Tag Archives: development
Residential property prices in Dubai still falling, latest analysis suggests
Residential real estate prices in Dubai continued to fall in the first six weeks of the second quarter of this year compared to the first three months of 2015, according to the latest data. However it is not necessarily bad news, according to the mid quarter research report from Phidar Advisory. ‘The ongoing erosion of sale prices is a healthy correction. The more significant concern is the scale and nature of the upcoming launched and announced projects,’ said Jesse Downs, the firm’s managing director. The report shows that apartment lease rates decreased a nominal 2.4%, while sale prices decreased 1.5%, marginally tightening yields. Lease rates for villas decreased 0.6% and sale prices decreased 2.9%, which pushed up yields slightly. In the first five months of 2015, apartment transaction volumes were down a modest 1.5%, compared to the same period in 2014. SFH volumes contracted almost 25%, over the same period. This is based on initial transaction data from the Dubai Land Department, which is subject to revision. The report references income specific supply-demand imbalances. The most vulnerable segment is housing supply with current annual rents of AED100,000 to AED160,000 per annum, which could be oversupplied by up to 40% in five years. ‘If we consider only under construction and launched projects, the majority of the development pipeline is justified due to sufficient total demand,’ said Downs, who added that over building in the middle high income segment is likely to increase competition and lead to supply reordering. The potential for total market disequilibrium increases significantly when adding announced projects into the supply pipeline, the report points out. Total market vacancy could reach 11% by 2020. Factor in a healthy frictional vacancy and the total vacancy rate converts to a 7% oversupply. ‘There is an opportunity to reposition upcoming products to meet the city’s anticipated housing needs. If current announcements convert into launches, the probability for instability by 2020 will increase significantly,’ concluded Downs. Continue reading
Property and building industry welcomes details of UK’s new housing bill
The UK is to see an increase in the supply of new starter homes to be exclusively offered to young first time buyers under the age of 40, it has been announced by the government at the opening of the new parliament. The Queen’s Speech included a number of issues relating to the nation’s property markets which have been met with a positive reaction. The new starter homes for first time buyers will be offered at a 20% discount below their open market value and the current Right to Buy levels of discount will be extended to 1.3 million housing association tenants. To help with the chronic lack of housing local authorities will be required to dispose of high value vacant council houses which would help fund the Right to Buy extension discounts and the building of more affordable homes. The government will also take forward the Right to Build scheme, requiring local planning authorities to support custom and self builders registered in their area in identifying suitable plots of land to build or commission their own home. A statutory register for brownfield land will be introduced to help achieve the target of getting Local Development Orders in place on 90% of suitable brownfield sites by 2020. Along with this the neighbourhood planning system will be simplified and speeded up to support communities that seek to meet local housing and other development needs through neighbourhood planning. The reaction from the property and housing industries has been positive as all agree that there is a pressing need to build hundreds of thousands of new homes across the country and particularly in London. However, Adrian Gill, director of Your Move and Reeds Rains estate agents, questioned whether these new schemes are setting sights high enough. ‘Building a home in Britain is about 18% more expensive than in Ireland, for example. Preliminaries like planning fees account for 12% of the total costs in the UK, compared to 10% in Ireland. Reforming the red tape surrounding the house building process may be one of the only safeguards around steadier house price rises,’ he said. ‘Home ownership is still a key life milestone and aspiration for UK households, so any measures that bring this goal closer into view will be very welcome. The Right to Buy extension sounds good on paper –but we’ve yet to see how this will translate in practice, and the reality is that authorities will have to sell off existing stock first before they can fund and deliver this new promised land of affordable properties,’ he explained. ‘At the same time, tenant demand for housing will be accumulating, and this could spill over into the private rented sector, and artificially push up prices and competition for rental homes,’ he added. According to Charles Haresnape, chairman of the Intermediary Mortgage Lenders Association (IMLA), the government must work swiftly with the mortgage industry to ensure finance is available to help consumers with their purchases. ‘If not,… Continue reading
