Wednesday, October 7, 2009
Increased liquidity for small and medium sized businesses will drive demand for office space as well as affordable residential property, says expert
SMEs hold key to UAE real estate growth
Increased liquidity for small and medium sized businesses will drive demand for office space as well as affordable residential property, says expert
Small Medium Enterprises (SMEs) could drive demand for both office space and affordable residential property in the UAE if they can secure bank loans to finance start ups, provide working capital and investment for expansion and growth, according to an industry expert.
“It is widely accepted that SMEs account for approximately 80% of the UAE’s economic activity, which means that collectively they employ a large number of staff, require industrial, commercial and office space and naturally employees need housing. However, they are restricted by a lack of liquidity,” said Mohammed Nimer, CEO of MAG Group Property Development.
According to the Dubai Chamber of Commerce these companies are having trouble securing credit from UAE banks. If they do, the terms are short, usually three to six months and the interest rates for unsecured loans are averaging around 15% due to their perceived high-risk category.
According to Ruwad Establishment, there are over 260,000 trading and industrial companies in the UAE of which over 200,000, are classed as SMEs. The UAE classifies companies according to the number of employees and the level of investment and in general an SME has less than 100 employees with an investment range between AED 200,000 and AED 2 million.
“Imagine the stimulus to the housing market alone if each SME averaged just one new employee per annum, not to mention the benefits to the wider economy – airlines, hotels, restaurants, shopping and so on,” added Nimer.
A Dun & Bradstreet report estimated earlier this year that loan rejection rates were in the range of 50-70% due in part to the bank’s difficulty in gaining access to accurate financial statements and in rare cases the complex and time consuming process of recovering money or liquidating seized assets.
Other statistics of the survey provide equally grim reading. Of those polled, just 25% of small businesses used a secured loan and only 13% had used an unsecured loan, while 45% used an overdraft and 55% a letter of credit facility.
Nimer acknowledged government efforts such as the lowering of minimum investment levels to form a company. He also praised the support provided by institutions like the Mohammed Bin Rashid establishment for Young Business Leaders and the Khalifa Fund.
“However more needs to be done to unlock the potential of the SME sector, banks must relax their lending criteria, SMEs are the backbone of many developed economies and they hold the key to real ecomonic growth in the UAE,” added Nimer.
“IT is interesting to note that SMEs are responsible for 30% and 28% of the US and Japan’s exports respectively. China’s 2 million SMEs have greatly increased their exports and Toyota depends on SMEs to produce 80% of its car parts,” said Nimer.
Nimer applauded the recent initiatives to improve transparency and regulations and agreed that liquidity was not the only hurdle the real estate industry needed to clear.
“The Dubai real estate market in particular has witnessed the more unsavoury side of property development. Financial irregularities, land ownership disputes, cancelled and delayed projects and poor quality finishes,” he said.
Nimer agreed confidence needed to be restored, but added that liquidity was at the root of the problem and would continue to play a critical role.
“Owners and staff of new small businesses with aspirations as owner-occupiers will still need mortgages,” said Nimer.
Having been in business now for 30 years, the MAG Group has an enviable track record of stability and consistency and it is that sort of profile that will new investors will be looking for when the inevitable upturn arrives.
In total MAG has a property portfolio in excess of AED3 billion and was one of the first developers to create Escrow accounts for all of its projects, long before the Dubai Government introduced Law number 8.
In October last year, MAG Property Development was awarded ISO 9001 certification by risk management company Der Norske Veritas (DNV). MAG still remains one of the few developers in the region to be accredited to that standard.
About the MAG Group
The Dubai-based Moafaq Al Gaddah Group of Companies (the MAG Group) was established in 1978 and has grown into a multinational organisation with 18 offices in eight countries throughout Europe, the Middle East and Asia.
In the last five years the MAG Group Properties has invested in 12 properties at various stages of development across the residential, commercial and industrial sectors. The company focuses on projects that provide long-term benefits to investors and customers.
Photo caption:
"Mid-range properties will be the first to recover,” says MAG Group CEO Mohammed Nimer.
Director of Architectural Heritage shines in UAE Cultural Heritage category at Cityscape Awards
Director of Architectural Heritage shines in UAE Cultural Heritage category at Cityscape Awards
Dubai Municipality Director honoured for two restoration projects
and revitalising public open spaces in historical Bastakia district
Rashad Bukhash, Director of the Architectural Heritage department at Dubai Municipality, picked up a cultural award during the Cityscape Awards for Architecture in the Emerging Markets, held at The Grand Hyatt Dubai hotel last night.
He was honoured for restoring Mohamed Sherif Sultan Al-Olama House and the House of Traditional Architecture in Dubai, and revitalising the public open spaces in the historic Bastakia district.
Suha Ozkan, one of the judges and founder of the World Architecture Community, said Rashad excelled not only for the restoration works, but the innovative use of public spaces. “Dubai was a large village in the 1950s before all the development and Bastakia now stands as a great monument to the city’s cultural heritage,” he said.
The awards received a record 300 entries this year and were judged according to quality, innovation and environmental response by a panel of five experts.
Other regional winners included Woods Bagot, which won the Commercial/Mixed Use Built category; RMJM, which collected the Special Award – Islamic Archictecture for their work on Al-Asmariya University, Zliten, in Libya; and Kuwait’s Bernard Khouri, which won the Leisure Future category for The Oberoi Resort at Al Khiran.
Two awards were given under the Tourism, Travel & Built category – Dubai’s Roads & Transport Authority, for the Dubai Metro, and Turkey’s Melkan Gursel & Mural Tabanlioglu for their work on the Libertas Rixos Hotel.
“We felt it was right the Metro should gain an Award,” added Ozkan. “It is not only the hardware which is impressive, but the stations, which are designed as landmarks.”
European companies were also among the accolades, with Spanish-based Agi Architects winning Commercial/Mixed Use Future; Denmark’s BIG Architects scooping the Community Future Award; and London-based John McAslan excelling in the Community Built category for their work involving Malawi schools.
Chan Krieger Sieniewicz waved the US flag, picking up the Special Award – Master Planning category for the Bund Waterfront project.
And further afield, Australian-based Laboratory for Visionary Architecture (LAVA) won the Special Award – Environment for their involvement with the MASDAR masterplan in Abu Dhabi, while Shatotto Architecture for Green Living and Lebanon’s Nabil Gholam Architecture & Planning won the Residential Built and Residential Future categories respectively.
Four young architects, all students from Sharjah, were also recognised for their potential, Momna Arshad, Reihaneh Ramezany Mahonaky, Tahereh Rajabi and Ahmed Hosny. “.
“They all showed striking creative ideas,” said Ozkan. “They experimented with new forms and spaces, and their buildings are not just shells but places where you can interact.”
Rohan Marwaha, Managing Director, Cityscape said: “In keeping with the exhibition itself, this year’s Awards had a truly international flavour and recognised the best architectural and planning practices globally.”
Photo caption: Winner of the Cityscape Awards 2009
Cityscape Awards for Architecture in the Emerging Markets 2009 winners
Residential Built: Shatotto Architecture for Green Living
Residential Future: Nabil Gholam Architecture & Planning
Commercial/Mixed Use Built: Woods Bagot
Commercial/Mixed Use Future: Agi Architects
Commercial/Mixed Use Future: Laboratory for Visionary Architecture
Special Award – Islamic Architecture: RMJM
Special Award – Master Planning Category: Chan Krieger Sieniewicz
Community Built: John McAslan + Partners
Community Future: BIG Architects
Cultural Heritage: Rashad Bukhash
Leisure Future: Bernard Khouri
Tourism, Travel & Transport Built: RTA
Tourism, Travel & Transport Built: Meikan Gursel & Mural Tabanlioglu
Young Architect: Momna Arshad, Reihaneh Ramezany Mahonaky, Tahreeh Rajabi, and Ahmed Hosny
Visit Hall 3 to see the Cityscape Awards stand.
For full details of Cityscape Dubai 2009 and its events, please visit: www.cityscape.ae
Tuesday, October 6, 2009
Real estate professionals at Cityscape conference cite low margins for the lack of developments; call for creative solutions to kick-start sector
Experts call for governments to support low cost housing
Real estate professionals at Cityscape conference cite low margins for the lack of developments; call for creative solutions to kick-start sector
Addressing the topic of whether the Middle East presented a best case scenario globally for investment in real estate, conference delegates at Cityscape Dubai stressed continued government infrastructure development as a key factor in confidence in and recovery of the sector.
Managing director of CBRE Middle East, Nicholas Maclean, said that while they had looked at low-cost housing projects, it was difficult to make the numbers work: “This has to be kick-started with government assistance since it could have a beneficial impact on the region as a whole,” he said.
Citing the example in Jordan, where the government has put in place a series of measures to germinate low-cost housing schemes, ceo of the Aqaba Development Corporation HE Eng Imad Fakhoury said reverse engineering was called for to determine what sort of costings the markets would bear.
“To make this work, first you have to analyse incomes, cost out the affordability of mortgage payments, and then come up with your costings,” he said. “The government has provided land almost free of charge, extended credit and worked to bridge the interest rate challenge – as well as supporting private developments by buying in to these schemes to provide accommodation for government employees.”
Equities and asset management specialist, Mohammed Al-Ali from Kuwati’s Alaman group said while it was easy to quantify the vast requirement for low-cost housing, the supply was not keeping pace with this demand, and government schemes could not deliver at an economic cost.
“If the land is not provide free, it is just not viable,” he said, emphasising development of the sector should be treated as a quasi-social service, introducing methods such as BOT (build, operate, transfer) in new private/public partnerships.
"The demand for low-cost housing in the UAE is undeniable - it will undoubtedly involve some form of PPP. The UAE has a strong track record with these sort of initiatives, said Chris Speller, Group Director, Cityscape Dubai.
Real estate marketer, Michael Shvo, raised another potential solution with the example of countries such as the UK and the US, where private developers were often mandated by governments to include a percentage of low-cost housing in any new scheme.
For full details of Cityscape Dubai 2009 please log on to www.cityscape.ae
Empower commissions Business Bay Executive Towers District Cooling Plant
Empower commissions Business Bay Executive Towers District Cooling Plant
World class plant geared up to supply chilled water to Business Bay and surrounding developments
Dubai: 6th October, 2009 – Emirates Central Cooling Systems Corporation (Empower) today announced that it has commissioned the 45,000 refrigeration tonne (RT) district cooling plant for the Business Bay Executive Towers (BBET), a mixed use community development within Business Bay. The world class plant started supplying chilled water to the area since 7th June 2009
Ahmed Bin Shafar, CEO of Empower, said: “Business Bay Executive Towers is expected to be one of the busiest and dynamic business spots of Dubai. International quality standards were adopted in commissioning this significant plant. The plant will supply not only the 11 towers of this development, but also other developments at the Business Bay at phase one and two project serving through a 6 – 7 Km long network.”
“As district cooling is beginning to gain wider recognition in the region, we are optimistic about our growth prospects. The Business Bay project further consolidates our position as the largest district cooling companies in the region,” said Bin Shafar.
Empower, a joint venture between TECOM Investments and Dubai Electricity and Water Authority (DEWA), provides energy-efficient district cooling services to large-scale real estate developments. It currently, provides 250,000 refrigeration tonnes (RT) to a wide array of projects in
Dubai, including Dubai International Financial Center, Dubai Healthcare City, Jumeirah Beach Residence and City Of Arabia, in addition to Business Bay.
Bin Shafar added: “District cooling systems (DCS) achieves economies of scale by using centralised plants instead of individual cooling units in each building. The centralised system results in reduced capital and operating costs, thus reducing air-conditioning set-up and energy costs per building.”
Bin Shafar added: “Commissioning is vital to ensure a seamless implementation of the project until the completion phase. It is a matter of pride that this project will be completed in time and within budget and this where commissioning fits in.”
Bin Shafar added: “Effective commissioning was essential to provide clarity to the required jobs and exactly what everyone needs to do. The commissioning process was well defined and simple for everyone involved.
We kept up to date records of the progress, which helps the contractors focus on issues that need attention.”
Comprising 11 towers including 9 residential towers, a commercial development, and the Business Bay Hotel, The Executive Towers is the first phase that has been launched in the multi-billion dollar Business Bay development. Empower has finished the commissioning of the world class plant which will serve the project through the off-site district cooling systems to save up to 35 per cent energy consumption.
Subscribe to:
Posts (Atom)
