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Aldar unveils homes on reem island

Aldar Properties on Saturday announced the launch of Reflection – a Dh440 million residential development on Reem Island.

The Abu Dhabi-based developer said sales for Reflection will commence on March 31 at Aldar’s sales centre on Yas Island, with prices starting from Dh580,000.

Reflection consists of 2 towers offering 374 homes, comprising studios, 1, 2 and 3-bedroom apartments. It is available for purchase by all nationalities.

Talal Al Dhiyebi, chief executive officer, Aldar, said: “We have witnessed sustained demand for this type of product – led by high-end amenities in prime locations and affordable for a wide range of customers.”

Construction is expected to commence in 2018 with 2021 targeted for Reflection’s completion.

Emaar, Aldar in Dh30B JV to boost UAE’s tourism ecosystem and lifestyle projects locally and internationally. The two developers will also initially jointly develop Emaar Beach Front in Dubai and Saadiyat Grove at Saadiyat Island in Abu Dhabi. This is the largest cross-emirate joint venture announced in the UAE’s real estate sector which will reshape the UAE’s skyline and further strengthen the UAE’s status as a major tourism destination. Going forward, the two master developers will jointly develop residential, commercial, retail, leisure and entertainment projects. His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, and His Highness Sheikh Mohamed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces, attended the announcement of the joint venture.

“We have great ambitions and we are confident our national firms have the capabilities to achieve them. We want our companies to be at the forefront of our development and collaborate with each other to explore creative ideas for strengthening the UAE’s leadership, and enhancing the happiness and quality of life of our people,” Sheikh Mohammed said.

Set to become the most-coveted address in Abu Dhabi, the mixed-use Saadiyat Grove development will house three museums, 2,000 residential units, two hotels, 400 serviced apartments, and 130,000 sqm of experiential lifestyle and retail space. It is slated to open in 2021.

The second mega project – Emaar Beachfront – in Dubai is a private island which will feature 7,000 residential units with an access to 1.5km private sandy beach. Located between Jumeirah Beach Residence (JBR) and Palm Jumeirah, the project has direct access to Sheikh Zayed Road and Duai Marina.

The project will feature leisure and lifestyle attractions including F&B outlets, beachside play areas, retail pop-ups set along a promenade, and more. Residents of Emaar Beachfront, comprising approximately 7,000 residential units, will have access to a 1.5km private sandy beach as well.

Mohamed Khalifa Al Mubarak, Chairman of Aldar Properties, said the joint venture will expand the country’s portfolio of iconic real estate projects and there is no limit to the development possibilities created by the JV partnership between Aldar and Emaar.

Mohamed Alabbar, Chairman, Emaar Properties, said: “The world-class lifestyle destinations that we develop will add to the civic pride of the nation, and further enhance its appeal as an investment and lifestyle destination. We are drawing on our proven competencies in delivering high quality master-planned communities that have not only redefined lifestyles but also created tremendous economic value for our country.”

The number one listed developer by market cap in Mena region, Emaar Properties had more than 2 billion square feet of land bank in key countries in November 2017. It had around Dh51 billion total backlog with Dh41 billion in UAE. It has delivered 56,000 units in the UAE so far. It had sold 80 per cent of Dubai’s total units under development. The master developer has over 42,500 units under construction with over 24,000 in the UAE.

Rehan Akbar, vice-president and senior analysts, at Moody’s Investors Service, said the UAE real estate sector has been evolving for several years now and this is another step in that direction.

“Soft demand dynamics, increased real estate regulations that protect investors and substantial supply in the market means that developers with a strong brand, proven track record and healthy balance sheet are the ones which are capturing market share. Both Emaar and Aldar are the strongest developers in their respective home market and this tie-up will open doors for further opportunities in the future,” Akbar said.

Jason Hayes, CEO and founder, luxuryproperty.com, said this joint venture aims to cement the UAE’s reputation for creating the world’s most innovative developments and in doing so the JV will serve to harnesses the power of two incredible organizations.

He said it is a strategic move to place the JV as a global operator. “Of course, Sadiyaat Grove project is incredible and I can see how Emaar would wish to be involved. The quid pro quo is true of The Dubai Island Harbour project for Aldar. This appears to be a case of two development companies with aligned strategic values and ambitions combining to achieve enhanced competitiveness and efficiencies for onward growth.”

Currently, Emaar has access to 21.3 million square metres of land in the UAE, of which 22 per cent is wholly-owned by them while the remaining is accessible through their joint venture projects such as Dubai Hills Estate, Dubai Creek Harbour and Emaar South, Moody’s Rehan Akbar added.

Vacant commercial properties subject to VAT in UAE

The Federal Tax Authority (FTA) and Dubai Land Department (DLD) have confirmed that the UAE’s recently introduced value-added tax (VAT) will have a limited impact on the real estate sector.

In a statement on Tuesday, FTA and DLD said all real estate transactions, with the exception of the sale of vacant commercial properties and commercial property leases, will be either not subject to or exempt from the 5 per cent VAT. They further said leased commercial property will not be considered a supply during their sale by the taxable person and will therefore not be taxable.

Khalid Ali Al Bustani, director-general of the FTA, stressed that the UAE tax system has been designed to support the real estate sector in all its activities and provide a suitable environment for its continued growth and development as one of the main contributors to the national economy and investment environment.

“The Federal Decree-Law No. 8 of 2017 on VAT and its Executive Regulation provide several mechanisms to ensure the continued competitiveness of the real estate sector. For example, the law stipulates that the first supply of residential buildings within three years of completion is subject to the zero per cent tax rate, which means that owners or investors can recover the tax related to the expenses incurred on construction. Residential buildings will be exempted from tax after first supply,” Al Bustani said.

Al Bustani added: “Landlords who rent their properties for residential purposes are not required to register with FTA, if all supplies made by the owner are exempt from tax. In addition, the tax paid on facility management services of commercial buildings can be deducted by the owners on their VAT returns.”

Sultan Butti bin Mejren, director-general of DLD, said 85 per cent of components in Dubai’s total real estate sector are not subject to the 5 per cent VAT.

“When reviewing the details of sales, rents and other transactions, we found that the value of bare land sales, residential properties, and occupied commercial and retail properties comprise the largest percentage of total properties traded during 2017. This ratio is expected to remain over the coming years and even stands to increase with commercial offices continuing to improve their leasing operations and minimise empty units,” he said.

 

Properties taxable by 5%

The sale of vacant commercial properties or the off-plan sale of commercial properties under the building license, are subject to a 5 per cent VAT; however, the tax paid during the lease period can be recovered through the tax return of the tenant if they are a taxable person registered for tax purposes and entitled to tax refund. Tax paid towards the purchase of an entire building may be recovered according to the capital asset scheme, if the cost of the property exceeds Dh5 million.

Real estate-related services including brokerage, management and real estate consultancy are subject to 5 per cent VAT on the value of the service rendered at the location where the property is located, and according to the normal business rules on taxation.

Dubai’s real estate continues to shift towards affordable homes

Dubai’s real estate sector outperformed many other economic sectors of the emirate last year, with 6 per cent growth in the transaction value reaching Dh285 billion in 2017, up from Dh268.7 billion recorded in 2016, according to the Dubai Land Department.The value of sales of land, buildings and units in the Dubai real estate market totalled Dh114 billion through 49,000 transactions, while mortgages for the same three categories reached Dh138.5 billion through 15,700 transactions.

In terms of the number of transactions, Dubai Land Department recorded a 14 per cent growth in the number of land and property transactions to 69,000. This in a layman’s term, means that the average value of transactions have become more affordable, reflecting a shift towards smaller units with more reasonable ticket prices.

Now, the question remains, what is an affordable home? What price threshold are we talking about?

Affordable home is a very relative term. For example, the price of an affordable home in Dubai is completely different from what it is in Ajman or Umm Al Quwain.

Generally, if a studio apartment is priced at below Dh400,000 – we could call it an affordable home. Fortunately, price of a studio apartment has come down to that level. An affordable 1-bedroom apartment is selling at Dh600,000 to Dh850,000 now depending on the location.

We have seen the price of a 2-bedroom townhouse starting from Dh1 million while the three-bedroom variant starts trading from Dh1.3 million. Affordable home prices also vary from location within the same city. For example, price of an apartment at Dubai South will be much lower than the one located at Business Bay.

For the last 15 years since the announcement of freehold properties in Dubai in 2002, developers have been building luxury properties in the emirate so much so, that there came a point of saturation in luxury properties. This was in sharp contrast to the development of affordable homes built in the city from the 1970s through to the 1990s – when residential apartments were targeted to house the middle income groups.

Serviced and hotel apartments gain grounds in Dubai

Traditional serviced apartments models are established in Dubai and meet international operator requirements providing predominately studio apartments, limited facilities and operated by a hospitality brand. Alongside this sub-market, the hotel apartment sector is also strongly represented across Dubai.

The layout, typology and unit sizing of this asset class is more aligned to standard residential units, therefore, resulting in synergies in demand and key players in the hotel apartment and residential markets. Whilst the asset class definition for hotel and serviced apartments are blurred within the current market, a key differentiator is the presence of a branded hotel operator. Operators are willing to be flexible in the application of a hotel apartment model with a number of brands existing in residential building schemes.

The total number of serviced/ hotel apartments and flats increased gradually since 2008 from 168 to 216 in 2015, followed by a decline since in 2016. The number of hotel apartments in Dubai declined from 206 hotel apartment buildings accommodating 24,966 flats to 196 with 24,698 flats in 2017. After registering a dip in 2014 to 75 per cent and then increasing in 2015 and 2016 to 79 per cent and 82 per cent, respectively, the occupancy reached 80 per cent by the end of 2017. The standard hotel apartments registered an average occupancy level of 81 per cent while deluxe category registered a slightly lower occupancy level of 78 per cent.

Dubai Islamic Bank unveils new home finance solution

Dubai Islamic Bank (DIB), the UAE’s largest Islamic bank, has launched a new home finance product called MyHome.

The product is unique in that it gives a customer the flexibility to tailor EMIs as per his/her financial situation. For instance, you can choose a fixed rate for the entire life of the mortgage up to 15 years at a rate ranging from 5 to 9 per cent. Or you could opt for a variable rate with a fixed margin for life linked to Eibor, with a choice of review frequencies of 3, 6 or 12 months. There are also introductory fixed rates for 1 or 2 years and variable rates linked to Eibor thereafter.

Varun Sood, chief of home finance at DIB, said: “We listened to what the market was saying. Most products are one-dimensional. Home buyers are already stressed with what they see as the biggest investment of their lives, they don’t want further duress through complicated pricing structures.”

DIB has also introduced a MyHome Credit Card that will help budget for the extras that come with home buying such as the Dubai Land Department registration fees and the brokerage cost. This breaks down the initial down payment into payment plans which will be interest-free for the first 6 months and then charge a rate of approximately 5 per cent for the remaining period.

The MyHome product will also offer Takaful protection for the home buyer’s family and the property for a fee of Dh41 per month for every million.

According to DIB, its biggest home finance clients are first-time home buyers, buyers of family homes and investors looking to purchase an income-generating asset.

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