Dubai ‘Not Worried’ About Maturing Debt, Ruler Says

Sept. 9 (Bloomberg) -- Dubai ruler Sheikh Mohammed Bin Rashid Al Maktoum said he is “not worried” about the emirate’s ability to repay at least $4.52 billion of debt this year, boosting property developer Nakheel’s bonds to a year-high.

“I assure you we are alright, the U.A.E. is alright, and we are not worried,” Sheikh Mohammed told reporters late yesterday at his Zabeel palace in Dubai, when asked whether the emirate would be able to repay the loans. Sheikh Mohammed is also the prime minister of the United Arab Emirates, a union of seven states of which Dubai is the second-biggest after Abu Dhabi.

The Dubai government must repay a $1 billion Islamic bond maturing in November, while state-owned real-estate developer Nakheel PJSC has a $3.52 billion Islamic bond falling due in December. The emirate borrowed $80 billion to finance its transformation into an international logistics, tourism and finance hub, and the seizure of global credit markets sparked concern about its ability to repay the loans.

Nakheel’s 3.1725 percent bond surged 9.3 percent to 102.5 cents on a dollar at 12:34 p.m. in Dubai after the comments, according to prices provided by National Bank of Abu Dhabi PJSC to Bloomberg. The bond, which slumped to 63.5 cents on a dollar in February, is headed for its highest close since Sept. 2008.

Moving markets

“This is moving markets,” Abdul Kadir Hussain, chief executive officer of Mashreq Capital DIFC Ltd., said in a phone interview from Dubai today. “It gives a boost to confidence that the market was looking for, and this is obviously coming directly from the source, so that provides a lot of comfort.”

Dubai set up a $20 billion fund earlier this year to help state-related companies struggling to raise money amid the credit crisis. Home prices in Dubai have tumbled by about 50 percent from their peak and may drop another 20 percent this year, Deutsche Bank AG said in a report in June.

Dubai established the fund after the global financial turmoil hurt its key property, finance and tourism industries and hindered companies’ access to credit. The first $10 billion for the fund was raised by selling bonds to the U.A.E.’s Abu Dhabi-based central bank in February.

The emirate, which is building the world’s tallest tower and the biggest man-made islands in the shape of palm trees, would study the viability of projects more closely in the future after the credit crunch led to an economic slump in the Persian Gulf business hub, Sheikh Mohammed said.

More careful

“We’ll be more careful now,” he said. “The crisis came for everyone, not just Dubai. People had to fight.”

The sheikhdom shelved some of its most ambitious plans including a set of dancing towers, made up of 80 stories of rotating floors, and a Formula One theme park. Emaar Properties, the U.A.E.’s biggest developer, is in talks to merge with three developers owned by state-controlled Dubai Holding LLC.

“The strategy is nearly the same,” Sheikh Mohammed said. “The U.A.E. is strong, it is like a plane facing headwinds. Now the headwinds are slowing down, so the plane will reach its destination more quickly.”

 

Source: Bloomberg

RAK seizes $800 mln failed realty project

The Ras Al Khaimah government said on Wednesday it has seized control of Khoie Properties, the failed developer behind an $800 million real estate project in the UAE emirate.Rakeen, owned by the emirate's sovereign wealth fund Ras Al Khaimah Investment Authority (RAKIA), has taken over legal custodianship of Khoie and the La Hoya Bay project following a court order, RAKIA said.Khoie has become insolvent after defaulting on land payments and failing to deliver properties to buyers.Some 800 investors, half of them from the UK, have bought properties in La Hoya Bay, a Mediterranean-inspired waterfront residential and leisure complex launched before the UAE property market collapse."The RAK court's decision to appoint Rakeen as custodian of Khoie Properties is a significant step that promotes and protects the welfare of investors and property buyers in Ras Al Khaimah,” RAKIA CEO Khater Massaad said in a statement.“With so much at stake, we believe that keeping this project on track will further consolidate the reputation of Ras Al Khaimah and highlight the local government's proactive support to all investors."Projects worth billions of dollars in planned properties were launched across the UAE with different emirates trying to replicate Dubai’s real estate boom, but developers have seen their fortunes turning upside down in the global financial crisis.

Source: MB

Residential and office rents continue falling in Dubai

Residential property rents in Dubai are continuing to plummet, according to the latest real estate report to be published but there are signs of some stabilisation.
Commerical rents are also falling and are set to tumble further as new office space comes onto the market in the next 18 months, another report warns.
Rents in the Dubai residential property sector fell up to 30% in August, the report from Landmark Advisory reveals. Worst hit were two bedroom apartments in Palm Jumeirah and in International City where rents fell 23%. Other key developments such as Discovery Gardens, JLT and JBR have now seen rents fall by between 10 to 30% since March.
The report says that although rents in many areas of Dubai have decreased significantly over the past five months there are exceptions to this trend with some unit types in preferred developments performing well.
For example, good quality one bedroom apartments in Dubai Marina have increased by 11% while two bedroom apartments have gone up by 6%. Also three and four bedroom villas on Palm Jumeirah have returned to March 2009 rents or increased marginally, Landmark's analysis shows.
Charles Neil, CEO of Landmark Advisory said those developments with rising rents are benefitting from a lack of supply. ,Many landlords have removed inventory from the market to avoid renting out at current market rates while others may be out of town during the summer period and consequently unavailable,' he explained.
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He also said that demand for property was particularly strong during June and July due to a significant amount of rental contracts ending around this time. But overall these marginal rent increases are unsustainable.
Landmark predicted that most residential areas in Dubai will be subject to further fluctuation, especially as new supply comes onto the market in the next 12 to 24 months.
Meanwhile average commercial rents are set to tumble further with some 25 million square feet of additional office space forecast to enter the market by the end of 2011, according to Jones Lang LaSalle.
The property advisor said office rents across Dubai fell by 25% in the second quarter, but the decline is falling compared to the 45% fall in the first quarter. Rents for Grade A space, excluding DIFC, now average at AED225 per square foot, in line with levels seen in mid 2007. This now made prime Dubai offices cheaper than those in London, Paris, Hong Kong, Mumbai and Moscow, the firm said.

Source: Property Wire

Dubai property asking and achieved sale prices converge

A report on Dubai's troubled residential sector has suggested that the market is experiencing the first green shoots of recovery, with real estate beginning to stabilise, following a devastating period for the market.

The Dubai residential real estate market is showing signs of renewed confidence as transactional value remained stable between Q1 2009 and Q2 2009 according to US-based property consultant Jones Lang LaSalle's Mena's Q2 2009 Dubai Residential Market Snapshot. While average asking prices have continued to fall - by around 24% in Q2 from 30% to 50% in the first quarter - the rate of decline in achieved prices has been lower at just -6%, resulting in a convergence between asking and achieved prices. This has been complemented by a lower rate of rental decline than in previous months, with the average rent for two bedroom apartments falling by 15% in Q2, compared with a 22% decline in Q1 2009, according to the report.
Signs of stabilisationIt is estimated that 22,400 residential units are expected to be handed over in 2009, in spite of over $24bn worth of residential projects being put on hold or cancelled. Demand remained stable with little change between Q1 2009 and Q2 2009, compared to the 58% annual decrease between Q2 2008 and Q2 2009. Craig Plumb, head of research at Jones Lang LaSalle Mena added: 'The stabilisation of transactional volumes is an important indicator, which reflects improved confidence among investors. The narrowing gap between asking prices and achieved prices is a further indication that the market is beginning to stabilise, albeit at significantly lower levels of pricing than those seen earlier in the year. 'While there have been a large number of projects delayed or cancelled, there remains a significant level of new supply, with around 22,400 residential units expected to be completed across Dubai in 2009.' The report's findings come on the heels of a report by the Dubai-based Landmark Advisory which revealed less flattering figures for the rental market. In its report published earlier this month, it revealed the average rents for villas has dropped by 42% from the peak of Q3 2008 to the second quarter 2009. In just the second quarter of 2009, average rents in Dubai declined by 23% to Dhs129,900 while average villa rents fell by 19% to Dhs220,350.
Developer slowdownDubai's construction sector has been among the worst affected by the global slowdown, with a sizeable number of high-profile projects being cancelled or delayed as finance streams dry up. Developer Emaar Properties announced that it had made a loss of Dhs1.3bn ($530m) during the second quarter of this year. Most of the losses came from the developer's decision to write down Dhs1.7bn of losses made by its US-subsidiary John Laing Homes. In June, Emaar announced it was in talks with Dubai Holding to merge the two real estate businesses: Emaar, Dubai Properties, Sama Dubai and Tatweer. Mohammed al-Gergawi, chairman of Dubai Holdings said: 'Consolidating these three companies with Emaar is a natural progression in the evolution of the Dubai real estate landscape, providing benefits to all stakeholders...The combined entity has a clear and concise strategy, better positioning Dubai as a world leading hub in real estate development and management.' A tentative timeline has estimated a completion of the merger by October 2009, following legal and financial due diligence, and approval by regulatory authorities and Emaar shareholders. In January, the SR2bn ($534m) Dubai Towers Jeddah project was put on hold as the developer, Sama Dubai reined in its development plans, which included the Jumeirah Hills development, which is planned for the site of the existing police academy next to interchange 4 on Sheikh Zayed Road. The status of another scheme, Falcon Island - which involves building a man-made island near the Burj al-Arab hotel - remains unclear.

Source: AME

Dubai, Abu Dhabi indices retreat

Emaar Properties headed early losers on Dubai's index, as investors cashed in gains from a four-session rally, but Shuaa Capital extended gains.
Emaar dropped 1.1 per cent, having hit a nine-week closing high the previous day, while rival developer Union Properties lost 2.1 per cent.
Shuaa bucked the negative trend, rising 4.1 per cent to take its gains to 19.2 per cent since Saturday. It appointed a new chief executive on Sunday and said on Saturday it would issue 515 million shares to Dubai Banking Group (DBG) to resolve a long-running bond row.
The index fell 0.5 per cent to 1,913 points.
"Ramadan trading has been slightly different this year and there has been some accumulation to help the index slowly pick up -- after Ramadan there might be a decent rally," says Haissam Arabi, chief executive and fund manager at Gulfmena Alternative Investments.
Meanwhile, property stocks also weighed on a retreating Abu Dhabi index, as declines in Asian stocks convinced UAE investors to sell.
RAK Properties and Aldar Properties were the two most active stocks and they fell 1.3 and 0.8 per cent respectively.
Aldar has risen 19.7 per cent this month as investors bet the UAE property sector was stabilising and that beaten down real estate stocks were undervalued.
Sorouh Real Estate was another to decline, dropping 1.6 per cent. The index fell 0.4 per cent to 2,871 points.
Analysts said UAE markets continued to maintain a high correlation to their global counterparts. Chinese stocks plunged 6 per cent to a three-month low on Monday.

Source: Business 24/7