جريدة الخليج: 53 % حصة البيع على الخريطة في دبي خلال ثلاثة أشهر

سجل السوق العقاري المحلي في دبي بيع نحو 6350 وحدة سكنية خلال الربع الثالث من العام الجاري 2018، واستحوذت المبيعات على الخريطة على أكثر من النصف بواقع 53% (3366 وحدة)، وتصدرت كل من «الخليج التجاري» و«مدينة محمد بن راشد» و«دائرة قرية الجميرا» مبيعات الشقق على الخريطة خلال هذه الفترة.
وتصدرت «المدينة العالمية» و«مارينا دبي» و«دائرة قرية الجميرا» مبيعات الشقق الجاهزة بنسبة 32 % من مجموع مبيعات الشقق الجاهزة خلال الربع الثالث لعام 2018
أما مبيعات الفلل والمنازل الفردية الجاهزة فقد تجاوزت المبيعات على الخريطة في الربع الثالث من عام 2018 والتي تصدرتها «روعة الإمارات» (اميريتس ليفينج (و«المرابع العربية» و«داماك هيلز» والتي بلغت مجتمعة نسبة 30% من مجموع مبيعات الفلل والمنازل الفردية الجاهزة خلال الربع الثالث

استقرار سعري

ولفت التقرير المشترك بين «هاربور العقارية» و«بروبرتي مونيتور» إلى أن الأسعار التي تم تداولها للفلل والمنازل الفردية قد استقرت خلال الربع الثالث من عام 2018 على أقل من متوسط أسعار عام 2017، وضاقت فجوة السعر بين الشقق والمنازل المستقلة. كما اتجهت أسعار الشقق أيضًا إلى الانخفاض وبلغت في المتوسط نحو 1.2 مليون درهم في الربع الثالث من عام 2018. كما أن تداولات العقارات الجاهزة التي بدأت في منافسة أنشطة البيع على الخريطة للفلل والمنازل الفردية منذ نوفمبر/‏تشرين الثاني 2017، قد استمرت في اتخاذ نفس المنحى خلال هذا الربع

 
في غضون ذلك، وخلال الأشهر التسعة الأولى من عام 2018 استمرت تداولات البيع على الخريطة للشقق في التصدر حيث ركز المطورون اهتمامهم على تزويد خيارات منخفضة الأسعار وخطط الدفع الميسرة والمنافسة
والمنافسة والتنازل عن رسوم  التسجيل وغيرها من الحوافز الأخرى

الرئيسي والثانوي

وطبقًا للبيانات الصادرة عن «بروبرتي مونيتور» فإن 27% من سعر تداولات البيع على الخريطة للشقق خلال الأشهر التسعة الأولى من عام 2018 تراوح بين 1,200 إلى 1,500 درهم للقدم المربعة. وبالمقارنة فإن أعلى سعر في السوق الثانوي للشقق بلغ بين 500 و 800 درهم للقدم المربعة
واستمرت شقق الاستوديو والوحدات ذات غرفة النوم الواحدة في تصدر المشهد الأنشط من حيث التداولات في كل من المبيعات على الخريطة والسوق الثانوي في عام 2018 حتى تاريخه
في الربع الثالث من عام 2018 سجلت أسعار المبيعات في سوق العقارات انخفاضًا ربع سنوي بنسبة 1.4% و 1.3% للفلل والمنازل الفردية والشقق على التوالي. ومن المحتمل أن النشاط الاقتصادي الضعيف وتسليم الوحدات السكنية الجديدة من المطورين لاحقًا هذا العام، أن يفرض مزيدًا من الضغط لخفض أسعار مبيعات المساكن. وفي تلك الأثناء، فإن إعلان حكومة دولة الإمارات في عام 2018 عن لوائح التأشيرة الجديدة لمدة عشر سنوات وتأشيرة الإقامة لمدة خمس سنوات للأجانب المتقاعدين سيكون له تأثير إيجابي على السوق في الأجل القريب

أداء الإيجار

كان انخفاض أسعار إيجارات الوحدات السكنية أكثر وضوحًا في «دبي لاند» و«الروضة – ذا جرينز» وفي «روعة الإمارات» و«موتور سيتي» و«المرابع العربية» و«فيكتوري هايتس» و كان متوسط التغير على مدى 12 شهرًا نحو7%
ومن المتوقع أن يستمر انخفاض الأسعار خلال الربع الأخير من العام الجاري وبداية عام 2019 مع وجود خطط لتسليم مساكن جديدة بكل من الملكية الحرة ومجتمعات الإيجار غير المنتهي بالتمليك في دبي
ومع ذلك، فإن أثر ذلك على بعض المشاريع سيكون أقل وضوحًا إذا استفاد المطورون من محفزات الطلب الفريدة مثل الواجهة البحرية والتشطيبات عالية الجودة والمرافق المجتمعية المتميزة

المعروض القادم

جرى تسليم نحو 6,000 وحدة سكنية في أنحاء دبي في الربع الثالث من عام 2018، وتركزت غالبية عمليات التسليم خلال الربع الثالث لعام 2018 في «دائرة قرية جميرا» و«منطقة برج خليفة» و«تاون سكوير» و«دبي الجنوب». واستحوذت الشقق السكنية على أكثر من 72% الوحدات التي تم تسليمها. أما بالنسبة لباقي السنة، فستتركز غالبية المعروض القادم في مناطق «الخليج التجاري» و«دائرة قرية جميرا» و«مدينة دبي الرياضية» و«واحة دبي للسيليكون» و«تاون سكوير»

مهند الوادية: 1.2 و 1.9 مليون درهم متوسط السعر

قال مهند الوادية، الرئيس التنفيذي لشركة «هاربور العقارية»: «من بين الملاحظات التي برزت في التقرير هذا عن السوق العقاري في دبي للربع الثالث من 2018، هو أن متوسط الأسعار الحالية للمنازل المستقلة والشقق يبلغ 1.9 مليون درهم و1.2 مليون درهم على التوالي، وهي تقريبا نفس أسعار ما رأيناه في الربع الأول من عام 2008 وقبل انهيار السوق المالي العالمي
وأضاف الوادية أن الفرق قبل عشر سنوات أن كنا في طفرة نمو اقتصادية سريعة متسارعة، حيث كان المشترون يلاحقون المكاسب المالية السريعة في ذلك الوقت، لم يتوقع الكثيرون أن السوق كان متجهاًً نحو الانخفاض الحاد، على الرغم من أن بعض العقول المنطقية تنبأت بحدوث هذه الحالة التي كانت وشيكة

محمد عبيدات: مبيعات الجاهز تتحرك للتفوقعلى نظيرتها على الخريطة

من جانبه أشار محمد عبيدات، الرئيس التنفيذي للتكنولوجيا في شركة بوروبرتي مونيتور إلى أن الجميع يدرك الوضع الحالي للسوق العقاري ونملك اليقين بأنه سيتحول قريبا للاتجاه الأعلى. ونرى أنه، بالنسبة للعديد من المشترين، فهذا هو الوقت المثالي لشراء منزل في دبي وأصبح الحلم هذا في متناول اليد حسب أسعار السوق الحالية
وذكر عبيدات أن بيانات نظام بروبرتي مونيتور تشير إلى أن مبيعات المنازل الجاهزة قد تخطت في الآونة الأخيرة مبيعات المنازل قيد الإنشاء في المشاريع المطلقة مؤخرا، وهذا أمر منطقي لأن العائلات المشترية لا تقدر أن تقوم بالدفع والانتظار لبناء منزل وفي نفس الوقت دفع الإيجار أيضًا، فهي تحتاج إلى منازلها الآن، وبالتالي فهي أكثر ميولاً إلى شراء المنازل الجاهزة في نفس الوقت

Ask The Agent

I have a property portfolio of a mix of 1 and 2-bedroom flats in JLT and Dubai Marina. With this in mind, how do I capitalise on what I have?

Seek professional advice as to how to manage your real estate portfolio. Many landlords across Dubai are bound to miss out on the revenue-generating opportunities that Expo 2020 will bring because of poor or non-existent planning. A competent property manager will provide you with the best opportunity to maximise your financial gains by giving you an assessment of the opportunities, and a strategy and activity plan designed to harness the financial potential of your property. Do not make the mistake of leaving your planning too late. You will need to comprehend current and likely future market conditions and events, likely risk factors that may enable or inhibit revenue growth, inflation and cost increases, and a complete comprehension of financial modelling and the ever-developing area of industry policy and regulation.

I am considering buying property to offer for rent. I am looking at two similar offers, one of which is located within 150 meters of a metro station and offered at a premium of around 8 percent. Is this reasonable?

Let us first look at why properties situated close to the Metro can command a premium. It is all about convenience, cost and lifestyle efficiency. Your prospective tenants can enjoy a cost-effective, fast, comfortable and reliable mode of transport to either travel to work, visit friends or even do some light shopping. No traffic hassles, road works, parking, and wear and tear on the family car while the requirement for a second family car is diminished. Many tenants are prepared to pay a rental premium for a property which allows them to enjoy these benefits. Our studies have shown that properties located within a .5-kilometre radius of the Metro in Dubai can command between a 6 percent and 11 percent premium when compared to similar properties with no feasible ambulatory access to a metro station.

My apartment is ready. When I said that I want to inspect it the developer said they already completed their inspection. Is this right?

Technically, once an official Completion Certificate has been issued for the building by the Dubai Land Department, it is deemed ready for handover and your contractual obligations regarding transfer of ownership remain. Nevertheless, I doubt if the developer has your best interests at heart in this instance. You have the right to inspect (snag) your apartment and report any legitimate issues to the developer for rectification. Items which 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 a full 12 months following the transfer of ownership. It is in your interests to snag your apartment, and I strongly recommend you engage a professional to do this on your behalf.

What is the difference between a leasing agreement and a property management agreement?

You enter into a leasing agreement when you wish your real estateto locate suitable tenants for your apartments, facilitate the signing of the tenancy agreement leaving you to assume the responsibility and devote your time to managing the tenant and all aspects of the property thereafter. A property management agreement includes a lot more. A competent property manager will provide an assessment, strategy and activity plan. Considerations include history, current market and risk factors, industry knowledge extending to policy and regulation, finance and market dynamics. An activity plan will be provided covering pricing and marketing, customer relationship management, tenant management and policy, cost management, maintenance supervision, communications and review schedules, status reporting, financial reporting and resourcing. All of these activities will be performed by the property manager under a property management agreement.

Question of the Week

With Expo 2020 coming, is there anything I should do differently with my two apartments in Dubai Marina from a leasing point of view?

Timing will be critical to the decisions that you make regarding the management of your property. First of all, you need to get professional advice as you require a skilled and knowledgeable property manager to help you harness the true financial potential of your property during this unique period in Dubai’s real estate history. You need to appreciate that there will be some nuances and important considerations when looking at the opportunities that the World Expo 2020 will provide. For example, overall values will change but differing asset types and locations will not necessarily move in unison as Expo preparations move ‘from the analytical and planning phases through to implementation and eventual launch and operational phases. Initially, it is likely that investor demand will drive much of the value appreciation to be followed by an increasing rate of end-user demand for accommodation, both for villas and apartments. Those areas in proximity and with easy access to the Expo 2020 site itself will attract initial attention. However, as the event draws closer, demand for more centrally located property will also increase. One can expect both the rental return and capital return curve to steepen as we move closer to the event launch.

ASK-THE-AGENT-4Nov17

Ask the agent

Gulf News Saturday, November 4, 2017
FREEHOLD
By: Mohanad Alwadiya CEO, Harbor Real Estate

I was advised to hire a property agent to get a better deal. They show what they have and say what others offer are not good. Are they being truthful?

The real estate market, like any sales-oriented industry, is a tough place to operate in since everyone is out to make a sale for themselves. So having observed the behaviour you mentioned, it would benefit you a lot to ensure you are dealing with a reputable agency with qualified professional agents. Since embarking on a real estate investment venture is a major decision you will have to make, it would be worth your while to do a little research, or ask people with some real estate know-how as to which companies have established themselves well in the industry. You may also want to have a look at the Dubai Land Department’s Brokers App, which shows you a ranked list of approved brokers in Dubai and could assist you greatly in picking out the agency that will work with you and for you.

Where can people go and discuss, or lodge a complaint against a property developer?

It is a fact that issues related to property transactions and deals (tenant vs. landlord, buyer vs. developer, buyer vs. broker) cannot be avoided; thus, authorities have come up with platforms where complainants can air their grievances. The Government of Dubai has made a web portal called “eComplain” available on the Dubai Government website.

Through the said portal, customers may lodge a complaint and if the matter involves a specific government department, the complaint is routed to the appropriate government entity for further action and resolution.

But in order to deal with real estate matters directly, any issues or complaints involving property industry stakeholders, in this case, a developer, need to be referred to the Real Estate Regulatory Agency (RERA) if the parties involved have failed to come to an amicable arrangement regarding the issue in question.

Who is responsible for the upkeep of leased premises? Is there no scope for natural wear and tear in lease contracts?

The landlord is responsible for the general maintenance of a leased property unless the parties have agreed otherwise in the contract. The owner is also responsible for taking care of any defects or faults that affect the tenant’s use of the property.

However, sometimes the landlord may also transfer responsibility for maintenance to the tenant as it may happen in the case of some commercial leases (Article 16, Law No. 26 of 2007).

Natural wear and tear is taken into consideration by law (Article 21, Law No. 26 of 2007) though upon the expiry of the lease, it is assumed that the tenant will return the property to the landlord in the condition that the property was in at the beginning of the tenancy.

We are very unhappy with the facilities management services in our building. What recourse do we have when the landlord is unable to offer a solution?

In Article 16 of Law No. 26 of 2007, it states that “Landlord shall, during validity of the tenancy contract, be liable for undertaking maintenance of the property and shall rectify any defects or faults that affect tenant’s intended benefit from the property, unless the two parties agree otherwise.”

The law very clearly states that property upkeep and repair is a responsibility of the landlord. The Rental Dispute Settlement Centre, which is the judiciary arm of the Dubai Land Department (DLD), would be your last recourse in case you have already exerted effort to properly communicate the matter to the landlord and/or the property manager to no avail. It hears complaints and provides solutions in a transparent and efficient manner.

Ensure though that you bring with you the required documents when filing a case.

Question of the Week

Now that protecting the environment and sustainability have become essential considerations across various sectors, are there rules to encourage builders to promote human and environmental health?

The already existing Article 7 of the Dubai Municipality’s Decree No. 66 of 2003 involves the selection of glazing for facades with the objective to minimise solar thermal heat gains. However, the article does not provide for penalties in terms of non-compliance.

A Mandatory Progression programme was introduced in 2008 with an objective to ensure new buildings meet “green” standards.

A more current development, however, is the introduction of the “Al Safat” green building rating system. The rating system applies to all types of buildings including residential, commercial, industrial and others.

The four classifications are platinum, gold, silver and bronze (in descending order), and the system requires new buildings taking permits from September 1, 2016 to meet requirements for bronze certification at a minimum.

Old buildings will have to be retrofitted to meet the minimum requirements.

Meanwhile, buildings that have previously acquired green building certification will need to apply again to be Al Safat certified.

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

5 KEY QUESTIONS You MUST ASK YOURSELF BEFORE INVESTING!

 

I always recommend that clients consult with a financial advisor prior to embarking upon the purchase of a property. Investing in property requires careful planning and a clear understanding of what it will entail.

How much do you really know about property as an investment?

You must have some knowledge about any investment that you might be considering. Property is no different. The old adage of “Don’t invest in anything you don’t know” applies. You may not be an expert, but you need to be able to communicate intelligently and knowledgeably with the experts.

Do some homework on the industry and gain an understanding of where the industry is now, where it is headed and what is driving its direction and development. “Get a feeling of its composition and what it has to offer you in terms of wealth generation opportunities, how you might be able to engage those opportunities and when you envisage starting your foray into the property investing space.”

It’s difficult for anybody to accurately assess opportunities and the risks associated with those opportunities if they have little knowledge of what it is they are investing in.

 

Are your investment objectives clearly defined and well considered?

As with any investment, investing in property is all about recognizing and capitalizing on opportunities that are consistent and supportive to your overall wealth accumulation objectives.

You must have a clear understanding of what you are trying to achieve and what role your property portfolio will play within a larger diversified investment portfolio. What proportion of your total investment portfolio is allocated towards property? towards stocks or bonds? towards gold or commodities? Etc.

The only person who can determine what you are trying to achieve is you so be sure you know you’re your objectives are before doing anything.

 

What is your source of finance?

Needless to say, investing in property is often a capital intensive exercise and, depending on your strategy, returns can be subject to relatively long lead times. A sufficient and robust finance plan is essential. What is your source of finance and where do the greatest risks lie in the event of an economic downturn or change in circumstances? How liquid might you need to be? How exposed will you be to interest rate increases and or exchange rate fluctuations? What level of gearing or leverage are you comfortable with? Will you be able to preserve capital invested in your property portfolio during cyclical swings in the market or will you need to move capital among portfolios?

All these questions (and many more) need to be addressed and the more skillful you are at conceptualizing your wealth generation schematic, the greater your likelihood of generating successful strategies to grow your wealth.

 

Do you have a financial advisor? (That you trust)

I always recommend that clients consult with a financial advisor prior to embarking upon the purchase of a property. Investing in property requires careful planning and a clear understanding of what it will entail; the effects it will have on lifestyle, the risks it may pose, the stresses that may emerge while, at the same time, the benefits of generating wealth in, what can be, a very lucrative industry . A financial advisor can help you understand and assess all these elements by helping you determine what you actually need to do (or do without) to achieve your objectives.

Ask yourself if you know definitively what you can afford, how best to use available finance, how to accurately assess alternative investment options, how best to utilize your current assets and how investing in real estate is going to enable you to grow your wealth in the future. A financial advisor will view your investment as one part of your overall financial landscape and should be able to guide you into committing the right type and the right amount of resources to acquiring that dream home that everybody aspires to.

As with any investment, investing in property is all about recognizing and capitalizing on opportunities that are consistent and supportive to your overall wealth accumulation objectives.

 

Do you have a team of professionals (that you trust) who can assist you in your quest?

Are you able to identify, engage and work with a professional in the industry? Do you have the skill to select the right agency? Do you know what separates professionals that will provide you with tangible added value rather than simply line their pockets with your money? It’s up to you to choose wisely and remember, cheapest is not always best. Do you know where to find an experienced and passionate team with people who really enjoy what they are doing? An agency that exhibits a breadth and depth of industry knowledge and expertise? This is important. Look for longevity and evidence of good relationships with key industry stakeholders such as the major developers or authorities such as the Dubai Land Department, RERA, DEWA or Economic Department. And finally, look for an agency that has received some form of Industry or peer recognition. These are the hardest plaudits to get! ■

The Essential role of property asset managers

The role of the property asset manager is misunderstood by many, with the majority of property investors and other industry participants thinking that the role does not extend beyond the collection and remittance of rental receipts and acting as a buffer between the landlord and the tenant.

Little do they realize that a good property asset manager will generate a greater return from a property portfolio and enable long term portfolio strategic objectives to be realized.

Any investor in property would benefit from a professional property asset manager but it is essential to   know what to look for in selecting a professional to manage their property(s)?

  1. Astute investors understand that you need a professional who is experienced in the market. Not just any market, but the Dubai market. Typically, if you find somebody with at least 10 years’ experience, you will have found somebody who has survived the global recession, and that should provide a reasonable indication that they are in the business for the long term and that they had the skills to navigate and survive Dubai’s property slump. Many didn’t.
  2. Strategic Approach. A competent property asset manager will provide a whole host of services for the investor but the most important is the development of a Property Portfolio Strategy. The professional must be able to articulate and present his thoughts after conducting a thorough assessment of your personal situation and property portfolio. He must be able to provide you with a credible strategy and activity plan which is designed to harness the true potential of your property and provide you with the maximum rate of total return. It is essential to have a well thought out strategy for your property portfolio if you are to maximize your returns.
  3. Knowledge and Understanding. Not just anybody can formulate a credible and implementable strategy. It requires years of expertise and a fundamental understanding of what makes Real Estate such a worthwhile and superior investment. A true professional will have a strong knowledge base on topics including industry history, current market factors and trends, risk factors, and the likelihood of relevant future events that will affect the performance of your property investment. This knowledge should span global, regional and local landscapes and will require a good understanding of economic factors, industry knowledge extending to government policy and regulation, finance and market dynamics.
  4. Planning Expertise and Ability to Implement. Forming a strategy is one thing, but being able to bring the strategy to life is quite another. A true professional will provide an activity plan which will include details of pricing and marketing, customer relationship management and tenant management and policy for the entire portfolio. Essentially, this area of expertise is related to the “topline” or revenue generation and management of the property. Equally important is the cost management and maintenance supervision of the property. Many times, I have seen excellent “topline” performance being eroded due to poor operational and maintenance cost controls.
  5. Organizational Ability and Communication Skills. Managing your property portfolio will also require proper performance measurement, communications and review schedules, and status reporting and financial statements. Investors should always seek examples of these elements as transparency and candid performance appraisals are essential for managing your portfolio correctly by addressing shortfalls to objectives, issues requiring addressing and opportunities for performance improvement, in addition to your peace of mind.
  6. Customer Centricity. It’s important to choose a property manager who you can work with and who, you believe, has your best interests at heart. Your property manager must be customer centered and, unfortunately, in this business, this is not always the case.
  7. There is no point entering a business relationship that is lacking in mutual trust and respect. The investor must have confidence in his ability to manage a business … the investor’s business… which just so happens to be a property portfolio. As with all investments, but especially investments in property, there will be good times and challenging times. There is no such scenario as “set and forget”. It doesn’t exist. If you do not respect the manager you have appointed, the relationship will not survive the challenging times and you will need to go through the whole process of finding a replacement.
  8. A History of success. The investor should be sure to ask for referrals and call some existing clients. It’s important to seek out success stories and ask to see examples of client reports to assess their completeness, continuity and timeliness. The investor must ask the property manager carefully thought out questions to gauge the depth and breadth of knowledge that he possesses.
  9. Finally, it’s essential that the organization the investor is dealing with has the resources to support the manager of the portfolio. In these times of eliminating overheads, individual performance can be inhibited because of a lack of organizational support. The investor should ask to meet the team.

Choose Wisely The investor must ensure that the property asset portfolio is in good hands providing expected returns with as little hassle as possible. But the investor must realize that once a property manager is appointed, the ultimate return on the investment is largely in his hands.

Property investing in 2017… many alternatives

There are many alternatives for the property investor in today’s market. Here are just a few of them and why I think each presents significant opportunities to increase my client’s wealth.

Affordable housing

The affordable housing segment in Dubai has outperformed its more luxurious alternative for some time now and continues to show lots of promise. Affordable properties will continue to be in high demand as Dubai’s population growth gains momentum during a period of expected strong economic growth leading up to the end of the decade.

Examples of affordable projects that are providing good rental returns and expected capital appreciation are the Skycourts project and the adjacent QPoint project. Apartments in Skycourts have proven to be very popular with tenants and investors alike and have historically delivered excellent capital growth with some apartment values growing by 20 to 25% % in the 24 months leading up to the correction and shedding no more than 5% reduction in values during the correction with rental premiums of at least 7% not uncommon. Purchasing an apartment at Skycourts 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 is also providing rental yields of 6% to 7% and has also showed strong resilience in losing minimal capital value during the correction.

And while the value is irrefutable, he risks associated with investing in the affordable segments of the industry as opposed to the luxury segments are much lower. 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. As Dubai grows, so will the need for affordable housing.

Hospitality

The rise of Dubai as one of the world most preferred tourist destinations is a remarkable story. Tourism and associated commercial activities are flourishing in Dubai and the focus of investment has been on new projects to grow these important revenues generating economic segments and further diversification. The launch of 2 major theme parks in 2016 will ensure Dubai attracts over 15 million visitors in 2017, continuing a growth trend of approximately 10% per annum since 2010 and is well on track to attracting over 20 million visitors in 2020 with continual investments in infrastructure and attractions expected to generate 25-30 million tourists annually to the emirate by 2030.

The local market offers significant opportunity. The GCC, with a total population of just over 40 million people, has one of the youngest populations in the world. Approximately 50% of the population on the Arabian Peninsula is below 25 years of age. What a wonderful opportunity this represents for Dubai. The possibility exists for the construction of the only mega family entertainment destination in over 2,500,000 square kilometers of territory. From an economic point of view, the provision of memorable entertainment experiences for the youth and families of the region must have a multiplier effect on the economy.

Offices

All things being equal, offices in today’s market can provide an ROI significantly greater than that of residential properties. This is mainly due to lower per sq. ft. capital cost but also reflects the higher levels of risk associated with owning this type of property.

Managing tenants is also more straightforward. You will have a business-to-business relationship with your tenant and many of the emotional issues which can complicate residential leasing arrangements won’t exist. It’s easier to keep interactions professional and focused and relationships are built over time with the opportunity to attract a ‘blue chip’ tenant and are likely to rent your property for a long period and less likely to default on rental payments. In many cases, office tenants and property owner interests are aligned. The tenant wants an efficient operation which presents a favorable impression to his customers, business associates or peers and, in this way, is more likely to assist the owner maintain or even improve the property.

Establishing a true value of the investment is often easier with commercial property. Reviewing the current owners’ income statement and existing lease details will provide a good indication of the likely future cash-flows and help to establish an accurate valuation. Residential properties are often subject to more emotional pricing or developer inefficiency and cost recovery considerations.
In addition to lease rates and periods, negotiations can include such items as provision of fit-out assistance, maintenance, implementation of office and storage systems, insurance, lease to buy provisions and options … the list goes on. The variations are countless.

Labor Camps

One alternative that is not considered very often is the ubiquitous labor camp. Dubai is going through a high construction phase with a growing requirement for construction labor. Demand for this asset type has been very strong and continues to grow. Yields above 15% are not uncommon and by selecting the right tenant, longer term contracts can be negotiated. This investment is certainly worth consideration when economic activity is expected to increase or remain strong for extended periods of time.

Investing in 2017? Five key points to ask

1- HOW MUCH DO YOU REALLY KNOW ABOUT PROPERTY AS AN INVESTMENT?

You must have some knowledge about any investment that you might be considering. Property is no different. The old adage of “Don’t invest in anything you don’t know” applies. You may not be an expert, but you need to be able to communicate intelligently and knowledgeably with the experts.

Do some homework on the industry and gain an understanding of where the industry is now, where it is headed and what is driving its direction and development. Get a feeling of its composition and what it has to offer you in terms of wealth generation opportunities, how you might be able to engage those opportunities and when you envisage starting your foray into the property investing space.

It’s difficult for anybody to accurately assess opportunities and the risks associated with those opportunities if they have little knowledge of what it is they are investing in.

2- ARE YOUR INVESTMENT OBJECTIVES CLEARLY DEFINED AND WELL CONSIDERED?

As with any investment, investing in property is all about recognizing and capitalizing on opportunities that are consistent and supportive to your overall wealth accumulation objectives.

You must have a clear understanding of what you are trying to achieve and what role your property portfolio will play within a larger diversified investment portfolio. What proportion of your total investment portfolio is allocated towards property? towards stocks or bonds? towards gold or commodities? etc.

The only person who can determine what you are trying to achieve is you so be sure you know you’re your objectives are before doing anything.

3- WHAT IS YOUR SOURCE OF FINANCE?

Needless to say, investing in property is often a capital intensive exercise and, depending on your strategy, returns can be subject to relatively long lead times. A sufficient and robust finance plan is essential.

What is your source of finance and where do the greatest risks lie in the event of an economic downturn or change in circumstances?  How liquid might you need to be? How exposed will you be to interest rate increases and or exchange rate fluctuations? What level of gearing or leverage are you comfortable with? Will you be able to preserve capital invested in your property portfolio during cyclical swings in the market or will you need to move capital among portfolios?

All these questions (and many more) need to be addressed and the more skillful you are at conceptualizing your wealth generation schematic, the greater your likelihood of generating successful strategies to grow your wealth.

4- DO YOU HAVE A FINANCIAL ADVISOR? (THAT YOU TRUST)

I always recommend that clients consult with a financial advisor prior to embarking upon the purchase of a property.

Investing in property requires careful planning and a clear understanding of what it will entail; the effects it will have on lifestyle, the risks it may pose, the stresses that may emerge while, at the same time, the benefits of generating wealth in, what can be,  a very lucrative industry . A financial advisor can help you understand and assess all these elements by helping you determine what you actually need to do (or do without) to achieve your objectives.

Ask yourself if you know definitively what you can afford, how best to use available finance, how to accurately assess alternative investment options, how best to utilize your current assets and how investing in real estate is going to enable you to grow your wealth in the future. A financial advisor will view your investment as one part of your overall financial landscape and should be able to guide you into committing the right type and the right amount of resources to acquiring that dream home that everybody aspires to.

As with any investment, investing in property is all about recognizing and capitalizing on opportunities that are consistent and supportive to your overall wealth accumulation objectives.

5- DO YOU HAVE A TEAM OF PROFESSIONALS (THAT YOU TRUST) WHO CAN ASSIST YOU IN YOUR QUEST?

Are you able to identify, engage and work with a professional in the industry? Do you have the skill to select the right agency? Do you know what separates professionals that will provide you with tangible added value rather than simply line their pockets with your money? It’s up to you to choose wisely and remember, cheapest is not always best.

Do you know where to find an experienced and passionate team with people who really enjoy what they are doing? An agency that exhibits a breadth and depth of industry knowledge and expertise? This is important.

Look for longevity and evidence of good relationships with key industry stakeholders such as the major developers or authorities such as the   Dubai Land Department, RERA, DEWA or Economic Department.

And finally, look for an agency that has received some form of Industry or peer recognition. These are the hardest plaudits to get!

Mortgage trend in Dubai set to continue

There has been a very pleasing trend that has developed during 2016 which is yet another demonstration of the development and maturation of Dubai’s Real Estate industry.
The marked increase in the utilization of mortgages to purchase properties in the emirate demonstrates a market that has undergone a structural shift to supply more affordable properties and the maturation of buyers in structuring their financial affairs to obtain a mortgage and buy the home of their dreams. For the first t.

Historically, mortgages have represented no more than 30%-35% of property sales in the emirate. This ration has now climbed to over 50% during 2016 and, in some months, levels of 60+% were achieved.

This is great news for several reasons.

First, while this trend highlights confidence of lenders in the marketplace it also highlights the increasing confidence of consumers, mostly owner occupiers, in the market to the extent that they are prepared to take on the risks associated with committing to a mortgage for the sake of purchasing some property.

This is very important to the development of long term sustainable growth for the industry as the bedrock of any property industry is its owner occupiers.  They represent the core of the industry as it is they who view property as an investment in life, not just a way to make a quick buck. And yet, historically, they have attracted focus in a market still undergoing the maturation process which is falling short and not proportionate to their importance.

Owner occupiers see Real Estate in a different light. For them, it’s about creating a lifestyle. It’s about creating a home which will provide an environment that is safe and secure within which the individual, couple or family can grow and develop in all aspects whether physical, emotional, social and, of course, financial. In this respect, they have a lot more at stake than those investors with financial interests only.

Typically, they form the core of society, not overly wealthy, who are concerned with providing the family with a future. For some, the purchase of the first family home is the first step towards creating a legacy which hopefully, for the more romantically minded, will turn into a dynasty. These are the dreams which make owning their own home the most important decision they are likely to make. They are in it for the long term; there is a lot at stake, which is why availability of finance through mortgages is critical.

The second reason why this is such good news is because we are witnessing, in real time, the market adapting to legislative changes that were made in early 2014. There is no doubt that the implementation of the mortgage caps earlier in 2014 had affected the demand for many first home buyers who were relying on a mortgage to acquire their dream home.  I remember writing an article at the time of the legislative change and observing the following …

“At Harbor, we see 62% of our clients who were considering buying a property prior to the mortgage caps delay their purchase until they can accumulate the down-payment differential while 38% have settled (or compromised) for a cheaper property to get an initial foothold in the market.”

As predicted, “… the new mortgage caps have certainly produced a definite lag in demand as clients adjust to the new financial realities and many of these clients are planning to participate within the next three years.”

 I am pleased to say, that these observations have essentially been proven correct. The legislative change made by authorities was implemented to help cool what was then, a rampant market. The desired effect was achieved but buyers didn’t simply disappear, they modified their purchasing behavior, another sign of an increasingly resilient and maturing market.

Finally, a growing number of mortgages are being undertaken for properties that are purchased in the more affordable areas of Dubai, which further demonstrates the systemic shift to affordable housing in the Dubai property market is becoming even further entrenched as a long-term characteristic.

A natural occurrence within any economy that is growing rapidly and is formally recognized as maturing and transitioning from being a “frontier” to “emerging” market as Dubai did back in 2013, is that its middle and lower-middle income segments will expand to support the rapid rise in commercial activities and economic initiatives being instigated by entrepreneurs and corporate or government entities. This expansion is unavoidable if the economy is to grow and providing affordable housing to enable this expansion is a critical element to the future growth of Dubai and the development of the Real Estate industry into a mature model that can efficiently cater for a broad and diverse set of people with different incomes, tastes, preferences and requirements.

And demand is set to grow very rapidly. A case in point … the World Expo is predicted by independent analysts to create over 270,000 jobs. The vast majority of these jobs will not be for people occupying senior executive positions. They will be for people in middle management or lower positions, many with families, who will be seeking affordable accommodation.

The importance of maintaining affordability for the average buyer is critical and the availability of affordable finance in the form of mortgages is vital to enable many to gain access this lucrative market going forward.

AN AMUSING STORY… IF IT WASN’T SO SERIOUS!

By Mohanad Alwadiya
CEO, Harbor Real Estate
Senior Advisor & Instructor, Dubai Real Estate Institute

When it comes to amusement, I have always thought that Dubai has a definite competitive advantage in that it is uniquely placed. With its geographic location, infrastructure, stability, cultural diversity and existing reputation as a leisure destination of note, development as the destination of choice by, not only GCC families and youth, but visitors from all over the world who desire amusement, adventure and unique experiences, will play an increasingly important role in building a strong, vibrant and resilient economy and, of course, property industry.

So, it was with excitement, not amusement, which I read about the latest addition to a city already swelling with entertainment and activity alternatives – the IMG Worlds of Adventure. This amusement park took three years to build and cost more than 3.6 billion dirhams. To be labelled “the world’s largest indoor theme park” is no idle boast, with the complex covering over 1.5 million square feet or around 20 times the size of the pitch at Emirates Stadium in London.

And, wait for it… there is more to come…

The next six months should see an even bigger development which, built at a cost approaching 10 billion dirhams, will include such entertainment icons as LEGOLAND and Bollywood, and a giant water park.

The new theme parks will play a key role in ensuring the emirate’s target of 20 million visitors will be visiting the emirate annually from 2021 will be achieved. Very impressive stuff!

But the reason why I love these latest theme parks is not because I enjoy rollercoaster rides … I will leave that for the more adventurous. I am excited at the effect these fantastic initiatives will have on the economy and, more specifically, the property industry that is so close to my heart.

From an economic point of view, this is very serious business indeed!

Aside from the obvious direct benefits of tens of billions of dirhams being invested into the economy, few people realize the enormous economic contribution theme parks make to the overall economy post launch. It is a cliché, but the world is a small place and the war for providing entrepreneurial and employment opportunities is waged on a global battleground and a successful entertainment and amusement industry is just one economic weapon that Dubai can employ to great effect.

And being a global growth industry, participation cannot be ignored.  Consider the following which was sourced from the TEA/AECOM 2015 Theme Index and Museum Index:

In 2015, there were …

…420 million visits to attractions run by the top 10 global theme park groups, up by 7.2 percent.
…236 million visits to the top 25 amusement/theme parks worldwide, up by 5.4 percent.
…146 million visits to the top 20 amusement/theme parks in North America, up by 5.9 percent.
…131 million visits to the top 20 amusement/theme parks in Asia-Pacific, up by 6.9 percent.
…61 million visits to the top 20 amusement/theme parks in Europe, Middle East and Africa, up by 2.8 percent.
… 29 million visits to the top 20 water parks worldwide, up by 3.7 percent.

In a world that is struggling to generate any form of impressive economic growth, the growth within this industry is truly impressive.

Without doubt, the current world leader with regards to amusement parks is the southern US state of Florida. It’s a fact that theme parks are a major reason why people visit this American state. Here are the top theme parks in Florida and the number of annual visitors they attracted in 2014 according to the TEA/AECOM Theme and Museum Index…

… Magic Kingdom – 19.3 million
… Epcot -11.5 million
… Disney’s Animal Kingdom – 10.4 million
… Disney Hollywood Studios – 10.3 million
… Universal Studios – 8.2 million
… Islands of Adventure at Universal Studios – 8.1 million
… SeaWorld – 4.7 million
… Busch Gardens Tampa Bay – 4.1 million

Truly impressive numbers which only highlight that the economic advantages created by having such a robust entertainment industry are staggering. The state estimates tourism brings in a whopping $82 billion in visitor spending while the State Department of Economic Opportunity says that of the approximately 9.1 million workers in Florida, 1.1 million of them hold jobs directly attributed to tourism. That’s better than 1 worker in 10!

Obviously, the job creation potential of this industry, both direct and indirect is staggering… which is why amusement parks are such serious business. The true long-term value of these projects lies in the long-term economic advantages of employing people and creating commercial activities in order to develop a unique capability to entertain the families and youth of the region and beyond.

And job growth fosters population growth which is critical to any property / real estate Industry. It is the undisputed catalyst to industry growth and the population growth generated by the substantial increase in investment and employment opportunities that a successful foray into the entertainment industry would generate would be and have huge and long-lasting benefits for the property / real estate industry downstream.

Aspire to be a Property Owner

By Mohanad Alwadiya
CEO, Harbor Real Estate
Senior Advisor & Instructor, Dubai Real Estate

Among the most fundamental (and practical) dreams people share in common is the dream of owning a home. But why is it that not everyone succeeds in this endeavor? Economics, of course, plays a significant role in the overall scheme of things. So, given the opportunity to purchase a property, or your home, no less, would you not hold on tightly and make sure you own (pun intended) it?

In Dubai, while there has been a correction in rental values, it has essentially lagged behind the correction in property values, and I do not believe that the general rent decline will exceed 10% in most areas. Rents will eventually start to rise from 2017 as preparations for the 2020 Expo start gathering pace.

I have always held a view that owning a property is essential to underpinning the accumulation of wealth and building net worth. Obviously, the accumulation of the property asset itself must be done judiciously and with a high level of diligence and care but, in my experience, the vast majority of people who have taken the step towards property ownership have benefitted significantly.

The essential question to ask is “How do I use my money to increase my wealth instead of the wealth of my landlord?”

Buying your home is a positive step towards establishing your financial security by building your equity or “net worth”. Owning property allows you to change the application of your hard-earned dirhams from covering an expense which offers you no financial return to investing in an asset which does. In a way, it’s a forced form of saving which will reap benefits for you in the future.

Conversely, paying rent actually detracts from your ability to build net worth because, not only are you paying out money for no financial gain, but you are at the mercy of rental inflation as well. This is a problem because you are consistently being asked to pay more while your salary increases are lagging behind, effectively eroding your ability to build wealth. By owning your home, inflation is working in your favor because, in all likelihood, your property is increasing in value and, if kept for a number of years, will enjoy an inflation-driven compounding effect on its value. This allows you to build your individual net worth through the capital appreciation of your property – something which is very important for your financial future.

The fundamentals of buying real estate in Dubai are no different from those elsewhere in the world. As an expat in a new country, you may be even more anxious regarding the decision to buy which is all the more reason to stick to some tried and true principles.

First of all, you need to be very clear as to why you are investing in real estate. Whether it’s to provide the family with a home, generate a steady stream of income or build equity for the future, make sure you are very clear about what your expectations are and quantify them wherever possible. Plan for the long term as the industry is cyclical yet very rewarding if you ride out one or two cycles.

You also need to ensure that you know what you can afford. If you have the cash to pay for the property that you really want, I suggest you pay for it outright; however, don’t be afraid to take out a mortgage and make the purchase as at least your repayments are building equity, not being lost forever on rent.

Then it’s a case of finding the right property. I suggest you contact a reputable real estate brokerage to assist you in doing this, but make sure that you conduct your own research as well. It’s a big decision you are making, and you need to make sure you take the responsibility and are fully aware of what you are doing.

As always, stick to the basics. Think carefully about location, building quality, developer reputation, completion status and quality of infrastructure and building amenities. Properties which are close to the beach (especially with a sea view), a golf course view or part of an iconic development such as Downtown Dubai is a good place to start. If you can have close access to the Dubai Metro, even better. These locations are more likely to provide superior appreciation in capital value as well as be able to ride out cyclical volatility with less distress.

You also need to consider the effectiveness of the owners association, service charges and the quality of maintenance services.  Facility management is becoming increasingly more important to determining the value of buildings, and it will have an effect on the long-term value of your investment.

Finally, think clearly and rationally. If you cannot find a property immediately that will satisfy your requirements and objectives, do not settle for less, regardless of what’s happening in the market.