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- Is Dubai's realty market about to enter a new period of oversupply? With new projects being announced and the market now in decline, will this prolong the current market correction?
Calculating optimal supply levels, particularly when emerging from a recessionary period, is particularly challenging. It depends on an accurate estimation of demand for real estate assets which will emanate from population growth which, in Dubai's case, will be largely driven by overall economic growth. It also needs to comprehend a lag effect from the time that conditions conducive to development are identified by developers and when properties are finally released into the market. Given that the Dubai economy is expected to grow at an estimated 5%+ annually and initiatives such as the Expo 2020 are expected to generate more jobs, the demand for housing and commercial facilities is expected to grow significantly.
- I recently arrived in Dubai. Can you give me tips on what I should consider when looking to rent a property?
There are six key considerations when going for your first rental.
1) Know what you can afford and allow 30% of your gross household income for rent.
2) Give yourself time to find the best solution that fits your budget. Do not jump at the first possibility and do not settle for less.
3) Make sure your agent is registered with RERA. You can log on to the Dubai Land Department (DLD) website to check.
4) Make sure the tenancy agreement is as per the RERA standard template. Check DLD website.
5) Ensure you document any property defects before you sign the contract. Raise them with your agent before you sign anything.
6) Ensure your rental contract is registered in RERA's Ejari system. Insist that your broker completes the registration as it is the first step towards safeguarding your rights as a tenant.
- I have owned my home for over seven years and I am looking at how I can save money by upgrading particular aspects of the property.
Here are seven ideas that may help you save a few dirhams:
1) Use low-flow fixtures to cut water usage by up to 40%.
2) Buy fluorescent bulbs which last four to 10 times longer than regular light bulbs.
3) Update your dishwasher. Modern units use 42% less water than older models.
4) Consider a tankless water heater and save on electricity.
5) Good ceiling fans can reduce air-conditioning costs. They dispel the need to turn on the aircon often.
6) Apply energy reducing film on windows to reduce internal temperatures.
7) Consider fitting solar panels.
- Our contract states there is payment due at handover and payment as maintenance advance. The developer is asking all payments on ''completion date.'' Is ''completion date'' not the same as ''handover date?''
''Completion date'' and ''handover date'' are not the same. The building can be deemed complete once the official ''Completion Certificate,'' which ensures the building passed all inspections, has been received. Just because a building has been issued a completion certificate does not mean it is ready for handover and occupancy. Often, there are a number of small items that need to be completed before it can be occupied. I suggest you confirm that your SPA definitely refers to the ''handover date'' as what triggers the final payment and maintenance advance. If so, you should not make the final payment until the developer is ready to hand over the keys to you and only after you (or a professional) had the chance to inspect the apartment to ensure you are receiving what you paid for.
- Question of the Week: With the current correction in the market having been underway for some time now, do you think the market has bottomed and represents a good opportunity to buy?
There are definitely opportunities available and advantages to be gained from purchasing now. The market will pick up again as the next five years are expected to see strong economic growth in Dubai, but picking the exact timing is always difficult.
Start your property search immediately as a property investment requires the same approach and set of considerations regardless of the state of the market.
Know what you can afford. If you have the cash, I suggest you pay for it outright; however, do not be afraid to take out a mortgage as long as you plan and understand the impact of interest rate rises in the future.
Think carefully about location, surrounding infrastructure, construction quality, developer reputation and building amenities. Properties which are close to the beach, with a sea or golf course view, or part of an iconic development usually provide good returns. If you have close access to the Metro, even better.
Also consider the effectivity of the owners association, service charges and the quality of maintenance services as these will have an effect on the long-term value of your investment.
Ask the Agent - How has the residential sales market fared?
Source: Mohanad Alwadiya, Special to Freehold
The author is Managing Director - Harbor Real Estate
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