Dubai is getting a Casper The Friendly Ghost Theme Park. Jealous.
Dubai is getting a Casper The Friendly Ghost Theme Park. Jealous.
Dubai's Worst Office Buildings Will Be Empty Forever: CBRE
By Zainab Fattah - Oct 14, 2010
Some Dubai office buildings are so ill-conceived and poorly located that they will never be occupied, while others may command no more than the cost of maintenance, according to CB Richard Ellis Group Inc.
“Some buildings will be permanently vacant and will never be let because they are wrongly located, they are of poor quality or have the wrong legal structure in place,” Nicholas Maclean, Middle East managing director for the U.S. property broker, said in an interview.
Speculation fueled Dubai’s property market after foreigners were allowed to buy real estate in parts of the emirate in 2002. Buyers with no experience in property management flocked to purchase floors in planned office buildings before any work started, resulting in poorly finished towers in inconvenient locations with multiple owners, Maclean said.
Such places have to compete for tenants in a Dubai market with an overall vacancy rate of 40 percent, with newly developed areas on the outskirts hit the hardest. At least 20 million square feet (1.85 million square meters) of space, about 40 percent of Dubai’s existing office supply, will be added in the next four years, CBRE estimates. That will put further pressure on prices that slumped by 60 percent on average since the peak in mid-2008.
“The further you are away from Sheikh Zayed Road, the less desirable the location and therefore the quicker rents fall,” Maclean said, referring to the main business thoroughfare near Dubai’s coast. “Why would you go there when you can get accommodation for a relatively low price closer to town?”
Landlords are providing incentives such as rent-free periods of as long as 12 months on seven-year leases and fitting-out allowances to attract tenants, Jones Lang LaSalle said in a report earlier this month.
“While increasing incentives may make one specific building more attractive than another, there are still projects for which it is difficult to attract tenants at any price,” Jones Lang said. Some properties should be demolished or converted to other uses to reduce excess supply, it said in a September report.
Dubai had 2.6 million square meters of offices under construction as of June, the third most in the world after Shanghai and Moscow, Colliers International said in a report this month.
Most of the new commercial buildings will be completed in the next two years, mainly in areas that have already seen rapid construction, such as Business Bay and Jumeirah Lakes Towers. Most are held by numerous landlords in an arrangement known as strata title, where a building is legally divided horizontally or vertically into separately owned properties. Tenants generally prefer negotiating with a single owner, Dubai-based MacLean said.
“If you’ve got a 10-story building and 10 owners and you want to take the whole building, you have to deal with 10 separate owners on one lease,” he said. “It’s impossible.”
Offices in Dubai International Financial Centre, a tax free area near the main business district, are commanding the best rents in Dubai, along with those in Emaar Square and on Sheikh Zayed Road. Rent per square-foot in DIFC is 350 dirhams ($95), while Emaar Square offices near the 200-story Burj Khalifa are priced at about 200 dirhams a square foot. When they do bring in tenants, offices on the periphery of Dubai are achieving rents as low as 40 dirhams, Maclean said.
“That is good for Dubai because two years ago you had to pay a significant rent for Silicon Oasis,” he said referring to a development that’s a 25-minute drive inland from Sheikh Zayed Road. “Now we’ve got a market that is functioning properly.”
Rents in the best-located buildings “are at the bottom of the cycle,” Maclean said. “The others, further away from the center of the city, have significant declines still to come.”
The Dubai Financial Market Real Estate Index closed 1.3 percent lower today. The index has fallen 85 percent from a record high in September 2005. Emaar Properties PJSC, Dubai’s biggest developer, closed down 1.5 percent at 3.94 dirhams, while Union Properties PJSC lost 1.2 percent.
To contact the reporter on this story: Zainab Fattah in Dubai on email@example.com
It's kinda raining The World
The World is sinking: Dubai islands 'falling into the sea'
The islands were intended as the ultimate luxury possession, even for Dubai.
But the World, the ambitiously-constructed archipelago of islands shaped like the countries of the globe, is sinking back into the sea, according to evidence cited before a property tribunal.
The islands were intended to be developed with tailor-made hotel complexes and luxury villas, and sold to millionaires. They are off the coast of Dubai and accessible by yacht or motor boat.
Now their sands are eroding and the navigational channels between them are silting up, the British lawyer for a company bringing a case against the state-run developer, Nakheel, has told judges.
"The islands are gradually falling back into the sea," Richard Wilmot-Smith QC, for Penguin Marine, said. The evidence showed "erosion and deterioration of The World islands", he added.
With all but one of the islands still uninhabited – Greenland – and that one a showpiece owned by the ruler of Dubai, most of the development plans have been brought to a crashing halt by the financial crisis.
Nakheel, the developer, was part of Dubai World, the state-owned conglomerate that had to be bailed out of debts put at around $25 billion at the end of 2009. The Dubai World Tribunal was set up to hear cases arising out of the restructuring and separation of the companies involved.
The low-lying islands represent a vague shape out to sea when viewed from Dubai's beaches, but are visible by satellite or from the top of the city's Burg Khalifa, the world's tallest building, which opened to the public last year.
According to the company, 70 per cent of the World's 300 islands have been sold. Nakheel is also behind Dubai's famous Palm-shaped offshore developments. Villas in the only one near completion, Palm Jumeirah, were given to or bought by footballers including David Beckham and Michael Owen.
Though few celebrity buyers were found for The World, it was rumoured – or joked – that Brad Pitt and Angeline Jolie had considered Ethiopia.
Many investors who did buy the islands proved unwilling or unable to finance further work when Dubai's property prices halved in the space of a year.
Some were hit by troubles elsewhere – the owner of the company which bought Ireland for £24 million, John O'Dolan, committed suicide, while the man who bought Britain for £43 million, Safi Qurashi, is serving seven years in jail in Dubai after being accused of bouncing cheques.
The dispute being heard by the property tribunal involves Penguin Marine, the company which bought the rights to provide boat travel to the islands.
With little business, it is trying to exit the contract, which involves paying an annual fee of just under £1 million to Nakheel.
Nahkeel say they will cash an advanced payment guarantee worth just over £1 million if that happens.
Penguin claim that work on the islands has "effectively stopped". Mr Wilmot-Smith described the project as "dead".
Graham Lovett, for Nakheel, said the project was not dead but admitted it was "in a coma".
"This is a ten-year project which has slowed down," he said. "This is a project which will be completed."
He said Penguin would make money eventually. "That's the price Penguin makes to stay in the game," he said. "They have the potential to earn millions."
The tribunal found for Nakheel on Thursday, saying it would give full reasoning later.
A spokesman for Nakheel insisted the islands were not sinking. "Our periodical monitoring survey over the past three years didn't observe any substantial erosion that requires sand nourishment," a statement said.
The fastest roller coaster in the world at 150mph just got built in Dubai at Ferrari World theme park. Everyone is required to wear goggles due to the sand.
Last edited by liquidsnake28; 01-21-2011 at 02:50 PM.