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Reletting property to a new tenant

Entering a unit vacated by an absconding tenant could be illegal without obtaining court approval

I think the tenant of my property has left the country without paying several months’ rent. What do I need to do to re-let the property to a new tenant?

If you have determined that the tenant has left the country, you will need to send him a 30 days official written notice for non-renewal/ payment of rent. As you are unlikely to receive a reply from your absent tenant, you should also ale a case against him at the Rent Disputes Committee. It will hear your concern and help you to gain legal access to your property by sending a representative to open the property. (You will have to arrange and pay for any locksmith charges).

You must not enter the property prior to legal access being granted as you will be in violation of the law. This is an important point to note as many landlords feel that, because they own the property, they have automatic right of entry. This is not the case when there is a current tenancy agreement in place.

The representative will make a schedule of belongings which have been left by the absconding tenant and you will have to store these at your cost for three months upon which time they can be auctioned and the revenues can be paid to cover your expenses and any shortfalls in compensation.

As soon as the apartment is ready for rent to a new tenant, you’ll have to settle any outstanding utilities and prepare it for re-renting. The case against the tenant will remain on ale and, if he should return to the UAE, you can pursue him through legal channels and claim all your losses.

As always, we recommend you engage professionals to help you deal with recalcitrant tenants and any claims you may have against them.

I plan on investing-in a property within the next four months to take advantage of the current lower prices. Can you advise on where I should invest?

There is no doubt that the affordable segment in Dubai is showing lots of promise as these properties will be in high demand as Dubai’s population growth gains momentum on the back of a period of expected strong economic growth leading up to the end of the decade.

Properties located in non-prime areas such as Dubailand continue to do very well and represent great value at today’s prices. With the current market correction in full swing we have witnessed the more affordable or secondary areas of the market continue to provide superior total returns for investors.

Examples of affordable projects that are providing good rental returns and expected capital appreciation are the Sky courts project and the adjacent QPoint project. An apartment in Sky courts have proven to be very popular with tenants and investors alike and has historically seen excellent capital growth with some apartments growing by 20 to 25 per cent over the past 24 months with rental premiums of at least 7 percent not uncommon. Purchasing an apartment at Sky courts has been made even been made more affordable with the developer offering units, some with existing and reliable tenants, with a very attractive easy payment plan.

QPoint, although recently released is also attracting rental yields of 6 per cent to 7 per cent. At the moment, apartments in Q Point are being valued between Dh685-Dh750 per square foot, representing fantastic value for this new development.

Demand for this type of affordable accommodation will continue to grow as Dubai’s population swells in the run up to the Expo and the demand for well located affordable housing increases.

There is no doubt that real estate values have been declining for some time now. Has the market reached the bottom and do you think now is the time to buy?

If you are considering purchasing a property, there are deﬁnitely opportunities available and advantages to be gained from purchasing now. The market has been cooling for around a year now, but is expected to pick up again in 2016 as the next five years are expected to see strong economic growth in the Dubai. Picking the exact timing is always difficult but it is better to be early rather than late.

Start your property search immediately as a property investment requires the same approach and set of considerations regardless of the state of the market and proper due diligence can take time.

Know what you can afford. If you have the cash, I suggest you pay for it outright. However, don’t be afraid to take out a mortgage. Make sure that you consider the many and varied easy payment plans that are currently on offer as many of these plans will save you considerable amounts of money.

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

You also need to consider the effectiviness 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. Finally, be purposeful, persistent, patient and pragmatic in your approach and you are well on the way to making a very sound decision.

Gulf News Freehold – Expert Eye

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

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.

Innovation… thriving where others do not survive

There have been a number of articles recently published describing the pressure that some real estate agencies are feeling as a result of the current correction in the Dubai real estate market. There have also been instances of real estate brokerages laying off a significant number of their staff or closing their doors altogether.

For some, survival was a short-lived ride on the post-Global Financial Crisis (GFC) wave, and the recent instances whereby entire businesses have struggled to continue surviving begs the question: what are the determinants of success in today’s market climate?

The answers are as simple as they are difﬁcult to attain. They remain elusive for many companies; but those establishments that understand them, capture them, develop them and practice them stand a greater chance at enjoying unbridled success.

It may be a cliché, but a primary ingredient essential to success is passion. Without passion, you cannot be successful in this business. Any real estate operation must attract, develop, motivate and retain a passionate group ofprofessionals, and any serious client will recognize this. This is a people’s business, and without a passionate and professional team, survival will be impossible.

Experience is critical. We are in a business characterized by high capital requirements, a broad spectrum of risks and deep emotional involvement. Failure cannot be an option. That is why I know I am fortunate to be part of an executive team with over 20 years of experience in the Dubai real estate market. As we are all aware, the industry has been evolving rapidly and still remains one of the most dynamic in the world. The GFC did show us that this is not an industry for those who don’t know what they are doing, and to be able to draw deep on experience is invaluable.

Being ﬂexible and developing the capability to adapt is a prerequisite to success, particularly in a market that is changing so rapidly. The GFC was a period of rapidly changing circumstances, which bore unprecedented challenges requiring immediate yet innovative solutions. This was a difficult period, but also one of great learning, which put those who were ﬂexible and adaptable in a great position to capitalize on the opportunities that were to eventually emerge with the recovery. It was no easy task and it required a brutally honest assessment of individual capabilities, as well as the capabilityof the organization to continue to provide the services that clients required, but within a totally new environmental context emanating from what was essentially economic turmoil.

But it is a culture of innovation that separates the “thrivers” from survivors. There is no doubt that tried and true practices that worked in the past have required an overhaul in order to address new realities, and create and maintain a discernible edge in a highly competitive market. This is what really differentiates those that have thrived in the post-global recession period, from those that managed to survive only to falter as a result of the latest market correction. A key learning from the GFC is that innovation relevant to circumstances will always prevail regardless of the situation. Whether the market is hot or cold, innovation will always provide the competitive edge.

If you look at the industry today and compare it to the days of 2008, it has come a long way. The advances made in the legal framework, regulatory infrastructure and overall governance typify a market that is rapidly heading towards full maturation and the type of sustainable profitable growth that all stakeholders in the industry have been seeking.

As professionals who care about our business, we must continue to embrace and support any change that will improve the health of our industry. Because it is the health of our industry that really matters most. Those of us who are around to tell of our experiences during the GFC will recall that the initial objective was pretty basic: to survive in an environment that nobody in the industry had witnessed before and, in order to survive, we needed to adapt, innovate and develop as individuals and organizations. Those that didn’t fell by the wayside, for after all, that is what a recession is all about… survival of the fittest… and it is the fittest that will thrive.

Why it is a good time to buy property in Dubai

The market has been cooling for around a year now,

but is expected to pick up again in 2016

I receive so many questions regarding the current state of the market and whether now would be a good time to buy. My answer is invariably yes, especially as the market has become attractive with opportunities available and advantages to be gained from purchasing now.

The market has been cooling for around a year now, but is expected to pick up again in 2016 as the next five years are expected to see strong economic growth in Dubai. Picking the exact timing is always difficult but it is better to be early rather than late and starting early will be a prime determinant of your success.

I recommend you start your property search immediately as a property investment requires the same approach and set of considerations regardless of the state of the market and proper due diligence can take time. You are embarking on a major purchase which has the potential to affect your life in either an extremely positive or negative way. So you need to make a timely decision, not a hasty one.

Be critical in determining what you can afford. If you have-the cash, I suggest you pay for your new purchase outright. However, don’t be afraid to take out a mortgage… just be sure you fully understand what mortgage ‘repayments are going to do to lifestyle and whether you are prepared to make some sacriﬁces to own your own property. Make sure that you consider the many and varied easy payment plans that are currently on offer as many of these plans will save you considerable amounts of money.

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

When buying an apartment, you also need to consider the efﬁcacy of the owners’ association, costs associated with service charges and the quality of maintenance services as these will impact the long-term value of your investment. Finally, be purposeful, persistent, patient and pragmatic in your approach and you are well on the way to making a sound decision.

Advice for hassle-free ownership

Mohanad Alwadiya is Managing Director of Harbor Real Estate and advisory board member and instructor at Dubai Real Estate Institute, the official training and certification arm of the Dubai Land Department.

A long-term outlook is important for property owners to maximise their investments

It seems that with all the new projects that have been announced over the past two years, Dubai’s real estate market is about to enter a new period of oversupply. What are your thoughts on this?

There is no doubt that developers have recommenced construction on many projects that were stalled during the recession, or launched new projects on the back of the market’s recent resurgence. Given the frequency of the headlines announcing new projects and the size of the developments being launched, it is easy to be concerned that an oversupply scenario may eventuate.

However, calculating optimal supply levels, particularly when emerging from a recessionary period, is challenging. It depends on an accurate estimation of demand for real estate assets, which will emanate from population growth. In Dubai’s case, this will largely be driven by overall economic growth going forward. In addition, one needs to comprehend 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.

Given that Dubai’s economy is expected to grow at an estimated 5 per cent annually for the remainder of the decade and initiatives such as the World 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 estimates the number of people living in the emirate to grow to 3.4 million by 2020, or a 7 per cent annual increase from the current population of 2.25 million.

We take a minimum ﬁve-year view when trying to understand supply and demand. Taking into account the nature of the market’s resurgence, strong growth in fundamental economic drivers such as tourism and trade, 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.

I own an apartment that is leased. The lease will expire in three months and I wish to refurbish the apartment and use it personally once the refurbishment is complete. Can you advise on any legal issues I might need to consider?

You need to consider the rights of the tenant. Law No. 33, Article 25 (2) provides protection to the tenant by stipulating the circumstances under which a tenant can be evicted. If the landlord wishes to demolish the property or conduct construction that makes it impossible for the tenant to use the property, the landlord has grounds for eviction. This would appear to apply in your case. However, if challenged, you will need to provide proof of your intentions, such as plans, contractor agreements, etc.

A landlord who wants to use the property himself or give it to next of kin also has the right to evict a tenant. He will have to prove that he does not have access to an alternative property.

The landlord must give at least 12 months’ notice of eviction and provide the reasons and necessary documentation supporting it.

Therefore, I recommend you advise the tenant of your intentions in advance of the upcoming lease renewal as he or she could choose not to renew and vacate the apartment. If this is not the tenant’s preferred course of action, at least you have abided by the law.

I just had a problem tenant vacate my apartment. How can I ensure I don’t get another troublesome one?

Bad tenants can make your life very miserable. There have been many reports regarding tenant rights but I feel the rights of landlords should also be recognized as much.

There are some basic steps you should take. Set a meeting to get to know the potential tenant better, including his or her lifestyle and employment stability. Try to ﬁgure out his or her plans for the future as such details can often give you an insight into the type of people you are dealing with. This will help you instinctively understand a person’s character. Trust your instincts.

Request references or contact details from previous landlords to identify any past issues with regard to the care of rental property or missed rental payments.

Obtain a letter from the employer stating the tenant’s salary and a copy of a bank statement. You should check for regular salary payments into the account, which should correspond with the employer’s salary statement and also determine whether there is enough to cover rent.

Obtain a copy of the tenant’s passport and visa. Check all details to ensure the person you are talking to is the actual lessee.

Use the standard contract form provided by the Real Estate Regulatory Agency. Once signed by all parties, it should be registered in the Ejari system, and you should ensure all cheques are signed by the party to the contract.

Finally, engage a property management company to take care of all the above (and more) for you. You will sleep a lot easier and stand a greater chance of realizing your investment’s potential.

I am new to Dubai, having started a new job six months ago. I am currently renting an apartment, but considering buying either an apartment or a villa for myself. What advice can you give someone new to investing in Dubai?

The ﬁrst factor to consider is location as this can drive up to 90 per cent of the property value. The more established and prestigious locations such as Palm Jumeirah, Downtown Dubai and Dubai Marina and those close to the Metro will always command a premium, while areas such as Jumeirah Lakes Towers, The Greens, Dubai Sports City, Skycourts, Queue Point, Discovery Gardens and International City offer affordability and value for money. A lot depends on your budget and lifestyle.

Quality of product and maintenance services as well as the extent of completion and quality of infrastructure surrounding your intended home are important, along with considerations such as an owners association and its effectiveness.

With regard to the type of property, current and future supply of various asset types need to be examined. You should consult a reputable property broker to assist you with this. For example, villas across the board have out-performed other asset types because of supply shortages. However, when looking at the inventory pipeline, this may not be the case in the future with more affordable property likely to be in higher demand.

Financial planning is key. It’s important to know what you can afford in terms of repayments, whether you will need a mortgage, how ﬂexible you can be should interest rates rise and what other demands may arise on your disposable income.

Finally, get yourself a good broker. As a newcomer to the Dubai real estate scene, you will beneﬁt from the experience and knowledge that a good broker can bring to your property ownership aspirations.

Gulf News Freehold – Ask the Agent

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.

Know what you can afford and allow 30% of your gross household income for rent.
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.
Make sure your agent is registered with RERA. You can log on to the Dubai Land Department (DLD) website to check.
Make sure the tenancy agreement is as per the RERA standard template. Check DLD website.
Ensure you document any property defects before you sign the contract. Raise them with your agent before you sign anything.
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.

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

H1 2015… and where are we?

Mohanad Alwadiya, MD of Harbor Real Estate & Instructor at
the Dubai Real Estate Institute, the Official
Training & Certification Arm of the Dubai Land Department

For the past 6 months, headlines have been making many and varied references to the Real Estate correction in Dubai. This is not surprising as yes; indeed, Dubai’s Real Estate industry is in the midst of a correction. For many, the term “correction” is viewed with suspicion and trepidation, particularly those with a more tactical, less strategic, short term point of view. For those who are taking the long term perspective, the term “correction” is viewed with anticipation as the term 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 itself.

There is no doubt that a “correction” was overdue. 2013 will long be remembered as Dubai’s comeback year as the total value of Real Estate transactions reached AED 234 Billion, a 52% increase in the prior year which was clearly unsustainable as witnessed when the correction began in 2014 when AED 218 Billion worth of real estate assets were sold, a reduction of over AED 16 Billion on the prior year. At the time of writing, just over AED 63 Billion worth of transactions had taken place during 2015 indicating that the market is well and truly into its correction phase.

The market definitely benefitted from high levels of liquidity during 2012 and 2013. Capital inflows seeking safe haven from regional conflicts flowed strongly, however, they were sure to weaken and have. Geo-political events such as the wrangling over the Ukraine and subsequent economic sanctions imposed on Russia by the West meant a rubble which was declining rapidly in value made investing in Dubai an increasingly expensive proposition for Russian investors who historically have been prevalent amongst the investing community. In addition, changes to mortgage laws also dampened the availability of capital for those investors wishing to use leverage to capitalize on attractive property valuations and the promise of high and sustainable rental yields. 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 Dirham intensified, leading to a gradual reduction in prices for off plan units 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, 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 going forward. In addition, it needs to comprehend a lag effect from the time that conditions conducive to development are identified by developers and when properties are completed and are released onto the market.

We at Harbor take, at minimum, a 5 year view when looking at equilibrium or imbalances in the market. When taking into account the nature of the markets 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 5 year forecast period. There will be around 11,000 villas, 7,500 townhouses and 35,000 apartments delivered between now and January 2020. While this may seem a lot, remember that we are a entering period where demand for properties, particularly those which are affordable, is expected to rise significantly and, given average current occupation rates are around 80 – 85%, 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%+ annually for the remainder of the decade and to deliver initiatives such as the 2020 World Expo. The Expo alone is expected to generate an additional 270,000 jobs and drive demand for housing and commercial facilities that, by and large, don’t currently exist. Much of the city’s planning comprehends the number of people living in the emirate to grow to 3.4million people by 2020, a 7% annual increase from today’s population of 2.25million.

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 5 to 7 years. The structural shift towards more affordable housing will not only serve to accommodate the expected rapid population growth associated with the 2020 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. In addition, 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. When taking this perspective, the correction could not have come at a better time.

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إيجارات دبي” تتمسك بأدائها عند المستويات نفسها في النصف الثاني”

دبي ملحم الزبيدي:

حافظ سوق إيجارات الوحدات السكنية (الشقق والفلل) في دبي منذ بداية النصف الثاني من العام الجاري على نفس مستويات الأداء الذي استهله خلال الأشهر الستة الأولى من 2015، حيث تمسكت أغلبية المناطق بالأسعار نفسها مع تراجعات طفيفة في بعض المناطق على حدود الإمارة.
من المرجح أن تحافظ أسعار إيجارات الوحدات السكنية على مستوياتها نفسها حتى نهاية العام الجاري نظراً لضعف تأثير المعروض الجديد الذي سيدخل إلى السوق الذي لن يتعدى الموازنة بين كفي معادلة العرض والطلب.

ورجحت المصادر ل«الخليج» أن تميل أسعار الإيجارات تدريجياً إلى التراجع بحلول الأشهر الأولى من العام الجديد 2016 بنسبة تراوح بين 5 و10% فقط مع دخول المزيد من المعروض من الوحدات السكنية الأمر الذي سيؤثر لمصلحة العرض.
وتستشهد مصادر عقارية عاملة في سوق دبي بأن الدور الأبرز للقانون العقاري رقم 43 الذي أسهم بشكل واضح في تحديد زيادة بدل إيجار العقارات في دبي، الأمر الذي عكس حالة من التباطؤ في ارتفاع الأسعار وميلها إلى الاستقرار.
وذكرت المصادر أن أسعار إيجارات الفلل والشقق ارتفعت خلال 2014 بنسبة 4 و7% في المتوسط على التوالي، لافتة إلى أن الأسعار ارتفعت بنسبة 65% للشقق و55% للفلل منذ 2011 غير أنها لاتزال تقل بنسبة 25 و20% على التوالي عن أسعار 2008.

مهند الوادية: الاستقرار يغلب على أسعار الإيجارات في 2015

وأوضح مهند الوادية، المدير التنفيذي لشركة «هاربور العقارية»، والمحاضر في «كلية دبي العقارية»، أن أسعار إيجارات الوحدات السكنية في أغلبية مناطق دبي لا تزال تميل إلى الاستقرار والثبات عند نفس معدلاتها التي أنهت عندها 2014، ومن المتوقع أن تبدأ بالتراجع التدريجي بنسب بسيطة جداً تراوح بين 5 و10% فقط حتى بداية العام المقبل 2016.
وأشار الوادية إلى أن المرسوم رقم 43 لسنة 2013 أسهم في تحديد زيادة بدل إيجار العقارات في إمارة دبي، حيث وصّف المرسوم نسب الزيادة القصوى الممكنة عند تجديد عقود الإيجار.
ما أدى إلى خلق حالة من التباطؤ في ارتفاع الأسعار وميولها إلى الاستقرار.
ونص المرسوم على ألا تكون هناك أي زيادة في القيمة الإيجازية للوحدة العقارية إذا كان بدل إيجارها يقل عن 10% من متوسط أجر المثل، فيما حدّد الزيادة بنسبة 5% من القيمة الإيجارية إذا كان بدل إيجار الوحدة يقل بنسبة ت`راوح بين 11% و20%، من متوسط أجر المثل.
وحدد المرسوم زيادة قدرها 10% من القيمة الإيجارية للوحدة العقارية إذا كان بدل إيجارها يقل بنسبة تراوح بين 21% وحتى 30% من متوسط أجر المثل، وزيادة قدرها 15% إذا كان إيجار الوحدة يقل بنسبة تراوح بين 31% وحتى 40% من متوسط أجر المثل، فيما تبلغ الزيادة 20% من القيمة الإيجارية للوحدة العقارية إذا قل بدل إيجارها بنسبة تزيد على 40% من متوسط أجر المثل.
وأضاف الوادية قائلاً: «سيكون الاستقرار هو الطابع الغالب على أسعار الإيجارات في 2015 في الوقت الذي سيؤدي الطلب من جانب المستثمرين إلى تعزيز القيمة بفضل تجدد الثقة بالاقتصاد الذي أظهر نمواً قوياً على أرض الواقع في 2014».

انخفاض7 مناطق

وكشف شركة «أستيكو» للخدمات العقارية، أن سبع مناطق في دبي انخفضت فيها أسعار إيجارات الوحدات السكنية خلال الربع الثاني من العام الجاري مقارنة بالربع الأول، إذ تراجعت إيجارات الشقق في تلك المناطق بنسب راوحت بين 1% و7% فقط.
وأشارت «أستيكو» إلى أن هذا الانخفاض في أسعار الإيجارات يعد الأول منذ بدء صعودها في عام 2012، عازياً السبب إلى استمرار ضخ معروض جديد من الوحدات السكنية في السوق.
وسجلت الإيجارات في منطقتي «ديسكفري غاردنز» و«إنترناشيونال ستي» تراجعاً بنسبة 7%، فيما سجلت مناطق «ديرة» و«شارع الشيخ زايد» و«جميرا بيتش ريزيدنس» انخفاضاً ب1%، في حين شهدت منطقة «دبي مارينا»، التي عانت مشكلات الأعمال الإنشائية والازدحام المروري مدة طويلة، انخفاضاً في أسعار الإيجارات بنسبة 2%، كما سجلت منطقة «جميرا فيليج» تراجعاً بالنسبة ذاتها.

متوسط الإيجار

أفادت الشركة بأن سعر إيجار (الاستوديو) سنوياً في منطقة «ديسكفري غاردنز»، راوح بين 45 و52 ألف درهم، فيما راوح إيجار الشقق غرفة نوم واحدة بين 60 و72 ألف درهم، بينما بلغ متوسط إيجار الشقق ذات الغرفتين بين 80 و90 ألف درهم.

من جانبها، أكدت شركة «ستاندرد للعقارات»، الإماراتية، التي تتخذ من دبي مقراً، أن قطاع الإيجارات شهد استقراراً في الأشهر الأولى من العام الجاري 2015، ولكنه بدأ تسجيل انخفاض طفيف خلال شهر إبريل/نيسان بضغط من دخول المزيد من الوحدات السكنية عبر مشروعات تطويرية تم الإعلان عنها خلال شهر إبريل.

وأرجعت بيانات الشركة تراجع إيجارات العقارات إلى دخول مزيد من الوحدات العقارية الجديدة في السوق أتاحت المزيد من الخيارات أمام المستأجرين وطمأنت السوق بشكل جعل من الهدوء سمة للسوق في الفترة الحالية، ما ضغط على الأسعار بشكل نسبي، حيث لفت التقرير إلى أنه تم الإعلان عما يقرب من خمسة مشروعات سكنية كبيرة في دبي خلال شهر ابريل فقط تستهدف قطاع الإيجار والبيع.