House prices in Dubai are likely to drop nearly 28 percent this year, due to sudden drop in demand. This puts a halt to the six-year property boom that the emirate had been witnessing, reveals the survey report by Reuters.
The residential prices in Dubai will see a decline of 15 percent next year reveal the median forecast of seven analysts at Banks Research Institutions and Investment Firms.

Six of the analysts are of the opinion that prices in Dubai have already touched its peak, in early June, even before the launch of $1.5bn Atlantis hotel on the Palm-shaped Island visible from space.

The prices could drop 27.5 percent thereafter, including a 17.5 percent drop from their current levels, as per the survey conducted between 23rd November and 3rd December.

Senior Financial Analyst at Global Investment House, Bikash Rout, said that there are hardly any takers at the moment. The pressure would be further more on properties that are under construction (off-plan properties) as speculators are desperate to sell the properties during global credit crunch, while the buyers grapple for mortgage loans.

The prices of housing in Dubai have surged since 2002, when the emirate kept its doors open for foreign investors by offering freehold ownership in certain areas, including the Palm Jumeirah.

According to Colliers International, the prices surged 80 percent during third quarter of the year, compared to same period the previous year. But considering quarter-on-quarter, the growth in prices have declined sharply from 43 percent in the first quarter to just 5 percent in the third.

According to Fabio Scacciavillani, the Director of Microeconomics and Statistics, Dubai International Financial Center, there will be an oversupply of residential units during the first half of 2009.

With the worsening of global financial crunch, tumbling of oil prices, and credit markets frozen, the economic boom in the Gulf have come to a total halt. Analysts are now expecting an overall increase of 15 percent in housing prices in Dubai for 2008.

Developers, most of whom, are partly or fully owned by the state are now scaling back on projects and cutting jobs due to the global financial crisis.

Most analysts said that prices of houses were overvalued and would take more than a year to attain stability, when buyers would re-enter market to take advantage of bargains.

The problem would get further aggravated, as the market has been focusing more on high-end units, which is far beyond what majority of the population can afford, said Roy Cherry, Vice President- Real Estate and Construction, Shuaa Capital.

But analysts still state that market for existing units is still healthy due to scarcity of residential units. Dubai Real Estate is oversold at the moment due to lack of liquidity, but, once the credit markets ease out, it will function smoothly again, said Chris Flinos, Head of MENA region-Real estate investment and banking, Merrill Lynch.

By Jason Benham

DUBAI, Nov 13 (Reuters) - Dubai property shares plunged and its biggest private developer slashed jobs this week as the global financial crisis tightened its grip on the tiny emirate, until now synonymous with the Gulf Arab real estate boom.

Dubai’s glittering skyline and luxury tourism sector have lured investors in droves over the past five years. But property prices have begun to fall, according to brokers and banks, in one of the clearest signs to date that the bubble has burst.

A real estate crash in Dubai would call into question the futures of millions of immigrant workers, many from India and Pakistan, and whether energy exporter Abu Dhabi would run to the rescue of its high-flying but poorer neighbour. “Villas that were very hot before the crisis have fallen. The buyers were chasing the sellers but now it’s the other way round,” said Quaid Abbas, property consultant at Engel & Volkers. “Small real estate companies are going to close down.”

Secondary prices in Dubai and Abu Dhabi fell 4 to 5 percent, with Dubai’s advertised villa prices falling by 19 percent month-on-month in October after several banks tightened lending conditions in August and September, HSBC said.

Apartments in the Dubai International Financial Centre, the nexus of the banking and investment sector, fell as much as 30 percent, it said.

Rehab Gouda, senior sales agent at Al Jabal Real Estate, said that property prices had fallen 30-35 percent in Dubai since September.

A three-bedroom villa in the unbuilt Jumeirah Park project, a sought-after area of the seaside emirate, which was worth around 4.8 million dirhams ($1.3 million) in August, is now valued at roughly 3.8 million dirhams, she said.

“The market is going through a tough time,” said Sana Kapadia, associate equity research at EFG-Hermes in Dubai.

“Whether or not it is the end of the market, remains to be seen.”

on Sunday, 19 October 2008

ONLINE DRIVE: The labour ministry plans to have all its services available online by 2010. (Getty Images)

The UAE Ministry of Labour expects to have 100 percent of its services available online by 2010, the ministry’s IT director said on Sunday.

“IT departments have now become the backbones of any organisation and we are focusing on this, especially with the new [UAE] government strategy to provide 100 percent e-services,” Mohamed Al Shamsi told Arabian Business on the sidelines of the Gitex technology exhibition.

“For the Ministry of Labour, by the end of 2009 it should be 100 percent. We are almost 75 percent now.”

ref: http://www.arabianbusiness.com/534945-100-of-services-online-by-2010—labour-ministry

on Sunday, 19 October 2008

MOBILE VISAS: The DNRD has unveiled new technological advances in customer services at Gitex. (Getty Images)

The Dubai Naturalisation and Residency Department (DNRD) on Sunday unveiled several new technological advances in customer services, including a system that allows people entering the emirate to use a barcode sent to their mobile phone.

The mobile visa service, ‘M-Visa’, allows people to receive all types of entry visa permits via email and text messages in a form of a barcode, which can then be scanned directly off a mobile phone upon arrival in the UAE, the DNRD said.

Major General Al Marri, director of DNRD, said in a statement “our latest automated services… will cut down on waiting times and offer our customers first class services with more options and features”.

To trade well it is not sufficient to understand the balance sheet and finances of a company. It is not even sufficient to understand how a company may have performed in the past. To trade well it is important to be able to look into the future.

One of the things which good analysts look at is something called ‘Competition Structure’. This means understanding the forces of competition affecting a company and how that may change in the future for the better or worse. The investment community generally breaks these forces down into: ‘threat of substitute products’, ‘threat of new competitors’, ‘intensity of competitive rivalry’, ‘bargaining power of customers’ and ‘bargaining power of suppliers’. You can read more about that all here.

Entire books have been written about the so-called “five forces of competition” and there is already a lot on the web about this subject so I’m not going to repeat all that. Instead I will summarise a quick method for performing a similar analysis to help you come up with your own view of whether the company you like will continue to grow or not.

1. Sketch out the supply chain. This means understanding what goes on from start to finish in the production process.

Let’s take palm oil for example: In this industry there are upstream producers who grow and harvest the stuff, then there are downstream producers who operate the mills to process the fruit and then there are exporters and finally customers who buy it.

2. Figure out where your company fits into the supply chain. Sime Darby for example, owns plantations and mills and can be considered an upstream and downstream producer. CB Industrial however, supplies equipment for mills and can thus be classed as a downstream operator.

3. Understand the most important factors which will affect these forces. This is actually the hardest and most important part. A textbook example of this would be how IBM in the 80’s opened up its computer architecture to third parties and found itself having to compete against Intel for processors and Microsoft for the operating system, whilst Apple in contrast has kept its architecture pretty much under its own control and has not suffered in the same way. By trying to drive down its own costs, IBM inadvertently increased the threat of substitute products in its own industry and managed to decrease its own growth in an industry which was itself still growing.

In the context of palm oil, the main factors affecting competition are a) supply of land and b) customer preference. Diminishing availability of agricultural land on the peninsula has meant that planting has shifted to Sarawak and further to Indonesia. Also environmental concerns are prompting more and more customers to source palm oil from plantations that “have not been established at the expense of tropical forests”. And finally, there is of course the possibility that palm oil can be used as biofuel, which opens up an entirely new market.

4. Identify the industry life cycle. The life cycle of an industry can be split into several phases - pioneering, growth, maturity and decline (You can read more about it here). Green energy, for instance is in the pioneering phase, whereas the fashion retail business is in its maturity phase.

The palm oil industry, which began in Malaysia almost a century ago has created fortunes and allowed companies such as Sime Darby to diversify into property development, manufacturing etc. Therefore it can be regarded as an industry in its maturity phase. However, with the growth of demand for agricultural oils from India and China and the possibilities over biofuel, there is the possibility that a new phase of growth has occurred, much like the same situation regarding oil and energy. This helps explain the recent correlation which palm oil prices have had to energy commodities such as oil.

It is hoped that these four steps will help impose some structure into your analysis!

At Google, we have a saying: “launch early and iterate.” While this approach is usually limited to our engineers, it apparently applies to our mailroom as well! As you may have read in the blogosphere, we hit “send” a bit early on a comic book introducing our new open source browser, Google Chrome. As we believe in access to information for everyone, we’ve now made the comic publicly available — you can find it here. We will be launching the beta version of Google Chrome tomorrow in more than 100 countries.

So why are we launching Google Chrome? Because we believe we can add value for users and, at the same time, help drive innovation on the web.

All of us at Google spend much of our time working inside a browser. We search, chat, email and collaborate in a browser. And in our spare time, we shop, bank, read news and keep in touch with friends — all using a browser. Because we spend so much time online, we began seriously thinking about what kind of browser could exist if we started from scratch and built on the best elements out there. We realized that the web had evolved from mainly simple text pages to rich, interactive applications and that we needed to completely rethink the browser. What we really needed was not just a browser, but also a modern platform for web pages and applications, and that’s what we set out to build.

On the surface, we designed a browser window that is streamlined and simple. To most people, it isn’t the browser that matters. It’s only a tool to run the important stuff — the pages, sites and applications that make up the web. Like the classic Google homepage, Google Chrome is clean and fast. It gets out of your way and gets you where you want to go.

Under the hood, we were able to build the foundation of a browser that runs today’s complex web applications much better. By keeping each tab in an isolated “sandbox”, we were able to prevent one tab from crashing another and provide improved protection from rogue sites. We improved speed and responsiveness across the board. We also built a more powerful JavaScript engine, V8, to power the next generation of web applications that aren’t even possible in today’s browsers.

This is just the beginning — Google Chrome is far from done. We’re releasing this beta for Windows to start the broader discussion and hear from you as quickly as possible. We’re hard at work building versions for Mac and Linux too, and will continue to make it even faster and more robust.

We owe a great debt to many open source projects, and we’re committed to continuing on their path. We’ve used components from Apple’s WebKit and Mozilla’s Firefox, among others — and in that spirit, we are making all of our code open source as well. We hope to collaborate with the entire community to help drive the web forward.

The web gets better with more options and innovation. Google Chrome is another option, and we hope it contributes to making the web even better.

So check in again tomorrow to try Google Chrome for yourself. We’ll post an update here as soon as it’s ready.

Homeowners in Dubai have seen service charges for communal areas almost double in 2008. Developers have blamed this on the inflationary pressures being felt in the markets as the cost of raw materials and necessary utilities increase.

 Residential service fees are often the ‘hidden’ charge placed on home owners living in community developments.

At present these are usually payable to the developer of the project, who charge owners a set sum which is then put toward the upkeep of communal grounds, facilities and building spaces.

From October, this role will be taken over by owners associations, under Dubai’s upcoming Strata Title Law.

Property owners have seen these charges rise sharply since the start of the year, as market pressures and the effects of double-digit inflation have trickled down to the end user.

Owners in Emaar communities have been told of added increases, but many have yet to receive invoices reflecting these.

Charges to double

AME Info has learnt that increases in some of the Emaar communities are likely to potentially double once the charges are seen.

In the Arabian Ranches development, the charges differ according to the size of the property.

Al Reem villas will go from approximately Dhs6,000 per year, to Dhs11,000. The Saheel and Savannah communities will see rates rise from around Dhs7,000 to close to Dhs16,000, while property owners in the Alvorada community could see their fees top Dhs20,000 annually.

Similarly, some owners in Union Properties Green Community development have seen their rates go up by over 50%, with charges for a studio going from around Dhs6,000 to approximately Dhs9,000 per year.

‘The charges have been increased in all communities, but it’s in line with the increases that are having to be paid across the board,’ said an Emaar Customer Care representative.

‘The service providers have raised their prices and there’s been an increase in raw materials. The Dubai Electricity and Water Authority have upped their charges by 50%, so it’s all reflected in the new rates.’

Property owner’s responsibility

Although the service charges are solely the responsibility of the property owners, some landlords have tried to pass on the rate increases to tenants, despite having no justification for doing so.

‘Service charges are the responsibility of the owner unless the tenancy contract specifically says otherwise,’ confirms Alexis Waller, partner in the property department of law firm Clyde & co.

‘I still always amend tenancy contracts to make this clear and to avoid any doubt. Maintenance and repair obligations are usually limited to leased premises, so a tenant could argue that they are not paying building maintenance charges.’

‘In relation to facilities, tenants could rely on Article 11 of the new Landlord and Tenant Law which states that the rent is inclusive of the use of communal facilities such as a pool, gyms etc, unless otherwise agreed.’

Owners could also be in for further price shocks. The introduction of the Strata Title Law could see charges rise further, as areas of communal maintenance that may previously have been subsidised by the developers in order to increase units’ appeal, come under the aegis of community home owners associations or strata management agents.

As well as routine maintenance and upkeep charges, owners are likely to have to pay premiums to cover complete building insurance, as well as contributions to an emergency reserve fund to take care of larger maintenance work; potentially including the road network within communities.