Dubai on course to outstrip pricey London’s record for building apartments

JLL estimates that around 34,000 apartments could be delivered in Dubai this year, followed by a further 28,000 in 2019. (REUTERS)
Updated 19 February 2018
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Dubai on course to outstrip pricey London’s record for building apartments

LONDON: Dubai is on course to absorb more new apartments than London over the next two years, as luxury “ghost towers” threaten to haunt developers in both cities, analysts say.
Brokers warn that the pair are developing luxury units far beyond the reach of average earners.
In London, the average home costs more than £470,000 ($663,000), which is 12 times more than the average salary of just over £39,000 ($55,000).
In Dubai, the average annual income is 72,000 dirhams ($19,600), according to property consultancy Phidar Advisory, whereas average apartment prices in the city are just over 2 million dirhams (nearly $550,000).
The disparity between average salaries and average homes in Dubai is even greater than in London.
The UK capital is expected to see about 50,000 new units (apartments) completed over the next two years, according to Cluttons — slightly less than Dubai, where JLL estimates that around 34,000 apartments could be delivered this year, followed by a further 28,000 in 2019.
But new affordable housing is woefully scarce in both cities.
“That area of the market is completely untapped and remains a huge area of opportunity as there is nobody at the moment who is targeting that sector of the population,” Faisal Durrani, the head of research at the Cluttons property consultancy, told Arab News.
“The issue we have in Dubai is there are 80,000 units due to complete in the next three years — but the vast majority of that stock is geared to the luxury end of the spectrum, which means we might have a mismatch between demand and supply,” said Durrani.
He believes that the “mismatch” will likely lead to upward pressure on prices in more affordable locations, but “at the top end of the market we may see softening persist.”
The top-end of the Dubai market could record price drops of as much as 15 percent this year, according to Jesse Downs, managing director of Dubai-based property consultancy firm Phidar Advisory.
While high-end apartments are struggling to shift, some developments described as “affordable” are still far from being accessible to average homebuyers.
“When you look at the average income in Dubai, it’s actually about 6,000 dirhams (per month), which is about $2,000. So these middle-income housing projects are not what the average resident in Dubai needs,” said Downs.
In London, the over-building of luxury apartments has been the result of developers being “very restricted with the number of units they can bring forward and the price at which they can sell them,” added Durrani. “They kind of have their arm twisted to build high-end apartments just so they can turn a profit.”
“Build it and they will come” has come to define luxury property development in both cities. But the question now facing property companies in Dubai and London is whether they can afford to continue seeking luxury buyers at the expense of middle income demand.


China says hard to proceed on trade with US putting ‘knife to its neck’

Updated 7 min 37 sec ago
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China says hard to proceed on trade with US putting ‘knife to its neck’

  • When the talks can restart would depend on the ‘will’ of the US, senior Chinese commerce official says
  • Several rounds of Sino-US talks in recent months have appeared to produce no breakthroughs

BEIJING: A senior Chinese official said on Tuesday that it is difficult to proceed with trade talks with the US while Washington is putting “a knife to China’s neck,” a day after both sides heaped fresh tariffs on each other’s goods.
When the talks can restart would depend on the “will” of the US, Vice Commerce Minister Wang Shouwen said at a news conference.
US tariffs on $200 billion worth of Chinese goods and retaliatory taxes by Beijing on $60 billion worth of US products including liquefied natural gas (LNG) kicked in on Monday as the trade dispute between the world’s two biggest economies escalated, unnerving global financial markets.
China also accused the US of engaging in “trade bullyism,” and said Washington was intimidating other countries to submit to its will, according to a white paper on the dispute published by China’s State Council, or cabinet, on Monday.
“The sharp criticism (from Beijing on Monday) suggests that China might prefer to wait out the current US administration, rather than embarking on potentially futile negotiations,” Mizuho Bank said in a note to clients.
“Given these developments, it is increasingly likely that both sides will not resume negotiations for some time, at least until there is a noticeable shift in the political mood on either side.”
Several rounds of Sino-US talks in recent months have appeared to produce no breakthroughs and fresh negotiations which had been expected in coming weeks have been canceled after Beijing reportedly decided late last week not to send a delegation to Washington.
One cannot say that all previous trade discussions have been useless, but the US has abandoned its mutual understanding with China, Wang said.
China does not know why the US has changed its mind after reaching an agreement with China on trade earlier, Wang said, apparently referring to talks in May when it appeared briefly that a framework was being sorted out.
US exporters including LNG suppliers would “certainly” be hurt, but Beijing’s retaliation would provide opportunities to other LNG-exporting countries, Wang said, adding that Australia is an important source of the fuel for China.
“China is a big and powerful nation, so whether it is a confrontation with China economically or militarily, it would come at a huge price,” the state-backed Global Times wrote in an editorial on Tuesday.
“As such, it is an attractive prospect for other countries including the US to coexist with China peacefully,” said the newspaper, which is published by the ruling Communist Party’s People’s Daily.