Foreign airlines decry lingering forex crisis as backlog mounts - PUNCH
By Justice Okamgba
There are concerns that more foreign airlines may be forced to suspend flights to Nigeria if the government does not find a lasting solution to their trapped funds, writes JUSTICE OKAMGBA
One of the biggest tasks currently before the Minister of Aviation and Aerospace Development, Festus Keyamo, is to ensure that more airlines do not suspend their operations from the Nigerian market.
Experts said any exit could be catastrophic to the entire aviation sector and the economy in general.
Following his return from the Dubai Airshow in November, Keyamo revealed that Emirates Airline was poised to resume flight operations in Nigeria, having suspended its operations in the country twice in 2022.
Emirates had previously suspended flights in September 2022 but resumed after the Central Bank of Nigeria released $265m in outstanding ticket sales.
And barely two months later, the airline halted operations in the country, citing unsuccessful negotiations with Nigerian authorities over fund repatriation.
Etihad Airways also suspended flights to Nigeria during the same period.
Keyamo wrote on Twitter, “On the sidelines of the Dubai Airshow in Dubai last week (November 2023), I met with the top echelon of Emirates Airline and we continued very warm and fruitful discussions towards the resumption of flights from Dubai to Nigeria, an effort that was championed by President Bola Ahmed Tinubu.
“We are presently working on the small details and the airline will soon announce the exact date of their resumption of the flights.”
The Nigerian government holds the highest amount of airline-trapped funds in the world, with over 27 foreign carriers operating in the country, according to the International Air Transport Association.
Data obtained from IATA showed that the funds had risen to about $792m at the end of last year.
Africa’s largest economy has been struggling with dollar shortages, which has made it difficult for foreign airlines that sold tickets in the local currency to repatriate their funds from the country.
The country’s foreign currency shortages have been worsened by declining oil production, which accounts for more than 90 per cent of dollar inflows.
Nigeria’s foreign reserves have maintained a steady decline since 2021, currently standing at 33.25bn as of January 18, according to the CBN.
The Chief Executive Officer of Centurion Aviation Security and Safety Consult, Captain John Ojikutu, said it was challenging for airlines to continue to pay in dollars while they collect naira from travellers.
He told The PUNCH, “We owe Emirates Airline and many others from Europe and the Middle East. These airlines collect naira on ticket sales but pay dollars for every service charge like passenger service charge, aircraft landing, and parking, ground handling services, fuel sales, etc.”
Ojukutu, who was also the former commandant of the Murtala Muhammed International Airport, Lagos estimated that Nigeria generates at least $2.5bn annually from all the service charges on passengers and air traffic figures.
He said, “The questions to ask are these: Where is the money, and who authorises their spending without the authority of the responsible authority?
“In 2007, ex-Nigerian President, Olusegun Obasanjo, at a public hearing in Aso Rock, directed that the dollar earnings in aviation should be domiciled in the CBN and the naira values be collected by the depositors. Since that time, how much has been deposited in the CBN and who has been spending the money?”
According to the National Bureau of Statistic, the aviation sector contributed N22.6bn to the country’s Gross Domestic Product in the third quarter of 2023, a 109.26 per cent rise from N10.8bn in the corresponding period of the previous year.
Beyond the pronouncements made by the minister on social media, the precise time frame for the resumption of operations by the airline is still unclear.
The minister’s spokesman, Tunde Moshood, told The PUNCH, “I can assure you that everything needed to be done has been done.”
He emphasised that the assurance was not unilateral from Nigeria but stemmed from a mutual agreement between the two countries.
Fear of more exit
Experts said if the crisis is not resolved early, some airlines may follow the steps of Etihad and Emirates Airlines in withdrawing their service from Nigeria.
They noted the government must find a solution to the forex crisis and prevent the loss of foreign airlines in the country.
Reacting to speculations that more airlines may exit the Nigerian market, Ojukutu told The PUNCH, “We are moving down fast into the valley of death of the industry if these airlines carry out their threats of withdrawing their commercial operations from Nigeria.”
According to Ojukutu, foreign airlines are crucial to Nigeria’s aviation industry, and the country needs them more than ever, adding that they contribute over 80 per cent of Nigeria’s commercial aviation services earnings.
“Pay off their earnings or kill the industry. You cannot be selling goods to debtors who are not ready to pay, otherwise, it will run you aground as you too can run aground if you don’t have dependable credible customers as they are,” he warned.
The General Secretary of the Aviation Safety Round Table Initiative, Olumide Ohunayo, pointed out that blaming Emirates Airlines for its departure due to trapped funds was unjustified.
“You cannot blame Emirates Airlines for leaving because its funds are trapped. It had just declared a profit. So, even without Nigeria, they are profitable. They can do without us, and their position is understandable,” Ohunayo told The PUNCH.
He highlighted the ongoing issue of paying in dollars for certain services in Nigeria, particularly in aviation fuel supply, which refused to accept payment in naira.
“Why wouldn’t they accept the naira in Nigeria? It’s one of those bases that made them pull the plug. If they return, you will see a slight drop in airfare. But, unfortunately, the local fuel supply refused to accept naira.
“They pay in dollars for almost everything, and you are not paying them. So, everybody is not getting money, agencies, and even the fuel suppliers. The entire value chain has lost money,” said Ohunayo.
Apart from the trapped funds, there are also concerns about high operating costs in the aviation sector.
The PUNCH gathered that it costs about $3,000 to operate a B737 aircraft on a one-hour flight when aviation fuel was less than N100 per litre.
However, with the current exchange rate and the increase in aviation fuel to over N800/litre, airlines operate a B737 aircraft for over triple that amount.
The Regional Vice-President for Africa and Middle East for IATA, Kamil Alawadhi, warned that if the current trend persisted, airlines may reconsider operating in the country.
Alawadhi told The PUNCH that the operational costs of running airports in Nigeria, at Lagos and Abuja airports, had become a critical concern for operators.
He said, “Nigeria happens to have the two most expensive airports to operate to, which are Lagos and Abuja airports. The fees are almost double and half than of the Gulf Cooperation Council Regions airports.
“The airports do give that much; they do not give that high quality of services to the passengers or the airlines, yet they charge humongous amounts of money to operate to and from those airports.”
Cleared backlog insignificant
Last week, the CBN paid $2bn to clear a part of its backlog of matured forex obligations to the Deposit Money Banks.
The apex bank confirmed, in a statement, that foreign airlines received $61.64m from the disbursement.
However, the airlines said the $61m they got was insignifi¬cant compared to the $792m owed the airlines in the country.
The President of the Association of Foreign Airlines and Representatives in Nigeria, Dr Kingsley Nwokoma, recently said the government must pay something reasonable to the airlines so as not to risk leaving the country.
He said, “The foreign airlines are not talking about the released funds because they felt it is a little drop. It is not some¬thing to be too excited about. If we have had about $300m now or half of what the airlines are owed, then, you can say there is hope.
Nwokoma recalled that the conversation with the Min¬ister of Aviation and Aerospace Development, Festus Keyamo, on the issue seemed worthwhile but only $61m had been paid thus far.
He said, “We are not saying the government should pay all, but the government should have a plan to pay a chunk of the money every quarter. The fear is that if it continues like this, some of the airlines may go.
Nwokoma said Nigeria was found wanting in terms of honouring the Bilateral Aviation Services Agreement.
BASA is an air transport agreement between two countries that allows designated airlines to operate commercial flights, covering the transportation of passengers and cargo.
He noted, “Nigeria is just a very strange country. Some are still saying that the airlines should not be asking for any money from Nigeria. What is BASA? BASA is signed by countries and not airlines. We signed our commitment to BASA and we are not doing any¬thing about it.
“If all countries are defaulting like Nigeria, there will not be any airline that comes into the coun¬try again. The aviation industry is predicated on the US dollar. You pay your catering, handling, hotel and a lot of things in dollars and if you don’t pay, your crew would be sent out.”
He advised the Federal Gov¬ernment to discuss with the foreign airlines the modes of payment for the blocked funds.
“The government should sit with the foreign airlines just like how you sign your BASA agree-ments and agree on quarterly payment of these funds. The gov¬ernment should please keep to that agreement. By then, we will be making progress,” he said.
The President of the National Association of Nigerian Travel Agencies, Susan Akporiaye, told The PUNCH that the $61.64m paid to foreign airlines was part of the accumulated debts.
Akporiaye explained, “The old debts are being settled at the prevailing rate when tickets are sold, with the exchange rate around N400/450 to one dollar. The debt, which was originally over $800m, has been reduced.
“This specific issue led to Emirates discontinuing flights into Nigeria. The government has committed to paying the old outstanding debt at the rates prevalent during the sales period.
Canada to cap international student permits amid housing crunch - REUTERS
OTTAWA, Jan 22 (Reuters) - Canada on Monday announced an immediate, two-year cap on international student permits and said it would also stop giving work permits to some postgraduate students as it seeks to rein in record numbers of newcomers seen aggravating a housing crisis. The cap is expected to result in approximately 360,000 approved study permits in 2024, a decrease of 35% from 2023, according to a statement from the immigration ministry. Advertisement · Scroll to continue
Immigration Minister Marc Miller said the federal government would work with the provinces, which oversee the educational system, to apply the cap. He said the main reason for the cap is to protect students who attend colleges, which are often private-public partnerships, that provide inadequate services at high costs, but also to ease pressure on housing and services.
"Some private institutions have taken advantage of international students by operating under-resourced campuses, lacking supports for students and charging high tuition fees, all the while significantly increasing their intake of international students," Miller told reporters. "This increase is also putting pressure on housing, healthcare and other services," he said, adding that fewer numbers would primarily help lower prices for rent.
Rapid population growth fueled by immigration has put pressure on services, like healthcare and education, and has helped drive up housing costs. These issues have weighed on Liberal Prime Minister Justin Trudeau's support, with polls showing he would lose an election if one were held now. Advertisement · Scroll to continue
In the third quarter of last year, the population grew at its fastest pace in more than six decades, with non-permanent residents - mostly students - increasing by 312,758, the most in more than five decades.
The Canadian Alliance of Student Associations (CASA), a student advocacy group, criticized the cap. "The biggest problem is that ... there's been announced a cap that is a reaction to the housing crisis," said CASA Director of Advocacy, Mateusz Salmassi, adding that what is needed is more support and housing for international students.
The University of Toronto welcomed the announcement and said it would work with all levels of government on the allocation of study permits. The changes are "focused on addressing abuses in the system by particular actors and are not intended to adversely impact universities such as ours," the university said in a statement.
Reporting by Steve Scherer, Promit Mukherjee and Wa Lone; Editing by Sharon Singleton and Sandra Maler
Rano Air Launches Katsina -Abuja, Kaduna-Lagos Flights - DAILY TRUST
Sunday, 21st January 2024, marked the beginning of another milestone for Rano Air after starting the airlift of domestic passengers from Katsina to Abuja and Kaduna to Lagos respectively.
Rano Air which was inaugurated last year has been ferrying passengers from Abuja to Lagos Kano, Sokoto and Maiduguri.
Reports indicates that passengers turn out for the Rano Airline from Katsina and Kaduna today was very impressive as the passengers expressed their happiness for the arrival of the Airline, saying that the era of delays and cancellations of flights by other airlines is over.
Rano Airline which has five Embraer Aircraft in its fleet with a capacity 50 passengers per trip has recorded huge success since it started domestic operations early last year, with passengers commending the Airline for providing its customers with relatively Cheaper Air tickets.
Following the inauguration of the Katsina and Kaduna Station today, Rano Air is optimistic that before the year runs out, it will spread its wings to all Nigerian Airports for the domestic flights, just as it’s planning to provide bigger and wide body Aircraft in order to accommodate more passengers.
Japa: 32,462 Nigerians apply for passports in two weeks - VANGUARD
By Evelyn Usman
The rush by Nigerians to leave the country for greener pasture reached its crescendo in the new year as 32,462 persons have so far applied for international passports and uploaded their documents from the Nigeria Immigration Service site between January 8 and 21,2024.
Of these applications, 15,113 have reportedly been approved for biometric capture and production, which is fifty per cent of the total application.
The summary of passport applications for the year 2024 was provided by the Comptroller-General of Immigration Service, Caroline Adepoju, who was on a visit to Ikoyi and Alausa passport offices, yesterday, to see how things were working, regarding the introduction of the automated passport application process.
Briefing journalists at the end of the assessment, the Immigration boss said of the 32,462 applications, 11,505 were awaiting approval, while 3,406 who made payment were yet to book appointments.
According to her, 1,438 applications were queried for various reasons.
Adepoju said: “50 per cent of the total applications have been successfully approved for biometric capture, production and issuance, 35 per cent awaits approval, 11 per cent made payments but yet to book appointments and only four per cent of total applications were queried.
“When queries are successfully answered, the applications return to the queue and are subsequently approved for biometric acquisition, production and issuance “.
Adepoju, who noted that the introduction of the automation of passport applications was not new, clarified that further: “The major difference now is that supporting documents are now uploaded online. It is a research-based decision and we have been recording successes.
“As of this morning (yesterday), we have only recorded four per cent rejection of uploaded documents which may be due to errors on the side of the applicant. But our help desk is operational 24/7.
“The Nigeria Immigration Service, our technical partners, service providers and other stakeholders worked together with the Minister of Interior, Dr Olubunmi Tunji-Ojo, to come up with this reform on the automation of passport process which has been in place since the inception of the issuance of enhanced e-passport in 2020.”
She explained that the automation of passport application was aimed, among other benefits, at easing the application process and reducing human interface which had been a major complaint from applicants who had been extorted by touts during application. The Immigration boss called on Nigerians to be patient and allow the NIS to ensure the perfection of the process.
Student visa cap will have economic, social consequences: experts - BLOOMBERG
Experts warn that Canada’s new cap on international student visas raises social and economic concerns while having a potentially “marginal” impact on housing prices.
On Monday, the federal government announced a two-year cap on international student admissions that would see new study visas cut by 35 per cent in some provinces.
Canada had more than 1 million international study permit holders as of December. The office of Immigration Minister Marc Miller has said that some institutions are taking advantage of the high tuition rates international students pay, while offering a poor education and exacerbating the country’s housing crunch.
“Through the decisive measures announced today, we are striking the right balance for Canada and ensuring the integrity of our immigration system while setting students up for the success they hope for,” Miller said in a Monday news release on the announcement.
International education brings $22 billion to the economy and supports more than 200,000 Canadian jobs, according to Miller’s office.
A drop in those dollar figures raises economic concerns for Desjardins economist Randall Bartlett.
Bartlett, senior director of Canadian economics at Desjardins, wrote in a recent report that closing the door to temporary residents, including international students, would deepen the recession and lower Canada’s gross domestic product, while an increase those numbers could help Canada avoid a recession altogether.
“When we look at the measures introduced today, which will significantly reduce the number of foreign students that receive study permits here in Canada, it looks to me like the federal government is making policy on the fly,” Bartlett told BNNBloomberg.ca in Monday phone interview.
“There are going to be some consequences when it comes to overall economic activity generated by foreign students coming to Canada, as well as the negative consequences for post-secondary institutions in Canada who have backfilled a lack of financial support from governments with tuitions from foreign students.”
Economist predicts 'marginal' house price impact
Bartlett believes the move will help cool some of inflation drivers, such as rent prices and consumer goods. But he predicted that housing price relief related to the policy change will be small, as other factors like high interest rates put pressure on the market.
“I think it's going to be pretty marginal in terms of the impact on providing that relief on the cost of housing,” he said.
“Demand isn't the only thing driving up rent prices right now. Interest rates are at the highest level they've been in a couple of decades and inflation back in 2022 was the highest in 40 years, so those high borrowing costs, high input costs, as well as strong demand are leading to higher rents.”
Sarom Rho, an organizer with Migrant Workers Alliance for Change, said the changes unfairly blame international students for Canada’s housing crisis and “cruelly” separate working-class families, as the cap also includes limits on family members of international students.
“It's not right. It's not cool,” she said. “Families deserve to be together. So we're calling on the federal government to reverse this decision.”
Rho made the case that immigration is not to blame when it comes to Canada’s high housing prices, noting that home costs skyrocketed during the pandemic, when immigration was at its lowest.
Statistics Canada data show residential property prices climbed 6.3 per cent in 2020, compared to just 0.7 per cent in 2019. Canada only welcomed 184,500 new permanent residents that year, compared to 341,000 in 2019 and 401,000 in 2021.
“Immigrants and international students are being scapegoated,” Rho said.
“We as people are being told that we should be divided and distracted from who's really responsible and that's the failures of government policy and particularly runaway profiteering. There are a group of people and institutions and corporations in this country who are making a killing off of our shared precarity, and that's not something that any of us want.”
In a statement, a spokesperson for Immigration, Refugees and Citizenship Canada acknowledged the economic growth that international students bring to Canada, but said the government needed to take action on issues “that have made some students vulnerable.”
“They are not responsible for the shortage of housing, but the growth in the arrival of international students adds significant demand for housing and other services that all Canadians must be able to access,” the statement said.
With files from The Canadian Press
Private jet owners in Nigeria face the risk of being put out of business - BUSINESS INSIDER
Owners of private aircraft in Nigeria that operate for profit are ay at risk of having their licenses revoked for failure to comply. The Nigeria Civil Aviation Authority (NCAA), the nation's aviation regulating authority, provided this update. Recent incidents, including a crash landing, prompted the NCAA to emphasize the necessity for private jet owners to obtain a commercial license for commercial or charter operations.
- Nigeria's NCAA threatens license revocation for private jet owners in commercial non-compliance.
- Recent incidents spurred the NCAA's decision.
- The NCAA plans sting operations to ensure non-compliant operators cease activities.
A report by the Nigerian newspaper, Punch NG, showed that the NCAA is looking to confiscate the licenses of some private jet owners, who use their aircraft for rendering services because they have failed to follow the rules.
Chris Najomo, acting Director-General of NCAA, made mention of this during the recent unveiling of his agency’s projects for 2024 in Lagos.
One such case of non-compliance was when a private jet bound for the western state of Ibadan from Northern Abuja, crash-landed before arriving at its designated airport.
The National Safety Investigation Bureau noted that the business; Flints Aero Services Limited, was issued with a permit for a non-commercial flight, but yet disregarded the sanction.
Such a case is what the director-general touched on. He stressed the importance of private jet owners obtaining a commercial license to operate commercially or charter.
He then went on to avow that the NCAA would increase surveillance for jets not intended for operating as commercial aircraft.
“According to Najomo, the NCAA will do some sting operations to ensure that operators who are not ready to comply to go and get an Air Operator Certificate cease operations. He also said the NCAA was committed to simplified certification and licensing processes as this will ensure ease of doing business,” the Punch’s report reads.
45 Visa-free Countries Nigerian Passport Covers In 2024 - LEADERSHIP
Written by James Kwen
The Henley Passport Index has listed the most powerful passports in the world, saying Nigerians now have about 45 visa-free countries enabled with their passports.
HPI is a global passport-ranking website with an original, authoritative ranking of all the world’s passports according to the number of destinations their holders can access without a prior visa.
Their index is often based on exclusive data from the International Air Transport Association (IATA) – the largest, most accurate travel information database – and enhanced by Henley & Partners’ research team.
The passport ranking website on Thursday listed Nigeria as 95th out of the 104 countries with the most powerful passports.
According to it, Nigeria sits behind Ghana, Guinea, Kenya, Lesotho, Morroco, Benin Republic and Namibia which are at number 76th, 83rd, 67th, 65th, 71st, 79th and 65th respectively.
The 45 visa-free countries Nigerians can travel with their country’s passports are: Barbados, Benin, Burkina Faso, Burundi, Cambodia, Cameroon, Cape Verde Islands, Chad, Comoro Islands, Cook Islands, Cote d’Ivoire, Djibouti, Dominican Republic, Fiji, Ghana, Guinea, Guinea-Bissau and Haiti.
Others include; Iran, Kenya, Kiribati, Lebanon, Liberia, Madagascar, Maldives, Mali, Mauritiana, Mauritius, Micronesia, Montserrat, Mozambique, Niger, Niue, Palau Islands, Rwanda, Samoa, Senegal, Sierra Leone, Somalia, St. Kitts and Nevis, The Gambia, Timor-Leste, Togo, Tuvalu and Vanuatu.
West African Junta Leaders Cut Ties With ECOWAS, Deepening Regional Tensions - BLOOMBERG
(Bloomberg) -- Three junta-led nations in West Africa are pulling out of the region’s political and economic bloc, further isolating their military regimes.
Mali, Niger and Burkina Faso in a joint statement Sunday said the Economic Community of West African States under the influence of “foreign powers” had become a “threat to its member states” and therefore decided to withdraw from the bloc with immediate effect.
The bloc had “failed to assist” the three countries, which are battling a sprawling Islamist insurgency, in their “existential fight against terrorism and insecurity,” Col. Abdoulaye Maiga, Mali’s government spokesman said in a statement on state television.
Ecowas said it remains committed to find a negotiated solution to the “political impasse.” The bloc hadn’t received the necessary one year notice from its three member states wishing to withdraw, it said in a statement.
The regional bloc has pushed for a return to civilian rule since military coups in all three nations, creating tension with military leaders. Last year, the three countries moved to create a new security alliance.
Ecowas had been negotiating with Niger to return to democracy while Mali and Burkina Faso were scheduled to hold elections this year, according to agreements with the union, which introduced far-reaching economic and diplomatic sanctions in an attempt to convince the juntas to hand over power.
Following the July coup in Niger, which has been a crucial security partner to the US and its Western allies, Ecowas threatened to use military force to restore democratic order if talks fail.
Maiga on Sunday criticized the regional bloc calling the sanctions “illegitimate, inhumane and irresponsible.”
Members of the 15-member Ecowas bloc benefit from free movement of persons, goods and capital, and a common market. Eight countries are also members of the West African Monetary Union with a common currency.
“After leaving the regional bloc, a withdrawal from the regional monetary union seems more inevitable,” Aly Tounkara, executive director of the Center for Security and Strategic Studies in the Sahel, said by phone from Bamako. Mali, Niger and Burkina Faso “will find themselves in a difficult situation with some of their traditional partners both diplomatically and economically,” he said.
Following the military power grabs, the three countries’ respective military leadership severed ties with France, the former colonial power, and moved closer to Russia. The Kremlin-linked Wagner Group has operated in Mali since late 2021. This week 100 Russian military personnel arrived in Burkina Faso, the first large deployment to the country of a planned force three times that size.
--With assistance from Diakaridia Dembele and Baudelaire Mieu.
(Updates with Ecowas comment in fourth paragraph)
China Sees ‘Big Increase’ in Arrivals to Thailand on Visa Rules - BLOOMBERG
BY Bloomberg News,
(Bloomberg) -- China predicted Thailand will see “a big increase” in visitors from the mainland after the two countries signed a pact on a visa-exemption program starting from March.
Foreign Minister Wang Yi signed an agreement with Thai officials in Bangkok Sunday to waive visa requirements for travelers between the two countries.
Tourists from China will be allowed to stay visa-free for a maximum of 30 days per entry in Thailand , and vice versa. For multiple entries. visitors can stay a total of 90 days within a 180-day period, according to a Thai foreign Ministry statement.
“This will bring our people-to people exchanges to a new height,” Wang said in a speech.
China’s Severed Air Links Drain $130 Billion From Global Tourism
Chinese tourists were Thailand’s largest group of visitors before the pandemic and are seen as key to a sustained recovery of the country’s tourism industry, a main growth driver. Travelers from the mainland accounted for more than 25% of the 40 million foreign visitors in 2019. That dropped to about 12.5% of 28 million tourists last year.
The Thai government targets 35 million foreign arrivals this year, with 8 million expected from China.
China is also Thailand’s largest trading partner and biggest source of foreign investment. The two countries agreed to strengthen their cooperation in transportation including speeding up the development of the China-Thailand railway.
Thailand, China Agree on Visa-Free Travel to Boost Tourism
China will also import more specialty agricultural products from Thailand and supporting the efforts of more Chinese companies which plan to invest in Thailand, Wang said.
Last year, Thailand issued temporary visa waivers for travelers from Russia, Kazakhstan, India and Taiwan. It has also been planning to allow longer stays for tourists from some countries to spur spending.
Dubai Home Prices Set to Rise Again, Real Estate Firm Predicts
BY Bloomberg News,
Commercial and residential properties in Dubai, United Arab Emirates. , Bloomberg
(Bloomberg) -- Property values in Dubai may climb as much as 12% this year, an increase that risks pricing some people out of the expatriate-dominant city, according to real estate consultancy Cushman & Wakefield Core.
Home prices could rise 8% to 12% this year after surging 20% on average in 2023. That’s even though 39,400 homes were completed — the highest number since 2020 — which helped ease demand. Rents, meanwhile, are expected to jump between 10% and 12% this year, compared with 19% in 2023 and 27% in 2022.
“Affordability is a growing concern for the low to mid-market segment,” Prathyusha Gurrapu, head of research and advisory at the property firm Cushman & Wakefield Core said in a report. “Although we don’t foresee the sharp rises witnessed in 2023 to continue in 2024, we believe the market will see rises at sustainable levels.”
Still, limited post-handover payment plans in the off-plan market and potentially lower interest rates “are expected to support the secondary sales market and help moderate price increases,” according to Gurrapu.
Dubai’s property market last year broke a decade-long record for home sales, while rental rates jumped to unprecedented levels. The rebound from a seven-year slump has been fueled by an influx of wealthy investors, and the government has also relaxed visa laws and introduced permits for job seekers and freelancers.
The rally is emboldening developers as they seek to capitalize on the surging demand. Advance sales of apartments climbed 78% last year, while off-plan sales of villas fell 31%. Emaar Properties PJSC delivered about 26% of new supply last year, Azizi Developments about 15% of new homes and Damac Properties about 8% of properties.
More than 65,000 homes are due to be completed this year in areas such as Meydan One, Business Bay and Downtown Dubai, but Cushman & Wakefield Core expects that only 32,000 will be built. About 76% of the new supply with be apartments.
The rise in rentals has pushed gross yields to a seven-year high. Yields on apartments stand at 7.3%, while those on family homes reached 5.5%, according to the report.
Rising rents are causing “significant upheaval as tenants grapple with rental escalations” and many choose to to stay in existing homes. New rents are significantly higher than renewed rents, the report said.