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.


US unveils new veto threat against WTO rulings

Updated 23 June 2018
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US unveils new veto threat against WTO rulings

  • US tells WTO appeals rulings in trade disputes could be vetoed if they took longer than the allowed 90 days
  • Trump, who has railed against the WTO judges in the past, threatens to levy a 20 percent import tax on European Union cars

GENEVA: The United States ramped up its challenge to the global trading system on Friday, telling the World Trade Organization that appeals rulings in trade disputes could be vetoed if they took longer than the allowed 90 days.
The statement by US Ambassador Dennis Shea threatened to erode a key element of trade enforcement at the 23-year-old WTO: binding dispute settlement, which is widely seen as a major bulwark against protectionism.
It came as US President Donald Trump, who has railed against the WTO judges in the past, threatened to levy a 20 percent import tax on European Union cars, the latest in an unprecedented campaign of threats and tariffs to punish US trading partners.
Shea told the WTO’s dispute settlement body that rulings by the WTO’s Appellate Body, effectively the supreme court of world trade, were invalid if they took too long. Rulings would no longer be governed by “reverse consensus,” whereby they are blocked only if all WTO members oppose them.
“The consequence of the Appellate Body choosing to breach (WTO dispute) rules and issue a report after the 90-day deadline would be that this report no longer qualifies as an Appellate Body report for purposes of the exceptional negative consensus adoption procedure,” Shea said, according to a copy of his remarks provided to Reuters.
An official who attended the meeting said other WTO members agreed that the Appellate Body should stick to the rules, but none supported Shea’s view that late rulings could be vetoed, and many expressed concern about his remarks.
Rulings are routinely late because, the WTO says, disputes are abundant and complex. Things have slowed further because Trump is blocking new judicial appointments, increasing the remaining judges’ already bulging workload.
At Friday’s meeting the United States maintained its opposition to the appointment of judges, effectively signalling a veto of one judge hoping for reappointment to the seven-seat bench in September.
Without him, the Appellate Body will only have three judges, the minimum required for every dispute, putting the system at severe risk of breakdown if any of the three judges cannot work on a case for legal or other reasons.
“Left unaddressed, these challenges can cripple, paralyze, or even extinguish the system,” chief judge Ujal Singh Bhatia said.
Sixty-six WTO member states are backing a petition that asks the United States to allow appointments to go ahead. On Friday, US ally Japan endorsed the petition for the first time, meaning that all the major users of the dispute system were united in opposition to Trump.