Mohanad Alwadiya

Property Weekly

July 2015: Where are we?

For the past six months, headlines have been making many and varied references to a real estate correction in Dubai. This is not surprising as indeed Dubai’s real estate industry is in the midst of one. Many view the term correction with suspicion and trepidation, particularly those with a more tactical and less strategic short-term point of view.

Those who take a long-term perspective look at a correction with anticipation as it refers to the elimination of systemic issues and making the necessary adjustments to deal with impacts of external issues on the efficient operation of the real estate market.

There is no doubt that a correction was overdue. The year 2013 will be remembered as Dubai’s comeback year as the total value of real estate transactions reached Dh234 billion, a 52 per cent increase on 2012, which was clearly unsustainable as witnessed when the correction began last year when Dh218 billion worth of real estate assets were sold, a reduction of over Dh16 billion on the previous year. At the time of writing, just over Dh63 billion worth of transactions has taken place this year, indicating that the market is well and truly entered its correctional phase.

Changing cash flows

The market definitely benefited from high levels of liquidity during 2012 and 2013. Capital inflows seeking safe haven from regional conflicts were strong. However, they were sure to weaken and have. Geopolitical events such as the Ukraine conflict and subsequent economic sanctions imposed on Russia by the West sent the rouble rapidly declining in value, making investing in Dubai an increasingly expensive proposition for Russians, who historically have been prevalent in the investing community.

In addition, changes to mortgage laws also dampened the availability of capital for investors wishing to use leverage to capitalise on attractive property valuations and the promise of high and sustainable rental yields.

Vying for investment

A slew of new projects being launched as a result of renewed developer optimism also placed pressure on liquidity levels and, eventually, prices market wide. Initially, launches were made with prices for off plan units consistent and supportive to prices for completed units.

However, with each additional launch, competition for the investor money intensified, leading to a gradual reduction in prices for off plan units and making the risk reward equation more palatable for off plan units versus completed units.

In addition, the shift of developer focus in response to the call for more affordable housing also meant that investors gravitated towards this – perhaps the most important structural correction in the market to date.

The number of new launches has been impressive, leaving many to question whether over – exuberance on behalf of developers will result in a significant oversupply. Calculating optimal supply levels, especially when emerging from a recessionary period, is particularly challenging. It depends on an accurate estimation of demand for real estate assets that will emanate from Dubai’s population growth, which will be largely driven by overall economic growth. In addition, supply needs to factor in a lag effect from the time that conditions conducive to development are identified by developers and when properties are completed and are released on to the market.

We at Harbor take a minimum five year view when looking at equilibrium or imbalances in the market. When taking into account the nature of its resurgence, the strong growth in fundamental economic drivers such as tourism and trade, the levels of investment into infrastructure and initiatives and stakeholder commitment to sustainable growth, we believe that while inventory levels may spike in the interim, they will not be excessive at the end of our five year forecast period.

Steady supply

There will be about 11,000 villas, 7,500 town houses and 35,000 apartments delivered between now and 2020. While this may seem a lot, remember that we are entering a period where demand for property – particularly those that are affordable is expected to rise signiﬁcantly and given average occupation rates are currently about 80-85 per cent, there is not much margin for error in terms of satisfying expected demand.

Put simply, Dubai needs people to support an economy that is expected to grow at an estimated 5 per cent annually for the remainder of the decade and to deliver initiatives such as the World Expo 2020. The expo alone is expected to generate an additional 270,000 jobs and drive demand for housing and commercial facilities that don’t exist.

Much of the city’s planning estimates the number of people living in the emir ate to grow to 3.4 million by 2020 – a 7 per cent annual increase from today’s population of 2.25 million.

Expo led growth

There is no doubt that a stabilised 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 accommodate the expected rapid population growth associated with the Expo 2020, but is also an important factor in the development of Dubai’s economy. Every emerging market needs to develop a strong middle class, whose expansion is critical to growing a sustainable economy and developing resilience in the face of external financial and economic shocks.

In addition, for Dubai to compete effectively in the region and globally, 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 alternative locations for their operations.

When taking this perspective, the correction could not have come at a better time.

Property Times – June 2015

I have been lucky in my professional life to have met and worked with some very successful investors. While I have found each to be different in personality, style and even investment philosophy, there are some attitudes, traits and perspectives that are shared among the most successful investors I have had the privilege to have met. Thinking back to many interesting discussions I have had with these people… some of whom are my most loyal and respected clients… there are several statements that we often hear in our everyday professional lives which I have not heard from this group of achievers. This is what separates them from the rest.

“I hate (insert anything) … “

I have rarely heard my successful investors project a negative stance about anything in their professional life. This is not to say that they support every philosophy, concept or idea and they will also not accept an occurrence which is contrary to what they think should have happened. But instead of expressing such a negative emotion as hate, they continue to think positively and seek positives from a situation or take a positive approach to remedying that which they do not agree with. As a result, the dialogue is always positive, creating an environment positivity, proactivity and energy directed towards progress. Taking this approach also helps to create a pleasant, purposeful and fruitful environment in which to work and helps to maintain or even build esteem and confidence among those that can contribute to achieving exceptional results. It promotes objectivity, focus and decisiveness.

“That’s not fair”

The world is not a fair place never has been and never will be, and successful investors understand, embrace and accept that. This allows them to be immune from the negativity that can arise when an individual feels hard done by or cheated. It also allows them to plan, create contingencies and maintain a positive attitude when a seemingly unfair occurrence occurs resulting in a greater chance to respond to a situation rapidly and appropriately rather than dwelling on the fact that an occurrence was “unfair”.

“That’s not how it’s done here”

An open mind is essential to develop, progress and eventual success. Successful investors will embrace new ideas and innovation. To not realise that progress is created from ingredients consisting of past experience and innovation is to rely too heavily on tried and true practices that gradually lose relevance over time. This form of decay has destroyed entrepreneurs, global corporations and even whole economies and societies. With globalization, the world has become a much smaller place. To not embrace, improve and implement world’s best practice and only holding close what you are comfortable is the biggest threat to creating continued success.

“I am a self-made man”

Nobody has ever made it on their own. It was once thought that the iconic, independent, totally self-sufficient, unchallengeable, silent-type, hard-nosed entrepreneur who left metaphorical bodies in his wake as he doggedly climbed the mountain of success was the role model that should be emulated by all who craved achievement. Many have tried and they all failed. No-one can achieve success on their own. As a matter of fact, the most successful people I have met have surrounded themselves with successful people and ensured that those people shared in their success. They seek opinions, listen carefully, discuss intelligently, consider alternatives and have their decisions reviewed. They reward those who contribute to their achievements and help them succeed as well for this is also a valuable way to learn and build momentum at the same time.

“That’s impossible”

Successful people know that nothing is impossible and hold the belief that every problem has a solution, some of which just haven’t been thought of yet. Anything is possible as long as there is a willingness to explore, question and challenge and imagination is intensely applied and ingenuity is rewarded. Achievers do not complain about obstacles. They embrace them so as to gain an understanding as to how they can be overcome for they truly believe that nothing is insurmountable. Negative words like “can’t,” “won’t,” and “impossible” are never heard from the mouths of successful individuals. They know complaining will not help them, but actually doing something about the issue at hand will.

“I could have”

Could have… would have … should have. We have all heard these expressions of retrospective folly. Experts in hindsight have no place at the table of successful people and regret is a fruitless and pointless emotion. Successful people thrive on opportunities not lost opportunities. If they cannot make one opportunity work to their satisfaction, they move on and find another opportunity. Regret simply slows down the effective pursuit of the next great opportunity.

“I have no choice”

Victims have no choice. Successful investors create alternative solutions to every problem and will carefully consider all of them. In this way, successful investors are never victims for they create an environment filled with choices. Then it’s just a matter of deciding which choice represents the best way forward. Successful investors know how to create opportunities where normal people think none seemingly exist. Successful investors believe that opportunities always will exist, but they are hidden in the recesses of our individual and collective imaginations. The reason why they are successful is largely due to their determination and ability to extract those opportunities, while others are stagnating in the belief that they don’t exist!!

Gulf News Freehold – Ask The Agent

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

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

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.

Managing through cycles

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

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

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

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

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

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

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

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

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

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

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

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

Impact of Expo 2020 bid win for Dubai

It’s hard to imagine the scale of Expo 2020 and therefore easy to underestimate its impact. It is the third largest event in the world with only the Olympics and the Soccer World Cup being larger however, while the Olympics and World Cup are conducted over a relatively short period of time, the Expo will be conducted over 6 months.

It is estimated that over 270,000 jobs will be created in Dubai with 90% of them in the period 2018 to 2021. The majority of these jobs are expected to be created in the tourism and hospitality sector while 80,000 jobs are expected to be created in the construction industry, the majority of which will be required to build the Expo site itself. Located in Jebel Ali, the Expo site will encompass 438 hectares and will consist almost entirely of hospitality and tourism amenities with at least 180 exhibition pavilions to cater for the 25 million visitors who 20% during the 6 months of the Expo.

The total costs are estimated at $8.8 billion with $7 billion required to develop the city-wide infrastructure, the Expo Area and its surrounding site. The benefits to the UAE economy from infrastructural investment, job growth, and massive increase in tourist revenue are enormous and obvious. Economies grow on the back of investment and investments of this scale are rare as are the resulting benefits in terms attracting more tourist dollars and further embellishing the brand Dubai. For Real Estate, hosting the World Cup is likely to create a boom in the industry. The last city to host a World Expo was Shanghai in 2010. Despite being held during the worst global recession in history, property values grew in excess of 60% in the 12 months before the event was held. While Dubai may not achieve such stellar value growth, the predictable surge in demand for accommodation of all types, from labor camps to apartments to executive Villas, for the additional 270,000 or so new job holders is sure to have a significant effect on values.

In addition, demand for office and commercial space is also likely to increase as existing businesses expand and new business entities set up operations to support the conduct of the event or service the bevy of new business operators or the millions of additional visitors. There is no doubt that the Expo will help re-balance supply and demand in this area. Retail space is likely to be at a premium as visitors will not confine their spending to the Expo site alone. In addition, 25 million visitors require a place to stay and, with Dubai’s hotel industry already enjoying consistently high occupancy rates, more hotels need to be built and serviced. Many of these are already planned as part of Mohammed Bin Rashid city.

ASK THE AGENT

News regarding the return of long queues at project launches’, flipping of properties and double digit growth is starting to sound like a bubble might be developing. Is the recent growth sustainable?

Dubai’s real estate recovery following the global financial crisis has consolidated from a “surge” in 2011 that included the Arab Spring and other extraneous events as catalysts, into a “trend” as evidenced with a strong 2012 performance with momentum continuing well into 2013. The sustain ability of the recovery is being underpinned by an economy which is steadily strengthening, showing strong GDP growth of anywhere between 4.0 and 4.5 which is mainly driven by the strong performance of the tourism and retail sectors, with trade and logistics also growing significantly. Local real estate recovery is being fuelled by growth in these core areas of the economy, aided of course, by the economic or geo-political problems being experienced elsewhere in the world.

In addition, there is no doubt that investors have returned to Dubai which is being seen as more favorable compared to a weak Eurozone, a slowly recovering US and uncertainty regarding the true state of the Chinese economy.

I bought my apartment about a year ago. A family recently moved into the unit next door, and the children are quite unruly and play noisily in the corridor. I have spoken nicely to the parents about the noise but nothing seems to stop them. What can I do?

You will need to maintain a good relationship with your neighbors and not get into any heated arguments over this matter. I suggest that you get to know your owners association and ask that an amendment be made to community rules regarding the use of corridors as playgrounds by children. Remember, the purpose of the association is to manage, operate and maintain the common areas such as hallways, lifts, stairwells, recreational areas, building systems – virtually all of the “owner shared” elements of the building in question, including rules with regard to how these areas are to be utilized by the residents. I suggest you take your issue to the next meeting and raise it with the association as it would seem to be a clear breach of community rules.

I have been thinking about investing in Dubai Marina but have been a little put off by the sharp increase in prices over the last year. Would you suggest any alternatives?

You need to consider Jumeirah Lakes Towers. While Dubai Marina is a location of note, entrenched as a respected and recognized area of Dubai, prices have been rising so sharply that some buyers must consider other areas. JLT enjoys a very strategic location. While there may not be a sea view, the proximity to Dubai Marina (including JBR) and all that the place has
to offer is certainly tempting, and it will cost you anywhere up to 25 less depending on the type of property you are looking at.
For a long-term investment purchased today, I would slightly favor Jumeirah Lakes Towers as I anticipate that the better quality buildings in JLT will enjoy more impressive capital growth over the long term given the project commenced its recovery after Dubai Marina, and the likelihood that it will benefit from buyers and tenants such as yourself who consider the more iconic locations a little out of the acceptable price range.

Property measurement standardization.

The news in September stating that Dubai has announced its support for the implementation of an International Property Measurement Standard (IPMS) is yet another sign of the local industry maturing even further.

The IPMS is being jointly developed by over 20 notable organizations including the IMF, Royal Institution of Chartered Surveyors (RICS) and Building Owners and Managers Association (BOMA International), and will address global inconsistencies in the way property is measured.

One of the areas of confusion for many property investors in Dubai has been the variety of acronyms and terminologies used to describe the actual area that the investor is considering purchasing. Recently, I decided to quiz several of my investor clients as to what constitutes “BUA,” “GFA’ and “NF A” . I was little surprised that only a quarter of them could accurately answer the question.

Of course, we all know that BUA stands for “built- up area” and is the total area being developed or constructed on. Another way of looking at it is that it is the GFA plus parking space plus any service area associated with the subject building or project. So, what then is the GFA?

Well, the GFA is the gross floor area which is the total floor area of a building including any underground saleable or leasable area (such as basement shops) but excluding parking and underground technical areas. Any building used for the purpose of supporting/ housing any type of service plant should be excluded from the GFA

But wait a minute, there is another unit of measurement which is used – the NFA which is the net floor area and is the GFA as described above, minus the facade of the building (measured from the center line of glass), plant areas, service risers, building structural core, fire stairs, lifts and lift lobbies, common corridors and common toilets.

Confused? am not surprised if you are; however, the individual, measurements all play important yet
differing roles and are used for separate reasons ranging from purchasing a building, calculating potential revenues to be derived from selling or leasing a building, to estimating cleaning costs.

Hiring frenzy reaches new high in Dubai realty

PACKAGES ARE GETTING SWEETER AS COMPANIES RACE TO SNAP UP BEST TALENT AVAILABLE

The festive season has started early for real estate professionals in the UAE. If the current momentum is sustained in the marketplace, they have every reason to party hard right through to the New Year as well.
Hiring has picked up across the board and for existing personnel there have been sweeteners in the form of pay rises of 3 to 5 percent compared with the same time last year, according to a senior official at Macdonald & Co, the specialist consultancy.
“Large developers are hiring new sales and marketing staff as they look to re-brand and re-launch their products and sell off-plan again,” said Ben Waddilove, director. “We have completed 22 percent more placements between April and September compared to the same period last year.”
The salary hikes and better packages are in evidence in specific areas such as development and project management, with developers placing premium on candidates having regional experience. “It is harder to recruit into locations such as Saudi Arabia and Qatar as there is so much going on in Dubai and Abu Dhabi,” said Waddilove. “The rapid increase in rents is also creating upward pressure on salaries as the cost of living increases.
“The positive market sentiment is feeding through to the consultancies that service large developers and we are noticing that some of the smaller players are now looking to hire and expand their teams.”
Despite all signs pointing to the property market remaining tuned to an upbeat mode, real estate firms are still showing a certain reserve on hiring practices. “We do not see a return to the situation in 2005-08 where developers hired very large teams very quickly . . . employers are much more selective.”

Dynamic situation
While developers work with the staffing numbers best suited to their immediate priorities, the situation at estate agencies is much more dynamic. “We have been receiving an increasing number of calls from former agents who, after leaving the industry as a result of the recession, now wish to re-enter the fray,” said Mohanad Al Wadiya, managing director at Harbor Real Estate. “We are also receiving calls from agents in the UK, South Africa and Australia.
“All of them have read about Dubai’s resurgence and are interested in opportunities in the locals market. In addition, the tax-free environment and eventual strengthening of the dirham are major draws.”

Competitive scene
With an eye on ensuring optimum retention, Harbor, currently in the midst of another recruiting drive, has instituted a compensation and benefits package that includes the possibility of agents getting up to 90 percent commission on property sales and leasing.
“The package was developed with the assistance of professionals from several industries including automotive, media and finance; high performers have the opportunity to achieve monthly recognition rewards and annual performance bonuses. In addition, a health insurance and savings scheme has been developed with Dubai’s National Bonds Corporation.”
But with more agents fighting to land deals, it is getting a bit crowded in Dubai realty. “After a point the sweet spot is gone as more players share the spoils,” said Chandrakant Whabi of Acrohouse Properties. “Dubai’s real estate industry is now at that point.”
“With more than 400 registered real estate companies already operating and more in the pipeline, it is going to be lot more competitive.”