Gulf News

Rental Yield Tightening?

Many people misunderstand the role of the property manager, thinking that the role does not extend beyond the collection and remittance of rental receipts and acting as a buffer between the landlord and the tenant. Little do they realize that a good property manager will generate a greater return from their property portfolio and enable a long term portfolio strategy to be realized. So what should you look for in selecting a professional to manage your property(s)?

Well, first of all, you need a professional who is experienced in the market. Not just any market, but the Dubai market. Typically, if you find somebody with at least 10 years of experience, you would find somebody who has survived the global recession, and that should provide a reasonable indication that they are in the business for a long time and that they had the skills to navigate and survive Dubai’s property slump. Many didn’t.

A competent property manager will provide a whole host of services for you but the most important is the development of a Property Portfolio Strategy. Your chosen professional must be able to articulate and present his thoughts after conducting a thorough assessment of your personal situation and property portfolio. He must be able to provide you with a credible strategy and activity plan which is designed to harness the true potential of your property and provide you with the maximum rate of total return. It is essential to have a well thought out strategy for your property portfolio if you are to maximize your returns.

Not just anybody can formulate a credible and implementable strategy. It requires years of expertise and a fundamental understanding of what makes Real Estate such a worthwhile and superior investment. A true professional will have a strong knowledge base on topics including industry history, current market factors and trends, risk factors, and the likelihood of relevant future events that will affect the performance of your property investment. This knowledge should span global, regional and local landscapes and will require a good understanding of economic factors, industry knowledge extending to government policy and regulation, finance and market dynamics.

Forming a strategy is one thing, but being able to bring the strategy to life is quite another. You will require an activity plan which will include details of pricing and marketing, customer relationship management and tenant management and policy for the entire portfolio. Essentially, this area of expertise is related to the “topline” or revenue generation and management of the property.

Equally important is the cost management and maintenance supervision of the property. Many times, I have seen excellent “topline” performance being eroded due to poor operational and maintenance cost controls.

Managing your property portfolio will also require proper performance measurement, communications and review schedules, and status reporting and financial statements. You should always seek examples of these elements as transparency and candid performance appraisals are essential for managing your portfolio correctly by addressing shortfalls to objectives, issues requiring addressing and opportunities for performance improvement, in addition to your peace of mind.

You also need to choose a property manager who you can work with and who, you believe, has your best interests at heart. Your property manager must be a customer centered and, unfortunately, in this business, this is not always the case.

There is no point entering a business relationship that is lacking in mutual trust and respect. You must have confidence in his ability to manage a business… your business… which just so happens to be a property portfolio. As with all investments, but especially investments in property, there will be good times and challenging times. There is no such scenario as “set and forget”. It doesn’t exist. If you do not respect the manager you have appointed, the relationship will not survive the challenging times and you will need to go through the whole process of finding a replacement. So take your time but invest your time to your benefit. Be sure to ask for referrals and call some existing clients. Seek out success stories. Ask to see examples of client reports and so you can have an idea of their completeness, continuity and timeliness. Ask your property manager carefully thought out questions to enable you to gauge the depth and breadth of knowledge that he possesses.

Ensure that the organization you are dealing with has the resources to support the manager of your portfolio. In these times of eliminating overheads, individual performance can be inhibited because of a lack of organizational support. You should ask to meet the team.

Finally, remember, it’s your investment, and you need to ensure it’s in good hands providing you with the returns you expect with as little hassle as possible. Once you appoint a property manager, your ultimate return on your investment is largely in his hands. Choose wisely.

Managing your property portfolio will also require proper performance measurement, communications and review schedules, and status reporting and financial statements.

The Essential role of property asset managers

The role of the property asset manager is misunderstood by many, with the majority of property investors and other industry participants thinking that the role does not extend beyond the collection and remittance of rental receipts and acting as a buffer between the landlord and the tenant.

Little do they realize that a good property asset manager will generate a greater return from a property portfolio and enable long term portfolio strategic objectives to be realized.

Any investor in property would benefit from a professional property asset manager but it is essential to know what to look for in selecting a professional to manage their property(s)?

Astute investors understand that you need a professional who is experienced in the market. Not just any market, but the Dubai market. Typically, if you find somebody with at least 10 years’ experience, you will have found somebody who has survived the global recession, and that should provide a reasonable indication that they are in the business for the long term and that they had the skills to navigate and survive Dubai’s property slump. Many didn’t.
Strategic Approach. A competent property asset manager will provide a whole host of services for the investor but the most important is the development of a Property Portfolio Strategy. The professional must be able to articulate and present his thoughts after conducting a thorough assessment of your personal situation and property portfolio. He must be able to provide you with a credible strategy and activity plan which is designed to harness the true potential of your property and provide you with the maximum rate of total return. It is essential to have a well thought out strategy for your property portfolio if you are to maximize your returns.
Knowledge and Understanding. Not just anybody can formulate a credible and implementable strategy. It requires years of expertise and a fundamental understanding of what makes Real Estate such a worthwhile and superior investment. A true professional will have a strong knowledge base on topics including industry history, current market factors and trends, risk factors, and the likelihood of relevant future events that will affect the performance of your property investment. This knowledge should span global, regional and local landscapes and will require a good understanding of economic factors, industry knowledge extending to government policy and regulation, finance and market dynamics.
Planning Expertise and Ability to Implement. Forming a strategy is one thing, but being able to bring the strategy to life is quite another. A true professional will provide an activity plan which will include details of pricing and marketing, customer relationship management and tenant management and policy for the entire portfolio. Essentially, this area of expertise is related to the “topline” or revenue generation and management of the property. Equally important is the cost management and maintenance supervision of the property. Many times, I have seen excellent “topline” performance being eroded due to poor operational and maintenance cost controls.
Organizational Ability and Communication Skills. Managing your property portfolio will also require proper performance measurement, communications and review schedules, and status reporting and financial statements. Investors should always seek examples of these elements as transparency and candid performance appraisals are essential for managing your portfolio correctly by addressing shortfalls to objectives, issues requiring addressing and opportunities for performance improvement, in addition to your peace of mind.
Customer Centricity. It’s important to choose a property manager who you can work with and who, you believe, has your best interests at heart. Your property manager must be customer centered and, unfortunately, in this business, this is not always the case.
There is no point entering a business relationship that is lacking in mutual trust and respect. The investor must have confidence in his ability to manage a business … the investor’s business… which just so happens to be a property portfolio. As with all investments, but especially investments in property, there will be good times and challenging times. There is no such scenario as “set and forget”. It doesn’t exist. If you do not respect the manager you have appointed, the relationship will not survive the challenging times and you will need to go through the whole process of finding a replacement.
A History of success. The investor should be sure to ask for referrals and call some existing clients. It’s important to seek out success stories and ask to see examples of client reports to assess their completeness, continuity and timeliness. The investor must ask the property manager carefully thought out questions to gauge the depth and breadth of knowledge that he possesses.
Finally, it’s essential that the organization the investor is dealing with has the resources to support the manager of the portfolio. In these times of eliminating overheads, individual performance can be inhibited because of a lack of organizational support. The investor should ask to meet the team.

Choose Wisely The investor must ensure that the property asset portfolio is in good hands providing expected returns with as little hassle as possible. But the investor must realize that once a property manager is appointed, the ultimate return on the investment is largely in his hands.

WHAT TO FACTOR INTO SPACE CALCULATIONS

If you are planning on expanding your business or simply relocating from your old office, the first major task at hand is determining how much office space you will require for your enterprise. Now, this is no easy task, and there are many considerations to be made as the decisions that you make at this stage can have a serious impact on how efficiently and effectively you will be able to conduct your business.

How so? Because your new office space will have a direct effect on your staff morale and productivity, impressions made on your new or potential clients or visitors to your office, and on your overall brand image as well.

When estimating space requirements, you first need to understand how you plan to arrange your employees so as to promote efficiency and productivity through the application of clever office spatial design. You must appreciate that allocating office space and configuring seating plans is very political, and egos within your staff can be either inflated or deflated depending on what you decide to do. So tread carefully, and make sure you can logically justify every decision that you will make.

For a start, everybody will have an argument as to why they must have their own office, or why their office needs to be bigger. Reasons, some valid and some not, will range from the need to keep confidential data and material away from prying eyes to the necessity to hold confidential meetings, to requiring a quieter work environment so as to concentrate better. Typically, its ego that’s the real driver behind such requests.

The easiest way to allocate work space is to do so on the basis of seniority requirements.

For example, I would generally allocate an office (or cabin) for the president, VP(s), CEO, general manager, directors, and anybody who deals with particularly sensitive information such as personnel managers or legal staff. The actual size of the offices is a function of seniority, how much of an impression you wish to make on clients, how efficient your office is in utilizing digital data storage, how many meetings are conducted with your clients or staff, and the size of the meetings that you will periodically conduct.

Depending on the above considerations, I would usually recommend to my clients that the offices should range in sizes from 40 sq.m. for presidents, 25 sq.m. for VPs to 15 sq.m. for general managers. Obviously, these sizes will vary according to business size and type, and you may find that many larger corporations actually will have guidelines as to what positions within the company warrant an office and how large it should be.

Cubicles or workstations tend to be of a more uniform size except where the organization employs team leaders or supervisors.

Employees such as secretaries, customer service reps, accountants, programmers, data entry, clerks and engineers generally require around 12 sq.m. to 15 sq.m. depending upon document storage requirements and desktop hardware such as computer screens, laptops, printers, scanners and telephones.

Estimating document storage is a critical factor. While every employee will probably require their own document filing cabinets, many businesses also need to provide for central file or document storage areas. This is one area where inefficiencies in data storage by employing digital storage capability can cost a company dearly by paying for, what in some situations may be premium space to simply store files which may be referred to only in emergencies. This is extremely inefficient, and alternative solutions such as digital data storage or offsite warehouse storage should be explored.

There are many additional spatial requirements that also need to be considered. Reception areas will logically depend upon the number of receptionists employed, but also be influenced by the number of visitors are typically received, and whether you utilize the reception area as a waiting area as well.

Conference and meeting rooms are always an interesting topic of discussion. It always seems that there are never enough, and many companies have quite elaborate online booking systems for staff to reserve the meeting room of their choice. Rule of thumb would suggest that a conference room should be 5 sq.m. with 2.5 sq.m. allowed for each seated person. Obviously items such as projection equipment, screens, sizes of conference tables and spare seating would need to be factored in before a final size could be determined.

Depending on the size of the organization and the actual amount of mail traffic expected, the mail room can be anywhere between 15 sq.m. to 30 sq.m. The process for distributing mail will play a large part in determining space requirements as systems utilizing “pigeon holes” can be quite space intensive.

Lunch and break rooms are very important for employee morale and can add to productivity as well as they often promote teamwork and cross-functional dialogue. Make sure that you provide a comfortable space for your employees by allocating at least 7 to 10 sq.m. plus 2.5 to 3 sq.m. per person seated.

Finally, do not get caught in the trap of outgrowing your premises halfway through the lease period. Calculate your future space requirements based upon your projected growth plan. Many organizations neglect to factor in the possibility of growing by at least 25% over the ensuing 5 years, and find themselves desperately short of space with no convenient place to expand to. While you may have unutilized areas in the initial period of the lease, this is far cheaper than having to either terminate a lease to relocate or have a second office situated in a different address.

القطاع العقاري يبدأ صياغة ملامح ما بعد كوفيد ـ 19

واجه الاقتصاد العالمي في ظل تداعيات أزمة كورونا انكماشا اقتصاديا مما كان له أثر كبير على شتى القطاعات ولاسيما القطاع العقاري. و يرى الرئيس التنفيذي لشركة هاربور العقارية والمحاضر في معهد دبي العقاري، السيد مهند الوادية، أننا نعيش حقبة جديدة وواقع جديد يمر به العالم بأكمله ويصنف اقتصاديا بمصطلح ” البجعة السوداء”، وهو حدث له تداعيات كبيرة على المدى الطويل وليس لأي قطاع مناعة ضد أي ازمة من هذا الحجم.
فعام٢٠٢٠ هو عام الشجعان بالنسبة للقطاع العقاري، والمرحلة القادمة تتطلب شجاعة من قبل جميع العاملين واطراف المعادلة العقارية من اصحاب القرار لسن قوانين لدعم قطاع العقارات بطريقة مبتكرة ، تخدم العاملين والمتعاملين بالقطاع. وايضا تقديم وابتكار حلول من قبل المطورين العقاريين و موفرين الخدمات لاستقطاب مستثمرين بطريقة ذكية تتماشى مع الوضع الراهن

وأضاف الوادية: قد تأثر قطاع العقارات بهذه الأزمة، وبالأخص قطاع الإيجارات. فقد تراجعت أسعار الإيجارات وشملت تسهيلات ومبادرات من قبل عدد كبير من الملاك المؤسسيين والأفراد تضمنت إعطاء أشهر إيجار مجانية أو تسهيلات في الدفع أو تخفيض للقيم الإيجارية للمحافظة على المستأجرين وتقليص نسب إخلاء المستأجرين. أما أسعار البيع لم تنخفض بنفس الوتيرة، لانه اذا نظرنا الى قطاع العقارات وأدائه خلال العقد الماضي في دبي، رأينا الأزمة المالية العالمية عامي ٢٠٠٨ و ٢٠٠٩. حيث حدث انخفاض حاد بالأسعار سببه حدوث تضخم و فقاعة عقارية سبقت الأزمة. تلاها هبوط حاد بالاسعار في عامي ٢٠٠٨ و٢٠٠٩، وظل العقار في وتيرة تصحيح لغاية نهاية عام ٢٠١٣، حين فازت دبي باستضافة معرض إكسبو دبي، فأصبح هناك صعود مفاجئ بالأسعار بنسب تصل ل 30% والتي تعد نسبة غير مستدامة تزامنت مع طرح مشاريع جديدة، تلاها حركة تصحيح للارتفاع السريع الذي شهده القطاع ومن ثم مر القطاع بمرحلة تصحيح وهدوء تدريجي خلال الأعوام التالية.

لكن الأزمة الحالية من غير المتوقع أن تسبب هبوط حاد مماثل للذي شهده القطاع في خلال الأزمة الاقتصادية العالمية لان أزمو كوفيد 19 لم يسبقها أي فقاعة، حيث أن القطاع العقاري كان يمر بمرحلة تصحيح تدريجي على مدى عقد من الزمن وصلت فيه أسعار العقارات لمستويات منخفضة لا توفر مجال لانخفاضات مفاجئة.

كما أنه يجب أخذ بعين العتبار أنه تم تطوير البنية التحتية القانونية والتشريعية في العقد الماضي بجهود جبارة من أصحاب القرار في الدولة ودائرة الأراضي والأملاك، لحماية جميع اطراف المعادلة العقارية من مشترين مستثمرين ومطورين و مهنيين عقاريين، والآن نحن بمرحلة نضوج قانوني لم يشهده القطاع من قبل، فقد تم طرح قوانين جديدة لتحسين قطاع العقارات منذ عام 2008. ومؤخرا تم تعديل السياسات النقدية والمالية التي طرحتها الحكومة بدولة الإمارات العربية لتعزز الاقتصاد بطريقة تطمئن الجميع، لذلك نرى أن آثار أزمة كوفيد 19 وتداعياتها الأثر الاقتصادية أقل بكثير من دول أخرى. فقد قررت الحكومة تأجيل أقساط الديون المتعثرة مدة 3 أشهر وإيقاف تنفيذ الإخلاءات الإيجارية والإجراءات التنفيذية وإعفاء رسوم تجديد التراخيص والأنشطة التجارية ورسوم حماية البيانات الشخصية وإعفاء رسوم إصدار وتجديد تصاريح العمل المؤقتة وتخفيض رسوم المرافق. وكذلك خطط التحفيز التي أطلقتها الحكومة، وخطة الدعم الاقتصادي للمصرف المركزي، إلى جانب حزمة الحوافز الاقتصادية التي ساهمت في توفير المرونة الكافية ومساعدة الاقتصاد ككل وقطاع العقارات على الاستجابة للأوضاع الراهنة.

وقد أصبح التوجه الآن بعد حدوث هذه الأزمة للحكومة الذكية والالكترونية، وبما أن حكومة دبي توجهت لذلك منذ فترة طويلة، لم يكن هناك عقبة لحدوث التداولات العقارية في فترة الحظر ، وتم إدراج الكثير من التداولات العقارية ولكنها انخفضت بنسبة ٪٦٠ في تلك الفترة. وقد قامت شركتنا هاربور العقارية بمعاملات عقارية منذ بداية العام بقيمة تتجاوز ١٥٠ مليون درهم ، مما يأكد أن هناك العديد من المستثمرين يقومون بشراء العقارات في ظل الأزمة الحالية. وتوفر البنية التحتية التكنولوجية في دبي بشكل كبير ساهم في استمرار التداولات العقارية عن بعد عن طريق الانترنت. ، فالتحدي الحالي هو التعايش مع هذه الفترة بطريقة ذكية، والمستثمر الذكي يقتنص الفرصة المناسبة بالوقت المناسب. وحالياً ترجع دبي وقطاعاتها تدريجياً للحالة الطبيعية، فمنذ تم فك الحظر الأسبوع السابق ارتفعت في شركتنا هاربور العقارية نسبة المهتمين بالشراء بنسبة ٪١٠٠.

وسيتم كذلك تغير العرض والطلب، فمثلا سيستمر العرض علي القطاع السكني، لان السكن والعمل أصبح حاليا من البيت، فسيزداد الطلب على البيوت. ومن المتوقع أن يزداد الطلب أكثر على بيوت اوسع بإطلالات اجمل مع غرفة اضافية لتكون مكتب للعمل عن بعد وحدائق وبلكونات واسعة. وبالمقابل من المتوقع أن يتباطأ الطلب عللى قطاع المكاتب ومحلات التجزئة، حيث شهد التسوق انلاين نمو كبير. كما من المتوقع أن يستعيد قطاع الفندقة نشاطه تدريجيا مع تركيز الطلب على الفنادق الراقية والتي تتبع إجراءات السلامة وقد يؤدي ذلك الى تباطؤ في الطلب على بيوت للعطلات. ومن المتغيرات التي شهدها القطاع هو حركة الهجرة الداخلية حيث ينتقل العديد من المستأجرين من الشقق ذات القيمة المرتفعة والموجودة في قلب دبي للمناطق الخارجية التي توفر مساحات أكبر وبأسعار أقل مع أسلوب حياة أكثر تناسبا مع الواقع الجديد وبالأخص وحدات فلل التاون هاوس.

في الفترة الحالية، البقاء سيكون للأكثر ابتكارا وتعايشاً مع واقع السوق الجديد. وتأجيل معرض إكسبو دبي سيفتح آفاقاً جديدة أمام المطورين، فإلى جانب أنه سيعطيها متنفساً للتعافي من الأضرار التي لحقت بهم بسبب الأزمة الراهنة، سيمنحهم فرصة لاستكمال وإنهاء مشاريعهم المخططة للعامين الحالي والمقبل.

انصح المطورين بتوفيرعروض تتماشى مع احتياجات القطاع الحالية والمستقبلية عبر خطط دفع ميسرة وكذلك عبر تقديم قيمة حقيقية وخدمة عملاء استثنائية ليستمروا في ادارة شركاتهم بطريقة ربحية، مع الحرص على توفير حلول مبتكرة، لا تعتمد على كثرة الاعلانات او تخفيض الأسعار بل بتوفير قيمة حقيقية على المال من خلال طرح خطط دفع ميسرة، واعفاء المشتري من رسوم الخدمة المرتفعة ورسوم تسجيل العقار وعقارات مصممة بشكل يتناسب مع احتياجات الطلب الجديدة. فلدينا في هاربور العقارية مشاريع لفلل تاون هاوس جاهزة مع خطط دفع تصل لعشرون عاماً وبأقساط ثابتة بدون بنوك.

ورغم أن هذه الفترة لها جانب سلبي، لها جانب ايجابي أيضاً، فهي فرصة لاقتناص شراء عقار باسعار توفر قيمة حقيقية على المال، حيث نرى هذه الفرص في وقت الأزمات، فالثروات تخلق في وقت الأزمات ، والعقار يستثمر فيه للمدى الطويل لذا يجب شراؤه بالوقت المناسب، والآن هو وقت مناسب للشراء سواء للاستثمار أو السكن. وتعد كذلك فرصة لسن قوانين لدعم قطاع العقارات بطريقة مبتكرة ، تخدم العاملين والمتعاملين بالقطاع. وايضا تقديم وابتكار حلول من قبل المطورين العقاريين وموفرين الخدمات لاستقطاب مستثمرين بطريقة ذكية وتتماشى مع الوضع الراهن.

العقار من افضل أصول للاستثمار على المدى الطويل ويجب الصبر عليه لتحقيق العوائد الاجمالية المرجوة منه، ويعد آمن جدا اذا استثمر بالوقت الصحيح وبالطريقة الصحيحة وإذا تم ادارته بالطريقة الصحيحة على المدى الطويل. فأي شخص يشتري عقار في بلد له مستقبل واعد وبنية تحتية قوية وموفري خدمات مهنيين، فهو ينتهج الطريق الصحيح لتحقيق الاستقلال المالي ولاختيار العقار الصحيح. أنصح الأفراد بالتطوير من معرفتهم العقارية و بشراء عقارات جاهزة وليس قيد الإنشاء، بخطط دفع ميسرة من المطور مباشرة وعدم الاقتراض من البنوك إلا إذا كانوا على دراية كاملة بتفاصيل التعاقد مع البنك. وأيضاً دراسة سمعة المطور وأسلوب الحياة قبل شراء أي عقار.

Ask The Agent

I have a property portfolio of a mix of 1 and 2-bedroom flats in JLT and Dubai Marina. With this in mind, how do I capitalise on what I have?

Seek professional advice as to how to manage your real estate portfolio. Many landlords across Dubai are bound to miss out on the revenue-generating opportunities that Expo 2020 will bring because of poor or non-existent planning. A competent property manager will provide you with the best opportunity to maximise your financial gains by giving you an assessment of the opportunities, and a strategy and activity plan designed to harness the financial potential of your property. Do not make the mistake of leaving your planning too late. You will need to comprehend current and likely future market conditions and events, likely risk factors that may enable or inhibit revenue growth, inflation and cost increases, and a complete comprehension of financial modelling and the ever-developing area of industry policy and regulation.

I am considering buying property to offer for rent. I am looking at two similar offers, one of which is located within 150 meters of a metro station and offered at a premium of around 8 percent. Is this reasonable?

Let us first look at why properties situated close to the Metro can command a premium. It is all about convenience, cost and lifestyle efficiency. Your prospective tenants can enjoy a cost-effective, fast, comfortable and reliable mode of transport to either travel to work, visit friends or even do some light shopping. No traffic hassles, road works, parking, and wear and tear on the family car while the requirement for a second family car is diminished. Many tenants are prepared to pay a rental premium for a property which allows them to enjoy these benefits. Our studies have shown that properties located within a .5-kilometre radius of the Metro in Dubai can command between a 6 percent and 11 percent premium when compared to similar properties with no feasible ambulatory access to a metro station.

My apartment is ready. When I said that I want to inspect it the developer said they already completed their inspection. Is this right?

Technically, once an official Completion Certificate has been issued for the building by the Dubai Land Department, it is deemed ready for handover and your contractual obligations regarding transfer of ownership remain. Nevertheless, I doubt if the developer has your best interests at heart in this instance. 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. 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. It is in your interests to snag your apartment, and I strongly recommend you engage a professional to do this on your behalf.

What is the difference between a leasing agreement and a property management agreement?

You enter into a leasing agreement when you wish your real estateto locate suitable tenants for your apartments, facilitate the signing of the tenancy agreement leaving you to assume the responsibility and devote your time to managing the tenant and all aspects of the property thereafter. A property management agreement includes a lot more. A competent property manager will provide an assessment, strategy and activity plan. Considerations include history, current market and risk factors, industry knowledge extending to policy and regulation, finance and market dynamics. An activity plan will be provided covering pricing and marketing, customer relationship management, tenant management and policy, cost management, maintenance supervision, communications and review schedules, status reporting, financial reporting and resourcing. All of these activities will be performed by the property manager under a property management agreement.

Question of the Week

With Expo 2020 coming, is there anything I should do differently with my two apartments in Dubai Marina from a leasing point of view?

Timing will be critical to the decisions that you make regarding the management of your property. First of all, you need to get professional advice as you require a skilled and knowledgeable property manager to help you harness the true financial potential of your property during this unique period in Dubai’s real estate history. You need to appreciate that there will be some nuances and important considerations when looking at the opportunities that the World Expo 2020 will provide. For example, overall values will change but differing asset types and locations will not necessarily move in unison as Expo preparations move ‘from the analytical and planning phases through to implementation and eventual launch and operational phases. Initially, it is likely that investor demand will drive much of the value appreciation to be followed by an increasing rate of end-user demand for accommodation, both for villas and apartments. Those areas in proximity and with easy access to the Expo 2020 site itself will attract initial attention. However, as the event draws closer, demand for more centrally located property will also increase. One can expect both the rental return and capital return curve to steepen as we move closer to the event launch.

Ask The Agent

Mohanad Alwadiya CEO. Harbor Real Estate

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 odours. 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.

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 and 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 maximises the potential return on your assets over the long term.

How does one become a shrewd property investor? What qualities or skills are important?

Investing in property is all about recognising and capitalising on opportunities that are consistent and supportive to your overall wealth accumulation objectives. 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 conceptualising 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.

What documents 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.

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 Defence 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 Defence 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

Mohanad Alwadiya CEO, Harbor Real Estate

Is there a state of oversupply in Dubai real estate? How does one know for sure?

It depends on an accurate estimation of construction timelines which are invariably fluid, and the demand for real estate assets due to Dubai’s growing population that is largely driven by overall economic growth going forward. In addition, it needs to comprehend a lag effect from the time the conditions conducive to development are identified by developers and when properties are finally released to the market. Given that the economy of the emirate is expected to grow at an estimated 5+ percent annually for the remainder of the decade, and initiatives such as the Expo 2020 are expected to generate an additional 270,000 jobs, the demand for housing and commercial facilities is expected to grow significantly. Much of the city’s planning comprehends the number of people living in the emirate to grow to 3.4 million by 2020, a 7 percent annual increase from today’s 2.25 million.

What property characteristics should I, as a buyer, pay close attention to in order to minimise any risks associated with my investment decision?

Location is the first factor to consider as it can drive up a property’s value. Prestigious locations like Palm Jumeirah, Downtown Dubai and Dubai Marina fared well in the post-GFC period, and affordable areas such as Jumeirah Lakes Towers, The Greens, Dubai Sports City, Discovery Gardens and International City followed suit. But there are other factors as well. The quality of the end-product and infrastructure, maintenance services, and the extent of completion must also be part of any consideration. Value for money and superior ROl must be considered if you are an investment buyer. Current and future supply levels of various asset types need to be examined. However, it is the fundamental drivers of market values which remain: location, product quality, features and benefits, and demand and supply.

We’re a startup company looking for an office space with the best value. Should we rent or buy?

At this stage, you need to keep costs down until you become fully established in the market. The old cliché “location, location, location” is all about the convenience and prestige it can bring to any business. Great value, affordable and well-constructed office spaces may be found in a particular area, but these may not work for you if the location is a hindrance to your operations. We always advocate businesses acquiring their own premises if they commit to operating long term in Dubai. There is no tax advantage in leasing in the UAE, and as long as your office space is appreciating, your balance sheet will grow stronger over time. If you decide to lease your premises, look for the best deal and lock it in for at least three to five years. Lease rates will soon increase going forward, so make sure you take advantage of current rates.

We purchased a villa in Dubai in 2010. Instead of continuing to rent it out, my husband and I decided to sell it. How do we find a good seller’s agent?

There is a large number of licenced real estate brokers in Dubai and the UAE. Finding the right agent to sell your property is something you need to pay close attention to because getting the best person is crucial to how quickly you can make a sale without compromising on your agreed-upon expectations. Factors such as years of experience in the UAE market, track record of success, in-depth understanding of market trends, area expertise, client testimonials, level of commitment, passion, dedication, professionalism and honesty are important. He/ she should also be a duly licenced RERA-certified real estate broker. Before committing to any realtor, make a list of all the questions you want answered first and see how they respond as doing so will help you gauge whether or not giving him/her your business is the best thing for you and your husband, and your property.

Question of the Week

What sort of documents are required after accepting an offer to buy my property?

The first (and most important) step is to prepare and sign an MOU which contains all the details and timing particulars of the offer. The buyer has to sign the MOU after reviewing its provisions. As with all legal documents, get a proficient broker or legal representative to draft the MOU for you. You also need to sign “Form F,” a contract between the buyer and seller. Ensure that the buyer and/or the relevant representative has their respective identification and/or authorisations so payments have been satisfactorily arranged. Step 2 will require the receipt of a “No Objection Certificate” from the developer. Step 3 is to pay the final utility bills so that the account is cleared and ready to be taken over by the new owner. If there’s a tenant, you will need to sort out any outstanding rent or payment details. Step 4 will require you to go to the Dubai Land Department offices or a trustee registration office together with the buyer and all relevant parties, and conduct the final transfer. Transfer of ownership will take place at the DLD with all monies owed by the buyer to you to be presented as part of the transfer procedure. Although the above procedure appears simple enough, I recommend you engage a professional to handle the transaction process for you. You will be surprised how little issues, many not foreseeable to the inexperienced, can delay the satisfactory settlement of your property sale.

Ask The Agent

Mohanad Alwadiya

CEO, Harbor Real Estate

Can you please share some details on how rental increases are determined in Dubai?

Your landlord needs to give you a notice of increase at least 90 days prior to contract expiry. You should familiarise yourself with Law No. 43 which introduced the following restrictions (summarized) with regard to legally allowable rental increases: There should not be any rent increase if the rent for the real estate alit is no more than 10 percent below the average rent that a similar property commands within a neighborhood; The annual rent increases can range from 5 up to 20 percent according to how much the current rent s less than the market average, The market average rates are to be determined by the RERA rental index. The implementation of Law No. 43 is necessary to safeguard consumer interest, the overall industry and the economy at large from unjustifiable rental increases on existing rental contracts.

What documents do I need to provide so I can arrange for an agency to market and sell my villa? Give a proof of identity, usually a passport and/or Emirates ID, and a copy of the original sales and purchase agreement to be verified with the Dubai Land Department (DLD). If the property is leased, provide details of the lease agreement including the status of outstanding payments and any information pertaining to the history with the tenant. Also, provide the status of payments of service and owners association charges. The agency will sit and consult with you as to what your requirements are and prepare for you a letter of engagement which will contain the details of what you require from the agency and what fees have been mutually agreed upon. If you are located overseas and like an agency to represent you, you need to provide a power of attorney detailing the extent to which you would like the agency’s representation in the various facets of marketing and selling your property.

What property features should I prioritise when listing my apartment for sale?

If you have a listing agent or are already working with a realtor, they would know exactly what characteristics of your property should be highlighted to make it stand out from the rest and be highly marketable. But the most important features that will make or break your goal to sell your apartment include the fact that it must be competitively priced or paced just right for the market, its location or proximity to landmarks and important infrastructure such as transportation links and commercial districts, size, building facilities and community amenities, duality and current physical condition, whether or not it is being handled by a professional property management firm, or fully paid or financed. Also, make sure you mention any improvements done, and if it has special features such as a nice view, balcony, closed kitchen or extra storage.

I have just joined the market as a property investor. Can you please help me in determining an optimal rental rate to attract may first tenant? The simplest way to determine a good rental rate for your property is the sales comparison approach (SCA) which relies on identifying a factor that is homogenous to similar properties. For example, an apartment similar to your planned investment which attracts a monthly rental rate of Dh7 per square foot can indicate the likely cash flow you expect: however, as property managers, we do not advocate this approach. A more comprehensive method is the capital asset pricing model (CAPM) which comprehends levels of risk and opportunity cost as it applies to your investment. It identifies your potential return on investment derived from capital appreciation in addition to net rental income and compares it to other investments that you may be considering. This enables smarter investment decisions and, therefore, is the one that we use as standard procedure.

Question of the Week

With many attractive off-plan offers today, I am tempted to buy an off-plan property. But how do I know if I am buying one with real potential?

Whether you are buying ready or off-plan property, market fundamentals still apply. Make sure that an off-plan purchase is consistent with your property portfolio strategy. Location can never be disregarded. Considerations regarding how close the project is to commercial, educational and leisure hubs, medical and health facilities, public infrastructure, popular and established communities, and the manifold views one can enjoy all add up to the desirability of a property’s location. The asset type is also important. What type of asset will be in demand in the future: affordable apartments, townhouses or villas? Be smart about the “product” that you buy. Look for certain property types in locations which you believe will be keenly sought in the future. You need to do some careful financial analysis which will enable you to determine the value of the discount that you anticipate receiving by buying off-plan. Easy payment plans can ensure you limit your capital exposure before completion. Also, you need to be conversant with financial concepts such as net present value (NPV) and internal rate of return (IRR) to guide you in the decision-making process when assessing your alternatives.

Population growth key to property market success

Dubai demonstrates strong growth in population compared to other economies around the world

The fact that the property industry is typically and notoriously cyclical is widely known yet quite often forgotten as viewpoints become blinkered due to current market performance, whether positive or negative. While some embrace cycles and their sometimes-associated market volatility that enables the opportunistic investor to profit from market fluctuations as they occur, other investors, those with a clear strategy and long-term plan, simply accept, foresee and plan for cycles in the industry. They are looking for longer-term sustainable growth rather than taking additional risks by trying to accumulate wealth by taking advantage of shorter-term spikes or dips. They are true managers of their property portfolios and have a much greater chance to succeed

A growing population is the fuel of any property industry, and it will be Dubai’s population growth that will enable the market to regain its equilibrium within the next three years

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 will occur in the industry. This, of course, is no different to managing a share portfolio, business venture or any other type of investments. Adopting a short-term vision and narrow perspective will engender reacting unreasonably to inevitable industry slowdowns which will lead to underperformance in the longer term.

The Dubai market is, having seen a period of falling values, rapidly approaching the bottom of its contraction phase, making 2018 a pivotal year for the industry. This contraction has been brought about by increased nervousness and uncertainty about global and regional geopolitical and economic events, the imposition of VAT, the distraction of alternative “new world” investments such as crypto currencies, along with the burgeoning oversupply in the highly competitive and lower margin per unit affordable segment. Developers, requiring greater sales volumes to achieve financial viability, needed to get financially creative to make their affordable offerings even more affordable and accessible for end-users and financially more attractive for investors

So, as we enter 2018, we are faced with a familiar situation. The market, despite lower than-promised delivery rates by developers, is in disequilibrium, particularly in the affordable segment. But this is no reason for excessive concern as the market is simply exhibiting the characteristics typical of its current cyclical phase. And while many of the issues that faced the world in 2017 remain, there are positive signs ahead: a growing world economy, rising oil prices and what appears to be an easing of some of the conflicts that have dogged the world in the last five years.

As for Dubai’s property market, its current predicament would be expected to last for quite some time, primarily as supply absorption rates are hindered by weak population growth, delaying the market’s emergence from the current phase. But Dubai has one string to its bow compared to a few other economies as the emirate has consistently demonstrated strong population growth, something many countries around the world have tried and failed to achieve.

A growing population is the fuel of any property industry, and it will be Dubai’s population growth that will enable the market to regain its equilibrium within the next three years, particularly as a spike in population growth is expected as the Expo creates an estimated 277,000 jobs.

It may come as a surprise to some that Dubai’s population is likely to exceed 3 million by end of 2018. This is up almost 331 per cent since the turn of this century. This amazing growth has been consistent during this period and is expected to continue at a rate of between 6.5 and 9 per cent over the next 10 years. This is fantastic news for Dubai’s property industry and the economy overall especially when other nations are facing stagnating population growth or, in the case of countries like Japan, falling populations.

The composition of the growth is also impressive as it will continue to be predominantly driven by people seeking to immediately benefit from and contribute to an economy that is expected to grow by a healthy and sustained 3.5 per cent in 2018 and beyond, as those who are seeking to progress and improve their economic well-being take advantage of the superior opportunities that Dubai will continue to offer going forward, courtesy of such major initiatives as the Expo 2020, in addition to the time-proven economic pillars of trade, finance and tourism.

So, the opportunities are there to capitalise on this population growth and resurgence in demand for property this year. The current situation is reminiscent of 2012 when the market started to emerge from the global financial crisis to foster a strong recovery peaking in 2014. The market has shown it has the capability to respond to favourable economic conditions, and as the absorption rates of properties start to build momentum with new aspirants entering the market, the positive effect on value and prices will see handsome returns being made by those who understood the market’s cyclical position and positioned themselves to capitalise on the imminent growth phase of the cycle.

Expert Eye, Gulf News, Dated: 19-04-2018 by Mohanad Alwadiya

Equilibrium now further away for Dubai market

Developers in Dubai will be happy with their 2017 results, with over 70% of all transactions in Dubai in 2017 being in the off-plan space, their efforts have been well rewarded.

In a year where over 69,000 real estate transactions were recorded, with a total value exceeding Dh285 billion, real estate transactions in 2017 eclipsed the 41,776 deals achieved in 2016 which represented a total value of Dh259 billion.

Winning the hearts and minds of real estate investors has never been easy. In recent years, certainly post 2008, buying off-plan would have been viewed with more circumspection as the prospect of buying finished property that would able to yield cash flow in the form of rental income virtually immediately would have been considered a less risky prospect than relying on developer platitudes regarding construction timelines.

In addition, attracting the buyers in the affordable segment has always been challenging as the purchaser tends to be more pragmatic, governed more by fiscal realities than emotion or ego. Developers needed to broaden and deepen their customer understandings and develop greater empathy for a segment that had really been neglected in the past.

So, the foray by developers into the affordable segment was accompanied by an increasingly attractive array of successfully marketed financing offers which were designed to garner an increasing proportion of available investor capital into the off-plan property space. After all, new customers have different needs requiring new strategies and tactics.

While these new tactics may have been treated with suspicion in the past, the industry has matured from the heady days of flipping, speculation, false promises and minimal accountability with the regulatory changes imposed on developers to ensure the rights of investors are protected making offerings in the off-plan space appear less risky in nature.

So, faced with a market nervous about global and regional geo-political and economic events, the imposition of a VAT, the distraction of alternative “new world” investments such as cryptocurrencies, along with burgeoning oversupply in the highly competitive and lower margin per unit affordable segment, developers, requiring greater sales volumes to achieve financial viability, needed to get financially creative to make their affordable offerings even more affordable and accessible for end users and financially more attractive for investors.

Inevitably, the amount of capital shifting from the traditional secondary market to the off-plan market created in a capital allocation imbalance, resulting in declining demand for finished properties. Interestingly, capital allocation was really the issue, as supply was quite healthy in 2017, with mortgages financing over 50% of transactions. It wasn’t that long ago that mortgages made up less than 30% of total transactions, extremely low by global standards.

So, as we enter 2018, we are faced with a familiar situation. The market is, once again, is moving further away from the equilibrium that we are all seeking.

The focus of developers to satisfy the requirements of an emerging affordable segment has been overdone, putting pressure on prices, yields and growth in across the industry.

To suggest a reversal or redirection of capital to the more expansive segments is likely in the short term is mere wishful thinking. The only way to address the issues facing todays market is to ensure that the long awaited and much speculated upon Expo inspired surge in demand transpires or to find other ways to expand the capital pool.

One initiative to do just that is in its final stages of planning. Looking to attract an even greater number of overseas investors, a series of roadshows will be held targeting key overseas markets such as India, China, Russia and the USA with the sole purpose of making investors in these countries to understand the benefits of investing in Dubai.

The schedule for the events is close to completion with events in Amman and Kuwait scheduled for late March to be followed by Cairo in April, Beijing in May, and Moscow in July before visiting London in September, Chicago and Dallas in October and wrapping up the tour in Mumbai does in December.

The importance of initiatives such as these cannot be overstated and The Dubai Land Department, realising the importance of increasing industry demand is pushing hard with this initiative.

Despite UAE investors leading the 2017 nationality rankings of investors in Dubai real estate, Indian investors continue hold second place and remain extremely important to the industry. Saudis came in third place followed by the British, who have dropped down the rankings in recent years due to uncertainty around Brexit and a decline in value of the British Pound. The Chinese are emerging rapidly as active investors in Dubai and still hold the greatest potential for foreign investment.

Foreign investors, almost 23,000 in number made approximately 30,000 transactions worth Dh56 billion in 2017. The local market’s reliance on foreign investment continues and, outside the Gulf region, there are huge opportunities to increase the awareness of what benefits the Dubai market continues to offer, not least of which, is the potential yields of 7-11 percent which are unheard of in much of the developed world.

So, the race continues … to win the hearts and minds of the global investment community.