Dubai property deals fall in first half as emirate rolls out reforms

Dubai property transactions fell in the first half of the year according to newly relesaed data. (Reuters)
Updated 07 July 2018

Dubai property deals fall in first half as emirate rolls out reforms

  • Value of deals down 16 percent in first half
  • Off-plan sales now account for half of transactions

Dubai Land Department (DLD) said the value of real estate transactions in the first six months of 2018 was 111 billion dirhams ($30.2 billion) across 27,642 transactions.

The DLD did not provide comparative figures for the year-earlier period, however data released by the department last year reflects a 16 percent decline in the value of deals and a 22 percent drop in their overall number.

The property market in the emirate has been battling headwinds from rising US interest rates, expatriate job losses and a strong US dollar, to which the dirham is pegged, making property purchases expensive for many overseas buyers.

To counter these downward pressures on property market sentiment, the Dubai government has started to introduce reforms aimed at boosting confidence and overall business activity.

“Granting investors a UAE residency visa for up to 10 years and reducing government fees included in previous initiatives will be of the most important incentives for economic growth in the emirate, as they will have a positive impact on reducing business costs,” said Sultan Butti bin Mejren, director-general of Dubai Land Department.

The UAE non-oil economy is expected to “turn the corner” next year, Bank of America Merrill Lynch said in a report last month — helped by Expo projects, changes to the workers insurance schemes and fiscal stimulus measures announced by the Abu Dhabi government.

Still, despite such efforts, the residential property market is bulging with newly completed homes built by developers offering off-plan payment schemes.

Off-plan sales, where purchasers commit to owning a property before it is built, now account for more than half of all property transactions in the emirate.

As many as 45,000 new homes could hit the market this year with a similar number slated for completion in 2019, according to figures from JLL, the international real estate consultancy.

Dubai residential property prices and rents declined by 5 to 10 percent overall in 2017, according to data from Standard & Poor’s (S&P), the credit ratings agency.

It expects the downturn in Dubai’s property market to continue until 2020.

Rising US interest rates are also hurting the market as many mortgage products are either directly or indirectly linked to prevailing rates set by the Fed. It represents a double whammy for the property market.

Another drag on real estate sentiment has been large-scale expatriate job losses in the past two years from major employers across the energy, aviation and financial sectors. This has reduced demand in both the rental and
sales markets.

Developers are hoping that the much-vaunted Expo 2020 event will spur confidence in real estate and help to boost overall demand as construction activity picks up.

The DLD said that UAE nationals topped the list of property buyers in the first half of 2018, followed by Indians and Saudis.

The Business Bay district close to Dubai’s financial center recorded most transactions during the first half of the year followed by Dubai Marina, the DLD said.

Saudi energy giant to invest $3bn in Bangladesh’s power sector

Updated 22 October 2019

Saudi energy giant to invest $3bn in Bangladesh’s power sector

  • Experts say deal will usher in more economic and development opportunities for the country

DHAKA: Saudi Arabia’s energy giant, ACWA power, will set up an LNG-based 3,600 MW plant in Bangladesh after an agreement was signed in Dhaka on Thursday.

The MoU was signed by ACWA Chairman Mohammed Abunayyan and officials from the Bangladesh Power Development Board (BPDB), officials told Arab News on Monday.

According to the agreement, ACWA will invest $3 billion in Bangladesh’s energy development sector, of which $2.5 billion will be used to build the power plant while the rest will be spent on an LNG terminal to facilitate fuel supply to the plant. Under the deal, ACWA will also set up a 2 MW solar power plant.

In recent months, both countries have engaged in a series of discussions for investment opportunities in Bangladesh’s industry and energy sectors. 

During the Saudi-Bangladesh investment cooperation meeting in March this year, Dhaka proposed a $35 billion investment plan to a high-powered Saudi delegation led by Majed bin Abdullah Al-Qasabi, the Saudi commerce and investment minister, and Mohammed bin Mezyed Al-Tuwaijri, the Saudi economy and planning minister.

However, officials in Dhaka said that this was the first investment deal to be signed between the two countries.

“We have just inked the MoU for building the LNG-based power plant. Now, ACWA will conduct a feasibility study regarding the location of the plant, which is expected to be completed in the next six months,” Khaled Mahmood, chairman of BPDB, told Arab News.

He added that there are several locations in Moheshkhali, Chottogram and the Mongla port area for the proposed power plant.

“We need to find a suitable location where the drift of the river will be suitable for establishing the LNG plant and we need to also consider the suitability of establishing the transmission lines,” Mahmood said.

“It will be either a JV (Joint Venture) or an IPP (Independent Power Producer) mode of investment, which is yet to be determined. But, we are expecting that in next year the investment will start coming here,” Mahmood said.

BPDB expects to complete the set-up process of the power plant within 36 to 42 months.

“We are in close contact with ACWA and focusing on the successful completion of the project within the shortest possible time,” he said.

Abunayyan said that he was optimistic about the new investment deal.

“Bangladesh has been a model for the Muslim world in economic progress. This is our beginning, and our journey and our relationship will last for a long time,” Abunayyan told a gathering after the MoU signing ceremony.

Economists and experts in Bangladesh also welcomed the ACWA investment in the energy development sector.

“This sort of huge and long-term capital investment will create a lot of employment opportunities. On the other hand, it will facilitate other trade negotiations with the Middle Eastern countries, too,” Dr. Nazneen Ahmed, senior research fellow at the Bangladesh Institute of Development Studies (BIDS), told Arab News.

She added that Bangladesh needs to weigh the pros and cons before finalizing such contracts so that the country can earn the “maximum benefits” from the investment.

“It will also expedite other big investments in Bangladesh from different countries,” she said.

Another energy economist, Dr. Asadujjaman, said that Bangladesh needs to exercise caution while conducting the feasibility study for such a huge investment.

“We need to address the environmental aspects, opportunity costs and other economic perspectives while working with this type of big investment. Considering the present situation, the country also needs to focus on producing more solar energy,” Dr. Asadujjaman told Arab News.