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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.

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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.