Author: mohanadalwadiya

Only the strongest will survive

Reality Check

The number of real estate brokerages and agents who operate within them will always fluctuate in accordance with market cycles. Wherever there is opportunity, those with a desire to capitalise will readily set up operations.

This phenomenon is not unique to the real estate industry and will occur any where there is economic opportunity coupled with relatively low capital requirements to start a business, where the skill set is not perceived as being particularly specialised or rare, and where there are minimal legal, political or policy barriers to launch a commercial enterprise.

However, in any industry, especially those yet to fully mature and develop such as Dubai’s real estate, there exists a natural process that essentially eliminates the weakest entities. Competition is fierce and only those that compete by applying experience, knowledge, skills, adaptive capabilities and business acumen will survive.

Put simply, as a market or industry matures, only the strongest survive. The cyclical nature of the industry facilitates this process by testing who can best capitalise on the opportunities in a growth market and who can best sustain operations in a contractional cycle.

So the fact that some brokerages are closing their doors is inevitable as the industry continues to mature, and the well-chronicled phase of correction the Dubai market is experiencing has played a natural role in eliminating the weakest players that cannot compete.

It is actually healthy for the industry as Dubai has too many brokerages. At the time of writing, there were 2,389 brokerages registered with Dubai Land Department. This is simply too many for the industry to support during the inevitable contraction or low growth periods. And one of the key drivers of industry maturation is to have fewer, but higher quality, brokerages and agents.

The levels of professionalism, quality and customer service in the industry still require a lot of attention. While good progress has been made by the Dubai Real Estate Institute (DREI) towards elevating the standard of real estate practitioners, too many poor performers remain, effectively hindering the development of the industry into the efficient and transparent marketplace we all desire.

Obviously, progress will require the continuance of the good work already done by DREI and Real Estate Regulatory Agency (RERA), but improvements cannot be achieved by these industry bodies alone. All participants need to embrace the idea that a sector that is comprised of a body of professionals who are knowledgeable, conversant, proficient, ethical and highly motivated will play a significant role in providing sustainable and profitable growth over the long term.

Put simply, the more efficiently and effectively an industry operates, the greater the rewards will be for all. This requires better people, not necessarily more people. As industry leaders, it’s up to all of us to make it happen.

Unfortunately, to introduce a “foolproof” system is always very difficult, but there are some common sense steps that every consumer must take.

First, it is always essential to determine the brokerage is registered with the Dubai Land Department. If not, walk away immediately.

In addition, careful investigation as to the reputation, online presence and market visibility of the company should be undertaken along with a meeting at the company offices to get a feel of its size, resources and stability. In addition, ensure that any individual brokers you deal with are registered and ask for proof of identification.

Only when you are 100 per cent sure that the company looks safe, solid and trustworthy should you consider handing over any monies that may be vulnerable to misappropriation. Ensure you get a written receipt.

In some circumstances, usually where large transactions are being conducted, funds advanced may be held by third-parties such a lawyer or bank in a form of an escrow arrangement. This can help ensure that funds provided are only released when certain conditions are met, making it much harder for any party to misappropriate the funds. With the resurgent real estate market of the past three years, there has been a sharp increase in the number of brokers. However the rate of growth was highest in the first two years, slowing significantly in 2014 and now showing signs of decline. This is due to many factors including the tougher guidelines and policies that are being introduced by RERA.

There are stricter requirements due for introduction by Dubai Land Department as well. For example, the pass percentage for brokers taking the mandatory exam to renew their licenses has been increased to 85 per cent from the current 75 per cent. Emirates IDs will replace broker ID cards as part of a new smart system allowing all the details regarding an individual agent to be monitored, including when they change employers. This will ensure that only licensed brokers operate in the market. Any broker who does not officially record any transaction for six months will be warned and if no improvement is apparent within one year will be deregistered.

In addition, new brokerage firms in Dubai will be restricted from employing more than four agents. If the agency can demonstrate good performance over the first year, an additional broker can be hired.

The quest for improvement is never-ending and regulatory frameworks should always be enhanced, updated and improved to ensure the industry operates as efficiently, effectively and equitably as possible.

Expert Eye – Gulf News

Home buying process explained

Purchasing a property in Dubai is relatively straightforward yet, as with the purchase of any property anywhere, there is a series of checks and requirements that must be completed to ensure a successful and issue-free transaction takes place.

Depending on a number of factors, it typically takes between two and six weeks to complete a property transaction.

Financial advisor. The first step is to consult a financial advisor who can help you determine what you can realistically afford.

Pre-approved mortgage. You should then obtain a pre-approved mortgage, if required. This is important as it can prevent any disappointment or embarrassment later on. .

Hiring a real estate broker. Then it is time to select a registered broker or agent. A good property broker will add value by finding the property that meets your requirements, saving you money, minimising your risk, ensuring you are legally compliant and providing you with peace of mind, allowing you to make the best decision possible.

Checking out available properties. Searching for the property of your dreams can be a frustrating and time-consuming experience.

While you can delegate this to your appointed property broker, I recommend you conduct your own search as well.

It will assist you in gaining an appreciation of what product is available in your budget range, where it is located and which facilities and amenities will be able to meet your needs.

It will also show you whether the property that you are seeking is rare or whether availability is high. This is important as it will affect your negotiating ability

Background checks. Once you have identified a property that is of interest to you, your broker should complete all the necessary background checks to ensure there are no impediments to a successful sale.

This would include establishing the ownership status of the property (is it mortgaged?), the occupation of the property, the availability of the owner to negotiate and conclude the transaction, among several other factors.

Making an offer. Assuming all is in order, you may proceed to make an offer.

Memorandum of understanding. Once your offer has been accepted, you will need to sign a memorandum of understanding (MOU) which details the terms, costs and responsibilities of both parties as agreed.

  1. You will then provide a deposit of 10 per cent of the purchase price of the property.

Property valuation. If you have applied for a mortgage on the property, your bank will be informed as to your intentions and will carry out a valuation on the property. The inspection is typically completed by a third party engaged by the bank to provide professional property valuations.

‘No Objection Certificate.’ Assuming all is in order and the bank gives the go-ahead, the seller will apply for a “No Objection Certificate” (NOC) from the developer.

Make an appointment at the DLD. An appointment is then made with the Dubai Land Department (DLD) to complete the transfer. The seller, buyer, their respective agents and, if necessary, their bank representatives all attend to formalise the transfer. When all documents have been checked and details have been registered, and you have paid the seller of the property, the agency commissions, and 4 per cent transfer fee (plus Dh315) to the DLD, you will receive the title deed.

You can then start celebrating. Your dream house is now in your hands!

Property Times

Alwadiya

Now that the market has entered its correction phase, the time has come to consider whether you should take advantage of value opportunities that are starting to appear and benefit from the capital appreciation that is likely to accumulate over the coming five to seven years. For those who don’t have the cash readily available, the first step is to organise a pre-approved home mortgage. It’s always best to be in a position to make an offer for a house with your mortgage pre-approval in place rather than expect to arrange your mortgage once heavily involved in a negotiation process.

So, how to go about selecting the right mortgage for you?

You must first envisage your economic circumstances at least two years into the future and ask yourself the question … “Given my projected earning capability and desired lifestyle,  what  mortgage  payment  will  be financially feasible and acceptable to me in two years’ time?”

Why two years’ time?…  because most mortgages interest rates on offer at the moment are locked in for two years, after which you will be subject to likely interest rate increases as after an initial two year period of fixed interest rates, the mortgage reverts to a variable rate.

First of all, estimate your projected earning capability. Be real. We all hope to progress  rapidly  in  our  professional  (a.k.a. financial)  pursuits  but there are generally more people disappointed than delighted with their achievements. And, notwithstanding the latest reports of 5% salary increases for Dubai employees in 2015, history has shown that salary increases generally tend to lag cost of living increases so conservatism in estimating future cash-flows is a must.  Then there is lifestyle. Is there a new baby planned in the near future? … a new car perhaps? What effect will significant family or lifestyle events have on disposable income? Are there existing children who will need to start school in that time frame? All these events will have an effect on disposable income and thereby decrease the financial flexibility to address interest rate shocks. And finally, what is financially feasible may not be acceptable to you or your spouse. How much sacrifice are you and your partner willing to make to service your mortgage? What are you willing to do without and what lifestyle changes are you prepared to make? Once again, being honest with oneself is paramount.

So, notwithstanding correcting markets, value opportunities and cheap finance, cautious financial planning based upon realism and self-honesty is key when planning the purchase of your dream home. Your future happiness could well depend on it. As a general guide, we recommend that not more than 40% of your household disposable income be devoted towards paying down your mortgage. So once you have determined what type of repayment you are willing to commit to, then it’s a case of determining the mortgage amount you can actually afford. This will be determined by the Loan to Value ratio (LTV) you are prepared to accept, the amount of your own cash savings you are prepared to put towards the property, the tenure of the loan and the interest rate that you expect to be paying initially and well into the future.

When talking to mortgage providers, they will help you assess what mortgage is best for you by looking at a number of specific factors such as other debts (including credit cards) you may have, reliability of current and future income streams, the Loan to Value ratio that you would be seeking, the type of mortgage you prefer, your true disposable income and what other assets that you may own. Don’t be surprised if different mortgage providers  suggest  significantly  different mortgage  solutions  for  your  requirements including  repayment  options.  These will include the most common type of mortgage known as the Capital and Interest (Reducible Balance) Repayment Mortgage but you may also consider interest-only payments, part repayment and part interest-only mortgages although these types of mortgages are usually used for very specific investment purposes. Then it’s a case of deciding if you wish to undertake a fixed rate, variable rate or fixed/variable combination mortgage. Once again you need to think long term. If you think that mortgage rates are likely to rise and you would like to lock in a fixed rate of interest for the foreseeable future as long as you understand that once the fixed interest rate term comes to an end, a variable interest rate will apply. In many cases, the variable rate will be greater so planning is essential. If however, you expect interest rates to fall in the near future, a variable interest rate mortgage would make better financial sense as long as you have the flexibility to handle an increase in mortgage payments if interest rates do not follow your predictions and unexpectedly rise. There are a number of items which you should pursue as part of your mortgage negotiations. Try and have the mortgage establishment fees waived. Depending on the institution, this may save you up to AED3, 000. Also request that you are not penalised for paying the mortgage down faster or in its entirety. By law, the mortgage provider cannot charge you more than 1% of the outstanding amount or a maximum of AED10, 000, but you should try to have this stipulation dropped from your mortgage contract.

And finally, make sure your mortgage provider will allow you to utilise the equity being built up in your home as you diligently pay down your mortgage.  This equity will compound if the value of your property is increasing due to favourable economic or market factors. Some lenders will allow you to use this equity as security for further borrowing. This can be very handy if you want to make some major home improvements, buy a new car or perhaps invest in another property. When selecting a mortgage, the key is to know what you need and pick the one that best suits you over the long term.

Property Weekly

mohanad_propertyweekly

Escrow law protection

With the recent flurry of new developments in Dubai, investors and potential owner-occupiers have been asking me how much protection is provided for the funds they are paying developers in advance. The conversation invariably turns to the concept of escrow and how this legally binding arrangement provides substantial protection for investors.

In its simplest form, an escrow can be described as a legally recognised financial instrument held by a third party (typically a bank) on behalf of two other parties (typically a buyer and a seller) who have agreed to conduct a particular transaction in accordance with certain conditions. Funds are provided by the buyer and held by the party (bank) providing the escrow service until it receives formal advice that certain previously agreed obligations of the seller have been fulfilled, upon which time the seller can receive an amount specified in the agreement between the seller and buyer.

The use of escrow accounts by Dubai developers has now been mandated by law for the specific purpose of protecting the prepayments made by buyers for properties that are bought off-plan. This limits developers from gaining access to funds until certain construction milestones are completed, helping ensure developers are not misappropriating funds provided in advance for purposes other than which they are intended for.

Anybody can open an escrow account but a developer must first be registered with the Real Estate Regulatory Agency (Rera), which involves providing an expansive array of documents, ranging from details of its officers and solvency, title deeds proving ownership of the land to be developed, and no-objection certificates (NOCs) from relevant parties such as the master developer, to performance guarantees backed by a financial institution and all planning and details about the project.

Rera requires the land subject to development to be fully paid for and a title deed issued in the name of the owner. Where the owner of the land cannot register as a developer, Rera permits the owner to enter into a property development contract with an existing registered developer to develop the project on behalf of the land owner. The development contract, however, must be approved by the senior legal adviser of the Dubai Land Department to be accepted by Rera. Only when a developer is registered with Rera can it apply to open an escrow account. When selling off-plan, the developer must ensure all proceeds of the sale of the units are deposited into the escrow account and are used solely for the construction of the project. Failure to comply with the escrow law can lead to hefty fines or criminal charges, which may result in prison sentences.

Once a developer has submitted all the required documents to Rera and is granted the authority to sell units off-plan, Rera will issue an NOC to allow the developer to open an escrow account with an authorised UAE bank.

The bank that will be providing the escrow service needs to understand all the details of the underlying agreement to ensure that it acts in accordance with its provisions. In this way, the bank can help protect the buyers’ prepaid funds by referring and strictly adhering to the conditions of the agreement.

But while the introduction of escrow as a legal requirement for developers has helped safeguard the funds of off-plan investors, there are other steps that investors must take to provide additional protection.

Buyers need to make sure they are dealing with a reputable developer, regardless if it is registered with Rera. One positive effect of the global financial crisis was that many suspect developers were exposed and forced out of business. Seek professional guidance, as those in the industry know who the reputable developers are. Ask the opinion of those who have transacted business with the developer.

Ask the developer what measures have been taken to ensure the end product is built to an acceptable standard and inspect buildings already completed by the developer. Warranties and quality assurance policies should be discussed in detail. Have the sales and purchase agreement reviewed by a professional to ensure you have legal recourse should any quality issues arise.

Upon completion you have the right to inspect your apartment and report any legitimate issues to the developer for rectification. Items that can be remedied in the short term should be fixed immediately. Remember: once you have taken possession of the apartment, the developer is obliged to fix any issues that would arise 12 months following the transfer of ownership.

Expert Eye

Some strategies to help you sell your residential property quickly

So you want to sell your house. You know that the person who likes your house most is more likely to pay you what you want. So how do you get somebody to really like your house? You need to carry out some “staging” and the following tips might help:

First impressions count. How do you make sure that as a prospective buyer approaches your front door the right impression is made immediately? Brighten up the entrance by applying a fresh coat of paint, repolishing the front door, cleaning and polishing the door knocker, handle and lock hardware, cleaning pathways, and placing potted plants and shrubbery to make your guests feel welcome and you confident in showing off your house.

Tidy up. We all have our favourite belongings, many of which we don’t even use. Get rid of them. Be ruthless in your approach. Stuff takes up space, makes living areas look smaller and disorganised, and detracts from the attractiveness of your house. If you don’t need it, give it away, sell it or just trash it. In this case, less is definitely more.

Try to create space, even if it is an illusion. One way to achieve this is to move your furniture away from the walls. Couches clinging to walls simply don’t work. Float furniture away from walls; reposition it into sociable groupings.

Utilise unused spaces. Just because you may not use a space doesn’t mean that somebody else may not value it. If you have a spare room which is empty, turn it into an exercise room, a family room, a rumpus room, or a quaint library or reading room. Give the space a purpose; let the sunshine in.

Use as much natural light as possible. Allowing natural light to shine into a room makes a closed-in space seem larger. Where you cannot use natural light, try to make your home look warm and welcoming by trying some lighting design. To remedy bad lighting and make your home more inviting, increase the wattage in your lamps and fixtures. Aim for a total of 100 watts for every 50 square feet. Then install dimmers so you can vary light levels according to your mood and the time of day.

Don’t depend on just one or two light fixtures per room. Try to construct a combination of overhead, floor, table and accent lighting to create an overall pleasant ambience and make the room interesting.

Get painting. Painting is the cheapest and easiest way to give your home a new look. Don’t be scared to experiment as you can always paint again if you don’t like the colour. You could also try painting an accent wall to draw attention to a lovely set of windows. If you have built-in bookcases or niches, experiment with painting the insides a colour that will make them stand out. Don’t be afraid of black paint. The key, as always, is moderation. Use black as an accent in picture frames, lamp shades, accessories and small pieces of furniture.

Make art a feature of your house, not an afterthought. If your home’s like most, art is hung in a high line circling each room. That’s a big mistake. Vary the pattern and grouping by hanging a row of art diagonally, with each piece staggered a bit higher or lower than the next; triangularly, with one picture above, one below, and one beside; in a vertical line (perfect for accentuating a high ceiling).

Bring your garden inside. Well-staged homes are almost always graced with bountiful fresh flowers and interesting floral displays. Take clippings of branches or twigs and put them in a large vase in the corner of a room to add height. Adorn dead space with greenery or interesting and intriguing arrangements. Make each piece different and unique in its form.

Finally, get creative.  It’s your responsibility to make people fall in love with your home. Do whatever it takes and you will be rewarded.

Ask the agent

Why is it that the cost of renting a good but not-so-new apartment in some areas remains expensive? The rates in these areas didn’t fall as much as in other places during the recession, and when rents increased, they increased in these areas fast. How come?
The value of a particular location is usually derived from the levels of lifestyle convenience, pleasure, harmony, security, future economic value or even status that can be derived from the property. Whether it is an outstanding view or proximity to dining, entertainment, business districts, schools, hospitals or public transport, the perceived benefits that a location may bring to a prospective tenant can account for up to 90%. Locations close to the beach and entertainment areas as well as properties located close to/within Downtown Dubai or the business district will command a location premium.
Most potential tenants consider a view as a key feature for their home to be enjoyed.

My apartment is ready. When I stated that I would like to inspect the apartment, the developer said they had already completed their inspection. ls this right?
Technically, once an official Completion Certificate has been issued for the building by the Dubai Land Department (DLD), it is deemed ready for handover and your contractual obligations regarding transfer of ownership remain. You have the right to inspect (snag) your apartment and report any legitimate issues to the developer for rectification. Items which can be remedied in the short term should be fixed immediately; and remember, once you have taken ownership of the apartment, the developer is obliged to fix any issues that may arise for a full 12 months following the transfer of ownership. I strongly recommend you engage a professional to do this on your behalf.

How does one become a shrewd property investor? What qualities or skills are important?
Investing in property is all about recognizing and capitalising on opportunities that are consistent and supportive to your overall wealth accumulation objectives. In order to do this, you must have some industry knowledge, able to communicate intelligently with the experts.
You must also have a clear understanding of what role your property portfolio will play within a larger diversified portfolio. The more skillful you are at conceptualizing your wealth generation schematic, the greater is your likelihood of generating successful strategies to grow your wealth.
You also need to be able to identify, engage and work with a professional in the industry. As astute, skillful and knowledgeable as you may be, a reputable, experienced and client-focused full service agency will greatly enhance your level of success. Choose wisely. Don’t think the cheapest will be good enough as this is rarely the case.

I own a third of a floor of office space with two other parties sharing the balance. We couldn’t find reputable tenants at a reasonable lease rate. Any advice?
The issue of multi-strata ownerships, particularly when looking at office space, would be a concern as prospective tenants do not want to negotiate or deal with multiple owners. One solution requires the willingness and commitment of all owners to form a type of cooperative or rental body. Under this concept, the owners would commit their space to a “rental pool” to offer to prospective tenants. This pool would be managed by a third party appointed by the owners so that tenants requiring space owned by more than one person would be dealing with one central body representing those owners, and all owners benefit from the rental receipts garnered from leasing “pool” space. This will provide superior returns.

Question of the Week
I am considering hiring a new property management team for my mixed-use property as I was receiving a lot of complaints about the old one. What things should I be on the lookout for since this is the first time I am changing property managers?
A proficient and professional property manager will make your investment work harder for you.
The property manager should be able to provide you with a complete and realistic property assessment, strategy and activity plan designed to harness the true financial potential of your property. Considerations start with your objectives and requirements and will include history, current and projected future market factors and risk factors. The scope of consideration should be global, regional and local in nature and your property manager should have a good understanding of economic factors, societal trends, industry knowledge extending to policy and regulation, finance and market dynamics.
Your property management agreement should stipulate that you receive an extensive range of services including marketing, vetting tenants, executing rental agreements, among others.
Choose your property manager carefully. Ask for referrals and call some existing clients. Remember, it’s your investment, and you need to ensure it’s in good hands providing you with the best returns.

Managing through cycles

The fact that the property industry is notoriously cyclical is widely known yet viewed differently. For some, cycles represent a form of volatility that enables the shorter-term investor to profit from market fluctuations as they occur. In extreme circumstances, this would be considered to be speculating and I know as many people who have lost money speculating as those who have gained.

Yet investors with a clear strategy and long-term plan simply accept, fore-see and plan for cycles in the industry. They look for longer-term sustainable growth rather than take additional risk by trying to accumulate wealth through taking advantage of shorter term spikes or dips. They are true managers of their property portfolios and have a much greater chance to succeed.

Investing in property has a very simple purpose: to create wealth over the long term. However, your property investment portfolio needs to be nurtured, maintained and managed to ensure its wealth-creating potential and capabilities are achieved as it rides the inevitable cycles that occur in the industry. Adopting a short-term vision and reacting unreasonably to inevitable industry slowdowns will lead to underperformance in the longer term.

Consider one of my clients. As the owner of a portfolio of apartments purchased early 2011, the past four years have been extremely lucrative for him. He asked whether to sell his property assets as the market had slowed. Rather than make a hasty decision that might be regrettable, I constructed a recommendation for his consideration.

An easy decision would be to sell his entire portfolio for a substantial profit, but the question remained: where should his newly gained wealth be invested? There was no answer as there was no plan.

We found that by retaining his portfolio, my client would continue to receive an average of 6.8% nett rental returns per annum on the adjusted value of his properties over the next five years. Notwithstanding the recent cooling of the market, we estimated that he could expect a capital growth of at least 6% per annum over the next five years for an estimated nett total return of 12% per annum.

The review included careful analysis of current maintenance requirements, future capital works, market factors, regulatory developments, industry forecasts and trends, alternative opportunities, risk factors, and relevant future events.

When I asked my client what alternative investment could provide the same return without taking on greater or excessive levels of risk or incurring new investment transaction costs, none could be identified.

The example of my client clearly illustrates that property portfolios require careful management. We all know the market has cooled, but this is hardly a reason to make rash decisions without doing proper analysis.

Wherever you look around the globe, yield and total returns are getting harder to find and the value of established property portfolios with good occupancy levels and projected tenant retention are increasing in comparative value all the time. The investors who hold and nurture their existing property asset portfolios will do very well over the next five years, particularly those who have diversified their holdings to include some of the more affordable asset types.

Not everybody is comfortable with managing a property portfolio. However, there is expertise available. You should consider engaging a good property manager who will ensure that you maximise returns.

Proper management is essential and you need to ensure your portfolio is in good hands.

Ask the agent

What document do I need to provide so I can arrange for an agency to market and sell my villa?

You need to provide a proof of identity, usually a passport or Emirates ID, so we know who we are dealing with. The original sales and purchase agreement is required so we can verify with the Dubai Land Department that we are dealing with the bonafide current owner.

If the property is leased, we need the details of the lease agreement including status of outstanding payments and payments for service charges or owners association.

We will consult with you and prepare a letter of engagement containing the details of what you require from us.

If you are located overseas and would like us to represent you, you need to provide a power of attorney which will detail the extent to which you would like our representation in the various facets of marketing and selling your property.

 

What fees can I expect to pay to have my apartments managed by a professional property manager?

It varies by provider and is anywhere between 3% and 8% of the rental receipts. Some will have an administrative fee as well. Understand what you expect from your property manager as the depth and breadth of services vary greatly. Negotiate a fee structure based on your requirements. Ask for referrals and follow up with some existing clients to get an appreciation of levels of efficiency and professionalism. A competent property manager will provide an assessment, strategy and activity plan designed to harness the true financial potential of your property. Considerations include history, current market factors and risk factors. Whether they be global, regional or local in nature. Depending on the size and complexity of your portfolio, you should have, as a minimum, a rolling five year activity plan which covers pricing and marketing, tenant management and policy, cost management and maintenance schedules.

 

How can I make my property highly marketable? I am trying to rent out some office space.

Think like a prospective business owner by developing a unique selling proposition (USP). Business owners think of their customers, staff and business associates. Location is critical. It is all about proximity, convenience the prestige that a well-chosen location can bring.

It seems logical, but it is amazing how many times owners do not present their leasable assets in mint condition. A little money spent on painting, repair and general cleaning goes a long way.

Business operators also think about the initial financial burden of office fit outs. Think about how you can entice and retain a long-term tenant by offering to assist with fit-out costs.

Offer financial inducements for longer-term lease contracts. Retaining a responsible long-term tenant in the best way maximizes the potential return on your assets over the long term.

 

When is the best day to conduct an open house? What preparations do I need to make?

Weekends, particularly Saturdays, are best because potential tenants and buyers are free then. Be prepared to have your house open for as long as possible to get as many people to see your home in a 24 or 48 hour period.

Make sure the outside of the house is neat and tidy and, if required, the paintwork or exterior of the house has been touched up. The garden should be presented in mint condition with lawn areas carefully manicured, trees and shrubs trimmed, patio areas swept clean and outdoor furniture wiped free of dust and dirt. Treat oil stains in parking areas.

The interior of the house must be clean and properly maintained with all defects attended to and be free of any odors. Consider subtle air deodorants to provide a pleasant overall ambience. Make sure that your home is cool, bright and welcoming, and that you have some refreshments available for your guests.

 

Question of the Week

 

I want to modify and extend my villa. What are the documents required/procedures to be followed when it comes to making alterations/additions to the original building construction?

You will need to establish that the amendments that you plan on doing do not threaten the structural integrity or safe habitation of your villa by you or by future owners should you decide to sell it one day.

Therefore, you should prepare the architectural and MEP drawings for the proposed concept. These would need to be viewed in conjunction with the architectural and MEP ”as built drawings” by a number of different authorities and regulatory bodies to ensure that the proposed designs will be structurally sound and meet all the required building codes and regulations.

You will need to obtain NOCs from your owners association, the zoning authorities, Civil Defense authorities and, in some instances, your project developer. You may also require NOCs from DEWA regarding electricity and water supply.

If renovations are extensive, you may be required to have the work inspected by the Civil Defense and the Building Department.

In the majority of cases, your architect or contractor can arrange for all approvals on your behalf and I Suggest you engage the professionals.

 

Ask The Agent

I am currently dealing with a real estate broker who also wants to be my property manager. Can a broker be a property manager?

The best property managers I have encountered all cut their teeth as successful broker. To be an effective property manager, you need to be able to provide your clients with a complete and realistic property assessment, and strategy and activity plan design to harness the true financial potential of your property. If you expect to provide the services expected of a property manager, such as vetting tenants, executing rental agreements, handling maintenance issues, conducting inspections and provide regular financial statements, then the “on the ground” knowledge accumulated by being a broker will be beneficial, Brokerage is an important learning platform to become a professional property manager, which is not to say that a property manager will necessarily make a good broker.

 

There has been a lot written about the lack of affordable properties in Dubai and the increased demand for such type of property. This sounds like a good investment opportunity to me. Would you agree?

We are encouraging everyone to invest in this segment as there are some great opportunities. An excellent example of a high-performing yet affordable development is Skycourts whose apartments. Have seen excellent capital growth.

Another is Queue Point, where you can invest in an apartment and retain ownership for at least five years to benefit from superior capital growth.

Aside from the two Dubailand projects, Dubai Silicon Oasis also offers a wide range of residential options, from villas to apartments.

Dubai investments Park has a variety of residential offerings such as apartments and townhouse, and even staff housing.

Of course, International City and Discovery Gardens always figure in the “affordable” list.

 

Should I invest in commercial real estate in Dubai?

Things are looking very promising for new business in Dubai and opportunities exist for commercial real estate investors to benefit accordingly. As Dubai seeks to grow economically, readily available office Space is one of the important factors that new enterprises will consider.

The amount of infrastructural, development and economic initiatives, culminating in the hosting of the World Expo in 2020, is indicative of the government’s commitment to economic progression. Office rental returns are staging a strong recovery. Already, there is a relative shortage of Grade A large floor-plate, single owner space favored by multinational companies.

Nevertheless, there is still a considerable albeit shrinking vacancy of around 23% which represents good opportunities for value it purchases providing strong cash flows.

 

I am new to Dubai and looking to settle for the medium term. While I have an extensive investment portfolio, I am new to investing in property. What advice can you give?

Investing in property is all about recognizing and capitalizing on opportunities that are supportive to your overall wealth accumulation objectives. You must have a clear understanding of what you are trying to achieve and what role your portfolio will play within a larger diversified portfolio.

You must have some knowledge about the investment you are getting. You may not be an expert, but you need to be able to communicate intelligently and knowledgeably with the experts.

What is your source of finance and where do the greatest risks lie in the event of an economic downturn? How liquid might you need to be? All these need to be addressed.

You also need to identify and work with a professional in the industry. Selection of the right agency is a skill in itself. Choose wisely. Remember, cheapest is not always the best.

 

Question of the Week

 

I am considering entering into a lease-to-own contract with a developer for my first apartment. Do you have any advice?

In today’s market, lease-to-own schemes make a lot of sense as the help manage any uncertainty that the potential purchaser may be experiencing. Buy an apartment or villa is a big commitment, and lease-to-own schemes can make it a lot easier from not only a financial point of the view but also from an emotional or peace of mind point of view.

By entering into such an agreement, you are effectively allowing yourself to “buy some time” before committing to the final purchase. The Major advantage of this scheme is that during your leasing period, you are effectively building some equity which can be utilized. In essence, if you choose to eventually purchase the unit, the money which would have been lost forever as a rental expense is being utilized as capital towards your new home which, if you are taking out a mortgage, will also provide savings on interest charges.

In our opinion, this scheme, which essentially makes buying a new home easier, has been massively underutilized.

Projects which have offered this scheme include the Greens, the Andalusia Collection at The Villa project and Sulafa Tower at Dubai Marina. All of them have done extremely well because of this scheme.

The Dubai expatriate’s dilemma

To buy or to rent? Find out how to use your money to increase your wealth

 

It’s not hard to see why expats choose Dubai. It has a lot of attractions: beaches, restaurants, shopping, outdoor activities… even snow skiing! Dubai boasts a modern infrastructure and is regarded by many as one “of the safest places for families to live in the world and is located advantageously for excursions to Europe, Asia and Africa.

As the emirate has grown and matured, the average tenure of expats living here has been on the increase. This is due to a number of reasons, principal among them is the recognition of employers that three year employee tenures are inefficient and the recognition by expats that Dubai is actually a very good place to live.

“If you cannot find a property immediately that will satisfy your requirements, do not settle for less. Be persistent and patient in your approach.”

With many expats now considering living in Dubai for longer, an increasing number are contemplating on purchasing a home instead of renting. For many, making this commitment can be a daunting respect and decision making will often become clouded. There are many things for the uninitiated to consider such as budgeting and finance, asset type, area, fair values and timings.

So, as an expat, why buy your home instead of renting it? Buying your home is a positive step towards establishing your financial security by building your equity or “net worth.” Owning property allows you to change the application of your hard earned dirhams from covering an expense which offers you no financial return to investing in an asset which does. In a way, it’s a forced form of saving which will reap benefits.

Conversely, paying rent actually detracts from your ability to build net worth because not only are you paying out money for no financial gain, you are also at the mercy of rental inflation. This is a problem because you are consistently being asked to pay more while your salary increases are lagging behind, eroding your ability to build wealth. By owning your home, inflation is working in your favor because, in all likelihood, your property is increasing in value. This allows you to build your net worth through capital appreciation.

The fundamentals of buying real estate in Dubai are no different from those elsewhere in the world.

First of all, be clear as to why you are investing in real estate. Whether it’s to provide the family with a home, generate a steady stream of income or build equity, make sure you are clear about your expectations and quantify them wherever possible. Plan for the long term as the industry is cyclical yet very rewarding.

Also ensure that you know what you can afford. If you have the cash, pay for it out right; however, don’t be afraid to take out a mortgage. At least your repayments are building equity, not being lost forever on rent.

Then it’s as case of finding .the right property. A reputable real estate brokerage can assist you in doing this, but make sure that you conduct your own research. It’s a big decision you are making. You need to make sure you take the responsibility.

As always, stick to the basics. Think carefully about location, building quality, developer reputation, completion status and quality of infrastructure and building amenities Properties close to the beach, with a golf course view or are part of an iconic development are a good place to start. If you can also have close access to the Metro, even better. These locations are likely to provide a superior appreciation in capital value.

“Also consider the effectivity of the owners association, service charges and the quality of maintenance services. Facility management is more important in determining the value of buildings and it will have an effect on the long term value of your investment.

Finally, think clearly and rationally. If you cannot find a property immediately that will satisfy your requirements, do not settle for less. Be purposeful, persistent, patient and pragmatic in your approach and you are well on the way to making a very sound decision. “