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Gulf News Freehold – Expert Eye

mohanad_professional

Why invest in real estate

before 2016?

The opportunities that have emerged so far will be too good to pass up

There have been a number of reports recently estimating the effect of the correction on Dubai’s real estate market. The most recent forecast shows a reduction of anywhere between 10% and 20% by the end of 2015.

The opportunities that have emerged so far in 2015 and will continue to emerge as the year progresses will be too good to pass up. Why is this, you ask? Oil prices are not expected to go anywhere soon. The decline of the Russian ruble has effectively made offshore investing too expensive. There is a growing oversupply, and the inevitable interest rate increases on the US dollar and its dirham cousin will further hamper liquidity. While these considerations are valid and worth considering, we need to put our positive hat on for a while.

Put simply, Dubai needs people to support an economy that is expected to grow at an estimated 5% annually for the remainder of the decade and to deliver initiatives such as the Expo 2020. The event alone is expected to drive demand for housing and commercial facilities that currently do not exist. Much of the city’s planning comprehends the number of people living in the emirate to grow to 3.4 million people by 2020; a 7% annual increase from today’s 2.25 million.

While the price of oil is a big issue for the region’s economies, the effect of the decline in oil prices is not as drastic as some may think. The Dubai economy is being driven by fundamentals such as tourism and trade, and a slew of projects to grow these important revenue-generating economic segments. Dubai has attracted almost 12 million visitors in 2014, continuing a growth trend of approximately 9% per annum since 2010.

And those visitor numbers will seem paltry once the Expo kicks off. Hosting the event will provide additional impetus for the industry to enjoy continued growth and the predictable surge in demand for accommodation and commercial space of all types.

We all know that the ongoing speculation surrounding the US Federal Reserve’s intention to raise interest rates is making many people nervous. However, we can be sure that interest rates in the US will eventually rise and the dirham will continue to get stronger. To invest in a market that is undergoing a 10% to 20% correction in a currency that is certain to appreciate only makes sense, especially when finance is still cheap and will remain so for quite some time to come.

While on the topic of certainty, there is no doubt that a stabilized real estate market will provide a much better launch pad for what will be a period of significant economic and commercial activity over the next five to seven years. The structural shift towards more affordable housing will not only serve to accommodate expected rapid population growth associated with the Expo, but also serve as an important factor in the development of the Dubai economy overall.

Every emerging economy needs to develop a strong middle class as its expansion is critical to growing a sustainable economy and developing resilience in the face of external financial and economic shocks. For Dubai to compete effectively on a regional and global basis, it needs to ensure that the cost of doing business in the emirate does not position it as an outlier when entrepreneurs or corporations are considering alternatives for their operations.

Talking of alternatives, there is an array of asset choice which has not been seen for some time. The availability of off-plan purchases with highly lucrative payment plans is unprecedented. There are investment opportunities in every segment of the market supported by the most affordable payment plans.

This year will be remembered as a year of the astute investor. Don’t miss out.

Gulf News Freehold – Ask the Agent

mohanad_professional

I am concerned about the risks involved in purchasing an apartment, particularly with regard to my rights if something should go wrong.

Laws have been introduced to better protect the rights of industry participants. These include measures to standardize and clarify the relationship between parties to a real estate agreement and provide recourse when a party has been disadvantaged because of unethical behaviors or practices. There has been a lot of progress made in other areas as well such as the management of investor finances with the introduction of escrow accounts; owner empowerment with the introduction of strata law and introduction of owners associations; investor recourse when disadvantaged by delays in handing over of projects or changes in specifications of properties; or tenant protection with the introduction of mechanisms to restrict the imposition of ridiculous rent hikes.

I am looking to buy an apartment in Jumeirah Lakes Towers or the Dubai Marina area. Do you think it is a good time to buy? Any recommendations?

lt is definitely a good time to buy right now. The market has corrected well for buyers and there are some fantastic easy payment schemes on offer. One example of an extraordinary payment plan is that which is being offered in Dubai Marina. Some two-bedroom apartments in the area are being offered with prices starting at Dhs 2,150,000. All you need is a 10% deposit and you can pay the balance in pro-rated monthly installments over the ensuing seven years with no profit charges applied to the balance.

Meanwhile, Jumeirah Lakes Towers is also a sought-after destination for residents and tenants because it is known to provide various housing options that offer affordable rates. It likewise has the huge advantage of being closeto the Dubai Metro and Dubai Tram, Dubai media and Internet Cities, the business district and Dubai Marina.

I have a young family and I am considering purchasing our-first home. Can you provide any advice as this is the first purchase I am making.

Here are common factors to consider as a first time buyer:  1)The real estate market is cyclical and home values do not always appreciate over time. Very careful planning is required if you plan to move in just three or four years; 2) You are much better off financially if you apply your hard-earned dirhams towards building equity in your own home, but remember that mortgage payments can be subject to fluctuations as interest rates rise, while rent increases are governed by law; 3) Avoid making lifestyle sacrifices by choosing a home and a mortgage that suit your budget; 4) Factor-into your decision your family requirements in the future; 5) The Dubai market today is a buyer’s market. If you have done your planning properly, you should be in a position to make a quick decision.

I am looking at expanding my business by establishing several branches around the city. What should I factor into my planning?

lt is all about the convenience and prestige that a carefully thought-out location can bring to your existing and potential customers, staff and business associates. Location is critical to establishing a competitive advantage. There is no use having a superior product or service if your location is inconvenient for your customers. The same can be said for the staff. Proximity to public transport and parking availability reach new levels of importance when summer reaches its peak and staff will be appreciative if you recognize their needs as well. Taking advantage of a prestigious location can do wonders for your brand image. People naturally gravitate towards successful enterprises and a prestige location can help send the message that your business is successful, strong and superior to the others located in lesser environs. Business associates will also be eager to visit and do business with you.

I am thinking of diversifying my property portfolio by buying some commercial assets. Any thoughts on this would be appreciated.

Things are looking very promising for new business in Dubai. As the emirate seeks to grow economically, readily available office space is one of the important factors that new enterprises will consider. A few points to keep in mind:

  • Dubai’s economic growth is strong at around 4%, driven by tourism and trade. New projects to expand these revenue-generating economic sectors are a feature of Dubai’s growth outlook
  • The amount of infrastructural, development and economic initiatives, culminating in the hosting of the expo 2020, is indicative of the government’s commitment to economic progression
  • Population growth is forecast to be between 5% and 7% going forward and, by some estimates. Is considered to be conservative
  • Business establishment costs, including the cost of capital, have been at their lowest for years

Office rental returns are staging a recovery. There is a relative shortage of Grade A, large floor-plate, single-owner space favored by large companies. This represents strong investment potential. But, there is still a considerable, albeit shrinking, vacancy rate of around 23% which represents good opportunities for value purchases providing strong cash flows increasing with Dubai’s economic momentum over the longer term.

Right time to grow your portfolio

Even though some buyers continue to maintain a ‘wait and see’ approach as property prices continue to soften, if you have invested in Dubai property, especially in key growth areas, then hold on to your portfolio. In fact, we would advise you to, if possible, add to your portfolio.

Dubai’s economy is still doing very well although the IMF forecast for UAE economic growth this year is down to 3 per cent compared to last year’s 4.6 per cent, which is quite understandable considering the after-effects of the recent oil price slump on economy. Having gradually weaned the country away from overdependence on oil, the UAE remains in a good fiscal position as it proceeds with economic diversification.

The UAE economy is being driven by tourism and trade, and a slew of successful new projects that will complement these important revenue-generating economic segments which continue to be a primary feature of Dubai’s growth outlook. In 2014, Dubai welcomed over 12 million visitors, continuing a growth trend of approximately 9 percent per annum since 2010, a statistic which is the envy of many nations.

The ‘soft landing’ of the UAE economy is by no means bad news as it is simply indicative of more gradual sustainable growth overall which, in turn, is supported by the following factors:

The market is in a healthy state of revaluation and consolidation, not recession. The reduction in growth rates is necessary to ensure the type of sustainable, profitable growth that long-term investors seek becomes a recognized characteristic of the Dubai market. The market has demonstrated its maturity and resilience by recovering post-global financial crisis and is now adjusting to more sustainable value appreciation levels.

Strong demand for property. When you are investing in real estate, you are actually investing in the economy, and the effect of the 2020 Expo on the UAE economy cannot be underrated in terms of generating demand for real estate assets. Hosting the World Expo will provide additional impetus for the industry to enjoy continued growth, and the predictable surge in demand for accommodation and commercial space of all types, from labor camps to offices to warehouses to apartments to executive villas, is sure to have a significant effect on property values.

Investor appetite and confidence remain for off-plan and under-construction projects especially for those launched by reputable developers. Outside of tier one developer-led schemes, there has been strong performance in recent launches outside of prime locations and emerging areas.

The low mortgage rates of today are unprecedented and, notwithstanding possible interest rate rises in the US later this year as the dollar continues to strengthen, will still be affordable in the ensuing five years. We should remember that affordable finance and demand for real estate assets are inseparable.

The market is approaching maturity. The on-going development of the industry’s regulatory framework and the implementation of laws to safeguard both consumer and investor interests, and the overall industry and economy at large from rampant and irresponsible speculative, predatory or unethical practices, reveal a mature and balanced approach to shaping an industry which will exhibit sustainable growth over the long term.

If it’s superior yield with minimal capital outlay that you are after, Dubai real estate is still hard to beat unlike older established cities like Hong Kong and Singapore which currently suffer from high costs of housing, especially the former where only 50 percent of residents own their homes. Affordable properties have all benefitted from Dubai’s recovering economy. Investors in these areas can reasonably expect rental returns of at least 7 percent per annum on top of annual capital appreciation. Given the relatively low cost of entry, even with the overall economic slowdown predicted to continue well into the coming year, buyers in growth areas such as Dubai land will see greater financial rewards for their astuteness and patience in due course.

There is definitely a shortage of affordable housing in Dubai. The number of developments that will be supplying housing affordable to the middle and lower income segments is definitely on the increase, more so in the run up to the 2020 World Expo. Historically, the established developments that were most associated with filling the affordable housing gap were international City, Discovery Gardens and, to a lesser extent, MotorCity. But there have been more recent additions that have provided realistic alternatives to these older developments, and several more to come.

Still, as both buyers and sellers are sticking to their negotiating positions with more determination and a greater propensity to walk away from the negotiating table if not satisfied, the real estate cycle will continue on its course. Prices may continue to soften, but what is more important is that the market does not go down on a steep fall, and keeps to its current sustainable path.

Gulf News Freehold – Ask the Agent

mohanad_in_style

ls Dubai’s realty market about to enter a new period of oversupply? With new projects being announced and the market now in decline, will this prolong the current market correction?

Calculating optimal supply levels, particularly when emerging from a recessionary period, is particularly challenging. it depends on an accurate estimation of demand for real estate assets which will emanate from population growth which, in Dubai’s case, will be largely driven by overall economic growth. It also needs to comprehend a lag effect from the time that conditions conducive to development are identified by developers and when properties are finally released into the market. Given that the Dubai economy is expected to grow at an estimated 5%+ annually and initiatives such as the Expo 2020 are expected to generate more jobs, the demand for housing and commercial facilities is expected to grow significantly.

l recently arrived in Dubai. Can you give me tips on what l should consider when looking to rent a property?

There are six key considerations when going for your first rental.

  1. Know what you can afford and allow 30% of your gross household income for rent.
  2. Give yourself time to find the best solution that fits your budget. Do not jump at the first possibility and do not settle for less.
  3. Make sure your agent is registered with RERA. You can log on to the Dubai Land Department (DLD) website to check.
  4. Make sure the tenancy agreement is as per the RERA standard template. Check DLD website.
  5. Ensure you document any property defects before you sign the contract. Raise them with your agent before you sign anything.
  6. Ensure your rental contract is registered in RERA’s Ejari system. Insist that your broker completes the registration as it is the first step towards safeguarding you rights as a tenant.

I have owned my home for over seven years and I am looking at how I can save money by upgrading particular aspects of the property.

  1. Here are seven ideas that may help you save a few dirhams:
  2. Use low-flow fixtures to cut water usage by up to 40%.
  3. Buy fluorescent bulbs which last four to l0 times longer than regular light bulbs
  4. Update your dishwasher. Modern units use 42% less water than older models.
  5. Consider a tankless water heater and save on electricity.
  6. Good ceiling fans can reduce air-conditioning costs. They dispel the need to turn on the aircon often.
  7. Apply energy reducing film on windows to reduce internal temperatures.
  8. Consider fitting solar panels.

Our contract states there is payment due at handover and payment as maintenance advance. The developer is asking all payments on “completion date.” ls “completion date” not the same as “handover date?”

“Completion date” and “handover date” are not the same. The building can be deemed complete once the official “Completion Certificate,” which ensures the building passed all inspections has been received. Just because a building has been issued a completion certificate does not mean it is ready for handover and occupancy. Often, there are a number of small items that need to be completed before it can be occupied. l suggest you confirm that your SPA definitely refers to the “handover date” as what triggers the final payment and maintenance advance. If so, you should not make the final payment until the developer is ready to hand over the keys to you and only after you (or a professional) had the chance to inspect the apartment to ensure you are receiving what you paid for.

With the current correction in the market having been underway for some time now, do you think the market has bottomed and represents a good opportunity to buy?

There are definitely opportunities available and advantages to be gained from purchasing now. The market will pick up again as the next five years are expected to see strong economic growth in Dubai, but picking the exact timing is always difficult.

Start your property search immediately as a property investment requires the same approach and set of considerations regardless of the state of the market.

Know what you can afford. If you have the cash , I suggest you pay for it outright; however, do not be afraid to take out a mortgage as long as you plan and understand the impact of interest rate rises in the future.

Think carefully about location, surrounding infrastructure, construction quality, developer reputation and building amenities. Properties which are close to the beach, with a sea or golf course view, or part of an iconic development usually provide good returns. If you have close access to the metro, even better.

Also consider the effectivity of the owners association, service charges and the quality of maintenance services as these will have an effect on the long-term value of your investment.

Send in your property issue-related questions to be answered by industry experts, mentioning ‘Ask the Agent’ in the subject line, to: properties@gulfnews.com

Gulf News Freehold – Ask the Agent

mohanad_professional

I bought a studio in 2008 financed by a lending firm. Since it is not furnished yet, my lawyer told me to cancel the SPA but the lending firm did not agree.

Visit RERA first to sort out the registration issue in Oqood as this is a prerequisite to any further action. Once the property is registered, meet with the lending company. Explain to them that you would like to terminate the finance agreement due to project delay. They will share with you the status of your liability. You then need to obtain compensation from the developer for the delay. Appoint a lawyer to determine if your contract has the proper compensation clause to support your case. If so, plot a course of action to receive what is rightfully yours under the contract. From the information you have provided, it appears that once the course of action is determined, you need to engage all parties and alert them of your intentions. It is then a case of you and your lawyer taking the necessary legal steps to resolve it.

I have an apartment that I have let through an agent. Despite numerous reminders, the agent has refused to pay me. What actions can I take?

The issue here is that you allowed the checks to be issued under the agent’s name. There is no reason to have allowed this and, unfortunately, the decision to do so has placed you in a vulnerable position.

I am not sure of the details of the contract that you have with your agent, but unless you have a proper property management agreement in place with a licensed property management firm, you should never allow the checks to be issued under the agent’s name.

Even if you have a property management agreement, you should stipulate that all cheques be issued in your favour and the property management firm is authorised to receive, issue receipts and bank the cheques into your account.

I am afraid your only option is to hire a legal consultant and go to court and file a legal case against the agent.

My husband and I bought an unfinished penthouse from a non-Emirati guy. Does he have to register it first so he can sell it?

Whatever happens, the penthouse must be registered first. Nothing can happen to affect the legal transfer of ownership of a property unless it is registered first. With regard to MOUs, they come in different formats with different content to suit the particular transaction at hand and each party’s wishes. If you want to ensure that it is legally binding, l suggest you hire a lawyer to draft it for you. Once the property is registered, you should visit the Dubai Land Department office or any of the trustee transfer offices and conduct the transfer of the property there. It appears to me that you have limited experience in concluding a property transaction such as this. My best advice for you is to hire a professional property consultant to take you through this journey in a professional and smooth manner.

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

You need to establish that the amendments 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 need to be viewed in conjunction with the architectural and MEP “as—built drawings” by different authorities and regulatory bodies  to ensure the proposed designs are structurally sound and meet the building codes. You need to obtain NOCs from the owners association, zoning authorities, Civil Defence and even the project developer and DEWA. If the renovation is extensive, you may be required to have the work inspected by the Civil Defence and the Building Department. Your architect or contractor can arrange for all  approvals on your behalf. Engage professionals who can achieve this for you.

 

I know that the market has slowed but is the slowdown being experienced across the board, or do some areas still look promising?

There is no doubt that the affordable segment in Dubai still shows a lot of promise. The properties In this segment will be in high demand as the emirate’s strong population continues to grow on the back of a strong recovery.

Properties located in non-prime areas continue to do very well. With the recovery in real estate going from strength to strength, we have witnessed the more affordable or secondary areas of the market continue to do well.

The demand for this type of affordable accommodation has been growing steadily as Dubai’s population swells in the run-up to the Expo and the demand for affordable housing increases.

Examples of affordable projects that are providing good rental returns and expected capital appreciation are the Skycourts and Queue Point located in Dubailand.

Other affordable residential destinations are the International Media Production Zone, International City and Discovery Gardens. These established communities offer a wide range of housing options for families and singles alike.

There is also the new project Town Square offering “value” apartments to newcomers in the city and families.

Gulf News Freehold – Ask the Agent

Mohanad Alwadiya

With the Dubai property market undergoing a correction, does it make sense to invest or wait until the market is showing signs of picking up?

While the market is cooling a little, there are advantages to be gained from purchasing now. The market will pick up again as the next five years are expected to see strong economic growth, but picking the exact timing is difficult. Start your property search immediately as a property investment requires the same approach regardless of the state of the market. Know what you can afford. If you have the cash, pay for it outright, but don’t be afraid to take a mortgage. Think about location, infrastructure, construction quality, developer reputation and building amenities. Consider the effectivity of the owners association, service charges and quality of maintenance services. Be purposeful, persistent, patient and pragmatic in your approach to make a sound investment decision.

There seems to be a lot of press and activity regarding the Expo 2020. How can I, as a landlord of four apartments, capitalise on any new opportunities?

Seek professional advice on to how to manage your portfolio. Many landlords across Dubai are bound to miss out on the revenue generating opportunities that the Expo 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. Do not make the mistake of leaving your planning too late. Know the current and likely future market conditions and events, risk factors that may enable or inhibit revenue growth, inflation and cost increases and a complete comprehension of financial modeling and the ever-developing area of industry policy and regulation. Depending on the size and complexity of your portfolio, make a five-year plan which covers pricing, cost management and maintenance schedules and several other considerations.

I have 14 apartments which are becoming too large to manage. I am considering hiring a property manager. What type of fees can I expect to pay?

It will vary by provider. It may be between 3% and 6% of the rental receipts; some will have an administrative fee. Understand what you expect from your property manager as the depth and breadth of their services vary greatly. You can negotiate a fee structure based on your actual requirements. Ask for referrals and make sure you follow up with some existing clients to check their efficiency and professionalism. A competent property manager will provide an assessment, strategy and activity plan designed to harness the financial potential of your property. You should have a rolling five-year activity plan which covers pricing, marketing and tenant management among others. A competent property manager will also provide you with review schedules regular financial reporting and many more.

With many new projects and off-plan opportunities, I am nervous about the quality of end products. Can we expect an improvement in quality?

During the global financial crisis, many developers realised that properties of poor quality were dealt the harshest of value declines. As a result, many developers did not survive. Having said that, the old caveat of “buyer beware” still applies. Deal with a reputable developer. Ask around or seek professional guidance. Ask what proactive measures are taken to ensure the end product has been built to an acceptable standard. Warranties and any quality assurance policies should be discussed in detail and have the sales and purchase agreement reviewed by a professional. Engage an expert to inspect (snag) your property and report any legitimate issues to the developer for rectification. Remember, once you have taken ownership of the apartment, the developer is still obliged to fix any issues that may arise during the full 12 months following the transfer of ownership.

Now that the market has corrected, there are many good opportunities in completed assets. Given the rising value of finished properties, are there advantages of buying off-plan now?

Purchasing an off-plan property. can provide you with superior capital gains by the time of completion, provided you are buying at a discount to today’s finished inventory and the market is expected to strengthen up to the completion date for the particular property that you are considering. This, of course, will depend on an estimation of economic growth, population expansion, the number of competing projects in the pipeline and the eventual industry inventory position.

Be smart about the product that you buy and try to avail yourself of a payment plan.

Look for certain property types complete with amenities and facilities in locations you believe will be keenly sought in the future. Do not assume that all property types in all locations will improve their values homogeneously. No market works this way. Also check the latest Metro route planning.

Deal with reputable developers only and check the status of the escrow account of the development. Escrow accounts were introduced under Law No.  8 whereby all property developers in Dubai must be registered with RERA and hold an escrow account which protects the funds of the buyers and ensures safety of the purchase.

Gulf News Freehold – Ask The Agent

mohanad_professional

I own an apartment in Dubai. I got a new tenant and increased its rent but I cannot raise it further according to the rental index. The market seems to have peaked. Should I sell it?

Yes, there is price correction, but we are far removed from experiencing a long-term trend. Looking over the next five years, we expect the market to achieve an average price growth of around 7%. Bear in mind that we are talking averages here and popular areas have a habit of outperforming the average. It really comes down to alternatives. If you have identified an alternative investment to give you a better income stream and capital return than what you expect to receive in five years from your apartment, then the right decision may be to sell. However, if you have not, hold on to the property. You will continue to receive at least a 5-7% net rental return and achieve around 7% per annum capital growth in the future.

Why is it that the rents of not so new apartments in some areas remain high? The rates in these areas did not fall as much when recession struck and when rents increased, their rents also increased fast. How come?

The value of a particular location is usually derived from the levels of pleasure, lifestyle convenience, security, harmony, future economic value or even status that can be derived from the property. Whether it is a spectacular view (sea, lake and others) or proximity to public transport, business districts, entertainment, dining, schools or hospitals, the perceived benefits that a location may bring to a prospective tenant can account for up to 90%, Areas close to the beach and entertainment venues 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 factor for their house to be enjoyed.

I think that l am paying excessive service charges. Getting access to information that might prove my suspicions is difficult. Is my OA obliged to provide me with information?

Attending owners association (OA) meetings and requesting details on the service charges would be the logical place to start and they are obliged to address your query. Remember, the purpose of the OA is to manage, operate and maintain the common areas, virtually all of the “owner shared” elements of the building. They do this by appointing contractors with the expertise to carry out the required tasks and set a service charge that all owners must pay to cover the cost of the contractor services. The OA is a “not for profit” business entity in its own right with the powers to operate a bank account, sue (or be sued), purchase, own and dispose of assets and enter legally binding agreements. You can request and view the financial statements of the association to ensure the charges you are paying are justified and correct.

Reports are saying that the market has slowed and prices are correcting. Is it a good time to buy?

Picking the exact timing is difficult. Start your property search immediately as this kind of investment requires the same approach regardless of the state of the market. Know what you can afford. If you have the cash, pay for it outright, but you can always take a mortgage. Think carefully about location, surrounding infrastructure, construction quality, developer reputation and building amenities. If you have close access to the Metro, even better. Also consider the effectivity of the OA, service charges and the quality of maintenance services as these affect the long-term value of your investment. Be purposeful, persistent, patient and pragmatic in your approach and you are well on the way to making a very sound investment decision. However, if you decide to rent, there are also great deals. With robust tenant protection legislation and a rental index to limit your exposure to increases, your rights will be recognised.

The property market seems to swing in favour of buyers and investors. Where do you believe the best investment opportunities are likely to appear?

Definitely in, the affordable segment of the market. We are encouraging clients to invest in this segment as it has great opportunities.

Excellent examples, of high performing yet affordable developments are the Skycourts and Queue Point communities in Dubailand. These have seen excellent capital growth.

Demand for this type of affordable housing will continue to grow and we expect other developments that are located close to the two communities to benefit as well, especially as Dubai’s population swells in the run-up to the Expo and the demand for affordable housing increases.

A smart move would be to invest in an apartment and retain ownership for at least five years as I am confident that you will benefit from superior capital growth and enjoy very healthy net annual rental return in the meantime.

In addition, consider looking at the apartments in Sarah Ajmal and Windsor Residence. They are all expected to perform very well as the demand for affordable properties continues to grow.

Of course, there are the established areas such as Remraam, International City, Discovery Gardens and International Media Production Zone, while the Town Square project is one to watch out for.

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!

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.