• 10 Dec 2017

    Gold mines and land mines in the property market

    I am often asked by investors to articulate my “philosophy” of real estate investing. Tough question. My ideal deal is one where it is possible to buy brick and mortar assets at 60-70 per cent of replacement cost. This usually occurs in the aftermath of a banking crisis or economic shock. This was the case in Florida homes in 2009 or Spanish office space in 2010. Another strategy is to “buy, fix and sell”. This was my rationale for East Kent homes as a proxy for King’s Cross, the biggest retail and office development complex in Britain since Canary Wharf and the Docklands in the Thatcher era. Now that towns like Ashford and Folkestone are linked to Kings Cross St Pancreas by high-speed link, rents will rise, bank mortgages will rise, commuter traffic and capital values will rise in East Kent.

    I believe the private and public property markets are rarely perfectly correlated, offering exceptional, if rare, opportunities for arbitrage in debt instruments or securitised property. Anybody who does not have a diversified portfolio of real estate investment trusts (Reits) is denying themselves the potential to make money in some of the world’s hottest real estate sectors and themes, easily accessed via an interactive brokers or e-trade electronic brokerage account. For instance, I had profiled Prologis as the ideal New York Reit to benefit from the industrial boom. Prologis was up 28 per cent in 2017. As I assure my parents, both avid property investors, if you think Wharton is expensive, try ignorance! The US desperately needs to build at least 50 million sqft of extra industrial space every year, thanks to the Amazonisation of the world. Even the US Air Force is leasing its vast spaces in Nevada to build mega one million sqft distribution and logistics centres. This is a 20 per cent per annum growth opportunity for at least the next three years. Timing and the right entry price are everything in real estate investing, as is real-time market intelligence. I avoid brokers and mortgage bankers like the plague, just as I do Third World guys who offer to sell me a BMW 7 series for Dh50,000, quick, quick Sahib!

    As a partner in Asas Capital, I am proud to have raised the equity capital for a 630-room Park Regis four-star hotel that will provide some of the Gulf’s most intelligent (they trusted me and their trust is sacred) investors a 15 per cent cash dividend in US dollars and a potential 200 per cent return on initial capital on the project’s eventual flotation or trade sale. Saudi Arabia wants five million extra Umra pilgrims by 2020 but Makkah has barely 12,000 branded four-star hotel rooms. This was the macro opportunity of a lifetime and my partners at Asas Capital began work on this project in 2014, when oil was $114 and religious tourism assets dirt-cheap.

    I absolutely abhor speculative real estate investments or “buy to let” in markets where a developer can arbitrarily raise service fees at will even when rents fall 20-30 per cent. So a Dh2.5 million, 1,000 sqft one-bedroom flat rents in the Burj Khalifa for Dh120,000 but service fees are Dh72,000. A two per cent net rental yield makes no sense as if I wanted a bank deposit, I would get one.

    Demographics and the credit cycle play a crucial role in property investing. So the exodus of executives due to job losses in banking, property, aviation, construction, retail etc. makes luxury a non no for us in Dubai. The only villas that are selling now are owner occupiers in the Dh2-to-3 million range villas in the Dh5 million-plus range will have to take a 40 per cent hit to capital. There is a glut of luxury apartments, high end office spare (a Mazaya building sold for Dh400 a square foot, just above construction cost. That is where I see eventual market equilibrium). Investors in British schools, especially if inspired by Dh120,000 a year pseudo-British public schools, will hemorrhage cash as companies slash education subsidies. Note the many high end schools who violate KHDA rules against discounts by offering “founder fees” or two sibling for one package. When hotel RevPARs fall by double digits, I have only one piece of advice for investors – get out!

    I expect the current trend of falling rents to accelerate in 2018 and even 2019. If rents fall by another 20 per cent, many segments of the property micro markets become affordable again, a huge ballast for Dubai’s trade/services economy.

  • 12 Dec 2017

    UAE’s economy to strengthen in 2018, says IMF

    The United Arab Emirates economy is expected to recover gradually next year without suffering a significant blow to growth from the introduction of a 5 per cent value-added tax in January, a senior International Monetary Fund official said.

    Natalia Tamirisa, IMF mission chief to the Arab world’s second biggest economy, said Dubai’s spending on preparations to host the Expo 2020 world’s fair would help to boost growth.

    On Sunday, Dubai announced a 19.5 per cent leap of spending in its 2018 state budget, largely because of higher allocations for infrastructure.

    “We see a gradual recovery for the UAE over the next few years on the back of firming oil prices, a pick-up in global trade, investment for Expo 2020 and easing fiscal consolidation,” Tamirisa said in a telephone interview on Monday.

    Non-oil sector growth is projected to rise from 1.9 per cent this year to 2.8 per cent next year, and to continue climbing to between 3.3 and 3.5 per cent in 2020, she said.

    The introduction of VAT next month will be a big change for consumers and companies, which have long been accustomed to minimal taxation in the Gulf.

    Analysts believe some consumers may rush to make purchases this month to beat the tax, potentially setting the economy up for weakness early next year when the spending fades.

    But Tamirisa said the effect was not likely to be large enough to hurt the economic recovery, and that the government looked set to manage the launch of the tax without disrupting business.

    “After the initial adjustment we’re expecting smooth operation of the system. The preparations by the government have been quite extensive.”

    The IMF’s forecasts assume oil will average over US$62 a barrel next year, based on futures prices, compared to an average of about $54 this year. This should help strengthen the UAE’s finances in 2018 despite looser budgets, Tamirisa said.

    The IMF expects the UAE’s consolidated fiscal deficit, including the federal government and all seven emirates, to shrink to 1.3 per cent of gross domestic product next year and gradually disappear in subsequent years, from 2.2 per cent this year and 2.5 per cent in 2016.

    Dubai’s real estate market has been slumping for over two years, but Tamirisa described the slump as natural given an ample supply of new housing and an economic slowdown, and said it was not a fundamental threat to the economy.

    “Oil prices still play an important role in the economy so it’s normal that they’re still working their way through the market,” she said, adding that the market still looked likely to recover after a period of consolidation.

    Banks are much more resilient than they were during the UAE’s property market crash nearly a decade ago, and the fact that rents and real estate investment are not subject to VAT should help the market gain strength in the long term, she said.

  • 11 Dec 2017

    Dubai Design District sketches to be a 24-hour hotspot

    Dubai: A 24-hour destination? Not yet.

    But the sprawling Dubai Design District (d3) is well on its way to being an 18-hour hub for its people to work, shop and even dine. The only element that’s missing is the living part, and d3 will set that right in time. And when that happens, it will turn into a 24-hour hotspot.

    “I think we have already created something for a professional working at d3 to come back later in the evening and dine in,” said Mohammad Saeed Al Shehhi, CEO. “This is what Dubai is providing now — something more than mall experiences. Projects such as La Mer, City Walk …

    “When we were putting the plans together. we wanted this place to be a full destination. The third phase of d3 will create that space.”

    Currently, d3 has crossed the 7,000 mark in the number of people who turn up at the many offices each day. There are 420 office units in Phase 1.

    The first two phases are entirely given up to create offices and workshops for the creative community — the designers, the specialist consultancies with a creative streak in them, and start-ups intent on offering something that is not the norm.

    “The Phase 1 works were completed in 2015 and we have 94 per cent occupancy,” said Al Shehhi. “Phase 2 should be complete by end 2019, but we haven’t started on the leasing. By early next year, we should most probably start with the soft bookings.”

    In the last three years, d3 has been rated by independent real estate consultancies as among the top performing office destinations in Dubai. That was based on the response generated by the Phase 1 releases. Phase 2 will make room for a campus and a design-focused university with curriculum put together by MIT and Parsons. “We always had in our masterplan space for a university to support the design industry,” said Al Shehhi.
    But it will be the third phase that will take d3 beyond the realms of being a hotspot for offices. And create that 24X7 destination.

    “The third phase will stretch all the way to the Water Canal,” the CEO said. “That’s under design and we will have boutique hotels and a strip of retail right on the water’s edge.

    “This phase will take a further three to five years to build.

    “The plans on the residential component are under design. We have a 1.8-kilometre stretch of waterfront and we were lucky to have the widest portion of the Creek in front of us. It makes it important that the masterplan creates opportunities for as much interaction with water as possible.

    “We are clear in our minds that the residential component is important. In the planning phase, we spoke to the creatives, asked them what the ideal home would be for you. That feedback gets incorporated into our design.
    “When we design the masterplan, we made sure d3 is where we can live, work, play and, now, learn.”

    The last one comes from having that design university. For the moment, the on-site campus is “receiving applicants now and they are fitting out classes,” the CEO said. “It’s a great opportunity to have academia right next to the industry alongside the big brands, the SMEs and start-ups. The student gets to see how he can start a business, grow to be an SME and potentially a big brand. It’s all there at their doorstep.”

    The whole of d3 across sits three phases will cover 25 million square feet. At full throttle, it will have around 17,000 creatives coming in on a day-to-day basis, including the students and visitors.

    But is d3 on its way to being one of the pricier parts of the city? “You could say we are choosy about who we take in — they need to be a creative,” said Al Shehhi. “But I won’t say that makes us pricey. We are surrounded by three main highways and in many ways in the centre of Dubai. Yet, if you compare us to the developments around us, we are not pricey.”

    Getting creative even with the start-ups

    Even with the retailers coming in, d3 has clear preferences for those who can conjure up something beyond the tried and tested.

    “To be a true destination, we will need to have those retail concepts that will attract people to come here,” said Mohammad Saeed Al Shehhi, CEO. “Sixty per cent of our concepts are home-grown. If you go to The Lighthouse, it’s two bankers who came up with a brilliant (F&B) concept. There’s OneLife, which is very unique for Dubai; we have Mum’s Table; and we have The Espresso Lab launched by an Emirati entrepreneur.

    “At the end of the day, d3 will always be about designers. We want to attract footfalls for our designer tenants. The showrooms we have are not just offices, but creative spaces.”

  • 12 Dec 2017

    How the Dubai real estate market evolved in 2017

    Investors and end-users in Dubai have never had it better. Developers in Dubai are going all out to woo buyers by offering unique payment plans. They are even acting as proxy lenders by offering interest-free finance options to buyers. With a slew of attractive payment plans in the market vying for buyers’ attention, new developers are launching unique schemes to garner interest.

    City Properties, the new kid on the block, has tailormade three finance options for buyers in its debut real estate venture – Al Haseen Residences in Dubai Industrial Park adjacent to Dubai South.

    The first standard option is for the cash/mortgage buyers where one pays 30 per cent of the property value till handover and the balance after.
    In the second plan, a buyer pays 40 per cent using flexible options until handover. At the time of handover, the buyer can pay 60 per cent of the property value in 120 interest-free monthly payments over 10 years. There is no bank involved.

    For instance, if you are buying a studio worth Dh400,000, you initially pay Dh160,000 until handover (40 per cent). The balance Dh240,000 can be paid in 120 cheques of Dh2,000 each over 10 years.

    The third option is targeted at investors. After paying the initial 40 per cent of the property’s value until handover, the investor hands over the unit’s property management rights to the developer for 10 years.

    “We will ensure that your installments are being paid. At the end of 10 years, you will only have paid 40 per cent and own the unit. We guarantee to pay the balance 60 per cent, inclusive of service charges. The investor also has the flexibility to sell or repossess the unit,” explains Gaurav Verma, CEO of City Properties.

    The promoters behind City Properties, which was launched in 2016, have over 20 years’ experience in property management in Dubai and handle over 90 buildings and 5,500+ properties in the city.

    The average sales price at Al Haseen Residences is Dh1,000 per sqft, with the service charge pegged at around Dh8 to Dh10 per sq ft.

    A studio is priced from Dh400,000, one-bed from Dh600,000 to Dh800,000 and two-bed from Dh850,000 to Dh1.1 million, informs Tauseef Khan, chairman and founder of City Properties.

    Construction on the Dh70 million project commenced in June 2017 and will be completed by Q1 2019.

    “We have sold 50 per cent of 138 units. The buyer profile is a mix of end-users and investors. We have GCC buyers, Emiratis and a lot of South Asians. We also have a few buyers from the Philippines holding senior positions in the government,” says Verma.

    The developer claims it intends to bring quality back into the affordable housing market. “The quality of apartments has deteriorated. Some developers even include parking in the liveable area to boost sales. We don’t intend to cut corners,” contends Khan.

    A studio in Al Haseen Residences ranges from 400 to 520 sqft, one-bed from 680 to 850 sqft and two-bed from 950 to 1,000+ sqft. Each unit comes with a covered parking spot.

    The development is completely self-funded and located 10 minutes away from Al Maktoum International Airport.

    The developer has nine more projects in the pipeline – all adjacent to Dubai South – and more plots in Meydan City. Its second project will be announced in January.

    Ruling out fears of oversupply in south Dubai, the CEO says: “We are very bullish about demand for housing in south Dubai closer to the new airport. We foresee a shortage of supply. Al Maktoum International Airport, Dubai Parks and Resorts and Dubai Wholesale City will be responsible for creating a huge number of jobs. That rules out an oversupply situation. Housing needs to develop a lot quicker in that area.”

Gold mines and land mines in the property market

I am often asked by investors to articulate my “philosophy” of real estate investing. Tough question. My ideal deal is one where it is possible to buy brick and mortar assets at 60-70 per cent of replacement cost. This usually occurs in the aftermath of a banking crisis or economic shock. This was the case in Florida homes in 2009 or Spanish office space in 2010. Another strategy is to “buy, fix and sell”. This was my rationale for East Kent homes as a proxy for King’s Cross, the biggest retail and office development complex in Britain since Canary Wharf and the Docklands in the Thatcher era. Now that towns like Ashford and Folkestone are linked to Kings Cross St Pancreas by high-speed link, rents will rise, bank mortgages will rise, commuter traffic and capital values will rise in East Kent.

I believe the private and public property markets are rarely perfectly correlated, offering exceptional, if rare, opportunities for arbitrage in debt instruments or securitised property. Anybody who does not have a diversified portfolio of real estate investment trusts (Reits) is denying themselves the potential to make money in some of the world’s hottest real estate sectors and themes, easily accessed via an interactive brokers or e-trade electronic brokerage account. For instance, I had profiled Prologis as the ideal New York Reit to benefit from the industrial boom. Prologis was up 28 per cent in 2017. As I assure my parents, both avid property investors, if you think Wharton is expensive, try ignorance! The US desperately needs to build at least 50 million sqft of extra industrial space every year, thanks to the Amazonisation of the world. Even the US Air Force is leasing its vast spaces in Nevada to build mega one million sqft distribution and logistics centres. This is a 20 per cent per annum growth opportunity for at least the next three years. Timing and the right entry price are everything in real estate investing, as is real-time market intelligence. I avoid brokers and mortgage bankers like the plague, just as I do Third World guys who offer to sell me a BMW 7 series for Dh50,000, quick, quick Sahib!

As a partner in Asas Capital, I am proud to have raised the equity capital for a 630-room Park Regis four-star hotel that will provide some of the Gulf’s most intelligent (they trusted me and their trust is sacred) investors a 15 per cent cash dividend in US dollars and a potential 200 per cent return on initial capital on the project’s eventual flotation or trade sale. Saudi Arabia wants five million extra Umra pilgrims by 2020 but Makkah has barely 12,000 branded four-star hotel rooms. This was the macro opportunity of a lifetime and my partners at Asas Capital began work on this project in 2014, when oil was $114 and religious tourism assets dirt-cheap.

I absolutely abhor speculative real estate investments or “buy to let” in markets where a developer can arbitrarily raise service fees at will even when rents fall 20-30 per cent. So a Dh2.5 million, 1,000 sqft one-bedroom flat rents in the Burj Khalifa for Dh120,000 but service fees are Dh72,000. A two per cent net rental yield makes no sense as if I wanted a bank deposit, I would get one.

Demographics and the credit cycle play a crucial role in property investing. So the exodus of executives due to job losses in banking, property, aviation, construction, retail etc. makes luxury a non no for us in Dubai. The only villas that are selling now are owner occupiers in the Dh2-to-3 million range villas in the Dh5 million-plus range will have to take a 40 per cent hit to capital. There is a glut of luxury apartments, high end office spare (a Mazaya building sold for Dh400 a square foot, just above construction cost. That is where I see eventual market equilibrium). Investors in British schools, especially if inspired by Dh120,000 a year pseudo-British public schools, will hemorrhage cash as companies slash education subsidies. Note the many high end schools who violate KHDA rules against discounts by offering “founder fees” or two sibling for one package. When hotel RevPARs fall by double digits, I have only one piece of advice for investors – get out!

I expect the current trend of falling rents to accelerate in 2018 and even 2019. If rents fall by another 20 per cent, many segments of the property micro markets become affordable again, a huge ballast for Dubai’s trade/services economy.

10 Dec 2017

UAE’s economy to strengthen in 2018, says IMF

The United Arab Emirates economy is expected to recover gradually next year without suffering a significant blow to growth from the introduction of a 5 per cent value-added tax in January, a senior International Monetary Fund official said.

Natalia Tamirisa, IMF mission chief to the Arab world’s second biggest economy, said Dubai’s spending on preparations to host the Expo 2020 world’s fair would help to boost growth.

On Sunday, Dubai announced a 19.5 per cent leap of spending in its 2018 state budget, largely because of higher allocations for infrastructure.

“We see a gradual recovery for the UAE over the next few years on the back of firming oil prices, a pick-up in global trade, investment for Expo 2020 and easing fiscal consolidation,” Tamirisa said in a telephone interview on Monday.

Non-oil sector growth is projected to rise from 1.9 per cent this year to 2.8 per cent next year, and to continue climbing to between 3.3 and 3.5 per cent in 2020, she said.

The introduction of VAT next month will be a big change for consumers and companies, which have long been accustomed to minimal taxation in the Gulf.

Analysts believe some consumers may rush to make purchases this month to beat the tax, potentially setting the economy up for weakness early next year when the spending fades.

But Tamirisa said the effect was not likely to be large enough to hurt the economic recovery, and that the government looked set to manage the launch of the tax without disrupting business.

“After the initial adjustment we’re expecting smooth operation of the system. The preparations by the government have been quite extensive.”

The IMF’s forecasts assume oil will average over US$62 a barrel next year, based on futures prices, compared to an average of about $54 this year. This should help strengthen the UAE’s finances in 2018 despite looser budgets, Tamirisa said.

The IMF expects the UAE’s consolidated fiscal deficit, including the federal government and all seven emirates, to shrink to 1.3 per cent of gross domestic product next year and gradually disappear in subsequent years, from 2.2 per cent this year and 2.5 per cent in 2016.

Dubai’s real estate market has been slumping for over two years, but Tamirisa described the slump as natural given an ample supply of new housing and an economic slowdown, and said it was not a fundamental threat to the economy.

“Oil prices still play an important role in the economy so it’s normal that they’re still working their way through the market,” she said, adding that the market still looked likely to recover after a period of consolidation.

Banks are much more resilient than they were during the UAE’s property market crash nearly a decade ago, and the fact that rents and real estate investment are not subject to VAT should help the market gain strength in the long term, she said.

12 Dec 2017

Dubai Design District sketches to be a 24-hour hotspot

Dubai: A 24-hour destination? Not yet.

But the sprawling Dubai Design District (d3) is well on its way to being an 18-hour hub for its people to work, shop and even dine. The only element that’s missing is the living part, and d3 will set that right in time. And when that happens, it will turn into a 24-hour hotspot.

“I think we have already created something for a professional working at d3 to come back later in the evening and dine in,” said Mohammad Saeed Al Shehhi, CEO. “This is what Dubai is providing now — something more than mall experiences. Projects such as La Mer, City Walk …

“When we were putting the plans together. we wanted this place to be a full destination. The third phase of d3 will create that space.”

Currently, d3 has crossed the 7,000 mark in the number of people who turn up at the many offices each day. There are 420 office units in Phase 1.

The first two phases are entirely given up to create offices and workshops for the creative community — the designers, the specialist consultancies with a creative streak in them, and start-ups intent on offering something that is not the norm.

“The Phase 1 works were completed in 2015 and we have 94 per cent occupancy,” said Al Shehhi. “Phase 2 should be complete by end 2019, but we haven’t started on the leasing. By early next year, we should most probably start with the soft bookings.”

In the last three years, d3 has been rated by independent real estate consultancies as among the top performing office destinations in Dubai. That was based on the response generated by the Phase 1 releases. Phase 2 will make room for a campus and a design-focused university with curriculum put together by MIT and Parsons. “We always had in our masterplan space for a university to support the design industry,” said Al Shehhi.
But it will be the third phase that will take d3 beyond the realms of being a hotspot for offices. And create that 24X7 destination.

“The third phase will stretch all the way to the Water Canal,” the CEO said. “That’s under design and we will have boutique hotels and a strip of retail right on the water’s edge.

“This phase will take a further three to five years to build.

“The plans on the residential component are under design. We have a 1.8-kilometre stretch of waterfront and we were lucky to have the widest portion of the Creek in front of us. It makes it important that the masterplan creates opportunities for as much interaction with water as possible.

“We are clear in our minds that the residential component is important. In the planning phase, we spoke to the creatives, asked them what the ideal home would be for you. That feedback gets incorporated into our design.
“When we design the masterplan, we made sure d3 is where we can live, work, play and, now, learn.”

The last one comes from having that design university. For the moment, the on-site campus is “receiving applicants now and they are fitting out classes,” the CEO said. “It’s a great opportunity to have academia right next to the industry alongside the big brands, the SMEs and start-ups. The student gets to see how he can start a business, grow to be an SME and potentially a big brand. It’s all there at their doorstep.”

The whole of d3 across sits three phases will cover 25 million square feet. At full throttle, it will have around 17,000 creatives coming in on a day-to-day basis, including the students and visitors.

But is d3 on its way to being one of the pricier parts of the city? “You could say we are choosy about who we take in — they need to be a creative,” said Al Shehhi. “But I won’t say that makes us pricey. We are surrounded by three main highways and in many ways in the centre of Dubai. Yet, if you compare us to the developments around us, we are not pricey.”

Getting creative even with the start-ups

Even with the retailers coming in, d3 has clear preferences for those who can conjure up something beyond the tried and tested.

“To be a true destination, we will need to have those retail concepts that will attract people to come here,” said Mohammad Saeed Al Shehhi, CEO. “Sixty per cent of our concepts are home-grown. If you go to The Lighthouse, it’s two bankers who came up with a brilliant (F&B) concept. There’s OneLife, which is very unique for Dubai; we have Mum’s Table; and we have The Espresso Lab launched by an Emirati entrepreneur.

“At the end of the day, d3 will always be about designers. We want to attract footfalls for our designer tenants. The showrooms we have are not just offices, but creative spaces.”

11 Dec 2017

How the Dubai real estate market evolved in 2017

Investors and end-users in Dubai have never had it better. Developers in Dubai are going all out to woo buyers by offering unique payment plans. They are even acting as proxy lenders by offering interest-free finance options to buyers. With a slew of attractive payment plans in the market vying for buyers’ attention, new developers are launching unique schemes to garner interest.

City Properties, the new kid on the block, has tailormade three finance options for buyers in its debut real estate venture – Al Haseen Residences in Dubai Industrial Park adjacent to Dubai South.

The first standard option is for the cash/mortgage buyers where one pays 30 per cent of the property value till handover and the balance after.
In the second plan, a buyer pays 40 per cent using flexible options until handover. At the time of handover, the buyer can pay 60 per cent of the property value in 120 interest-free monthly payments over 10 years. There is no bank involved.

For instance, if you are buying a studio worth Dh400,000, you initially pay Dh160,000 until handover (40 per cent). The balance Dh240,000 can be paid in 120 cheques of Dh2,000 each over 10 years.

The third option is targeted at investors. After paying the initial 40 per cent of the property’s value until handover, the investor hands over the unit’s property management rights to the developer for 10 years.

“We will ensure that your installments are being paid. At the end of 10 years, you will only have paid 40 per cent and own the unit. We guarantee to pay the balance 60 per cent, inclusive of service charges. The investor also has the flexibility to sell or repossess the unit,” explains Gaurav Verma, CEO of City Properties.

The promoters behind City Properties, which was launched in 2016, have over 20 years’ experience in property management in Dubai and handle over 90 buildings and 5,500+ properties in the city.

The average sales price at Al Haseen Residences is Dh1,000 per sqft, with the service charge pegged at around Dh8 to Dh10 per sq ft.

A studio is priced from Dh400,000, one-bed from Dh600,000 to Dh800,000 and two-bed from Dh850,000 to Dh1.1 million, informs Tauseef Khan, chairman and founder of City Properties.

Construction on the Dh70 million project commenced in June 2017 and will be completed by Q1 2019.

“We have sold 50 per cent of 138 units. The buyer profile is a mix of end-users and investors. We have GCC buyers, Emiratis and a lot of South Asians. We also have a few buyers from the Philippines holding senior positions in the government,” says Verma.

The developer claims it intends to bring quality back into the affordable housing market. “The quality of apartments has deteriorated. Some developers even include parking in the liveable area to boost sales. We don’t intend to cut corners,” contends Khan.

A studio in Al Haseen Residences ranges from 400 to 520 sqft, one-bed from 680 to 850 sqft and two-bed from 950 to 1,000+ sqft. Each unit comes with a covered parking spot.

The development is completely self-funded and located 10 minutes away from Al Maktoum International Airport.

The developer has nine more projects in the pipeline – all adjacent to Dubai South – and more plots in Meydan City. Its second project will be announced in January.

Ruling out fears of oversupply in south Dubai, the CEO says: “We are very bullish about demand for housing in south Dubai closer to the new airport. We foresee a shortage of supply. Al Maktoum International Airport, Dubai Parks and Resorts and Dubai Wholesale City will be responsible for creating a huge number of jobs. That rules out an oversupply situation. Housing needs to develop a lot quicker in that area.”

12 Dec 2017

All you need to know about registering for VAT?

Dubai: According to the executive regulations on value added tax (VAT) published last week, the mandatory registration threshold is Dh375,000.

This means that anyone with a turnover of Dh375,000 or more is required to register their business for VAT, the Federal Tax Authority (FTA) and Ministry of Finance (MoF) said in the recently release regulations.

The voluntary registration threshold is Dh187,500, with companies of that size or above able to register for VAT too.
The failure of a taxable person or business to submit a registration application within the time frame specified in the tax law is liable for a Dh20,000 fine.

Also according to the executive regulations, companies are able to register as a tax group.

Through this mechanism, more than one company can register for VAT as a group, under a single common control, according to Dubai-based Jitendra Consulting Group. They say that the main benefit of group registration is to simplify the procedures and save costs through consolidated tax returns and a single VAT registration.

The group’s tax returns and payments are carried out by the member who acts as a representative of the group, the FTA has stated. All the members are jointly liable, however.

VAT rules VAT rules

VAT rules

 

6 Dec 2017

UAE’s Federal Tax Authority announces full VAT supplies list

The Federal Tax Authority (FTA) has announced the supplies that will be subject to Value Added Tax (VAT) as of January 1, 2018, revealing selected sectors that will be assigned zero-rated tax, such as education, healthcare, oil and gas, transportation and real estate.

Selected supplies in sectors such as transportation, real estate, financial services will be completely exempt from VAT, whereas certain government activities will be outside the scope of the tax system (and, therefore, not subject to tax).

These include activities that are solely carried out by the government with no competition with the private sector, activities carried out by non-profit organisations.

The UAE Cabinet is expected to issue a decision to identify the government bodies and non-profit organisations that are not subject to VAT.

The below table outlines all supplies that will be subject to the 5% Value Added Tax, as well as zero-rated supplies and exempt supplies:

VAT in education

UAE vat in all sectors

 

6 Dec 2017

Can you buy a home with Dh10,000 salary in Dubai?

There is a property for every income bracket in Dubai. The lower sales prices and attractive payment plans offered by developers in Dubai are resulting in more first-time home buyers hopping on the property bandwagon. The introduction of new innovative mortgage products by some local banks has also contributed towards this increased activity.

Even someone with a salary of Dh10,000 can climb onto the property ladder today, provided they can arrange for the up-front payment and registration charges.

home buying plan

“There are enough properties available to cater across a wide range of salary brackets. Prices and accessibility criteria for a home mortgage, traditionally the two biggest barriers for new entrants to the property market, have been lowered, thus resulting in an uptick in market activity,” says Lynnette Abad, partner and head of Property Monitor/Cavendish Maxwell.

Apartments are the achievable properties for salaries between Dh10,000 to Dh15,000.

qouate

“The average one-bedroom apartment in new residential areas such as Dubai Silicon Oasis, Liwan, etc., is worth about Dh600,000 with a down payment of Dh150,000 and Dh30,000 in registration expenses. The buyer has to pay about Dh2,200 a month. This is easily achievable for most people earning Dh15000+ a month. This is much less than their rent,” suggests Sanjay Chimnani, managing director, Raine & Horne Dubai.

This year, the top areas for affordable properties to one with a monthly salary of Dh10,000 are (in order) International City, Jumeirah Village Circle (JVC), Al Furjan and Dubai South, estimates Property Monitor, a real estate intelligence platform.

For someone with a monthly salary of Dh15,000, the top areas with affordable properties are Dubai South, JVC, Business Bay and Dubai Sports City, the consultancy adds.

However, if you are looking to buy a villa or a townhouse, it would require a monthly salary of Dh25,000. “It will fetch you a townhouse in master-planned communities such as Town Square and Reem, Mira. Some of the other top areas in this salary bracket are Dubai Marina, Business Bay and The Lagoons,” informs Abad.

The challenge for most buyers is to arrange for the down payment plus registration costs of about 30 per cent. “If this was to be reduced to 15 per cent, we would see an even greater shift to ownership in this market,” suggests Chimnani.

However, the moot question is whether a person earning Dh10,000 a month is eligible for a mortgage. Provided the customer does not have any major loans (personal, credit card and auto), s/he would be eligible for a house loan of up to 25 years, subject to age criteria which restricts payments to the age of 65.

“People earning Dh10,000 and above can apply for a mortgage. The minimum salary requirement for a mortgage is Dh10,000. However, there are only a few banks who do mortgages for clients with Dh10,000 income and, therefore, options for these clients are limited. Majority of the banks require a minimum salary of Dh15,000 and above,” says Carol Monis, head of mortgages, MortgageMe.ae, a group of mortgage brokers in Dubai.

She adds that “most of our mortgage clients are end-users who fall into an income bracket of Dh20,000 to Dh25,000”.

Dhiren Gupta, managing director, 4C Mortgage Consultancy, adds in the same vein that the average income group buying property in Dubai is around Dh25,000 to Dh35,000 and they are primarily buying mid-priced property worth of Dh1.5 million to Dh2 million.

“With such income, they can easily qualify for a loan, barring they do not have pre-existing liabilities and age limitation is not a barrier. Moreover, banks are more comfortable to funding such profiles wherein the property will be utilised for self-use,” concludes Gupta.

3 Dec 2017

Sheikh Mohammed signs VAT Executive Regulation

The Ministry of Finance, MoF, Monday announced that His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, signed the Executive Regulation for the Federal Decree-Law No. (8) of 2017 on Value Added Tax, VAT.

The Regulation defines VAT as the 5% tax imposed on the import and supply of goods and services at each stage of production and distribution, including what is a deemed supply, with the exception of specific supplies subject to the zero rate and what is exempted as specified in the Decree-Law.

The tax will go into force effective January 2018, and all business have to take all necessary measures to avoid the risk of non-registration by 1st January, 2018, which would entail fines as stipulated in Cabinet Decision No. 40 of 2017 on Administrative Penalties for Violations of Tax Laws in the UAE.

Commenting on the milestone, Younis Haji Al Khoori, Undersecretary of MoF, said, “Today’s signing of the Executive Regulation by the Vice President, Prime Minister and Ruler of Dubai, His Highness Sheikh Mohammed bin Rashid Al Maktoum, marks a new milestone in the application of an efficient taxation system in line with best international standards with the ultimate objective of improving performance of primary sectors and enhancing social welfare.”

The first title of the Regulation includes the definitions of terms used, while the second title deals with supply, which includes articles regulating the supply of goods and services, as well as supplies that consist of more than one component and the exceptions related to deemed supplies.

The third title of the document tackles the subject of registration, such as mandatory and voluntary registration, related parties, conditions to be met to register tax groups and appointing a representative member, deregistration, exception from registration, registration on law coming into effect and obligations to be met before deregistration.

Meanwhile, the fourth title looks into rules relating to supply, including articles on the date of supply, place of supply for goods, place of supply of services for real estate, transport services, telecommunications and electronic services, intra-GCC supplies, the market value, prices to be inclusive of tax, discounts, subsidies and vouchers.

Furthermore, title five discusses profit margins and explains how to calculate VAT based on profit margins, while title six addresses zero-rated goods and services, including telecommunications, international transportation of passengers or goods, investment grade precious metals, new and converted residential buildings, as well as healthcare, education and buildings earmarked for charity.

Title seven clarifies provisions relating to products and services exempt from value added tax, namely: the supply of certain financial services as specified in the Executive Regulation, the supply of residential (non-zero-rated) buildings either by sale or lease, the supply of bare land, and the supply of local passenger transport.

The eighth title of the Regulation then addresses accounting for tax on specific supplies and includes articles relating to supplies with more than one component, general provisions in relation to import of goods and applying the reverse charge on goods and services, as well as moving goods to implementing states and imports by non-registered persons.

In title nine, the Executive Regulation address Designated Zones in article (51), while title 10 provides further detail on calculating due tax, recovery of input tax relating to exempt supplies, input tax not recoverable, and special cases for input tax. The following titles 11 includes article (55) on apportioning input tax and article (56) on adjusting input tax after recovery, whereas title 12 addresses the capital asset scheme in article (57) and adjustments within the capital asset scheme in article (58).

Title 13 of the Regulation includes article (59) on tax invoices, article (60) on tax credit notes and article (61) on fractions of the fils. Then in title 14, the Executive Regulation discusses Tax Periods and Tax Returns, before title 15 goes into recovery of excess tax in article (65). Adding to that, title 16 tackles recovery in other cases and includes article (66) on new housing for nationals, article (67) on business visitors, article (68) on tourists and article (69) on foreign governments.

The 17th title includes article (70) on Transitional Rules, article (71) on record-keeping requirements and article (72) on keeping records of supplies made. Meanwhile, the 18th and final titles discusses closing provisions.

28 Nov 2017

Who we are

The team, at Chii Richtown, comprises indigenous experts in renting, selling and managing commercial properties and villas in Dubai, UAE. Established in 2006, the company has over a decade of experience in tracking new property developments and estimating trends in prime market areas that help clients in meeting their requirements. We are currently selling and leasing out properties in all areas of Dubai.We strongly believe if you have a requirement for a home or office space, we will help you find it!

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