I am an overseas investor and not familiar with district cooling. Can you provide a little background on this?

District cooling where chilled water is provided to apartments from a central facility for cooling has emerged globally as a way to provide cooling in a more environmentally sensitive way. It is known to provide great environmental benefits in the long run by using less energy and, in addition, helps in saving on the cost of electricity which is reflected in lower DEWA bills of owners or tenants.

Having said that. the DEWA savings will be offset somewhat as the overall utility charges of units that are “quipped with chilled water district cooling will be slightly higher as it involves the remuneration of the fixed operating costs of the chilling unit via a capacity charge, in addition to the application of the appropriate consumption charges.

The system has benefitted all stakeholders in a high temperature environment such as Dubai. It is more energy efficient, environmentally friendly and cheaper for the owner or tenant.

Will the commercial real estate sector witness growth comparable to that of the residential sector?

While not matching the outstanding performance of the residential sector, commercial real estate performance has
improved markedly, and is expected to continue doing so for the foreseeable future.

Demand for commercial space is highly correlated to economic performance and, with the Dubai economy:S growth in 2013, robust growth is also expected in 2014 and 2015; commercial real estate performance, notwithstanding inventory anomalies, will continue to improve.

Already, there are shortages of certain types of spatial configurations. For example, well-located Grade A space a available in floor plates of 25,000 sqft, or more is not readily available. Many multinational companies will pay a premium o have their entire operations situated on a single floor.

As with the residential sector, improvement in the commercial sector will be a little two-paced. The issue of fragmented ownership of Single floors will continue to per the effective marketing and leasing of those units, and this issue may take some time longer to be resolved.

Is there any truth to talks that Dubai real estate is heating up once more?

Dubai real estate started its recovery around the start of 2011 when investors, having faced a high degree of uncertainty resulting from the Arab Spring, sought safe harbor for their hard-earned capital.

Dubai, having successfully reached settlements with many of its debtors as it emerged from the global financial crisis, promised greater stability and opportunity and, with its established infrastructure, certainly fit the bill.

There have been other factors at play also. A modicum of global economic recovery / growth, a local economy which is growing at around 4%, a competitively affordable UAE dirham and the fact that Dubai’s property values had fallen by as much as 60% from its glory days all attracted investors from virtually every corner of the globe seeking yield and tax advantages.

Confidence has returned to the industry, demand is representative of a more educated and astute buyer (as compared to speculators), banks are more circumspect with regard to who they lend money to and for what, and equilibrium issues such as oversupply in some sectors are being managed. Add to this the emirate’s Expo 2020 bid success which leads us to believe that long-term recovery has well and truly commenced, and we are in the growth phase of a new cycle.

I own an apartment in Downtown Dubai and have been getting 6.5% net rental returns for the last 18 months. Would selling the unit now be a good idea?

Real estate anywhere is cyclical and Downtown has been on the upswing for last 2 years! We believe that the market has at least another 2 years of solid growth. You have made some impressive capital gains in the last 18 to 24 months, and I believe the property still has bit left to offer you financially.

If you have identified an alternative investment to give you a better income stream and capital return than what you expect
to receive in the next 2 years, then the right decision maybe to sell; however, if not, hold on to the property as I believe that you
will continue to receive at least a 6% to 7% net rental return

Question of the Week

Investors are always advised to find a reputable and professional real estate broker to assist them . How , in your opinion , can this be accomplished?  

For you, the investor, there are many considerations to take into account and what follows are just a few things you may want to look for:

  • Look for an experienced and passionate team. You want people who really enjoy what they are doing so they do it with dedication
  • Find an agency that exhibits a breadth and depth of industry knowledge and expertise
  • It is always better to consider getting a full service agency
  • Look for a history of innovative solutions that have delivered tangible results
  • Longevity is key. Those that survived the recent recession must be doing something right!
  • Get an agency with a strong network of corporate and industry partners. An agency that has good relationships with key industry stakeholders such as major developers and government authorities such as the Dubai Land Department, RERA, DEWA or Economic Department will be able to operate more efficiently and effectively
  • And finally, employ an agency that has received some form of industry or peer recognition. These are the hardest plaudits to get!

Leave a Reply