Issued by Vice President and Prime Minister of UAE and Ruler of Dubai HH Sheikh Mohammed bin Rashid Al Maktoum, the grace period order, aims at providing another opportunity for the beneficiaries to re-arrange their construction procedures without pressures. The move will also help them benefit from the lower current prices of the building materials.

Mohammed Al Shebani, director of Dubai Ruler’s Court, Board Chairman of the Mohammed bin Rashid Housing Establishment (MBRHE), thanked Sheikh Mohammed for “this kind gesture, which reflects his follow up of living conditions of the citizens”. He added that the move comes in the wake of Sheikh Mohammed’s waive of the special administrative fees, which used to be paid by the beneficiaries to the MBRHE when they got the residential units.

Sami Al Gargash, executive director of the MBRHE, said that it was natural for Sheikh Mohammed to take such a move, citing the lands granted by the MBRHE five years ago to the UAE nationals and the new grace period to further allow them build their houses.

The lands were allocated for the UAE nationals for five years. As the construction ultimatum will expire by Feb. 2010, another grace period was issued to give them sufficient time to build their houses.

WAM/MN

The decision came as a relief to hundreds of investors, mainly from the UK, who have committed their savings to the flagship project of the Ras al Khaimah Investment Authority (RAKIA), on the man-made island of Al Marjan.

“We won’t make it complicated for investors,” said Khater Massaad, the chief executive of RAKIA and adviser to Sheikh Saud bin Saqr, the Crown Prince and Deputy Ruler of Ras al Khaimah.

“Those who have paid for a studio will get a studio. The project will be built.”

Investors had petitioned the Government to come to their rescue after the original developer, Khoie Properties, became insolvent and stopped construction. A senior board member of Khoie Properties is in jail for allegedly failing to honour a cheque for Dh57m written in favour of the Government to pay for the land on the island.

Ashley Merry, a London-based investor in the project who acts as a spokeswoman for other investors, said:

“Our dream position would be for RAKIA to take over the project and complete it. RAKIA has acted very honourably and graciously to the investors in a very difficult situation.”

RAKIA has asked the courts to designate an official receiver for Khoie Properties. It will then appoint another developer to finish building the first phase of La Hoya Bay, which consists of seven residential buildings of seven storeys.

Mr Massaad said: “We don’t want to take the project just like this and continue it. We want to do it in a legal way. This is why we have asked the court to designate a caretaker to continue the project.”

Rakeen, the property arm of the Government, may become the new project manager because no other developer had come forward. Rakeen is the master developer of the whole island.

“If Rakeen is the project manager of La Hoya Bay, it will open an escrow account, award a construction company to do the project. It could all take less than a month,” Mr Massaad said.

Wahid Attalla, a director of Rakeen, said the project would also be renamed because “La Hoya Bay” has become an “irritating name for everybody”.

The takeover by Ras al Khaimah is the most direct example of government intervention in the UAE property market, which has suffered from steep price falls, a growing number of defaults and some cases of fraud by developers. In Dubai, the Government has so far favoured assistance to developers in the form of loans.
Khoie Properties has already received a 30 per cent downpayment from investors, worth about Dh280m, and the balance was originally due on completion.

In return for completing the project, Rakeen proposes to ask investors to pay another 50 per cent of the agreed price in five instalments to finance construction, leaving just 20 per cent due on completion. Rakeen would absorb any loss of the initial downpayment, which is now missing and possibly unrecoverable, Mr Attalla said. “We are even keeping the prices as they are,” he said. “The only thing is that there will be escalating payment terms.”

But RAKIA does not intend to take on any of the liabilities of Khoie Properties. “They took nearly Dh300m from investors. What have they done with it?” Mr Massaad said.

If designated, Rakeen will also help investors obtain mortgages to minimise the risk of buyers defaulting and ensure the project goes ahead despite the current tight credit conditions.

“We already started discussions with the banks to give them mortgages for the due money,” Mr Massaad said.

Rakeen is also developing Bab al Bahr, another huge property project on Marjan Island.
La Hoya Bay was originally planned in three phases, with the second and third phases themed as Business Village and Regency respectively.

The first phase was the most popular. The second phase had a few sales, while none of the third was sold. Rakeen is likely to rationalise all the investors into the first phase.
“Our role is really to secure the first phase in order to protect the investors,” Mr Massaad said. “Concerning the second, I have met with two large investors who have bought in bulk and they don’t have a problem with relocating to the residence part if we are not going ahead with the business.”

The land designated for the two other phases could be sold to other developers if there is any interest.

Once a decision has been made by the court, Mr Massaad said the investors would be informed by e-mail.

The National

The museum will cost Dhs400m in addition to a franchise fee of $1bn (Dhs3.67bn) for using the Louvre brand name and for hundreds of artworks loaned from the Paris museum for periods of between six months and two years.

Designed by French architect Jean Nouvel, the civic area will span 260,000 square feet and comprise pavilions, plazas, canals and alleyways. (About 65,000 square feet will be dedicated to exhibitions.) A dome 590 feet in diameter will hover over much of the complex. Completion is set for 2012 or 2013.

The Louvre Abu Dhabi is a joint effort between the governments of France and Abu Dhabi. It will feature artworks loaned from several top French museums, including the Louvre, the Musée d’Orsay, le Centre Pompidou, the Musée de Quai Branly and the Musée Guimet. In addition, the center will exhibit work from its own developing collection.

Billed as “the first universal museum,” the Louvre Abu Dhabi will also feature archaeological artifacts and art from all cultures.

Gallery

The National/LA Times

The plots are in several development projects such as Raha Beach, which is under development by Aldar Properties, the Rawdhat Abu Dhabi project by Reem Developers, and the Saraya project by Sorouh Real Estate.

Aabar said in a statement that the land would be used for development projects such as hotels, and residential and commercial buildings.

In February, the company signed an agreement with Tamouh Investments to acquire six plots on Reem Island, at Dh1,285 a square foot, for a total of Dh5bn. Development plans for Reem Island include four commercial tower buildings and eight mixed residential-commercial tower buildings, with a net floor area of 361,397 square metres. The 12 towers are due for completion in 2012.

Aabar’s biggest acquisition to date was the 9.1 per cent stake in Daimler, the car maker, for $2.7bn in March.

The company also completed the purchase of the Swiss-based private banking division of American International Group, renamed Falcon Private Banking.

The company agreed in December to pay 307m Swiss francs (Dh1.02bn) and assume 100m francs in debt to take over the bank.

Aabar reported that its first-quarter net profit increased to Dh177.3m, from Dh40.1m for the same period a year ago, after its state-owned parent, the International Petroleum Investment Company (IPIC), converted a bond issue into shares.

IPIC uses Aabar as its investment vehicle outside the oil industry.

The National

Last month NCE revealed that the developer was close to bankruptcy, with analysts estimating that it owed consultants up to £200M. Last week the Dubai government bailed it out with cash from a successful bond issue worth £13.3bn (US$20bn), with neighbouring Abu Dhabi buying half the offering. Despite this, NCE understands that consultants will struggle to get paid in full for work done.

“One of the offers on the table is for firms to get 65% of their consultancy fees, with the understanding that in doing so, they waive their legal rights [to further payment], ”

Association for Consultancy and Engineering chief executive Nelson Ogunshakin told NCE.

“We also believe UK firms may be further down the pecking order, and indigenous suppliers are given a preference,” he said, adding that the money owed to global consultants will top £400M.

The ACE has approached business secretary lord Mandelson to step in on behalf of British consultants.

“We want to take action where appropriate, but the UK is one of the biggest players in Dubai, and this relationship must not be damaged,” he said.

He added that Nakheel may not be the only Dubai firm to be in trouble.

“Nakheel’s troubles are visible, but there are other investment vehicles trying to play the same game,” he said.

Nakheel refused to comment on the details of payments to consultants. “We have benefited from an injection of capital from the bond issue. The value and other details relating to this funding remain confidential.”

Nakheel’s problems stem from difficulties in securing pre-construction sales on property space. Its cashflow dried-up when its housing market collapsed in September 2008, leaving no money to pay consultants or contractors.

Consultants had previously warned that allowing Nakheel to collapse would have damaged the reputation of the Emirate.

Numerous consultants had reported cash collection issues in the Emirate, although it is unclear how much is owed to them by Nakheel.

Mouchel reported it was chasing £23M in Dubai, “the vast majority being due from the local state backed development companies”.

Atkins is owed £25M in the whole Middle East market, Scott Wilson between £4M and £6M and WSP an undisclosed sum.

New Civil Engineer

A decision whether to cancel or not would be made by the end of the month, said Marwan bin Ghalita, the head of the Real Estate Regulatory Authority (RERA).

“The decision has not been done. They are projects all over Dubai – third party projects (sub developers),” he said.

Earlier this year, Ghalita said he believed 25 percent of projects will be cancelled in Dubai as a result of the global economic slowdown.

“It’s almost the same,” he said when asked if that figure had changed. The Dubai Land Department and RERA set up a committee last week to cancel projects in the emirate that are not feasible.

Real estate prices tumbled 41 percent in the first three months of the year, property consultants Colliers said in a recent report.

A collapse in property prices has already led to project cancellations in the region worth billions of dollars.

More than half of the construction projects in the United Arab Emirates, worth $582 billion, have been put on hold, Dubai-based market research firm Proleads said in February.

Ghalita said on Monday the committee would cancel projects based on RERA’s decision whether or not they should continue, a request from developers to cancel, or through complaints to the watchdog from project investors.

In February RERA said Dubai developers are likely to delay the delivery of about 20 percent of residential units in 2009 and 40 percent in 2010.

Arabian Business/Reuters

The naturalisation and residency departments (NRDs) of various emirates will ask property owners and developers to change their status as per the new ministerial resolution, which introduced a multi-visit entry visa on Sunday, said Brigadier Nasser Al Awadhi Al Manhali, acting Director-General of the Naturalisation and Residency Department.

The NRDs will communicate with developers and top realty firms to bring the resolution into force, he added. Brig. Al Manhali added the new resolution will be brought into action by the beginning of June.

He added the multi-visit entry visa will not have a specific number of renewals. The conditions for visa renewal include departure and then return to the UAE to complete the procedures of renewal and pay a charge of Dh2,000 for each renewal.

Emirates Business

Romain Felber, General Manager, Al Hamra Village, said:

“Ras Al Khaimah has become a popular destination for tourist and business travellers, while there is also a growing number of people who have chosen to live and take advantage of the exciting new opportunities in the emirate. Al Hamra Village has been created primarily to complement the emirate’s growing reputation as a choice destination for business, leisure and home living. The unique development has been expertly designed to allow residents to fulfil their dream lifestyle and redefine the meaning of luxury living. Moreover, Phase 2 delivers a fresh supply of nearly 1,000 housing units, which will certainly address the growing demand for residential properties in the emirate.”

Al Hamra Village has also disclosed that the planning for Phase 4 of the residential project is now being finalised and will begin construction soon. Aside from a range of leisure and recreational facilities, Al Hamra Village is also fully equipped with essential utilities and services such as efficient electricity and water billing through a card billing system, petrol and diesel distribution pontoon and dispensers and boating facilities within the Marina Yacht Club among others.

Construction on Phase 3 of Al Hamra Village, on the other hand, has been well ahead of schedule with a phased handover of units scheduled between September 2009 and March 2011. Located south of Ras Al Khaimah City, the 2.5 million square-meter residential community is a picturesque sight set against a backdrop of salt water lagoons, a championship golf course and its own marina. Al Hamra Village offers freehold property options and features an excellent range of amenities within a highly secure, safe, vibrant and luxurious community.

Mena Report

Year-on-year prices fell for the first time with values falling 34% since the first quarter of 2008, Colliers said in its quarterly price index, which collates mortgage transactions on properties open to foreign ownership since the start of 2007.

“Without any support from previous quarters 1Q 2009 clearly represents the impact of the global crisis on the real estate market,” the report said.

The average price of property fell to 1037 U.A.E. dirhams ($282.3) per foot in the first three months of 2009, compared with AED1770 in the fourth quarter of 2008, the report said, and are “currently at Q2 2007 levels”.

Apartments and townhouses have been hardest hit, with prices for each falling 42% and the price of villas falling 40%.

Property prices were rising sharply as recently as the first half of 2008. But in recent months, as the impact of the global crisis draws in on the emirate, real-estate agents have reported softening prices and a lack of buyers, especially property speculators that helped drive steep price increases.

First Symptoms

Prices rose 42% in the first quarter of 2008, 16% in the second quarter and 5% in the third quarter, according to previous Colliers reports.

However, the consultancy said negative sentiment from the global financial crisis, the postponement of developments by large government-backed developers and concerns over job losses has deterred potential property investors in recent months.

“During Q4 2008 the U.A.E. experienced the first real symptoms of the impact of the global financial crisis on the region; however the negative impact averaged over the three month period was softened as it included transactions initiated during late Q3 and being concluded in early Q4,” the report said.

Colliers said although there is some evidence of improved liquidity at the end of the first quarter 2009, it is too early to assess the impact this would have on the housing market in the medium term.

Last week, Swiss Investment bank UBS (UBS.AG) downgraded the U.A.E.’s real estate sector, citing a possible 70% fall in prices and significant oversupply as its main concerns.

“In our view we are still in relatively early stages of the property down cycle in the U.A.E.,” the bank said in a research note. “We believe risk-reward profiles are not yet compelling for investors to consider market reentry hence continued price declines are expected.”

Dow Jones Newswires

The new development will provide around 5,000 homes for middle-income UAE families, as part of the Abu Dhabi Government’s housing initiative. It will comprise of five villages, each with its own village centre, schools, and mosques. The town centre will be the focal point of the entire development and will contain civic buildings, a 65,000 square metre retail mall, a hospital, 50,000 square metres of commercial office space, a hotel and a sports and leisure complex..

Residents will have excellent access to education, with 15 schools catering for children of all ages from early learning to high school.

Located to the east of Abu Dhabi International Airport and the Abu Dhabi-Dubai highway, Al Falah has been designed as a practical and sustainable community within a development area of approximately 12 million square metres. Moving away from the traditional “grid” approach for developments, Al Falah’s innovative design encourages community gathering with a number of open parks that connect the residential, commercial and leisure elements.

Speaking at the launch of Al Falah, Ahmed Ali Al Sayegh, Chairman of Aldar Properties commented,

“Aldar is proud to be a major contributor to one of the main pillars of Plan Abu Dhabi 2030. Increasing housing availability for middle income families is one of many ways through which Aldar is living up to its mission of building sustainable communities to cater to the growth needs of the Emirate of Abu Dhabi.

Al Falah is a residential development that creates a strong sense of community, not only by its design but also through the community centres and amenities that will be available for the residents.”

Zawya