Questions

Ask the Agent

By Mohanad Alwadiya
Published: Gulfnews
Dated: November, 2016

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

Initially, your landlord needs to give you the notice of increase at least 90 days prior to the expiration of your current contract. You should familiarise yourself with Law No. 43 which
introduced the following restrictions (summarised) with regard to legally allowable rental increases:
• There should not be any rent increase if the rent for the real estate unit is no more than 10% below the average rent that a similar property commands within a neighbourhood
• The annual rent increases can range from 5 up to 20 per cent according to how much the current rent is less than the market average
• The market average rates are to be determined by the RERA rental index

The implementation of Law No. 43 is necessary to safeguard consumer interest, the overall industry and the economy at large from rampant and unjustifiable rental increases on existing rental contracts.

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

It depends on an accurate estimation of construction timelines which are invariably fluid, and the demand for real estate assets due to Dubai’s growing population that is largely driven by overall economic growth going forward. In addition, it needs to comprehend a lag effect from the time that conditions conducive to development are identified by developers and when properties are finally released onto the market.

Given that the economy of the emirate of Dubai is expected to grow at an estimated 5+ per cent annually for the remainder of the decade, and initiatives such as the Expo 2020 are expected to generate an additional 270,000 jobs, the demand for housing and commercial
facilities is expected to grow significantly. Much of the city’s planning comprehends the number of people living in the emirate to grow to 3.4 million by 2020, a 7 per cent annual increase from today’s population of 2.25 million.

How is the Dubai real estate market? Is now the best time to buy, or should I wait for prices to fall further?

The real estate market is an industry full of surprises. The Dubai market has been correcting for several months and is picking up again, as the next five years
are expected to see a strong economic growth in Dubai. My recommendation is for you to start your property search immediately in the places you like as proper due diligence can take time. If you have the cash, we suggest you pay for it outright; however, don’t be afraid to take out a mortgage with varied easy payment plans that will save you considerable amounts of money.The location, surrounding infrastructure, construction quality and developer reputation as well as building amenities or properties close to an iconic development, such as Downtown Dubai or those with close access to the Dubai Metro or Tram usually provide good returns. Finally, be purposeful, persistent, patient and pragmatic, and you are well on the way to making a very sound business decision.

I have just joined the market as a property investor. Can you please help me in determining an optimal rental rate to attract my first tenant?

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

Question of the Week

I have heard some realtors use certain terms like “GFA,” “BUA” and “NFA.” As an investor, I am left in the dark. What do these terms mean?

Like any industry jargon, there are quite a few confusing acronyms used in real estate but those that you have highlighted relate to the actual dimensions of the property you are buying or leasing. For this reason alone, it is imperative that you understand them and their significance.

The gross floor area (GFA) 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 as some form of supporting service plant is excluded from the GFA.

Meanwhile, the built-up area (BUA) is the total area being developed or constructed. It is the gross floor area plus parking plus any service area associated with the subject building or project.

The net floor area (NFA), on the other hand, is the GFA minus the facade of the building (measured from the centre line of glass), plant areas, service risers, building structural core, fire stairs, lifts and lift lobbies, common corridors and common toilets. The individual measurements are used for separate reasons, ranging from purchasing a
building and calculating potential revenues to be derived from selling or leasing a building to estimating cleaning costs.

Ask the agent

Can you explain the term capitalization rate?

Capitalisation rate (cap rate) is the rate of return on a real estate property based on the income that the property is expected to generate. It is used to estimate the investor’s potential return on investment. It maybe calculated by dividing the investment’s net operating income (NOI) by the current market value, where NOI is the total revenue derived from renting or leasing the property minus all operating costs. Put simply, the cap rate = NOl current market value. Given that the capital values for Dubai properties have shown greater volatility than the income being derived, the NOI being generated from the property at today’s value needs to be looked into. This allows us to see whether the property’s performance is improving or declining by referring to the cap rate. If the cap rate is declining, this leads us to conclude that selling the property would generate greater income.

Where do you think the best investment opportunities are in the Dubai real estate market?

Definitely in the affordable segment of the market!

We are encouraging clients to invest in this important segment as there are some great opportunities and the demand for affordable housing is likely to continue increasing as Dubai heads towards the Expo 2020. There are many affordable developments that have been sprouting in Dubailand and other parts of the city, especially in the outskirts. They are strategically located, with easy access to major road networks like the Shaikh Mohammed bin Zayed Road, thus residents enjoy fast transit times to most of Dubai’s popular areas. The demand for this type of affordable accommodation will continue to grow. invest in apartments and retain ownership for atleast five years to gain superior capital growth and enjoy healthy net annual rental return in the meantime.

Do you think the property prices will fall further in this current cycle? If so, would now be a good time to sell?

The fact that the property industry is notoriously cyclical is widely known yet viewed differently. Investors with a clear strategy and long-term plan simply accept, foresee and plan for cycles in the industry. They look for longer—term sustainable growth rather than take additional risk by trying to accumulate wealth by taking advantage of shorter-term spikes or dips. Investing in property has a very simple purpose: to create wealth over the long term. However, your portfolio needs to be nurtured, maintained and managed to ensure its wealth-creating potential is 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 engaging a good property manager who will ensure that you maximize returns.

I plan to purchase our first family home. What are the factors to consider when getting a mortgage?

There are a number of considerations that you need to factor into your plan of buying a home. One of these is getting a mortgage. Generally speaking, you are much better off financially in applying your hard-earned money towards building equity, but keep in mind that mortgage payments can be subject to fluctuations as interest rates rise. Not all mortgages are the same. Try and have the mortgage establishment fees waived. Depending on the institution, this may save you up to Dh3,000. Also request that you are not penalized for paying the mortgage down faster or in its entirety. By law, the mortgage provider cannot charge you more than 1% of the outstanding amount or a maximum of Dhl0,000, but try to have this stipulation dropped from your contract. Make sure your provider will allow you to utilize the equity you build in your home over time. Some lenders will allow you to use this as security for further borrowing.

Question of the week

I am buying an off-plan property. Can you explain the principles of escrow?

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

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

Anybody can open an escrow account but not anybody can open one for the purposes of property development in Dubai. The developer must first be registered as a bona fide developer with RERA which involves providing documents ranging from those which establish the bona fide nature of the developer including details of its officers and solvency, title deeds proving ownership of the land to be developed, NOC from relevant parties to performance guarantees.

Ask the agent

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Q1) There are many opportunities invest in off-plan properties, but the values in the secondary market have improved significantly. Are there still advantages of buying off-plan?

Purchasing a property off-plan can provide you with superior capital gains by the time of completion, providing you are buying at a discount to today’s finished inventory and the market strengthens up to the completion date for the particular property that you are considering. This will depend on an estimation of economic growth, population expansion, the number of competing projects in the pipeline and 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 sought in the future. Deal only with reputable developers and check the status of the escrow account.

Q2) I am planning to invest in Dubai real estate.As this would be my first property investment, can you give any useful tips?

First of all, know why you want to invest in property. You must have a clear understanding of what you are trying to achieve and what role your property portfolio will play in building your wealth. Then you must set your financial objectives carefully. Success in property investment can only be attained when (and if) those objectives have been realised. Always think long term for your greatest success. Those who have had the greatest success possess the ability to think long term, make rational, well-researched and carefully thought-out decisions with the end objectives in mind and understand that every real estate industry globally will go through cycles of growth and contraction. Make sure you know your-stuff by being able to communicate intelligently and knowledgeably with the experts. Always strive to eliminate risks. Plan your finances, cash flows, capital requirements and debt levels carefully.

Q3) I wish to sell my villa, but the garden needs a little bit of work. Is it worth investing in improving the garden? Am I likely to get my money back?

For your garden to become a selling point, you need to establish a low-maintenance, functional landscape that is highly appealing to the potential buyer. Resist the temptation to clutter the landscape with every species of flora known to man. Plants grow and you need to keep that growth in check as your garden can look unkempt and create a negative impression. Ensure that all landscaping elements must be coordinated carefully. if you don‘t know or understand the differing qualities of certain soils, it’s time to call your landscape gardener and have him produce an impressive garden for you. Even if you don’t plan on selling your home for another five or 10 years, now is a good time to lay the foundation for a great landscape design that will win over your future homebuyers.

Q4) While the correction in the Dubai property market is broad, certain segments have undergone a greater correction than others. Are there greater-opportunities in some segments in terms of long-term ROI?

Definitely! We are encouraging everyone to invest in the lower priced, higher value, affordable segment of the market as there are some great opportunities. There are many high-performing, yet affordable developments spread all across Dubai, giving investors a wide range of options to choose from. Apartments in some developments have seen excellent capital growth with some residences growing by 35%-over the past two years, with rental premiums of at least 7% not uncommon. Demand for this type of affordable accommodation continues to grow especially as Dubai’s population swells in the run-up to the Expo. invest in an apartment and retain ownership for at least five years as you will benefit from superior capital growth and enjoy a healthy net annual rental return.

Question of the week

Q5) Recent reports have suggested that the current property correction in dubai has bottomed. Would you agree with this and is it a good time to buy?

It is always difficult to pick peaks and troughs in real estate cycles.
Having said that, there are definitely opportunities available and advantages to be gained from purchasing now as the next few years are expected to see strong economic growth. Start your property search immediately as a property investment requires the same approach regardless of the state of the market. lf you have the cash, pay for it outright, but do consider taking out a mortgage as long as you understand the impact of interest rate rises in the future. Think carefully about location, surrounding infrastructure, construction quality, and developer reputation and building amenities. Properties with attractive views, close to the beach, with golfing facilities, are part of an iconic development and have close access to the Metro generally provide good returns. You also need to consider the effectivity of the owners association, the service charges and the quality of maintenance services as these will affect the long-term value of your investment. Be purposeful, patient and pragmatic and you are well on the way to making a very good investment decision.

Reletting property to a new tenant

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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 – Ask the Agent

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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.

Advice for hassle-free ownership

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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.

Boost your portfolio

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By Mohanad Alwadiya

Long-term planning is paramount to maximize financial gains

I have a property portfolio consisting of a mix of one and two-bedroom apartments in Jumeirah Lakes Towers and Dubai Marina. How can I capitalize on opportunities that arise as the World Expo 2020 draws near?

You need to seek professional advice. 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 maximize your financial gains by providing an assessment of the opportunities and a strategy. Do  not  make  the  mistake  of  leaving  your  planning  for  too late. You will need to comprehend current and future market conditions and events, factors that may enable or inhibit revenue growth, inflation and cost increases as well as a complete understanding of financial modelling and the ever-developing area of industry policy and regulation. Depending on the size and complexity of your portfolio, you should have, as a minimum, a rolling five-year activity plan, which covers cost management and maintenance schedules, pricing and marketing, and tenant management and policy. A competent property manager will also provide you with communications and review schedules, as well as status and financial reporting.

There are a lot of opportunities to buy off-plan at the moment.  How can I protect myself against buying an apartment of inferior quality?

Firstly, make sure that you are dealing with a reputable developer. A positive effect of the recession was that a lot of inferior developers were exposed and are no longer in business. Seek professional guidance — those in the industry have a good understanding of who the reputable developers are. Secondly, ask about the proactive measures taken to ensure the product is built to an acceptable standard and take the time to inspect the developer’s completed projects. Warranties and any quality assurance policies should be discussed in detail. Get the sales and purchase agreements reviewed by a professional so you have legal recourse should any issues arise. Upon completion you have the right to inspect your apartment and report any legitimate issues to the developer for rectification. Matters that can be remedied in the short term should be fixed immediately.  Remember, once you have taken ownership of the apartment, the developer is obliged to fix any issues that may arise for 12 months following the transfer of ownership.

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

ASK THE AGENT


I am moving to Dubai and a friend has suggested I live in the Greens or The Views. What would be your advice?

Both The Greens and The Views are very nice places to live in. Situated adjacent to the Emirates Golf Course on Sheikh Zayed Road, they are very well located with all that in Dubai has to offer within easy driving distance.

They offer very nice lifestyle with excellent amenities, retail and dining alternatives in a very well-planned development. If you are lucky, you may be able to procure a view overlooking the Emirates Gold Club Wadi course. Very picturesque indeed, particularly in the evenings.

You will have a wide choice of studio; 1, 2 or 3-bedroom apartments in buildings of varying standards with annual rents ranging from about Dh60K to Dh195K.

If you are thinking of purchasing a property, the time is right as the area has shown excellent capital appreciation over the last year or so. Sale prices will range from around Dh850K for a studio apartment to as much as Dh3 million for the most luxurious three-bedroom apartment.

All in all, great places to live.

Hello, when I tried ti renew my rental contract, my landlord tried to increase my rent by 15%. I consulted with RERA and proved to him that he cannot do this, and now he has instructed me to vacate my apartment because he wants it for a family member. Can he actually do this?

These types of situations are occurring more frequently now that the market is picking up.

Law No. 33, Article 25(2) is very clear and provides protection for you, the tenant, by stipulating under which circumstances a tenant can be evicted.

First of all, the landlord must give you at least 12 months notice of eviction and the reasons and neceary documentation supporting the notice to evict.

Regardless of whether his intention is to use the property for himself, a relative or a friend, he would still need to provide you with a notice of eviction 12 months prior to the effective date.

In this instance, you have every right to remain in the apartment as a paying tenant if you wish to do so.

Some 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 current growth sustainable?

Dubai’s real estate recovery following the global financial crisis has consolidated from a surge in 2011 that had the Arab Spring and other extraneous events as catalysts, into a trend as evidenced by a strong 2012 performance, with momentum continuing into the first quarter of 2013.

The sustainability of the recovery is being underpinned by an economy which is steadily strengthening, showing strong growth of anywhere between 4% to 4.5% of the GDP, mainly driven by strong performances in the tourism and retail sectors with trade and logistics also growing significantly. Property recovery is being fuelled by growth in these core areas of the economy aided in part by economic or geopolitical problems being experienced elsewhere in the world.

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