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- Why is it that the cost of renting a good but not-so-new apartment in some areas remains expensive? The rates in these areas didn't fall as much as in other places during the recession, and when rents increased, they increased in these areas fast. How come?
The value of a particular location is usually derived from the levels of lifestyle convenience, pleasure, harmony, security, future economic value or even status that can be derived from the property. Whether it is an outstanding view or proximity to dining, entertainment, business districts, schools, hospitals or public transport, the perceived benefits that a location may bring to a prospective tenant can account for up to 90%. Locations close to the beach and entertainment areas as well as properties located close to/within Downtown Dubai or the business district will command a location premium.
Most potential tenants consider a view as a key feature for their home to be enjoyed.
- My apartment is ready. When I stated that I would like to inspect the apartment, the developer said they had already completed their inspection. Is this right?
Technically, once an official Completion Certificate has been issued for the building by the Dubai Land Department (DLD), it is deemed ready for handover and your contractual obligations regarding transfer of ownership remain. 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; and 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. I strongly recommend you engage a professional to do this on your behalf.
- How does one become a shrewd property investor? What qualities or skills are important?
Investing in property is all about recognising and capitalising on opportunities that are consistent and supportive to your overall wealth accumulation objectives. In order to do this, you must have some industry knowledge, able to communicate intelligently with the experts.
You must also have a clear understanding of what role your property portfolio will play within a larger diversified portfolio. The more skillful you are at conceptualising your wealth generation schematic, the greater is your likelihood of generating successful strategies to grow your wealth.
You also need to be able to identify, engage and work with a professional in the industry. As astute, skillful and knowledgeable as you may be, a reputable, experienced and client-focused full service agency will greatly enhance your level of success. Choose wisely. Don't think the cheapest will be good enough as this is rarely the case.
- I own a third of a floor of office space with two other parties sharing the balance. We couldn't find reputable tenants at a reasonable lease rate. Any advice?
The issue of multi-strata ownerships, particularly when looking at office space, would be a concern as prospective tenants do not want to negotiate or deal with multiple owners. One solution requires the willingness and commitment of all owners to form a type of cooperative or rental body. Under this concept, the owners would commit their space to a ''rental pool'' to offer to prospective tenants. This pool would be managed by a third party appointed by the owners so that tenants requiring space owned by more than one person would be dealing with one central body representing those owners, and all owners benefit from the rental receipts garnered from leasing ''pool'' space. This will provide superior returns.
- Question of the Week: I am considering hiring a new property management team for my mixed-use property as I was receiving a lot of complaints about the old one. What things should I be on the lookout for since this is the first time I am changing property managers?
A proficient and professional property manager will make your investment work harder for you.
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.
Your property management agreement should stipulate that you receive an extensive range of services including marketing, vetting tenants, executing rental agreements, among others.
Choose your property manager carefully. Ask for referrals and call some existing clients. Remember, it's your investment, and you need to ensure it's in good hands providing you with the best returns.
Source: Mohanad Alwadiya, Special to Freehold
The writer is Managing Director - Harbor Real Estate
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