Glimmer of hope for builders as loans for new houses ticks up

I recently read an interesting article on the Master Builders Australia website - there is hope for the construction industry in sight!

Loans for ‘new’ dwellings moved higher in September in contrast to a further decline in loans for the purchase of established dwellings, according to peak building and construction industry organisation Master Builders Australia.

Mr Peter Jones, Master Builders’ Chief Economist, said “The steep decline in overall housing finance commitments over the past 12 months lends support to the Reserve Bank’s aggressive moves to bring down interest rates down by a full two percentage points in the past three months. “With the likelihood of more cuts to come over the next six months, the bold decision to bring rates sharply down coupled with additional government spending should bolster confidence and should put a floor under the market.”

“Encouragingly, the number of loans for ‘new’ dwellings moved higher in the month, following 12 consecutive monthly declines.”He said “A further period of uncertainty is likely over the remainder of the year as the full extent of the global financial crisis plays out and this means soft conditions in the housing market can be expected to prevail for another 6 to 9 months.” The total number of dwellings financed for owner occupiers, seasonally adjusted, fell by 2.7 per cent in September 2008, to be down 26.9 per cent on the same month last year.

The number of loans for ‘new’ dwellings (construction and new combined) was up by 2.4 per cent in September to be down 26.8 per cent on the same month last year.- the number of loans for the construction of dwellings rose by 2.0 per cent in September, to be 17.4 per cent down on the same month last year. - the number of loans for the purchase of new dwellings rose by 3.6 per cent in September, to be down 42.3 per cent on the same time last year.

The number of loans for the purchase of established dwellings fell by 3.3 per cent in September, to be down 27.0 per cent on the same time last year. The value of lending to finance the purchase of investment housing fell by 1.1 per cent in September, to be down 22.8 per cent on a year ago.

Dubai Cityscape Conference - A Vision of Tomorrow

A couple of consultants at Conduit along with myself recently attended the Dubai Cityscape Conference.

Cityscape Dubai 2008, in its 7th year, is the largest business-to-business real estate investment and development event in the world. Cityscape Dubai attracts regional and international investors, property developers, governmental and development authorities, leading architects, designers, consultants and all senior professionals involved in the property industry. It provides an annual forum that celebrates the very best in real estate, architecture, urban planning and design from around the world.

About 60,000 participants from over 150 countries had gathered in Dubai, to be a part of the world's largest development exhibition and its associated conferences, which is expected to break all previous records. About 40,000 visitors flocked the Cityscape Dubai during the first two days of the show, which exceeds a total of three days of crowd gathering during last year's event.

With the world facing market uncertainty, we enter a new era in which the Middle East developers are expected to maintain or even increase their presence across the world. The intensity and scale of the iconic projects, is one of the most impressive property booms in modern history that has kept the UAE and Dubai in particular, on focus worldwide for most of the decade.

However, a report by the property consultants Colliers International stated that Dubai prices would drop by 16 percent during second quarter of 2008, and will remain flat until 2010, which came as bad news just prior to opening of the seventh Cityscape Dubai.

On the whole, about $100bn worth of new projects were launched on the first day of Cityscape. However, this news failed to ignite investor confidence, as there were growing fears about the global credit crunch and the possible overheating of the local property market. Starting from Dh.350bn beachfront project to a kilometer-high tower, the developers at the annual Cityscape exhibition in Dubai launched the usual series of mega-developments, which has been responsible for boosting the Gulf Arab Commercial hub to international fame.

While the Dubai mortgage lender Tamweel, announced plans to launch about Dh.2bn worth of Islamic bonds in 2009, the Sorouh Real Estate of Abu Dhabi announced that all its projects have been proceeding on track.

It is evident after attending Cityscape that we began to think about whether the large scale projects exhibited at the conference will actually be built. Although the shopping malls and apartment complexes look great now, when they are completed in 10 years time they will look dated. There was alot of talk surrounding Dubai and whether places such as Abu Dhabi will in fact produce bigger and better developments in the years to come.

It will be interesting to see as to whether other countries in the Middle East overtake Dubai with the grandeur and large scale of their developments. One thing is for sure that the Dubai Cityscape Conference will continue to be the largest property exhibition in the world attracting tens of thousands from all over the globe.