The plunge in oil prices may take more of the froth off Dubai's booming real estate market, but broad-based demand for property is likely to prevent any crash, said a report.
As the global financial crisis slashed oil and equity prices in 2008, Dubai's real estate market began a collapse that roughly halved residential prices in 12 months and forced the restructuring of tens of billions of dollars of corporate debt.
So oil's current slide is being watched closely in the UAE emirate. During the last slump, a sharp downturn in the Dubai stock market preceded the beginning of the property crash by about nine months; the stock index is now down 37 per cent from its May 2014 peak.
This time around, however, there are major differences. The UAE has built up huge fiscal reserves which are expected to let the government keep spending heavily, insulating the economy from the reduction in oil revenues.
Also, Dubai's real estate market looks healthier and less vulnerable to a crash than it did in 2008, when frenzied buying by speculators and overextended property developers created a bubble that was waiting to burst.
"I wouldn't say lower oil will have much effect on Dubai's property market in the long run because demand is there - if not from the Gulf, then from India, China and Europe," said Harshjit Oza, assistant director of research at Naeem brokerage in Cairo, Egypt.
He said Dubai's real estate would not be able to escape a temporary impact from cheaper oil, but noted the UAE as a whole was not as dependent on oil as the other big Gulf economies, and that Dubai - with little oil itself and big tourism, travel and trading sectors - was even less exposed.
Dubai's real estate industry began rebounding from its last slump in 2012. Residential prices soared by roughly a third in the 12 months to mid-2014, bringing them near their 2008 peaks.
In the last several months the market has begun slowing. Consultants CBRE estimate residential prices rose just three per cent in the third quarter of the year and two per cent in the fourth; Knight Frank calculates mainstream prices - for properties under Dh10 million ($1.4 million) - fell 5.2 per cent in the third quarter.
The big threat to the market is that lower oil revenues in the Gulf could slash the amount of money available to buy Dubai property, just as the supply of new units increases next year as projects launched at the start of the boom are completed.
But many analysts think such fears are misplaced. Oil revenues do not flow directly into Gulf real estate markets; they go into state coffers, and governments then decide how much they want to inject into their economies via state spending.
The UAE, Saudi Arabia, Kuwait and Qatar have spent the last five years building up fiscal reserves that will let them keep spending actively even if brent oil, at $115 a barrel as recently as June, stays around $60 or goes even lower.
"There is no need now for a very steep and quick reduction of spending, which would not necessarily be desirable," Harald Finger, the International Monetary Fund's head of mission for the UAE, said last week. Gulf economic officials, including the Saudi finance minister and the UAE economics minister, have made similar statements.
So the impact of cheaper oil on property prices is likely to be more psychological than economic. And the market is less jittery than it was at the start of the last downturn, because many of the excesses of the last boom have been avoided.
New regulations have limited short-term speculation in property - the central bank increased the size of deposits required from mortgage borrowers, and Dubai doubled its land transaction fee. Despite their bullish rhetoric, developers have launched projects more carefully than they did a decade ago.
Even if demand from the Gulf does ease, it may not matter much because interest in Dubai property is diversified.
Figures from the Dubai Land Department show that while UAE nationals bought a quarter of property in the emirate in the first half of this year and Saudis seven per cent, over a fifth was bought by Indians and 12 per cent by Britons.
"In the early part of 2015, weaker sentiment as a result of lower oil prices and the ongoing uncertainty in the euro zone is likely to dampen residential investment activity from the Gulf and Europe," Knight Frank wrote of the Dubai market.
"Emiratis and Indians, however, are likely to remain important investors in real estate."
Even if a long period of cheap oil slows economic growth in the Gulf, it may increase wealth in the rest of the world - and some of that money is likely to find its way to international cities such as Dubai. This is a big difference from 2008, when the global crisis reduced wealth globally.
"Purely from a real estate point of view, while there are potentially negatives - say, if the oil and gas sector slows in terms of new office openings etcetera - there are also a lot of potential positives, given what it could do to the global economy," said Matthew Green, CBRE's regional head of research.-Reuters
The residential rents in Dubai witnessed a modest growth of around seven per cent over the course of the year, as compared 24 per cent last year, according to global property consulting firm CBRE's year-end market update.
More than 20,000 new units are expected to enter the market during the course of the next 12 months which could have a deflationary impact on sales and rental rates, it said.
Mat Green, head of research and consultancy UAE, CBRE Middle East, said: "Over the past 12 months the sales segment has comprehensively out-performed the rental market, recording an 18 per cent growth year-on-year as compared to 30 per cent in 2013.
"This disconnect is highlighted as a potential area of concern for the market, with mounting pressures on rental yields as a result. However, despite the slowdown, the market continues to see strong occupier and investment demand for well located, good quality residential apartment buildings, a fact backed up by recent transaction numbers in the established community locations."
"Over the course of the year, the residential market has progressively slowed with transaction volumes well down on 2013 performance. While values have grown steadily during the period, the growth is just a fraction of the 30 per cent growth achieved last year. A similar story has also been evident in the residential leasing market, wherein rentals suffered a first quarterly decline since the last downturn in 2008."
Despite a rise in new stock and high vacancy ratios, office lease rates have surged across the prime and secondary locations. Solid economic growth and improved business confidence has paved the way for the entry of new SMEs while existing firms are solidifying by way of expansion/consolidation culminating in a strengthening of lease rates.
Single held quality office assets across prime and secondary areas have benefitted the most, recording rising lease and occupancy rates.
"Overall, we expect the scheduled pipeline of offices to help constrain rental inflation and add more balance to the market in the coming quarters. As of end of 2014, the total office stock stands at close to 8.1 million sq m rising from 7.7 million sq m as of the end of 2013. This reflects an addition of 0.4 million sq m and an increase of six per cent year on year," said Green.
According to the CBRE annual market update, the retail sector remained buoyant during the year, with major retail centres recording occupancy rates of over 95% and with strengthening lease rates.
"While all sectors have performed well, perhaps two of the most promising have been the retail and hospitality sectors which have seen rising demand amidst increasing visitors to the emirate," added Green.
A positive economic outlook and an increase in tourist numbers, combined with a rise in per capita income and changing consumer behaviour are currently acting as a growth catalyst for the sector.
Dubai remains the principal regional draw as an established 'retail tourism market' which is further reflected by the continuous rise in new brands and in footfall figures reported by the malls.
"Total retail stock in Dubai has now reached nearly 2.3 million sq m, rising three per cent from the same period last year. Recent growth has been a result of a number of factors, including rising visitor numbers, an increasing population, and a strong brand affiliation. This has been underpinned by the development of mega sized destination malls, which are anchored with large-scale leisure attractions, with entertainment forming an increasingly important part of the retail mix," said Green.
The rising tourist numbers along with planned festive activities should see another strong year for the retail sector.
However, with no new major retail space expected to enter next year, the quandary of retailers is likely to continue. With strong fundamentals, the sector is expected to see further growth with addition of new retail brands waiting to enter the market.
By the end of 2017, more than 27,000 new hotel keys and hotel apartments could be delivered, adding capacity for close to 10 million room nights a year to Dubai's annual room inventory.
While the next year is set to see significant new supply with over 5,500 new hotel keys, 2016 and 2017 are the real growth years with close to 15,000 new hotel keys in these two years alone. Over the next 12 months there will also be 1,500 new hotels keys delivered in the Dubai Marina, JBR, Jumeirah Beach and Palm Jumeirah sub-markets, although the main focus of supply in the short term is very much business focused.
"With a solid economic outlook, Dubai's position as the headquarter city of choice for global corporates in the Middle Eastern region looks set to continue. However, with limited good quality and efficient office properties available in the market, it is likely that this segment of the market could see a growing demand and supply imbalance in the coming quarters," concluded Green. - TradeArabia News Service
A 'park and ride' facility where Dubai Tram users are able to park for free has been established, post the launch of Dubai Tram this month.
When you park your car to hop on the Tram, parking is free in the multi-storied parking garage located on Sufouh Road. This service has been provided to encourage people to use the new transit mode, the Roads and Transport Authority (RTA) said.
"Similar to the park and ride facility at several Metro stations, the tram user only needs to park in the parking area reserved and he will be able to leave the car behind, free of charge," explains Adel al Marzouki, Director of Parking at the RTA.
"In the multi-storied parking garage at the foot of Palm Jumeirah, we have reserved the third floor for tram users. Security persons are present at the location. All the commuter needs to do is inform the staff that he is planning to hop on the Tram, and he will be able to park the car."
Near the parking garage commuters can get on at Station 9 Palm Jumeirah, from where they can also reach the Monorail, which commutes passengers onto the Palm.
The park and ride concept on the Metro service is available at Rashidiya and Nakheel Harbour and Towers on the Red Line, and Etisalat on the Green Line.
In Rashidiya, the facility comes with a barrier that only opens when a Nol card, or day pass is presented.
Park and ride for Tram users is currently manned by staff to avoid misuse, but might have a security system in the future, Al Marzouki added.
International exhibitors are set to showcase the latest developments in the railway industry and highlight opportunities in the region, according to a report.
The rail projects in the region has been estimated to reach SR45 billion ($11.9 billion), said the Arab News report.
Saudi Rail 2015, the international exhibition for rail, metro lines and urban transportation, will run from January 25 to 28 at the Riyadh International Convention and Exhibition Centre, in cooperation with Ramatan Exposition and Conference.
The range of products and services at the exhibition will include passenger and cargo transportation wagons, maintenance services, train line systems, train network and communication systems, train station equipment, facilities and services, consultancy, broadcasting, and customer clearance services.
The event will be held concurrently with Saudi Logitrans 2015, the international exhibition for transport, logistics and freight, the 'Saudi Rail and Logitrans Conference' and 'Trans 4 Saudi Arabia'.
The seminar sessions will provide a podium for key government decision makers, transport organisations, port authorities, and industry professionals to announce new initiatives, formulate strategic policies and regulations, discuss up-to-the-minute case studies, and exchange information on global best practices.
According to recent reports, rail projects account for 32 per cent of the total GCC transportation developments valued at $298 billion.
Transportation makes up to 20 per cent of the total construction spending in Saudi Arabia where nearly $25 billion is at the bidding stage or under development in the railway sector, it added.
Saudi Arabia has launched construction work on a 700,000-sq-m low-cost housing project for nationals in the Western Province, a report said.
A spokesman of Housing Ministry was quoted in the Arab News report as saying that work has already started on the housing units in Al Jammom and the development of the new town is on schedule to be completed soon.
A recent research indicated that Saudi Arabia will need three million housing units annually to cater to the rising demand, the report said.
The government plans to build 500,000 low-cost houses at a cost of SR250 billion ($66.6 billion), which will also help reduce apartment and real estate, the report added.
Bahrain is preparing to open the door to alternative power providers with the setting up of a new watchdog to oversee the green energy sector, a senior government official said.
A proposal to establish a National Renewable Energy Regulatory Authority is due to be presented to Bahrain's Legislation and Legal Opinion Commission, Energy Minister Dr Abdulhussain Mirza told the Gulf Daily News (GDN), our sister publication, in an exclusive interview.
He said the new body, which would be independent from the ministry, would pave the way for investment in solar power and wind farms.
"Bahrain will soon open its doors for investments in the renewable energy field, whether solar or wind, and for that we need a regulator to help with licensing and monitoring as those interested from across the globe are set to enter," revealed Dr Mirza.
"It is a completely new concept and altogether something never witnessed before in Bahrain, despite work being carried out in a number of renewable energy projects. The new body will be independent, despite being chaired by the concerned minister, and will ensure a competitive market as private providers work to produce energy.
"The issue will first be studied by the Legislation and Legal Opinion Commission before the necessary bill is drawn up for presentation to the Cabinet and later on the National Assembly."
Bahrain has already launched a pilot renewable energy project with a solar power plant producing five megawatts of electricity for Bapco, Awali and the nearby Bahrain University coming online earlier this year.
Work on a similar pilot project to produce five megawatts of electricity using both solar and wind power is due to commence around the middle of next year.
"We have a new mult-million dinar project for five megawatts of renewable energy near Al Dur Jetty, which is close to Al Dur Power Plant, and will produce three megawatts of solar and two megawatts of wind power," said Dr Mirza.
"It is a pilot project that will help us decide on future steps, especially continuing with wind energy.
"Previous tests - notably experiments done by a Japanese company on wind velocity - have shown success, but it is still early to say that it could be used on a vast spectrum for commercial purposes in the coming years.
"In regard to solar power, we have successfully managed to get electricity produced by the sun integrated within the local electricity network after we found it to be compatible with that produced by gas."
The minister said the Tender and Auctions Board was now reviewing bids for the multi-million dinar project.
"Whenever we get the technical evaluation sorted and a winner is selected early next year, then a contract will be signed without delay as we are looking to start work by mid next year - despite necessary legislation organising the sector not out yet," said Dr Mirza.
"We can now work with ministerial decisions approved by the Cabinet until we introduce regulations." - TradeArabia News Service
Manama, Dec. 27 (BNA)-- A new medical centre has been inaugurated today in East Riffa. Representatives Council member Mohammed Marefi opened Al-Jawza Medical Centre in the presence of Health Ministry representative Consultant Wafa Ajour and senior officials.
Southern Governorate Municipal Council Head Ahmed Yousef Al Ansari, a host of doctors, the new centre's Board Chairwoman Dr. Jamila Makhimer and the medical and nursing crew also attended the inauguration of the new facility which is considered an added value to outstanding medical services provided by the private sector.
The state-of-the-art health centre offers a wide range of services including maternity and child care, follow-up of chronic diseases, pre-matrimonial check-ups, yoga exercises during pregnancy and post-delivery periods, sonar x-rays and circumcision.
A newly appointed contractor has said construction on the northern-most portion of the Doha Metro will start by the end of December, the latest milestone in Qatar's massive rail roll-out.
South Korean firm Lotte Engineering & Construction said it was part of a consortium selected to build a 6.7km section of the Red Line North, according to a report in The Korea Economic Daily.
Other companies involved in the joint venture include Italian company Rizzani de Eccher and Qatar's Redco.
The total value of the project is worth $609 million, the report added.
According to Qatar Rail, the joint venture had been pre-qualified to design and build the elevated and ground-level portion of the Red Line North that runs from Lusail Center - where passengers can transfer to a separate light-rail line - to the Doha Golf Club, where the metro starts to run underground.
The Korean media report said the project would take 43 months to complete, or until mid-2018.
Months of testing are expected to commence once construction is completed. Qatar Rail has previously said that the the first phase of the Doha Metro would open to passengers in 2019.
Construction of the Doha Metro appears to be in full swing in many areas, where work crews have taken over entire city blocks with heavy machinery surrounded by tall, gray metal fences bearing Qatar Rail's logo.
Doha Metro construction.
In some cases, work has led to lane closures or entire roads being blocked off - something transportation authorities say will continue to be a reality for motorists, who should expect to face traffic snarls for the next three to four years.
Officials hope Doha's rapid transit system will take some of the pressure off the city's roads when the first phase opens in five years. At that time, some 37 stations along four lines are expected to be operational:
The Doha Metro is one of three separate rail projects planned for Qatar.
In addition to the 37-station Lusail LRT that contractors say will begin operating in 2018, construction of a long-distance rail and freight line is scheduled to start late next year and run between Education City and Saudi Arabia in its initial phase.
An iconic inauguration, the landing of an Oman Air Airbus A330 marked the launch of Muscat International Airport's new North Runway.
The newly introduced facility is to play a fundamental role in the development of Muscat's new airport, which is in the final stages of its construction and will replace the existing facilities. Upon opening, it will host up to 12 million visitors annually in its first phase - up to five million more than the current airport's capacity.
Welcoming the aircraft at the airport's North Apron was guest of honour, Minister of Royal Office, HE General Sultan Bin Mohammed Al Numani as well as other VIPs and media. A delegation led by the CEO, Oman Air, Paul Gregorowitsch and chief officer service delivery, Oman Air, Andrew Walsh introduced the pilot of the plane to Al Numani and other guests.
Gregorowitsch commented on the event: "It is an honour for Oman Air to inaugurate Muscat International Airport's new runway. As the airport that serves the Sultanate's capital city and home to its national carrier, Muscat International Airport holds very special significance for Oman Air. It was therefore a pleasure to see our Airbus A330 become the first aircraft to touch down as a signal of the start of operations at the new runway.
"As Oman Air's programme of ambitious growth continues, we look forward to seeing many more of our aircraft make use of this outstanding facility by building Oman Airs hub and continuing to offer outstanding transfer options to connecting passengers from around the world."
Owner, developer and asset manager of branded three- and four-star hotels in the Middle East and Australia, Action Hotels, recently signed a hotel management agreement with Accor Group, granting it the long term management of Action Hotels' third property in Kuwait, the 160 key Novotel Sharq.
The hotel management agreement was signed by chairman, Action Hotel, HE Sheikh Mubarak Abdulla Mubarak Al Sabah and chief operating officer, Accor Hotel Services Middle East, Christophe Landais.
Landais said: "This is the first Novotel in Kuwait and confirms Accor's commitment to bringing world-class mid-market hotels to the region. Our partnership with Action Hotels which started back in 2007 is highly significant in this plan."
Sharing that the construction of the freehold hotel is expected to cost approximately $29 million (in addition to the $12.3 million already paid to secure the plot of land), CEO, Action Hotels, Alain Debare commented: "Construction is scheduled to commence by mid-2015 and we expect the Novotel Sharq to open its doors to Kuwait in 2017."
Action Hotels' current operating portfolio comprises of six hotels, of which five are in the Middle East and one in Australia. Looking to the future, the pipeline entails another nine hotels, which are expected open by the end of 2016, with new openings in Bahrain and Sharjah anticipated by the end of 2014.
Debare explained: "Our focus remains on developing a leading economy and midscale hotel business in the undersupplied and high growth markets, with a primary focus on the Middle East where we are well-placed to take advantage of the significant growth opportunities for branded hotels in this category."
Kuwait is home to 2,433,559 foreign residents, the latest official figures indicate.
The number of male expatriates is 1,612,699 while 820,550 are women, the General Department for Residency Affairs said.
According to the figures detailing the categories, 1,192,105 foreigners are working in the private sector while 99,940 are employed by the government. The number of domestic helpers is 619,895, making it one of the highest in the Gulf Cooperation Council (GCC), the loose alliance that comprises Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates.
The number of foreigners who are on family visas are 518,377, and the number of foreign students is 655, the statistics show, local daily Al Anba reported on Monday.
Foreigners, mainly unskilled Asian labourers in the construction sector and domestic helpers, make up two-thirds of the total population and the Asian community alone outnumbers Kuwaitis.
Several Kuwaiti lawmakers said that they were alarmed by the demographic imbalance and pressed for ways to address it and to reduce the country's reliance on foreigners.
Last month, a bill calling for the imposition of a five-year residency cap on foreigners in Kuwait and a ban on bringing their families into the country was cleared by the parliament's legal and legislative committee.
The bill, submitted by MP Abdullah Al Tamimi, also limits the size of any expatriate community to less than 10 per cent of the Kuwaiti population. Under the proposal, no community should be larger than 125,000 people.
The Indian community, the largest in the northern Arabian Gulf country, with more than 670,000 members and the Egyptian community, the largest among Arabs with around 520,000 people, would be dramatically affected and thousands of foreigners would have to leave the country under the proposal.
The Bangladeshi, Pakistani, Filipino and Syrian communities would also see their numbers slashed.
The bill applies to unskilled and semi-skilled expatriates who make up the largest segment of the communities in Kuwait.
Highly qualified and skilled expatriates are not included in the proposal promoted by Al Tamimi as seeking to address the alarming demographic issue in Kuwait.
The committee also reportedly called for removing the six-month period accorded to expatriates who leave the country before their residency visa is cancelled.
Under the bill, foreigners will also be banned from brining their families into the country.
GCC, European Union and US citizens as well as consultants and doctors will be exempted from this provision, the committee said.
The legal and legislative committee assesses whether the bill is in line with the constitution and laws of the country.
It is referred to the interior and defence committee as the next step in the long process to come into force.
If it is passed by the parliamentary panel, it is taken up by lawmakers who debate its merits at the parliament. If it is endorsed, it is referred to the government.
Government officials said that there was no intention to reduce the expatriate population.
In February, MP Khalil Abdullah called for the deportation of 280,000 expatriates per year for the next five years to help address the imbalanced demographic in the country.
"There is a critical need to find solutions for the demographic situation in Kuwait," he said.
"We need to have a Kuwaiti population that is at least equal to the number of foreigners who live in the country. Since we have 2.5 million expatriates, we need to bring the number down to 1.1 million in the next five years, which means we need to reduce their numbers by 280,000 every year," he said.
However, he said that expatriates "with laudable contributions to the prosperity of the nation and with commendable experience to serve the country and the citizens" should not be included in the mass-deportation plan.
Last year, pushing for an exhaustive reform of the labour market, Dhikra Al Rashidi, the then minister of social affairs and labour pledged to spearhead a campaign to limit the number of unskilled foreigners amid reports that one million will be deported over the next 10 years with an average of 100,000 a year.
The business community has been vigourously resisting all deportation calls, warning that any move to slash the numbers of expatriates dramatically could result in grave economic issues in the country.
Algiers - Alcatel-Lucent and Ooredoo Algeria have deployed what is said to be the first 400G ultra-broadband mobile access network in Africa.
The firms said this would provide maximum capacity and transmission quality necessary to meet growing demand for high-speed mobile bandwidth Alcatel-Lucent and Ooredoo Algeria, a subsidiary of Ooredoo group, have built a high-capacity optical transport network to connect Algeria's mains cities of Algiers, Constantine and Oran- as well as smaller cities - with high-speed ultra broadband mobile access.
The network will be based on Alcatel-Lucent's Dense Wave Division Multiplexing (DWDM) optical transport technology using the 1830 Photonic Service Switch platform, which is now the mainstay of the company's terrestrial optical business.
Joseph Ged, Chief Executive Officer at Ooredoo Algeria said Ooredoo Algeria has the fastest growing 3G network in the country and in north Africa.
"Our 400G network will be instrumental to support the best quality of experience (QoE) for our customers as well as to increase our market share in Algeria.
"Through this game-changing achievement we intend to consolidate our technology leadership within the Maghreb region but also in Algeria in order to offer to our clients best-in-class network in terms of capacity and speed," he said.
Pierre Chaume, Vice-President, Alcatel-Lucent Middle East & North Africa, said thanks to 400G and the efficiency of OTN sub-wavelength grooming, Ooredoo Algeria's new network will support the booming explosion of data traffic generated by the proliferation of mobile devices such as smart phones and tablets and do so in the most economical way.
"As Alcatel-Lucent, we are proud to be Ooredoo's partner in the transport area and to enable Ooredoo Algeria to be the first service provider to deploy our 400G solution in Africa.
"It will enable Ooredoo Algeria to take and maintain the lead in providing robust service in Algeria for the foreseeable future," he said.