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Parking has become a valuable commodity to many households and businesses. The shortage of parking space in many areas in the UAE has led to serious concern among residents and has forced many to pay a premium to secure their own parking bays.
"When speaking about parking spaces, we can't generalise or include all cities across the UAE, because this issue differs from one city to another,'' says Wiaam Mahmoud Rabah, Chairman of Green Valley International Real Estate.
"For example, in Abu Dhabi this is a major problem and it is a stressful matter for residents looking for parking space when returning home. This is also an issue in Dubai and Sharjah but on a smaller scale."
The parking issue is an even bigger concern for residents who own more than Property Weekly January 22, 2014 one car as most landlords and building owners only allocate one parking space per apartment.
"Inadequate guest parking facilities often discourage people from visiting the property. If it is a commercial property with offices or shops, this affects the business adversely as it becomes inconvenient for clients to visit the place," says Rabah.
Avtar Mamotra, Residential Manager, Sales and Leasing, Better Homes Barsha branch, says parking should be a priority when looking for a home, especially for those in apartments. "It's an issue for people looking for apartments as those who live in villas often have room to park in their front yard,” he says.
"Based on the market norm, three-bedroom and larger apartments are allocated two parking spaces. Apartments with two bedrooms or less are usually only allocated one. Generally, issues arise with one- and two-bedroom units as they are often occupied by families with two cars.
“These days, clients ask about parking space as much as they do about the number of bedrooms a property has."
While car parking is a big concern for tenants and homeowners, it is not much of an issue for investors who will not reside in the property, Mamotra says.
Karim Haidar, a resident at Jumeirah Lakes Towers (JLT), says, "I find it difficult to find parking space for my wife's car as only one parking slot was given to us by the landlord. This is a major issue most residential areas in Dubai face, for the simple fact that only a single parking slot is allotted, without taking into consideration parking for guests and other family members. More space should be given or at least there should be additional parking space for a reasonable fee."
Residential buyers with at least a Dh1-million budget often expect at least one parking space, says Robin Teh, Country Manager -
UAE, Chesterton Middle East and North Africa. "If the seller does not offer parking, it could be a deal breaker," he says. "Projects such as Burlington Tower in Business Bay did not offer parking space with its units, making it a hard sell."
Almost all older communities in areas such as Karama, Bur Dubai and Deira continue to suffer from parking woes, adds Teh, making them unattractive to companies looking for commercial space. Parking also remains a nightmare for most residents in these locations, as drivers have to spend a lot of time looking for a parking space during busy hours.
"I have seen some towers in Dubai Sports City with poor parking arrangements, such as a very narrow entrance to the parking,” says Suraj Rajshekar, General Manager at Rocky Real Estate. "Due to this, tenants and homeowners prefer parking their cars outside the building and this has an impact when renting out or selling the apartment. There is also Dubai Marina, which lacks common or public car parking facilities."
How new projects can avoid the parking problem
• Developers should not be permitted to build buildings close to each other. Constructing residential projects in other areas will encourage residents to live across the UAE, and not only in specific areas.
• Schools and governmental institutions can be moved to new areas to reduce traffic in cities where they are mostly located.
• Build taller parking buildings.
• No building permits should be given to any project that does not offer parking space for tenants and visitors.
- Mahmoud Rabah
Many new master-planned developments are facing parking issues, including well-developed freehold communities such as Dubai Marina, Jumeirah Beach Road, JLT, Palm Jumeirah, Tecom, The Greens and Downtown Dubai, adds Mamotra.
Commercial areas such as Dubai Media City and Business Bay likewise have to deal with the same problems, adds Pawan Batavia, Director at Synergy Properties. "With a lot of construction happening in Business Bay, where residential and office buildings are getting filled, developers have already started selling parking separately," he says.
Mario Volpi, Managing Director at Prestige Real Estate, says, "There are not enough parking spaces assigned per apartment by tower developers in JLT. Also, only homeowners can purchase the extra parking units offered by the developer and these can only be leased to residents of the same tower. No one else can get involved.
"Many developers, especially in areas such as JLT, Business Bay and Dubai International Financial Centre [DIFC], offer parking bays for as much as Dh125,000 per space. It will not surprise me if this figure will increase in the future.
"However, this should be alleviated soon as there has been an announcement that the Dubai Multi Commodities Centre will make 1,200 parking bays available this year. Hence, the solution is for the master developer to either build or allocate more land for parking than at first thought was adequate."
In the normal property buying process, car parking is allocated by the developer to the owner of the office or apartment. The allocated parking bays are also mentioned in the title deed. "For example, I have an office in Silicon Oasis. I would normally be given two parking spaces, but I had asked the developer to give me seven more, so in the title deed all nine have been mentioned," says Batavia.
Developers have been selling parking spaces to landlords as far back as 2005, when people were buying and selling prelaunch properties, adds Batavia. "Some leading developers were selling parking space for Dh50,000. Now, since the demand in certain areas has gone up significantly, the prices for these units have risen sharply. Developers are now charging up to Dh100,00 for car parking that used to cost Dh50,000," Batavia says.
"Some developers kept the parking spaces for themselves and sold these separately to off-plan buyers who demanded for parking space. Now, with many properties being turned over and the area becoming populated as people start to live in their apartments, the demand for parking space has also escalated. All this has resulted in people being forced to buy car parking spaces at exorbitant rates."
On average, car parking prices range from Dh50,000 to Dh100,000, according to Batavia. "However, in 2007 the DIFC rates had gone up to Dh150,000 per car park. But in areas that are not heavily crowded such as Jumeirah Village Circle, one can still find parking space for Dh25,000. The annual rental rates range from Dh5,000 to Dh10,000 per car park."
It is important for an apartment buyer to include parking during the negotiation, says Mary Clothilde, Senior Property Consultant at Century City Real Estate. "Check with the developer on how many parking spaces you will be allocated and also ask for the additional spaces you want to purchase at this stage," she says.
"One of my clients was ready to give Dh100,000 for a parking space on Al Sufouh Road in Dubai Marina in early 2012, but the developer could not sell the parking space alone. Another important factor is that there is no way to register the car park units alone with the Land Department, making it even more difficult to purchase car parking space."
Many property buyers fail to negotiate the parking issue at the time of purchase, which will lead to complications later on, says Clothilde.
"For example, a client did not negotiate with his developer when he bought a four-bedroom duplex, and was allocated only one car park space. For six months it was difficult to rent out the apartment because of inadequate parking space. When the client went back to the developer to ask for additional parking space, he was told there was no more space available. The first tenant of the duplex didn't renew the contract, as his friends did not want to visit him because of the parking issues," says Clothilde.
"In another incident, I had purchased a studio apartment for a client and, generally, you don't get a parking space with a studio, but at the time of negotiation I added a parking to his property. So it is probably the only studio apartment in that building that has parking. Hence, it is essential for buyers to put forward their exact needs at the time of negotiation."
Because of the huge demand, parking has become big business for building owners, says Teh. "Due to the shortage, a developer in JLT is charging Dh100,000 for each parking bay. However, price controls and ownership regulations can be brought in, to control exorbitant increases. Generally, most renowned developers provide at least one parking space. However, as the market has improved, some private developers are selling parking spaces separately, mostly in JLT, to earn extra revenue."
There are investors who have purchased up to 50 parking spaces in commercial buildings, says Batavia. "This is because an individual company would not invest in 30 car park spaces for its staff, so these parking units generally become a product for an investor who buys and leases them on annual basis," he says.
"For example, an office building in Dubai Media City is charging an annual rent of Dh10,000 for parking, while in JLT it is Dh6,000 annually. If parking space is purchased at Dh50,000, you fetch a rental income of 11 per cent, whereas if you buy an apartment, you fetch a maximum rental income of 7 per cent. There are already people who are investing in these units and it is anticipated to further grow as a business."
Meanwhile, building owners feel the need to offer new parking space only when people refuse to purchase or rent their apartment due to inadequate designated parking space, points out Rabah.
"However, it is important that the person buying a parking space agrees on its price. There is currently a bit of confusion in Dubai in terms of the price of a parking space inside a building, which is generally around Dh50,000. However, it actually costs more than Dh80,000. Many times, the owner agrees to sell the parking space at a lesser price only when people refuse to purchase it at prices above Dh50,000," says Rabah.
Advice to people looking for additional parking space
• Contact the developer or property manager to ask for additional parking space. Find out if it is available and at what cost.
• Ask the building management staff or the building's security about any unused parking slots. Ask the owner if you could use it for a fee.
• Try to find an alternative community where additional car parking space is available.
- Avtar Mamotra
Source: Hina Navin, Special to Property Weekly