of Nasma Residences Phase 1 and Al Zahia Residences, both due for handover by the end of the year.

    Apartment rental rates in the Northern Emirates declined by 1% on average since Q4 2017, while recording an annual decrease of 11%. Further downward pressure is expected, as the delivery of supply in Dubai directly affects the recovery of rates in the other Emirates. Office demand in Sharjah continued to drop, with quarter-on-quarter rates declining by 2% on average.

    Summarising Asteco’s outlook on real estate developments in the Northern Emirates, Stevens said: “The recently implemented legislation that allows non-Arab nationals without a UAE residency visa to purchase properties in Sharjah on a 100-year renewable lease is expected to stimulate demand and ultimately increase foreign investment in the real estate market.”


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    Emarat Al Youm

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    Al Bayan

    Dubai City Guide