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

Published : 3 Dec 2017 ,      Source : Khaleej Times

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

After qualifying for a mortgage, you have to arrange the up-front payment and registration charges

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.

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Related News

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

Real estate risk allocation and insurance tips for Dubai property investors

As an owner-occupier, your primary risk would be damage or destruction to your real estate asset. As such your insurance will likely be for a lump sum amount or full replacement or reinstatement of the asset. Owner-occupiers may also insure for business interruption to cover them for lost income when the premises becomes unusable due to damage. This may be important, for example, where the owner has a mortgage and would have difficulty in meeting the repayments.

An owner would generally take out insurance for third-party risks: for example, where a visitor suffers an injury caused by or occurring on the real estate asset. In transferring ownership of a real estate asset, the buyer and seller will need to establish a clear date for the risk of damage or destruction of the real estate asset to pass. The logical time for the passing of this risk is the date the title is transferred. Generally the seller will cancel the insurance on this date and the buyer will implement its own insurance. There may also need to be a clear position in the sale-and-purchase contract as to what may happen should damage occur between the date of contract and the date of title transfer.

Where a real estate asset is tenanted, the lease contract may expressly address the allocation of risk between the landlord and the tenant and require the parties to obtain insurance.

It is not possible to map out all of the possible variations in such arrangements, however, the following represents a fairly typical allocation of risk and insurance in a retail/office unit context.

Fit-out period
The landlord will generally require the tenant to have or procure contractors all risk insurance as well as worker’s compensation insurance. The landlord will generally require that the landlord is named co-insured and specify the level of cover the tenant must obtain or procure.

Typically the insurance undertaken during the fit-out period will be obtained by the contractor completing the fit-out. The tenant will need to ensure that this insurance is obtained and contains the relevant covenants sought by the landlord under the lease agreement.

Damage and destruction of the building
The landlord would normally obtain all risk building insurance but may require the tenant to insure for damage arising out of the tenant’s or occupiers’ negligence. This could result in double insurance and an alternative approach would be for the tenant to be named as a beneficiary of the landlord’s insurance. This is, however, not the practice in the region.

Landlords will typically exclude liability for any other types of losses sustained by the tenant — for example, economic losses when the tenant is unable to operate from the premises. Were the landlord to face a claim by the tenant in these circumstances, it may be that the landlord’s third-party liability insurance provides a measure of protection to the landlord. As the landlord will exclude liability for the same, the tenant may wish to obtain insurance for business interruption.

As the landlord will be required to cease charging rent for the period the premises cannot be occupied, the landlord may wish to obtain loss of income insurance.

It is common in the context of a commercial office or retail unit lease that the tenant would meet the landlord’s insurance costs as part of the service charges charged to the tenant.

Tenant contents damage
The landlord may specifically require the tenant to insure the tenant’s contents, fixtures and fittings and to name the landlord as co-insured and/or require the insurer to provide a waiver of its right to sue the landlord in any case where the landlord’s negligence causes the damage.

Third-party injury
Third-party injury claims are civil wrongs and accordingly the party claiming damage or injury does not need to establish a relationship in contract with the party causing the harm. Generally, such claims will arise due to the party in control of the area not taking due care to ensure that areas are kept safe.

Accordingly a landlord may wish to insure for any injuries that may occur to third parties in common areas of a building. As the tenant may also exercise control over their premises, the tenant should also take out insurance for such claims.

Other third-party risks
Other third-party risks arise in multi-tenanted buildings in that if a tenant damages the building, this may cause losses to other tenants. The landlord can seek to exclude liability for such claims in the contract with each tenant, but would very likely also cover such risks through their own third-party policies.

As a tenant will have no ability to mitigate the possibility of claims from other tenants in contract, the tenant would need to obtain its own third-party policy to cover such risks.

Developers, investors
Throughout the construction of a project, the contractors will undertake the necessary insurances. As the developer will be paying progress payments throughout the construction, it is in the developer’s interest to ensure that this insurance is in place and that the developer is also co-insured under the contractor’s policy. It is also important to specify clearly under the construction contract when the developer shall be required to accept risk for the property following completion of construction and, therefore, should obtain its own insurance.

If the project involves off-plan sales, then, once the development is completed, the developer will start handing over the units to the investors. Generally, in the case of jointly owned (strata) property, insuring the building, including the usual fitting and fixtures in the units, would be the responsibility of the owners’ association (OA). In cases where there is not a legally established OA, then it may be possible for the developer to obtain a policy that nonetheless recognises the interests of investors as beneficiaries of the policy.

The developer or the OA will need to consider the type of policies they obtain. Generally speaking, such insurance will cover, and may be required to cover by law, full replacement and reinstatement, third-party liabilities and could cover loss of income or alternative accommodation costs.

Investors would typically insure their own contents and improvements. Investors may also wish to obtain loss of rent insurance or insurance covering the cost of alternative accommodation if this is not taken out by the developer or OA.

Summary
This is a general discussion of the risks in real estate and how they may be addressed in contract and through appropriate insurance. As each property and transaction is different, the risks and insurance solutions may differ so it is important that each transaction is assessed on a case-by-case basis. Accordingly, this article should not be treated as advice as to what is required in any particular set of circumstances.

Reporting by Jeremy Scott and Justin Carroll

Jeremy Scott is partner, real estate, and Justin Carroll is senior associate, insurance, at Al Tamimi & Company. The views expressed here are their own.

29 Nov 2017

Not renewing tenancy contract in Dubai? 3 months notice a must

I have been staying in a rented apartment for around last 12 months and do not want to renew the tenancy for another year. I have notified the landlord by giving one month notice of my intention but the landlord insists a notice period of three months. Further, the landlord is asking me to paint the apartment. Surely that comes under wear and tear of living in a rented apartment? What does the law say exactly as I have been reading contradictory reports?

Pursuant to your questions, we assume that the rented apartment where you are staying is situated in the Emirate of Dubai. All tenancy contracts in the emirate fall under the ambit of the Law no. 26 of 2007, Regulating the Relationship between Landlords and Tenants in the Emirate of Dubai. Subsequently some provisions of the said law have been amended by Law No. 33 of 2008.

Article 14 of the law states: “Where either of the two parties to the lease contract do not wish to renew the contract or wish to amend any of its terms, such party must notify the other party of such intent no less than ninety days before the date on which the lease contract expires, unless otherwise agreed by the parties.”

Moreover, Article 14 of amendment states: “Unless otherwise agreed by the parties, if either party to the Tenancy Contract wishes to amend any of its terms in accordance with Article 13 of this law, that party must notify the other party of same no less than ninety days prior to the date on which the tenancy contract expires.”

In the event your tenancy contract states that you need to provide a three months of notice period not to renew the tenancy contract, then Article 14 of Law No. 33 of 2008 should be applicable.

You are bound to return the apartment to the landlord in the same condition as provided by the landlord at the time of renting it to you, other than normal wear and tear. This is in accordance with Article 21 of Law No. 26 of 2006 regulating the Relationship between Landlords and Tenants in the Emirate of Dubai, which states: “Upon the expiry of the term of the Lease Contract, the tenant must surrender possession of the real property to the landlord in the same condition in which the tenant received it at the time of entering into the lease contract except for ordinary wear and tear or for damage due to reasons beyond the tenant’s control. In the event of a dispute between the two parties, the matter must be referred to the Tribunal to issue an award in this regard.”

Know the law

Where either of the two parties to a lease contract do not wish to renew the contract or wish to amend any of its terms, such party must notify the other party of such intent no less than 90 days before the date on which the lease contract expires, unless otherwise agreed by the parties.

 

17 Oct 2017

Making cities an extension of a workplace

This year’s Knight Frank “Global Cities Report” looked at what constitutes best-in-class across all aspects of property: encompassing building design, occupier trends, place making, investment strategy, and mix of uses. However, success in real estate is often achieved by being on the ground where economic growth is strong.
This raises the question — what does a best-in-class city economy look like?

The answer is increasingly about having the culture, diversity, lifestyle, and opportunities necessary to draw talented people. While employers can provide a micro-location — the workplace — where these factors are brought together, they must similarly exist at a city-level to generate the critical mass of skilled and creative people necessary to feed growth for successful firms.

This creates a self-fulfilling prophesy in which the most talented people want to live there. In turn, the best employers locate there to tap that high value workforce.

The cities that genuinely achieve this are those in the lead ranking of global cities. Locations are losing businesses, jobs or investment to places that are.

In today’s world the cities that are successfully earning the right to be called a global city are those at the forefront of the tech and creative revolution, which is demonstrated by economic growth. Since 2007, the GDP of Berlin, with its thriving technology scene, has expanded by 19 per cent, whereas in finance-oriented Frankfurt output grew by just 5.9 per cent, according to Oxford Economics.

Similarly, in the US we see tech- and R&D-oriented cities like San Francisco (17.6 per cent GDP growth since 2007) and Boston (15.2 per cent) outperforming locations like Chicago (6.2 per cent) and Miami (6.6 per cent). However, note the level of growth seen since 2007 in cities such as London (21.2 per cent) and New York City (11.5 per cent).
Both were finance-led cities back in 2007, and which successfully re-weighted towards technology and the creative industries in the last decade. This arguably makes adaptability a greater strength than a large tech exposure. If the technology sector moves into a downturn, we will find out whether Berlin can quickly reposition itself towards the next rising industry.

To a property investor London and New York City offer the security of having proved themselves capable of reinvention. The picture that we see emerging is that the ability of a city to draw in fast rising tech and creative firms is defined by whether the location has the ability to become a city that offers inspiration and contains as much wow-factor as a Google office. If it hopes to draw firms of that calibre …

A city must provide the ambitious with a stage they want to succeed on, because impressing bohemian friends in the cool part of town is more important than pleasing any boss.

So logically the next and final question is simple, is Dubai a global super city?

It certainly does not lack the wow-factor, but Dubai is much more than the eye-catching commercial and residential real estate it is renowned for. In recent years, Dubai has excelled in attracting young international talent, but mainly to the worlds of finance and business.

Now Dubai is seeking to diversify by offering the kind of culture, work hubs and social spaces that see a new generation of creative pioneers who consider working and living in Dubai in the way they might in London, Berlin or New York. These amenities come in many package, from its offering of world-class lifestyle in locations such as DIFC, to the cultural offerings at Dubai Opera and Dubai Design District, The Dubai World Cup and Art Dubai.
All of this is underpinned by a population that contains over 200 nationalities.

These factors combined with Dubai’s strategic location and business credentials continue to produce results. The population has grown by over 85 per cent over the last decade and GDP by 29.5 per cent over the same time period. Dubai is certainly seen as a global city by both businesses and by employees.

To maintain its global city status, Dubai must continue to be an open, diverse and vibrant place to live and work to ensure it continues to excel as of one the world’s super cities. At a time where many developed economies are facing populist pressure to step back from globalisation, Dubai’s openness to it will mean it will continue to be a regional hub for global business.

25 Nov 2017

V Nagarajan: Norms for inherited property while filing the income tax return

I have inherited ancestral property in Bengaluru after the demise of my parents. My sister and myself are the legal heirs. Will it be included as deemed rent in the IT return? How do we treat this while submitting IT returns? Please clarify. Anantkumar, Dubai.

When you own two or more properties and if any property remains vacant and not self-occupied by the owner, it will be treated as a ‘deemed let out’ property. A notional rent will be computed for income-tax purposes. Since you and your sister are the owners of the inherited property, you will have to declare the notional rent in respect of the ancestral property in the proportion of your respective share in the property.

I sold a flat bought in Hyderabad in 2016 and reinvested in another flat this year. However, the possession of this flat is expected only in 2018 now as the developer has delayed the project. Do I have a remedy against the developer now? Hidayath, Sharjah
It is not clear whether the project has been registered under RERA or whether the project comes outside the purview of RERA depending on the regulation in Hyderabad. However, RERA insists that in case of delay in completion of projects, liability imposed on the developers to pay interest to the consumer is a direct remedy available to you.

The Act now obliges the developer to park 70 per cent of the project funds in a dedicated bank account. This will ensure that developers are not able to invest in numerous new projects with the proceeds of the booking money diverted to another project. Additionally you have a remedy through consumer redressal forum to seek compensation for deficiency in service which includes delay in giving possession of the house.

Our parents died without leaving a Will for the property. While the legal heirs are now disputing over the property, one or two beneficiaries are willing to relinquish their rights. What is the legal remedy to resolve this issue? Ramesh Krishnan, Dubai.

If your parents died intestate and there is a dispute between the legal heirs, they will have to approach a competent court, having jurisdiction to settle the dispute. As you mentioned, if some beneficiaries are willing to relinquish their rights to a property in favour of another legal heir, banks and other debtors may insist on NOC from other legal heirs.

Notes:

Logistics sector

The government has given infrastructure status to logistics sector. This is likely to attract more funding at competitive rates. The government has been working for quite some time to attract more investments into transport and logistics as part of efforts to bolster infrastructure development in the country.

The infrastructure status would help the logistics sector get credit at competitive rates and long a long-term basis, as rising logistics cost impacts global competitiveness of exporters. Logistics costs of exports are very high in India and so Indian goods are less competitive.

The definition of logistics includes industrial parks, warehouses, cold storages and transportation. Logistics infrastructure includes multimodal logistics park comprising inland container depot (ICD) with minimum investment of Rs 50 crore and minimum area of 10 acre.

A cold chain facility having an investment of at least Rs 15 crore as well as warehousing facility with investment of minimum Rs 25 crore would come under logistics infrastructure, in both cases, the facilities should also have a minimum required area.

Chennai is one of the top 10 global automotive clusters, and this sector continues to attract interest across various automotive ancillary units. The automobile and engineering companies already established in the state are actively deploying their expansion plans. Large original equipment manufacturers (OEMs) are insisting that their suppliers set up their facilities near their plants to enable them to maintain inventory support for just-in-time production.
For the current financial year, TN has a potential investments pipeline of over INR 19,033 crore. Since 2015, the state has seen over 46 investment proposals with cumulative investments of approx. INR 37,381 crore.

The resulting employment commitment from industries is over 30,000 direct jobs in the semi-skilled / skilled and unskilled categories. Apart from industrial activities, the logistics and warehousing industry is extremely upbeat in the state and keeping the market active.

24 Nov 2017

Pay as you throw waste fee for all Dubai buildings soon

Dubai: A new ‘pay as you throw’ waste fee is coming soon for Dubai buildings, Gulf News has learnt.
All buildings in Dubai will soon be charged for waste collection as Dubai Municipality has decided to outsource the service to the private sector, Gulf News can reveal.

A senior municipality official confirmed that the civic body would stop the waste collection and transportation service to all buildings that are considered as business — whether commercial or residential — after it announces the proposed tipping fee.

commets

Then, the building owners or property management companies will have to make a contract with private companies approved by the municipality for collecting and transporting waste to landfills, said Abdul Majeed Abdul Aziz Al Saifaie, director of the Waste Management Department.

A circular in this regard was sent out to building managements in different parts of Dubai recently, a copy of which was obtained by Gulf News. The circular says the building management companies have to make the waste collection contract with the private service provider before December 1.

The circular also contains the list of companies that have successfully complied with the requirements of the department and thus permitted to carry out their respective waste management-related activities like garbage collection, transportation and disposal services.

However, Al Saifaie said the plan has now been deferred.

“We were supposed to announce the tipping fee first, which we are going to do soon. We will give a maximum of six months for the buildings to make the contract after the tipping fee is announced,” he said.

The official did not provide the date of announcing the tipping fee which will be levied per tonne of garbage from the companies transporting waste to landfills. However, he estimated the move to outsource the waste collection service by the middle of next year. The move is part of the emirate’s integrated waste management plan and strategy to reduce the generation of waste going to its landfills.

However, the plan to introduce the new fee even for residential buildings is a deviation from the earlier plan the municipality had.

Earlier, the municipality had stated that the tipping fee will be levied for waste sent to landfills from private companies, that is, commercial services.

However, Al Saifaie said all buildings renting out spaces — whether for commercial or residential purposes — will be considered as a private business.

“Till now, we have been serving all these buildings for free,” he pointed out.

Dubai has so far been charging only Dh10 gate fee per trip from trucks dumping waste at its landfills.

“The owners [of the buildings from where waste is collected] have not been paying anything. How can we serve them for free when there is a tipping fee [on companies transporting waste]? That is why once the tipping fee will be introduced, these buildings are going to be charged [for waste generation],” he explained.

Zone-wise implementation

He said the municipality will implement the waste collection fee zone wise.
“We have not finished the zoning yet. But we will try to work it out with companies to choose three companies for each zone and offer the best price. We will make sure that they [building managements] won’t be ripped off by any of these companies [collecting waste].”

Currently, different waste management companies are charging different rates for their services. However, the official said the municipality will issue guidelines on the charges.

Asked if building managements will pass on the new fee to the tenants who are already paying five per cent of their rent as housing fee that is meant for civic services, Al Saifaie said:

“That is between the building management and the tenants. What people need to understand is that your waste generates pollution. So, we need to collect and treat the waste. The municipality continues to provide waste treatment services for free for all.”

The civic body has also been investing on recycling services and is working on a waste-to-energy plant which is expected to start operation in the second quarter of 2020.

All these new moves are part of the efforts to reduce the per capita solid waste generation per day to 900 gram as per the UAE’s National Agenda 2021. Dubai has also set its target to reduce 75 per cent of rubbish going to landfills by 2021.

The UAE has one of the highest waste generation rates, with each person in the country estimated to produce from 1.9kg to 2.5kg of waste everyday.

Dubai generates 8,200 tonnes of municipal solid waste per day, according to figures released in 2016.

Highlights
Dubai will announce a tipping fee soon.

This will be imposed on companies collecting and transporting waste to landfills.
Dubai Municipality will then completely stop waste collection and transporting services and outsource it to private sector.

All Dubai buildings — commercial and residential — will then have to make contracts with private firms for waste collection.

This will be done zone wise, with three companies assigned to provide services in each zone.
Buildings will be charged for waste collection by these companies which they will use to offset the tipping fee that they will have to pay to the municipality.

It is not known if the building managements will pass on the burden to occupants who generate waste.

26 Nov 2017

Latest News


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

Dubai prime home rents may fall further

Rents in the Dubai prime residential rental market have some more room to contract as demand for prime residential decreases from ultra high net worth individual and C-suite occupiers, says Core Savills, a real estate consultancy.

New stock in the upper and mid-prime residential segment are also diluting demand. However, with capital values also softening considerably, some products in this segment still hold stable yield values.

With relatively slower falls in rents in mainstream locations over the last few quarters, the prime segment is expected to be sluggish in moving towards the bottom.

Gross yields continue to be upwards of eight per cent for apartments across most mainstream sub-markets in Dubai, however, some degree of yield compression is expected through further rental decrease.

“As the next cycles of lease renewals inspire relocations, particularly among tenants whose rents are yet to reflect the softening market, we expect rents to continue softening. Although widespread, the magnitude of these drops is expected to remain limited,” says David Godchaux, CEO of Core Savills.

Meanwhile, Dubai’s residential market has completed an entire cycle in the last 10 years and is currently in the midst of its second cycle. After seeing a quick recovery over 2011-2014, rents in Dubai declined again between 2015 to 2017.

According to a report issued by Core Savills, Dubai was able to see a swift recovery in rents due to significant fiscal stimulus from the government which kickstarted growth and fuelled job creation, thus driving up demand for rental property. After reaching a peak in 2014, rents declined again, mirroring the decrease in oil prices.

“Given that Dubai continues to be a fast-growing economy, largely reliant on expatriate tenant demand, that has historically been responsive to Dubai’s economic fluctuations, the speed with which the city traversed its rental cycle is not surprising. As the UAE sees further economic diversification and private sector-led growth, Dubai’s rental cycle is likely to decelerate and lengthen,” observes Godchaux.

Office rents

Dubai’s prime office market has been outperforming the overall real estate landscape over the last few years due to limited grade A supply and unmet demand from large international occupiers wanting to set up or expand their regional operations. However, the pace of upward movement in prime rents is expected to moderate as the upcoming stock gradually self-adjusts, with new prime stock anticipated to exceed new grade B supply for the first time in the last 10 years.

This is expected to create a healthy balance between supply and demand as more options become available for large corporates to choose from – many have been resorting to purpose-built premises due to limited options available in recent times.

The secondary office market continues to lag due to strong headwinds faced from the large amount of existing and upcoming stock, despite marginal improvements in demand.

“As macro-economic indicators start improving and demand for grade B and C office space starts increasing again, we still expect a significant lag in absorption for the existing vacant stock. We are very cautious about any chance of a recovery in secondary market rents in the next 12 to 18 months,” Godchaux adds.

12 Dec 2017

Dubai real estate consultancy launches Dhs5m endowment

Real estate consultancy group Freehold Mediation and Information has launched a Dhs5m ($1.4m) endowment scheme to help small-scale property investors and real estate entrepreneurs find solutions to the difficulties they face.

Through the initiative, the Dubai-based company will bear the cost of 400 integrated studies annually, analysing their clients’ real estate situations and providing advice and consultancy services.

FMI’s move is part of the Global Endowment Vision, which has been adopted by His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, to revive the endowment as a development tool for communities. By launching the initiative, FMI has received the Dubai Endowment Sign from the Mohammed bin Rashid Global Centre for Endowment Consultancy – one of the Mohammed bin Rashid Global Initiatives.

The Dubai Endowment Sign – bestowed upon companies in recognition of their community contribution – gives private institutions a preference for procurements and contracts with the Dubai government.

Dr Hamad Al Hammadi, secretary general of the Mohammed bin Rashid Global Centre for Endowment Consultancy, said: “With the diversity of entities in the private sector, we are designing a variety of innovative endowments that suit the nature of each entity.”

11 Dec 2017

Dubai rental declines pick up in October: analyst

Dubai: The cost of renting apartments and villas around Dubai fell at a much faster rate in recent months, a property analyst has said.

According to a review by Phidar Advisory, accommodation costs across properties in the emirate posted the biggest quarterly decline in October since the slowdown started in the middle of 2014.

The decline continued to hit many communities, including popular areas like Downtown Dubai, where rents dropped by 5.2 per cent at the end of October.

“Rent declines are escalating, largely driven by the combination of weak job growth, new supply handovers and reduced housing budgets,” Jesse Downs, managing director of Phidar Advisory, told Gulf News.

“Wider corporate restructurings and salary adjustments have reduced housing budgets, which exacerbates rent declines and will lead to a reshuffling of pricing.”

The analysis coincided with the trend shown in the Reidin Residential Rental Price Index, which fell from 92 in August 2017 to 90.4 in October 2017. In its most recent report, Core Savills also highlighted that rents for flats in Dubai registered more declines than villa properties.

“The core submarkets of Dubai Marina and the Palm Jumeirah were the weakest performers, with rents dropping by 10 per cent year-on-year. Occupiers across these areas either negotiated lower rents or chose to move to cheaper comparable units.”

Rents for apartments had dropped by only 0.9 per cent in August, according to Phidar, but the pace picked up to 2.6 per cent in September and 3.8 per cent in October. For townhouses and villas, rents fell by 1.1 per cent in August to 2.7 per cent in October.

“It has been escalating. In fact, for apartments, October’s data shows the biggest quarterly drop since the market started to decline in mid-2014,” said Downs.

Despite the rental declines in many areas, including those in the city centre, tenants who are constantly on the lookout for ways to save money on accommodation costs continue to move farther away.

“The new housing, often in outlying areas, is drawing relocation from key existing communities, which is driving up vacancies in some of the traditionally most popular areas,” said Downs.

However, there are still some landlords out there who are hesitating about lowering their asking prices. Downs said this is leading to “long void periods and lost income.”

“In many cases, it’s more rational to reduce the rent and fill the unit. Landlords often think their units in popular areas are immune, but nothing is fully immune now.”

“Rents across the city are interconnected. From studios to villas, central locations to the suburbs, everything is interrelated, to some degree. Eventually, rents will adjust downward in all areas and the market will reach a new equilibrium. Sometimes it takes a few months, or more, to find the equilibrium, “ she said.

11 Dec 2017

Abu Dhabi’s home rents will remain under intense pressure

Dubai: The pressure on rents will continue to be intense across Abu Dhabi city, with next year likely to see them drop by a further 5-7 per cent.

This year, residential rents are down by 10-12 per cent and more than the forecasted 8 per cent, says Cluttons in its latest update.

The reason for the continued tightening of rents stems from many factors. The obvious one is the weakened demand brought on by job losses in key sectors. Plus, recently completed buy-to-let properties is pulling in quite a bit of buyer interest.

Then, there is the question of new and steady supply becoming available. “The sheer volume of rental stock means tenants are spoilt for choice, which is driving void periods and vacancy rates up,” the report notes. “We are aware of a number of prominent buildings where vacancy rates are as high as a third in some cases.”

But where landlords have “demonstrated sensitivity to market conditions, absorption rates still remain healthy”. (Even in the freehold offplan space, this is in evidence, with Aldar recording significant take-up for its mid-market Water’s Edge apartments on Yas Island.)

More developers will have to learn to play it smart, even pick up tabs from what their counterparts in Dubai did when faced with such a situation in 2016. “Developers may be forced to turn to the lettings market to generate incomes from unsold stock,” Cluttons states.

But there could be a downside to this for the wider market – this will likely “further depress any chances of a rebound in rental value growth”.

Among key locations, Al Reef Downtown had a 17 per cent drop in rents over the last 12 month, with two-bed leases down by as much as Dh25,000. And one-beds are Dh15,000 down from levels in Q3-16.

“With household finances under pressure due to a reduction in housing allowances, the removal of various subsidies and the impending introduction of VAT in January 2018, tenants are focused on value for money,” said Edward Carnegy, Head of Cluttons Abu Dhabi in a statement.

chart

No respite for Abu Dhabi’s office rentals either

With less demand from key business and government enterprises, office rentals in Abu Dhabi could tread even lower.
Existing tenants are making full use of the market situation. “With increasing vacancy across the market, the majority of landlords are seeking to retain existing tenants where possible, typically agreeing improved terms at renewal,” said Edward Carnegy, Head of Cluttons Abu Dhabi.

chart

Rent-free periods and easing of payment terms are becoming standard features. Some landlords are willing to go further, even offering to fit out the interiors for those tenants seeking relocations.

“We are seeing fairly significant churn from public sector and related entities, with at least 50,000 square metre requirements currently in the market.”

Cluttons states that top-tier office buildings have had rent drops, with the Aldar HQ building seeing a 2.8 per cent softening and International Tower by 3 per cent.

Prime office rents could end the year down 5 to 10 per cent from last year and likely to do a repeat in 2018.

12 Dec 2017

UAE’s Azizi hands over two Dubai projects worth $125m

UAE-based Azizi Developments announced on Monday the completion and handover of two premium serviced apartment projects in Al Furjan – Candace Acacia Serviced Residences by Azizi, and Candace Aster Serviced Residences by Azizi valued at AED460 million ($125.2 million).

Candace Acacia is valued at AED240 million and spans a construction area of 335,246 square feet and includes 316 units of studio and one-bedroom apartments.

Candace Aster is valued at AED220 million with a construction area of 259,757 square feet and includes 227 units of studio and one-bedroom apartments.

Al Furjan is one of Dubai’s fastest growing residential neighbourhoods. The new metro line named Route 2020 will serve seven additional stations and will connect Al Furjan to Dubai Investment Park, Discovery Gardens, Jumeirah Golf Estates and will eventually service the Al Maktoum International Airport.

Farhad Azizi, CEO of Azizi Developments, said: “Candace Acacia and Candace Aster were conceptualised to meet the growing demand for premium living spaces in Al Furjan. Serviced apartments are an important category for Azizi Developments and one that we will aggressively tap into in the coming years in emerging residential neighbourhoods in Dubai.

“In this regard, we have seen that Al Furjan is emerging as a premier residential real estate destination in Dubai, offering a comfortable community lifestyle to residents.”

Azizi Developments said that in the last three years it has delivered over 800 units across eight projects in Al Furjan, and is expected to complete a further nine projects in the area before 2020.

11 Dec 2017

Abu Dhabi’s prime office rents fall as market ‘stagnates’

Prolonged economic headwinds has seen Abu Dhabi’s real estate market continuing to stagnate during 2017, with the majority of sale and lease activity driven by affordability and incentives being offered by landlords and developers, according to Cluttons.

Weaker economic growth has taken a toll on the hydrocarbon sector in particular, which has been a key driver of demand in the residential and commercial markets in the emirate historically, the consultancy said on Tuesday.

Faisal Durrani, head of research at Cluttons said: “The nervousness we have been reporting on for almost three years is well entrenched in the market at present.

“Saying that, we are seeing some positives emerge that may help to boost economic growth, including the recent announcement by ADNOC to invest $109 billion in its gas downstream growth strategy over the next 5 years.

“This will likely filter through to the UAE capital’s real estate market in the form of fresh demand for residential and commercial property. However, in the short term we anticipate that both tenants and buyers will continue to err on the side of caution and activity will continue to be driven by affordability and favourable payment terms offered by landlords and developers.”

Cluttons Winter 2017/18 Abu Dhabi Property Market Outlook said subdued growth in the oil and gas sector continues to undermine overall activity in the office market.

The public sector on the other hand, which includes government departments and other quasi government entities, appears to be mobilising in response to the weak rents, with a range of requirements in the market.

While some are looking to consolidate, others are attempting to upgrade from older offices.

Edward Carnegy, Head of Cluttons Abu Dhabi said: “We are seeing fairly significant churn from public sector and related entities, with at least 50,000 sqm requirements currently in the market. This is attributable to various drivers including consolidation exercises, upgrading offices from older legacy locations and the availability of new office supply to enable such relocations.

“These factors are all framed by a requirement to cut cost and drive efficiency. Similarly, corporate occupiers are still consolidating, cost cutting and requiring increased lease flexibility.

“With increasing vacancy across the market, the majority of landlords are seeking to retain existing tenants where possible, typically agreeing improved terms at renewal. New tenants are being offered a range of increased incentives to win them into buildings, such as rent-free periods and payment terms. We’ve also seen a small number of landlords fitting out premises for tenants, removing a substantial barrier for relocation.”

Cluttons’ report also highlights the reduction of headline rents across the city. Even the top-tier Grade A buildings have seen rents weaken, with the Aldar HQ building (-2.8 percent) and International Tower (-3 percent) both registering falls in headline rents in Q3.

Cluttons said it expects office rents to remain under pressure across Abu Dhabi during 2017 and 2018.

Durrani said: “Prime office rents appear to be on track to end the year roughly 5-10 percent down on this time last year and it is our view that a similar pattern is likely during 2018.”

12 Dec 2017

Expert tips: Real estate investment for beginners in the UAE

Investing in real estate for the first time can seem a very daunting task, particularly for first-time buyers. However, real estate investment can also be a great asset, and a steady income source.

Saad Audeh, Managing Director of Campbell Gray Hotels and Audeh Group put together a list of tips for first-time buyers to keep in mind when looking for real estate in the region.

Location is key

When looking at where to invest in a city, location and accessibility is key. Proximity and connectively to main squares, good shopping areas, great health facilities and dining will always be a positive whether you are buying the property for personal use or as an investment.

dubai

If buying for yourself, decide on the kind of lifestyle you’d like to be around and choose the location accordingly. For example, residential communities offer a different vibe to a modern partment in Downtown Dubai.


Should I say yes to brands?

Branded residences are a great option for first-time buyers as they are usually managed and linked to a prestigious development group and offer additional services and amenities to regular homes and apartments.

home

They are also a safer investment option when compared to others, especially for international investors or first-time investors, as they offer brand recognition and trust. While they tend to be slightly more expensive than others, the pros are worth the extra investment.


Lifestyle benefits and amenities

When buying property, you want to make sure to get the most out of your budget. Always look for developments that offer access to premium lifestyle benefits such as a swimming pool, gym, on-site car washing and parking spaces as well as state-of-the-art and energy efficient electrical and water amenities. These will help you save costs in the long run while also driving up resale value.


Rentability and return on investment (ROI)

If you are looking to rent out the property when you are not using it yourself, or perhaps thinking of selling it later, then you need to ensure that the development will get you a good return on investment (ROI). Homes that are centrally located and offer added lifestyle benefits will always be more attractive and easier to rent out.

dubai city

In the UAE, accessibility to metro stations and bus stops along with shopping centres, schools and medical facilities is key, especially if you’re looking at renting out the property later.


Short term vs. long term rentals

While long-term rental contracts offer stability, short-term rentals can offer higher yields in the long run. This is especially great if you want to use the property personally during certain periods of the year as a holiday home. Instead of keeping the property locked up for the remainder of the year, you can get some financial gain.

12 Dec 2017

Super premium Bulgari hotel opens in Dubai

Dubai: The lights have gone on at the seahorse-shaped Jumeirah Bay, Dubai’s next big destination for luxury living.
The first component of that experience — a Bulgari hotel and right on the waterfront — opened its doors wide on Wednesday (December 6) and to be followed shortly by the branded residential component spread across six buildings.

An overnight stay in the hotel will come at Dh4,000 to Dh5,000 ($1,333), of course depending on whether it is the peak season or not.

Resorts and Residences

The hotel component will feature 121 keys, with 50 being for the super-premium suites and villas. Meraas is the master-developer of Jumeirah Bay and also of the hotel and residences.

This is the first hotel — and residences — bearing the Italian jeweller’s name anywhere in the Middle East.

As such, there are only five Bulgari hotels in the world and to be followed shortly by a sixth, in Shanghai.
By 2020, the one in Moscow will have opened and another five are in the works, in New York and Beverley Hills among others.
But one thing Bulgari will not do is be associated with “100 hotels and become a player in the hotel industry,” according to Silvio Ursini, Executive Vice-President of Bulgari and head of Bulgari Hotels & Resorts.
“It took us 15 years to get to three hotels and now five. We wanted to create something that’s not too big or businessy. Our hotels are for those who want the hotels of old, where everything was crafted to perfection. That’s what we’ve delivered in Dubai.”
Priciest units

Earlier this year, Bulgari struck some of the priciest deals for off-plan units in Dubai — two of the Bulgari Residences there fetched Dh60 million and Dh50 million, respectively.
The homes are part of the 1-7 million square foot Bulgari Resort and Residences development.
Meraas Holding, a Dubai-based real estate and development company, signed an agreement with Bulgari Hotels and Resorts to bring the luxury brand to the emirate. It will be the hotel company’s fifth property after those in Milan, Bali, London and Shanghai.

Property profile

The Bulgari Resorts at Jumeirah Bay island, a six-million-square-foot mixed-use development is sculpted in the shape of a titanic seahorse.
Besides the rooms and suites in the main hotel buildings, there will also be 20 hotel villas and a marina. The marine complex will cover an area of 1.7 million square feet.
The hotel is expected the third designer hotel in the UAE, followed by the Armani Hotel in Dubai and the Palazzo Versace.

Designer
The Bulgari property in Dubai was designed by Italian architectural firm Antonio Citterio Patricia Viel and Partners, which have both traditional and modern themes.
It is part of Bulgari Hotels and Resorts’ plan to have a stronger presence in the Gulf, according to Jean-Christophe Babin, chief executive of Bulgari Group.

6 Dec 2017

Articles

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

Real estate risk allocation and insurance tips for Dubai property investors

As an owner-occupier, your primary risk would be damage or destruction to your real estate asset. As such your insurance will likely be for a lump sum amount or full replacement or reinstatement of the asset. Owner-occupiers may also insure for business interruption to cover them for lost income when the premises becomes unusable due to damage. This may be important, for example, where the owner has a mortgage and would have difficulty in meeting the repayments.

An owner would generally take out insurance for third-party risks: for example, where a visitor suffers an injury caused by or occurring on the real estate asset. In transferring ownership of a real estate asset, the buyer and seller will need to establish a clear date for the risk of damage or destruction of the real estate asset to pass. The logical time for the passing of this risk is the date the title is transferred. Generally the seller will cancel the insurance on this date and the buyer will implement its own insurance. There may also need to be a clear position in the sale-and-purchase contract as to what may happen should damage occur between the date of contract and the date of title transfer.

Where a real estate asset is tenanted, the lease contract may expressly address the allocation of risk between the landlord and the tenant and require the parties to obtain insurance.

It is not possible to map out all of the possible variations in such arrangements, however, the following represents a fairly typical allocation of risk and insurance in a retail/office unit context.

Fit-out period
The landlord will generally require the tenant to have or procure contractors all risk insurance as well as worker’s compensation insurance. The landlord will generally require that the landlord is named co-insured and specify the level of cover the tenant must obtain or procure.

Typically the insurance undertaken during the fit-out period will be obtained by the contractor completing the fit-out. The tenant will need to ensure that this insurance is obtained and contains the relevant covenants sought by the landlord under the lease agreement.

Damage and destruction of the building
The landlord would normally obtain all risk building insurance but may require the tenant to insure for damage arising out of the tenant’s or occupiers’ negligence. This could result in double insurance and an alternative approach would be for the tenant to be named as a beneficiary of the landlord’s insurance. This is, however, not the practice in the region.

Landlords will typically exclude liability for any other types of losses sustained by the tenant — for example, economic losses when the tenant is unable to operate from the premises. Were the landlord to face a claim by the tenant in these circumstances, it may be that the landlord’s third-party liability insurance provides a measure of protection to the landlord. As the landlord will exclude liability for the same, the tenant may wish to obtain insurance for business interruption.

As the landlord will be required to cease charging rent for the period the premises cannot be occupied, the landlord may wish to obtain loss of income insurance.

It is common in the context of a commercial office or retail unit lease that the tenant would meet the landlord’s insurance costs as part of the service charges charged to the tenant.

Tenant contents damage
The landlord may specifically require the tenant to insure the tenant’s contents, fixtures and fittings and to name the landlord as co-insured and/or require the insurer to provide a waiver of its right to sue the landlord in any case where the landlord’s negligence causes the damage.

Third-party injury
Third-party injury claims are civil wrongs and accordingly the party claiming damage or injury does not need to establish a relationship in contract with the party causing the harm. Generally, such claims will arise due to the party in control of the area not taking due care to ensure that areas are kept safe.

Accordingly a landlord may wish to insure for any injuries that may occur to third parties in common areas of a building. As the tenant may also exercise control over their premises, the tenant should also take out insurance for such claims.

Other third-party risks
Other third-party risks arise in multi-tenanted buildings in that if a tenant damages the building, this may cause losses to other tenants. The landlord can seek to exclude liability for such claims in the contract with each tenant, but would very likely also cover such risks through their own third-party policies.

As a tenant will have no ability to mitigate the possibility of claims from other tenants in contract, the tenant would need to obtain its own third-party policy to cover such risks.

Developers, investors
Throughout the construction of a project, the contractors will undertake the necessary insurances. As the developer will be paying progress payments throughout the construction, it is in the developer’s interest to ensure that this insurance is in place and that the developer is also co-insured under the contractor’s policy. It is also important to specify clearly under the construction contract when the developer shall be required to accept risk for the property following completion of construction and, therefore, should obtain its own insurance.

If the project involves off-plan sales, then, once the development is completed, the developer will start handing over the units to the investors. Generally, in the case of jointly owned (strata) property, insuring the building, including the usual fitting and fixtures in the units, would be the responsibility of the owners’ association (OA). In cases where there is not a legally established OA, then it may be possible for the developer to obtain a policy that nonetheless recognises the interests of investors as beneficiaries of the policy.

The developer or the OA will need to consider the type of policies they obtain. Generally speaking, such insurance will cover, and may be required to cover by law, full replacement and reinstatement, third-party liabilities and could cover loss of income or alternative accommodation costs.

Investors would typically insure their own contents and improvements. Investors may also wish to obtain loss of rent insurance or insurance covering the cost of alternative accommodation if this is not taken out by the developer or OA.

Summary
This is a general discussion of the risks in real estate and how they may be addressed in contract and through appropriate insurance. As each property and transaction is different, the risks and insurance solutions may differ so it is important that each transaction is assessed on a case-by-case basis. Accordingly, this article should not be treated as advice as to what is required in any particular set of circumstances.

Reporting by Jeremy Scott and Justin Carroll

Jeremy Scott is partner, real estate, and Justin Carroll is senior associate, insurance, at Al Tamimi & Company. The views expressed here are their own.

29 Nov 2017

Not renewing tenancy contract in Dubai? 3 months notice a must

I have been staying in a rented apartment for around last 12 months and do not want to renew the tenancy for another year. I have notified the landlord by giving one month notice of my intention but the landlord insists a notice period of three months. Further, the landlord is asking me to paint the apartment. Surely that comes under wear and tear of living in a rented apartment? What does the law say exactly as I have been reading contradictory reports?

Pursuant to your questions, we assume that the rented apartment where you are staying is situated in the Emirate of Dubai. All tenancy contracts in the emirate fall under the ambit of the Law no. 26 of 2007, Regulating the Relationship between Landlords and Tenants in the Emirate of Dubai. Subsequently some provisions of the said law have been amended by Law No. 33 of 2008.

Article 14 of the law states: “Where either of the two parties to the lease contract do not wish to renew the contract or wish to amend any of its terms, such party must notify the other party of such intent no less than ninety days before the date on which the lease contract expires, unless otherwise agreed by the parties.”

Moreover, Article 14 of amendment states: “Unless otherwise agreed by the parties, if either party to the Tenancy Contract wishes to amend any of its terms in accordance with Article 13 of this law, that party must notify the other party of same no less than ninety days prior to the date on which the tenancy contract expires.”

In the event your tenancy contract states that you need to provide a three months of notice period not to renew the tenancy contract, then Article 14 of Law No. 33 of 2008 should be applicable.

You are bound to return the apartment to the landlord in the same condition as provided by the landlord at the time of renting it to you, other than normal wear and tear. This is in accordance with Article 21 of Law No. 26 of 2006 regulating the Relationship between Landlords and Tenants in the Emirate of Dubai, which states: “Upon the expiry of the term of the Lease Contract, the tenant must surrender possession of the real property to the landlord in the same condition in which the tenant received it at the time of entering into the lease contract except for ordinary wear and tear or for damage due to reasons beyond the tenant’s control. In the event of a dispute between the two parties, the matter must be referred to the Tribunal to issue an award in this regard.”

Know the law

Where either of the two parties to a lease contract do not wish to renew the contract or wish to amend any of its terms, such party must notify the other party of such intent no less than 90 days before the date on which the lease contract expires, unless otherwise agreed by the parties.

 

17 Oct 2017
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