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MANAGING EDITOR
K Raveendran ravi@sterlingp.ae
MANAGING DIRECTOR
Sankaranarayanan sankar@sterlingp.ae
EDITOR
Linda Benbow linda@sterlingp.ae
Contributing Editors
Vanit Sethi vanit@sterlingp.ae
Manju Ramanan manju@sterlingp.ae
Creative Director
Message from the CEO
Harikumar PB harikumarpb@gmail.com
Designer
Ujwala Ranade ujjwalaranade@yahoo.com
Cherish your customer
I
n the real estate sector there are so many participants and interested parties,
Sales and Marketing
just like in any other industry. Regardless of how big or famous other parties
General Manager (Sales & Marketing) are, the customer is always the most important.
Radhika Natu radhika@sterlingp.ae Customers are the heart beat of our real estate sector.
Customer satisfaction creates an energetic and interactive industry that
Product Manager
makes customers feel safe and more open to real estate transactions which
Vijayan G vijay@sterlingp.ae
boosts growth and development in the market.
Developers, brokers, and even real estate experts, are taking investors
Accounts & Administration for granted. They do not care about the customer concerns or wants. They
Biju Varghese biju@sterlingp.ae don’t give investors the treatment they deserve and ignore their concerns and
enquiries. These developers and brokers are losing the most important part of
Office Co-ordinator
today’s real estate equation: satisfied customers are necessary to develop a safe,
Daisy Cartagena Orfrecio daisy@sterlingp.ae
sustainable and active real estate market.
Circulation Supervisors Cherish your clients, make them a priority in all your dealings, listen to them,
Ibrahim A. Hameed and recognize that customer satisfaction will bring great benefit and interaction
Saleem K U into the market.
Any disregard or underestimation of the investor’s thoughts, abilities and
actions, will result in distrust and a weakening of our sector.
Remember that without investors or customers, our market is stagnant.
Cherish your customers and you will see the difference.
Printing
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email: asiatic@eim.ae CEO, Real Estate Regulatory Agency
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C
O
N
T
E 4 COVER STORY
N Sealed with a
T handshake
S
11 News Partnerships
40 Appointments
26 Comments
Promotions in turbulent times
Dubai Hotspots 43 Law & Regulations
Emergence of a mature regulator Questions & Answers
Buyers market 44 Law & Regulations
Selling homes or buying a listing? Overview of property laws in Dubai
2 Mortgage market – dead or alive? 46 Law No. 16 of 2007
Reinforcing core business values
STATISTICS
T
he Dubai Land Department Since then, the Land Department propriation. It has also facilitated ment to provide clients with quality
was established on January (LD) has kept pace with the great transactions between landowners and time-efficient service.
24, 1960 / 26 Rajab 1379H strides the UAE has made towards and buyers, and their heirs, when ap- The cumulative number of the ac-
when His Highness Sheikh modernisation. In days gone by, the plicable. tions of sales from the beginning of
Rashid bin Saeed Al Maktoum, the sale of land was based on trust, and LD has developed in sync with the 1963 until the end of 2008 amounted
late Ruler of Dubai, signed a decree, sealed with a handshake. Now, these rapid growth of Dubai. The process of to 145,770 worth Dh451 billion. And
stating: “We have decided to estab- traditional methods have been re- registering real estate data is entirely the cumulative number of mortgages
lish a committee to oversee affairs placed with contracts and paper- computerised. All procedures related during the same period amounted to
related to land and private proper- work. All matters of legalisation of to sale, purchase, and mortgage are 51,739 worth Dh620 billion.
ties in the emirate, in order to register sale and purchase of lands have been conducted electronically. The LD has The number of landowners in the
these lands and properties in a sys- entrusted to the LD. This has served left the era of manual work behind, emirate of Dubai, at the end of 2008,
tematic and effective manner and to to regulate the registration process keeping pace with advanced tech- was 48,033 and the total number of
safeguard the rights of our people.” and protect property from misap- nology, which allows the depart- property owners was 66,243.
Trading: Land
During the period from 1963 to 2008 results show that the trend was for cash sales in the trading of land, but mortgages increased in
numbers in terms of area and value.
78%
59% 56%
41% 44%
22%
DUBAI REAL TIMES
90% 87%
84%
16% 13%
10%
Trading: Villas
During the period from 1963 to 2008 results show that the trend was to use a mortgage on villa sales, more so than for apartments
During the period from 1963 to 2008 results show that the number of owners who have registered amounted to 66,243.
Of this 4,8,033 of them are land owners.
48033
13774
4436
Total number of
transaction 665 3120 188
Mortgage Transactions :
• Total number of land mortgage transactions of the districts was 334
with the total
• value of transactions being Dh1.81 billion for 3.60 million square feet
• Arabian Ranches has the highest number of mortgages at 14
• The highest value of mortgages achieved by Sheikh Zayed Road district
was Dh127.2 million
6 • The highest area value price per square feet was Al Nahda 1st district
with Dh4,000
Total Number of Mortgage Transactions – Top 10 Mortgage Transactions
Overview of flat mortgage transactions for districts in Dubai:
Value Price / (sq.ft): • Total number of mortgage transactions was 132 with a total value of
Dh181.82 Million.
• Sheikh Zayed Road has the highest number of mortgage with 45 mort-
gages.
• The highest value of mortgages achieved by Sheikh Zayed Road district
with Dh76.30 million.
• The highest area value price per square feet was in Sheikh Zayed Road
district with Dh1276.14.
• Total number of mortgage transaction:
• Dubai Marina, Sheikh Zayed Road, Emirates Hill 2nd , Emirates Hill 1st
Total value of sales transaction (Dh Million) – Top Ten DUBAI REAL TIMES
Total value of apartment mortgages transaction (Dh.m) Total number of villa sales transaction (Dh.million)
DUBAI REAL TIMES
T
o regulate land and property at the level of government services between officials of various govern- ministrations in various spheres.
dealings in Dubai, a forum of and private institutions. ment departments in Dubai, and He further said: “Such partner-
coordinators of various Dubai Abdel Bari Soqat, Director of asks them to hold seminars for de- ships will help us in identifying the
government departments held its Partnerships in the Management of veloping methods of work, improv- most important problems facing
first meeting on March 16 to open Land and Property, said: “The meet- ing services and exchanging experi- departments in carrying out their
channels of communication be- ing aims to strengthen the bonds ences.” functions, while proposing solu-
tween themselves and create a of cooperation, consultation and Soqat added that such partner- tions and working with the system
working group of all departments coordination between different ships encouraged the exchange of to harmonise laws and regulations.”
under one roof. The initiative came government departments so as to knowledge and experience gained He also expressed his happiness at
out of Dubai government’s keenness achieve their common interests. It through cooperation with interna- the response to the initiative of the
to activate institutional partnerships encourages the exchange of visits tional organisations and regional ad- Dubai government.
T
he Land Department, Dubai’s of online property data provider Rei- partment’s registration system. The and growing stronger. Such a market
Real Estate Registration and din.com, who said information is an richness of the information available can only benefit from providing the
Regulatory Agency, has re- essential tool for investors if they are is one of the features peculiar to the information property investors need
vealed that the online provision of to make informed decisions and gen- Dubai real estate market and one to make long-term investment deci-
data will spearhead its latest strategic uine choices. Mr. Mohammed Sultan which has ensured it is most trans- sions. Real estate is affected by so
DUBAI REAL TIMES
initiative targeting transparency in Thani, Assistant Director General at parent.” many factors and all of these should
the emirate’s real estate market. The the Land Department, confirmed the Guest speaker at the think-tank be taken into account when deci-
announcement follows a ‘think-tank’ official view that: ‘Proper provision meeting Mr. Kayhan, who is one of a sions involving large sums of money
meeting at the department’s Deira of information is crucial to the op- long line of experts co-opted by the are being made. The legal framework
headquarters earlier this week which eration and integrity of the real estate department in a programme that and the rights of property owners
highlighted investors need for accu- market, which is why we make all the constantly reviews the effective- can have as much of an effect as price
rate and timely information to have a necessary data available through the ness of its operations, said: “Dubai movements, and investors need this
sound basis for investment decisions. online site Dubai Focus. is a very strong market which, on type of data to have a solid basis on
Delegates at the meeting re- ”All the information provided the evidence of the numbers and which to make decisions that are, in 11
sponded to Mr. Ahmed Kayhan, CEO there is extracted from the Land De- size of transactions, remains strong general, long term.”
MARKET TRENDS & ANALYSIS // PROPERTY PRICES
COMMUNITIES
Developers
Investors
national level, to communicate and estate and create opportunities similar communities in GCC lawyers or consultants.
exchange expertise with the direc- for cooperation between com- and Arab world to establish The Executive Committee has four
tion and support of the Department munity members. the Arabian Real Estate Society members. Each committee will sub-
for Real Estate Sector Development • Maintain communication with which will have deeper and mit one representative to this com-
in RERA. the decision makers in real es- more widespread goals to help mittee. The board of directors will
• Discuss all of the issues related tate and offer recommendations economic growth in the Arab include:
to development, to facilitate to serve the real estate com- world. • President
the stakeholders work enabling munity by boosting trust. Such • Exchange expertise with local • Vice-President
them to bring better services to suggestions will be executed in and international authorities on • Secretary 13
the market which are in line with cooperation with governmental this subject matter. • Representative from RERA
REAL PERSONALITY
MARKET // PROFILE//
TRENDS & ANALYSIS
S
he is one of those free spir- sector and she told us that she was
its who cannot be tied to one of the founders of this data
places or positions. Con- base; and updating this information
sidering her as a promis- is one of her responsibilities.
ing leader is not a surprise because Khawla is preparing to take her
she kept her standards higher than master's degree in real estate man-
all of the difficulties and challenges agement. She chose this field be-
that have come her way, and stuck cause her constant desire is to be
to them no matter what she was number one in her area.
facing Far from the real estate sector,
The dream is the real begin- she has the ability to live like any
ning...Because she believed that other girl who reads and watches
she has something different to movies but her biggest addiction is
offer in life's journey, she pictured shopping, shopping, shopping!
the future in the way she likes She admits that the art of apply-
and accepted all its opportunities ing makeup is her thing, and she is
knowing that she can have it all if really good at it, which makes a lot
she tries the hardest that she can. of sense when you see her.
She is different, for sure, and I noticed that she is always quot-
that leads her to glow and stand ing from her mother and asked her
out in this ordinary world. about this wonderful bond. She
Khawla Mohammed Altamimi
Khawla Mohammed Altamimi told me that her mother has been
is one of the promising leaders in gone for a long time now. I figured
the Real Estate Regulatory Agency. She graduated from UAE University as an that this is the reason to the sad
Working as a senior statistical ana-
economic major and started her career as an eyes she has.
To change the direction of our
lyst doesn’t describe what she re-
ally does here or how important it accountant in the Arabic United Bank conversation I asked her about
is. When your work becomes so at- young leadership. She said that a
tached to your identity and when Believing that she has more alty. She was working passionately leader without a vision is just like
you work like a leader, even if potential made her seek a much for the sake of Dubai (her native a knight without his horse. She
you’re not the head of the section, more creative and effective ca- city) and that forced her to feel so added that Sheikh Mohammed has
DUBAI REAL TIMES
you will do what it takes to satisfy reer, so she joined Dubal for a few responsible for the real estate sec- given us a good example of leader-
your eager heart. months. She then accepted an tor. These feelings made her work ship and success.
She graduated from UAE Uni- offer in the Real Estate Regulatory harder and actively in the agency’s She insists that all the people
versity as an economic major and Agency knowing that this is the projects such as the Dubai map; it that she has met in her life, even the
started her career as an accoun- place to be, and starting with only made her so proud to be one of the ones who hurt her, have made her
tant in the Arabic United Bank in five other people in the agency people who shaped the features of a better person. She was so grate-
the central operational unit. She meant that she is one of RERA's Dubai. ful to be one of the people who can
stayed like this for six years gain- founders She always insists that RERA has discover life and beat challenges.
14 ing experience and the trust of her Believing in the importance of the most valuable data system in That was only the beginning of
managers and colleagues. this place was beyond career loy- Dubai about stakeholders of the her rising star … and that is Khawla.
DUBAI FOCUS
Dubai’s 2009
Property Hotspots
A
UAE real estate website propertyfinder.ae has recently released Mega projects success largely determined by strength of internal assets
findings revealing Dubai’s top locations to rent and buy in 2009. Dubai’s mega projects create their own forward momentum, as component
The findings reveal that both renters and buyers are moving fur- assets become integrated to provide an investment value that is greater than
ther out of Dubai’s traditional residential hubs to areas such as the sum of its parts, says a Dubai Sports City (DSC) spokesperson. Speaking at
The Springs, Jumeirah Lake Towers and Discovery Gardens, with new com- the MEED Dubai Mega Projects forum, Malcolm Thorpe, a senior spokesper-
munities high on the priority list for both renters and buyers. son for Dubai Sports City, said that the development’s ‘city within a city’ con-
The findings are based on approximately 500,000 unique page visits to cept allows the various assets within the city to
the website over the month of February 2009 and highlights ongoing activ- build on each others strengths.
ity in the Dubai real estate market despite the economic downturn. “It is the integration of a mega project’s
Commenting on the survey results, Marcello Sambartolo, Head of Mar- different elements which propels the whole
keting at propertyfinder.ae, said: “This survey has revealed some interesting project to completion,” said Thorpe. “There
statistics. We are seeing a real shift in rental interest towards new residential are often asset-specific time delays for various
areas such as Discovery Gardens and Jumeirah Lake Towers where rents are reasons, but here it becomes an overriding col-
more competitive. This data also shows that there is still interest from end lective confidence that the project will be de-
users looking to invest in Dubai real estate which is now offering opportuni- livered and be a success as planned.”
ties to capitalise on the recent drop in house prices.” Dubai Sports City is a $4 billion, 50 million Palm Jumeirah
Propertyfinder.ae’s property hot zones include: square feet mixed-use development which will be the world’s first integrated
purpose-built sports city.
“The sheer size and scale of integrated projects encourage completion and
delivery despite what can be considered short-term worries,” added Thorpe.
Recently completed projects include the first handover of properties in
the Victory Heights development at Dubai Sports City and The Els Club Golf
Course, which has already celebrated its first year of operation.
The coming months will see a wide range of programmes on offer at DSC
Hot Zones in Dubai To Buy Hot Zones in Dubai To Rent Academies.
“Dubai Sports City is providing a lifestyle choice for families to live, learn,
Area Dubai’s Area Dubai’s
work and play. People are now making this their home, and as more areas of
Hot Hot
the project open, we will see a thriving community developing,” concluded
Property Property
Zones to Zones to Thorpe.
Buy Rent The development is being built around five major sports venues and
1 The Springs 13.52% 1 The Springs 22.69% feature a series of major sports academy facilities. Included within the DSC
Academies Campus is the Dubai Sports City Football Academy–the home of
2 Jumeirah Lake Towers 11.21% 2 Discovery Gardens 19.28%
Manchester United Soccer Schools, Dubai; the World Hockey Academy, a firs-
3 Dubai Sports City 8.03% 3 The Lake 8.75% of-its-kind partnership with the International Hockey Federation; a Swimming
4 International City 8.69% 4 Dubai Marina 7.72% Academy with a 50-metre training pool; a Rugby Academy and the Interna-
5 Dubai Marina 7.85% 5 Arabian Ranches 6.66% tional Cricket Council’s own ICC Global Cricket Academy.
6 Palm Jumeirah 7.77% 6 JLT 5.81% In addition, Dubai Sports City is home to a David Lloyd Tennis Academy
DUBAI REAL TIMES
and the first Butch Harmon School of Golf outside the United States.
7 Discovery Gardens 6.68% 7 Palm Jumeirah 4.36%
8 Meadows 6.78% 8 SZR 3.83%
9 Emirates Hills 5.29% 9 Jumeirah 3.38%
10 IMPZ 5.48% 10 Mirdif 3.60%
15
Victory Heights overlooking the Ernie Els golf course
MARKET TRENDS & ANALYSIS
T
he mid-market and budget softening in demand from key Euro-
segments of the hotel industry pean source markets brought about
are expected to perform rela- by the dollar appreciation and the
tively better in 2009, according to a financial crisis. The occupancy rate
review by Jones Lang LaSalle. of 79 per cent experienced in 2008
Hotels most at risk are those in is the lowest recorded in the Dubai
the upper upscale category, as Eu- market since 2004.
ropean tourists cut back their travel Over the second half of 2008,
budgets along with the apprecia- approximately 3,245 new rooms
tion of the dollar, it says. were added to the stock of quality
According to the leading real hotel rooms in Dubai, with the larg-
estate consultancy, the outlook for est completion being the Atlantis
2009 is expected to be less optimis- hotel on Palm Jumeirah. This brings
tic than previously anticipated, with the total to approximately 40,000
visitor arrivals well below the Dubai rooms, representing an increase ably less than the announced pipe- slightly lower at Dh782. Market wide
Tourism and Commerce Marketing of 10 per cent from the first half of line due to the impact of the prevail- RevPAR’s grew roughly by four per
(DTCM) target of 13 per cent annual 2008. ing credit crisis on the financing of cent in 2008 compared to 15 per
growth. Visitor arrivals to Dubai over Although announced supply many projects, especially those that cent in the previous year. However,
the first half of 2008 were up by could add a further 40,000 new are still in the planning stages, ac- RevPAR decreased by 27 per cent in
8.5 per cent on the same period in rooms to the market (doubling the cording to the JLL report. September, 12 per cent in November
2007 according to DTCM. Although current total) by 2012, it is likely that Most of the announced new sup- and 18 per cent in December 2008,
no official results have yet been re- the future supply will be consider- ply is currently under construction thus marking the lowest results in
leased for the second
half of 2008, anecdotal
evidence suggests tour-
ist arrivals have slowed
down significantly, JLL
Over the second half of 2008, approxi-
points out.
Over the period be- mately 3,245 new rooms were added to
tween July and Decem- the stock of quality hotel rooms in Dubai,
ber 2008, occupancy
rates fell by approxi-
with the largest completion being the
mately seven per cent. Atlantis hotel on Palm Jumeirah
This came as a result of
the new supply in the
market, as well as the
F
or most of the world’s prime become the expectation, perfor-
residential markets, 2008 was mance has weakened noticeably in
a year to forget. Prices fell in recent months and there is talk of
almost half of all global hot steep price falls this year as wealth
spots and sales volumes all but dried creation falters. Different parts of the
up in many markets. From Europe, world are at different stages of the
to the Middle East, to the Americas global downturn, but now here will
and Asia, few places had much to be immune from a significant fall in
celebrate, according to Liam Bai- property values.
ley, Head of Residential Research at Tax-efficient locations, which
Knight Frank. proved to be market leaders dur-
The impact of the credit crunch ing the boom years, have begun to
was felt first in the prime new build come under pressure. Zero growth
and investment-led markets. By the was recorded during the year for
summer of 2008, off-plan sales in both the Cayman Islands and Ber-
Europe, North Africa, the Caribbean muda, whereas in Monaco a re-
and Middle Eastern resorts struggled spectable rate of growth in the first
to maintain traction and develop- half of 2008 was reversed by a sharp
ment plans were either scaled back downturn in Q3 – before values sta-
or put on hold. markets – including London, New Sydney (-12 per cent). bilised in the final quarter – leaving
It was perhaps obvious in ret- York, Hong Kong, Sydney and Sin- The most resilient prime markets prices 2.1 per cent up on the year.
rospect that investment and some gapore – weakened sharply. last year tended to be found in the Following rapid price adjust-
over-inflated second-home markets The results from the Prime In- emerging economies – notably Mos- ments, in addition to currency fluc-
would be hit hardest. In areas where ternational Residential Index reflect cow (+13 per cent), Jakarta (+18 per tuations, the league table for the
local demand for prime property is these trends. Of the 55 locations cent) and Bangkok (+23 per cent). world’s most expensive residential
limited or even non-existent – es- covered by the index, 23 saw prices Even Dubai, which has been markets has changed substantially
pecially those with an abundance fall over the course of 2008, six saw tipped for a crash for almost as long since the 2008 Wealth Report. De-
of stock – investors have created an no change and 26 saw growth. But as it has been developing, managed spite recent price falls, Monaco
artificial market, Bailey points out in a data for the final quarter of the year to record growth of 11 per cent in stands out at the head of the field –
report that is part of Citibank’s 2009 is more telling, revealing how the 2008, although by Q4 prices were with an average value of €50,000 per
DUBAI REAL TIMES
edition of the Wealth Report. downturn has gathered pace. Com- slipping substantially and our data square metre for the best properties.
Without them there is nothing to paring Q4 against Q3 2008, 35 loca- revealed a 19 per cent decline be- London, where values have been hit
support prices. As returns from equi- tions saw prices fall as opposed to tween Q3 and Q4, the report notes. hard by the slide in the value of ster-
ty and commodity markets plunged, only 14 showing growth. The big- Price rises in prime Asian loca- ling, slips down the ranking to num-
even HNWIs and UHNWIs cut their gest losers were the prime districts tions have been driven by a lag ber two. Manhattan is in third place,
discretionary expenditure. But the of the big cities: Hong Kong (-25 per between wealth creation and slow while Asian cities (Hong Kong, Tokyo
worsening global and local mar- cent) and London (-17 per cent) led growth in new high-specification and Singapore) compete with Euro-
ket conditions meant that through the decline, but several other cities housing. But evidence is mounting pean centres (Moscow, Rome and
18 the year even the prospects for the saw double-digit price falls, includ- that in these locations, where an- Paris) for the remaining positions in
world’s most expensive first-home ing Singapore (-15 per cent) and nual double-digit price growth has the table, with Sydney bringing up
HNWIs sitting on the fence the rear. The impressive showing
from Moscow (fourth) is influenced
and resulting economic downturn
slowed this process.
T
he majority of HNWIs appear to be sitting on the fence at the moment, by the relatively small size of the The question to answer is wheth-
with 57.1 per cent making no change to their property portfolios, al- city’s prime market area – and the er the downturn is leading to a
though over 90 per cent have seen their property portfolios decrease in rapid growth of HNWI purchasers simple re-pricing of assets that had
value during the credit crunch, with about a third of those hit by a substantial over recent years – although recent become overvalued through the late
decrease. The illiquid nature of property probably goes some way towards evidence is that price growth has boom period, or whether something
explaining this lack of action, the Citibank report said. slowed and turned negative in the more fundamental has occurred in
“While an entire portfolio of stocks and shares can be sold with just a few final quarter. the global economy that will mean
taps on a keyboard, it is more difficult – and sometimes almost impossible – Depending on where you were prime market pricing will be further
during an economic downturn to sell property quickly. Many investors also in the world, 2008 saw prime mar- suppressed and take a long time
acknowledge the long-term nature of property investment: even if values fall ket conditions range from ‘challeng- to recover. The evidence from one
your asset is unlikely to disappear completely. Despite this, a significant num- ing’, to ‘difficult’, to ‘awful,’ the report market at the epicentre of the down-
ber of HNWIs have either increased or reduced their exposure, with a very points out. Looking ahead to the turn is that the former is more likely.
small percentage increasing it substantially.” rest of 2009 and beyond, it is very London’s top-end market saw the
According to the report, this ambivalence is probably a reflection of the di- easy to become despondent about downturn accelerate in late 2008 as
versity of the property market and the attitude of the wealthy towards it. While the prospects for prices and sales the market accepted that 10 per cent
stock markets around the world have all been heading one way only, property volumes throughout the luxury or 15 per cent price reductions were
markets have not reacted homogeneously. market. Rather than being immune insufficient to get sales underway,
According to a survey quoted by the report, performance has varied wide- from the wider market downturn, the report says.
ly. In those areas where values dropped fastest and furthest, canny HNWI in- as many felt would be the case 12 By early 2009, the 30 per cent dis-
vestors are sensing the bottom of the downturn is imminent and are slowly months ago, the luxury housing counts being offered triggered a rally
reinvesting. sector is potentially more vulnerable in market activity and allied to a 20
Experienced investors realise we are firmly into the bargain-hunting stage to economic shocks than the main- per cent decline in sterling against
of the property cycle, especially in the commercial and new build sectors, the stream market, although the most the major world currencies, offered
report noted. desirable and established prime lo- the potential of savings up to 50 per
A number of survey respondents said their clients were actively looking to cations will retain their liquidity and cent on peak prices for international
take advantage of distressed sales to cheaply acquire stable assets with good long-term values better than the ar- buyers.
yields. Many fortunes have been property-based and a large proportion of the tificially inflated newcomers to the The response has been dramatic:
HNWI community has a passion for property ownership. According to the sur- prime arena discussed earlier, the wealthy international buyers who
vey, property accounts on an average for 30 per cent of their asset portfolios. report asserts. considered the market too hot a
But even this enthusiasm has been dented by recent events. Although the at- The element that gave the sec- year earlier have come back strongly
titude of almost 60 per cent has either remained unchanged or become more tor its impetus for growth over the and the early evidence is that this
positive towards property as an investment since the credit crunch, that still last decade was the expansion of demand has acted to place a floor
leaves a significant number who now have a more negative outlook. It may be global trade and economic linkages. underneath prices. An additional fac-
that these are relatively new or over-geared investors who have only invested This factor contributed to the rapid tor supporting prices is that supply is
in rising property markets and whose confidence has been knocked by the growth of a footloose and wealthy constrained when low prices are of-
realisation that not even bull runs with seemingly boundless energy can carry global elite, giving the global luxury fered – the very wealthy do not need
going on for ever, according to the report. market a substantial raison d’être. This to sell their prized assets in a weak
Most commentators are also predicting that prices will start to stabilise, trend saw an explosion in demand market.
bringing some certainty to the market. By nature, many investors fear buying
an asset that has further to depreciate in value, but by waiting for the bottom The biggest losers were the prime districts of the big cities: Hong
of the market they also risk missing out on the best opportunities. These will Kong (-25 per cent) and London (-17 per cent) led the decline,
already have been snapped up by those prepared to take more risks. but several other cities saw double-digit price falls, including
Commercial property is also set to grow in popularity, with just under half Singapore (-15 per cent) and Sydney (-12 per cent). The most
of HNWIs showing their understanding of the market by planning to increase resilient prime markets last year tended to be found in the
their investments in this area. This sector has been particularly hard hit by the emerging economies – notably Moscow (+13 per cent), Jakarta
recession, and is arguably well placed to offer growth potential in the near (+18 per cent) and Bangkok (+23 per cent)
future for the shrewd investor. Quality stock in the best locations with good
clients has probably been devalued too much and this is reflected in some for multiple residences by those The desire to own good property
very tempting yields for those with funds to spend now. But investing in com- who ran their business in, say, Rus- in the best markets is an enormous
DUBAI REAL TIMES
mercial property does generally require a more in-depth understanding of sia, raised finance in New York, and driver for the prime residential sec-
specific industries and markets to minimise risk. Perhaps acknowledging this, spent August in St-Jean-Cap-Ferrat tor. The lesson to draw from the
over 20 per cent of the survey sample is planning to cut its exposure to the and February in Courchevel. last two years is that no market, no
sector. The demand for property to fa- matter how luxurious, can escape a
Real Estate Investment Trusts (REITs) have suffered horribly during the credit cilitate this lifestyle grew substan- bubble-and-bust scenario. Howev-
crunch. With the market for new homes stagnant, cash flows have all but dried tially. As late as the summer of 2008, er, when the market believes prices
up for developers and construction firms, sending their stock into freefall. Al- Knight Frank sold more European have returned to offer good value,
though nearly 20 per cent of HNWIs feel bullish enough about a future recov- properties priced at or above 10 mil- activity will rise and the perennial
ery to recognise some value in this kind of investment, 27.5 per cent are less lion euro in three months than in the factors that make a true prime mar- 19
confident and plan to scale back their exposure. whole of 2006. The credit crunch ket desirable will endure, says Bailey.
MARKET TRENDS & ANALYSIS // PROPERTY PRICES
erage service charge where proper centage of the recurring expenses dustry. For example, when agents than determining them by a proper
budgeting occurred was around Dh that make up the service charge. were questioned about the level of budgeting process and the future
18 per ft² whereas the average where The fund is set aside each year to service charges on The Palm Jumei- outlook for some buildings appear
estimates were used was Dh 8 per allow for long-term maintenance rah, responses included Dh0 per ft² , very bleak. Indeed, the likelihood is
ft². Chilled water was another factor and restoration of the building. The monthly payments of Dh2500 per ft² that building related service charges
highlighted by the survey. Of the 140 survey found that this charge aver- and annual payments of anywhere (which will become the responsibil-
buildings surveyed we were unable ages Dh1 to 2 per ft² and that it is between Dh 15,000 to 30,000 per ft². ity of Owners Associations) are likely
to determine whether chilled water usually included in the headline ser- Nakheel subsequently advised that to increase substantially in many
was included in the service charges vice charge. Surprisingly, 31 per cent current service charges are paid as a cases when the Strata Law takes ef- 21
for 12 buildings. Of the remaining of the properties surveyed did not fixed annual fee per villa type. In fu- fect.
MARKET//
TRENDS & ANALYSIS
PROPERTY PRICES
J
anine was asked how prop- lords, who are often non-Nationals, able to make informed decisions.
erty managed building occu- based outside Dubai, do not un- In addition, we make the property
pancy levels are fairing in this derstand what has changed in the available as soon as notice is given
new market. market. They are therefore reluc- which allows us a two-month buf-
“Our occupancy levels haven’t tant to look at maintaining rents fer to fill the space and encourage
changed since last year in both and/or working with tenants on a Landlords to complete their own
our established property man- long-term payment plan; however, viewings of the property within
aged buildings. I’m surprised as with regular dialogue between that time period. We faced diffi-
the changes in the property market landlord and BH, landlords feel culty with break leases as landlords
seem to have hit all areas of Dubai. better informed on new market saw this as an opportunity to raise
I attribute this to the solid relation- practices and many now consider the rent. However, through our con-
ship we have with our landlords a rate reduction and/or amended sistent open dialogue, the majority
who have remained loyal to us in payments, where a client requires a of our residential landlords can see
spite of market changes. Tenants in renewal and has the option of mov- the long-term advantage of rate
both the established residential and ing to a more affordable property. maintenance and reductions.”
commercial buildings consistently They have noticed that ‘amended The Property Management Di-
want professional management and payments’ are becoming the ‘norm’ vision was created in 1993, though
Janine Crisp
dependable maintenance. Land- in this new property market. the company has been in business
lords who have retained their high landlords built their cash flow pro- What kind of marketing has been for 25 years. In that time property
occupancy levels have maintained jections on the higher rental rates involved in maintaining these management has been a huge
affordable rental rates, even with of 6-12 months ago.” levels? selling point for both tenants and
the new 2009 Rent Decree, that When asked “What is surprising “Our biggest tool has been main- landlords as tenant and landlord
would have permitted a rent hike. about the levels?” she replied: “This taining an open dialogue between feedback indicates dependable
Established commercial build- new market has opened up a wide our tenants and our landlords, with property management generally
ings have undergone much price choice of affordable options in a regular updates so they’re better means more ‘value for money’.
fluctuation as landlords have been range of locations around Dubai
undecided on whether to raise or and newer buildings with decent
maintain rental rates. Adding to facilities are aplenty; but, many cli-
this, commercial business owners ents are ‘sticking to their roots’ and
started moving to better priced opting to stay faithful to depend-
properties with improved facilities, able property management with
DUBAI REAL TIMES
Opportunity
fund to acquire
First distressed assets
company to and companies
list on DFM
Khaldoun Albari, Vicechairman &
CEO, Drake & Scull International in 2009
A
head of its first day of listing plus an offering cost of Dh0.02 per
on the Dubai Financial Mar- share, with a minimum subscription
ket (DFM), Drake & Scull Inter- of 20,000 shares. The IPO, which was
national PJSC (DSI) announced that closed on July 17, was 101 times over-
it had been awarded its largest IWP subscribed. Around 45,600 subscrib-
(Infrastructure, Water & Power) proj- ers applied for DSI shares, investing
ect to date – a 65 tonne district cool- funds of approximately Dh124 billion.
ing plant in Durrat Al Bahrain which it DSI will use the proceeds from the
is to design and build. The scheme IPO to enhance its market-leading
comprises two plants, the first of position in the UAE and expand its
which will hold 65 tonnes of refriger- activities in the Middle East and North
ation and is DSI’s largest IWP project Africa. The company has a clearly
to date. The scope of the project also defined strategy to grow both hori-
includes reticulation pipe work, an zontally and vertically. DSI is currently
energy transfer station and all meter- evaluating a number of companies Behnam Eshragh
C
ing systems. as potential acquisitions to extend irrus Developments LLC, is set to launch an
DSI Executive Director of IWP, its geographical presence in leading opportunity fund to acquire distressed and
Tawfiq Abu Soud, said that the an- regional construction markets, in ad- income-producing real estate and hospitality
nouncement of this project, which dition to companies that will help DSI assets or companies, in the region as well as in the UK
coincided ahead of its DFM listing of secure access to raw materials. and the US.
date, reinforces DSI market leadership DSI has completed many pres- The fund is to take advantage of the vast opportu-
in IWP projects across the region and tigious projects in the UAE. Recent nities in the respective sectors due to the economic
supports the financial strength DSI is completed projects include Shangri- downturn and liquidity crises. The fund is being set up
currently experiencing. La Abu Dhabi Hotel, Park Place Tower, to acquire a number of distressed assets locally while
“We have big plans for the future,” Indigo Tower, Rashid Hospital Trauma at the same time is closely looking at companies out-
he said. “We are already working on Centre, Zayed University Campus, side the region, particularly ones hit by the economic
over 35 projects across Dubai, Abu Dubai Police Headquarters building, slowdown while still possessing prime real estate as-
Dhabi and the greater Mena region. Jumeirah Beach Residence district sets. There is a great appetite from a certain class of
As both time and our shares begin to cooling plant and Dubai Festival City investors that have profited from the Dubai real estate
mature, we will continue to expand district cooling scheme. boom and who are now looking to invest their funds in
and launch new projects.” Some recent projects DSI are cur- the slowing property sectors of the United States and
DUBAI REAL TIMES
DSI is a leading UAE-based end- rently working on include Abu Dhabi the United Kingdom
to-end service provider of mechani- National Exhibition Centre (Adnec), Behnam Eshragh (CEO) said: “We believe that with
cal, electrical and plumbing (MEP) The Palm Anantara Hotel Resort & our inhouse development expertise and reach in the
contracting, infrastructure, water Spa, Fairmont Palm Hotel and Resort, market, we are strategically placed to find, acquire, and
and power (IWP) and civil contract- Fairmont Palm Residences, Golden manage distressed assets locally and internationally.
ing services and the first specialist Mile, Laguna Hotel and Residential Despite the current price correction, Dubai continues
contractor to become a public com- Tower, Ocean Heights Tower, Yas Is- to be unique in offering attractive opportunities and
pany. In July 2008, DSI offered 55 per land Rotana Resort and Centro by standards of living unrivaled in the region and would
24 cent of the company to the public. Rotana Abu Dhabi and the Sahara therefore always attract demand and investments.”
The shares were priced at Dh1 each Mall Expansion.
Flexible payment options for long-term leases
E
merald Apartments, a luxury erty’s facilities come equipped with atmosphere we’ve worked hard to Location is key to both business
property of spacious one and all the necessary appliances along create here, whether it be short- and leisure-based clients. The
two-bedroom units, located with a contemporary fully furnished term business tenants, couples or apartments offer convenience, ac-
opposite Wafi and next to Dubai package, catering to Dubai’s profes- even families.” cessibility and affordability in a lux-
Healthcare City, is offering flexible sional and leisure-based tenants. The strategy behind offering ury setting, including a stunning
payment options for leases be- “We have decided to offer ten- flexible payment options and ex- swimming pool, gym and sauna for
tween three and 12 months. Man- ants flexible payment terms on tendable lease periods to tenants is residents. They are in close proxim-
aged and owned by Better Homes, short-term leases at Emerald Apart- to provide a comfortable and afford- ity to all the business and leisure
Emerald Apartments was previous- ments” said Janine Crisp, Head of able solution for expatriates who do nerve centres in and around Dubai,
ly offered as a 5-Star, short-term ser- Property Management, for Better not want to commit to annual rental with an upcoming Dubai Metro
viced apartment concept, and has Homes. “Many of our short-term cli- contracts given the economic situ- station on the property’s doorstep,
been adapted to fit in with the cur- ents have chosen to stay on with us; ation both in the region and glob- enhancing convenience.
rent market conditions. The prop- they like the home away from home ally.
T
he sale of UAE cement company Orimix
Concrete Products LLC (Orimix) by Bahrain-
Mubashar Khokhar, CEO, Badr Al Islami accepts the award for Sukuk Deal of the Year 2008
based Unicorn Investment Bank (Unicorn)
B
adr Al Islami, the Islamic Banking Division of Mashreq, won the ‘Sukuk Deal of the Year 2008’ award has been named the ‘Islamic Finance Deal of the
from the Islamic Finance News Awards, for being the Joint Lead Manager and Bookrunner in the Year’ by pre-eminent international financial mag-
AED 1.1 Billion Tamweel Sukuk. The Awards were given at the annual ceremony of Islamic Finance azine Euromoney. In citing the transaction, the
News in Grand Hyatt, Dubai on the 3rd of March 2009 to Badr Al Islami, Dubai Islamic Bank and Standard magazine noted the outstanding return to inves-
Chartered Bank as Joint Lead Managers and Bookrunners. tors achieved by the Unicorn Global Private Equity
Mubashar Khokhar, CEO, Badr Al Islami, said: “Tamweel’s sukuk was an innovative structure which the Fund I upon its exit from the transaction following
Joint Lead Managers and Bookrunners were able to bring forth, and will pave the way for similar issuers to a holding period of under two years.
use such an innovative structure. We are very proud of this international award that recognises the efforts The fund acquired a controlling stake in Orimix
of the experienced team behind the Sukuk in this bank, especially as this was Badr Al Islami’s first Sukuk as in November 2006 for a price of $17.2 million and
Joint Lead Manager & Bookrunner”. sold it in February 2008 for $44.9 million to Al Safat
Publisher of Islamic Finance News, Andrew Morgan noted that: “The Sukuk deal of the Year was a hotly Investment Company, a Kuwait listed investment
contested category with more contestants than ever. The Tamweel sukuk deal was rated ‘A3’ by Moody’s group. This represented a return on capital of 160
DUBAI REAL TIMES
Investor services and ‘A’ by Fitch ratings, and pools Ijarah and Istisna transactions to generate a yield of per cent and an Internal Rate of Return (IRR) of 98
Eibor plus 225. The deal was closed in July 2008 at the height of the market meltdown. The five-year deal per cent.
matures in 2013 and was over-subscribed”. Commenting on the award, Aamir Khan, Man-
Mr. Moinuddin Malim, Head of Corporate & Investment Banking in Badr Al Islami said, “Tamweel aging Director of Global Private Equity at Unicorn,
required a Sukuk Structure which would enable them to use the proceeds for their General Corporate said: “Our team worked closely with the manage-
Purposes. The Investment Sukuk structure was used for the first time in the UAE. The Portfolio Assets ment of Orimix to almost double it in size, by ex-
comprised the Original Leased Assets and the Original Istisna Assets in addition to any asset replacing panding capacity and improving profitability. The
the Portfolio Assets, including Sharia Compliant Income Generating Assets. Therefore, the innovative sale of this single investment allowed us to distrib-
Investment Sukuk structure gave full flexibility to Tamweel for raising financing for General Corporate ute over 50, per cent of the fund’s initial invested 25
Purposes.” capital to Unit holders in less than two years.”
MARKET TRENDS & ANALYSIS // PROPERTY PRICES
COMMENTS
The emergence of
RERA a mature regulator
By Jeremy Scott, Associate - Property Department, Al Tamimi & Company
T
he Real Estate Regulatory for sustainable development. 1. A public corporation called for the real estate sector and devel-
Agency of Dubai (better We discuss the role of RERA as a the Real Estate Regulatory oping and executing the necessary
known as ‘RERA’) was consti- mature regulator. In particular we [Agency]. work plans.’
tuted by Law No. 16 of 2007 comment on how RERA is exploring 2. RERA has legal personality and The objectives include those
issued on 30th July 2007. Since that the creation of a fully regulated and an independent financial and items in Articles 5(1) to (13) set out in
time RERA in conjunction with the cohesive real estate industry through administrative structure. full below:
Dubai Land Department has presid- the use of professional associations 3. RERA has full authority to 1. Proposing the necessary legis-
ed over changes in the legal frame- and other industry associations over perform legal acts in accor- lation to regulate the work of
work of one of the fastest growing whom RERA has jurisdiction. dance with its stated objec- real estate brokers and owners
and dynamic real estate markets in Finally we include Al Tamimi & tives including the capacity to associations;
the World. Company’s views on the regulatory contract and may, in its own 2. Issuing regulations for the
DUBAI REAL TIMES
In this article we review RERA’s changes being explored and those name, sue and be sued and training and certification of real
constitutional make up and accord- that may assist RERA in discharging appoint others to represent it estate brokers;
ingly its obligations and powers. its duties and completing a compre- for this purpose. 3. Licensing all activities relat-
We also review the changes in hensive regulatory framework. RERA is attached to the Dubai Land ing to the real estate sector in
the law and regulatory framework Department. Dubai;
brought about with RERA’s involve- The legislative background The objectives of RERA are set 4. Accrediting banking and fi-
ment and the role RERA has played in RERA was constituted by Dubai Law down in Article 5. They are stated nance institutions to manage
balancing the interests of all parties No. 16 of 2007 which was issued on as ‘the regulation of the real estate guarantee accounts on behalf
26 in the real estate industry, increasing the 30 July 2007. Article 3 establish- sector in the Emirate of Dubai, an- of real estate developers in ac-
transparency and creating a platform es: ticipating and devising strategies cordance with applicable legis-
the interests of stakeholders such as
developers and brokers against the
need for protection of consumers
and investors.
information that aid such stud- actions; (with some exceptions) is related to broad.
ies and offer insight into the 4. Lay down the rules in con- maintaining the register and real RERA’s broad powers are estab-
property market in Dubai; nection with the organising, property issues such as the rights lished by virtue of Article 3 of Law
12. Preparing and executing pro- maintaining and destroying of and obligations of the parties as No 16 of 2007 giving RERA ‘legal
gramme and projects that documents; owners of property. personality and an independent fi-
enhance the role of Nationals 5. Lay down the rules in connec- RERA’s jurisdiction in contrast ex- nancial and administrative structure’
in the real estate sector and tion with the use of computers tends towards the regulation of the combined with having ‘full authority
encourage their involvement for saving and registering data; relevant stakeholders in the real es- to perform legal acts in accordance
in that sector; 6. Lay down the rules in connec- tate industry. RERA’s role could more with its stated objectives.’ 27
13. Developing and implement- tion with the evaluation of real particularly be seen as balancing The objectives of RERA are set
out in Articles 5 (1) to (13) and Article are very few direct obligations on
8 as listed above. We emphasise the RERA to enforce the Property Laws.
following: RERA has in a commendable way
1. The opening wording of Article chosen to engage as a watchdog
5 which states ‘The objective of and mediator on the many issues in
the [Agency] is to regulate the its administrative capacity. Some ex-
real estate sector in the Emirate amples of RERA having a direct juris-
of Dubai by participating in de- diction are set out below.
vising strategies in this sector The best example of RERA hav-
and developing and executing ing a direct jurisdiction in order to
necessary work plans.’ ensure compliance arises out of Law
2. Article 5 (3) concerning the li- Article 16 of the Escrow Law specifies No. 8 of 2007 (Escrow Law) and Law
censing of all activities relating penalties of incarceration or a fine of not less No. 13 of 2008 (Pre-Registration Law).
to real estate development in The Escrow Law places an obligation
Dubai.
than Dh100,000 or both should any person upon developers to open escrow
RERA’s powers are not limited to only conduct any of the listed, restricted practices accounts and for these to be super-
those ‘objectives’ set down in Article vised by an account trustee being a
5 (1) to (13), as Article 5 states that works. bank or financial institution certified
these are ‘include[ed]’ as objectives. Interim Registry of Real Estate by the Land Department as suitable
The use of the word ‘include’ estab- In simple terms we consider the in the Emirate of Dubai. for managing the escrow account.
lishes that the listed items are not role of RERA could be broken down 5. Law No. 14 of 2008 Concern- Article 16 of the Escrow Law
intended to be exhaustive and are into four broad categories as fol- ing Mortgages in the Emirate specifies penalties of incarceration
simply to assist in establishing that lows: of Dubai. or a fine of not less than Dh100,000
which RERA must exercise jurisdic- 1. Recommending legislative 6. Law No. 33 of 2008 Amending or both should any person conduct
tion over. changes and promulgation of Provisions of Law No. 26 of 2007 any of the listed, restricted practices.
The exercise of any discretionary regulations. Regulating the Relationship be- By Article 8 of Law No 16 of 2007
power however must be ‘in accor- 2. Enforcement and measures to tween Landlords and Tenants RERA is responsible for ‘managing
dance with [RERA’s] stated objec- increase accountability. in the Emirate of Dubai. and regulating the Escrow Accounts
tives’ as required in Article 3. As this 3. The collection and analysis of b. Promulgation of regulations. of real estate developers.’ The refer-
is defined as the ‘regulat[ing] of the data. In addition to the laws listed above, ence to ‘managing’ these accounts
real estate sector in Dubai,’ RERA’s 4. Social objectives, including we understand that the following strongly suggests that RERA must
jurisdiction and discretionary admin- increasing education and regulations are drafted and shortly to also be responsible for any neces-
istrative powers are broad. awareness in the wider com- be implemented pursuant to Law No sary enforcement. We understand
A complete analysis of RERA’s munity and promoting Emirati 27 of 2007: that RERA does as a matter of fact
powers as an administrative entity involvement in the real estate 7. The Jointly Owned Property undertake this task.
is outside of the scope of this article industry. Regulations. The Pre-registration Law provides
and is best considered on a case by Below under each of the four cat- 8. The Survey Regulations. another example of RERA exercising
case basis having regard to the deci- egories above we consider RERA’s 9. Forms and Guidelines. a direct jurisdiction. Article 10 states
sion under review. The importance role and the significant steps taken 2. Enforcement and measures to that developers who do not com-
however of such an analysis can be by RERA towards performing its ob- increase accountability. ply with the pre-registration regime
illustrated by having regard to recent ligations since July 2007. Implicit in the existence of the above may have their contracts avoided
administrative decisions of RERA and 1. Recommending legislative laws and regulations is the require- by purchasers where they have not
the Land Department. changes and promulgation of ment that these are enforced. In gen- obtained the approval of the ‘Com-
The most prevalent of these regulations. eral terms, RERA’s obligations relating petent Authorities.’ Competent Au-
administrative decisions is the con- a. Recommending legislative to enforcement could fall into two thority is defined as the authority
troversial Administrative Circular of changes categories. The first is a direct re- ‘concerned with licensing and reg-
10th November 2008 interpreting Since the creation of RERA the fol- sponsibility to supervise, investigate istering real estate projects in the
the provisions of Law No 13 of 2008 lowing legislative changes have and ensure compliance. The second Emirate.’ This reference is therefore
as these relate to termination of con- been made: is a supervisory role over various in- to RERA due to Article 5(3) of Law No
tracts. Another example has been 1. Law No 8 of 2007 Concerning dustry groups or professional bodies 16 of 2007.
an administrative decision prevent- Guarantee Accounts of Real Es- who could, in conjunction with RERA A third example arises out of
DUBAI REAL TIMES
ing developers from selling off plan tate Developments in the Emir- agree upon their own professional Article 5 (9) of Law No 16 of 2007
unless they have paid for their plot ate of Dubai. and ethical standards and disciplin- which requires RERA to ‘keep track
and have completed at least 20 per 2. Law No. 26 of 2007 Regulat- ary procedures. We consider below of property advertisements that are
cent of works. More recently the well ing the Relationship between these two means in which RERA published in the various media op-
received Administrative Circular of Landlords and Tenants in could exercise its regulatory obliga- erating in Dubai including the Free
2nd February 2009 has been imple- Dubai. tions and give examples where avail- Zones.’ The Escrow Law, Brokers Law
mented restricting developers from 3. Law No. 27 of 2007 Concerning able: and Pre-Registration Law all place
collecting more than 30 per cent of Strata and Community Title in a. Direct jurisdiction in order to restrictions on the marketing of proj-
28 the value of the unit if the developer Dubai. ensure compliance. ects unless certain regulatory provi-
has not commenced construction 4. Law No. 13 of 2008 Concerning Contrary to public perception there sions are complied with. As RERA is
required to monitor property adver- cap, Decree No 1 of 2009. their brokers license.
tisements it is contended that RERA We see very real benefits arising We consider that requiring man-
is also required to ensure compli- out of the easy access to the raw datory membership of professional
ance with the relevant provisions of data by professionals. In particular, associations may also facilitate more
these Laws. this being made available to pro- organised and structured profes-
In addition to the existing leg- fessional and accredited and valu- sional involvement in the real estate
islation it is understood the jointly ers may play an important role in industry. This could be achieved by
owned property regulations will stabilising the market and giving requiring these associations to have
create additional disclosure require- banks the confidence to lend on social objectives as part of their con-
ments upon developers in order that the strength of this objective data. stitutional framework. These objec-
purchasers buying units within de- Valuers can also assist in a range of tives could be achieved through
velopments are better informed as disputes and arbitrations and can requiring these organisations to of-
to what common facilities, common We support moves give certainty to contractual matters fer accredited courses and training
areas, fittings, fixtures and finishes
towards establishing such as rent reviews. and disseminate information to the
may be employed or used. Purchas- To have an accurate picture of wider public.
ers must also be informed of other mandatory demand and supply of real estate We consider it likely that all profes-
costs and liabilities associated with membership stock also enables developers and sional associations would welcome
ownership in any particular develop- other stakeholders to better predict increasing education in the wider
ment.
of professional their business requirements. This community and Emirati involvement
In this instance failure to comply associations in ensures sustainability and efficiency. in the real estate industry amongst
by developers may once again certain industries In this category we consider RERA their constitutional objectives and
cause contracts to be avoided has once again greatly contributed would work collaboratively with
by purchasers. In this regard we to the overall transparency of the RERA to achieve these objectives.
anticipate RERA’s direct involvement Dubai real estate sector. In this way we may see the vision
will be in assisting developers 4. Social objectives including for Dubai as a place of great endeav-
conducting their own checks to increasing education and our and achievement within real es-
ensure compliance. We understand that RERA is awareness in the wider com- tate development, architecture and
Whilst the above are some specif- considering indirectly regulating a munity and promoting Emirati engineering fields to also become a
ic examples where RERA is required range of professional and industry involvement in the industry. centre of learning in relation to such
to involve itself directly, our view is groups through the use of associa- Commenting on the social objec- fields and take advantage of the
that RERA may, as part of its discre- tions and the requirement of man- tives in depth goes beyond the local and international talent that
tionary powers, enforce the Property datory membership. These profes- scope of a legal article as it falls more will continue to involve itself in the
Laws and Regulations notwithstand- sional associations would engage in within the realms of policy rather Dubai real estate sector.
ing that the Legislation may not ex- a measure of self regulation but re- than legal principle.
pressly impose upon RERA an obli- main subject to regulatory overview We do note that significant ad- Scope for reform
gation to do so. by RERA in a manner similar to that vancements have been made in The importance of regulation and
b. Supervisory jurisdiction. proprosed for brokers. terms of the objective of increasing transparency is now well recognized.
There are no current examples of We understand there are a variety public awareness and the overall In order to cope with the challenges
RERA having a supervisory jurisdic- of industry and professional groups transparency of the industry due to increased regulation may bring we
tion. It has been proposed that a that RERA is considering regulating RERA’s preparedness to work with make the following observations.
Committee and Council be set up in this manner. In particular valuers, the media and through the use of Firstly, we support moves towards
pursuant to Law No. 85 of 2006 (Bro- surveyors, strata managers and pos- the internet and RERA’s website. establishing mandatory member-
kers Law) but we understand that sibly conveyance professionals. In terms of increasing education ship of professional associations by
the Committee and Council are yet we understand that RERA currently those working in certain industries.
to be constituted. The framework to 3. The collection and analysis of requires brokers to undertake cours- We see a pivotal role in a mature
do so is however in place. data. es through RERA as part of obtaining real estate market for the regulation
Once constituted RERA could Clearly the Land Department and
supervise these delegated bodies RERA are in the best position to col-
being the Council and the Commit- lect data that may be pertinent to
tee to ensure professional standards the real estate industry and many
are maintained and appropriate dis- statistics are now published by
DUBAI REAL TIMES
fundamental changes to any rules where required. from the register (to use current ex- industry associations and allowing
and bylaws of any association. RERA Requirements could be put on as- amples). RERA will in fact be able to these industries to engage in a mea-
will also need to ensure that each as- sociations to set up fidelity funds in tailor the penalty to fit the infringe- sure of self regulation. The estab-
sociation meets the standards jointly order to fairly compensate the public ment thereby ensuring that minor lishment of such regulated bodies,
agreed. where no compensation would oth- technical defaults do not result in when combined with some revision
We consider nonetheless that a erwise be available. Mandatory audit unjust harm. of the Property Laws and RERA’s
measure of self regulation is justified requirements on members can also Our final observation relates to fine constituting laws will see a cohesive
as most industries are focused on be included (where necessary) and tuning RERA’s role once the full regu- and comprehensively regulated real
30 the long term fundamentals and are be overseen by RERA and account- latory framework is settled. Clearly estate industry and round out RERA
well placed and motivated to direct ing or other professionals further RERA having very broad powers as a mature institution.
COMMENTS
Professional advice in a
buyers’ market
By Martin Ashkuri, Sales Director, Cirrus Real Estate Brokerage
A
Buyers’ Market can be ue. Home buyers should make the out the market is a gambit, but so
plainly defined as a mar- same price checks a seller makes is buying a home if you don’t think
ket which holds more to price their property. Seek com- you can stay put long enough to
sellers than buyers. The parative prices from newspapers weather the change. Renting could
resulting outcome is low prices and websites with online listings to pay off in a buyers’ market that hasn’t
from an excess of supply over de- keep tabs on asking prices. Finally, bottomed. Find out rents within the
mand. In fact, the buyer/seller scales employ a good real estate agent to area and calculate rental yields. Any-
in Dubai’s property market are cur- highlight and explain market trends thing that shows a particularly high
rently imbalanced, with a small and statistics. yield is a good sign that you should
select few making up the buyers’ Martin Ashkuri Don’t abuse your power - In a buy rather than rent.
corner who pack a hefty punch in cate that there is still some price buyers’ market, buyers who don’t Maintenance fees – Some loca-
negotiations. movement expected. For young educate themselves about prices tions have suffered in popularity in
So how did we end up in this professionals living in Dubai there tend to massively undercut sellers light of high and rising maintenance
buyers’ market? Ambitious develop- is an equally attractive opportunity and ask for too many concessions. and service charges. Before entering
ment plans and estimated popula- to improve their quality of life by This will only alienate the seller, es- into a sale and purchase agreement
tion growth statistics encouraged availing themselves of the price pecially those less motivated with be sure to find out about associated
an abundant supply of housing corrections in apartment sales. more sought after homes. The sell- costs as this may affect the future
units. Naturally property investors Given the benefits already pre- er will simply look elsewhere for a price of your home
and home owners alike took ad- sented and the limited availability more reasonable buyer. Costs of buying – A number of
vantage of the investment oppor- of ready buyers, sellers in most cas- Finance buyers be wary - Cau- other transactions amounting to as
tunities available. This has today es are the weak link. Buyers are in a tious lenders are rejecting many much as 5-7 per cent of the total
resulted in a manic disequilibrium. position to take full control of ne-
Scarce pre-approval letters and gotiations provided offers are con-
cash buyers lacking confidence in sidered reasonable. So what advice
price stability have left a very small can we give to the buyers?
proportion of buyers who are ready Cash is king - cash offers in a buy- Cash is King - Cash offers in a buyers’ market
to put down deposit cheques and ers’ market can have sellers fighting
sign MOUs. over you. A buyer with the full pur- can have sellers fighting over you. A buyer
For those who are fortunate chase price immediately available with the full purchase price immediately
enough to be considering a prop- will dictate the speed at which the
available will dictate the speed at which the
erty purchase despite the current transfer can be done. Sellers look-
economic climate, it’s time to con- ing to accept hearty price cuts are transfer can be done
sider an upgrade in your quality usually interested in a speedy sale.
of life. Affordability has kept many Know the market - Obtain gen-
constrained in the last few years eral knowledge about the home-
DUBAI REAL TIMES
and with villa prices soaring, many buying process and the real estate
families were compromised into market. This will give you a com- loan applications and down valuing sales price are incurred at transfer.
buying or renting smaller homes. petitive edge in negotiations. It is properties due to the credit crunch Broker commissions, RERA transfer
The price of villas is now down as important to know of other homes and significant price fall in the last fee, RERA registration fee, service
much as 60 per cent since the peak that have been sold in the area and six months. Be sure not to engage charges, developer transfer fee are
in 2008. As a result homes that fam- at what price. If no recent transac- in any deal believing that finance some of the various costs involved.
ilies could only dream of before are tions have been carried out, you approvals are a ‘given’ and have In a buyers’ market it may be possi-
now very affordable. should question the location. Your sufficient funds to top up deposits ble to better the value of your pur-
Apartment sales have not fa purchase could leave you with a should the valuation fall short. chase by negotiating the payment 31
ired as well as villas. This may indi- home that immediately loses val- Rent - Renting now and waiting of these costs by the seller.
COMMENTS
D
espite the ongoing dis- a willingness to get the potential time we consigned those stories to
cussions about how buyer to purchase at a higher price. history.
much prices have re- Some consumers, realising this If a client is selling their home -
duced and if and when fact, want a knowledgeable person especially now, in the current market
the market will revert, any experi- with no conflicts of interest helping – they should not automatically go
enced realtor knows that whether them to navigate the market. Thus, with an agent who promises them
market conditions are good or bad they will contract an estate agent access to ‘the cash buyers’. Instead,
there is still always a market out who can give them professional ad- they should be looking for an agent
there. vice for a fee. This person is called who can back up their price with ac-
Currently, some agencies refuse the ‘buyer's agent’. Any agent can tual comparable sales. An agent who
to enlist a potential client’s prop- provide this function, and some do is a specialist in an area. Who can give
erty if they “feel the asking price is both, but for enhanced credibility, them a proper plan of how they will
too high” and, conversely, others still many buyer's agents are exclusively market their property, its features
Cecilia Reinaldo, MD of Fine & Country
are telling consumers that they can that, and do not list and sell. and uniqueness. From a company
get more for their property than the service delivered to a client and With adherence to the new regu- with a solid track record. If not, they
market will actually take – with the whether the agent’s role actually
sole intent of getting the listings. responds to their needs and, more
Given this background, the ques- importantly, is in their best interests.
tions our industry should be asking The listing/selling agent is the
are, “who is leading the market in most common model internation-
the correct direction?” and “why are ally. Contracted by the seller of the
C
ontrary to popular belief, have to avoid the sub-prime pitfalls
it is still possible to find a which have caused so much damage
mortgage in Dubai. The to Fannie Mae and Freddie Mac, but
former key players such this should not be difficult in a mar-
as Amlak and Tamweel may have ket which has traditionally been con-
closed their doors for new business, servative in its mortgage lending. It
but others are prepared to lend on …in the has been suggested that the merged
a conservative basis to good quality Amlak-Tamweel entity could be used
end-users. Ninety per cent finance meantime the for this purpose once it is back on its
might be a thing of the past, with government feet.
average Loan To Value (LTV) ratios of The other major issue facing
around 70 per cent, but with prices
could banks is that of defaults. The Mort-
falling to more reasonable levels, assist by gage Law-which came into being
some buyers can still afford the guaranteeing last year-covers foreclosure, but the
down payment. process has yet to be fully tested in
Banks are generally blaming a
a portion practice. Banks will need to deal sym-
lack of liquidity for their reluctance of each pathetically with borrowers facing
to lend. However, their confidence mortgage difficulties in their mortgage pay-
has been dented by seeing prop- ments, to avoid forced sales, legal dis-
erty values fall for the first time in putes and reputational damage. The
Chris Dommett, CEO of John Charcol Dubai
Dubai, and they fear that the market tactics used in recovering credit card
has some way to fall before it sta- insecurity, and it is not hard to see avoided the sub-prime derivatives or auto loan debts will just not work
bilises. When the market was rising why people are reluctant to commit and other toxic assets that have in the case of mortgages, and the
they were confident that in the time to a mortgage. brought down banks like Lehmann threat of arrest and jail for a bounced
between a valuation and the loan So what can be done to bring Brothers. Their loan portfolios are security cheque could well encour-
disbursal, the value of their security interest rates down to more accept- still performing reasonably well, but age potential defaulters to skip the
would have increased. In a falling able levels and to encourage the this will change unless the economy country. Repayment breaks, resched-
market, the opposite is true, and banks to open their doors at least stabilises and rates come down. uling of loans and even interest rate
most banks will not even rely on the tentatively for mortgage lending? Restoring confidence in the prop- reductions would help genuine bor-
original price of a property as the ba- The key concerns of liquidity and erty market could take time, but in rowers to avoid defaulting, and if
sis for their lending. confidence need to be addressed, the meantime the government could these are not possible, an agreed sale
In contrast to most of the West- and in some ways the liquidity is- assist by guaranteeing a portion of of the property is much better than
ern world, interest rates in the UAE sue is the easier of the two. A direct each mortgage. This would reduce a forced or disputed sale. Inevitably,
remain very high, and this is deter- injection of deposits by the Federal the bank’s exposure on each prop- banks will suffer some losses, particu-
DUBAI REAL TIMES
ring potential property buyers and government or the central bank erty and give it the cushion it feels it larly on those properties financed at
at the same time as squeezing the into the banking system, with a needs to cover the risk. An alternative 90 per cent in the latter part of 2008,
repayment ability of existing bor- proviso that at least a percentage of would be to establish a government but given that mortgages represent
rowers. Borrowers who took out the deposits need to be made avail- backed institution along the lines of only a small portion of each bank’s
mortgages when the rates were able for sensible mortgage lending Fannie Mae in the United States to total assets, these losses should not
around six per cent are now paying at reasonable rates could be done guarantee loans and to facilitate se- be life-threatening.
around nine per cent, and in terms quite quickly. Unlike many of the curitisation of the banks’ mortgage The mortgage market is still alive
of monthly installments this is a Western banks, banks in the UAE do portfolios, thereby increasing both in Dubai, but it is in urgent need of
significant increase. Add to this the not need bailing out yet. They are liquidity and confidence in the sys- resuscitation before the cost of res- 33
likelihood of negative equity and job well capitalized, and have generally tem. Of course, this institution would cuing it becomes too high.
COMMENTS
in the extremely complex process strengthens the core business of management providers." Sungwon OBO, the pioneering
of building these structures and building owners and developers. Although it targets a relatively facility management company in
their prohibitively high costs, you "It's all about maximising busi- modest growth forecast of 10 to 15 South Korea and the Facilities Man-
can be sure that these buildings are ness value. It is not enough to just per cent for 2009, Atallah said the agement Division of Makateb Hold-
being created to last for a very long create an exceptionally strong and company is confident of achieving ing, delivers a full range of integrat-
while," said Wahid Atallah, Chair- long-lasting facility; it must be more gainful business opportuni- ed facilities management services,
man of Sungwon OBO. properly maintained for it to stay ties in the long-term as possible including mechanical and electrical
This change in attitude towards perfectly fit to serve its purpose corrections brought about by the maintenance for buildings, clean-
34 real estate development, Atallah throughout its extended lifecycle." ongoing economic downturn are ing, security, FM consultancy and
points out, has made it easier for the The ongoing global financial cri- settled. In fact, the company pre- energy management.
IN FOCUS
Reality check
By Ambily Vijaykumar
R
eal Estate Darwinism is how in carbon footprint levels, it is impera-
experts are defining the cur- tive for it to take corrective measures
rent phase of the sector in to sustain a realistic growth in the real
the UAE. They predict that estate sector.
with a tectonic shift in the function- “The tools and technology com-
ing of the market, the ‘bad objects’ ponents are available to bring down
will be wiped off and it will ultimately operational costs for existing facilities.
benefit the end user who will get to The need is to implement them,” says
choose quality and attractive offers. Franz Emig, an advisor to the Urban
This will in turn bring back a func- Development Committee of Abu
Panelists explained the need for sustainable development
tional market. Dhabi and also the head of the archi-
“Dubai and the UAE were not tectural division at KN International. Experts say it is absurd to design ing it difficult to deliver on promised
meant to be built on real estate. A “Operational aspects should be buildings that are intended for a quick projects. How then would facilities
building is built only once, but the included in the design and planning flip, because finally there might be a management as a requirement be
tenant operating the shop in the phase of any project. The aim then case when a seller is unable to find a sold to those who are unsure of the
building is to stay and do business should be to improve noise control buyer. So the aim now should be look future of their projects?
year on year,” says Dr Ronald Zibell of in buildings. If implemented with a at property as long-term investment. “Even if the existing owners go
ADI Consulting, a logistics expertise long-term perspective in mind, then Part of that long-term plan is facili- bankrupt, the building that has been
provider for the real estate sector. the costs for cooling, electricity and ties management. Dr Ralf Zerenner of built will still be there and needs to
Diversification was the back bone water consumption in a facility can Berkley Services recommends indig- be maintained. Even in the hands of
of the strategic plan with focus indus- be brought down by at least 50 per enous means of maintaining assets. the banks, these buildings can be
tries being energy, petro-chemical, cent,” Franz Emig informs. “Operational costs can be reduced maintained and used,” says Werner
construction material, equipment, This is the reason Dr Uwe Forgber, and loss of value can be avoided in Maluck.
machinery, healthcare, pharma, food, co-founder of Conject International, non-rented buildings by choosing the Facilities management can be
beverage, banking, tourism, telecom- believes “some of the buildings that right maintenance strategy. The need combined, with the requirement of
munication and media sectors. were erected in a short term will have for stake holders however is to have a the end user so that the customer
The boom in the real estate mar- to be torn down” because they are tailor made solution that caters to in- can keep the property and keep it
ket sidelined these focus industries not in synch with the need for sus- dividual needs,” he says.
and with it sustainable development tainable development. The real estate sector that has
for the economy. But in the aftermath Dr Forgber is involved in mak- failed to wake up to the need for a
of the economic crisis and the real es- ing information relating to building long-term strategy for growth so far is Facilities management
tate crash, it is assuming significance transparent. He believes that infor- now opening its eyes to a new reality. is receiving the
particularly in Dubai. Experts are mation technology can be used in Saving on costs of operating a facil-
warning that if due attention is not managing massive data required for ity is as important as making a profit
attention that was
given to this arm of development; it large number of buildings that need on the facility itself. “We know that denied to it so far
will be difficult for the real estate sec- to be maintained over a long period. investing in facilities management at
tor to get back on track. According to him, the present an earlier stage can save up to ten per
Infrastructure and logistics are crisis in the real estate sector is like cent of the investment costs and we profitable as well. Some experts say
seen as ‘enabling industries’ in sus- a thunderstorm. It is only after the will be able to save up to thirty per they are noticing a change in the at-
DUBAI REAL TIMES
tainable development, however the storm that the temperature cools cent of operations costs,” says Werner titude of developers who are waking
returns on investments in these sec- down and the weather is pleasant. Maluck, of ACI Real estate. up to the need to not just erect huge
tors is not instant but a slow process. “The real estate industry heated up In the words of the experts, the structures and earn quick money, but
Industry experts recommend a con- too much. This crisis will cool it down. sector that is in a state of emergency also invest in maintenance so that
solidation to enable a steady growth The gamblers have left the scene. needs to be redirected towards trans- they benefit in the long term. Finally,
for the real estate sector. Whoever has a genuine interest in parency and sustainability. But that is the beneficiaries will be the tenants
From an architectural point of good infrastructure has already given possible only when the seriousness of who will receive more quality for a
view, sustainable development in- a thought to what will happen with the present problem subsides. lesser cost in the future, thereby en-
volves making facilities energy effi- the buildings when they are com- With the sector undergoing a se- suring that facilities remain profitable 35
cient. With the UAE leading the world pleted,” Dr Forgber adds. vere cash crunch, developers are find- for the owners.
INFRASTRUCTURE
E
ng. Hussain Nasser Lootah, gic programmes for the preserva- being implemented, and a project to many miracles mentioned in it in
Director General of Dubai tion of the environment. establish a huge sewage treatment the areas of science and medicine,
Municipality, was recently Challenges facing the Municipal- plant in Jebel Ali which is expected the plants how modern medicine
interviewed for a German ity include the increased amount of to be completed in 2010. is highly dependent upon this for
television channel. He explained waste water. "We are keen to raise He also spoke about the Quran the treatment and its benefits to
about the cooperation between the level of hygiene. We have im- park project, which is one of the the environment. The integration of
various civic bodies and their plan- plemented plans for drainage and most creative initiatives of the DM all services required in the park was
ning for the many infrastructure stormwater projects to cover needs in the establishment of parks and also taken into account. We are also
developments that must be main- until the year 2020. This was planned increasing the green areas in the keen to ensure the Islamic nature of
tained, updated and installed, de- by dividing sewage needs into urban emirate. "This park is a wonderful the park in all its components and
pending on whether they were talk- areas as per future expansion plans. opportunity to explain the mean- the nature of the life of the desert as
ing about established areas of the The plan will serve each of the areas ings of the Holy Quran and the it was described in the Holy Quran."
city, newly built ones or about to be with a main pumping station that
DUBAI REAL TIMES
D
anube Building Materi- Jumeirah Island, Discovery Gardens, square feet (25 per cent).
als, a leader in construc- Jumeirah Lake Towers and Ibn Bat- Customers will be contacted in-
tion, building materials tuta Mall. dividually in order to develop a tailor
and shop fitting industries, made solution that meets their indi-
has outlined an expansion plan to Deyaar Development PJSC vidual needs.
construct Buildmart retail complexes has presented details of its 2009 As part of the financial strategy,
across the GCC. The move follows business strategy, including specific Deyaar will reduce the sale price for
the recent inauguration of the first projects to be considered for consol- some projects that have already been
one in Ras Al Khaimah, which caters idation and total area of units to be sold. This is in line with the company’s
to interior designers, consultants and Rizwan Sajan, Chairman, Danube delivered over the next three years. objective of passing on the benefits
homeowners by giving them ac- Building Materials The strategy has already been rolled of its reduced cost of construction
cess to more than 15,000 high qual- ing stronger ties with customers by out across all business units and is fo- to customers. This includes 30 per
ity products. This Dh75 million retail providing personalised services and cused on safeguarding its customers cent price reduction on Bristol Office
complex in RAK features products high quality products that address and cash flows, the company’s chief Tower, and 25 per cent on Bristol Resi-
that are installed in an actual home their specific needs. executive said. dential Tower, 30 per cent on Oxford
set-up, thereby allowing for greater Under the development strategy, Tower, an office tower development;
convenience and a customer-friendly Palm District Cooling (PDC) the total area of units within all cur- and 25 per cent on Fairview Resi-
shopping experience. It stands on a has announced that it recently raised rent projects in the UAE is estimated dency. All three projects are located
150,000 square feet. plot and incor- a Dh519 million bridge financing fa- at 16 million square feet. Of this, seven within Business Bay.
porates a 20,000 sq. feet showroom, cility, in line with its growth strategy projects accounting for four million The company will also provide soft
a 40,000 sq. ft. warehousing section, within the UAE. This financing com- square feet (25 per cent) will be deliv- payment plans to customers, replac-
and a huge open area for additional mitment comes at a time when the ered in 2009. Projects accounting for ing the original payment schedule
shops and parking. The store is di- region is experiencing severe liquid- four million square feet (25 per cent) with smaller payments to be paid out
vided into 20 different sections in- ity constraints and will be utilised for are on track for delivery in 2010 and over an extended period. This will al-
cluding kitchens, bathrooms, tiles, capital expenditure requirements of 2011. Deyaar Park, Mirar Residences low customers facing liquidity prob-
shower rooms, Jacuzzis, flooring for the company and is part of a wider and Deyaar Enclave, which together lems to avoid defaults and meet their
both ceramic and wood, ceilings, financing strategy that will include constitute to an estimated four mil- obligations. This strategy has already
doors, paints, decorative glass and accessing the syndicated loan and lion square feet (25 per cent), will be proved successful on Deyaar’s Al Seef
wallpapers. capital markets in the future. consolidated within the rest of the II project in Jumeirah Lakes Towers,
In line with its aims to satisfy the PDC specialises in the Build-Own- Deyaar portfolio. Investors in these which was delivered earlier this year.
building material needs of customers Operate model of development of- projects will be given the option to The financial strategy has been
across the region, the company re- fering design, construction, opera- transfer their ownership to projects developed to safeguard customers
DUBAI REAL TIMES
vealed that its plans to establish more tion and maintenance services in the that will be completed on a fast track by stabilising their cash flows and
retail complexes mark only the begin- district cooling space and has pio- basis. The transfer option will be ex- helping them secure easier access
ning of a new phase in their strategic neered the concept of using treated ercised purely on a voluntary basis to finance. This, in turn, will result in
expansion, which will unfold within sewage effluent for its district cool- and will give customers the option lower risk of defaults and lower re-
a two-year period and is expected ing operations. The company’s cur- to transfer their ownership to premi- ceivables risk for Deyaar, maintaining
to culminate in Dubai. The shift in rent capacity 450,000 TR is expected um projects in prime locations. It will the company’s healthy cash flow.
the focus of the company from rec- to increase to one million TR over also allow customers to consolidate
ognised construction hubs to new the next few years. Some of the key their total outstanding payments.
potential-laden markets underline clients it currently services include Unannounced and unsold proj- 39
its commitment towards establish- developments such as the Palm ects are estimated at four million
APPOINTMENTS
H
is Excellency Mohammad Al- Holding’s leadership, Bin Byat has this important period.” (EITC); Chairman of the Dubai Real
Gergawi, Chairman of Dubai accomplished many achievements Bin Byat will work closely with Estate Corporation and Chairman of
Holding has announced the since the launch of the group. I am Dubai Holding’s Executive Com- the Aswaaq Founding Committee.
appointment of Ahmad Bin Byat as confident he will have a significant mittee, under the leadership of HE He is also a member of the Zayed
the new Chief Executive Officer of impact on the future growth of Al Gergawi, towards the conclusion University Board ofTrustees.
in the Gulf
Morgan (steven.morgan@
ae.cluttons.com) as Head of
their Dubai operation. Steven has
spent five years in the Gulf with the own company in Dubai - Abdul-
firm and prior to his new role, was salam AlRafi Group. Following in his
heading up the UAE valuation func- father’s footsteps, Mohammed AlRafi
tion. Prior to that he was with DTZ in as CEO of Abdulsalam AlRafi Group
Mohamed Abdulsalam AlRafi
the UK. manages over 26 different national
N
Steven Morgan
Commenting on the Dubai mar- orthacre Plc is delighted and international companies, which
ket in general, Steven said: “Although This region is well placed to recover to announce the ap- have completed many impressive
the Dubai market has not escaped quickly. pointment of Mohamed and renowned projects in his port-
the global financial turmoil with most Cluttons has been in the Middle Abdulsalam AlRafi, an eminent folio. Mohammed brings to Northa-
sectors of the property market being East for over 30 years and currently has Emirati property developer and cre more than 22 years experience in
affected; in the medium to long term eight offices across the Gulf. As a firm, entrepreneur to its board. Mo- real estate in the Gulf.
the current downturn will be a posi- they are committed to the region and hamed AlRafi will partner with The initial project of this new ven-
tive for the market. This is an oppor- plan to expand further as soon as mar- the company in the Gulf, working ture will be to establish a platform to
DUBAI REAL TIMES
tunity for Dubai to catch up with the ket conditions permit. The company with all three of Northacre plc’s expand Northacre’s existing interior
construction of the city’s infrastruc- is an independent partnership of char- subsidiary companies – Northacre design business, Inatrya, across the
ture and the chance to implement fi- tered surveyors founded in 1765. With Developments, Intarya (Interior Gulf region. Intarya’s Managing
nancial and real estate regulation, cre- a network of offices in the UK, Europe, Design) and Nilsson Architects. Director, Kamini Ezralow has many
ating a more sustainable platform for Middle East and South Africa, it offers The company’s success has private clients in the Gulf. The part-
future growth. To this end, we are cur- a wide range of professional property been built on experience and nership with Mohamed AlRafi will al-
rently working in an advisory role with management, agency and consultan- a strong skill base for generat- low for multiple new opportunities,
various government entities relating cy services across the commercial and ing added value with passion for pairing excellence in building design
40 to the development and execution residential sectors, for both investors quality at every stage, qualities with the highest quality craftsman-
of new property law and regulations. and occupiers. Mohamed AlRafi echoes in his ship, design and decor.
Leo Sterling increasing staff strength to
bolster expansion plans
Company holding open days for RERA-certified sales candidates
L
eo Sterling, a dynamic property Russia among other countries, sales flowing in, we have been able to every day. This is an opportune mo-
management company aims executives must have the ability to beat all odds and competition and ment for us to access the right kind
to expand its team of skilled deal with those clients as investors go ahead with an expansion in office of talent and experience which is in
and qualified sales executives by in- and not just customers. space and headcount. While most surfeit. We are looking to recruit top
viting dedicated sales professionals Leo Sterling invited RERA-certified companies are laying off their staff end professional candidates, who
to join its workforce. The company professionals to get in touch during or shutting down, we are proud to are great deal makers, with a reli-
has been buoyant in the current its open recruitment days on March be recruiting people and expanding. able sales track record of results and
economic condition, by offering a 21, 25, 28 and April 1. The company We believe in calculated growth and a large network of hot prospects,
higher quality of products and ser- feels that it has the right credentials have strong business fundamentals. positive attitude and heavily driven
vices. It targets the upper echelon of to offer interested candidates look- That is why the focus is on contin- to business development,” she said.
regional and international investors, ing to tackle the challenges of the ued investment in skilled personnel,” LEO Sterling Real Estate deals
while aiming to be both a progres- present day real estate market. commented Laura Martorano, CEO, with prestigious properties such as
sive and a trend setting company “The middle of a recession may Leo Sterling. Burj Dubai, The Palm and The World
in this industry. With wealthy clients seem an odd time to talk about re- “The real estate industry tests your islands, Jumeirah Golf Estate and
from the USA, Europe, Australia, and cruitment. But, with steady business capacity in a variety of areas each and Business Bay.
SUBSCRIPTION FORM
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DUBAI REAL TIMES
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Q&A
Your questions answered by Jacqueline
Latham, DLA Piper Middle East LLP
As a developer, I would like to know how I am supposed to use the in-
terim register?
The Land Department has set up an online system called Oqood, through
which a developer is to register all of the units in its project. To access
Oqood, a developer must have completed a training course with the Land
Department and have a password. Once the registration process is com-
plete, a confirmation receipt will be produced by Oqood as proof of reg-
istration.
new mediation centre to settle real estate disputes and shall subsequently
I bought an off-plan property in Dubai directly from the developer last
November, in a tower that is due to be completed in 2011. I now want avoid the need for parties to resort to the Property Court. The Property
to sell the property but will I need to inform the developer, so that the Court will in fact oversee the mediation centre, which is intended to be
developer can amend the interim register? operational in April, but the mediation centre will speed up the process of
settling disputes, since it is intended that cases can only be heard within a
As the first buyer of the property, you will need to contact the developer maximum time-frame of one month.
but only in order to obtain a no objection certificate (NOC) and at pres-
I work in an advisory position for a developer, which intends to start
ent the Landlord is entitled to charge an administration fee of Dh5,000
selling units off-plan although no groundwork has commenced on the
in respect of the no objection certificate. You, along with the prospec- project. I have heard that there are some new measures being intro-
tive buyer, will then need to approach the Land Department, in order to duced and would like to know how our project will be affected?
complete and register the transaction in the interim register: both parties
to the resale transaction are each required to pay a fee of one per cent of There is a possibility that new legislation may be implemented, which
DUBAI REAL TIMES
the purchase price. As a seller, you will also have to pay a knowledge fee of would link the sale of off-plan units to the actual achievement of certain
Dh10, whilst the buyer would pay a knowledge fee of Dh380. construction milestones. It has been suggested that at least 20 per cent of
the construction works should be completed before a developer can ob-
I am currently involved in a heated dispute with regard to a sale and
tain RERA's consent to commence sales and that in respect of payments,
purchase agreement I entered into last summer. Is mediation a pos-
sibility? a developer can collect an initial payment of 20 per cent of the purchase
price of a unit, with subsequent payments to be linked to the construction
It is understood that a law will be issued this month, which shall establish a timetable.
43
UPDATES // LAWS & REGULATIONS
MARKET TRENDS ANALYSIS //
M
ost observers would agree that Dubai has experienced World Islands, Palm Jumeirah, among others. Dubai Law No. (21) of 2006
phenomenal growth in its real estate industry, especially sets forth the amended registration fees and provides that the purchaser
during the last five years. Everywhere one looks, the evidence shall pay a fee equal to 1 per cent of the sales price and the seller 1 per
of this growth can be seen in the amazing display of glittering cent of the same.
hotels such as the Burj Al Arab, office buildings such as the Burj Dubai, which
will be the tallest building in the world when completed, and shopping Off-Plan Laws
centres such as Mall of the Emirates with its indoor ski slope; in the creation Dubai Law No. (8) of 2007 (the "Escrow Law") was enacted to provide leg-
of man-made islands such as the islative protection to purchasers in off-plan (i.e., pre-construction) transac-
World Islands and Palm Jumeirah; in tions. A developer, that is a natural or legal person licensed by the Real
the development of free zones, such Estate Regulatory Agency ("RERA") to carry on the activity of buying and
as the Dubai International Financial selling properties for developing, who intends to sell off-plan units in
Centre, where companies can be Dubai and receive payments from buyers or financing parties, must regis-
100 per cent owned by non-UAE ter in the Register of Developers prepared at the Land Department before
nationals; and the list goes on. it can carry out these real estate development activities. The Law provides
Especially exciting to lawyers who that this license can be cancelled if the developer does not commence
have chosen to practice in Dubai is construction within six months of the date it was granted approval to sell
the constantly developing legal and off-plan without an acceptable excuse. In addition, the developer must
regulatory framework that is neces- apply to the Land Department to open a Guarantee Account through
sary to provide the legal protection Raymond J. Termini which sums paid by buyers of units off the plan or paid by financing parties
and clarity that property ownership shall be deposited. As a general rule, monies can only be paid out from
and investment require in order for the Dubai property industry to be suc- the Guarantee Account to settle the invoices of contractors and consul-
cessful. In Dubai much of this framework in the real property area has only tants engaged in the project; however, not all of the expenses incurred by
been in place since 2006. This article provides a brief overview of the major the developer may be paid from the Account. For example, only five per
laws of this legal framework, cent of the proceeds in the Guarantee Account may be applied toward the
costs of marketing the project, and no part of the proceeds may be used
Registration of Title to meet the developer's general business overhead.
Pursuant to Dubai Law No. (7) of 2006, only United Arab Emirates ("UAE") Dubai Law No. (13) of 2008 (the "Pre-Registration Law”) seeks to sup-
and Gulf Cooperation Council ("GCC") plement the financial protection
nationals and companies wholly owned granted to the purchasers under
by such nationals have the right to own the Escrow Law by introducing new
property interests in all areas of Dubai and mechanisms aimed at providing con-
can register their rights at the Dubai Land tractual protection for the purchas-
Department (the "Land Department”). ers. It provides for the creation of an
DUBAI REAL TIMES
Public joint stock companies and other Interim Real Estate Register to record
companies that are listed on the Dubai all transfers of real estate units off-
Financial Market also are allowed to plan. Any sale or other disposition
own property in all areas of Dubai and that transfers or restricts title or any
to register. Other nationalities and their ancillary rights shall be void if not re-
companies are granted a right to own corded in that Register.
a freehold interest, a right of usufruct As of March 2009, there are uncer-
or a long term lease of up to 99 years tainties with respect to some of the
44 in designated areas of Dubai. These provisions of the Pre-Registration
designated areas are set forth in Regulation No. (3) of 2006 and include the Law. Although the Law states that any sale and purchase agreements that
newal tenancy
agreement
and permits
forfeiture
rights to be
exercised at
any time during
the term under
certain circum-
stances.
Dubai Decree No.
(1) of 2009, which applies
to both residential and non-resi-
dential properties, prevents increases
in rents during 2009 for tenants who are
renewing rental contracts signed in 2008,
as long as the rent value in 2008 was equal
to or less by a maximum of 25 per cent than
the average rents in the Index compiled by
are not registered by October 30, 2008, are technically null and void, the RERA. It also clarifies that RERA is the body to
Land Department is considering an extension to this deadline. In addition, deal with any procedural matters regarding
if the purchaser defaults in its payment obligations and the developer tenancies in Dubai and the Rental Committee
elects to terminate the agreement, it is unclear whether the developer is is the appropriate body to hear any dispute re-
entitled to 30 per cent of the purchase price or 30 per cent of the monies lating to Dubai tenancies.
paid by the purchaser, as the Pre-Registration Law states; or 30 per cent of
the purchase price plus 30 per cent of any further monies paid above 30 Mortgage Law
per cent of the purchase price as provided in the Administrative Circular Dubai Law No. (14) of 2008 stipulates that mort-
issued by the Land Department. It is anticipated that an amendment to gage contracts must be registered with the
the Law will be issued that will address these issues, but until then, these Land Department and must specify the size of
issues will be determined by the Property Court applying the Pre-Regis- the loan, the repayment period and the value
tration Law and the UAE Civil Code. of the property to which the loan is linked. It
It is anticipated that future regulations will confirm that the maximum provides that mortgage lenders obtain prior-
permitted variation in the size of a unit from that set forth in the sale and ity over unsecured lenders in the case of en-
purchase agreement will be five per cent, so that if the unit as constructed forcement and provides for a "court-assisted"
is larger than five per cent, the developer cannot increase the purchase process, rather than a "self-help" remedy which
price, and if the unit is smaller by more than five per cent, the developer permits the lender to sell the property without
must compensate the purchaser for the difference. having to go through a court process.
On December 30, 2008, RERA announced that a developer would be
restricted from collecting more than 20 per cent of payments on develop- Conclusion
ments until the developer had started construction. It is understood that These laws are positive moves in protecting
RERA intends to recommend that two new laws be introduced that will the players in the ever-expanding real estate
provide that the developer will (a) be precluded from selling off-plan until
it owns the land to be developed and has completed at least 20 per cent
of construction, and (b) ensure that its payment plans under its agree-
ments with its purchasers will be linked to milestones in the construction
of the development, rather than be time-based.
Strata Laws
Especially exciting to lawyers who have chosen
Dubai Law No. (27) of 2007 provides for registration of jointly owned
to practice in Dubai is the constantly developing
property, which covers two concepts of subdivision, namely (i) subdivision legal and regulatory framework
within buildings where common areas will be created, and (ii) subdivi-
DUBAI REAL TIMES
Tenancy Laws
Dubai Law No. (26) of 2007 requires tenancy contracts to be in writing and development in Dubai. It is hoped and expected that their passage should
registered with RERA. Certain tenancies, such as hotels, were excluded. inspire increased confidence to further the Dubai government's objectives
Dubai Law No. (33) of 2008 amends the earlier 2007 law in several respects. as the real estate market continues to develop and mature.
All tenancy contracts, except free accommodations provided by employ-
ers to their employees, are now required to be registered with RERA. The Raymond J. Termini, Esq., is the resident partner in charge of the Dubai office of 45
2008 law also sets forth the procedure for amending the terms of the re- Patton Boggs LLP, rtermini@pattonboggs.com
// LAWS &
MARKET TRENDS
UPDATES & REGULATIONS
ANALYSIS //
Translation and views supplied by Al Tamimi & Company and do not necessarily reflect RERA’s point of view
Article (2)
The following words and expressions shall have the meanings set out opposite unless the context shall
require otherwise:
Article (3)
There shall be set up under this Law a public corporation called the “Real Estate Regulatory Institute”
with legal personality and an independent financial and administrative structure. The Institute has
full authority to perform legal acts in accordance with its stated objectives including the capacity to
contract and may, in its own name, sue and be sued and appoint others to represent it for this purpose.
The Institute shall be attached to the Lands and Property Department
DUBAI REAL TIMES
Article (4)
The head office of the Institute is to be situated in Dubai. The Institute may open branches in the Emirate
and elsewhere
Article (5)
The objective of the Institute is to regulate the real estate sector in the Emirate by participating in
devising strategies for this sector and developing and executing the necessary work plans, including:
46
1. Proposing the necessary legislation to regulate the work of real estate brokerage offices and owners
associations
2. Issuing regulations for the training and certification of real estate brokerage offices
3. Licencing all activities relating to the work of the Institute including activities relating to real estate
development in the Emirate
4. Accrediting banking and financial institutions which are certified to manage guarantee accounts
of real estate developments on behalf of real estate developers in accordance with applicable
legislation
5. Licencing and regulating real estate brokerage offices and monitoring and overseeing their
activities
6. Licencing and regulating companies and establishments that manage real estate and residential
developments and monitoring and overseeing their activities
7. Registering and attesting leases for the various kinds of real estate units in the Emirate in accordance
with such legislation as may be issued in this regard
8. Monitoring and overseeing the activities of owners associations and auditing their accounts and
records
9. Keeping track of property advertisements that are published in the various media operating in the
Emirate including those operating in free zones
10. Providing support and advice on property valuation in accordance with the latest accredited
standards
11. Issuing statistical reports and specialised research and studies on the property market including
Law No. (16) of 2007 any publications and information that aid such studies and offer insight into the property market
in the Emirate
12. Preparing and executing programme and projects that enhance the role of nationals in the real
estate sector and encourage their involvement in that sector
13. Developing and implementing education and awareness programme on the rights and obligations
of parties involved in the real estate sector
Article (6)
The Executive Board of the Institute comprises an Executive Director appointed by decision of the
Chairman of the Executive Council and a number of staff in respect of whom Dubai Law No. 27 of 2006
on human resource management will apply
Article (7)
The Executive Director of the Institute shall oversee the work and activities of the Institute and shall
represent the Institute in relation to third parties including but not limited to:
1. Adopting the strategic plan and work plans of the Institute and submitting them to the Executive
Council for approval
2. Implementing the general policy that is approved by the Executive Council and its decisions in this
regard
3. Proposing initiatives, programme and projects concerning the work and activities of the Institute
4. Proposing an organisational structure and financial, administrative and technical regulations for the
Institute and submitting them to the Executive Council for approval
5. Overseeing the work of the Executive Board of the Institute and hiring staff for the Institute
6. Preparing the Institute’s annual budget and submitting same to the Executive Council for approval
7. Exercising any other powers conferred on him by the Executive Council or under a decision issued
pursuant to this Law
DUBAI REAL TIMES
Article (8)
There are hereby transferred to the Institute the following functions of the Department:
Regulating the work of real estate offices and real estate brokers
Preparing studies and research on real estate
Managing and regulating guarantee accounts of real estate developments
Regulating and overseeing owners associations
47
Article (9)
Subject to the Article 6 of this Law, the Institute may, in its discretion, transfer staff engaged in the
regulation of real estate at the Department to the Institute
Article (10)
The Institute shall keep regular accounts and records that conform to commercial accounting standards.
The financial year of the Institute shall run from 1st January until 31st December. The first financial year
shall begin on the date on which this Law comes into effect and end on 31st December of the next
following financial year
Article (11)
The financial resources of the Institute consist of the following:
Subsidy allocated to the Institute in the Emirate’s budget
Fees the Institute charges for its services to the public
Any other resources approved by the Executive Council
Article (12)
The Chairman of the Executive Council shall issue the regulations and decisions necessary to implement
this Law
Article (13)
Any contrary provision of any other law or legislation is hereby repealed
Law No. (16) of 2007
Article (14)
This Law shall be published in the Official Gazette and shall come into effect on the date of publication
48
RERA REGISTRATION NO 153