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- What do you think of the current real estate market scenario in Dubai?
What we are seeing right now is evidence that the market is becoming more mature, stable and healthy. The key indicators include: the deliberate measures taken by the UAE Central Bank to apply mortgage cap and the Dubai Land Department to double the transfer fee are already showing results; the supply is deliberately being kept in check by the authorities; the Dubai population is growing by a higher rate and is estimated to reach 3.1 million by 2020; if in the next five years the rate of supply remained the same as was every year from 2003-2013, the supply and demand will be at an equilibrium in the year 2020; the market has a long-term view, e.g. the handover dates of master developments like the Mohammed Bin Rashid City and others are long term with a perspective of eight to 10 years. This again builds on the perspective that supply is more phased to suit Dubai's long-term needs.
- What is your forecast of the market in the next two years? What would you advise a real estate investor?
In my estimation, in the next two years, the commercial real estate sector will perform better than the residential real estate sector.
If we visualize a real estate cycle with periods of slump, recovery and boom, and if we plot both the commercial and residential real estate markets on this graph, we will realize that after the slump in 2008-2010, the commercial realty market recovered two years later than the residential market.
My advice for those who want to invest in real estate is that this is a good time to buy. However, do not just go purchasing property without doing your homework. Conduct research, get to know the market better, weigh the different pros and cons, count and measure the different options, use a broker you can trust and one who will partner with you in this endeavor, and make conservative offers. Even with low success rate, you will end up with gems in your portfolio.
- I have a flat in Downtown Dubai. The tenancy renewal is in four months. My tenant wants to continue, but I want to increase the rent. What do I do?
Landlords can increase the rent as per the rental index and notify the tenant of the increased rent in writing no less than 90 days prior to the renewal. The increase is due every year from the first renewal. The rent increase calculator can be accessed on www.dubailand.gov.ae You will need to fill in simple details such as tenancy expiry date, locality of the property, property type and current annual rent. The rent calculator will calculate how much the increase is by under what criteria within the rental index.
In order to have the increase in rent applied to the tenancy, it is imperative that it is communicated to the tenant in writing 90 days prior to renewal. Failing to do so will leave you no choice but have the same rental price be carried over to the next tenancy period.
- I want to get my apartment vacated as I want to sell it. How do I go about it?
In the UAE, you have to take the proper and legal course when you want to inform your tenant to vacate your property.
You can give a 12-month vacating notice to the tenant through the public notary. The notice will be communicated to the tenant through a courier. You, the landlord, will then get an acknowledgement of receipt of the notice.
You need to carry documents such as the tenancy contract, the title deed of the property, the Ejari registration, and the landlord and tenant passport copies to a Dubai Court typing center.
The typing center will create a document which will then be notarized by a public notary, and the document can be couriered from the court itself, for example, Barsha Court has an Aramex counter.
They will courier the document within seven days and send you an acknowledgement of receipt so you know that the tenant has received the vacating notice.
- Question of the Week: I am planning to purchase an off-plan apartment in Dubai. What factors should I consider before buying one?
The first thing to do is conduct a research on the developer, its history, credibility and track record of delivery. The real estate market is monitored and regulated by RERA. Any development has to have all the approvals from RERA before it is announced and advertised for sale. All proceeds from the sale go into the development escrow account. The fund is released to the developer on reaching development milestones to ensure that it is utilized for construction. Buying off-plan in Dubai is more secure today than it was before 2008.
If you need finance, you do not have many options since, at present, only Emaar is regarded as low risk by the banks and, even then, only 50% loan to value (LTV) is granted. That's not to say that banks will not lend to other developers but it might be hard to find one that will. Payment plans are also criteria that one must look at, so look for one that fits your timelines of cash flow and budget.
These days, there are some restrictions placed by developers about when it is possible to resell. Whether you are buying to sell or buying to reach handover, keep in mind to choose your developer with thought and careful consideration.
Ask the Agent - Where is a good place to invest in Dubai?
Source: Akshay Bhargava, Special to Freehold
The writer is Sales Director - Candour Real Estate
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