Week 15 - asteco.com · UAE / GCC / MENA SAUDI BINLADIN HIRES NEW CEO AS IT PLANS $15 BILLION DEBT...

Week 15 SUNDAY, 12 APRIL 2020

ABU DHABI | AL AIN | DUBAI | SHARJAH | JORDAN | KSA

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REAL ESTATE NEWS

UAE / GCC / MENA

SAUDI BINLADIN HIRES NEW CEO AS IT PLANS $15 BILLION DEBT REVAMP

UAE: NEGOTIATING RENTAL CONTRACTS IN TIMES OF COVID-19

ARABTEC RESTRUCTURES TOP MANAGEMENT AND APPOINTS NEW CHIEF EXECUTIVE

DUBAI

DUBAI Q1 PROPERTY TRANSACTIONS EXCEED EXPECTATIONS DESPITE A SEEMINGLY

SLOW MARCH

COVID-19 FALLOUT: UAE CONSTRUCTION SECTOR TOLD TO 'RE-PRICE' PROJECTS

COVID-19 FALLOUT: UAE LANDLORDS WAIVE RENT PENALTIES, BUT NOT RENTS

INVESTMENT IN DUBAI REAL ESTATE A SAFE BET

CORONAVIRUS IMPACT: DANUBE TO NOT LAY OFF ITS 3,600 WORKERS

TABREED BUYS 80% STAKE IN EMAAR COOLING ASSETS AND LOOKS AT NEW

OPPORTUNITIES

ALABBAR HITS BACK AT 'LIES AND NONSENSE' OVER CLAIMS EMAAR PROJECTS

SUSPENDED DUE TO CORONAVIRUS

COVID-19: EMAAR SAID TO HALT WORK ON ALL MAJOR PROJECTS

ABU DHABI

GHADAN 21: ABU DHABI PUTS DH15BN OF TENDERS ON OFFER TO LOCAL

COMPANIES

NORTHERN EMIRATES

CORONAVIRUS: UAE-BASED PROPERTY GROUP CALLS FOR RENT DEFERRALS

INTERNATIONAL

COVID-19: INDIA NEEDS A 50% CUT IN ITS CONSUMER, BUSINESS TAX RIGHT NOW







COVID-19 FALLOUT: UAE CONSTRUCTION

SECTOR TOLD TO 'RE-PRICE' PROJECTS Friday, April 10, 2020

Dubai: UAE contractors will have to go through the whole price negotiation process again as project promoters

insist on re-pricing contracts because of the changed circumstances. Even projects that were awarded as recently

as weeks ago are being put through re-pricing.

“There’s no set requirement that contract values should be revised downwards by 10 or 20 per cent,” said a top

official at a leading construction firm. “But in the post COVID-19 economic reality, re-pricing contracts is the only

way forward.

“Clients will not even be willing to listen otherwise. It’s a take it or leave it approach.”

This could mean the UAE’s construction sector will have to go through extended negotiations to arrive at contract

values suitable to both parties. But won’t more negotiations lead to more delays down the line?

“Construction-related activity is exempt from the movement restrictions in place in the UAE,” said Vinod Pillai,

General Manager at RP Group, which has ongoing work at Meydan and Business Bay, as well as oil and gas

projects in the UAE and Saudi Arabia. “As long as contractors get the work permits, activity is happening on site…

but with extra precautions being taken against the COVID-19.

“The re-pricing talks relate to main contracts – the preliminary works such as the enabling are already happening

at most of these sites. We don’t expect to see major delays happening on the main contracts.

“That everyone has to work on reduced contract values and margins is part of the new reality.”

Working hours

But the extra precautions against the COVID-19 have left its imprint in many ways on construction activity. Only 50

per cent of the total capacity on a bus can be used to transport workers to the site. This means multiple trips to

handle a single shift.

“The number of shifts and the hours on site have reduced – each of the anti-contamination processes require

time,” said Pillai. “Also, we can only be sure of our processes – there are subcontractors involved on the site as

well.

“How robust are the preventive measures they have in place for their own workers? Do they have regular

temperature checks? Do they have an isolation policy? These are all factors that impact on the flow of work.”

Construction industry sources say going the extra mile on COVID-19 precautions makes sense, both from a wider

social and business perspective. If doing so helps limit downtime at construction sites, it ends up as a big plus

eventually.

“In accordance with government guidelines we have taken all the measures required, including the mandatory

wearing of masks plus distancing of workers,” said Mohammed Mustafa, Managing Director at Emsquare

Engineering Consultants.

“In this time of crisis, we are being more than vigilant of the responsibilities that the government has placed on

our shoulders. Mandatory usage of hand sanitizers frequently is also in place along with high level of alert for

anybody who shows any sign of virus symptoms.”







Any delay will add to costs

But contractors are worried that even two to three additional months spent on price renegotiations will still be a

burden. The “running expenses” – the costs involved in maintaining the workforce and other mandatory expenses

– will still need to be borne.

“Our running expenses are not going to go down drastically, even if we retain only a limited workforce,” said one

contractor. “The construction industry will see massive layoffs – project activity will take time to recover, especially

those sponsored by the private sector.”

Conares, the steel mill operator, had ceased production at one of the two plants in Dubai for two weeks in view of

the slowdown. Bharat Bhatia, CEO of Conares, certainly did not want to be caught with excess inventory until

demand returned to normalcy.

“There were no lay-offs at the idled plant for those two weeks and we have just resumed operations,” said Bhatia.

“Businesses of all sizes are hopeful that the various stimulus packages announced will filter down at the earliest.

And hopefully, some easing of the bank facilities extended to businesses… as per the Central Bank directive.

“Until now, only a few banks are heeding that directive on lending norms.”

Thankfully, no supply shortages

After fearing the worst in February, UAE contractors say they are seeing no shortages of key building materials,

even those coming in from China. “On the supply side, things are returning to pre-January levels, though the

shipment volumes are lower,” said Pillai.

“If at all there are shortages, it’s most related to protective gear for the oil and gas industry, not in the

construction sector.

“Prices of key materials – cement, steel products - too are as steady as they have been for some time. Given that

project build up from current levels will be gradual, expect the prices to be steady as well.”

Only contractors can be onsite

According to sources, only construction firms and their personnel are being issued permits to be on site.

Representatives from the project’s promoters are, so far, not allowed access under the current strict restrictions

on people’s movements in the city.

Ensure liquidity

At this moment in time, contractors’ focus is on finishing the projects on hand rather than dwell on re-pricing new

contracts. “Any delay, even in such unforeseen circumstances, will be costly for contractors,” said a source.

“Clients, at least the majority, will not listen to what caused such delays. At best, they may give three-month

extensions – but beyond that they are likely to encash the performance guarantee bonds contractors put up.

“Even a COVID-19 situation may not change their behaviour.”

RENT WAIVERS, PLEASE

Small and mid-sized businesses with a sizeable labour workforce on the payroll are hoping landlords owning staff

accommodation facilities will start getting lenient.

“Staff accommodation rent also need to be looked at seriously for a waiver,” said Zahir Hassan, Managing Director

of Power Print. “This is crucial on the costs for companies in the SME category.

“A medium-sized printing or manifesting company would have 75-100 staff members and cost of their

accommodation roughly runs into Dh600,000 per annum.”







Hassan and other business owners will need to make their claims heard… so far, landlords, especially in the

private space, are yet to hear those demands clearly. For now, at least.

Source: Gulf News

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COVID-19 FALLOUT: UAE LANDLORDS

WAIVE RENT PENALTIES, BUT NOT RENTS Friday, April 10, 2020

Dubai: More private landlords in the UAE have stopped enforcing penalty clauses on rental contracts, while some

are now allowing payments to be made via monthly cheques.

But landlords are yet to go in for full-scale rent waivers or rent-free extensions to ease their tenants’ pain

following the COVID-19 outbreak and the subsequent impact on all layers of the economy.

“We have tenants who have lost jobs and are waiting to exit the country once flights re-open in the UAE,” said

Pawan Batavia, CEO, Synergy Properties. “In such cases, early termination of rent contracts usually sees a two-

month rent penalty. But under the current situation we have exempted tenants to pay the penalty.

“They are also accepting re-negotiation on the cheque amount, allowing tenants to pay monthly cheques instead

of quarterly.”

But what of rent waivers?

For now, the big relief is coming from the leading developer-landlords. Dubai Holding in tandem with Meraas, was

the first to announce a Dh1 billion relief package. The two will be offering such support on a case-by-case basis

for tenants, principally commercial, at developments such as City Walk, Bluewaters, and La Mer.

Will private landlords follow suit?

Naval Vohra, CEO of Appello Real Estate, feels the smarter ones will look at their property portfolio and go in for

options where they are assured of a steady income and, at the same time, ease the burden on tenants?

“In residential sector, some landlords are offering waivers of up to three months,” said Vohra. “I would advise

tenants with financial or employment issues to reach out to their landlords and negotiate a deal. Our main advice

to landlords is to try and retain their tenants by being flexible either in reducing some rent or in the payment

terms.”

Check the contracts

Relief could also come to tenants if they go through their tenancy contracts. If there is a mention among the

clauses of a “force majeure” sort of situation, then could initiate talks with their landlords by invoking that clause.

It applies to situations where forces outside of people’s control impact on their prospects and financial situation.

A pandemic certainly qualifies as a force majeure situation.

According to John Peacock, Head of Indirect Tax and Conveyancing at BSA Ahmad Bin Hezeem and Associates, if

residents are unable “to make payment of rentals due to a lack of income resulting from the forced closure of a

business or a loss of salary as an employee, they should fanalyse the relevant contract, which may provide for

both force majeure and hardship events.

“Should the contract however not make provision, the affected party may wish to consider the provisions of

Federal Law No. 5/1985 (Civil Transactions Law).”

Article 249 of the Civil Transactions Law provides that a judge may, to a reasonable level, order a modification of a

“burdensome obligation” if instigated by “public exceptional unpredictable circumstances, making the execution

of the contracted obligation, if not impossible, burdensome to the debtor.”







In other words, when circumstances force constraints on the financial situation of the tenant. And many are

finding themselves in just such a situation.

It will only get stronger

There has been a demand for residential rent relief keeping in mind the temporary and permanent salary cuts

and job redundancies. Employers are yet to take such drastic action, even though many have been sounding out

their workforces.

Elaine Jones, Executive Chairman of Asteco Property Management, said, “We do not expect rental waivers as such

for residential property, but there may be revised payment plans. Tenants must refer to their employers for rental

support.

“Some landlords can and will help, but the resident should first address [the issue] with their employer.”

Landlords might not be ready to renegotiate rent, as rents had dropped substantially in the last two years and

tenants have had that benefit.

“Some landlords have agreed to accept rent in monthly instalments,” said Jones. “We expect this trend to increase

significantly over the coming weeks.”

"We are on an average getting four to five applications for either a rent-free period or rent extension. Landlords

are giving either deferment on the payment or in some cases even a rent holiday for a month or two.”

- Pawan Batavia of Synergy Properties

Source: Gulf News

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CORONAVIRUS IMPACT: DANUBE TO NOT

LAY OFF ITS 3,600 WORKERS Saturday, April 11, 2020

Danube Group, which employs 3,600 people, will not lay off employees despite the impact of coronavirus on the

sector and economy as construction work on the developer's projects is moving ahead, said its chairman on

Saturday.

"There are layoffs across the region and worldwide but we are not going to cut staff at Danube Group. All the

construction sites are running and people are working but not as fast as it used to be. Other developers who are

able to pay have also their sites working," said Rizwan Sajan during a webinar hosted by the Indian Business and

Professional Council (IBPC) on Saturday.

Construction sector has been exempted from the lockdown announced by the government along with other key

strategic industries such as healthcare and banking. BNC Projects Journal's February data showed that work on

the construction and infrastructure projects continued apace in the country.

Recently, two UAE banks - Ajman Bank and Abu Dhabi Commercial Bank - also announced that they will not make

any of their employees redundant despite pressure following the outbreak of virus.

Post-Covid-19, he pointed out that construction sector will continue at steady pace but there may not be a lot of

new launches.

Sajan hoped that the country will be out of the Covid-19 crisis in 2-3 months and will be among the first countries

to announce victory over the virus, thanks to a large number of tests being conducted on the residents and the

healthcare being provided to patients.

The quick victory over the virus, according to Danube founder, will improve foreign investors' confidence on the

UAE's healthcare system and its economy.

"Prices can fall further - there is no question about it. But as a buyer, you should buy property when prices are

falling, rather than rising. There is a lot of bargains in the market and distressed sales because of people losing

jobs.

"But at the end, Covid-19 is not going to last longer. We should be out of it in three months," he said during IBPC

webinar.

Source: Khaleej Times

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INVESTMENT IN DUBAI REAL ESTATE A SAFE

BET Saturday, April 11, 2020

Atif Rahman, director and partner at Danube Properties, said that there is a temporary correction in the market,

but its long-term prospects are bright due to a strong regulatory system.

"I have always believed that Dubai's real estate market is more strongly placed than most of the developed real

estate industries if compared worldwide," Atif Rahman told Khaleej Times.

Elaborating, he said that the underlying risk for consumers arising in any industry is cash flow and how the funds

are managed.

"Due to the Escrow system, which is an elementary requirement of any freehold project in Dubai, the consumer is

at far lesser risk as the funds are locked in Escrow account and released only for construction. This is not the case

in most of the other countries. This ensures that any investment made in real estate shall remain intact and the

development of the project is largely assured.

"We tend to forget that the only industry where the investment is made in appreciating asset is real estate. Yes,

there can be temporary correction that might take place, but in the long run you will make money. I always advice

people to refrain from investing in real estate if they do not have an outlook of 7-10 years. Until such time that

your asset is built and delivered, your risks are under control," he said.

Danube 2020 targets

Atif Rahman said that Danube started 2020 on a positive note with the completion of Resortz Residence and is

expected to complete three more projects this year.

He said that the combined value of Glamz, Miraclz and Bayz, that are next in line for delivery, is Dh1.12 billion

spread across 1,488 units.

"Including Resortz, it takes our tally of planned delivery this year to almost 2,000 units," he said.

Realty to survive Covid-19

Atif Rahman appreciated the UAE leadership for taking phenomenal steps to contain the coronavirus outbreak

and said that the government has been extremely swift in responding to any crisis whether it is social, political,

economic or pandemic as such.

"We all know the speed at which the government works towards improvement, it's phenomenal. They have been

consistently committed in making the country one of the top destinations for tour-ism, business, education,

healthcare and every sector. For me the flavors of UAE are truly global and we are never satisfied enough on the

improvement index, it's always getting better," he said.

He said the group has adopted precautionary measures to minimise the impact of Covid-19 on its business and

human resources.

"Well, we have already encountered the crisis and hopefully this is not the end of the world. As a leader, I think my

job is clearly cut out; I need to keep my focus on two most important things: how to limit any form of damage and

how to keep moving forward. While doing this, we have to be extra careful at all times as the virus threatens

human life which can never be recreated.







"We need to be in total control of the cash flow at this point of time and focus on project delivery. We are blessed

that we started the year on a great note with one project delivery and we had a remarkable success with the

launch of our next gated community Olivz Residence just before the crisis," he said.

Expo 2020 delay

To a question about the proposed delay in Expo 2020 and its impact on the industry, Atif Rahman said the

government has already started discussing the possibility with the stakeholders. So, it will most likely be pushed

forward.

"I believe once we are out of the current crisis, Expo on its revised date will attract a huge amount of attention

from the business world because it will be the single such large-scale event required for boosting the global

confidence, where UAE will play a major role in.

"I have visited the Expo site personally a few months back and I was amazed to see the amount of development

already happened. I have always believed that Expo in Dubai will be the finest Expo ever seen until date. The scale

and the preparation are unimaginable and when it opens the doors on the revised date, the world will witness the

true caliber of UAE," he said.

Focus on projects completion

Atif Rahman said the group has a decent number of projects in the pipeline, but that its primary focus is on

existing developments delivery and construction.

"I believe the strength of any developer lies in the ongoing projects and how efficiently we can deliver. We will

always remain committed and focused on our ongoing projects, this is our real report card.

"At the same time, we exert a lot of effort on understanding consumer needs and innovating new ideas on the

drawing board. We have a decent pipeline but one of our core values is to advance one project at a time. We will

only think of launching the next one once we have sold out the current project and commenced the construction,"

he added.

He said the group has launched projects at some of the toughest times throughout its lifecycle and recorded sales

success.

"The current situation is an exception and we need to act responsibly. The situation will improve in the next two

quarters, it's important we remain strong until then to be able to take advantage in business," he said.

"I firmly believe the situation with Covid-19 shall improve rapidly in UAE however the global impact will last for at

least a quarter before things roll back to normal. We will assess the situation then and decide about launching any

new project," he said.


Back to Index







DUBAI Q1 PROPERTY TRANSACTIONS

EXCEED EXPECTATIONS DESPITE A

SEEMINGLY SLOW MARCH Thursday, April 09, 2020

Dubai registered a total of 10,243 real estate transactions in Q1 2020, according to Data Finder, the real estate

insights and data platform under the Property Finder Group. This represents a growth of 9.74 per cent in the

volume of registered property sales transactions compared to 9,317 transactions in Q1 2019.

It is also the highest number of sales transactions registered in Q1 in Dubai since 2017 where we saw 11,910

property sales transactions registered during that time.

So far this year, mortgage registrations are consistently higher than 2019 on a weekly basis. March alone saw

more than 1,209 mortgage registrations, which is the highest number of registrations since October 2019 and

24.8per cent more than March 2019.

"In H2 2019, we started to see an upward shift in sales transactions with multiple record breaking months in

regards to sales volumes. This trend continued into Q1 2020, with transaction volumes increasing month-on-

month. During the current situation, we have obviously seen a slow down in transactions, however due to the

governments proactive, swift, extreme efforts and policies I believe we will get through this tough period quicker

than most and the real estate market will start to transact again and will continue the trend where it left off in

Q1," said Lynnette Abad, director of Data and Research, Property Finder.

March 2020 - Off-plan vs secondary transactions

The top 5 areas which witnessed the highest overall property sales transactions in March 2020 were Downtown

Burj Khalifa (223 transactions), Business Bay (217), Dubai Marina (182), Mohammed Bin Rashid City (145) and

Jumeirah Village Circle (132).

For off-plan sales, the top 5 performing areas in Dubai were Business Bay (149), Downtown Burj Khalifa (144),

Mohammed Bin Rashid City (120), Jumeirah Village Circle (88) and Palm Jumeirah (70).

On the secondary market, areas that witnessed the most sales were Dubai Marina (147), International City (109),

Downtown Burj Khalifa (79), Business Bay (68) and Jumeirah Beach Residence (66).

March 2020 - Villa/Townhouse vs Apartments

For villas/townhouse sales, the top 5 performing areas in Dubai were Dubai Hills Estate (53 units), Dubai South

(37), Akoya Oxygen (35), Arabian Ranches 3 (34) and Mohammed Bin Rashid City (29).

In the apartment market, buildings that witnessed the most sales were Burj Crown in Downtown Burj Khalifa (90

units), Se7en Residences, Palm Jumeirah (68), The Terraces, Sobha Hartland (52), Seven City, Jumeirah Lakes

Towers (44) and Zada Tower, Business Bay (40). - [email protected]


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UAE: NEGOTIATING RENTAL CONTRACTS IN

TIMES OF COVID-19 Sunday, April 05, 2020

Do landlords in the UAE have to decrease or postpone rental payments due to COVID-19? And can tenants

terminate tenancy contracts immediately without paying penalty?

These are the questions that will be asked a lot more of in the coming days as the COVID-19 situation impacts on

the economy and, by extension, its residents.

Article 249 of the Civil Code provides that if exceptional circumstances of a public nature that could not have been

foreseen occur — i.e. a force majeure — as a result of which performance of a contract becomes oppressive for a

party, but not necessarily impossible, the judge has discretion to reduce the obligation to a reasonable level.

The tenant must go to court if he seeks to obtain relief under Article 249.

If your income has been reduced due to COVID-19 and the landlord does not want to act with fair solidarity, then

you can ask the court to find the fair level of rental relief (decrease or postponement) and let it be legally ordered

to the landlord.

Other provisos kick in as well

Article 273 (1) stipulates that if a force majeure event makes a contract impossible, all contractual obligations will

cease, and the contract will be automatically terminated.

Article 273 (2) stipulates that in cases where the force majeure event makes only part of the obligations

impossible to perform, only that part of the contract will be cancelled. The remainder will continue in effect.

It, however, also permits the tenant to cancel the entire contract on giving notice to the landlord.

If a contract is cancelled under Article 273 (1) or 273 (2), the landlord and tenant are to be restored to the position

they were in before they entered into the contract. If that is not possible, damages may be awarded by way of

compensation to a party that has suffered a loss as a result of the inability to unwind the contract.

The Civil Code does not exactly specify any definition of what “force majeure” is. The court will decide whether the

COVID-19 classifies as one in the context of the specific contract.

In general there are two factors the court looks at while making its evaluation — is there a contract in place and

whether the extenuating circumstances made it impossible to fulfil the contract.

What’s pertinent

If your income as a tenant dropped to a level that makes it impossible to pay the rent, you may terminate the

contract without having have to pay the penalty on giving a notice to the landlord. And you should pay only pro-

rata until the day you vacated the property.

In case the landlord disagrees then he may raise the matter to the court, which will decide whether the tenant’s

situation qualifies as force majeure. If landlords do apply penalties for terminating contract regardless of being

given the notice by tenant referring to the force majeure, the tenant can forward the matter to the court, which

will evaluate the situation and decide whether force majeure is applicable or not.







The following rule of thumb can be used: in case the income of the tenant dropped to a level where he is unable

to pay the rent due to COVID-19, this will justify the impossibility condition stipulated by the law. And therefore,

the tenancy contract can be terminated immediately without any applicable penalty.

1. Do landlords have to decrease or postpone rents due to COVID-19?

No. But upon tenant’s request (whose income is negatively affected by COVID-19) to the court, the rent relief will

be ordered by the court under article 249.

2. Can tenants terminate tenancy contracts without paying penalty?

Yes, in case tenants have been impacted to the level that makes it impossible to pay for rent. For instance, if

tenant’s income is smaller than costs in a given month and he cannot pay the rent, the rental contract can be

terminated without further obligation.

3. What should landlords do?

Negotiate fair rent relief with tenants if they ask for it. If the tenants are affected, they can walk away from the

contract on the spot and leave you without rental income or they can ask the court to provide a fair relief.

In both cases the tenants will obtain a relief which you will not control the financial impact of. To control the

conditions of the relief, the best approach is to negotiate and come to fair conditions. For example, a fair relief

may constitute an agreement that for the months through which the income of the tenant is affected the rent will

be decreased proportionally.

For instance, if a commercial tenant’s revenues decreased by 50 per cent year-on-year due to COVID-19, agree to

a 50 per cent rent reduction for three months and visit the agreement after three months or sooner depending

on the situation’s development.

Under such an approach you will not risk losing 100 per cent of your rental income for several months and can

agree on terms which are in your control catering to your cash needs

4. What should tenants do?

Negotiate with landlords a fair rental relief if your income dropped temporarily, or terminate your tenancy

contract in case the loss of income is permanent due to the pandemic. Present the landlord a fair proposal

supported by documents you are willing to share year-on-year comparison of revenues to showcase the

percentage drop in sales, seeking a proportional relief on rent from the landlords.

For instance, three months with option to revisit the agreement if the situation gets better or takes longer by both

parties. In case you do not reach an agreement, approach the court to obtain the relief from the judge or you can

terminate the contract without paying any penalty to the landlord.

Ground reality

If tenants cannot pay their rental obligation due to COVID-19 they can terminate their tenancy contracts without

having have to pay a penalty or they can ask for a fair relief from the obligations of the tenancy contract the court.

It is better for landlords to negotiate a fair relief with tenants in order to avoid loss of rent for multiple months or

to obtain a court order for relief landlords will not have a control over and which may not fit their cash flow

needs.

— Tomas Dolezal is CEO of Elite Royal Apartments.

Source: Gulf News

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COVID-19: INDIA NEEDS A 50% CUT IN ITS

CONSUMER, BUSINESS TAX RIGHT NOW Thursday, April 09, 2020

Dubai:The Indian government will need to come up with a steep cut in consumer and business tax - even by as

much as 50 per cent - for the next six months.

This is one of the key demands being put to the government by an influential group of Indian businesses.

On March 26, India had announced a 1.7 trillion rupee relief package that was aimed more at its citizens than

businesses directly. This was to counter the slowing down of the economy because of the 21-day lockdown

announced by the government as part of its measures to rein in the COVID-19 spread.

“A stimulus package by itself will not work to revive economic activity,” said Niranjan Hiranandani, President of

Assocham (Associated Chambers of Commerce) India. “The economy needs demand creation in parallel - and for

that to happen, there needs to be a 50 per cent reduction in the GST (Goods & Service Tax) for the next six

months.

“And not just for a handful of sectors, but across the board. This will create the demand push that is need

alongside the economic stimulus.”

Assocham is putting up the recommendation to the government, which is expected to announce a second

stimulus package to safeguard the economy from the worst of the COVID-19 pandemic.

Drastic measures

On whether the government can consider such a drastic cut in its tax revenues at such a time, Hiranandani said:

“Only drastic moves can work in this environment - you don’t prescribe Crocin for cancer cure. That only works for

headaches.

“The situation right now needs strong intervention by the government - and a slashing of GST rates for a fixed

period would work.”

Size of economic boost

Assocham and other business entities are hopeful whatever India will announces as its second stimulus is hefty

enough. Hiranandani believes it should be about 10 per cent of GDP or between $200 billion to $300 billion.

“This package could address all sectors, including the interests of the salaried,” he added. “Lots of people ask

whether India can afford such a package.

“But the Indian government will benefit because of low oil prices and what this means for its import bills. The

benefit could be to the tune of 1,700 billion rupees for the next six months alone.

“With that kind of [import bill] savings, the government can well use it for the stimulus package. Other countries

have already come up with similar packages.

“We need to do the same at the earliest.”

Real estate - a downer?

But can India’s real estate turn itself around at a time when buying has dropped to negligible levels? Even if given

a boost by way of any stimulus package?







According to Prashant Thakur, Director & Head – Research, Anarock Property Consultants, “Another fallout of the

lockdown is that many key markets will have almost zero construction activity at project sites. This will further

strain several developers’ financial health.

“As many as 1.56 million units across the Top 7 cities were in various stages of construction as on 2019 end.

“Further analysis reveals that out of these 1.56 million units under construction, nearly 57 per cent are in MMR

(Mumbai Metropolitan Region) and NCR (Delhi’s National Capital Region) alone. Both regions already have a

backlog of hundreds of thousands of delayed/stalled units.

“With construction activity almost coming to a standstill, homebuyers will have to brace themselves for another

wave of delayed project deliveries.”

But hopeful

Hiranandani, however, is willing to look beyond such bleak numbers. “People want security, and when they need

that, they get into real estate and not invest all in mutual funds and stocks,” he added. “Yes, people had shifted to

stocks in the last five years… but that’s completely disappeared now.

“There are investors who would want to now get back to real estate rather than wait for a stock market

appreciation.”

Hiranandani, who is also head of the National Real Estate Development Council, said: “I would not be wasting my

time making suggestions or recommendations if I was not hopeful of the government doing the right thing.

“We are not asking for reduction of interest rates or extension of credit - all we are asking for is something that

will go beyond the normal measures taken at such times of economic distress.

“And remember, real estate is the second biggest employer in India. The market will spring back - but it needs

government intervention to make it happen sooner.”

GST SLASH MAY NOT REVIVE PROPERTY DEMAND

Reducing the Goods & Service Tax (GST) will not on its own help rebuild buying activity, according to Anuj Puri,

Chairman of Anarock, the property consultancy.

That's because "people are not able to visit sites and are also in cash-conservation mode," he said.

According to Puri, "Given the ongoing global healthcare calamity, it’s no surprise that housing sales and new

project launches across India’s Top 7 cities decreased both on yearly and quarterly basis. As expected, March –

the month when most advisories and lockdown were imposed - saw a steep decline in both new launches and

housing sales against the preceding two months.

“The Government has taken an inarguably necessary hard-line stance to curtail the spread of the virus. The

lockdowns have stalled construction activity and will lead to project delays in the future. But this is a reality the

sector must accept and live with.”

Source: Gulf News

Back to Index







TABREED BUYS 80% STAKE IN EMAAR

COOLING ASSETS AND LOOKS AT NEW

OPPORTUNITIES Monday, April 06, 2020

Dubai’s Tabreed bought a majority stake in Emaar Properties’ Downtown Dubai district cooling business for

Dh2.48 billion on Monday and said it is looking at new opportunities in its core markets to boost growth.

“Our appetite remains for new transactions. As long as it makes commercial sense and provides value the

shareholders expect from us, we will definitely be pursuing including acquisitions as well as greenfield

projects,” chief executive Bader Al Lamki told The National in an interview.

Tabreed, in which France's Engie and Abu Dhabi's Mubadala Investment Company hold stakes, currently operates

in the UAE, Saudi Arabia, Bahrain, Qatar and Oman.

It provides district cooling to developments such as the Dubai Metro and Ferrari World in the UAE; Bahrain’s

financial centre and the Jabal Omar Development in Saudi Arabia.

“Geographies of priority are Gulf states, North Africa and [the] Indian sub-continent and if opportunities arise

beyond these markets, we will be mindful and we will be open and look at them on a case-by-case basis,” he said.

The company is well placed to ride out the current economic downturn in the wake of the coronavirus pandemic

and is looking at long-term growth, Mr Al Lamki said.

“Our business is quite stable ... we continued to manage our operations and adjusted to the current situation. The

business is not interrupted," he said.

"We are taking whatever actions are required in our liquidity and we are very much in a position to navigate this

period with minimum impact.”

The transaction with Emaar Properties will result in Tabreed controlling 80 per cent of the district cooling scheme

serving Downtown Dubai, one of the biggest in the world, while Emaar will retain the remaining stake as part of a

long-term partnership with Tabreed, the companies said in a joint statement to the Dubai Financial Market, where

their shares trade.

The deal is being financed through a corporate loan secured from HSBC and other banks.

“As new opportunities come our way, we will be assessing our financing solutions; some can be through equity,

some can be a mix of equity and debt and others could be fully financed. We have flexibility and look at

case by case,” Mr Al Lamki said.

Downtown Dubai is the flagship project of Emaar Properties, the biggest-listed developer in the UAE. The master

development is home to the iconic Burj Khalifa – the world’s tallest building, the Dubai Mall and other residential,

commercial and hospitality developments.

The long-term concession will exclusively provide up to 235,000 refrigeration tons of cooling to the development.

http://feeds.dfm.ae/documents/2020/Apr/05/6858c1ce-fa6b-44fa-9eee-f6d06c1c645b/Emaar_PR_E_05_04_2020.pdf







The utility scheme currently provides 150,000 RT of contracted capacity through a network that distributes chilled

water produced through three interconnected district cooling plants. A fourth plant is currently under

construction.

After the transaction, Tabreed’s total capacity increases by 12.6 per cent to 1,338,602 RT from 83 plants.

“This is … a truly transformational transaction for the company, accelerating our growth trajectory and

consolidating our position in Dubai,” Khaled Al Qubaisi, chairman of Tabreed, said.

“This acquisition in the world’s largest district cooling market is a further testament to our financial strength and

leading market position.”

After the deal was announced, Moody's Investors Service affirmed the Baa3 long-term issuer rating of Tabreed

and also its Baa3 instrument rating on the company's senior unsecured sukuk certificates.

"The acquisition materially improves Tabreed's position in Dubai, the world's largest district cooling market and

contributes to improve Tabreed's operating diversity," the ratings agency said.

"With it, Tabreed becomes the second-largest district cooling player in Dubai, with an estimated 18 per cent

market share."

Tabreed is well placed to take advantage of growth opportunities and expects its enhanced presence within Dubai

will help it achieve its long-term objectives, Mr Al Qubaisi said.

The deal is Tabreed’s second acquisition this year. In January, the company bought cooling plants in Masdar City

and said it will explore the development of large-scale cooling plants in Sharjah through a venture with

environmental management company Bee'ah.

Tabreed is also consolidating a number of service offerings to set up a new entity, Tabreed Energy Services,

offering consultancy services, as well as operation and maintenance services for cooling plants.

Source: The National

Back to Index







ARABTEC RESTRUCTURES TOP

MANAGEMENT AND APPOINTS NEW CHIEF

EXECUTIVE Wednesday, April 08, 2020

Arabtec, the UAE's largest listed contracting company, promoted Wail Farsakh from group chief operating officer

to chief executive and appointed Najeh Awad as acting chief financial officer.

“Wail joined Arabtec ... in September 2019 and has primarily focused on restructuring Arabtec’s construction

business," the contractor said in a statement to the Dubai Financial Market, where its shares trade.

"In the past eight months, considerable progress has been made in closing out legacy projects, strengthening line

and project management and closely aligning the group's construction-related businesses.”

Mr Farsakh has more than 33 years of experience in the UAE’s construction sector, having previously served as

general manager of the former Dutco Balfour Beatty joint venture.

He takes over from Peter Pollard, who was hired as chief financial officer in April 2017 by Hamish Tyrwhitt, chief

executive at the time. Mr Pollard took over as chief executive last May after Mr Tyrwhitt’s departure.

Mr Awad's most recent post was that of group chief financial officer at Abu Dhabi Ship Building and he also held

the same post at Abu Dhabi General Services Company before that. He has also worked at Ernst & Young, PwC

and JP Morgan in the US.

The board thanked Mr Pollard for his work, which it said “allowed Arabtec to rebuild a long-term leadership team”.

Arabtec, which has a workforce of more than 45,000, suffered its first full-year loss since 2016 last year, mainly

owing to weaker income from its construction business as liquidity for projects remained tight.

The company reported a net loss to shareholders of Dh774.5 million, compared to a profit of Dh256.3m in 2018

as revenue fell 21 per cent to Dh7.78 billion.

A slowdown in the real estate sector resulted in fewer contracts being awarded. The settlements and recovery of

claims and losses from an investment in an associate company also reduced profitability.

However, Arabtec's industrial, infrastructure and mechanical, and electrical and plumbing business lines

remained profitable last year.


Back to Index







GHADAN 21: ABU DHABI PUTS DH15BN OF

TENDERS ON OFFER TO LOCAL COMPANIES Wednesday, April 08, 2020

The Abu Dhabi Department of Economic Development is encouraging local companies to bid for up Dh15 billion

of government tenders with a view to funnelling more spending back into the emirate's economy.

It is rolling out the Abu Dhabi Local Content programme, which includes more than 1,244 tenders issued by

government and semi-government entities within the first three months of the year.

The initiative, part of the Abu Dhabi government’s Ghadan 21 initiative, follows on from the In-Country Value

programme initially developed by Abu Dhabi National Oil Company, whose certification regime was recently

extended through an agreement with the Department of Economic Development to cover government contracts.

The programme aims “to encourage companies dealing with government entities in Abu Dhabi to invest in the

local market in an effort to strengthen the supply chain”, the department’s chairman, Mohammed Ali Al Shorafa,

said in a statement, adding that accredited private sector firms can benefit from local products and expertise.

Companies who gain in-country value certification will be prioritised in the awarding of tenders, particularly those

with high ratings for the amount of local content, he added.

The ADLC programme underwent a trial period last year, the department said, during which approximately Dh890

million of projects and tenders were awarded.

The Department’s Industrial Development Bureau also held workshops for 60 government and semi-government

entities that will be involved in implementing the programme, which were also attended by more than 1,500

representatives from supply chain companies. Since the coronavirus outbreak, many of these briefings have since

switched to online platforms, the department said.

Five new consultancy firms are due to be granted ICV certificates, which will bring the total to 11, the department’s

undersecretary Rashed Al Balooshi, said. These consultancies have been entrusted to do a lot of the necessary

assessment and to help companies with any queries they have when submitting tender bids.


Back to Index







ALABBAR HITS BACK AT 'LIES AND

NONSENSE' OVER CLAIMS EMAAR

PROJECTS SUSPENDED DUE TO

CORONAVIRUS Tuesday, April 07, 2020

Emaar chairman Mohamed Alabbar has hit back at claims that Emaar has suspended work on major projects

projects due to Covid-19-related issues, describing them as “nonsense being peddled by people in the media who

have no sense.”

It follows a report by Reuters earlier today that Emaar had suspended work on major projects, including Dubai

Creek Harbour, that has added to a slowdown in the emirate's real estate market.

Speaking to Arabian Business, Alabbar said: “This is not even speculation or rumour, it is total lies and nonsense.

And I am astonished that in this time, when the whole world is on lockdown, people can come up with this kind of

thing to damage us. I won’t allow it. Let’s be clear. There is no virus on any of our sites. There are no cases of

Covid-19. None of our sites have stopped operating.”

He added: “Are we operating at full capacity on every site? Well no, of course not. But you don’t need to be an

award-winning investigative journalist to know that. You just need to look out the window and see that we, like

most of the world, are on lockdown. Planes are not flying. Most of America is at home. Boris Johnson is in

intensive care. Do you not think that would probably mean some things are slowing down?”

Alabbar said that like most major companies, Emaar had taken radical cost cutting measures to steer it through

the crisis.

He said: “All I know for sure is that this will end, and we will get through this and be back. But nobody knows

when. But in the meantime, I won’t allow anyone to damage Emaar or the UAE by false claims. There is nonsense

being peddled in the media by people who have no sense.”

Source: Arabian Business

Back to Index







COVID-19: EMAAR SAID TO HALT WORK ON

ALL MAJOR PROJECTS Tuesday, April 07, 2020

Emaar Properties has suspended work on its major projects in Dubai amid the ongoing coronavirus pandemic

that has added to a slowdown in the emirate's real estate market, according to media reports.

According to a Reuters report citing “source familiar with the matter”, Emaar has now suspended work on major

projects, including Dubai Creek Harbour, and its planned Dubai Creek Harbour Tower, which the company has

billed as being higher than Dubai’s famous Burj Khalifa.

Once completed, the Dubai Creek Harbour project is expected to become home for approximately 200,000

residents.

Arabian Business has reached out to Emaar for comment.

Pay cuts

Earlier this week it was revealed that Emaar chairman Mohamed Alabbar has taken a 100 percent pay cut as the

economic crisis fuelled by the Covid-19 pandemic hits Dubai’s real estate sector.

Effective April 1st, 2020 and until further notice, the new structure will see the chairman will take a 100 percent

reduction on his salary, while senior management (grade 13-9) will take a 50 percent salary reduction and middle

management (grade 8-7) and junior staff (grade 6-4) will take a 40 percent and 30 percent pay cut respectively.

Additionally, Emaar had earlier announced the temporary closure of a number of hotels as a result of the

pandemic.


Back to Index

https://www.reuters.com/article/us-health-coronavirus-emaar/dubais-emaar-suspends-construction-projects-due-to-virus-sources-idUSKBN21O0RR







SAUDI BINLADIN HIRES NEW CEO AS IT

PLANS $15 BILLION DEBT REVAMP Wednesday, April 08, 2020

Saudi government took a stake of about 36% in the company from the Binladin family in 2018 to settle allegations

of corruption

The contractor’s top management has been overhauled several times since 2018.

Binladin International Holding Group has appointed Khalid Al Gwaiz chief executive officer as Saudi Arabia’s

biggest construction company seeks to push ahead with its proposed $15 billion debt restructuring.

Al Gwaiz joined the company, formerly known as Saudi Binladin Group, in March, according to an internal

announcement seen by Bloomberg. A representative for Binladin International Holding Group declined to

comment.

Binladin - for decades Saudi Arabia’s go-to developer for mega-projects such as airports and religious sites - took

a financial hit after one of its cranes at the Grand Mosque in Mecca collapsed in September 2015 and the

government banned it from taking on any new projects.

That ban was lifted in May 2016, and the government took a stake of about 36 percent in the company from the

Binladin family in 2018 to settle allegations of corruption.

The contractor’s top management has been overhauled several times since then. Chairman Abdulaziz Al-Duailej

joined in September, replacing Khalid Nahas who was in the role for about seven months.

Al Gwaiz was previously managing director of conglomerate Acwa Holding, and prior to that was CEO of Astra

Industrial Group, according to his LinkedIn profile.


Back to Index







CORONAVIRUS: UAE-BASED PROPERTY

GROUP CALLS FOR RENT DEFERRALS Sunday, April 05, 2020

The Representative Committee of the Real Estate Sector Business Group of the Sharjah Chamber of Commerce &

Industry said move would ensure business continuity

Sharjah Government has previously announced that it is delaying rent payments.

A UAE-based property group has called on property owners to delay rent payments for residential and

commercial tenants impacted by the coronavirus outbreak.

The Representative Committee of the Real Estate Sector Business Group of the Sharjah Chamber of Commerce &

Industry (SCCI) said the move would ensure business continuity.

Sharjah Government has previously announced that it is delaying rent payments.

While last month Sharjah Asset Management announced a three-month exemption of rents for tenants in Souq Al

Haraj and Souq Al Jubail amid the ongoing coronavirus pandemic.

At a virtual meeting, headed by Saeed Ghanem Al Suwaidi, chairman of the group, the possibility of rescheduling

rental payments, implementing exemptions in specific cases, and the chance to introduce online technologies in

collecting the payments, was also discussed.

Al Suwaidi said: “The property owners should take part in the government initiatives aimed at reviving the

economy since cooperation and solidarity between all community members are the only way to maintain

businesses and to get through this critical stage.”

Banks were urged to postpone installments of tenants and find financing solutions for them.

The meeting also highlighted the importance of coming up with innovative solutions to solve issues of those

having troubles in rental payments, as well as to examine the role of the real estate sector in securing support for

the government and private agencies.


Back to Index

https://www.arabianbusiness.com/property/443788-uae-firm-announces-three-month-rent-exemption-for-tenants-during-covid-19







With 35 years of Middle East experience, Asteco’s

Valuation & Advisory Services Team brings together a

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of research that supports our decision-making.

John Allen BSc MRICS

Executive Director, Valuation & Advisory

+971 4 403 7777

[email protected]

Jenny Weidling BA (Hons)

Manager, Research & Advisory

+971 4 403 7789

[email protected]

VALUATION & ADVISORY

Our professional advisory services are conducted by

suitably qualified personnel all of whom have had

extensive real estate experience within the Middle

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Week 15 - asteco.com · UAE / GCC / MENA SAUDI BINLADIN HIRES NEW CEO AS IT PLANS $15 BILLION DEBT...

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