Dubai Real Times Oct 09

Dh 10

October 2009

OFFICIAL MAGAZINE OF REAL ESTATE REGULATORY AGENCY

Page 3

Page 6

ARELLO Owners Associations

PERSONALITY

Ahmed Al Hamdani

Page 7

R.E. Licence Law Officials

GET REAL AT CITYSCAPE Welcome ARELLO

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OFFICIAL MAGAZINE OF REAL ESTATE REGULATORY AGENCY

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EDITOR

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Contributing Editors

Ambily Vijaykumar Vanit Sethi Manju Ramanan

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Our metro...

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Another success is added to our beautiful Dubai. This success is Dubai Metro; a visionary project which is now up and running, connecting the city with its communities in a smooth first class ride. More than one million passengers have ridden on the Dubai Metro during the first three weeks of its launch, official figures show to be precise, 1,018,030 people travelled between the 10 stations on the Red Line during this period.

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Ujwala Ranade Sales and Marketing Product Manager

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Message from the CEO

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I like the slogan used by RTA, Roads and Transport Authority, when they promote the metro as “My City, My Metro”. Yes, I strongly believe that the Metro will shape the future of the city and will take the place of the creek, which has been the heart of the city for so long.

As the creek drew traders and residents to its heart, so the new rail transport system will draw workers, residents and tourists to the many interesting places that this expanding city has become.

Old and new destinations will benefit, both commercially and as attractions. Dubai is opening up further to its fans.

The Metro will affect all kinds of business in our Dubai and the real estate sector will gain a lot from this project. Let’s take the ride and see how Our Metro is shaping and adding value to the real estate map.

Eng. Marwan Bin Ghalita

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12 Cover Story

DUBAI REAL TIMES

C O N T E N T S

2

GET REAL AT CITYSCAPE

9

Taqyeem

Draft regulations

3 Owners Associations The shape of things to come Personality Ahmed Al Hamdani 6 Event Welcome to ARELLO 7 Valuation

Land valuations 8 Taqyeem Draft regulations 9 Statistics August figures 10 Environment A need for standards 18 Market Trends & Analysis Attracting investments 20

The next frontier Comments End users take centrestage 27

A welcome move

Negotiating the real estate transition

LED lighting

Walking around Community Charity time 34 Interview

Scope for timeshare 37 Focus Do it yourself 38

JLT free zone simplifies procedures

Building safely

Improvise and innovative Under Construction Projects on course 47 Handovers Ahead of 2010 deadline 49 Infrastructure Unbundling electricity supply 50 Interview

Conveyancing services 52 Legally Speaking Cancellation of projects 57

Renewal of the property market Law Law 7 of 2006 60

OWNERS ASSOCIATIONS

Empowering home owners Licensed management companies to be introduced to assist home owners mange properties

By Ambily Vijaykumar pected to give more rights to the end users by means of empowering them to decide how their properties will be maintained. The aim is to give the association the power to make their own decisions, have their own rights and responsibilities and also explain what their relation with the developer would be in this regard. With developers having to register a home owners association with RERA within six months of the introduction of the JOP Regulations, the owners association then has to elect a board within three months of the registration. The home owners

Ahmed Khalil Al Hamdani

To coincide with the introduction of regulations to manage home owners associations and developers, RERA is also introducing management companies into the picture. These management companies will be RERA approved and will work under the supervision of the home owners’ association association software that has been developed by RERA is aptly titled ‘Mollak’ (Arabic for ‘owner’).

“The JOP Regulations will explain what the process will be to register the home owners’ association. And once that registration is done, the JOP Regulations will also explain what powers they have. The election of the board members of the association would be an annual process and the guidelines for election would be explained by the JOP Regulations,” informs Ahmed Hamdani.

RERA is expecting a flurry of registrations for the home owners’ association once the JOP Regulations

DUBAI REAL TIMES

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t has been one of the most talked about regulation in recent times and it is being awaited with a lot of hope from home owners and developers alike who will now know what their rights are with regard to the upkeep and maintenance of their properties.

The regulations to the 2007 Law No. 27 concerning Ownership of Jointly Owned Properties in Dubai is done and is “awaiting management approval” according to Ahmed Khalil Al Hamdani, who is in-charge of the Owner’s Association Section at RERA. The JOP Law introduced in 2007 has been the source of much controversy with neither owners nor developers clear about who is responsible for maintaining a property. What then are the key features of the proposed amendments?

The JOP Regulations are ex-

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DUBAI REAL TIMES

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are out. When asked about what the fees for registration would be, all RERA was willing to say is that “registration is a fee and that needs to be shelled out”. What can be said though is that the proposed fee is very reasonable taking into account the current market conditions.

To coincide with the introduction of regulations to manage home owners associations and developers, RERA is also introducing management companies into the picture.

These management companies will be RERA approved and will work under the supervision of the home owners’ association. The JOP Regulations will also clarify the process for new licenses for these companies.

The aim of RERA is then to be able to regulate not just the developers, but also the home owners’ association and the management companies.

“It will be a huge task. And with the large number of associations, they will need the help of management companies. That is why we thought that this is the right time to introduce new licenses for management companies so that we can better regulate them,” says Ahmed.

With home owners “not fully equipped” with the knowhow of managing a building, management companies that will come into the picture will put a plan or strategy in place keeping in line with the requirement of the home owners for the upkeep of the property.

In line with the constant education of real estate brokers, the board members of the owners association as well as the management companies will have to undergo compulsory training to be able to work as recognized entities.

“When management companies from outside Dubai set up business here, they need to be oriented to the functioning and the needs of the market here. So training is very essential for them to be aware of the rules and regulations of this market.

The same holds true for owners’ associations. Unless you know the law, you cannot run the show. You need to have the knowledge to be able to address grievances,” explains Ahmed Hamdani. The thrust of the education RERA says will be on educating the companies to manage a

community.

But who decides which management company should be employed for maintaining a building?

“It is ideally the developer who will choose the management company.

This will happen alongside the registration of the owners association.

Within three months of registration, the board members will be elected to whom the developers will pass on the complete contractual authorities for the running of the building,” informs Ahmed Hamdani.

However, the JOP Regulations allow the owners association the right to terminate the management agreement after the first year to ensure that the management company is performing its obligations in a proper manner. While the new law will introduce new licenses for management companies, the onus will also lie on them to employ service providers with proper licenses.

What if the home owners’ association then is unhappy with the functioning of the management company for the one year that they are employed? To this RERA says that for the management company to stay in business, they will automatically have to raise their service standards and ensure that the service companies that they employ meet the stringent standard demanded by the home owners.

When asked whether the introduction of the management companies will add to the financial burden of the upkeep of buildings, Ahmed Hamdani says, “What is the use if the owners’ association is unable to maintain a building. It is not just about individual owners; it is about managing a community.

Moreover there is a need to bring professionalism into the market.

All over the world, management companies undertake the task of maintaining buildings under the supervision of Home Owners’ Associations.”

The contract for these maintenance companies will then be awarded on a performance basis, a clause, RERA says will enable them to give the best services.

Coming to the costs, while the training of the owners association will be borne by the home owners

“When management companies from outside Dubai set up business here, they need to be oriented to the functioning and the needs of the market here...”

there is still lack of clarity on who pays to register with RERA. Service charges have also been in news for the wrong reason. RERA considers as one of its achievements for putting a stop on independent service charge increase by developers. The new rule now makes it mandatory for developers to get a RERA approval to be able to do so.

“The home owners will have the right to decide the budget and the service charge. What needs to be understood is that home owners need to add value to the building so that other people are interested in the property. So it is not about the charge that you incur per square foot, it is about utilities and other

facilities and about maintaining a community. People require additional things and that comes at a cost,” elaborates Ahmed Hamdani.

Prior to the formulation of the amendments, RERA said it has been holding dialogues with various developers and home owners to arrive at a suitable solution that works to everybody’s advantage. The result, says RERA, has been that despite the law not being in force, many developers have gone ahead and formed interim associations.

“Developers have realized that it is not possible for them to single handedly run a development without involving the owners,” says Ahmed Hamdani.

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5

PERSONALITY

Positively speaking Ahmed Khalil Al Hamdani says new regulations for owners associations will bring transparency to the real estate sector

By Ambily Vijaykumar

DUBAI REAL TIMES

H

6

e is the one man army heading the Owners Association section at RERA. Twenty eight year old Ahmed Khalil Al Hamdani, however, says that with the regulations on the JOP Law awaiting a final nod from the higher-ups, his efforts over the last eight months will bear fruit once the regulations are out.

Ahmed is guided by a group of legal experts who have been assisting him in researching for formulating the regulations that have been at the centre of much debate in the real estate market in Dubai. So how has he coped with the pressure of performing a task that has been in the news for a very long time?

“I prefer to not let the pressure get to me. My task has also been made easier by the fact that the management has given me all the support and guidance necessary.

The head of my department, the General Manager Land Department and the CEO at RERA have had complete faith in me. Even with the knowledge and experience they have, they entrusted me with the task of researching. They would seek my opinion in several matters and that really boosted my morale,” says Ahmed.

Currently pursuing a degree in information technology, Ahmed juggles between work, college and family. But he says that he has given his heart and soul to his work even if that has meant listening to grievances.

“When someone listens to you, it is the first step to relief. My stint with RERA has brought me face to face with several homeowners, in-

Ahmed Khalil Al Hamdani

vestors and developers who come to us for a remedy to their problems. That has helped me better understand what would work out for the best interest of all those who are involved. This has gone a long way in helping me with framing the regulations for the JOP Law,” Ahmed says.

What has also helped Ahmed with his task is his background in Information Technology. He says he is able to work with the IT department at RERA in developing the software, named Mollak, that will be used for the registration of the owner’s association.

During his stint with RERA, Ahmed says he has had several moments that he is proud of; one of them being the time when he was instrumental in putting a stop on the hike in service charges for various developments. He says being a part of the regulatory body and also being able to formulate rules and regulations that guide the real estate market is another feather in his

cap. Most recently he was involved in the formation of the Middle East Facilities Management Association.

“What people don’t understand is that RERA is absorbing all complaints from all quarters and is using that as an input while formulating the laws so that things work in the best interest of everyone in the industry,” Ahmed states.

That is also one of the reasons why his department has an open office where people can walk in and address their problems. Ahmed says he makes sure that even if he has a prior meeting fixed, he takes time out for complainants who have taken the effort to address their issues to RERA. “The very fact that people are coming to RERA shows they still have faith in the Dubai market and that is a positive signal,” he elaborates.

For a person whose day begins at six in the morning and extends to well beyond midnight, his stint with HSBC’s customer service department has helped him deal with

his present job better. “I like being friendly with people. It is the only way to win their trust. Especially when you know that the market has suffered a jolt, it is your duty to make sure that, as a regulator, you go that extra distance to win people’s trust,” Ahmed says.

Surrendering to a difficult situation is also not Ahmed’s characteristic. His constant interaction with people in the industry has brought him into the good books of developers and owners and he says that his association with them has gone beyond official.

“I get a lot of inputs from owners and developers in connection with the regulations. I have tried to imbibe the best of all the inputs while formulating these regulations,” he says.

Ahmed is waiting for the new regulation to be out so that he can get the reaction not only from the market but also from his top management who have put their trust in him.

He is equally confident of the real estate sector in Dubai returning to boom days once the regulations help in bringing transparency into the system. Ahmed however says that it is time for the entire sector to know and abide by the law and work in accordance with the government perspective so that Dubai maintains the trust of its investors.

On a personal level, he is keen to give himself a much-needed break sometime next year on an island with his family. But till then, he is toiling to ensure that RERA’s new set of rules help to guide the real estate market towards a stronger future.

NEWS

RERA to host Association of Real Estate Licence Law Officials Conference

T

he Real Estate Regulatory Agency (RERA), under the guise of Chief Executive Officer Eng. Marwan bin Ghalita, is hosting a conference of the international arm of the Association of Real Estate Licence Law Officials (ARELLO) on 4-5 October 2009. ARELLO is a US-based association of real estate regulators from various jurisdictions across the world who meet regularly to discuss regulatory issues, advancements of education, training and licensing of real estate practitioners, and various means of cooperation.

As host to ARELLO’s first international conference since 2005, RERA and its international relations team headed by Eng. Mahmoud El Burai are pleased to welcome conference guests from several different

countries including America, Australia and South Africa, to Dubai.

The conference will take place over two days, the first of which has been opened to a small group of participants from UAE–based companies to engage themselves with this unique group, and benefit from their knowledge and expertise as well as offer a private-sector perspective to the discussions.

While RERA looks forward to welcoming its guests to Dubai for the first time, and showing them first-hand the successes of this emirate and its real estate market, as well as its advancements in regulatory and legislative framework, the goal of this conference is to foster discussion amongst jurisdictions on topics ranging from the characteristics of a mature real

estate market to defining an investor’s rights and responsibilities to uses of technology in real estate regulation. The conference will also feature a special roundtable brainstorming session between RERA’s directors and ARELLO executives.

About this conference, Markus Giebel Chief Executive of Deyaar Development commented, “At Deyaar, we applaud and welcome this initiative to bring together real estate experts and professionals from around the world under one roof at a time when the industry at large is looking for new ideas.

I am sure the real estate sector in Dubai will benefit immensely from this initiative, while drawing on the experiences of our international counterparts in finding innova-

tive solutions to the challenges at hand.”

The conference will host a compilation of prestigious speakers including an opening welcome address by Eng. Marwan bin Ghalita, a talk about the role of media in changing economic times by Her Excellency Ms. Najla al Awadhi Deputy CEO Dubai Media Inc and FNC Member, Mr. Habib Bittar from Dubai Islamic Bank, Mr. Markus Giebel CEO of Deyaar, and others.

Given the event’s close proximity to Cityscape Dubai, RERA is pleased to announce that several guests are extending their stay in our Emirate in order to attend this event in its full glory. Deyaar is the Diamond Corporate Sponsor to this conference, and emirates is the official air carrier for the event.

R

ERA has launched a new four-tiered, colour-coded classification system for real estate broker licences.

Under the system will each broker will be registered with one of the four types of licences that will authorise them to sell a particular type of property within a specified area.

Yousef Al Hashemi, Director of Licensing, said: "This initiative is the next major landmark in the process of safeguarding property buyers, owners and investors' interests by consolidating the rigour, accountability and transparency that is so crucial to the market. RERA has been introducing regulations step by step as required and where it can be most effective."

“We began the process with initiatives such as escrow accounts and

Yousef Al Hashemi

regulating brokerage sales by introducing registration for brokers with a strict system for qualification and training and a scale of penalties,” he added. "These initiatives emerged after consultation with professionals within the industry. Previously, RERA-had recommended that only registered brokers should be used and had taken steps to ensure they

were properly qualified to carry out their duties professionally. Today, we have moved to the next stage. Now, only brokers with the appropriate licences will be able to act as agents in buying and selling specific types of property. This is a huge step in the right direction," Al Hashemi added.

The new colour-coded classification allows tier one brokers, those issued with a blue licence by the Department of Economic Development (DED) and registered with RERA, to carry on all types of broker activities and operate throughout the emirate. They can operate within free zones if authorized to do so by the relevant authority. These have the widest sphere of operation.

The next step down from the tier

one 'blue' brokers are the yellow licensees. These will be licensed by the appropriate free-zone authorities to carry out the full range of brokerage activities but will be registered to operate only within designated freehold areas owned by that authority. If an authority does not own freehold real estate it will not be entitled to issue licences and any broker with such a licence from such a free zone will not be registered by RERA. Tier three registered brokersgreen licence holders-will be authorised to sell only the properties of specific companies or developers.

Tier four licensed brokers are those issued with a red licence, authorized only to promote, sell or rent time share units.

DUBAI REAL TIMES

New classification scheme for brokers

7

VALUATION

Reliability of land valuations

Mouaiad AL-Omari

By Mouaiad AL-Omari Real Estate Appraisal Centre Project Manager, RERA

DUBAI REAL TIMES

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8

nternational real estate investments (cross-border investments) put pressure on real estate valuers to respond to the demand for reliable valuations to support the efficiency and transparency of real estate property markets.

In everyday language, the word reliable used to define one characteristic of a machine, a system, a product, and/or even a person in the meaning of trustworthy or dependable. The term ‘reliability’ has a strong connection to the term ‘quality’ and they cannot exist separately.

They are strongly connected to the extent that any unreliable organisation, system or process cannot produce a competitive product with high quality.

For the product to be reliable, all individual components (mechanical, information, and human) must be fully evaluated under all service conditions. Any failure of any one component will cause product failure, which means that the reliability of the whole system can rely on a very small component. Hence, all components must be 100 per cent reliable and some of them may be duplicated to increase the safety factor (i.e. in flight work systems).

Valuation is an economic concept and is the process of estimating the likely market price of a property if it is sold. To approach to land value, valuers follow a system with several components that depends on different processes.

A great deal of literature exists connecting the reliability of valuation (the output) to the certainty of

one of three main factors: Firstly the valuer (behaviour, skills, and knowledge) as the responsible person for deciding the last value; secondly, data (efficiency, reliability, and availability); and thirdly, valuation methods.

The valuer is One of the main resources of the valuation process is the human valuer. The valuer is a human being with his own character traits influenced by culture, behaviour, needs, convictions, precepts, tendencies, and so on; and, as well, there are no two persons that have the same way of thinking and of interpreting the available information. Therefore, it is normal that each valuer has his own interpretation of the status subject to be valued. Differences could arise even between professionals using accurate data and implementing modern methodologies.

Although the valuer is one of the most important factors that enhance system reliability, the valuer "exists as a conduit through which the available information can flow" (Brown 1985a, 1985b cited in Keogh, G. and D'Arcy, E., 1999: p. 2405). Therefore, he must not be considered as a superman, but rather he is an interpreter to what already exists and must not take the whole issue alone on his own shoulders (Joslin, A., 2005).

After market recession in the USA, Germany, Japan, and the UK, these countries and many others (e.g. the Philippines, Malaysia, and Sweden) have realised that judgments should be based on accurate and reliable valuations that depend upon good quality data (Rowley S. et al., 1996).

The sales comparison approach is considered to be most reliable way

to estimate land value, if a reliable data is available.

Issac, D. and Steley, T. (1999) argue that it is not easy to use the traditional valuation methods in properties such as shopping centres, office buildings or over-rented ones as they are inflexible, so alternative approaches are needed. They add that one of the main causes of the German property market collapse in 1994 was the poor valuation methods. Johnson T.A. et al. (2000) to some extent agreed with Issac and Steley and stated that to reach an accurate valuation, the selection of valuation methods is important.

Pomerleono, M. (2002) argues that in order to reduce risks in property transactions, valuers should

is needed for a sound infrastructure of the valuation profession (Sopon P. 2006).

Another important factor which is the umbrella of the previous factors is the legal framework. Mallinson (1994) in his response to the general criticism after the property crash in the UK of the late 1980s stresses in his report that effectively regulated framework is necessary for valuers to achieve valuation credibility. He added that reliability depends on the use of appropriate valuation bases (Market Value, Market Rent, Depreciated Replacement Cost, and Value of Plant and Machinery to the business (see French N. 2003)) with supporting evidence and accurate and consistent results

Reliable land valuations depends upon reliable land valuation system components base their valuation on a standard method.

Moreover In his attempt to draw a roadmap of valuation infrastructure in developing countries, Sopons (2006) asked specific questions to a number of international leaders in the valuation profession (for the list of leaders see Sopon, P. 2006 Appendix I). Sopons concluded that methodology of valuation is one of the main factors that

(Parland C. et al., 2000).

As land valuation is a system with several components and has its own process to approach land value, hence we can’t reach reliable valuations unless the whole system is reliable. Therefore, we should make sure that the land valuation system components, which are the inputs, constraints, and resources are reliable.

(To be continued…)

TAQYEEM

New valuation regulationsA sneak preview

E

very day as I walk through the corridors of RERA and the Land Department, I get asked the same question! After we’re done with the usual pleasantries, everyone wants to know: “Mohamad, when will the new valuation Regulations come out?”. Unfortunately as we’re still not ready to issue the Regulations I wanted to use this space to give you a sneak preview on what they might contain.

The Regulations will be based on Dubai Law number 7 for 2006 and will legally establish the framework for Taqyeem to regulate the valuation profession. All property valuation professionals will have to be registered with Taqyeem before they can issue valuation reports.

Registration will consist of two stages that each need to be completed before an entity is legally registered.

The first stage of registration is for companies and the second stage of registration is for individuals.

Company registration is all about Taqyeem getting to know each company in the market. We will require the name of a senior person or director in that company responsible for valuations. That person will be our main point of contact with that company. Registered directors will be informed of the new Regulations and we will liaise with them

Mohamad Khodr Al-Dah

The Regulations will be based on Dubai Law number 7 for 2006 and will legally establish the framework for Taqyeem to regulate the valuation profession

to ensure that the appropriate level of Professional Indemnity (PI) insurance is there. We hope that this registration will help these directors to ensure that their staff continue to work within the law and to the highest professional standards.

Registered companies will be is-

sued with an updated trade licence via the Department of Economic Development listing them as property valuers as appropriate.

Individual registration is the second stage and will be our focus. We will ensure that only qualified and experienced professionals

are allowed to conduct property valuations. Aspiring valuers will be required to attend a short course to explain the new Regulations.

There are also plans for a mentoring scheme to welcome less-experienced people into the profession.

The Regulations will require that all valuation reports are done in accordance with the International Valuation Standards (IVSC) or other suitable approved standards. Valuers will be expected to adhere to a Code of Ethics and avoid conflicts of interest. Areas measured should be as per the Code of Measurement Practice, which was featured in the September 2009 issue of Real Times.

All reports issued by the valuer should have two registration numbers on it (one for the valuation company and one for the individual valuer) as this will guarantee full accountability to the end user of the valuation. Information systems will be developed to link individual reports back to Taqyeem. The Regulations also list the penalties in case of offences.

Everyone here at RERA and DLD hopes that these Regulations, once published, will offer the market renewed confidence. It’s also worth noting that the contents of the official Regulations once published might be different from the contents of this article.

DUBAI REAL TIMES

By Mohamad Khodr Al-Dah, Head of Taqyeem (Real Estate Appraisal Centre)

9

STATISTICS

More mortgages issued Value of mortgages in Dubai top Dh8 billion during the second quarter of 2009, reports REIDIN.com

T

Mortgage values post Dh1 billion growth versus first quarter numbers

Ahmet Kayhan

and end-users,” said Ahmet Kayhan, CEO, REIDIN.com. “With more banks offering competitive lending ratio, especially during this economic downturn, it is no surprise that Dubai’s mortgage market has amounted to such staggering value despite the slowdown. The information from DUBAIFocus establishes a positive trend for the mortgage market, among other data that can provide valuable insights to guide users in making informed decisions.”

DUBAIFocus is the most detailed and up-to-date information source on real estate investment deals for the Dubai market based on a comprehensive database going back to 1973. It also incorporates timesaving functions such as heat maps, graphing facilities and customised chart and analysis tools.

In addition to DUBAIFocus, REI-

DIN.com also offers products including INDEXFocus, RETAILFocus and REBIS (Real Estate Business Information Service). The data and information used in REBIS, which are collected from various different sources - including newspapers, newswires, magazines, research houses, financial institutions, real estate agents, legal firms, municipalities, government institutions, and consultants - are structured by REIDIN.com research and data management team into intelligence and disseminated via

its website and email newsletters.

“Our product portfolio is the result of our commitment to delivering accurate and up-to-date industry information on the local and regional real estate markets, to give industry players a precise overview of the current situation and therefore help them make the right decision. To date, we have launched four products, which address the specific needs of our customers. We are working towards further developing and implementing various new features in all our products, in line with our aims to help customers through accurate and relevant industry data,” concluded Kayhan.

To cater to the specific demands of Dubai’s booming property market, REIDIN.com has teamed up with the Dubai Land Department to establish DUBAIFocus, the first exclusive online information product tracking real estate deals and transactions in Dubai.

DUBAIFocus – which has data from the year 1973 - provides daily information on all types of land, villa and flat deals (sales, mortgage, lease, grant, inheritance, etc.) in Dubai.

DUBAI REAL TIMES

he value of mortgages issued in Dubai topped Dh8 billion during the second quarter of 2009 compared to Dh7 billion in the previous quarter, according to DUBAIFocus, a product by REIDIN.com in partnership with RERA & Dubai Land Department. REIDIN.com is the world’s first online information company focusing on real estate markets in the emerging countries.

While the market is in a critical correction phase, where there is growing need for regulation and transparency within the industry, governments are taking steps to encourage stabilisation in terms of property prices and investor confidence and thus open up growth opportunities for the mortgage industry.

Statistics from DUBAIFocus revealed that 39 banks registered 1,365 mortgages in Dubai during the second quarter of 2009. Abu Dhabi Commercial Bank (ADCB) extended mortgages worth Dh1.86 billion, from the 91 transactions it undertook within the three month period. This was followed by Dubai Islamic Bank (DIB), which has registered close to Dh1.83 billion from its 151 transactions, while the National Bank of Dubai (NBD) financed over Dh1.07 billion in mortgage loans in a total of 80 transactions finalised in the previous quarter.

“At present, the UAE is witnessing a downward correction in loanto-value ratios as the market dynamics continue to shift, thereby making the Dubai property market more accommodating to buyers

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COVER STORY // Cityscape

As Cityscape Dubai 2009 focuses on transparent real estate dealings, Dubai Municipality adds more green cover to the emirate

GETTING REAL

DUBAI REAL TIMES

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t is the time for getting real – both in terms of tackling the real estate market scenario in Dubai as well as combating global warming issues. While worldwide economic upheaval plus a radical shake out in the regional investment landscape shall make Cityscape Dubai 2009 (5-8 October) a very important real estate event, answering to the global green clarion call is Dubai Municipality that has decided to increase its green areas to match with its rapid development.

In terms of the real estate, scholar, investor and author Dr Christopher M. Davidson, who is a keynote speaker at Cityscape Dubai conference states, “With tumultuous international circumstances having taken their toll on the Middle East’s most liberalised economy, now is the time to focus on reality and the opportunities that still exist in Dubai.

There’s no escape from the fact that this year we will be meeting under very different circumstances.” Davidson is the author of Dubai :The Vulnerability of Success . Though times

of volatility will eventually be over, Davidson believes that the growth and vision that has accompanied the rise of this astonishing city is “nothing short of phenomenal.”

And that the same energy will find a way forward, paving the way for Dubai’s next chapter.

Dr Christopher M. Davidson

Cityscape Dubai 2009, now in its eighth year and part of the largest business-to-business real estate investment and development brand in the world, encompasses a major exhibition and a series of confer-

ences taking place at the Dubai International Exhibition and Convention Centre. Davidson will give a keynote address – 2010: Can Dubai weather the storm? – on the opening day of the main conference.

The speaker line-up for the conference brings together some of the world’s most powerful investors, developers and economists for five days of discussion on the global real estate market. Included among them is Donald Trump Junior, President of the Trump Organisation who shall speak on Dubai: Why it is a long term investment for us.

In 2008, the Cityscape Dubai attracted 80,297 participants and 954 exhibitors. “Clearly, while it is still far too early to make accurate forecasts, we are not anticipating the same level of participation,” said Chris Speller, Cityscape Group Director. “Like the rest of the world, the real estate investment business in Dubai and the region has had a reality check,” Speller added. “We are now seeing the emergence of more measured, more transparent

business models. While considered decisions may take away some of the market dynamism, that is probably no bad thing at this present time. “With a return to real market values the event will return to its roots free from amateur investors and speculators.”

Alongside the main Cityscape Dubai event is the World Architectural Congress from 5 – 7 October at which some of the world’s most respected architects and visionaries will share with their experiences and outlook on architecture in a global recession. The Cityscape Dubai Facilities and Asset Management Conference is on 4 – 8 October attracting delegates in the design, build and post-occupancy of buildings. There will also be a Cityscape Dubai ‘Green Day’ on 7 October which will include green communities, green construction methods, energy saving issues, financing green buildings, regulations, facilities management, whole life costs and new materials and products.

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Cityscape Dubai Conference

4-8 October 2009

Sheikh Maktoum Hall 5 October 09:00 - 19:30, 6 October 08:00 - 17:00, 7 October 09:00 - 16:15; 8 October 10:00 - 14:00 The Cityscape Dubai Conference will focus on global real estate investment and development issues, and will feature world class speakers and industry experts. You will have the opportunity to hear cutting edge strategies and discussions, as well as crucial networking and benchmarking with your peers.

Facilities and Asset Management Conference 4-8 October 2009

Sheikh Maktoum Hall 4 October Pre-Conference Workshop 08:30 – 16:00, 5 October 08:30 – 16:15, 6 October 08:30 – 17:00-7 October Understanding Facilities Management Day 18 October Understanding Facilities Management Day 2.

The conference is the regions, premier gathering for Facilites Management professionals at all levels; the conference highlights the latest trends and technologies, their impact on Facilities Management practices and examines new service offerings. It also provides the industry with a platform for debate and solution finding.

World Architecture Congress 5-7 October 2009

DUBAI REAL TIMES

Sheikh Maktoum Hall 5 October 08:30 – 16:15, 6 October 08:00 – 18:45-7 October Post-Conference Workshop 08:00 – 14:30 An integral component of Cityscape – the World Architecture Congress drawstogether the global leaders and brightest visionaries in architecture and design to discuss and debate the foremost challenges facing the built environment.

Last year’s World Architecture Congress @ Cityscape Dubai saw the beginning of what is going to go down in history as the First Great Depression of the 21st Century. With liquidity gone and project development on pause, architects around the world are asking themselves the same question, what can architecture practices do to survive the recession?

This year’s World Architecture Congress is not going to be about groundbreaking, out of this world creations but simply an event where architects and developers will discuss survival techniques in today’s rapidly changing economy.

The global downturn and cost cutting does not mean that this year’s event will lack in quality or expertise. On the contrary, this year’s event has been put together in Association with Continental Europe, Hong Kong, Japan and UK Chapters and the International Committee of the AIA and it will feature a speaker panel unrivalled in the Middle East. Some of the world’s most respected architects and visionaries will share their experiences and outlook on architecture in a global recession.

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Green Day

7 October 2009 Sheikh Maktoum A 08:00 – 17:15 The event is not just about “green buildings” – it will include green communities, green construction methods, energy saving issues, financing green buildings, regulations, facilities management, whole life costs and new materials and products. Green Day at Cityscape Dubai will be a focused oneday event which will be a sharing of ideas – no presentations, but intellectual discourse, which will take the subject forward.

Investor Round Tables 5-8 October 2009

Sharjah A 5 October Hospitality/Tourism 10:30 – 11:30-Saudi Arabia 16:00 – 17:00 6 October Dubai 10:30 – 11:30, Abu Dhabi 15:00 – 17:00-7 October India 10:30 – 11:30-Asia 15:00 – 17:00, 8 October MENA vs Global Markets 10:30 – 11:30 Investor & Developer Thank You Reception 12:30 – 13:00 The Investor Round Tables are the latest addition to Cityscape’s growing portfolio, offering an exclusive opportunity for leading figures in real estate to discuss the key issues affecting real estate investment and development in emerging markets today. Admission to the Round Table sessions is strictly by invitation only and restricted to CEOs, MDs and other senior level industry leaders.

Cityscape Connect Sessions 6-7 October 2009

Sharjah D 6 October Dubai Prices 10:30 – 11:30 Market Transparency 11:30 – 12:00 REITS 14:00 – 14:30-Retail 15:00 – 15:30, 7 October Home Finance & Mortgages 10:30 – 11:00-Cost Cutting 11:30 – 12:00-Affordable Housing 14:00 – 14:30-Saudi Arabia 15:00 – 15:30 In response to the overwhelming success and demand for recent Cityscape Connect. Business Breakfasts, this year there will be a number of not- forprofit, high value content sessions at Cityscape Dubai.

Cityscape Awards for Architecture 6 October 2009 19:30 – 22:00 Grand Hyatt Dubai

The most prestigious architectural awards platform from the emerging world underthe theme – Design for an Emerging World.

The awards will attract the world’s leading architects from the emerging world as well as developers, consultants, governmental authorities and senior professionals involved in the industry.

Cityscape’s ‘Environmental Partner' EEG offers expertise in sustainability and environment as Cityscape Dubai lays special focus on 'green' development

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Marashi.

With over 500 exhibitors and more than 30,000 professional visitors from over 100 countries expected to attend the event, Cityscape Dubai offers an excellent opportunity for EEG to reach out to a much wider spectrum of industry players in its mission to create greater awareness about environmental issues, particularly in the area of energy conservation.

EEG is the first environmental NGO to be given the ISO 14001 certification for its environmental man-

agement system. The group operates in consonance with the UAE’s sustainable development plan and is actively encouraged and supported by local and federal government agencies.

Cityscape Dubai is an annual networking exhibition and conference focusing on all aspects of the real estate development cycle. The event comprises a large scale exhibition, conferences, awards ceremony and gala dinner, networking cocktail party and numerous other special networking events.

Habiba Al Marashi, Chairperson, EEG

ing issues concerning sustainability and the environment; the event will definitely serve as an excellent venue for all parties to discuss the challenges and opportunities that lie before us in our pursuit of longterm sustainable development.”

“Emirates Environmental Group will actively participate in the event to help provide invaluable support and guide participants to identify the right solutions, best practices and international trends that will add greater value to their energy conservation initiatives. Furthermore, this event serves as a significant move forward in achieving our ultimate goal of preserving our precious natural resources and protecting the environment,” added Al

The Emirates Environmental Group

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he Emirates Environmental Group (EEG) is a voluntary, nongovernment organization (NGO) devoted to protecting the environment through means of education, action programmes and community involvement. EEG is actively encouraged and supported by concerned local and federal government agencies. It is the first environmental NGO in the world to be ISO 14001 certified and the only organization of its kind in the UAE with accredited status to the United Nations Convention to Combat Desertification (UNCCD). In 2005 EEG was awarded accredited status to the United Nations Environment Programme (UNEP)’s Governing Council. It is also a member of the United Nations Global Compact and is a focal point for the Global Compact in the GCC States. EEG is also a member of the International Union for Conservation of Nature (IUCN). Emirates Environmental Group is open to men and women of all nationalities, as well as to public and private organizations, academic establishments and international institutions.

DUBAI REAL TIMES

mirates Environmental Group (EEG) has announced that it will participate as Environmental Partner in the 8th Cityscape Dubai, the world’s largest business-to-business property investment and development event. Cityscape Dubai is poised to leverage EEG’s environmental expertise as the event, which will be held from October 5-8, 2009 at the Dubai International Exhibition Centre, adopts a new focus on sustainability and environmental impact.

According to recent studies, GCC countries are expected to spend around $70 billion or around Dh 257 billion on energy projects this year to address the rapid growth in energy consumption all over the region. The UAE, in particular, has been posting a 10 per cent growth in average annual energy use, which has stimulated a growing concern for sustainability and green technologies.

Habiba Al Marashi, Chairperson, EEG, said, “The massive real estate and construction activities across the GCC have greatly influenced the surge in energy consumption in the region. As such, it is clear that players in these key sectors will have an important role in addressing both the present and future energy challenges of our society. In this regard, it is highly commendable that Cityscape Dubai has focused on more press-

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Participants

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number of developers have decided to exhibit at this year’s event – showcasing their existing projects. Tanmiyat is the official Platinum sponsor of Cityscape Dubai 2009.

Dr. Wan Hasni, Advisor in Charge of Tanmiyat, said: “Tanmiyat has been one of the sponsors of Cityscape Dubai since 2006, and despite the difficult year that the region’s real estate sector has had, we believe it is important to continue being active and to participate in industry exhibitions. We need to keep communicating to sector specialists and the public about where things stand – the sector was vocal during the peak times and it certainly is just as important during the current financial crisis.”

“Cityscape Dubai is the world’s largest real estate development and investment event in and by participating as Platinum sponsors for the Dubai exhibition, Tanmiyat is honouring its commitment to the region’s real estate sector – which in the long term will prove its strength and resilience,” added Dr. Wan. Tanmiyat’s stand at this year’s Cityscape exhibition will showcase and offer development updates on the firm’s prestigious $3 billion Ajman Marina development and its renowned Living Legends project.

Rohan Marwaha, Managing Director of Cityscape and Managing Director of IIR Saudi Arabia said: “This year has been a challenging year for the real estate industry, but Tanmiyat is a testament to the strength of the sector. We are delighted to host Tanmiyat once again this year – I hope the event is as fruitful as it has been in the past and we look forward to working with them for many years to come.”

Since its inception in 1982, TanMotorCity

miyat has been a pioneer for the region’s real estate development sector, utilising the industry's most skilled engineers, alongside highly creative architects and designers in order to develop its groundbreaking projects.

Union Properties (UP), a recipient of the ‘Superbrands’ award for 2009 , will be exhibiting this year too.

Commenting on UP’s participation, Mr. Khalid Al Jarwan, General Manager, Union Properties, said: “There is no doubt that Cityscape is one of world’s most recognized business to business real estate shows, it is a show we look forward to attending every year. Our participation this year is a crucial step for further reinforcing to the show visitors, even during turbulent times, our dedication to delivering excellence and unsurpassed levels of quality through our unique portfolio of projects and development brands”.

UP will be showcasing its flagship project, the 38,000,000 square feet MotorCity development that includes residential, commercial and retail amenities and comprises five project components: • UpTown MotorCity • Green Community MotorCity • Business Park MotorCity • Dubai Autodrome • F1-X Dubai themed park The company will also showcase its unique DIFC projects; Index™ the

Dr. Wan Hasni

80-storey multi-purpose tower offering state-of- the-art offices for multinational corporations, minimalist designed luxury apartments as well as retail offerings; and Limestone House the exclusive luxurious residential building that will connect to a five star hotel.

Mr. Al Jarwan also added: “The reputation that we achieved as a trusted developer for more than 20 years is something we are proud of today. Whether it’s offering high quality developments, flexible leasing and buying options, or delivering projects on time, we want all our stakeholders, potential investors, and customers to know that their satisfaction is the number one objective behind every action and decision we take”.

The UP stand will be located in Hall 4, stand number 4C20. A dedi-

“Cityscape Dubai is the world’s largest real estate development and investment event and by participating as Platinum sponsors for the Dubai exhibition, Tanmiyat is honouring its commitment to the region’s real estate sector – which in the long term will prove its strength and resilience” cated sales team will be available on all four days for taking enquiries on the showcased projects; Index and Limestone House of which construction is progressing well for both projects with a confirmed date for completion and delivery by year-end. In addition to the unique MotorCity development to which UP is currently progressing with the handing over of the project’s two residential components; UPTOWN MotorCity and Green Community MotorCity.

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DUBAI REAL TIMES

ENVIRONMENT

A need for green standards Dubai Real Times spoke to Mr Parasu Raman R, Founding Vice-Chair of World Green Building Council and CEO of BMTC (Bahri & Mazroei Trading Company), a major UAE engineering solutions company/ supplier of electrical, water and lighting solutions to the construction industry in the UAE How did you first get involved with green buildings?

I have been working within the construction sector for over 20 years.

Previously I was Chairman and MD of a British company that later became a Honeywell subsidiary in India, and which was very active within the Confederation of Indian Industry (CII). As part of an initiative in the late 1990s by the CII to make Indian industry more competitive globally, I was asked to lead a National Committee on Construction looking at promoting changes within the industry. With this in mind we created a unit, the CII Green Business Centre, to drive corporations to focus on sustainability practices in regard to water, waste management, renewable energy, conservation and green buildings. I was then invited to be the Founding Chairman of the Indian Green Building Council.

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What is the World Green Building Council (WGBC), and your role within it?

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The WGBC is the global umbrella body for a rapidly-growing number of national green building councils worldwide. It was founded in 2002 to encourage more sustainable practices across the global construction industry and to support the development of international green building rating systems. As ViceChairman, my role is to promote the concept of sustainability and efficiency within the green building sector. The ‘green movement’ has

What is the definition of a ‘green’ building and what standards are used to judge this?

Parasu Raman R

quickly gained momentum; our member countries now represent 50 per cent of global building activity, and their councils work with more than 10,000 companies and organisations all over the world.

What challenges have you faced in getting the ‘green’ message across at the local level?

When you drive change, whether for good or bad, you are usually faced with a series of challenges. Added to this, if initiatives are intangible, you will undoubtedly have more cynics than advocates. A major challenge has been to rectify the common misconception that ‘going green’ is an expensive, charitable thing

to do that requires sacrificing profit and comfort for the sake of cleaner living. This is far from the truth, as sustainability is economically viable in both the short and the long term.

Globally however, the concept is still in its infancy, so we have to be persistent in promoting the ‘green’ way and clearly conveying the message that green building is not simply for the social good, but makes business sense too. Case studies of successful sustainable development projects are very important here, as they help to prove that green building design leads to a better environment, better human health for those who live and work in the buildings, and also provides substantial cost savings for developers.

A green building is one that is designed, built and operated in an ecological and resource-efficient manner. Green buildings are designed to reduce the overall impact to the environment and focus on the key principles such as materials, indoor environmental quality, water, energy use and waste management.

Internationally, there are many sets of standards being used to measure a building’s sustainability.

The most popular voluntary rating system is the US-conceived LEED (Leadership in Energy and Environmental Design), which is now being adopted by most other parts of the world. LEED looks at a number of areas that makes a building a holistic sustainable design, rather than merely an energy efficient one. Other major systems are the UK BREEAM and Australian Green Star. In the UAE, Dubai has so far followed LEED. However, following a decree issued by His Highness Sheikh Mohammed in October 2007, the Emirate will soon be introducing its own comprehensive set of (mandatory) green building regulations that have been formulated from reviewing over 250 international rating tools currently in use.

This is the most historic global step forward in the area of sustainable design and will go a very long way

in setting the trend across the rest of the world. Abu Dhabi, on the other hand has developed its own voluntary Pearl rating system as part of its Estidama ‘sustainability’ initiative. It is not yet evident which system the other emirates will follow.

Is it possible to set global standards of sustainability for the construction industry?

Is green building driven by environmental concern, or do you feel corporations are simply using it as a new marketing tool?

There is an ever-increasing focus on environmental issues among all stakeholders. It is clear that the world can no longer afford to waste scarce resources such as energy and water, and so construction has had to move towards adopting more sustainable, efficient practices. In

several countries, such as those participating in the Global Reporting Initiative (GRI), it is now compulsory for companies to report on matters such as their carbon footprint details and a series of social and environmental issues. However, many developers are now adopting sustainable practices even in the absence of legislation.

While companies may be motivated to some degree by environmental concerns, ultimately green building has to make good business sense.

The global real estate community has quickly recognised this potential economic value, in that green buildings are more efficient and therefore more attractive to potential investors. Therefore, sustainability is naturally a new marketing tool that makes sense for corporations to take advantage of if they wish to remain competitive.

For example, during the first year of operation a typical green building will save 35-40 per cent in energy costs, around 40-45 per cent in water, and about 90 per cent in waste management. This is proven from statistics in India, Australia and the US; the cost of power is lower here in the UAE, meaning an approximate power saving of 20-25 per cent.

Taking into account the U.A.E’s booming construction industry, what do you feel is the role of ‘green building’ in the Emirates?

While the concept is still relatively

new here in the UAE, there is no doubt the region is quickly catching up with countries such as India, Australia and the US, where sustainability is already well established. The green movement has steadily been gaining traction here; people are conscious that it is here to stay, and we have seen demand rising steadily for certain associated services such as green consulting and contracting.

In the most successful markets that have managed rapid transformation, the local Green Building Council has played a key role, and since its establishment earlier this year, the Emirates Green Building Council has been very successful in advancing green principles within the UAE. This region has been a booming construction hub for many years, and since there is already a high density of built-up space, in one way the notion of green building has arrived too late. Many developers did not include sustainable measures in their original designs and this lack of efficiency will continue to remain for quite a long time to come.

Having said this, the definition ’sustainability’ itself is constantly evolving as new technology is developed, so by looking at the past we can also learn how to move forward.

While it is possible to retrofit existing structures, it is far easier and less expensive to concentrate on new buildings. There is still a lot of construction planned in the UAE, and incorporating better sustainable designs into

new buildings costs very little at the outset but can yield huge returns on investment. In this way, ‘green building’ should become an increasing focus for the real estate industry here in the region and should help to revitalise the market.

What will help the global green building movement continue to grow in the future?

When looking at the various different models of green building councils worldwide, it is evident that in some places, governments play a bigger role than in others. Green practices are a matter of attitude, but it must be remembered that the construction industry is a business which exists to make money. From what we observe in best-practice economies, it is beneficial for governments to set minimum benchmarks of building performance, to force the industry to move from unsustainable consumption to more modest levels of sustainability. Thereafter, the gap between this standard and competitive excellence must be managed by the national Green Building Councils, supported by the WGBC, and market-led activity rather than through legislation. As the market rapidly develops, education will take place across all levels, and as a result, green building, which is still often viewed as simply something ‘good to know’, will become a business necessity.

DUBAI REAL TIMES

Requirements change between climatic zones and to that extent standards will have to be adaptable, but in order to drive forward the concept of green building, an acceptable benchmark is imperative.

There appears to be some confusion today, which is certainly impeding progress. The various systems in use today vary from country to country and include different judging criteria, but uniform elements that can therefore be applied at an international level include: I) the sustainability of site II) conservation of energy III) indoor environmental quality IV) water management V) material VI) design innovation While I appreciate that generally every country desires its own system, my recommendation is to have one standard tool across the GCC. With climatic conditions reasonably consistent and given that most building industry professionals work across the region, it would be difficult for them to work with a different tool for each country. It should not be difficult to create a consensus-based GCC set of standards if all communities and governments work through the national Green Building Councils.

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MARKET TRENDS & ANALYSIS

UAE best positioned to attract investments Jones Lang LaSalle says creating competitive conditions is vital for stability and recovery

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DUBAI REAL TIMES

ones Lang LaSalle has assessed that Abu Dhabi, Dubai, Cairo and Casablanca are best positioned within the MENA region to create the competitive conditions required to attract more long term capital into their real estate markets over the next few years.

In a report titled ‘Race to Competitiveness: Preparing MENA Markets for Long Term Investors’, JLL says the ability of different markets to attract long term regional and global investors will be of critical importance to their progression into the stabilization and recovery phases of their cycle as the emphasis shifts from a short term to a longer term investment paradigm.

Creating the right environment to attract long term investment into MENA real estate markets remains a work in progress. While few of the

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necessary requirements have yet to be fully met, significant progress has certainly been made in many critical areas, the report points out.

In the rush to build and sell real estate assets, markets across the MENA region have largely overlooked the requirement to attract more stable, long term investors and end users over the last decade.

The wholesale withdrawal of speculators and short term investors over the past year has left many owners with the need to hold and reposition assets they had originally intended to transact quickly.

Compounding the challenges facing many existing owners is the fact that prices and rentals have declined by 25-50 per cent in some markets across the region and most markets have experienced a dramatic downturn in the volume and size of real estate transactions.

Dubai has made considerable progress since last year. There are no longer any red lights, with the market being characterised by a mix of amber and the emergence of a few green lights, suggesting progress has been made on all the factors and some have now seen recovery.

on the creation of quality real estate assets that will be attractive to both occupiers and long-term real estate investors.

Long Term Investment

Jones Lang LaSalle had predicted 2009 would be a year of correction, with the markets moving into a stabilization phase in 2010, ahead of a recovery in 2011.

“While we expect to see a further consolidation in the real estate sector, with prices and rents continuing to decline in some markets over the short term, the pace of correction is now easing as global and regional economic stability leads to an improvement in investor sentiment. A key to the success of markets in this phase of the cycle will be their ability to attract long term regional and global investment,” it said.

The report noted that this transition will require a paradigm shift, from the previous reliance on short term strategies and rapid implementation, to an increased focus

In mature economies, long term investors (including private family groups, conglomerates, government entities, and institutional investors e.g. insurance companies, pension funds and listed real estate funds) account for around 80 per cent of large real estate investment transactions. These groups bring high volumes of relatively stable, long term capital to the real estate sector.

JLL has identified a range of criteria that these long term investors typically consider when assessing any potential real estate transaction. These criteria can be grouped together into three broad headings, ranging from the macro to the micro level, from market wide to asset specific considerations: • Competitiveness of the investment environment • Real estate market conditions • Availability of investable product The report points out that speculative investors tend to be relatively opportunistic in nature, attaching the greatest weighting to the third set of largely asset specific criteria. In contrast, long term institutional real estate investors tend to take a more ‘top down’ approach, beginning with the competitiveness of the economy and the real estate sector of any market, before moving on to

Pulse • MENA House View • September 2009 3

impact the timing of the recovery identify particular assets.

Attracting Long Term Investment Before considering the specifics of real estate markets. The report In mature economies, long term investors (including private family of the real estate markets them- explained how Dubai, the region’s groups, conglomerates, government entities, and institutional selves, long term institutional inves- hardest hit real estate market, has investors e.g. insurance companies, pension funds and listed real tors will typically assess the broader improved in relation to these facestate funds) account for around 80% of large real estate tors over the past months.

Whileof macro economic and investment investment transactions. These groups bring12high volumes definite progress has been made, environment within which the real relatively stable, long term capital to the real estate sector. estate markets operate. The chal- creating the right environment to Working with our colleagues in LaSalle Investment Management, lenge here is for governments and promote the recovery of the real we have identified a range of criteria that these long term regulators to build a transparent estate market (and thereby attract investors typically consider when assessing any potential real investment) clearly investment and business environestate transaction.

These more criterialong canterm be grouped together into remains a ‘work in progress’. ment to encourage employment three broad headings, ranging from the macro to the micro level, JLL notes that Dubai has made and population growth, from marketwhich wide towill asset specific considerations. then attract long term real estate considerable progress since last • Competitiveness of the investment environment year. There are no longer any red investors, the report says. estate market lights, with the market being charThe World• Real Economic Forumconditions (WEF) produces an annual report • Availability of investable acterized product by a mix of amber and which scores cities based on a the emergence of a few green Speculative to be relatively opportunistic in nature, suggesting progress has range of 110 such factors.investors In its re-tend lights, attaching the greatest weighting to the third set of largely and cently released 2009/2010 report, been made on all the factors asset specific criteria. In contrast, long term institutional real estate the WEF notes the improvements in some have now seen recovery. investors tend to take a more ‘top down’ approach, beginning with As would be expected, ‘leading the overall competitiveness of marthe competitiveness of the economy and the real estate sector of indicators’ as equity kets across theany MENA region.

Eight market, before moving on to identifysuch particular assets.markets countries (UAE, Qatar, Saudi Arabia, and energy prices have recovered Competitive Environment first, with other indicators (e.g. emTunisia, Oman,Building Bahrain, aKuwait, and Investment the specifics the occupier real estate markets ploymentof and demand) Jordan) featureBefore in theconsidering top 50 most themselves, longworld; term institutional assess lagging investors behind. will Thetypically real estate competitive countries in the the UAE, broader macro economic and investment environment within market is itself a lagged indicator and three (Qatar, Saudi Arabia) which the real estate markets operate.

The challenge here is for in the top 30. These results reflect and while further declines may be governments and regulators to build a transparent investment and expected in both values and rental the vision and investment these business environment to encourage employment and population governments have made to be- levels to occur over the rest of 2009, growth, which will then attract long term real estate investors. come competitive and more trans- the pace of decline is certainly easThe World ing,(WEF) it said.produces an annual report parent, it is pointed out. Economic Forum which scores cities based on a range of the 110 improvement such factors. Ininits Despite The second set of factors considrecently released 2009/2010 report, the WEF notes the ered by long term investors relate sentiment and the emerging conimprovements in the overall competitiveness of markets across more specifically to the real estate sensus that the Dubai market is the MENA region. Eight countries (UAE, Qatar, Saudi Arabia, markets themselves. In its report through the worst of the crisis, one Tunisia, Oman, Bahrain, Kuwait, and Jordan) feature in the top significant – the MENA House View issued in Marchcountries 50 most competitive in thechallenge world; andremains three (Qatar, potential oversupply that is emerg2009, Jones Lang LaSalle identiUAE, Saudi Arabia) in the top 30. These results reflect the vision ing in many have sectors of the fied a series ofand 17 investment factors thatthese will governments made to market. become competitive and more transparent.

Requirements for Real Estate Recovery

Requirements for Real Estate Recovery – Dubai Oct 08 Mar 09 Oct 09

Macro Economics Global economic stability Recovery in oil prices Stability in employment levels Financial/Liquidity Decline in cost of capital (interest rate) Recovery in equity markets Recapitalization of banking sector Increased funding available to real estate sector Real Estate Increasing occupier demand Reduction of future supply pipeline Stabilization of pricing levels Increasing transaction levels Consolidation of real estate participants Implementation of new investment paradigm Supporting Factors Recovery in tourism Improved brand perception Improvement in corporate governance Concerted government action

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Required

Source: Jones Lang LaSalle

•

Underway

• •• •• • • • •• • • • •• •• •

• •• •• • • • •• • • • •• ••

Achieved

• •• •• • • • •• • • • •• ••

Pulse • MENA House View • September 2009 5

However, Dubai has made considerable progress since last year. longer any red lights, with the market being characterised by a mix of amber and the emergence of a few green lights, suggesting progress has been made on all the factors and some have now seen recovery achieved.

more specifically to the real estate markets themselves. In our MENA House View (March 2009), Jones Lang LaSalle identified a series of 17 factors that will impact the timing of the recovery of real estate markets. The following table shows how Dubai, the region’s hardest hit real estate market, has improved in relation to these factors over the past 12 months. While definite progress has been made, creating the right environment to promote the recovery of the real estate market (and thereby attract more long term investment) clearly remains a ‘work in progress’.

As would be expected, ‘leading indicators’ such as equity markets and energy prices have recovered first, with other indicators (e.g. employment and occupier demand) lagging behind. The real estate market is itself a lagged indicator and while we expect further declines in both values and rental levels to occur over the rest of 2009, the pace of decline is certainly easing.

DUBAI REAL TIMES

There are no Attractiveness of Selective MENA Markets for Long Term Investment The second set of factors considered by long term investors relate

Source: Jones Lang LaSalle

21 Conclusions – Which MENA markets are likely to attract the new breed of long term real estate investor?

As the economic storm passes we expect that real estate markets will move into a period of stabilisation in 2010 and recovery in

Having regard to the three sets of factors identified in this article, Jones Lang LaSalle has assessed that Abu Dhabi, Dubai, Cairo and Casablanca are best positioned to attract more long term regional and global investment into their real estate markets over

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Vacancies in the office market are currently around 25 per cent and the average occupancy rate in the hotel market has fallen to around 65 per cent. The report notes that the oversupply situation is likely to get worse before it gets better in some sectors and this will continue to place downward pressure on prices and rental levels in the short term. This is likely to lead to a ‘two tier’ investment market, with continued demand for those properties that are well leased and provide a secure income flow, while there will be little interest from long term investors in projects under construction or those suffering low occupancy levels.

JLL says the third set of factors required to attract long term investors relate specifically to the real estate sector itself and the availability (or otherwise) of investable quality real estate product.

Despite the dramatic correction in pricing in markets like Dubai and the more subdued corrections elsewhere in the MENA region, selling has not proved to be easy and few major deals have occurred to date. Attracting long term investors into the market requires more than just competitive pricing. Existing owners must also

adopt a changed mindset, in line with the new (longer term) investment paradigm.

With the majority of owners continuing to adopt a ‘wait and hold’ strategy in expectation of a future rebound, pricing is often still not in line with market expectations, JLL points out. Even where pricing is competitive, assets are not being packaged in a way that provides the secure long term leases required to underpin the stable cash flow sought by investors.

Those owners that recognise the importance of securing quality tenants on long term leases and implementing more proactive asset and facility management programme will be those that succeed in selling their assets to the long term investors that are currently searching for opportunities.

Despite the common perception that there is an excess of stock on the market, JLL’s recent Real Estate Investor Sentiment Survey (completed in September 2009) reveals there are actually currently more buyers than sellers for well priced commercial assets in most of the major MENA markets. Converting these potential buyers into actual deals will largely depend upon the extent to which existing owners are

prepared to meet the new market conditions in terms of not just pricing but also the structuring of their assets to make them attractive to longer term investors.

One of the major hurdles to creating more investable product is the short term leases that continue to prevail across most markets in the MENA region. In this regard it is encouraging that average commercial leases in the Dubai market have increased from one to three years and that a number of owners of commercial premises are now openly talking about the prospect of offering tenants longer term leases (up to 10 years). This would make any asset much more attractive and therefore saleable to the new breed of long term investors that the markets need to attract if they are to progress to the next level in their real estate maturity.

So what can existing owners do at the asset level to attract regional and international investors? The answer is to make products and portfolios investable, through a practical and realistic approach to the pricing, structuring, and operating of their assets.

The six key initiatives have been identified as: • Price Adjustment: Owners must

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recognise the true value of their assets in the face of current market trends, and price accordingly.

Stable Cash Flows: Owners should look to secure stable income for their operating assets.

This may involve accepting longer term leases than have traditionally been offered.

Asset Management: Owners must implement an asset and property management strategy which can considerably improve the value of the asset over the long run.

Legal Structuring: Owners should make sure that the legal structure of the property is in line with international industry norms.

Financial Structuring: Owners should make full use of future debt. The standard in the region has been toward full equity plays, and owners can increase the return and value of an asset by leveraging a healthy degree of debt.

Restructuring/Adopting Long term Portfolio Strategy: Owners must restructure and consolidate their portfolios around a cohesive strategy which needs to have a long term-focus.

MARKET TRENDS & ANALYSIS

The next frontier Seeking operational excellence in real estate and facilities management: the next frontier in a maturing real estate market

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fter several years of unprecedented regional growth in the construction sector, the real estate market in most GCC countries is now faced with a large supply base of residential, commercial, hospitality and retail assets. As the rate of construction slows to adjust to the new market dynamics, businesses are shifting their focus from developing new assets and looking for ways to increase performances of the existing ones. In an oversupplied market the winners will be those who can successfully extract maximum value from their existing assets and this will be found through the deployment of best practice operations.

“As development projects are completed, there is an opportunity for GCC developers to shift their focus from ‘develop to sell’ to ‘develop,

manage and collect’ business models. This means they will need to look at the way they operate their existing business units and identify opportunities which will drive bottom line performance”, said Dr. Dirk Buchta, Senior Partner and Managing Director of A.T. Kearney in the Middle East. “For the real estate sector this requires an in-depth understanding of asset management, property management and facilities management businesses“.

The reality is that the management of real estate assets in the region is often limited to poor quality reactionary led responses to repair needs with limited attention to preventative maintenance. In addition to this the property management role, in most cases, is limited to administrative tasks. The average level of service in this sector in the UAE is

Dr. Dirk Buchta

still generally regarded as poor and one of the key reasons for this is that the full scope of property management services and value remains widely misunderstood.

Asset Management is the finan-

cial management of a portfolio of real estate assets, with a focus on financial return and risk management through diversification, valuation, portfolio management and optimization as well as strategic Capital Expenditure planning.

Property Management focuses on the attraction of tenants and state of the art delivery of services to tenants. Its key objective is to maximize revenues from tenants and to minimise vacancies: operationally effective property management is geared to capturing a greater ‘share of wallet’ or ‘end user spend’. This focuses on delivering added value services to the end user - the most important point in the real estate value chain (a key point that was overlooked during the property ‘boom time’ in the GCC markets).

The regional market is still very

developers, operating in more mature markets, typically focus on asset management and property management as the core of their strategy to maximise the value of their properties” said Olivier Laroche, Senior Manager of A.T. Kearney

2010. Levels of professionalism will emerge as competition increases and the demand for better performing outsourced expertise rises – an expected subsequent change as the market matures and gets property

been very little maturity within the standard of operations and a large proportion of these services remain managed in-house, having grown organically out of large local landlords’ portfolio of assets. In Dubai only, although only 50 per cent of the market is outsourced today, the market size is siginifcant and estimated at around Dh10 billion in

management driven. The FM business generates returns between 5 to 10 per cent. It also adds value by protecting the assets and therefore generating increased profitability.

Eighty per cent of the life-cycle costs of a building are in Facilities Management, not in the initial development and construction.

“Many successful Asian and US

Olivier Laroche

The Hines portfolio, valued at approximately $25.8 billion, is a mix of projects under construction, completed, acquired and managed for third parties in diversified segments including in residential towers and communities, corporate

The reality is that the management of real estate assets in the region is often limited to poor quality reactionary led responses to repair needs with limited attention to preventative maintenance Middle East. “As a result these areas are commonly seen as key sources of revenue. Historical analysis shows that many successful developers in mature markets have developed comprehensive business models with an end to end real estate value chains by diversifying their businesses to include asset and fund management driven revenue streams.”

In the long-term, diversified developers are those generating the best results, with average EBIT margins of 25-30 per cent and ROIs above 15 per cent.

A good example of a firm that demonstrates property management best practices is Hines, a successful privately owned, international real estate firm. This company approaches property and facility management from an owner’s perspective, delivering high-level of service and asset management. The objective of this strategy is to outperform competition by attracting the highest caliber tenants willing to pay high rents for the appropriate level of service. As a result Hines' tenant retention averages more than 95 per cent of its square footage that comes up for renewal.

About A.T. Kearney A.T. Kearney is a global strategic management consulting firm known for helping clients gain lasting results through a combination of strategic insight and collaborative working style. The firm was established in 1926 to provide management advice concerning issues on the CEO’s agenda. Today they serve the largest global clients in all major industries.

A.T. Kearney’s offices are located in major business centres in 33 countries.

headquarters, mixed-use centers, industrial parks, and others.

The example of Tishman Speyerm-another global company with a long track-record from development to property management and asset management-highlights that some operations should remain in-sourced as they are key value creators. Tishman has an inhouse team of over 300 property management experts who oversee all aspects of the buildings operations and “operate their buildings as if they were stand-alone businesses with a focus on making sure that the tenant’s needs are taken care of”.

Property asset owners in the region are entering a stage in the business cycle which represents a maturing market and this is characterised by a larger number of existing revenue-generating assets on the market and increased competition to come to manage them.

Staying ahead will demand attention to detail in the value chain and a commitment to delivering added value to the end user. “Key success factors will be driven by the effective implementation of best practices and the employment of management teams who can demonstrate solid track records in all three key areas of expertise; asset management, property management and facilities management businesses” added Olivier Laroche.

“This operational approach would be beneficial for all large developers to consider as part of their strategy for the future”.

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immature: there are some experienced global companies active in this segment such as CBRE, Colliers and Jones Lang Lasalle, as well as some regional players like Asteco and Arenco Real Estate, but they control only a limited proportion of the market and mostly on the commercial side. The property management, leasing and tenant management businesses generate healthy returns from 15 to 20 per cent.

Facilities Management encompasses a wide variety of activities from project management and value creation activities to basic operations and maintenance. This sector of the market has grown considerably in Dubai and the UAE as a whole, in line with the rate of construction. However there has

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MARKET TRENDS & ANALYSIS // FINANCIAL ROUND-UP

REMNotes subscription deadline extended Shariah-compliant distress property fund records high demand among investors from the Middle East

M

ayfair Wealth Management (MWM) a financial and investment advisory services providers based in the Cayman Islands, has extended the subscription deadline for its ‘Real Estate Musharakah Notes’ (REMNotes), a Shariahcompliant distressed property fund worth $50 million in the UAE, until October 29th, 2009. The move follows the massive demand achieved by the fund among regional investors. Taking advantage of the correction in real estate prices, ‘REMNotes’ is expected to deliver an annual return of 12 to 15 per cent to investors by allowing them to participate in the acquisition of strategically sourced undervalued properties in the UAE.

Based on the Shariah principles of Musharakah, ‘REMNotes’ gives investors an opportunity to invest in the UAE real estate market in a more secured manner while earning above average returns through future sales and long-term and short-term leasing of the properties. Available to individual, joint or corporate investors for a minimum investment of $25,000, the property fund and its progress can be monitored through the semi-annual reports to be published by MWM and distributed to investors. MWM has partnered with E-valuations Chartered Surveyors, a Dubai-based valuation firm certified by the Royal Institution of Chartered Surveyors (RICS), and Mayfair Interna-

Amani Choudhry

tional, a global property consultancy firm from the UK, who will ensure that the properties acquired are efficiently managed and will yield excellent returns.

“The huge demand for ‘REM-

Notes’ is a testament to the potential of this distress property fund and its attractiveness among investors, who appreciates, the simple and ingenious way it leverages the current downtrend in the property market,” said Amani Choudhry, CEO, Mayfair Wealth Management. “We have made a decision to extend the subscription deadline after seeing the massive attention and demand ‘REMNotes’ has garnered across the region, with many individuals and companies still expressing their intent interest to invest. We are confident that this extension will give them ample time to make their move and capitalise on this excellent investment opportunity.”

Creating a real estate investment portfolio

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asweek Real Estate Marketing and Development, an Abu Dhabi-based property advisor and solutions provider serving the Middle East real estate markets, has announced that it plans to create a real estate investment portfolio worth $250 million featuring key Dubai and Abu Dhabi projects within the next 18 months.

Masood Al Awar, CEO, Tasweek Real Estate Marketing and Development, said: “We plan to acquire properties in free zones and investment zones in Dubai and Abu Dhabi over the next few months. We have already begun acquiring properties using our own funds. We are ready for a steady start and are confident that we can raise the total amount

Masood Al Awar

we need mainly through the support of our shareholders and potential investors.”

“We have already identified some strategic locations and we

are aiming for an asset structure comprising a mix of commercial, residential and retail investments,” he added.

Among the locations being eyed by Tasweek are Dubai Marina, Jumeirah Beach Residence and Dubai International Financial Centre (DIFC) in Dubai and Reem Island, Al Raha Beach, and Building Material City in Abu Dhabi. The targeted acquisitions are expected to generate a return on investment of at least 10 per cent. The company will focus on transactions that can expand its core competencies of networking and professionalism and will decide on buying single units, complete floors or even projects at the opportune time.

Tasweek recently signed a management and marketing consultancy Memoranda of Understanding (MoU) with independent management and technology consulting firm RQ Associates Ltd. and strategic marketing, communication and training consultancy IK Consult Ltd. The MoUs form part of TASWEEK’s strategy of offering a one-stop shop for real estate and related services and marketing.

“We recognize the need to meet the growing market demand for efficiency and effectiveness.

We want to build on solid portfolios and services and further enhance our mediation between developers, customers and banks,” concluded Al Awar.

INTERVIEW

End-users take centrestage Investors have taken a backseat amid an uptick in demand for residential properties says Choueri Real Estate

By Ambily Vijaykumar

Laura Choueri

income? “There will always be a demand for high end properties. But the mass demand is for properties in the range of Dh1.5-4 million. In fact with the demand for readyto-move properties on the rise, the problem now is of availability,” says Laura Choueri.

Banks are now beginning to open up lending, but with stricter rules. Some of which Choueri says need to be revised. “I know many who are not able to borrow because of the industry they are in.

Anywhere in the world, whether the market is up or down loans are available, percentages may change but banks don’t abandon you. These gaps need to be filled,” elaborates Laura. A solution to that, suggests Laura, should be to redefine the mortgage system in Dubai to match that in other leading markets.

The year has also seen many changes and fluctuation in the real estate sector in Dubai, and that has reflected in prices for properties across Dubai for example, Palm Jumeirah properties once touched Dh14 million then went down to about Dh6 million and now is back

in the range of Dh7.5-9 million. Property at The Springs went down to less than Dh1 million from Dh2.4 - 2.6 million but has bounced back to Dh1.6 million.

Choueri gives a thumbs up to the following places in terms of property sales: Downtown Burj Dubai, Arabian Ranches, Palm Island, JBR, Jumeirah Lake Towers, Dubai Marina, The Springs, Victory Heights, and The Greens. In terms of the rental market, they say wherever there is a property worth renting there is a client for it.

Currently property prices are at rock bottom says the company and hence it is the right time to invest because from here on, prices will appreciate; and with banks offering finance, this will definitely contribute to properties’ appreciation.

The uptick is visible in the residential property segment, but what about the commercial segment?

Commercial, the company says, has begun to pick up in leasing and sales. This trend is being attributed to people beginning to look at opportunities to have their own offices, people wanting to expand or those wanting to take advantage of offices that have been left furnished. Prices in the commercial sector might still come down and the supply is definitely more than the demand at this point.

A concern in the real estate sector has been the developers’ inability to deliver on time. Choueri

says that they have had a couple of clients who have been disappointed with having to pay for off-plan property that is not proceeding as per the developers’ promises.

“We have only dealt with developers who have a RERA approved escrow account. Our job is to make sure that the product that we sell to our client is reliable. Despite that there are some developers who have not been able to proceed as per schedule, but none of the developers have pulled out,” defends

Georges Maurice

Laura.

Choueri also draws attention to the need for proper regulation.

Laura, being certified from Montreal, Canada over 30 years ago, welcomes RERA’s education initiative for brokers. Georges Maurice is an approved Instructor for brokers and he believes that introducing these regulations in the market will help the industry become more professional.

Asked if Choueri has introduced additional services during these times, they mentioned about the activity of their sister company lccb |commercial brokers who offer extra services complimenting the real estate industry.

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“D

ubai has been very kind to a lot of people. The amount of money that many people made here, umpteen of them won’t be able to make that kind of money if they lived their lives three times over. But unfortunately most folks forget that,” says Laura Choueri, CEO and Managing Director of Choueri Real Estate Broker (LLC).

The company has always had faith in the market, which has been re-affirmed with signs of activity beginning to show in the past two months.

“The fact is that investors have taken a backseat for the moment.

They used to buy off-plan and flip, but now, with off-plan sales almost stagnant, investors are not jumping into the market with the earlier fervor. But they are collectively setting up funds to purchase property whether it is here or in London or USA. However it is the ready-tomove property market that is seeing a boom,” informs Georges Maurice, Manager-Operations at Choueri.

With a cumulative presence of about 16 years in the Dubai market, including the era before the freehold concept came into being, Choueri holds a commercial broker’s licence with 20 real estate agents working for them.

So what has the year been like for the company? “It has been tough,” says Laura Choueri. A year also made tougher by banks closing their taps on the mortgage front.

So is the demand more for high end properties or for the middle

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COMMENTS

IFRS for SMEs: A Welcome Move CA Atul Shukla, Audit Partner at Jitendra Chartered Accountants, says the adoption of the new standards for SMEs has the potential to be truly widespread in the region. This is because more than 95 per cent of the business entities/companies in the UAE are SMEs

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n July 9, 2009, the International Accounting Standards Board (IASB) released the International Financial Reporting Standard (IFRS) for Small and Medium Entities (SMEs). The IFRS for SMEs could transform the way privately held businesses around the world prepare their accounts. The standards are developed specifically for private companies and recognize that SME financial statement users are generally more focused on cash flows, liquidity, balance sheet strength, and solvency matters. The IFRS for SME standards represent a simplification of the full IFRS standards and eliminate many accounting requirements that are not generally relevant to private companies, such as earnings per share and segment reporting.

The new standard offers a unique opportunity to create a standardized accounting framework for privately held businesses throughout the world.

According to IASB, SME’s have been defined as entities that do not have public accountability, but still publish general purpose financial statements for external users such as banks, credit rating agencies, loan providers and so on. The UAE government adopted IFRS long ago and banks in general, require companies to prepare accounts based on the IFRS. Though companies, over the years have been stating that financials and accounts are based and prepared on the IFRS, not all the standards of IFRS & IAS are followed in true spirit for preparing accounts.

IFRS for SMEs provides a substan-

CA Atul Shukla

tially simplified set of internationally recognized accounting principles for privately held businesses in the UAE. The new IFRS for SMEs is more relevant for companies in the UAE, because most companies operating in this market can be listed under the SME category. However certain entities such as stock exchange listed companies, other PJSCs, banks, insurance companies, large real estate developers and brokers etc. will be specifically required to follow full IFRS. Compared to the full IFRS, which was developed primarily for large business entities like listed companies, the new standards will particularly benefit medium sized businesses that operate internationally. At a mere 230 pages, a new version of the international accounting standards for non-public small and medium entities may win a big following, sooner rather than later. Adoption has the potential to be truly wide-

spread: more than 90 percent of the companies in the world are SMEs, according to the IASB. We expect individual countries to consider the new standards, consult with local stakeholders and decide whether and when it should be used in their jurisdiction. Individual countries will also have discretion over which entities the new standard will apply to – unlisted subsidiaries of listed multinationals, for instance, could be excluded in the scope. The new IFRS for SME will assist privately held businesses to meet the qualitative accounting standard requirements with affordable cost. We at Jitendra Group believe the IFRS for SMEs will be particularly welcome in those countries (more than 100 worldwide) that currently use full IFRS for all entities, listed and unlisted. In these countries, the pressure to reduce the administrative burden on SMEs will surely persuade governments to

adopt the new standards at the earliest. Converting to new accounting principles always involves some degree of financial and resource cost.

Lenders and private investors may also benefit from widespread adoption. The IFRS for SMEs also includes a set of illustrative financial statements and a presentation and disclosure checklist to assist entities while preparing their financial statements. The application of this standard is expected to reduce the compliance costs for many smaller entities and help make the financial statements of such entities less complex. In particular, the IFRS for SMEs will: provide improved comparability for users of accounts; ensure more adherence to standards as regards recognition, measurement, presentation and disclosure of any item in financials; Enhance the overall confidence in the accounts of SMEs; reduce the significant costs involved in maintaining accounts as per IFRS standards.

The IFRS for SMEs will also provide a platform for growing businesses that are preparing to enter public capital markets, where application of full IFRSs is required. The IFRS for SMEs is separate from full IFRSs and is therefore available for any jurisdiction to adopt whether or not it has adopted the full IFRSs, It is also for each jurisdiction to determine which entities should use the standard. It is effective immediately on issue. The IFRS for SMEs responds to strong international demand from both developed and emerging economies for a uniform but simplified set of accounting standards for smaller and medium-sized businesses.

COMMENTS

Deyaar says its coffers are well-stocked to fulfill commitments on its projects

Negotiating the real estate transition

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ith eight projects in its kitty at the moment, real estate developer Deyaar says it is “exploring various potential opportunities in a range of markets across the region and beyond.” The statement is a testimony to the company’s claim that in a sector that has lost considerable momentum since last year as a result of the downturn, “it remains in a healthy cash position to fulfill all its commitments for project completion,” according to Markus Giebel, CEO, Deyaar Development.

The positive outcome, including a second quarter net profit of Dh75.40 million has been achieved as a result of sticking to a “larger strategy of safeguarding our customers and securing our cash flows,” elaborates Markus Giebel. Customer service, innovation and product and income diversification remain the key factors driving Deyaar’s growth strategy through the crisis.

Growth has also been consolidated with the delivery of undertaken projects. “We have already fulfilled our pledge of delivering seven projects this year. This includes our projects in the UAE as well as our premium residential project in Beirut. We recently handed over The Citadel, the first commercial tower to be operational in the Business Bay neighbourhood,” informs Markus Giebel.

That raises a question of whether deadlines have been kept at the cost of other projects that have been cancelled. Deyaar clarifies that none of its undertaken projects have been cancelled. Flexibility is being exercised to ensure that the company’s customers get what has been promised to them.

By Ambily Vijaykumar As part of Deyaar’s strategy, customers are given the choice to consolidate their units in projects that are likely to witness quicker completion and have superior infrastructure. “We have had to align our resources and revisit our plans in line with market conditions. But

Markus Giebel

we continue to remain committed to our customers and provide them all the support and assistance in this period of transition in the real estate sector,” explains Giebel.

The transition phase has meant that Deyaar employ measures to remain operational cash flow positive. Monitoring and managing cash flows, consolidating strategies on project and customer level, financial modelling to factor different market scenarios, revaluation of future growth strategies, implementation of negotiation teams and diversification of revenue streams are some of the adjustments that the developer has taken to remain successful under the current financial circumstances.

Future strategies encompass an obvious path for developers that include new projects. But Deyaar says there are no new project launches that are planned in the next quarter.

“We are constantly monitoring the market, and if there is potential in the market to absorb more supply, we will definitely consider the op-

portunity,” says Markus Giebel.

Deyaar’s strong position is also reflected by the fact that the developer currently has one of the biggest land banks in Dubai’s premier master planned communities a-position it believes it will be able to make the most of with the signals of a recovery beginning to show.

One of the important steps towards achieving that recovery is also the easing of lending norms by the banking sector. With a strategic partnership with seven of the UAE’s leading banks, Deyaar says it is assisting its customers gain access to the best mortgage financing options.

“From a demand perspective, it is important that the constraints in terms of buyers’ financing begin to ease for price stabilization and transaction volume growth to return. We are already seeing that happen in some segments and projects,” says Markus Giebel.

From a business standpoint, Deyaar has reduced costs on certain projects and also restructured payment schedule on others to help customers faced with the challenge of restrained liquidity. But the reduction, they say, has been “in line with market trends.” These steps have ensured that the company is able to safeguard its customers by stabilizing their cash flows and helping them secure easier access to finance.

Simultaneously, the company aims to lower the risk of defaults and receivables risk by maintaining a healthy cash flow. What this is likely to do is drive new enquiries from investors who are sitting on the fence due to lack of favourable financing options.

“We are starting to see price stabilization in some areas and a potential

uptick in a few neighbourhoods. As an international real estate market, Dubai has some very strong factors in its favour and we continue to be pleased with government initiatives to spur overall spending and confidence in the marketplace,” states Giebel.

Price stabilization is being enabled largely due to the non-existent off-plan market. That has resulted in virtually no speculative pressure on pricing. Negotiating the crisis has been a challenge for the real estate sector at large and Deyaar is no different. To facilitate smooth functioning and to keep projects on track, the developer has divided its entire project portfolio into four categories, each of which comprises 25 per cent of the overall portfolio.

“Twenty five per cent of our portfolio consists of projects under construction. We remain committed to all our projects currently underway.

In fact, we handed over seven projects this year which were in various stages of construction when the impact began to be felt in the local real estate market. However, a portion of our portfolio that consists of unannounced and unsold projects has been temporarily put on hold until the market is ready to absorb more supply,” Giebel elaborates.

The current market scenario however has not deterred Deyaar’s plans that remain “extremely dynamic”. The developer looks at the current phase as an opportunity for the real estate sector to set the foundation for long term sustainable growth. The developer says that it is well positioned to take advantage of emerging opportunities over the next two years.

DUBAI REAL TIMES

The Citadel

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COMMENTS

LED MediaFacade & Architectural Lighting Dubai Real Times spoke to M. Alberto Ramón, Citiled’s Managing Director

Citiled is a company specialized in Concept Design, Consultancy & Supply of LED MediaFacade Systems integrated into Architecture, with offices in Dubai and Paris. From concept design to final handover, Citiled offers: LED Digital Out-Of-Home (OOH) & MediaFacade systems, LED Dynamic Architectural Lighting and LED Landscape & Street Lighting.

DUBAI REAL TIMES

What is a LED?

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LED stands for “Light Emitting Diode”. They are small electronic components that transform electricity into light. Applications of LED are diverse but they are mostly used in the Automotive Industry, for indicators and signs, and for lighting. Amongst all their great advantages, one amazing thing surely is their long lifetime: from 70.000 to 100.000 hours, and over time they don’t switch off: they slowly lose brightness. This electronic light source is also highly efficient because it produces more lumen per Watt than other light source. LED is also a cost effective solution. Its compact size also makes it easy to use and integrate into small spaces, and it can produce more than 16.7 million different colours, which intensity and brightness can be dimmed. Being solid state components that do not contain any mercury, LEDs are more robust and shock resistant than any other light source; the emitted light is directional without needing to use external reflector to collect and direct the light.

Why recommend the LED technology for Lighting?

We are convinced it is the light of the future. First of all, national and

M. Alberto Ramón

international laws already started to forbid the use of traditional light source such as incandescent light Cocor Luxury Store - Bucharest, Romania

bulb, in order to move to more efficient lighting to reduce electricity use and greenhouse gases; and LED is one way of replacement. Also, new standards and regulation for Construction, such as LEED, EHS Green Regulations in Dubai or HQE in France, will automatically push people to look for ecofriendly solutions. All in all, LED supports sustainable architecture and represents the most environmentallyfriendly option: it is non toxic and shows low carbon footprint. For

example, a building’s lighting carbon footprint can be reduced by 70 per cent by changing traditional incandescent bulbs for LED-based lights. It’s also a cost-effective solution in regards to its high efficiency, its long lifespan and the lower cost of maintenance.

Architectural Lighting & MediaFacade LED technology contributes to improve the visibility of iconic real estate projects and creates impact for advertising and strong corporate identities. Citiled’s expertise helps maximize the return for the developer by delivering state-of-the-art

next years, because it is the environmentally-friendly solution for lighting and the more cost effective one too.

Lighting and video systems using LED technology will benefit from this market expansion, as a new architectural material that participate in renewing and giving new dynamics to cities and urban spaces in general.

Citiled is planning on strengthening its presence and growth in the MENA Region and in developing countries. With the delivery of what will be the biggest MediaFacade integrated into a tower (6.000 sqm) in Jeddah (KSA) at the beginning of 2010, we will have proven why we belong here because we are one of the few capable of offering specific and unique design and solutions for Architects, Developers, Lighting Designers, Investors, etc.

architectural projects. Citiled applies its Specific and Unique Know-How to LED MediaFacade Systems integration into likewise unique architectural projects.

Custom Concept & Product Design

Lighting & Video Systems Control A MediaFacade is managed through very simple electronic and computer systems that control the whole installation from one single PC Room. For the operating people, the process is easy-to-use, powerful and flexible. This software tool is custom-made to facilitate every operation for the user. From any type of images and video (Internet, Animations, DVD, etc.) it allows infinite possibilities to coordinate what is displayed on the MediaFacade.

Project Portfolio Our team members have worked on

United Office Tower - Jeddah, KSA

many projects, located all over the globe. Amongst many others: the Agbar Tower in Barcelona (Spain), United Tower in Jeddah (Kingdom of Saudi Arabia), Grand Indonesia in Jakarta (Indonesia), Cocor Luxury Store in Bucharest (Romania), or Monoprix Tower in Paris (France). Citiled maintains a global presence through its Paris Headquarters and the Dubai Regional Branch.

The Company Company founders have been working with the LED technology since 1996. They’ve participated and witnessed the advancements made by this cutting-edge technology.

The range of LED applications have widen in the last decade, going from Industrial to Architectural usage, passing by Lighting and Video Systems. Citiled is made of a team of highly qualified professionals who

bring their expertise and knowledge to participate to the constant development and evolution of the LED technology applied to architectural applications. Since 2006, Citiled has been almost exclusively working on large scale architectural projects, by designing and developing customized lighting and video solutions, street lighting and lighting objects.

“Citiled’s growth strategy of expansion led us to explore new territories, especially in the Middle East & North Africa, and developing countries.

Thus opening a regional branch office Dubai has been a natural development Citiled, as the Middle East is showing a great urban development dedicated to being a cutting-edge, attractive & modern region“.

Plans for the Future The LED market will certainly show a prosperous growth throughout the

Citiled & Cityscape Citiled will be present at the next Cityscape tradeshow in Dubai from 5th to 8th October 2009, in Hall 7, stand 7G30. Cityscape is one of the World’s largest international events dedicated to the real estate industry investment and development. After the success of our presence as Architectural Awards Sponsor during the first edition of Cityscape Saudi Arabia, we decided to continue investing in Cityscape. We would like to take this opportunity to thank Cityscape organizers and team for their great dedication to create and deliver what we believe is a highly demanding and qualitative event in the Real Estate business. Our presence during the show will be a great opportunity for reaching out to our clients and partners with our innovative design concepts and cutting edge solutions.

Digital MediaFacade - View from inside

DUBAI REAL TIMES

Citiled is specialized in customized LED Lighting and Video Systems specifically designed for Architectural purposes. We call it “MediaFacade”, a mix of video imagery with dynamic lighting or “MediaLighting”, fully integrated into the facades of buildings, allowing transparency from the inside and a new skin from the outside. The system is controlled altogether in a coherent and synchronized way. Every kind of image source can be imagined: advertising, video, pictures, graphics, animations, texts, etc. Every single project being unique, we specialize in finding customized solutions in order to obtain the exact result developed through the design phase.

This process enables Citiled to constantly create and offer new cuttingedge and innovative solutions to our clients and partners. For example, we have patented the process of integrating small LEDs in between the two panes of a double-glazed window (Digital MediaFacade 2.0), this solution removes the internal light reflection on the glass and facilitate window cleaning. Citiled is actively participating in the evolution of LED technology applied to Architecture.

As such, it can be considered as a new architectural material.

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COMMENTS

Walking around

The Gallerie

Experts recommend taking 10,000 steps a day to maintain a healthy lifestyle. But as Rachel Jones discovers, taking fitness in one’s stride is easier said than done 8.05am: 297.

8.51am: 748. 9.30am: 1094.

DUBAI REAL TIMES

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hen Limitless, the Dubai-based real estate developer challenged me to take their pedometer test, I thought it would be a piece of cake. But here I am, already half way through the day, yet less than 20 per cent on my way to reaching that all important number: 10,000.

I’ve been wearing my pedometer for five days now. The small, digital device is permanently strapped to my waist, and has become as essential to my daily routine as my Blackberry, vitamin tablet and morning cappuccino. It’s also an obsession, as I check – and check again – the number of steps I’m notching up every couple of minutes.

While I’ve always considered myself to be fairly fit, often taking the stairs instead of the elevator, walking around the office to speak to colleagues instead of emailing someone who sits less than 50 metres away from me, and strolling over to my local shops and restaurants in the evenings, this ‘ped test’ has given me a wake up call. I am, like most Dubai residents, falling way short of the ground I should cover for optimum health.

I’m taking part in this research as part of Limitless’ ongoing study into the walking habits and transport usage of residents in Dubai. The company’s survey of 625 people, includ-

5.15pm: 2194.

Saeed Ahmed Saeed, CEO, Limitless

ing 188 who wore pedometers to track their steps for a week, found that people in the emirate are, on average, walking only half as much as they should, at 5,506 steps at day.

While around half of them make a conscious effort to walk – for better health, to lose weight or to avoid parking problems – one in 20 admits that they never walk anywhere.

Now, you’re probably reading this and thinking “who on earth wants to walk in this heat?”, but I should point out that the study was carried out in March, when temperatures are considerably cooler – so much so that, if you’re anything like me, you seriously consider buying a winter coat.

According to the company, physical inactivity costs economies billions of dollars, as it places enormous strain on health services and causes lost working days through sick leave.

1.04pm: 1526.

The company’s CEO, Saeed Ahmed Saeed, believes that ‘walkable’ communities with carefully planned infrastructure can contribute to a more sustainable society by boosting the economy, improving social lives and reducing harmful emission from cars. It is for this reason that Limitless is promoting social interaction and wellbeing by designing sustainable communities where people can walk in safety and comfort. Its Downtown Jebel Ali (www.downtownjebelali.com) project in Dubai, for example, includes public open spaces, shaded areas and affordable, environmentally-friendly transport alternatives to the car.

The study showed that Asians and Westerners living in Dubai walk the most, at 6687 and 6135 paces a day respectively. Residents of Bur Dubai walk more than people in any other location (6416); and 45 to 60 year olds cover more ground than any other age group, taking 8128 steps daily – almost 3,000 more than the average. Income plays a part too: those paid less than Dh15, 000 a month taking 31 per cent more steps than people earning Dh25, 000 or more.

The Dubai Metro is poised to cut car use significantly: respondents to the survey say that they will give up the car for some journeys and use the Metro instead. Currently, cars outweigh any other form of trans-

7.31pm: 3027. 8.13am: 3624.

port in Dubai, with residents driving, on average, on 24 days each month. In any given week, 80 per cent will use the car, 42 per cent taxis, 20 per cent RTA buses; 14 per cent company-provided transport, eight per cent boat and six per cent bicycle.

But while many are currently walking less than they should, most people in Dubai are keen to step up their walking routine, given the right facilities. Ninety per cent of those questioned say that shaded streets and parks would encourage them to stroll regularly.

Meanwhile, if you’re keen to do more walking but can’t stand the heat, there’s always the air-conditioned comfort of the great indoors.

Dubai’s malls are more than a place to eat, see the latest blockbuster movie or browse the sales, according to residents, who told Limitless than they often visit the mall – for an hour at a time, on average – just to walk. Others strive to reach their daily walking quota by hitting the treadmill. Given my ‘ped test’ track record, averaging just under 5,000 steps a day, I think it’s high time I hit the shops, or the gym, myself ....

Limitless is keen to hear people’s views on walking in Dubai. Comments can be emailed to walking@limitless.com

10.22pm: 4728.

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DUBAI REAL TIMES

COMMUNITY

The blessed month of Ramadan gave Dubaiians an opportunity to reach out to the underprivileged

Charity Time

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ore than 7,000 construction workers in Dubai received a gift in the form of a shoe box filled with personal items, post Ramadan. All due to the charitable efforts of Radisson Blu Hotel, Dubai Media City and organisations like Helping Hands plus key organisations, including TECOM, City 7 TV, Union Papers Mills and Strategic Solutions and DHL. “The campaign team have received just over 7,000 boxes, donations worth a value of Dh875,000, and the momentum from individuals and organisations looks set to continue,” said Pasquale Baiguera, General Manager, Radisson Blu Hotel, Dubai Media City.

“A number of schools showed wonderful enthusiasm with children, faculty and parents joining hands to help us meet the cam-

A shoe box gift for workers contain essential items of daily use. The simple and engaging idea of Shoe Box Appeal mobilises communities in the holy month of Ramadan.

paign target,” said Baiguera. Elle of the Roger and Elle duo at Helping Hands, the organisation behind the concept said that the campaign reaches out to the emirate’s construction workers “who are very much the silent backbone of Dubai’s city infrastructure”. “A simple, smart and engaging idea such is the Shoe Box Appeal shows its ability to mobilise community engagement for a community cause,” she said. The campaign that ran till September 30, 2009 and also marks the annual Responsible Business month for Radisson Blu Hotel, Dubai Media City.

“We want our children to appreciate how fortunate they are, and that they can help make even a small difference to the lives of people less fortunate than themselves in this way. Our children and staff very much shared the spirit

of Ramadan through their efforts,” said Tim Waley, Principal of Raffles International School, West Campus Dubai. The school raised Dh96,000 worth of donation boxes, 800 in total, after they opened for the new school year.

“We are building a sense of community at The Galleries through a series of tenant relations initiatives that encourage new friendships and enhance business relationships. The Ramadan Shoe Box Appeal brought together tenants who have recently moved into the office towers at the development. Between them, they donated scores of boxes,” said Christo Diamandopoulos, Senior Operations Manager at The Galleries. Limitless, the Dubai-based master developer, collected nearly 200 boxes through its tenants at The Galleries at Downtown Jebel Ali.

“We want our children to appreciate how fortunate they are, and that they can help make even a small difference to the lives of people less fortunate than themselves in this way. Our children and staff very much shared the spirit of Ramadan through their efforts”

Ramadan Reminiscences

Summit Heroes Dubai Holding executives raise Dubai Cares banner on Mt Kilimanjaro. During a recent visit to East Africa, executives from Dubai Holding completed a climb of Mt Kilimanjaro, in Eastern Tanzania - the highest mountain on the African continent rising 4,600 m (15,100 ft) from its base for Dubai Cares. Pictured top left-right: Soud Ba’alawi; Cedric Betis; Gerald Lawless; Fadel Al Ali. Bottom leftright: Hashim Al Dabbal; Ali Tabbal; Khalfan Khalfan; Ahmad Bin Byat.

DIFC and City of Arabia teamed up once again for their celebrated Ramadan Majlis at the Emperor Hall located in DIFC District during the Holy Month. Abdulla bin Hamad Bin Sougat, Chief Executive Officer of the DIFC Lifestyle Group, pointed out that the Holy Month of Ramadan is an important time for prayer and reflection for people in the Muslim world. “It is a time to celebrate the generosity and compassion of God with families and friends.

Victory Heights held a Suhour to celebrate the holy month of Ramadan with its homeowners.

The attendance also included Victory Heights team and media representatives. The event was held on 10th of September 2009 at the Els Club.

When losing is winning

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ubai Properties Group (DPG), a member of Dubai Holding concluded a successful eight-week Summer Challenge - a healthy lifestyle campaign that drew participation of about 75 employees in various contests for getting into shape and losing weight. Organised in collaboration with The City Hospital, the first multi-disciplinary hospital at Dubai Healthcare City (DHCC), the Summer Challenge offered complementary weight monitoring and check-ups for blood pressure, body mass index (BMI), and sugar levels.

Conducted by dedicated specialists from The City Hospital, the campaign also ran lectures for

employees while a physical therapist held one-to-one support and counselling sessions. As the Summer Challenge Champion, the first prize winner Jameel Moidheen lost 14.9kg during the two month initiative, dropping 4.3 points on the BMI. The second prize winner Maha Majid lost 6kg, dropping 2.3 points on the BMI, while the third winner Mohamed Ashraf lost 3kg and dropped 1.4 points.

At a gala awards ceremony, senior DPG officials presented the winners with exciting prizes including memberships and vouchers from Fitness First and Healthy Ways.

Fareda Abdullah, Executive Director of Human Capital said: “The

DPG Summer Challenge provided a platform to encourage employees to change their daily routines, eat healthier foods and exercise regularly. Over a short period of time, the programme has registered spectacular results and we are confident more employees will commit to a healthier lifestyle even after the conclusion of the challenge. The challenge initiative helped us endorse a healthy lifestyle and build a positive environment within the organization. It particularly highlighted key workplace qualities such as self-confidence, productivity and constructive attitude.”

The City Hospital is a state-ofthe-art, 210-bed multi-disciplinary

medical institution offering worldclass preventative, primary, secondary, tertiary and even rehabilitative healthcare in a sophisticated ambience.

As a property-oriented business operation and a complete solutions provider, Dubai Properties Group places considerable emphasis on delivering top-notch services to clients. Through partnerships with various management and business excellence organisations, DPG continuously endeavours to support activities that promote the professional growth of its employees as part of a larger objective to contribute to the overall development of the real estate sector in the region.

DUBAI REAL TIMES

Here was one instance when winners were the losers

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FOCUS

Do it yourself

By Hashim Ahmed

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latform, platform, platform.

The world is changing.

Those forward thinking enough to change along with it are also those who stand to make the most gains in the coming years. Few worldwide markets have been as affected by the most recent world revision as Dubai property and, in general, UAE real estate.

It is new services such as for-saleby-owner property platforms which allows buyer and seller to mutually engage, that have sometimes slowed or impeded the process throughout the industry’s history. If the Internet has proved one thing above all others, it is that the ‘Do It Yourself’ mentality is alive and well in the human race. A for-sale-byowner (FSBO) property listing service allowing buyers and sellers to trade was only a matter of time for the maturing UAE real estate market.

For the first time, UAE property owners can now provide individualized attention to buyers or renters, who in turn find themselves more in touch with the entire property buying or renting process. Beeyoot.com is a newly established Dubai-based FSBO property listing service for investors of UAE property.

By introducing a direct conduit between buyer and seller for the UAE property market, both sides can now achieve balance and unrivaled benefit. FSBO real estate listing platforms serves the interests of both parties best. On one side, using a direct channel to buy, sell or rent, saves buyers from paying commission or agency fees. On the other side, property sellers enjoy dealing directly with buyers, encouraging them to freely ask questions and negotiate. The transparent nature

of this new online relationship leads to a gain in efficiency and greatly reduces the time it takes to close a deal.

An overwhelming percentage of property buyers and sellers, landlords and tenants, in the UAE still choose to hire a broker to navigate the transaction. Just as developers use escrow companies, buyers and sellers will continue to employ the use of third party services to ensure everyone’s needs are being met and no one is being taken advantage of.

Of course, no great change can happen overnight. Evolution takes time and while the company’s FSBO platform may be well ahead of the curve in the region; there will certainly be a multitude of real estate investors who will be far too slow to catch up, handling their real estate portfolio in the old outdated ways and missing the beauty of using a FSBO online marketplace, where agents, buyers, sellers, and suppliers can all coexist in capitalistic harmony - such as in matured real

unfounded. FSBO platforms follow every law. The only difference is that the needs of the buyer and seller are being put first.

One comparable model that is starting to see its share of success as a bold proclamation of things to come is the Home Owners Association. Introduced by Dubai’s RERA, it endeavours to place the power directly into homeowner’s hands rather than dispersing it amongst parties who hold only temporary interest in the transaction. These efforts are

Those who will now embrace a FSBO channel for their property selling or renting process will get the best of both worlds!

FSBOs are based on the following premise: The more buyers and sellers who join, the more robust the community. More properties listed means more buyers looking. More buyers looking means that there will be a multiplicity of sellers more than willing to list property using a FSBO channel such as UAE’s Beeyoot.com

estate markets using Multiple Listing Services (MLS).

The Dubai real estate community is slowly discovering that buyers and sellers can function independently with fantastic results. Property owners using Beeyoot’s FSBO platform are already benefitting from RERA registered brokers who frequent the platform to contact owners when they have buyers or renters. Any concern over the legalities or safety of such transactions are completely

helping to make buying, owning and maintaining property in the UAE much easier, less expensive, and most importantly, excitingly transparent.

Progress can’t be stopped, and there is no doubt advancements are now knocking on the recovering UAE real estate industry’s door.

Hashim Ahmed is the Managing Director of Beeyoot.com. He can be reached at hashim@beeyoot.com

INTERVIEW

Time-share boom soon Schon Properties believes that Dubai’s location and infrastructure makes it an ideal destination for the time-share concept to take shape

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acked by the financial soundness of its two billion dollar parent company, Schon Properties (SP) says that it is well placed to sail through the crisis. The developer that is behind projects like the Dubai Lagoon, Schon Business Park and Schon Residences, among others, says that a majority of their portfolio has been sold out.

Danial H Schon, Vice President, Schon Properties informs that the handover for the first 500 apartments at the Dubai Lagoons project will begin by the end of this year or early next year. Dubai Lagoons has a total of 49 buildings and is in line with the “vision of Schon Properties to provide affordable housing to residents of Dubai,” says Danial.

A key feature of the project is a building zoned for ‘time share’, a concept that SP says is the future. “I see a big time share boom coming into Dubai in the next three to five years because Dubai is a very good holiday destination,” says Danial.

Explaining the concept futher, Danial says, “for example, if a person pays Dh50,000-55,000 over two years, he gets a right to use the property at the Dubai Lagoons for one week every year for the next forty years.”

If the person does not want to come to Dubai, Schon properties can rent that property out for the buyer or even switch places depending upon a person’s choice of destination. This gives the person an opportunity to holiday all over the globe, “for a very reasonable

Danial H Schon

cost.”

Apart from this concept, the developer has six projects currently on its plate. Out of it about 80 per cent is centered on residential projects. But why the tilt towards residential projects?

“We saw a big opportunity in the affordable residential projects.

With land prices dramatically escalating here in 2008, it directly reflected on the pricing of property.

It was very difficult to sell something at Dh700 per sq foot,” elaborates Danial.

So did Schon Properties have to slash their property rates in order to be able to find buyers? “We haven’t reduced prices to find buyers. We have actually started receiving calls

recently, because there is a metro station next to Dubai Lagoons. I believe in the future, locations close to the metro will have one and a half times the value of the ones that aren’t,” states Danial.

The company says it has been “sitting with customers for price revisions so that things can return to a more realistic level.” A reality check has also meant that the company is now prioritising construction and delivery of its projects.

With construction costs coming down, customers are also demanding discounts. The company has cut overheads. It is awaiting the land handover for one of its forthcoming projects called Signet, which is expected to kickstart in a couple of months.

With Dubai’s central location, a lot of investors showed keen interest in owning a hotel, but did not have the necessary finances. About 300 investors were assembled under the Schon Suites umbrella to construct a hotel that will have investors getting returns while sharing profit with Schon Properties who will also undertake the task of managing the hotel.

Dubai’s celebrity status during the real estate boom also affected

“We have actually started receiving calls recently, because there is a metro station next to Dubai Lagoons”

it adversely with desperate sellers spoiling the game and dragging down rates drastically. But now things are beginning to look up believes Schon.

“The clean up was essential and this has resulted in genuine business people staying behind. So the next time you meet people on a professional level, you know they are the ones who have stood by during the tough times and are not going to abandon and leave the place,” says Danial.

The company says that the clean-up has largely been the result of RERA enforcing strict regulations with regard to property ownerships whether it is the developer, broker or end user. The cracking of the whip was essential, says Schon with speculators damaging the market.

So was the company adversely affected by these speculators?

“That has been one of the plus points for us. When we launched, we targeted end-users and we got them. Though investors did buy from us, they sold it to end-users.

We had a very small percentage of investors to begin with,” Danial explains.

The future, says the company, lies in the affordable housing segment of which there is a huge scarcity. Schon Properties is buying land in Dubai to launch affordable housing projects when the market picks up. With the ready property market already picking up and prices beginning to rise, Schon Properties says it is time to be realistic as far as growth is concerned.

DUBAI REAL TIMES

By Ambily Vijaykumar

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FOCUS

Jumeriah Lakes, Jumeirah Lakes Towers and Dubai Marina

JLT Free Zone simplifies licensing procedures

DUBAI REAL TIMES

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umeirah Lakes Towers is a dynamic waterfront community, encompassing attractive residential and office towers alongside hotels, leisure and retail outlets. A total of 87 towers will stand tall in this prestigious project, with 78 of them clustered in groups of three alongside beautifully landscaped gardens and unique waterways. Four winding, man-made lakes, stretching to approximately 179,000 square metres create a vibrant waterfront environment. Situated along the Sheikh Zayed Road between interchange 5 and 5.5, with 34 completed towers, 1700 companies and more than 10,000 residents, JLT is becoming the community of choice for residents and businesses alike.

The upcoming 200 acre mixeduse, real estate development, is fully owned by the Dubai Multi Commodities Centre Authority. JLT was conceptualised with the intention

to fulfill DMCC’s mandate to provide the physical infrastructure for businesses wishing to set up offices in Dubai, covering a wide range of commercial activities. Accordingly it has been designed as a free zone freehold community and offers all related services to its ever increasing population.

JLT was conceived with the idea of meeting the demands of the 21st Century urban professional’s living and working environment.

Ahmed bin Sulayem, Executive Chairman DMCC, talks about the development of JLT as a free zone as well as its impact on the Dubai economy.

How has the vision of JLT unfolded over the past few years?

JLT was envisioned as a unique waterfront master development, nurturing both trade and community living. It is a novel mixed-use free

zone, offering both freehold property and leasing options. Already home to 1,700 companies and more that 10,000 residents in 34 towers, including 18 residential towers, JLT is progressing fast and on track for completion in mid-2012. Upon completion, 87 skyscrapers will

ply for a trade licence in order to set up within the JLT Free zone?

As the regulatory body for JLT, which is within the Dubai Multi Commodities Centre (DMCC) Free Zone, the Dubai Multi Commodity Centre Authority (DMCCA) is the official licensing authority. We offer two types of

“JLT offers something unique to every audience, be it trade or individuals. For many, it offers quick and efficient licensing procedures that we have in place, coupled with the solid regulation that DMCCA provides” reach for the sky in this prestigious development located in New Dubai alongside Sheikh Zayed Road interchange no. 5.

What kind of companies can ap-

licences. One is specifically for the commodities sector (DMCC License) and the other is for a wide range of commercial activities (JLT License).

Although initially JLT was a company in the commodities industry, today

Dubai already has quite a number of established free zones.

What additional appeal does JLT have for commercial entities?

JLT offers something unique to every audience, be it trade or individuals. For many, it offers quick and efficient licensing procedures that we have in place, coupled with the solid regulation that DMCCA provides.

For others, it the ability to buy freehold property or lease office space from the open secondary market here in JLT at very competitive prices. As JLT offers both residential and commercial developments within the free zone, employees can locate where there is no commute. Strategically located between old and new Dubai, JLT's location is one of its biggest appeals.

Given the current economic climate, have you simplified your licensing procedures to attract companies to set up in JLT? Yes we have made our licensing process as efficient as possible while still maintaining high standards of regulation and compliance. Recently, we have implemented several new internal procedures, reducing the number of documents required when applying for a JLT license. The process is now simpler and faster for everyone with the initial stage being completed within a few days.

Our team of licensing officers ensure that the majority of licences are processed within a couple of weeks, and even faster if we have all the required documentation in order from the start. On an ongoing basis, we review our processes at every stage in order to improve

efficiency.

What does the JLT location offer companies and residents considering moving to the development?

From a community level, the towers within this master community are strategically situated to give breathtaking panoramic views of not only JLT but the surrounding area which includes Dubai Marina, Jumeirah Beach and Islands, and Emirates Hills all at the same time. JLT is the only community to offer such prime views including that of our flagship Almas Tower, which at 65 stories is the tallest, exclusive business tower in Dubai. Easy accessibility and the transportation infrastructure are key benefits. JLT has two entrances, direct access to the Sheikh Zayed Road, overpass and walkways to the Marina, and two dedicated metro stations. A vast amount of office space and residential space together make it an excellent area to live, work and invest in. We are the only master community currently to deliver such extensive benefits and amenities within a single community offering freehold and free zone options.

With so many companies now moving into JLT and completing fit outs, the whole free zone is taking shape and becoming a hive of business activity. JLT is about providing a community that caters for both businesses and residents, where people can work, relax and live their lives with all the necessary amenities.

There is some ongoing construction; however at least 50 of the proposed 87 towers will be completed and fully operational by the end of 2009. Currently, 34 towers are completed including 18 residential towers and nine office towers in addition to five towers that are residential-cum-offices. The remaining two completed towers include a hotel and hotel apartments.

With one of the lakes already full, we look forward to the next, with all four of the proposed lakes expected to be completed by mid 2010. Lake Zafeer– the first lake – was filled in early 2009 and the second is on track for completion early next year.

Lake Zafeer at JLT

“The process is now simpler and faster for everyone with the initial stage being completed within a few days. Our team of licensing officers ensure that the majority of licences are processed within a couple of weeks, and even faster if we have all the required documentation in order from the start”

The last to be filled will be Almas East and West and these will complete JLT’s water-front community.

How is JLT contributing to the development and economy of Dubai?

The JLT Free Zone was established in 2006 and today we have over 1,700 companies operating under DMCC and JLT licences and bringing with them multi-billion

dollar foreign investments. Since inception, JLT has witnessed significant changes and is now busy growing into a mixed use community, where well over 10,000 residents currently live and work. Of course JLT has the distinction of being the first mixeduse free zone in Dubai, offering both freehold as well as leasehold property options. Today we are working towards completion of our develop-

DUBAI REAL TIMES

there are several hundred licensed companies from a large cross-section of commercial entities, including trading, manufacturing and service industries located within JLT. This includes energy, media, property, electronics, shipping, IT solutions, consultancy and architectural concerns, among others. Despite the current economic conditions, we continue to receive a growing number of inquiries from a broad spectrum of companies that look at making JLT integral to their strategic plans and future activities.

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Additional information and background JLT FREE ZONE BENEFITS 100% Corporate Tax exemption 100% Import and Export Tax exemption 100% Personal Income Tax exemption 100% Freehold property available for purchase as well as leasing Licences available for a wide variety of business activities (JLT/DMCC)

INVESTMENT INCENTIVES: 100% Foreign Company ownership 100% Repatriation of capital and profits 100% Freehold property ownership No customs duty No currency restrictions ment and taking on the challenges that this exceptional combination of mixed uses has brought to us as the Master Developer (DMCCA).

The cluster effect that JLT provides gives a huge boost to other local and regional industries such as transportation, import/export, construction, consumables, telecommunications, and many other service providers. Free zones play a vital role in the economy of Dubai and we put a huge amount of effort into attracting companies from around the world who inevitably invest in Dubai and bring with them not only investment but great

knowledge and experience across all sectors of business.

Dubai’s strong trading heritage, it is well established port and logistical infrastructure, as well as its geographical location and being a significant gateway for many commodities into the surrounding region make Dubai the ideal location for a huge variety of businesses involved directly or indirectly with trading. DMCC is well known for providing the infrastructure and prime location for many of these companies and we pride ourselves on having created a regional trading hub here at JLT.

Almas tower

TYPES OF COMPANIES:

REGISTRATION PROCESS:

A wide range of business activities can be licensed (NOT just commodities)

Fill in and sign a ‘Know Your Client’ form

Minimum share capital of Dh300, 000 (JLT) Dh 200,000 (DMCC) (This is only held for a short period in your own company account)

Provide Passport copies of shareholders

Branch, Subsidiary and New Company set up available

Call us on 8003622

Sole shareholders also allowed

Decide on a Company name

DUBAI REAL TIMES

Major companies in JLT

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KPMG Lower Gulf Limited (Branch)

Oaks Hotels & Resorts JLT

Rosy Blue DMCC

Itera

Emirates NBD

The House of Cakes Bakery FZCO (JLT Branch)

Emirates Shipping Line (LLC) (JLT Branch)

Trafigura Beheer

Total

Rockwell Group Middle East JLT

Arcos East DMCC

Sucden Middle East

Bylaw Consultants JLT

Vitol Euroasia DMCC

Antwerp Diamond Bank Asia Pacific Ltd (Branch)

Noble Resources Pte Ltd

Serene Consultancy JLT

National Bank RAK

RWE Supply & Trading GmbH

LNG Impel

Convergent Media JLT

Sinopec

Petronas

EcoSecurities Middle East DMCC

Viacom ME JLT

Compass Ocean Logistics LLC

Christie’s

Dome International Petroleum

Praxis Solutions JLT

Vela International Marine Limited (Saudi Aramco) Xstrata Commodities Middle East DMCC

PTT International Trading DMCC (Thai national oil company),

Cargill Middle East

Reliance Engineering (Middle East) DMCC Orion Corp.

Reef Real Estate Investment Co L.L.C (Branch)

Damas Vault DMCC

Perfetti Van Melle Middle East (Branch)

Conoco Phillips International Trading PTE. LTD

Emirates Gold DMCC

Schweger Associated Architects GmbH (Branch)

Fitness First

SCG Polymers Vopak Middle East Hakan Lukoil

Scan-Trans Shipping DMCC Clarkson Posco Steel & Alloys DMCC Stemcor Mesa DMCC

FOCUS

Building safely

DUBAI REAL TIMES

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uild Safe UAE is a not-forprofit organisation aimed at improving the health, safety and welfare conditions of all construction industry stakeholders through the free exchange and sharing of information between organisations working in the UAE. By encouraging companies to pool information it hopes to prevent accidents by raising awareness and communicating potential dangers and lessons learnt throughout the industry.

Build Safe UAE consists of a number of major (international and local) developers, contractors, consultants, project managers and service organisations of the UAE donstruction industry who have agreed to share their ‘Best Practice Safety Information’ in the forms of risk assessments, safe working methods, safety presentations, safety alerts, tool box

talks, best practice case studies, etc. for the greater good of the whole industry in an effort to improve the general standard of health, safety and welfare across the UAE. By sharing experiences the group hopes to demonstrate that accidents are preventable and that safety is ethically “the right thing to do” and business-wise “the smart thing to

Build Safe UAE recorded eight out of 20 fatalities and 81 lost time injuries relating to falls from height

do”.

In 2008, Build Safe UAE recorded eight out of 20 fatalities and 81 lost time injuries relating to falls from height. This number of fatalities & LTI’s indicates a huge scope for improvement. Unfortunately the causes for these types of incidents are not new to the industry and clearly more needs to be done. A considerable amount of these accidents could have been prevented if the proper standards of practice were implemented.

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DUBAI REAL TIMES

FOCUS

Improvise to excel

Landscaping work at Algeria Road

It is time for survival of the fittest and the cleverest at innovation

DUBAI REAL TIMES

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otun Paints one of the world’s leading paint manufacturers, in the Middle East since 1974 unveiled its new website for the Middle East calling it ‘Lady’ (http://lady.jotun.com).

The Lady was born due the company’s online initiative that aims to enhance service levels for women customers in the region. She is the company’s interior paint brand, targeting modern day women, in the Middle East.

Designed as an interactive portal, the website provides users with advice on colour psychology and tips to decorate their homes and is inspired by the active role of women in home decoration. Currently available in English and soon to be launched in Arabic, the website links to ‘Colour Advisor’, the company’s revolutionary, easy-to-use online colour visualisation tool that lets users enjoy a more realistic experience through the extended interactivity and accessibility to more colours, thereby enabling them to make better planning and painting decisions.

“In addition to the new website, we have also invested in events and seminars - including the ‘Lady Essentials’ workshop, as part of our commitment to raise awareness among women end-users in the region-the most recent being in partnership with the Dubai Ladies Club, focused on educating women on colour psychology, colour trends and painting techniques,” states Eirik Kristensen, Regional Marketing Manager - MENA, Jotun Paints.

In terms of the steel fabrications industry, Fabtech International

the largest oil rig in the world. In 2007 it built the first three dimensional bridge in the world for Abu Dhabi. Fabtech is currently engaged in number of innovative projects in aviation and other process industries and is confident of maintaining the pace of its growth in 2009 as well.

In the rubber industry, average price of rubber raw material prices have shot up by 15 per cent in 2009 as per Rubber World Industries (RWI), the leading manufacturer of closed-cell rubber insulation ‘GulfO-flex’ in the Gulf and South-East Asia. Amidst the upward movement Eirik Kristensen of global prices, RWI, which accounts for 86 per cent of the Middle East Limited, one of the largest and rubber insulation market share, has most technically advanced steel committed to maintain its prices and fabricators in the world, has posted 24 per cent growth in its revenue in 2008 despite difficult market conditions. “Our outstanding engineering capabilities and commitment to deliver efficient solutions to our clients have helped us achieve double digit growth even this year when the industrial engineering sector is going through a tough time,” says Dr. Harry Moreas, Chairman, Fabtech.

Fabtech added one more feather to its portfolio of achievements, when in 2008 it built and delivered the world’s biggest Kangaroo crane to Qatar Petroleum. Established in Abu Baker Shaikhani 1995 in Jafza, in less than fourteen years of its operation, the company ensure sufficient supply of rubber inhas seen more than 10, fold growth sulation products across the region, in its revenue and 20, fold growth in including pipes, sheets and other rubber-derived products. Also three its facilities.

In the last thirteen years Fabtech of the largest rubber producers in has brought many firsts to the re- Southeast Asia - Thailand, Malaysia gion. It built the first high power and Indonesia, agreed to cut down oil rig in 1997. In 2005 Fabtech built their exports to push up the export

price. Rubber producers and exporters have also decided to cut down output, which could translate to a 6.2 per cent drop in world rubber production in 2009 to hit 9.36 million tone. Amidst increasing global rubber raw materials prices, RWI maintains a positive outlook on the regional market taking pioneering efforts to enhance its processes and production capacity.

“Amid present challenges, we are strengthening our efforts to increase our production by 600 containers to sufficiently address the need for rubber insulation products in the region,” said Abu Baker Shaikhani, Managing Director, Rubber World Industries, and Chairman of the Memon Group.

Eng Hussain Nasser Lootah, Director, General of Dubai Municipality, reviewed the plantation projects of main roads in Dubai at a meeting with the Plantation Committee of Dubai and its projects include planting trees on various roads such as Bab Al Shams, Baghdad, Algeria, Tunis and Al Aweer Roads.

Lootah also issued instructions to landscape Al Khawaneej Road and reviewed steps taken to implement greenery projects at road junctions, especially the Ras Al Khor and Wafi junctions. Following a presentation on landscaping projects in the Hatta area, Lootah stressed the importance of beautifying and landscaping the city’s roundabouts using the latest aesthetic agricultural designs and issued directives to landscape the area surrounding the dump in Bayada and to set up a water tank to irrigate the trees and plants in the area.

R-serviced offices Offices that will revolutionise real estate business

By Abhishek Chandra

Sheikh Ahmed Mohammed Zayed Saqer Al Nahyan,

offices are the most cost effective way to create an instant Dubai office. The monthly rent for R-Serviced Offices ranges from Dh8000 to Dh10, 000 and includes a wide range of benefits such as use of

common areas like reception, business lounge, service areas and receptionist services.

Ian Lloyd, Chief Executive of RServiced Offices, explains, “These offices are the perfect option for companies today as they look to reduce costs. It is a protracted and expensive process to search for office space, negotiate a lease agreement, purchase the office equipment and hire highly trained support staff. With R-Serviced Offices, companies can avoid excessive upfront expenses of opening an office, not tied to long leases and do not incur service charges.

And save on furniture, fittings, staffing and monthly rent. In addition, it allows business owners to access

all of the benefits of being in the DMCC Free Zone.”

There is no additional service charge for air-conditioning, lighting, water, full-time security and electricity. The rent also includes dedicated local DID telephone and local fax number assigned to each workstation, secure dedicated V LAN Segment for each company’s exclusive use, CAT 6 Structured Ethernet connectivity and high-speed intelligent network switching and secure firewall functionality. Other attractions include: complimentary tea, coffee and water for clients and visitors, a dedicated post office box and mail sorting service, daily newspapers (English and Arabic), office maintenance and daily housekeeping.

Serviced offices hold a huge potential for growth as companies seek to become more efficient and flexible in their use of space

DUBAI REAL TIMES

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ccording to business analysts, there is a strong demand for serviced offices amid the economic downturn. Demand comes from new local companies, downsizing firms or overseas groups wanting to set up branch offices in Dubai.

Serviced offices at the newly constructed Reef Tower, located at DMCC, was inaugurated by Sheikh Ahmed Mohammed Zayed Saqer Al Nahyan in August. These offices will revolutionise real estate business in the future as they offer several added benefits compared to conventional offices.

As Sheikh Ahmed affirms, “serviced offices hold a huge potential for growth as companies seek to become more efficient and flexible in their use of space.

A recent report by Reuters confirms that Dubai is the second most expensive office market in the Europe, Middle East and Africa (EMEA) region. In such a scenario, serviced

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STOP WONDERING, START KNOWING

UNDER CONSTRUCTION

45 per cent of Gulf projects are in UAE Dubai-based developer reiterates support for the country's building industry

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orty-five per cent of projects planned in the Gulf, which have a total value of $930 billion, are currently under construction in the UAE, according to recently published reports, thereby asserting the country’s leading position in terms of developments and project activity in the region. Forming part of the massive bulk of construction projects in the UAE is the Dh1.34 billion project portfolio of Memon Investments among which there are high profile developments within sought-after communities, including luxury residential projects ‘Champions Towers’ series, ‘Gardenia I & II’, and ‘Frankfurt Sports Tower I’; as well as its inaugural commercial tower - ‘Cambridge Business Centre’ (CBC).

The study further revealed that despite the economic slowdown, the value of property construction is four times higher than what had been estimated in June 2005 and represents an annual growth rate of nearly 50

per cent. In addition, some 81 per cent of the UAE projects are in the construction sector, which indicate that the country has overtaken all GCC states in terms of total value of projects. Amidst ongoing prospects within the construction industry, which is witnessing early signs of recovery, Memon Investments is committed to the ongoing construction of its projects, encouraged by the relatively lower costs of construction, in an attempt

to ensure timely delivery and customer satisfaction.

“The strong standing of the UAE in the construction market is an indicator of the capacity of developers of locally-based projects to proceed with the construction of launched projects amidst the challenges presented by the economic slump,” said Ahmed Shaikhani, Managing Director, Memon Investments. “As one of the leading players in the Dubai property market, we lever-

age our extensive industry expertise and strong financial backing, thereby enabling us to proceed with unhindered construction works on our flagship projects.”

Construction on the four towers under the ‘Champions Tower’ (CT) banner are progressing at an impressive pace, with various important contracts already been awarded to a number of top contractors, including leading MEP companies as well as companies that specialise in elevator and air-conditioner installation.

Moreover, construction of eight of the 10 floors within CBC has been completed, with initial steps already being made in preparation for the scheduled handover of the project to investors by the fourth quarter of 2009. The company also previously announced that it is fast-tracking the construction of ‘Gardenia I & II’ and ‘Frankfurt Sports Tower I’, in line with aims to hit their respective delivery deadlines.

H

ircon LLC unveiled its iconic residential project, 23 Marina’s first, fully-fitted show apartment on September 30. Working with leading interior design specialists, Best Interiors and contemporary furniture specialists, nuvo.

Speaking on the announcement, Manish Bhatia, Director of Sales and Marketing, Hircon International, said: “We have chosen the best-in-class partners to work with. Both nuvo and Best Interiors have the expertise to provide a world-class interior.”

Two types of show apartments were unveiled. A fully furnished 3-

bedroom apartment and a 2- bedroom unfurnished unit. The furnished apartment will be equipped with Smart Home technology, supplied by Crestron, the world’s renowned advanced home automation system.

According to Alkesh Tandon, Owner, Best Interiors, “We are excited with the opportunity to lend our expertise in designing the interior of the show apartment. The space, view and floor-to-ceiling windows provide us with an inspiring base to work from.” nuvo will provide furniture carefully selected and flown in from Italy.

Commenting on this, Girish Mahtani, General Manager, nuvo said: “We hope to create a sense of comfortable living and warmth through the

combination of our contemporary furniture and customised materials” The 380-metre tall 23 Marina tower boasts 48 duplex apartments offering a new level of residential opulence.

Each of these duplex apartments is located on the top 24 floors with its own private plunge pool with Jacuzzi and internal elevator, setting a new hallmark of excellence, with an area of around 5,782 square feet, each duplex is a hanging villa.

DUBAI REAL TIMES

23 Marina set to debut world-class show apartment

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DUBAI REAL TIMES

48 For more information dial +9714-2221112 Or mail us at info@rera.gov.ae

www.rpdubai.com

HANDOVER

Le Grand Chateau ahead of 2010 deadline Developer is first to deliver in Jumeirah Village

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key solutions as a truly integrated construction group in the UAE, we believe that we have positioned ourselves as a real estate provider of choice to customers that seek solid investment solutions.”

In line with its commitment to provide excellent care to its investors, the Al Fara’a Group has provided LGC investors access to flexible financing options for the project through Abu Dhabi Commercial Bank (ADCB). Furthermore, the Group has also recently launched a facilities management division, which will help in optimising the costs of maintenance and ensuring the longevity of investments, whether it be through well maintained facilities or stretching the maintenance pool fund as far as possible. As an additional value-add, Al Fara’a Properties has partnered with Al Huzaifa Furniture to bring occupants a range of décor ideas centered on classic Italian furniture in a contemporary modern setting. LGC tenants are also offered special rates on the leading furniture company’s latest collection and its turnkey interior design services such as design consultancy, concept designing and custom interior solutions.

“We are committed to exceeding the expectations of our clients throughout the value chain, whether in terms of providing the right solutions for their needs or actively ensuring the sustained value of their investment. We remain steadfast in our belief that swift, efficient and timely handover of projects is as important as the value of investment driven by construction quality and facilities offered. We will continue to apply these standards to The Manhattan’, and ‘Mulberry Mansions’ projects in Jumeirah Village, and bolster the investments of our clients through our recently launched facilities management division within the Al Fara’a Group, which will assume full responsibility for the care and security of the project to ensure the quality of the building is well maintained at the most acceptable cost and value,” concluded Natasha Gangaramani, Director, Al Fara’a Properties.

In addition to LGC, Al Fara’a Properties has two other luxury residential projects within Jumeirah Village - the ‘The Manhattan’, and the ‘Mulberry Mansions’. Inspired by the urban residences of 1930’s New York, ‘The Manhattan’ will offer 355 units,

which comprise a selection of studio, one-, two-, and three-bedrooms apartments; while ‘Mulberry Mansions’ will provide 12 Victorianstyled two-storey townhouses, incorporating four bedrooms, a private two-car garage, a terrace, a balcony, maid’s room with separate access, and a small private garden.

Al Fara’a Construction, Property and Industrial Group Al Fara’a Construction, Property and Industrial Group has a solid track record of three decades. It is a conglomerate of leading business entities including Al Fara’a General Contracting, Unibeton, Belgium Aluminium and Glass and Al Sabbah Electro Mechanical.

Unibeton is the market leader in ready mix concrete, and it recently created history by pouring a record 22,000 m3. of concrete in less than 35 hours at Al Attar Sky Spiral, Dubai. Belgium Aluminium and Glass is UAE’s largest service provider for the fabrication and installation of aluminium and glazed structures and decorative metal work.

Other business entities of Al Fara’a Group deal in contracting, precast, joinery, and steel structure, covering the entire domain of the construction industry.

DUBAI REAL TIMES

l Fara’a Properties, a member of the Al Fara’a Construction, Property and Industrial Group, has announced that the handover of units within its Dh225 million inaugural residential development - ‘Le Grand Chateau’ (LGC) is complete, well ahead of the 2010 deadline set for the project’s delivery. The announcement also coincides with the welcoming of the first batch of tenants moving into the high profile development, which is the first project to be completed in Jumeirah Village. As a testament to the developer’s achievement in adopting top quality construction standards and in affirming the competitiveness of Dubai-based developments among other landmark projects across the Gulf region, LGC has bagged the ‘Best Development’ award at the CNBC Arabian Property Awards 2008.

Located at the heart of Jumeirah Village, Le Grand Chateau draws inspiration from the architecture of the 16th century Chateaux of the Loire Valley in France. The development comprises 15 luxurious fourbedroom G+2 townhouses and a residential block with a combined total of 185 apartments. In addition to its impressive design, all aspects of the project - from furniture to lighting - have been carefully selected and blended to uphold the highest standards.

“We are thrilled to be the first developer to deliver a project in Jumeirah Village, ahead of our 2010 scheduled completion date,” said Dr JR Gangaramani, President and Executive Chairman, Al Fara’a Construction, Property and Industrial Group. ”Through maximising our ability to deliver world-class turn-

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INFRASTRUCTURE

Utilities consider unbundling to increase efficiency A. T. Kearney reviews sector opportunities

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.T. Kearney, a leading management consulting firm, recently reviewed electricity regulation in the Middle East and North Africa (MENA) and the discussions concerning unbundling, separating electricity supply from networks.

Unbundling is expected to be a key facilitator for competition through discriminatory-free network access for third parties, and thus lead to efficiency gains. The A.T. Kearney review however, showed that in most cases the expectations towards unbundling are unrealistic and requirements of the regulators are not defined.

Electricity across the MENA region is highly subsidised by the various governments at 30 to 50 per cent. In recent years however, these governments have looked for ways to lower those subsidies. Utilities companies have added surcharges to customer bills to manage the extra costs, as there were no other means of compensation or ways for improving efficiency.

“The defining element of an ownership unbundling model is

Dr. Goetz Wehberg

that the network of electricity transmission is operated and owned by one independent company, which clarifies the incentives, responsibilities and liabilities for the network, but unbundling does not necessarily mean lower tariffs”, said Dr. Dirk Buchta, Managing Director of A.T. Kearney Middle East.

National strategies on development of electricity markets in MENA vary considerably from country to country due to different national constraints. However, unbundling is

seen as one way of improving efficiencies without tariffs becoming so unrealistic that they might threaten the sustainability of the power grid.

“Unbundling the right way can provide significant opportunities for MENA countries”, said Dr. Goetz Wehberg, Leader of A.T. Kearney`s Utilities Practice in the Middle East.

Many regulators think of the United Kingdom as a role model for unbundling. Due to the ownership unbundling and demand regulation the electricity market in the UK is highly sophisticated in terms of pricing and customer fluctuation, with churn rates up to 15 per cent per year. However having the strongest competition does not necessarily mean a positive economic impact.

“The UK has suffered from its tough regulation. Shortages in generation capacity have led to an increasing number of outages in the past years. The fierce competition has reduced the capitalisation of the utility companies. As a consequence, international companies were invited to take over. Last year for example, Electricité De France (EDF) acquired British Energy to help

invest in generation capacity such as new nuclear power plants,” commented Dr. Wehberg.

Examples from Europe and the US show that an appropriate regulation is of utmost importance when it comes to developing the utilities sector and creating regional champions.

Electricité De France (EDF) for example, has become a leader in nuclear energy in Europe over the past years.

The company is sufficiently capitalised to finance more than $60 billion for new nuclear plants over the next years and maintain safety standards at the highest level. EDF has gone through a moderate unbundling process, consolidating its transmission network through its subsidiary Réseau de Transport d’Electricité (RTE).

“For MENA countries, we recommend a step-by-step unbundling process, because of the strong growth of electricity demand of three to six per cent annually. Regulators in MENA have to make sure that clear responsibilities for balancing supply and demand are maintained within the incumbent companies, despite of unbundling,” concluded Dr. Wehberg.

DUBAI REAL TIMES

Omniyat awards main construction contract of Gemini Tower

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O

mniyat has awarded the main construction contract to build The Gemini Tower to China State Construction Engineering Corporation (CSCEC).

“Having recently celebrated the handover of our two premium developments, Bayswater and The Square, we are delighted to move forward with yet another milestone and partner with CSCEC for the main construction of the Gemini,” said Mehdi Amjad, Chairman and

CEO of Omniyat Properties.

CSCEC is one of the world’s largest and most successful international contractors. They have worked on many major projects around the globe receiving numerous awards for on-time delivery of projects while also adhering to the most stringent quality standards.

Omniyat confirmed that the enabling work by Al Habtoor STFA Soil Group (HSSG) has been completed and the site has been

handed over.

Planned and designed by ARCIF Local German Joint Venture, The Gemini will house freehold offices, serviced offices, retail, a ‘Car Spa’ to provide basic car services, as well as a roof garden and fine dining restaurants set in a landscaped terrace overlooking the creek. It is easily accessible using any mode of transportation, by car, public transport with the Dubai Metro or even by water-taxi as the main jetty is only a few minutes away.

Gemini Tower

INTERVIEW

Conveyancing services

Carla Polkinhorn, Counsel & Senior EnTrustee asked her boss, CEO and Founder Aziz Valliani, about the company and its future plans.

Aziz Valliani, CEO & Founder, EnTrust

DUBAI REAL TIMES

Q. Aziz, tell me about your company, enTrust & Title?

A. enTrust & Title is a neutral third party company that provides Escrow Settlement & Title Conveyance Services. At the written instructions of both parties, whether it is buyer/seller or landlord/tenant, it ensures that all the elements including any missing facets of the transaction are performed as per the sales purchase agreement, MOU or rental contract. It eliminates complications and provides safety, security, speed and simplicity in facilitating closing for all the participants in a transaction.

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Q. What does neutral third party mean? Do you represent the buyers or the sellers or the landlord or the tenant?

A. Our company takes instructions that buyers/sellers & tenants /landlords have agreed upon and we ensure that those instructions are complied with. By not just representing one party, we minimise any risks of disputes, loss of deposits, unnecessary accumulation of interest on loans and any surprises related to fees and commissions. We provide full accounting of funds received in escrow and its disbursements with the approval of principals in the transaction. If a dispute arises during the transaction, the parties must come to a new agreement so neither party believes they have an upper hand.

Q. How does using an escrow help in real estate transactions?

A. When a client decides to employ our services, the earnest money deposit, transfer fees, commissions and funds to complete the transaction are held in our insured escrow account. This avoids an unscrupulous party

running away with the funds. Only upon the successful transfer of the property from the seller to the buyer are the escrowed funds released to the seller. Or in the case of rental transactions, after checking the ownership and the authority of the management company, the funds are released to the landlord and post-dated cheques are held and deposited when rent is due. We can issue payments to necessary parties, track the rent and home owner’s pro-rations, security deposit transfers, attorney fees, developer and lender fees etc.

Q. What are the main benefits of using enTrust & Title?

A. Many brokers, agents and attorneys refer their clients to us routinely as our officer are experienced with time consuming day-to-day practices

We use state-of-the-art technology which includes accounting engine to expedite transactions, and we biometrically validate the identity of the parties in the transaction

of buying /selling or renting residential or commercial property in Dubai.

We use state-of- the-art technology which includes accounting engine to expedite transactions, and we biometrically validate the identity of the parties in the transaction. These benefits are extremely important to busy attorneys and real estate agents and brokers. They have found our service a necessary one to secure transactions that would otherwise not happen, be very expensive or consume too much of their time away from what they do best. This burden is unloaded once we step in and monitor the transaction on behalf of all the parties until successful completion. Our company becomes an intermediary overseeing the property transfer and we ensure that best practices are followed throughout every step of the transaction.

Q. Can you give me an example of how a deal was saved by using your Escrow Settlement and Title Conveyance service?

A. There have been cases in which a buyer is asked to pay off the seller’s existing loan. The buyer in some instances has to release funds directly to the seller’s account in order for him to pay off the existing loan. The buyer does not take title to the property until after the payoff is made. In these situations, many buyers refuse to allow their funds to be under the sellers, control thus the deals fall through and never happens.

Q. How does your company validate the identities of the parties?

A. We authenticate fingerprint, signature and photograph of the principals in the transaction and gather appropriate identification which is then encrypted and stored in what we call an enTrusted Token and it can only be unlocked if the same principal is present to do so. This safekeeping of the parties’ identities is extremely important. Not only do we make sure that we are dealing with the proper parties in a transactions, we ensure that

being sold and buyers with funding requirements for their new loans.

The buyer’s lender can fund directly to the escrow account only when the transaction is about to close and we are sure that we can secure the lender’s collateral. We provide complete transparency of all accounting and disbursement statements to lenders, buyers and sellers. We also secure the registration of the mortgage at the transfer of the property to the new buyer. enTrust & Title becomes the central point or the hub for the transaction because we work for all parties, not just one. We ensure that we have all the information and that no details are missed.

Q. How are your services different than from of brokers?

A. Brokers are supposed to represent a buyer or the seller, and sometimes both. But in the end, the broker is interested in closing the deal and collecting his commission. Therefore, brokers are not neutral intermediaries in a deal. If they are representing both parties, they have agreements signed by each party separately. Our escrow instructions require both parties to give us joint and mutually agreed upon direction detailing all the terms and conditions that they want us to execute on their behalf prior to the closing.

Q. Do you work with the brokers and what benefits do they get from prescribing to your services?

A. We work with brokers, agents and attorneys all the time. We help them expedite their sales cycle, take away the painstaking process of completing the transaction and create time for them to do what they do best, i.e. match buyers with sellers and landlords with tenants. Brokers are able to hand over the leg work involved with closing a transaction once an MOU is signed by buyer and seller. We control and manage the funds, documentation and most importantly for the brokers, ensure that their

Q. How does using an escrow help in real estate transactions?

A. When a client decides to employ our services, the earnest money deposit, transfer fees, commissions and funds to complete the transaction are held in our insured escrow account.

This avoids an unscrupulous party running away with the funds. Only upon the successful transfer of the property from the seller to the buyer are the escrowed funds released to the seller.

Or in the case of rental transactions, after checking the ownership and the authority of the management company, the funds are released to the landlord and post dated cheques are held and deposited when rent is due. We can issue payments to necessary parties, track the rent and home owner’s pro-rations, security deposit transfers, attorney fees, developer and lender fees etc

Q. Do you have any competition in Dubai?

A. Not to my knowledge. We are pioneering the first independent Escrow Services Company in Dubai which is truly a neutral third party.

Q. How can the parties trust that their funds will be safe with your company?

A. Besides providing the clients with an evidence of insurance of funds, our company is licensed by RERA and the Dubai Land Department.

Q. Do you help or work with lenders in any way?

A. Actually yes. Lenders or financial institutions benefit greatly from our services as we assist sellers with paying off outstanding loans on properties

commission is paid as per the terms of SPA, MOU or the rental contract.

Q. How do you market enTrust & Title?

A. Currently, enTrust & Title services are marketed through its network of brokers, agents, attorneys and lenders who have experienced the value we provide to our mutual clients, i.e. buyers, sellers, tenants, landlords and management companies. Financial advisors also rave at the benefits derived by using our services to their clients.

Q. There are many foreigners who have invested in UAE? how do they benefit from your services?

A. enTrust & Title has the capability to close transactions without the parties having to travel to Dubai. Parties can be validated, funds transferred and documents delivered electronically. enTrust & Title’s Certified en-

DUBAI REAL TIMES

their identities are safe and their privacy is not compromised

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Trusted Witness Programme allows parties to execute documents from anywhere in the world and check the status of the transaction, be it a sale or rental.

Q. What is Certified enTrusted Witness Programme?

A. The Certified enTrusted Programme, also known as the CeW, is a worldwide network of people with pristine reputation. The programme qualifies trains and certifies individuals of good standing in the community they reside to serve as the witness to a transaction. These individuals can then market themselves as Certified enTrusted Witnesses. The seller/ buyer or landlord/tenant who wish to utilize services of enTrust & Title may execute their documents from anywhere in the world by showing

signing authorities must be validated, terms and conditions of the tenancy contract or commercial lease must be properly documented and complied with. Tenant’s cheques can be held, payments can be made on behalf of landlords who are out of the country and tenancy contracts can be registered. The company has efficient, simple and cost-effective solutions to ensure no landlord or tenant is put at risk in a transaction.

Q. How long did it take you to set up enTrust & Title in UAE? A. The entire process took two long years. We had to ensure that we met all regulatory issues, all our documents complied with the local rules and regulations, and that all best practices were incorporated when creating local practices and procedures for Escrow in Dubai.

Q. How long did it take you to set up enTrust & Title in UAE? A. The entire process took two long years. We had to ensure that we met all regulatory issues, all our documents complied with the local rules and regulations, and that all best practices were incorporated when creating local practices and procedures for Escrow in Dubai.

identification, and submitting their legal documents to an enTrusted Witness nearest to them. The enTrusted Witness would then biometrically endorse them and submit the order electronically.

Q. Already the cost of real property transaction is very high. Who pays for your services and how much is it?

A. Real property investment for most people is the largest investment one makes in their life time. Considering that, the cost for our services is actually fairly minimal and can be paid by either party individually or split between the parties as agreed upon.

Q. Is Escrow service used anywhere else in the world?

A. Escrow is a 150-year-old industry, originating in North America and now is being used widely in many countries, all across the globe.

DUBAI REAL TIMES

Q. How is the Escrow and conveyance system different here?

A. Escrow is a neutral third party that is instructed as to how to proceed with closing a transaction while conveyancing is the legal term for transferring property. Here in UAE, we provide both services without having to employ expensive services of a solicitor.

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Q. How did you find resources here in Dubai who have the skill sets to provide Escrow services in UAE? A. Our management team is from California, USA. We train those in the legal and real estate field on the escrow best practices after conducting a full background check on them.

Q. How can people get in touch with your office?

A. We are located at Dubai Internet City (DIC) Bldg # 16, Suite 236, Dubai, UAE, Tel # 971 04 434 5730 and email is info@entrusttitle.com. You can visit www.entrusttitle.com for more information as well.

Q. Why would your services be needed for rental contract?

A. In a rental transaction the ownership of the property needs to verified,

Q. What is your definition of best practices and transparency? How is it applied?

A. In response to the challenges of the real estate market, the company’s process offers balanced protection to the buyer, seller, landlord and tenants.

The issues of legal ownership, authority to enter into contract, registration of deed, misrepresentation, financial disclosures, and non-availability of documents in time for a resale, are resolved when using the company’s enTrusted Escrow Services. The company’s proprietary state-of-the-art technology such as digital biometric authentication of all principals mitigates financial risks to the buyer, tenant or the lender. The company stands behind its quality of service by offering limited and renewable guarantees to ensure proper and complete transfer of title at the close of transaction.

Q. Can your records be audited? How can people be assured that you have proper internal controls?

A. We use time tested and multi-state approved software that balances the trust account down to the fil at any given time. The company self audits itself routinely in accordance with Generally Acceptable Accounting Principles (GAAP) and is open to audit by the authorities at any time.

Q. What is your Escrow settlement process?

A. The Escrow settlement process involves inputting a formal agreement from the parties (MOU or sale and purchase contract (or tenancy contract if rental)) and their closing instructions into the enTrust & Title Enterprise System (enTTS) online. The company requires certain information from the parties to ensure that all the checks and balances in their closing are in place and that there exists transparency throughout the transaction. Once all data is gathered the terms of the transaction are noted and calendared and the closing process begins. Once formal terms are complied with (i.e. buyers loan funds, sellers existing loan is paid off, etc) the final formalities with the transfer of the property are complied with (i.e. Deed Certificate is Registered into the buyers name, rents are prorated, leases assigned) and a final accounting is provided to all parties to the transaction.

LEGALLY SPEAKING

Cancellation of projects

By Patricia Wardrop and Helen Hangari, DLA Piper

Procedure for Cancellation of a Project Law No. 9 of 2009 Amending the Interim Real Estate Register Law (‘Law 9’) provides that RERA can cancel a project "based on a report grounded with reasons". This power appears to be extremely broad but until the executive regulations to accompany Law 9 are issued, there are no clear guidelines and procedures setting out when or how a project will be cancelled by RERA.

Escrow Account If a project is to be cancelled the developer should return all payments received from the purchasers in accordance with the procedures and provisions stipulated in Law No. 8 of 2007 concerning escrow accounts for property development in the Emirate of Dubai

Termination of off-plan purchase agreements Patricia Wardrop

(‘Escrow Law’).

The Escrow Law provides that if a real estate project is cancelled or delayed, the Escrow Account Trustee of such project must take all requisite steps in order to maintain the rights of purchasers so as to ensure either the completion of the real estate project, or, the refund of all amounts paid by the purchasers.

In practice, it is not necessarily the case that all the purchasers' monies will be protected in an escrow account. For example, the developer may not have been required to maintain such an account or some of the funds may have been utilised to cover land acquisition, consultant's fees and sale and marketing costs. If construction has commenced, then it is unlikely that there will be sufficient funds in the escrow account to return all mon-

For the cancellation of any real estate projects, all off-plan purchase agreements have to be cancelled.

This can be instigated by the developer pursuant to Law 9 if a purchaser is in default. In these circumstances the developer must first notify the Land Department of the breach. The Land Department will then give the purchaser 30 days notice to rectify the breach. If the purchaser does not remedy the breach within this period then the amount of monies that will be refunded to the purchaser will depend on the stage of completion of a project at the time of cancellation. This can vary from the developer being required to refund all monies paid to it by purchasers to the developer being entitled to retain all monies received from purchasers and recover any shortfall if the developer has completed 80 per cent or more of the construction of the project.

Projects 'On Hold' Law 9 does not expressly give purchasers the power to terminate their off-plan purchase contracts. Purchasers are entitled to lodge complaints at RERA and we also hope that the executive regulations to accompany Law 9 will clarify what steps a purchaser can take if a project it has invested in does not seem to be progressing.

RERA has taken steps to increase the information available to purchasers with regards to the progress of projects. The RERA website now contains monthly progress reports for over 875 projects in Dubai. New investors to Dubai will also benefit from such information being publicly available and for purchasers who have already invested in Dubai, they will be able to continuously review the progress of their investments.

So far, whilst many projects are on hold, we understand that very few projects have actually been cancelled and this is understandable given the complexities of 'undoing' a vast number of contractual arrangements that will be in place in relation to every project. At the moment it is not clear how long a project can simply be 'on hold' for before steps can be taken to cancel the project but we hope that the executive regulations will clarify this to protect all parties.

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A

ies paid by purchasers as the developer is likely to have drawn down funds in accordance with certain construction milestones being met.

However, if there are funds in an escrow account the developer is prohibited by the Escrow Law from applying these to any other real estate projects.

s a result of the global economic slowdown there has been much speculation over delays in delivery of projects or cancellation of projects in Dubai. Some commentators have estimated that more than half of the construction projects in the UAE have been put on hold and that around 25 per cent of real estate projects in Dubai would be cancelled.

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LEGALLY SPEAKING

The revival of the Dubai property market Dubai’s real estate market has experienced some heavy turbulence since late summer 2008. However, there are signs that the market has stabilised and that green shoots of recovery are emerging.

By Shahram Safai

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I

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n these days, that are based on more realistic valuations, there are significant and lucrative opportunities for both developers and purchasers. Those who are equipped with an in-depth knowledge of both the new market conditions and the new real estate laws will be best placed to take advantage of these opportunities.

Some developers may still dream of the days before the credit crunch when they could take a more aggressive attitude to negotiations with purchasers, giving little ground.

However, these days developers are likely to find purchasers far easier to attract if they demonstrate flexibility and creativity.

Purchasers are increasingly aware of the bargaining strength they inherited from the credit crunch, focusing not only on having unit prices reduced, but also seeking changes in the unit sale and purchase agreement (“SPA”), (a document that was previously sacrosanct and to which revisions were generally not permitted).

Law Number 13 of 2008 and Law Number 9 of 2009 Two real estate laws of particular importance in relation to the SPA are

Shahram Safai

Dubai Law Number 13 of 2008 and Dubai Law Number 9 of 2009.

These laws govern the developer’s right to terminate the SPA in the event that the purchaser falls into default, and they stipulate (i) a ter-

mination procedure to be followed and (ii) the monies that may be retained by the developer in the event of termination.

In general, pursuant to Law Number 13 and Law Number 9 the greater the completion of the project, the more monies that the developer may retain.

1. If the developer has completed at least 80 per cent of the project, the developer may retain all monies paid and may request that the purchaser settle the outstanding portion of the purchase price. If the purchaser fails to pay, then the developer may request that the property be auctioned in order to recover the outstanding monies.

2. If the developer has completed construction of at least 60 per

cent of the project, the developer may terminate the SPA and retain 40 per cent of the purchase price.

3. If the developer has commenced construction of the project but has not completed 60 per cent, the developer may terminate the SPA and retain 25 per cent of the purchase price.

4. If construction of the project has not yet commenced for reasons beyond the developer’s control, without any negligence or omission on the developer’s part, the developer may terminate the SPA and retain 30 per cent of all monies paid by the purchaser.

Commencement of ‘construction’ is defined in Law Number 9 of 2009 as handover of the site by the developer to a contractor and com-

Purchasers are increasingly aware of the bargaining strength they inherited from the credit crunch, focusing not only on having unit prices reduced, but also seeking changes in the unit sale and purchase agreement (“SPA”), (a document that was previously sacrosanct and to which revisions were generally not permitted)

Delays in completion Whilst the developer will be focused on receiving payment of the purchase price, the purchaser’s eyes will be on when the completed unit is to be handed-over to him. The purchaser will want some comfort that the SPA is not committing him to purchase a unit with no foreseeable construction completion date. On the other hand, developers all across the world, not simply in Dubai, have experienced difficulties and delays due to the credit crunch.

The above competing interests are frequently addressed in the SPA by (i) the provision of an ‘anticipated’ date of completion, with the developer retaining some freedom to push the date backwards if events do delay construction and (ii) the inclusion of a date beyond which, if the unit is not complete, the purchaser has the option of terminating the SPA and having his monies returned to him.

Unit specifications At times, the developer does not complete a unit that exactly matches the dimensions detailed in the SPA for a variety of reasons. On the other hand, the purchaser must have some certainty as to the size of the unit. The common resolution is for the SPA to state that the as-built area of the unit must be within a specific percentage of the area as stated in the SPA (generally 3-5 per cent).

Linked with this, Law Number 13 of 2008 provides that if the as-built area exceeds the area mentioned in the SPA, the developer is not permitted to increase the price as a result. To help avoid any confusion, the purchaser would be advised to ensure that there is no contradictory wording in the SPA. On a similar topic, the purchaser

should review the SPA to establish the freedom retained by the developer to replace finishes and materials in the unit in the event that the stated finishes and materials become unavailable. The SPA should state that any replacement finishes and materials should be of the same or better quality.

Sales brochures When marketing projects, developers will often use artist’s impressions

Payment plan Whilst not law, RERA issued recommendations in early 2009 to the effect that developers should revise their payment schedules such that payments fall due on completion of construction milestones and that no more than 30 per cent of the purchase price should be collected prior to construction commencing. To attract purchasers, some developers offer such pay-

The purchaser will want some comfort that the SPA is not committing him to purchase a unit with no foreseeable construction completion date

of how the finished project will look. This is another area where purchasers ought to beware. The SPA will generally state that the description of the unit in the SPA is the only description that is legally binding. Any descriptions, sales brochures or plans that were given to the purchaser prior to the SPA being signed are therefore irrelevant.

ment plans as a matter of course without the purchaser requesting it.

Looking to the future Even with the strong negotiating position now enjoyed by purchasers, there remain a myriad of SPA clauses that may become legal pitfalls for even the most experienced of purchasers. As a result, the SPA

should be carefully reviewed before being signed. For their part, in the rush to sell units and ease cash flow, developers must be wary not to concede issues that may seem irrelevant in the early days of a project, but may cause severe difficulty for them at a later stage.

With the real estate market rising again, developers and purchasers should pay careful attention to the details of their dealings to ensure that each receives what she or he expects.

About the Author Shahram Safai is a lawyer, professional engineer and a partner at the law firm of Afridi & Angel, Level 35, Emirates Towers, Dubai, United Arab Emirates. Tel: (+9714) 330 3900;

Fax: (+9714) 330 3800. Email: ssafai@ afridi-angell.com. * The above information is not legal advice and is neither intended to create nor creates a lawyer-client relationship. Neither the writer nor Afridi & Angell are responsible for anyone relying on the above information. You are recommended to obtain independent legal advice.

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mencement of construction works in accordance with designs approved by appropriate authorities.

For the purposes of paragraphs 1, 2 and 3 above, the developer must return any monies due to the purchaser within the earlier of (i) one year from the date of cancellation or (ii) 60 days from the date of a resale of the property by the developer.

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UPDATES // LAWS & REGULATIONS

LAW NO (7) of 2006 CONCERNING REAL PROPERTY REGISTRATION IN THE EMIRATE OF DUBAI We, Mohammad Bin Rashid Al Maktoum, Ruler of Dubai: Upon cognizance of the Federal Law No. 5 of 1985 issuing the Civil Transactions Law, as amended, The Federal Law No. 11 of 1992 issuing the Civil Procedures Law, as amended, The local Law No. 7 of 1997 concerning the charges for the registration of lands, And the local Decree of 1960 concerning the formation of the Lands Committee, Have issued the following Law:

Chapter (1)

Name and Definitions Article (1)

This Law shall be called the “Law No. (7) of 2006 concerning Real Property Registration in the Emirate of Dubai”.

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Article (2)

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Unless the context requires otherwise, the following terms and expressions in this Law shall have the meanings as shown against them respectively: “State” means United Arab Emirates; “Emirate” means the Emirate of Dubai; “Government” means the Government of Dubai, including any of its departments, authorities or public establishments; “Ruler” means H. H. the Ruler of the Emirate of Dubai; “Department” means the Department of Lands and Properties; “Chairman” means the Chairman of the Department; “Manager” means the General Manager of the Department; “Real Property” means anything immovable fixed within its boundaries which cannot be moved without damaging or changing its features; “Real Property Rights” means any right in rem, whether principal or collateral, over a Real Property; “Real Property Register” means a set of documents held in written or electronic format in the electronic register at the Department, which point out the description and location of each Real Property and the rights attached thereto; “Real Property Unit” means any plot of land and any constructions, plants and other things thereon located in a single Real Property Area without any part thereof being separated from the other parts by any public or private property and without having any rights or liabilities on any part thereof other than the rights and liabilities of the other parts; “Real Property Area” means a group of Real Property Units identified by main streets or fixed and clear landmarks, bearing an approved name and independent serial number in accordance with the regulations applied by the Department; “Person” means a natural or legal person.

Law No. (7) of 2006

Chapter (2)

Scope of Application and Right to Hold Title Article (3)

The provisions of this Law shall apply to the Real Properties in the Emirate.

Article (4)

The right to own Real Property in the Emirate shall be restricted to UAE and GCC nationals and to companies owned in full by them and to public joint stock companies. Subject to the Ruler’s approval and in specific areas in the Emirate as determined by him, non-national persons may be granted the following rights: A. The right to freehold ownership without time restrictions; or B. Usufruct right or leasehold right over a Real Property for a period not exceeding 99 years.

Chapter (3)

General Provisions The original documents and judgments under which registrations are made shall be maintained at the Department, and removing them outside the Department is prohibited.

Any party having an interest, the judicial authorities or any experts appointed by them and the competent committees may inspect the documents maintained in the Register and obtain a certified copy of them in accordance with the provisions of this Law.

Chapter (4)

Competence of the Department Article (6)

The Department shall solely, to the exclusion of others, be authorized to register the Real Property Rights and long term leases as provided under Article 4 hereof. For this purpose, the Department shall undertake the following: 1. determine areas for survey or re- survey and approve maps prepared thereof; 2. determine the rules in connection with the survey, inspection and issue of maps related to Real

Property Units; 3. prepare standard contracts in relation to Real Property transactions; 4. lay down the rules in connection with organising, maintaining and destroying documents; 5. lay down the rules in connection with the use of computers for saving and registering data; 6. lay down the rules in connection with regulating and maintaining a register for real estate brokers; 7. lay down the rules in connection with the evaluation of Real Properties; 8. lay down the rules in connection with the sale of a Real Property at optional public auction and the

supervision thereof; 9. determine the charges payable for services provided by the Department; and 10. establish branches for the Department as the Manager may deem fit.

Chapter (5)

Real Property Register Article (7)

A Real Property Register shall be established at the Department. All Real Property Rights and any amendments thereon shall be registered in the Register, which shall have absolute power of evidence against all parties. No objections against the data of the Register may be made other than on the grounds of fraud or forgery.

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Law No. (7) of 2006

Article (5)

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Article (8)

Subject to the provisions of Article 7 hereof, documents and instruments of the Real Property Register registered electronically in a computer shall be acceptable for the purpose of evidence as original documents and instruments.

Chapter (6)

Registration Article (9)

All dispositions that may create, transfer, vary or terminate a Real Property Right and all final judgments confirming any such dispositions shall be registered in the Real Property Register. Such dispositions shall not be valid unless they are registered in the Real Property Register.

Article (10)

The liability for breaching an undertaking to transfer any Real Property Right shall be limited to payment of indemnity, whether or not such undertaking provides for an indemnity.

Article (11)

Any inheritance declaration shall be registered in the Real Property Register if the inheritance includes Real Property Rights. No dispositions by any heir in connection with any such rights shall be valid or effective against third parties unless such dispositions are registered in the Real Property Register.

Article (12)

The Department may, in accordance with procedures to be issued under a resolution by the Chairman of the Department, consider applications for registration submitted by holders of lands that are not registered in their names in order to settle the position of such lands.

Chapter (7)

Alteration or Correction of Data in the Real Property Register Article (13)

The Department may correct purely material errors in the folios of the Real Property Register upon a request from an interested party or on its own initiative and shall inform the concerned parties of such corrections.

Article (14)

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The Department shall, in coordination with the relevant authorities, update the data in relation to Real Property Units together with the buildings, plantations or other structures thereon.

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Law No. (7) of 2006

Chapter (8)

Maps Article (15) 1.

2.

3.

Upon the registration of the Real Property Areas and Units in the Real Property Register, the following maps shall be relied upon: (a) The base topographic map; (b) The Real Property Unit map; (c) The Real Property Area map.

Every Real Property Area shall have a separate map showing the Real Property Units in that area together with their numbers.

Every Real Property Unit shall have a separate map indicating its location, boundaries, dimensions, area, features and the structures thereon together with the numbers of the adjacent units.

Chapter (9)

Article (16)

If a dominant Real Property Unit is divided, the easement right shall persist for each part of the Unit, provided that such division shall not increase the burden on the servient Real Property Unit. However, if the easement is actually beneficial to only one of those parts, the owner of the servient Real Property Unit may apply to the Department to terminate the easement right of the other parts.

Article (17)

If a servient Real Property Unit is divided, the easement right shall persist on each part of the Unit. However, if the easement is actually used on some parts or cannot be used thereon, the owner of each part thereof may apply to the Department in accordance with the provisions of this Law to terminate the easement right on the part owned by him.

Article (18)

Easement rights shall terminate if the servient Real Property Unit and the dominant Real Property Unit become under the possession of a single owner.

Article (19)

If a Real Property Unit burdened with a collateral right in rem is divided to two or more Real Property Units, each new Real Property Unit shall bear the right in full.

The new owners and the holder of the collateral right in rem may agree to divide such right so that each of the new Real Property Units will bear only part thereof as agreed.

Article (20)

If two Real Property Units are merged, where one of them is burdened with a collateral right in rem and the other unit is free of such right, the collateral right in rem shall extend to the new Real Property Unit in full without the consent of the holder of the right to merger.

However, if each of the Units is burdened with a separate collateral right in rem, the consent of the holders of such rights to the merger shall be obtained prior to such merger.

Article (21)

Any amendment of merger or division on the Real Property Unit shall be registered in the Real Property Register.

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Law No. (7) of 2006

Division and Merger

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Chapter (10)

Title Deeds Article (22)

The Department shall issue title deeds of Real Property Rights in accordance with the current records in the Real Property Register.

Article (23)

Subject to the provisions of any other law, a multi floor or apartment Real Property shall be considered as a single Real Property Unit and a folio shall be designated thereto in the Real Property Register.

Supplementary folios in the names of the owners of such apartments and floors and common areas shall be added to the original folio.

Article (24)

1. Title deeds referred to under Article (22) of this Law shall have absolute power of evidence to

establish Real Property Rights.

2. Any conditions, undertakings, encumbrances or any other liabilities related to Real Property Rights

shall be stated in the designated folio of the Real Property Unit.

Chapter (11)

Final Provisions Article (25)

The provisions of the Federal Civil Procedures Law No. 5 of 1985, as amended, shall apply to anything not provided for in this Law.

Article (26) 1.

2.

Any agreement or disposal made in violation to the provisions of this Law or with the intent to circumvent its provisions shall be null and void.

Any party having interest or the Department or the Public Prosecution may demand to invalidate such agreement or disposal and the courts shall rule as such on its own initiative.

Article (27)

The Decree dated 6 November 1977 concerning civil and criminal cases relating to land transactions in the Emirate of Dubai is repealed.

Article (28)

The Chairman shall issue the required regulations, orders and instructions for the enforcement of the provisions of this Law.

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Article (29)

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This Law shall be published in the Official Gazette and shall come in force as of the date of its publication. (signed)

Mohammad Bin Khalifa Al Maktoum Ruler of Dubai Issued in Dubai on 13 March 2006

Law No. (7) of 2006

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