The Changing Nature of Real Estate Deals
The Dubai property market is expected to rebound in 2011 after stabilizing next year, according to research by global real estate firm Jones Lang LaSalle, reported the Emirates Business. Property agents already say that buyers show a bit more interest in real estate lately as viewings and sales of completed property have increased in recent weeks, according The National. Last week, the local press reported that a federal law granting residency visas to owners of freehold property would be introduced within the year. The proposal will allow owners to obtain a six-month, renewable residency visa.
Good news from the property sector could be a remedy for the whole economy, but only if clearly represent the current situation and real time actions.
The local real estate market adjusted it self to the global downturn in a matter of few months. The nature and type of transactions has been changing in some important ways.
What is trading now?
The easy answer is: nothing! And with global transactions off 80% in Q4 and all together 60% in 2008, that wouldn’t be wrong.
However, deals continue to happen, and some sales have been recorded after Cityscape 2008.
Portfolio transactions and mega deals
Few buyers are willing to take a macro bet on the asset class right now, and fewer still could finance a large-scale portfolio acquisition anyway. Entity-level deals, such as commercial floors and complete buildings, are basically gone in Q4. All of these mega deals required too much capital for the inhospitable credit markets to handle in the final months of 2008 and will be scarce in 2009 as well. Million-dirhams transactions were occurring at a frequency of two to three a week throughout 2007 and the first half of 2008, but transpired since than.
Partial interests of prime assets
Partial interest deals are increasing lately, and most are taking place off-market. Several investment banks and real estate funds are rumored to be quietly shopping stakes in some trophy assets, but not many have recently been announced. In the past, investors had picked up partnership positions in properties through large entity level and portfolio deals. Now, with some of those investors looking to raise capital and others trying to consolidate ownership positions at a discount, the environment is ripe for more of these strategic deals.
Owner-occupier transactions
Owner-occupiers will be involved in a greater share of property deals, on either side of the transaction. Emaar Properties has unveiled a pioneering ‘To Own’ scheme aimed at making it easier for customers to purchase property in Dubai with two programmes – ‘Plan to Own’ and ‘Rent to Own’ .
However, dispositions by owner-occupiers will be also on the rise. The increase in deal making stems from dispositions of excess and vacant property.
Distressed sales
Although we are already six months into the credit crunch, relatively few distressed assets have traded. Much of the distress has only emerged in the past few months, and in most situations, lenders have yet to take control or force sales of troubled assets. Properties repossessed from homeowners, who fail to keep up their mortgage payments, will be sold off at public auctions held by the Dubai Land Department, said lawyers to Emirates Business.
The growth potential in this segment of the real estate market is huge, with many property investors now facing liquidity shortage due to job losses, slump in rental values and tightened lending facilities.
B Gergana Mineva at Editor@DubaiChronicle.com
I thnink,It is the right time to invest in dubai property.Present crisis is only temporary.
Hi and thanks for your comment, and link
!
It is good to invest and the timing is right, only one should have the resources…Unfortunately, most of the remaining resident of Dubai don’t, as they are already heavily burnt either in real estate or stock market, or lost their jobs.