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- We heard that we are going to have an owners association in our freehold building. What are owners associations, and what is the advantage of having one?
An owners association is comprised of and represents all owners of a joint-owned property, e.g. an apartment building, which is registered as an official entity with RERA. The association is a ''not for profit'' business entity in its own right with the powers to operate a bank account, sue (or be sued), purchase, own and dispose of assets and enter legally binding agreements. Its purpose is to manage, operate and maintain the common areas such as hallways, lifts, stairwells, recreational areas, building systems, virtually all of the ''owner shared'' elements of a building. It elects a Board, consisting of five to seven members, whose role is to action ''motions'' in addition to managing contractors, enforcing rules for the common good and organizing items.
- I read in the news that the property market is slowing down. Does this mean that we are headed for more difficult times or does it indicate stability?
You are right. The pace of price growth has slowed somewhat when compared to the estimated 30% increases of 2013. But this should not be construed as a bad thing. No market anywhere can sustain the pace of growth that Dubai experienced during 2013. What will determine whether the market heads into a period of significant downward correction or whether the market stabilizes and value increases settle to a more sustainable, albeit lower, level will depend on the success of the policies and tools implemented by industry regulators and stakeholders. Everybody, from IMF, UAE Central Bank, Dubai Land Department and even individual developers, is aware of the need to eliminate the boom and bust cycles and share and seek the formation of an industry that exhibits long-term, sustainable and profitable growth.
- There are a lot of off-plan projects being launched and ongoing projects yet to be finished. Do you think the market is big enough to continue this model of growth?
There is no doubt that many developers have recommenced construction on many projects that were stalled by the global financial crisis, or have launched new projects on the back of the market's recent resurgence. However, it's not a case of the market being ''big enough.'' It's whether the market demand exists to absorb the planned supply. The Dubai economy is expected to grow at an estimated 5%+ annually for the remainder of the decade, and initiatives such as the World Expo 2020 are expected to generate an additional 270,000 jobs; demand for housing and commercial facilities is expected to grow significantly going forward. Much of the city's planning comprehends the number of people living in the emirate to grow to 3.4 million by 2020.
- Our landlord refuses to replace our water heater which has broken down because of normal wear and tear. We have only lived in the apartment for a little over a year. Is it fair for him to tell us to shoulder this expense?
You are not liable to compensate the landlord for any maintenance items considered normal wear and tear. This is the responsibility of the owner. Having said that, you should fix any damage caused by you which would be considered to be excessive to normal wear and tear, e.g. a broken window or a structural damage to a wall. The landlord, after serving a notice to the lessee, may retain the deposit cheque or deduct part of it. He may fix the damages at the expense of the lessee provided he proves the expenses by obtaining and presenting receipts. If he retains the deposit cheque without reasonable grounds, the lessee may lodge a complaint at the Rental Dispute Settlement Centre, which is located within the Dubai Land Department, for adjudication.
- Question of the Week: The World Expo 2020 has made a lot of investors excited. Would it really make sense, business-wise, to concentrate on investing in the areas close to the Expo site?
Yes, but there are a number of points to consider. Office and commercial space, in general, including those located within the Jebel Ali Free Zone and Dubai Investments Park (DIP) will benefit from a rise in demand from companies involved in the initial construction or preparatory phases. It is likely that new developments will commence on the southern areas of Dubai, with close proximity to the site, while the area surrounding Dubai World Central is also likely to be in focus as logistics, storage and transport service providers look to set up shop. More labor camps will be required from the initial stages as the race to implement the infrastructure required to cater to many visitors begins in earnest. When it comes to accommodation, the Expo is likely to generate the predictable surge in demand for accommodation of all types, from labor camps to apartments to executive villas, as the additional 270,000 or so new jobholders are sure to have a significant effect on values. While it may be advantageous to be located in close proximity to the site, areas such as Dubai Marina, JLT, Discovery Gardens, Jumeirah Islands and the resurrected Dubai Lagoon should benefit from additional demand emanating from the Expo as commuting distances are not too inhibitive.
Source: Mohanad Alwadiya, Special to Freehold
The writer is Managing Director – Harbor Real Estate