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- How do eviction rules work in DIFC? Can your landlord refuse to renew your tenancy contract because he wants to sell the property?
The Dubai International Financial Centre (DIFC) has its own laws regarding tenancy and real estate in general, and they are different from the property laws that regulate the rest of Dubai. In DIFC, your landlord is not obligated to renew your lease unless your tenancy contract explicitly grants you a right to renew, regardless of your landlord's reason for non-renewal.
- From a legal point of view, can you outline the service charges collected for maintaining a building? Is it fine for utility providers to disconnect individual units?
From a legal standpoint, the recourse for nonpayment of service charges is placing a lien on the property of the defaulting owner and/or filing a court case to force the sale of the property, the proceeds of which would pay the outstanding debt. Under RERA Circular No. 1 of 2010, Article 9, ''Failure to pay the Service Charge on time is a violation of the Law and may result in civil penalties including a lien being imposed over the Unit. Continued failure to pay the Service Charge may result in legal enforcement of the lien to recover the Service Charges, which may result in a public auction, with the outstanding Service Charges being deducted from the selling price.'' This is also the case under Law No. 27 of 2007, Concerning Ownership of Jointly Owned Properties in the Emirate of Dubai, aka Strata Law. Article 25 provides that in the event of non-payment of service charges, the owners association (OA) ''shall have a lien on every Unit for unpaid service fees and any other obligations levied.'' And that such liens are ''enforceable by the Execution Judge at any Competent Court.'' Also, it is the responsibility of the developers to pay the services charges until the OA is properly and fully registered. Therefore, the burden could and should reasonably be placed on the developers to cover the shortfall.
- There is a lot of buzz for luxury serviced apartments. What is its market forecast for 2015?
While the Dubai real estate market has been witnessing increased property values since 2011, Q3 and Q4 2014 were silent. Q3 saw subdued growth levels in both villa and apartment sectors while Q4 witnessed correction in most segments.
The worst hit in the slowdown is the luxury apartment sector. The new rules have impacted the luxury market comprising flats and villas worth Dh10 million and above to a great degree.
The Dubai luxury apartment market in the recent past can literally be defined by serviced hotel apartments which find a perfect balance for people with a kick for opulent living as well as an option in making their asset earn brilliant returns.
Hence, we have seen a few routine high-end luxury apartment projects being launched. Even the ones launched are marketed at a silent pace.
Highlights are branded hotel/serviced residence projects like The Address, Vida, Versace, Damac Maison, Anantara, Kempinski, Fairmont and Hyatt Creek Residences which give clients the option to use the unit for personal use for the tenure they stay in Dubai or a few weeks in a year, and the rest can be passed to a hotel management or annual hotel pool, giving brilliant returns.
This option has become very popular among business travelers and families who invest in Dubai as it hedges the risk and addresses their concerns of sudden price drop. Statistics prove that even in the worst recession, quality serviced apartment projects in Dubai like The Address (Downtown Dubai), Kempinski (The Palm) and Versace maintained certain levels of prices and hotel pools have worked very well for some investors, touching 8% to 10% net of charges ROI.
- Can you bring a commercial tenancy dispute to the Rental Dispute Settlement Centre (RDSC)?
Yes, the RDSC also hears tenancy disputes for office rentals, and the same tenancy laws apply.
- Question of the Week: The Dubai real estate market has been very quiet recently. What makes you believe it will bounce back by 2020?
Dubai attracted 10 million tourists for the first time in 2012, and the Department of Tourism and Commerce Marketing (DTCM) announced its aim to attract 20 million annual tourists by 2020.
While Dubai's demand has begun to recover since the economic downturn, 2012 year-end figures showed an 8.5% growth compared to 2011. The upward trend continued in 2013-2014 at an average growth of 11% per year.
Upscale and upper-upscale hotels have dominated the graded supply and represented 69% of the total inventory of hotel rooms.
The first half of 2014 saw a 30% increase in the number of residency visas issued compared with the same period in 2013. There were 570,917 new residency visas issued in the first half of 2014 as opposed to 436,993 in 2013. In the first half of 2014, 21,865,088 passengers entered and exited the country, compared with 20,219,288 in the first half of 2013. There were 6,512,465 entry visas issued in 2014, 12.05% more than the 5,812,465 visas in the first half of 2013.
We are in a healthy phase in the property cycle. After a 25% to 30% upswing in prices and rentals in 2013 and 2014, we are now in for two years of healthy growth and market stabilisation. If we were looking for another period of 30% price growth, it would have led to a bubble.
Ask the Agent on leasing issues
Source: Sanket Khanna, Special to Freehold
The writer is CEO and Founder, SNS Properties
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