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- Why should I hire a property manager and what are the advantages?
A proficient and professional property manager will make your investment work harder for you and the additional returns you receive will outweigh any fees he might charge. The property manager should be able to provide you with a complete and realistic property assessment, strategy and activity plan designed to harness the true financial potential of your property. Considerations start with your objectives and requirements and will include history, current and projected future market factors and risk factors. The scope of consideration should be global, regional and local in nature, and your property manager should have a good understanding of economic factors, societal trends, industry knowledge extending to policy and regulation, finance and market dynamics. Choose your property manager carefully. Ask for referrals and call some existing clients. It is your investment, and you need to ensure it is in good hands.
- Can I buy property anywhere in Dubai and can you describe the difference between freehold and leasehold?
No, you cannot buy property just anywhere in Dubai. As with most real estate markets, the development of land in Dubai is ''zoned'' or subject to plans depicting intended usage so there are stipulations as to where you can purchase and what you can construct. In Dubai, the two most fundamental and important forms of legal property ownership are freehold and leasehold. If you own a property ''freehold,'' you essentially own any buildings or structures and the land it stands on outright. You are registered as the ''freehold'' owner with the Dubai Land Department and you will own the property until you decide to dispose of it, either through a commercial transaction or by transfer of ownership. Leasehold, on the other hand, means that you acquire the rights to occupy a property for a fixed period courtesy of a lease contract created with the owner. The leases are usually long term, and allow the leaseholder to make modifications, improvements or additions.
- I am considering purchasing a property. The seller told me he was about to construct a well on the property to access water for his garden and fountain. Is this legal?
This is certainly not legal without express permission from the authorities. The restrictions placed upon drilling wells are governed by Law No. (15) of 2008 on Protection of Groundwater in the Emirate of Dubai.
Ownership of groundwater within the emirate is considered to belong to the emirate, and that groundwater may only be extracted or exploited by obtaining a license from the Dubai Municipality and an approval from DEWA.
Water is a necessary yet scarce resource in the emirate, and the objective of Law No. (15) of 2008 is to protect the groundwater of the emirate of Dubai from pollution, depletion and salinization in order to save it as a strategic reserve for emergency use. I suggest you use the tap.
- I am an investor. Should I invest in commercial or residential real estate?
A lot will depend on what investments you are currently holding. I believe that the next untapped opportunity is commercial property, specifically office space. There is no doubt that there has been a strong focus on the residential market; however, despite Dubai's strengthening economy, investors have been slow to consider office space despite values having bottomed out early in the middle of 2013. Things are looking very promising for new business in Dubai and opportunities exist for commercial real estate investors to benefit accordingly. While office rental returns are in the very early stages of recovery, Dubai office space is still cheap. With a high, albeit shrinking, vacancy rate of around 30%, there are definitely opportunities for value purchases providing strong cash flows increasing with Dubai's economic momentum over the longer term. Already, there is a relative shortage of Grade A, large floor plate, single-owner space favored by multinational companies. As Dubai seeks to grow economically, readily available office space is one of the factors that new enterprises will consider.
- Question of the Week: I have been operating my business in Dubai for eight years now. I am in a position to buy my office space, but this will require relocation. Should I do this or continue renting?
The old cliché of ''Location, location, location'' is critical. It is all about proximity and the convenience and prestige that a well-chosen location can bring to your potential customers, staff and business associates. You will find great value, very affordable and well-constructed office space in Business Bay, which will cost you anywhere between Dh95 and Dh150 per square foot, but it will be pointless if the location is a hindrance to conducting your business. You need to choose your location first and work from there.
Definitely think about purchasing your premises. Do a complete analysis to see if this option will work for you. If you are a business committed to operating long term in Dubai, it makes sense to own your office space, particularly if it is a well-negotiated purchase. There are still excellent deals to be had, but as Dubai's economy continues to grow, they are getting harder to find.
If you decide to lease your premises, try to get the best deal possible and lock it in for at least three to five years. Lease rates in Dubai will be on the increase going forward and make sure you take advantage of the current rates.
Learn about the advantages of enlisting a real estate agent
Source: Mohanad Alwadiya, Special to Freehold
The writer is Managing Director - Harbor Real Estate
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