What is the penalty for tenants who use a residential villa for commercial activities? Can they just get permits/ licenses to legalize their operations, or do they need to move elsewhere?

If the tenant has breached the tenancy agreement or broken the law in some way. You must serve him a 30-day notary public notice delivered by courier. It must clearly state why he is being given a notice to fix the matter and the details of the matter itself.

If the tenant does not respond to the request, you can go to the Rental Dispute Settlement Centre and request an eviction order. The center will appoint an inspector to investigate the matter. Depending on the type and seriousness of the illegal activity being carried out, you may be required to appear as a witness in court. Ensure to keep a proper record of communication, interactions or dealings with your tenant, It can stand you in good stead should things go awry.

The market is said to stabilizing. Does this bode well for all, including buyers and tenants?

The market might be cooling a little, but will pick up again as the next five years are expected to see strong economic growth in Dubai. Start your property search immediately as a property investment requires the same approach regardless of the state of the market. Know what you can afford. If you  have the cash, pay for it outright, but don’t be afraid to take a mortgage. Think carefully about location. Surrounding infrastructure, construction quality, developer reputation and building amenities. Also consider the effectivity of the OA, service charges and maintenance services. Be purposeful, persistent, patient and pragmatic in your approach and you are on the way to making a sound investment decision. However. If you decide to rent, there are some great deals. With robust tenant protection legislation and an official rental index, your rights as a tenant will be recognized and your tenancy should be hassle free.

If I were to choose between a ready and an off-plan property in the same area, how do I determine if I stand to gain from the realtor’s or developer’s offer?

Off-plan property can provide you with superior capital gains by the time of completion provided the market continues to exhibit price increases beyond the completion date. Off-plan purchases are as affected by market movements as purchases of completed assets. Consider economic growth, population expansion. Projects in the pipeline and inventory position. Be smart about the “product” you buy. Look for certain property types complete with amenities and facilities in locations which will be sought in the future. Check the latest Metro route planning. If you wish to compare an off-plan purchase with a finished property purchase, conduct a discounted cash flow analysis to determine which alternative makes the most financial sense.

Why are some companies not investing in commercial/office space and instead seem to prefer renting?

If a business is committed to operating long term in Dubai, it makes sense to own an office space. As long as it is appreciating, the company balance sheet will grow stronger over time. There are still some excellent deals to be had, but as Dubai’s economy continues to grow, they are getting harder to find. We encourage our corporate clients to conduct a complete analysis to see if purchasing works for them. Location is critical. It is all about proximity, convenience and prestige that a well-chosen location can bring to potential customers, staff and business associates. There are office units in Business Bay which cost Dh95,150 per square foot, but it will be pointless if the location is a hindrance to conducting business. Identify the location first and work from there.

If the decision is to lease premises, lock it in for at least three to five years with an option to extend. Lease rates in Dubai will be on the increase going forward. Take advantage of the current rates.

Question of the Week

I am facing trouble dealing with my mortgage provider. Any other solutions or a plan B, and whom can I approach?

You need to examine if you can exit the contract before it expires and, if so, if there are penalties to be applied. It may well be that you need to pay a hefty fee to exit the contract. If there are no problems in exiting your current agreement, the answer is yes, but only if it makes financial sense. In short, you still need to do some arithmetic because you do not want to jump out of the frying pan and into fire.

There are attractive mortgage products in the market, with a few mortgage providers offering rates as low as 3.99% or even 3.49%, signaling that competition among banks of a higher market share of the market continues to be pretty intense. While 3.99% is an attractive rate, how long are you guaranteed this? Interest rates will eventually rise, and this needs to be understood by mortgagors as the attractive interest rate enjoyed today will be replaced with a higher rate in two years’ time, requiring increased payment to cover the interest rate hike. Factor this into your financial planning.

Will you need to pay any establishment fees for your new contract? With the competitive mortgage market, you should be able to have fees waived. Ensure you can pay out your new mortgage in time without any penalty. This is an unnecessary expense that you should not be burdened with.