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.

The confluence of global shifts and market demand

The confluence of global shifts and market demand

By Mohanad Alwadiya
CEO, Harbor Real Estate
Senior Advisor & Instructor, Dubai Real Estate Institute
Published: Expert Eye, Freehold, Gulf News

The phenomenon of globalization has been around for a while, and all economies, regardless of scale and location, are subject to forces that continue to shape and reshape them.

Real estate markets globally are feeling the effects of a general decline in global economic growth. The world is still, after some eight years, trying to shake off the effects of the global financial crisis and while some economies such as the US have fared reasonably, other major economies in Europe and Asia are still struggling with systemic issues.

In addition, the ongoing issues associated with geo-political upheavals, politically inspired sanctions and major restructurings such as Brexit, simply add to the overall pall of gloom that seems to hang over virtually every headline that we read these days.

The resulting effect on consumer and investor confidence is quite negative, and we all know that confidence is a key prerequisite for growth in the industry. World events are definitely affecting, not just Dubai, but global sentiment overall.

Yet the market is still developing… it is not stagnant.  It is always a very promising sign when an industry demonstrates the flexibility and resilience to undertake a structural shift when market requirements change or develop. This is exactly what we are witnessing in the Dubai real estate industry.

It came as no surprise to those that take a broader view of the industry that calls from a variety of industry participants including the government, banks and the more visionary industry observers for more affordable housing in Dubai gathered volume and intensity. In so doing, there was a recognition that the most important investor in Dubai’s real estate market had been forgotten all too often by developers and brokers, and that a refocusing on building affordable, robust and sustainable communities to be inhabited by the average family living frugally on an average salary was of irrefutable importance if Dubai’s economy was to develop and grow to the next level.

So the news that total value of real estate transactions in Dubai at AED 113 billion in the first half of 2016 represented a decline of around 12 percent from the first six months of 2015 may have disappointed some, but did not tell the whole story. The fact that this total figure was generated by 28,251 transactions, almost 25 percent higher than the same period last year, is very good news indeed. It clearly demonstrates a market that in growing in health, because it can provide more affordable solutions to a broader spectrum of owner occupiers and investors.

Just about everybody who plays a role in our industry has a role in providing affordable housing but, more significantly, the government, the financiers and the developers. And given the results of the first half of 2016, they are to be congratulated for initiating the structural shifts that we are witnessing.

As proven in the recently concluded Cityscape Global 2016 event held at the Dubai World Trade Centre early this month, the level of interest in Dubai real estate projects and in the UAE as a whole, as well as in world-class developments being marketed overseas, remains high.

However, a lot of work still needs to be done for the demand for more affordable housing to be fully satisfied. If the emirate is able to realistically supplement the clamor for affordable housing, perhaps even those renting in nearby emirates would be persuaded to make Dubai their permanent home.