PROPERTY WATCH BY ROOTS LAND REAL ESTATE
Q4 2014 - Jan 2015
Dubai Market Watch Jan 2015
Conveyancing in Dubai
Properties for Sale / Rent
by Roots
by Roots
by Roots
dUBAI / aBU dHABI pRICE iNDEX
Mortgage Update q1 2015
Dubai Market the future of Retail
by Reidin
by Home Matters
by JLL
www.rootsland.com
Contents 3
DIRECTOR’S MESSAGE
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DUBAI MARKET WATCH
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DUBAI RESIDENTIAL PROPERTY PRICE INDICES
14 DUBAI COMMERCIAL MARKET 18 ABU DHABI OVERVIEW & FORECAST 20 CLARIFICATION OF REAL ESTATE DEVELOPMENT 23 AN EXPERT OPINION
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DIRECTOR’S Message Dubai property market is shifting towards a healthier and more mature stage with end-users and long-term investors strengthening the sector by entering into the market place. The latest events that happened on an international scale including the rising strength of the US Dollar against the Euro, the British Pound, the Indian Rupee and the Russian Ruble, along with the drastic fall of oil prices lead to speculators, mainly from countries which currencies are falling, to start exiting the property market and selling their properties in order to repatriate capital in their home country at a favorable exchange rate. During Q4 2014 Dubai Financial Market experienced instability, however the UAE economy remains strong, the Government expects the country’s GDP to grow by 4.5% this year.
DIRECTOR
Month-on-month we noticed majority of communities recorded lower volume of transactions and price decrease; however year-on-year fully-integrated communities such as Downtown Dubai, Jumeirah Lake Towers and Dubai Marina show positive percentage price change.
GRAPHIC DESIGNER
Albeit these areas are the most sought-after places in the city providing numerous dining options, retail, recreational and family facilities, the expected future supply in these communities is relatively limited compared to other areas further from the coastline such as Dubai Sports City and Jumeirah Village. Majority of units that will be brought to the market in the coming years will be apartments considered mid-end and high-end products. The off-plan market is also adjusting to the new market conditions; developers offer more flexibility on their payment plans, some tend to include property transfer fee or registration fee in the purchase price. This trend has been noticed especially in high- and very-high-end developments. This edition offers a review of Dubai and Abu Dhabi property markets from our internal research team as well as third-parties that are all renowned companies active in the sector; among them Dubai Properties Group, JLL, Home Matters, Asteco and Al Zahmy Advocates & Legal Consultants.
FADI BOUSH RESEARCH
ESTELLE RISSE BUSINESS DEVELOPMENT
NATHALIE KLIER
REHMAN ASHRAF COVER PHOTO
AMAR SALEEM
POB 215273 Dubai, UAE 1310 Grosvenor Commercial Tower Sheikh Zayed Road T +971 4 329 8333 F +971 4 329 8997 E inq@rootsland.com facebook /rootsland twitter /rootsland
Fadi Boush
google plus/+rootsland
Managing Director For advertising and editorial opportunities please contact: research@rootsland.com DISCLAIMER This publication is the sole property of Roots Land Real Estate Brokers LLC and must not be copied or reproduced in any form or by any means, either in whole or in part without the prior written approval of Roots Land Real Estate Brokers LLC. The data and other information contained in this publication have been obtained from sources generally regarded to be reliable and every effort have been made to ensure maximum accuracy. However we make no guarantee, warranty or representation in respect of the accuracy and completeness of the information contained herein. Roots Land Real Estate Brokers LLC does not accept any liability whether in negligence or otherwise to any party for any loss or damage suffered as a result of negligence, errors, omissions, change of price or other on this publication. The material presented in this publication does not necessarily represent Roots Land Real Estate’s view and opinion. The listings are correct at the time of printing, availability and prices are subject to change without notice. Photos are for illustration purpose only.
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Roots Analysis Dubai Market Watch - Jan 2015 The past six months the UAE property market has been challenged by a changing macroeconomic environment marked by a sharp decline in oil prices and significant appreciation of the US Dollar against other currencies amongst them the Euro, the British Pound, the Indian Rupee, and the Russian Ruble. The country’s forecasted GDP however has not been modified; it is expected to reach a 4.5% growth this year. In the residential property market a slowdown was recorded during the last quarter, the activity in the sector at the beginning of the year remains quite; the macro environment as well as the oscillations of the Dubai Financial Market during the same period refrained investors from investing in what they consider an unstable market. On the other hand foreign owners are willing to sell properties they own in the UAE to benefit from the current favorable exchange rate, bringing additional supply to the property market. The off-plan market remains active with developers bringing new supply consisting of commercial, residential and hospitality projects. Midincome residents are taken more in consideration by developers who offer them flexible payment plans and cheaper properties.; this focus seems to be working out well as witnessed by Danube that unveiled Glitz in January, its tantalizing payment plan of 10% upon registration, 15% two month later and 1% monthly during 75 months allowed the developer to sell the project in only a few hours the day of the launch. The completed residential buildings show decrease in prices month-on-month in the majority of Dubai communities, as recorded by the Dubai Land Department in January; the results year-on-year depend on location with prime communities presenting positive figures. However the price drop in closing prices remains healthy and stabilizes the property market; the major changes can be seen in the asking prices that have unsustainably risen during the last quarter of 2013 and the first half of 2014. 2. Therefore with the current market conditions landlords who seriously want to sell their properties are willing to
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reduce their asking price to attract buyers; however the asking price is not a reliable measure of the real estate activity, unlike the selling price. Overall the Emirate, the volume of sale transactions increased both month-onmonth and year-on-year to reach levels experienced during the first quarter of 2014.
Prime Areas – Apartment Segment Among the five communities selected (Business Bay, Downtown Dubai, Dubai Marina, Jumeirah Beach Residence and Palm Jumeirah) Business Bay shows the highest number of sales transactions amounting to nearly a quarter of the total volume recorded in these areas; Downtown Dubai, Palm Jumeirah and Jumeirah Beach Residence share the remaining quarter.
Sales Transaction Volume by Prime Area
In January the highest sale price increase was recorded in Business Bay, the number of transactions follows a similar trend with a six-fold rise month-on-month. These changes rely mainly on the handover from developers to end-users and investors of some properties located in the area among them Bay Square developed by Dubai Properties Group, ENI Coral Tower by Emirates National Investment, and Damac that continues to hand over keys of Executive Bay. In Downtown Dubai sale rates remain stable monthon-month and year-on-year with prices reaching similar amounts as experienced during the first quarter of 2014.
Prime Area AVG Sale Rate
Transaction volume as well stabilized month-on-month, however according to Dubai Land Department’s record it slowed down year-on-year. Downtown Dubai is a well-connected fully serviced landscaped area renowned as one of the most bustling communities counting numerous dining and shopping options and offering perfect life-balance to its dwellers.
The world-renowned Burj Khalifa, the Dubai Mall and the dancing fountains count as the masterpieces of the community as well as the city making Downtown Dubai a must-see for any visitor; therefore in an overall quiet market this area keeps buyers’ interest high. Recall that during the first half of the year majority of communities showed rising rates, which gradually decreased during the second half of the same year.
Prime Area Sales Transactions
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Roots Analysis Dubai Market Watch - Jan 2015
Dubai tram construction work finished last November, tourists and residents benefit from the brand new transportation that links JBR, Dubai Marina, Knowledge Village and the Palm monorail bringing value to the community, as reflected in the sale price rise in the area year-on-year; month-on-month rates remain stable. The sale transaction volume in this well-integrated district experiences slowdown, however these figures do not encompass off-plan projects. Plot owners continue to develop their land; Dubai Marina currently counts over 25 projects under construction. Month-on-month sale prices stabilized in Jumeirah Beach Residence (JBR), while they rose by over 7% year-on-year. The volume of transactions on the other hand dropped in January compared to the previous month and the same period last year. Despite the slowdown, this beachfront community is one of Dubai’s most visited districts; tourists and residents enjoy countless dining options on The Walk and The Beach, leisure time at the brand new cinema as well as family recreational facilities. The largest man-made island Palm Jumeirah shows stable transaction volume for apartments since September 2014 also the slightest slowdown year-on-year among the residential prime areas we selected was recorded in Palm Jumeirah. The transactions recorded in January by Dubai Land Department present a decrease in the sale price per square foot month-on-month, while owners benefit from a rise compared to the same period last year. The island is one of Dubai’s essential landmarks from which visitors and residents enjoy lavish views of the Dubai skyline and the Persian Gulf. Developers do their best to constantly improve the area by adding new residential, hospitality and retail properties to the market; completion of majority
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of the projects currently under construction is scheduled throughout 2016, including Club Visa Mare, Palm Views and Palm Tower by Nakheel, The 8 by IFA Hotels and Resorts and Viceroy Hotel by Skai.
Prime Areas – Villa Segment After a quiet end of the year the villa segment picks up in January with rising sale volume month-on-month. However the market is quieter compared to the same period last year as shown by the transactions recorded by Dubai Land Department. Overall the city villa prices have fairly risen year-on-year; buyers benefit from a quiet market to negotiate on their deal leading to a fair decline month-on-month. In this market developers have started attracting investors and end-users to their off-plan projects by using different strategies such as reducing prices and including 4% transfer fees required to register the property in Dubai Land Department in the purchase price. Additionally developers increase their market shares by strengthening their relationship with real estate brokerage firms active in the market; advantages from which buyers are the direct beneficiaries. Arabian Ranches’ activity was relatively high in January with a rising number of transactions month-on-month. Developed by Emaar this community keeps attracting investors and end-users with its villas surrounded by landscaped garden and green areas; residents enjoy numerous facilities and amenities within the development as well the ideal location which allows them to reach main landmarks in Dubai with relative ease.
Villa AVG Sale Rate (high-end)
The exclusive developments of Emirates Hills and Jumeirah Islands offering luxury villas in lush landscaped communities with impressive views of the Montgomerie
Golf Course for the former and of crystal waterfalls for the latter have a limited volume of transactions recorded not allowing us to highlight any trend.
Villa Sale Transactions (high-end)
Estelle Risse Research Analyst
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Dubai Residential Market Residential Property Price Indices
Dubai Real Estate Transactions
Dubai Residential Price Change
Dubai Residential Price Index vs. Gold Price vs. Oil Prices
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Abu Dhabi Residential Market Residential Property Price Indices
Abu Dhabi Residential Price Change
Abu Dhabi Residential Price Index vs. Gold Prices vs. Oil Prices
UAE Rental Yields
UAE Price to Rent Ratios
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DUBAI FINANCIAL MARKETS and Dubai Real Estate
Visually, it appears that the DFM has been a leading indicator to the resultanting impact in real estate prices. This implies that unless equity prices recover, there is likely to be a correction in real estate values. The impact of this will be most felt in the higher end of the market as Dubai’s residential price index is dominated by top heavy properties, implying a reversion to the mean as prices adjust to falling equity asset values.
Oil Prices and Dubai Real Estate
Oil prices (being a liquid barometer) have had a high correlation on real estate prices in the short term; a longer term time series analysis reveals however that the underlying relationship is a weaker one, and will be felt indirectly through other pass through effects. We opine that oil price volatility has a weak impact on underlying real estate price fundamentals in the medium term.
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An expert opinion Dubai Property Market Updates
T
he real estate sector in Dubai and the UAE has experienced a progressive recovery during the last few years, and we have seen this continue throughout 2014. The industry has matured in terms of best practice, regulations and laws to protect both the investor and the developer, such as the mortgage regulations that have made a positive contribution to ensuring controlled, sustainable market growth. The latest industry reports have seen a gradual slowing in the pace of price growth; which means that these measures are effective and have positively impacted the market behaviour. From a Dubai Properties perspective, the market this year placed us in a favorable position and our strategy has allowed us to experience sustainable growth across our portfolio in 2014. For example, we have seen strong demand from investors for new residential projects such as Dubai Wharf launched at Cityscape recently. In addition, other DP developments have recorded a sellout success and prompted the release of further units such as in Mudon and Remraam. I believe 2014 will be remembered as a successful year for the real estate market, and for DP in particular, our strong sales been a clear reflection of not only the positive market conditions, but also our successful strategy to develop practical, high quality and sustainable projects in every segment and area of Dubai, that offer essential amenities and facilities to enrich the lives of residents and end users. DP has already delivered over 36,000 residential units, 2.8 million sq. ft. of office space and over 1.2 million sq. ft. of retail space to the market across key areas of Dubai. The
main projects we have launched in 2014 include: Mudon, Remraam, Manazel AlKhor, and Dubai Wharf, some of which experienced sell out successes. DP will continue to develop a growing portfolio of retail, commercial, residential, hospitality and mixeduse projects, and we have a strong pipeline of projects across all sectors that are tailored to meet the needs of real estate investors in the region. We will continue to align our business with the current market demand by launching new projects that provide strong investment opportunities. Collectively, the real estate industry in Dubai is continuously experiencing strong growth with investors looking for ‘value for money’ projects across the city with completed infrastructure, accessibility and quality building and finishing. Our projects will continue to meet this market demand in line with Dubai’s growth across the residential, commercial & retail sectors while continuing with the strategy to develop projects in prime locations of Dubai Winning the Expo 2020 presents a huge opportunity for Dubai’s real estate industry, and as a leading developer with a wide range of projects in every segment and area of Dubai, we are well placed to capitalize on the increasing requirements which this will bring. Going forwards, we plan to launch more projects that cater to the increasing population expected in Dubai over the coming years, from affordable apartments to villas and townhouses and high-end luxury accommodation across key areas of Dubai.
Mohammed Al Habbai
Chief Officer for Urban Planning and Infrastructure, DPG www.rootsland.com 11
Dubai Commercial Market the Future of Retail
T
he retail market in Dubai began modestly in the 1990s with Burjuman, Al Ghurair Centre and Deira City Centre being the prominent malls. From that time the retail market has progressed significantly and today Dubai is home to some of the world’s best malls such as Dubai Mall and Mall of the Emirates and other impressive developments to make what we call Dubai today. It has been a long journey from the souks of old Dubai to international standard super regional malls, and the way this transition has been managed has brought Dubai into the spotlight of retail development globally. Today, Dubai’s retail landscape is undergoing another transition, this time from standard malls to more innovative and creative retail developments that aim to encapsulate the entertainment, leisure, shopping and gastronomic experiences. Some examples of these more innovative retail concepts are The Beach by Meraas and the recently announced Mall of the World and Dubai Canal developments. The extension strategies for Citywalk are another example, where trendy box retail, the first of its kind in Dubai, is under construction. Existing retail developments are witnessing this evolution and many have chosen to upgrade their malls to meet
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the coming competitive challenges. Burjuman Centre and Wafi Mall are repositioning while Mall of the Emirates, Dubai Mall and Ibn Battuta Mall have expansion strategies in place to accommodate the increasing and evolving retail demand. This change is not just limited to mega retail projects but can also be seen with community sized retail popping up in proximity to major residential communities to provide consumers with shopping ease, a sense of community and quick access to goods that serve their everyday needs. The Mall in Jumeirah is a perfect example of an upcoming upscale community centre that is aiming to fill this gap in the market. As developers gain insight into the consumer mind they understand that providing the right experience in terms of the five senses, customer service, ambience and decor are just as crucial for customers as the accessibility, parking, location and tenant mix. Developers will also be forced to distinguish themselves and add character to their retail projects to create their own place in the market. They need to attract tourists worldwide and increase retail spend.
The government of UAE works to promote UAE’s image as a stimulating destination globally by providing enriching experiences, including the impressive display of fireworks every year at Burj Khalifa on New Year’s Eve, the hosting of Expo 2020 and Formula One. Dubai has also uniquely succeeded in bringing a piece of every country into its own city through Global Village, which displays merchandise from around the world, creating a one stop shop for tourists to see and purchase a variety of international products in one place. Additionally attractive sales such as the Dubai Shopping Festival and Dubai Summer Surprises
Current Supply (2011 - 2014)
occur annually to further attract retail spend from around the world, especially from other Middle Eastern countries. JLL’s interaction with prominent regional real estate clients has given us insight into initiatives they are taking to be on the forefront of innovation. In this new age where consumers hold the power and where change is the only constant, we expect to see Dubai aiming to further outdo itself and competitively execute projects that thrill and excite.
Retail Supply
SOURCE: JLL Dubai Real Estate Market Overview - Q4 2014
Future Supply (2015 - 2017)
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Abu Dhabi oVERVIEW & fORECAST Double Digit Sales Growth Double digit sales growth for Abu Dhabi real estate market for 2014, with stable outlook for 2015 • Villa sales prices rise by 16%, apartments up 15% • Rental rates increase by 10%, and 9% for apartments, villas respectively
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nvestors in Abu Dhabi’s real estate sector can expect sustained rental growth and relatively stable capital values in 2015, on the back of a strong performance in 2014, according to the latest Abu Dhabi real estate report from Middle East’s largest independent full service real estate company, Asteco. In its Abu Dhabi Property Review: 2014 Highlights & 2015 Outlook, Asteco, noted that Abu Dhabi market had strengthened over the last two years and is set to continue in 2015 with continued rental growth across all sectors, in an encouraging investment climate. Average sales rates for apartments and villas increased by 15% and 16% respectively in 2014 with a strong performance in H1, followed by a stable second half of the year. The volume of transactions also declined in H2 due to the shortage of quality stock for sale in the secondary market. The high sales volumes experienced at the newly launched projects in Ansam, Al Hadeel and Mamsha Al Saadiyat, proved that pent-up demand for quality products exists. “Popular master-planned developments for sale included Saadiyat Island and Al Raha Beach while Reem Island proved to be an attractive area providing more midmarket units. We expect apartment sales prices to remain stable this year as the market becomes more competitive due to the imminent handover of new projects,” said Jerry Oates, General Manager, Asteco Abu Dhabi. Full year-on-year comparisons (2008-2014) highlight continuous apartment sales price growth since 2012, up on average by 48% for all areas combined but still 26% lower than 2008 market peak. Sales prices in Al Muneera at Al Raha Beach now stand at AED 1,425 per square foot on average, up 21% compared with last year, whereas rates at Reef Downtown also climbed 21% to an average of AED 1,000 per square foot.
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Marina Square saw a 17% increase to an average of AED 1,375 per square foot. Villa sales prices also witnessed strong growth from their lowest level in 2012, growing 47% on average (for Al Raha Beach, Golf Gardens and Al Reef Villas during the period, with increases of 19% during the last year alone. Rates are however still 11% lower than at their Q4 2008 peak. According to the report, the villa sales market will remain relatively flat as there will be limited prime and high-end product available for sale in the primary and secondary markets in 2015. Despite continuous increases of 20% since their low point in 2012, rental rates for both apartments and villas are still considerably more affordable than in 2008 by over 40%, indicating potential for further growth. Apartment rental rates were up by 10% year-on-year (2013-2014) while villas rentals rose by 9%. A prime two-bedroom apartment currently rents for AED 175180,000 per annum with high-end units achieving AED 140-175,000 (compared with the peak 2008 figure of AED 280,000) and mid to low-end units recording an affordable AED 90-120,000 (down from highs of AED 225,000 in 2008).
Villa rental rates are expected to increase during 2015 due to a shortage in quality villa units with occupancy rates expected to remain high. An average four-bedroom villa could be leased for AED 239,000 per annum in Q4 2014, whereas the average in 2011 was AED 203,000 and AED 433,000 respectively in 2008. The biggest increases in rental rates in 2014 were on Saadiyat Island and Marina Square on Reem Island where recent hand-overs of high-end projects achieved high occupancy levels leading to rental increases as landlords capitalised on strong tenant demand. The year was also marked by a positive level of transaction activity as tenants continued their flight to quality. New mid to high quality developments at still relatively affordable rents are encouraging relocation by tenants to upgraded accommodation with older properties and lower quality projects being placed under increased rental and occupancy pressure. Since 2012 quality and recreational amenities have been a tenant priority across all areas and Asteco expects this to continue in 2015 with occupancy rates in popular developments maintaining their current high levels.
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The Abu Dhabi rental market in 2015 is expected to see continuous strong levels of demand. A range of new projects are due for handover in 2015 including an anticipated 13,000 apartments and villas which will come online, will have an impact on the Abu Dhabi real estate market by creating greater competition, particularly in apartment rents. Jeremy Oates
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steco expects this to continue in 2015 with occupancy rates in popular developments maintaining their current high levels.
“The Abu Dhabi rental market in 2015 is expected to see continuous strong levels of demand. A range of new projects are due for handover in 2015 including an anticipated 13,000 apartments and villas which will come online, will have an impact on the Abu Dhabi real estate market by creating greater competition, particularly in apartment rents,” said Oates. Abu Dhabi’s office market was stable in 2014, as landlords of single-owned buildings maintained their asking rates. However, it is anticipated that as new developments such as ADDAX Tower on Reem Island hand over during the year, rates for multiple-owned office space in the Investment Areas could come under pressure as individual landlords compete to secure tenants. Since 2013, the Abu Dhabi real estate market has continued to strengthen, a trend Asteco predicts to continue throughout 2015.
Jeremy Oates General Manager, Asteco Abu Dhabi
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Conveyancing Dubai Real Estate Services Conveyancing We offer conveyance services to developers across the UAE, allowing them to outsource the non-income producing tasks to a professional service company that has already helped other developers trim their expenses while increasing their collections and handovers. Keep your valuable resources, time and skills focused on your real business. We assist with contract management, payment collections, structured payment plans and the legal processes involved in the registration, consolidation and termination of non-performing sales contracts. Our services can save you significant expenses and free you up from the compliance aspects of property delivery and hand-over. • Pre-register properties and pre-sales • Contact buyers, provide final statement of account • Facilitate the collection of stage-payments, service charges and NOC • Negotiate consolidations under direction of the Developer • Handle legal termination of non-performing sales contracts with land registry • Lodge title registration and transfer of title to purchasers • Sub Division and Data Upload • Interim, Oqood and DSR Registrations and Cancellations • Registration of Mortgages/ Finance Charges • Application and collection of affection maps • Assisting with customer complaints submitted to Dubai Land Department • Consolidations, Terminations, Settlement Agreements and De-registrations • Strata/Subdivision of Units on the Interim Real Estate Registry 16 www.rootsland.com
• Registration of individual ownership of units on the Interim Real Estate Registry • Registration of finance mortgage charges on individual units where applicable • Access to DLD/RERA software platforms available to Developers as provided
Dubai Land Department We recognize the difficulties developers sellers and buyers can face when dealing with the Dubai Land Department. Therefore we offer our experience that means all of your registration requirements or any other DLD inquiries
will be handled quickly, cost-effectively and will be fully compliant with all rules and regulations. • Developer and Project Registration • Off-plan Sale and Re-sale Registration • Land Department Consulting or Assistance
developer to end-user Handover Introducing a dedicated, single-purpose service provider to be the intermediary can improve client’s responsiveness to communication. A quick and effective transfer of sold properties to your clients is essential; this process requires full dedication and includes the following services:
Handover Management
• Collection of outstanding final payments
A smooth and quick building hand over is essential to maximize the developer’s cash-flow and profit. We avail you through this complex and time-consuming process which requires technical knowledge and expertise, allowing you to focus on your main core activities.
• Service charge management • Sinking Fund • Collecting from the developer SPA and buyers’ passport copies • Building Budgeting • Termination of non-performing contracts • Building handover from Developer to Owner Association • Welcome kit to all landlords including guidelines: utility connections, building rules and restrictions, etc.
Resale NOC Processing This special service offered to Developers, saving you the hassle of applicant meetings, document collections, verifications and follow ups with community managers, facility providers and mortgage providers: to ensure that the unit in question is applicable for resale with no issues arising in the future affecting the Developer.
For further information contact:
Mahmoud Darwish Head of Conveyancing T E
+971 4 329 8333 mahmoud@rootsland.com
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Finding homes made easy
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Clarification of Real Estate Development Requirements
t can be said that the most important real estate requirements lie in the conditions developed for the real estate developer business in Dubai, as it is the main cornerstone of all real estate development. The real estate developer is defined under law as: “Any natural or juristic person licensed to purchase and sell properties with a view to developing the same with such definition including the main developer or sub-developer.” In addition, real estate development is defined as “Development of multi-storey buildings or complexes for residential and commercial purposes.” The Government of Dubai developed clear and simple conditions for licenses. It supported these conditions with strict requirements to determine the duties and liabilities of the parties involved in the real estate development together with safeguarding the same by imposing strict penalties against those who breach such provisions. These actions ensure transparency and bolster confidence in the real estate sector and reflect its significance and magnitude for those who strategically plan to invest in a city. The development of the real estate sector remain promising despite the magnitude of challenges, as evidenced by detailing subheadings and relating the same to laws as set out in this concise essay.
First - License Obvious and Affordable Conditions In order to proceed with a real estate development project, the real estate developer shall comply with the provisions of the law governing the off-plan sale of the real estate properties. This is the most substantial element of real estate development as it represents an investment and commercial business by offering real estate units to investors against installments with a view to achieving profits together with a parallel endeavor to convince banks of the profitability of financing real estate development projects. The local lawmaker in Dubai determined the legal umbrella governing such business in the Land Department of the Government of Dubai, which is responsible for maintaining a special register for real estate developers and determining the banks in which the developers and financers can deposit the installments of the real estate units under the account of the real estate project. Accordingly, since inception, the real estate developer has to open the escrow account, in which the amounts paid by the purchasers or financers of the real estate units sold off-plan are deposited. Article (3) of Real Estate Development Escrow Account Act (8) of 2007 stipulates that the provisions of this law apply 20 www.rootsland.com
to those who sell units off-plan and receive payments from purchasers. Further, Article (4) emphasizes that no developer may engage in such business, advertise in local or foreign media or participate in exhibition for promoting real estate units or properties sold off-plan unless it is registered in and licensed by the Land Department in Dubai represented by its director general. Article (7) of the Act stipulates in relation to the real estate escrow account that any developer who wishes to sell units off-plan must submit a request to open an Escrow Account and attach the following documents therewith: 1. A certificate of membership in the Dubai Chamber of Commerce and Industry; 2. Trade license; 3. Title deed of the plot to be developed; 4. A copy of the contract concluded between the master developer and the sub-developer;| 5. The initial architectural designs and engineering drawings approved by the Competent Entities and the master developer; 6. A financial statement of the estimated cost and revenues of the project approved by a certified chartered auditor; 7. An undertaking by the sub-developer to start the
purchase real estate units off-plan in consideration of installments pro-rata with the completion rate and the hand-over of the real estate unit We will tackle some of the real estate developer’s obligations by answering the following ever-pressing question: When is the real estate developer deemed late in the performance of its obligation to complete the project?
construction works of the project upon having obtained the approval of the master developer for off-plan sale, or an undertaking by the master developer if there is no sub-developer; and 8. A standard sale contract between the Developer and the purchaser. All such established conditions are required for opening the escrow account that shall be contemporaneously accompanied by an agreement made in writing between the real estate developer and the escrow (the bank in which the payments made by purchasers of units sold offplan or by the financers of the project are deposited). Such agreement shall determine the account management conditions, rights, and obligations of the contracting parties with a copy thereof being deposited with the Land Department. It is important to shed light on the above conditions because they protect developers due to the governmental control on such account and ensure that the amounts collected from investors for purchasing units sold off-plan are only applied towards the real estate project. These conditions also ensure the real estate developer is honest in relation to such development and the cash it received for such purpose.
Second - Strict conditions for the performance of the mutual obligations of the real estate developer and investors who
Real estate developer delay in the performance of its obligations to complete the project is a very material issue as an expected risk associated with building and construction agreements with their diversified requirements. Such requirements include the approvals to be obtained from governmental bodies and the duties of the developer, the main contractor, and subcontractors. Therefore, a specific body shall be nominated to bear solely such liabilities and risks in consideration of the investment advantages, margins of profits, and speculations. Accordingly, the lawmaker has not left this issue to the will of developers or investors or to be determined at the discretion of courts with their conflicting assessments based on the human discretion for assessing the extent to which the real estate developer complied with the general obligations under contract or tort principles. In recognition of such importance, the Government of Dubai has specifically determined the standards relating to the issues that the real estate developer may encounter whilst executing the real estate project. It suffices to demonstrate such cases in order for interested parties to realize their clarity and sufficiency and so that those interested in the real estate domain can be familiar with their legally protected rights. The specialists may refer to the resources referred to herein. Whereas the review of the real estate law indicates the cases where the real estate developer is deemed in default in the completion of the project, Article (21) of the Executive Council Resolution No (6) of 2010 approving the Executive Regulations of Law No (13) of 2008 Regulating the Interim Real Estate Register in Dubai expressly states the reasons deemed beyond the reasonable control of the real estate developer, as follows: 1. If the plot where the project is to be constructed is expropriated. www.rootsland.com 21
Clarification of Real Estate Development Requirements 2. If a government body has frozen the project for replanning reasons. 3. If a building remains or manuscripts are discovered within the site of the project. 4. If the Master Developer makes alterations to the project site entailing the alteration of the project boundaries and area in a manner affecting the performance of the sub-developer’s obligations. 5. Any other grounds to be estimated by the Agency.
Third - Strict Penalties for Violations Each reviewer of the legal texts realizes that the powers vested in dealers and investors are subject to providing a secure, safe and stable investment atmosphere where the investor has broadest credit powers by entering into off-plan sale agreements with investors together with concluding banking finance agreements with banks and financial institutions to finance the real estate project. Accordingly, the lawmaker has ensured the proper guarantees for both investors and banks. In this regard, Article (16) of the Real Estate Development Escrow Account Act (8) of 2007 stipulates that: Without prejudice to any penalties stipulated by any other legislation, an imprisonment sentence and a fine of at least one hundred thousand Dirhams (AED 100,000), or either penalty, shall be imposed on those who: 1. Engage in Real Estate Development activity in the Emirate without a license; Provide the Competent Entities with incorrect documentation or information in order to obtain a license to practice the Real Estate Development activity;
5. In the case of consultants, knowingly certifying fraudulent reports on a Real Estate Development project; or 6. In the case of Developers, dealing with a real estate broker who is not registered on the Real Estate Brokers Register maintained by the Department in accordance with Bylaw No. (85) of 2006 concerning the Real Estate Brokers Register in the Emirate of Dubai. Furthermore, Article (17) stipulates that the real estate developer shall be deregistered and punished with penalties set forth in Article (16) in the cases where:1. It is declared bankrupt; 2. It fails, without an acceptable reason, to commence construction works after the lapse of six (6) months from the date on which he was granted permission to sell Units off-plan (as may be estimated by the Land Department in Dubai); 3. The license granted to the Developer by the licensing entity is revoked; 4. It commits any of the violations stipulated in items 2, 3, 4 and 5 of Article (16) of this Act; or 5. It violates any of the laws and bylaws regulating the activity of Real Estate Development in the Emirate. We hope we have managed to make the real estate legal concepts a bit clearer for developers and investors together with adding information to the legal culture for all interested parties. Best Regards,
2. Knowingly offer for sale Units in fraudulent Real Estate Development projects; 3. Steal, appropriate, or forfeit any amounts of money delivered to them for the purpose of implementing Real Estate Development projects; 4. As for auditors, deliberately preparing a fraudulent report upon auditing the financial standing of the Developer or deliberately failing to disclose material facts in their report;
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Mr. Osama Bashir - Legal Counsel Al Zahmy Advocates & Legal Consultants +971 50 327 5790 osama@alzahmyadvocates.com
Mortgage Market - Q1 2015 Update & Opportunities
2
015 is set to be a challenging year for the UAE mortgage market, with most banks committed to higher targets and property transactions continuing to slow. This will provide prospective buyers and existing borrowers with better lending opportunities as the banks battle over a smaller pool of business. As competition amongst the banks intensifies, consumers can expect lower interest rates and greater transparency in mortgage products. The UAE Central Bank mortgage regulation has also had a positive impact in softening house prices and most banks have standardized exit fees at 1% (maximum AED10,000) for early settlement of loans. Existing borrowers now have greater flexibility than in the past, where excessive penalties minimized the opportunity of securing better terms elsewhere. Home Matters is delighted to showcase some excellent lending options for UAE residents, non-residents, first time buyers, equity release and refinance clients, along with UK, under construction and commercial mortgage solutions;
Refer a friend and get a FREE HOME MATTERS ENTERTAINER BOOK
Refinance Why pay more? Move your mortgage to 2.99% and count the savings! Non-Resident If you live oversees, secure a 50% mortgage with only 3 months bank statements and your passport New Purchase Buy your dream home with the lowest rates available in the market Equity Release If you have a small or no mortgage on your property, release up to 75% of the current market value to utilize the funds elsewhere UK Mortgages 90% residential mortgages starting from 1.99% Under Construction secure 50% mortgage at 2.99% Commercial Buy your own office or retail space with a 75% mortgage
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MUDON Community
M
udon is a gated community in DUBAILAND comprising spacious, high quality townhouses and villas offering residents a tranquil yet vibrant lifestyle. Fostering a local neighborhood spirit, the community is inspired by Arabic themed designs. With the first phase of handovers currently ongoing, Mudon is one of DP’s most popular communities due to its convenient location, unique design and balanced lifestyle offering. The community spans an area of approximately 30 million sq ft, and offers a wide range of facilities to enhance the overall living experience for residents. Units include spacious four bedroom townhouses, and three to five bedroom independent villas with sizes ranging from 3557 sq ft to 5457 sq ft.
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Mudon will also feature a 20,000 sq m dedicated retail and leisure community centre with a grocery, nursery, 14 leasable retail units, cafÊ and family restaurant with outdoor seating, kiosks and a medical clinic, all of which are designed to accommodate the needs of Mudon residents. Various outdoor facilities will also be available to Mudon residents including swimming pools, two tennis courts, and ample parking space for visitors. Cycle routes, jogging paths and children’s play areas woven in-between the natural green open spaces will also enrich the well-being of residents. In addition to the numerous lifestyle facilities Mudon offers, it also provides parents with quality educational
options for their children within a short distance of their homes. These include a recently announced GEMS school at Mudon, which will cover the entire educational age range from KG through to Grade 12. The school will spread over three storeys with an expected opening date of September 2016. Mudon is located 15 minutes from the centre of Dubai and just over 20 minutes from Mall of the Emirates on the Umm Suqeim Road. For sale enquiries please: Ccontact 800 374 or visit dp.ae
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Dream Palm Residence Occupancy Commenced!!
D
ream Palm Residence is the newest addition to the high-end portfolio of Al Fattan Property LLC. Established in 1974, Al Fattan Property LLC has built a reputation for excellence of quality construction.
"Dream Palm Residence" a combination of Luxury Residences, is offering a private sanctuary in the middle of marvelous harbor of the world’s largest manmade island -The Palm Jumeirah This Sanctuary of Private Luxury is located at the right tip of the outer Crescent Island, facing HRH Sheikh Mohammad bin Rashid Al Maktoum’s Palace with a perfect backdrop view of the majestic Burj Al Arab. Besides the exclusive apartments with 2 bedrooms, 3 bedrooms, 4 & 5 bedrooms Dream Palm Residence offers state of the art Penthouses and splendid Townhouses on the Ground floor. The spacious Townhouses at Dream Palm Residence comprises private swimming pool and Exclusive garden is the embodiment of “quality construction work” which is reflecting throughout the Project. Precisely, the right blend of high-end architectural skill and superior Luxury concepts incorporated in each unit makes Dream Palm Residence one notch ahead of other properties in the vicinity. The sophisticated and intelligent design and high roof sealing of Dream Palm Residence allow every apartment to capture the magnificent views of the Lagoon, the blue waters of the Arabian Gulf, Atlantis Hotel and Burj Al Arab. The highlight of the luxury at Dream Palm Residence is that all residents share direct access to the Beach, exotic infinity pool, state of the art gymnasium and the adjacent 5 star Hotel and SPA which is managed by the world renowned Rixos Luxury Hotel Group, with all the facilities and services one would expect. These elite residences come with secured underground parking and superior white goods in the kitchen. Naturally, it is one of the sought-after freehold properties for the elite class who adores quality finishing and exclusivity.
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Dream Palm Residence
Lake Shore Tower for Sale
L
ake Shore Tower offers a choice of spacious apartments in different layouts, with beautiful views of the lake and golf course. The strategic location of the tower enables easy access to Sheik Zayed Road, Dubai Marina, Dubai Media City and Jebel Ali. For the non-driver the metro is just minutes away, which makes any part of the city easily accessible. The close surroundings include a newly completed park, the beautiful lakes of JLT, a wide variety of restaurants, supermarkets. JLT offers all sorts of services, which will contribute to a comfortable and carefree day-to-day living.
Features • Great location • Spacious units • Lake and Golf course views • Ample parking for residence and visitors • Outdoor swimming pool • Fully equipped Gym • Jacuzzi and Sauna
Multiple exclusive UNITS
+971 4 329 8333 inq@rootsland.com
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FOR SALE
World Trade Centre Residences J
umeirah Living World Trade Centre Residence is located in the heart of Dubai, only minutes away from the city’s financial and business districts.
Features • 1, 2, 3 and 4 Bedroom Simplex and Duplex • High Quality Finishes
Whether you are passionate about shopping, the beach, business or pleasure – the surroundings serves all needs.
• State-of-the Art Fittings
From the extravagant shopping in Dubai Mall, to the soft sand of JBR beach, all surrounded by amazing views of the buzzing city.
• Smart Home System
• Housekeeping Services
for Sale T +971 4 329 8333 / E inq@rootsland.com
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INVEST IN OFF-PLAN IN
SPORTS CITY
Bermuda Views, Eagle Heights and Profile Residence are all projects to be launched during the year – all offering high quality finish, in prime locations in Sports City. Weather you choose to live next to the golf course or the stadium, you can be sure to enjoy the facilities offered while living an active lifestyle. Sports City is the upcoming, affordable area for residences as well as the ultimate location for investment – offering one of the highest rental yields in Dubai.
Book your home or place your investment in Sports City Studio, 1 & 2 bedrooms apartments available for sale
+971 4 329 8333
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Price starting from AED 800 per SQFT
Site visit and viewing of mock up apartment possible
nathalie@rootsland.com
ELITE LIVING
newest Masterpiece in Downtown, Dubai Elite Downtown Residence offers outstanding views of the fountain and Burj Khalifa. • 24-storey tower with premium finishes and luxurious amenities • Five star pool, gymnasium and other facilities • Studios, 1, 2 and 3 Bedroom available • Fully furnished • Only few minutes away from Dubai Mall and the boulevard.
+971 4 329 8333 elie@rootsland.com
FOR MORE DETAILS
T +971 4 329 8333 / E inq@rootsland.com
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Why Invest In Greece?
H
ave you ever imagined owning a dream home in one of the most attractive and historical destinations of Europe? A place where a combination of beautiful landscapes of greenery, mountains, sea, Mediterranean climate, and a history of over 3000 years where democracy was created and the birthplace of Europe initiated? … Greece is this destination and now offers outstandingly reduced prices on properties with an opportunity to gain a permanent EU visa for you and your family. Although Greece has suffered from the well known recent European economical crisis like several other countries in the region, it is now finding it’s way out to becoming a stronger country and has shown to be a top destination in Europe for investing or acquiring properties as the package offers it all. Greek property prices have dropped dramatically in the past four years due to the crisis which has led to an increasing trend in foreign investors having an interest towards acquisitions. In many areas, properties and plots have dropped in selling prices up to 40% where some may be acquired as an investment or as a second home. Among several EU countries, Greece has initiated the advantage of gaining a permanent EU visa after acquisition in anticipation of attracting more investments.
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EU VISA RESIDENCY - The cheapest EU VISA Residence program in European Union In April 2013 the Greek parliament passed legislation to offer residency to non European Union purchasers of properties over €250,000 (about $323,000). The new law offers a five year buyer’s residency as well as the chance of obtaining a Schengen visa that can enable the holders and their families (spouses and children under the age of 21) to freely travel in the Schengen area of 25 European countries. The residency can be renewed after the initial five year period. Now the prospects for the non-European Union house hunters to find a bargain in the Greek “buyer’s” real estate market seem even more promising. Greece has the lowest purchase requirement amount in order to gain Shengen Visa
Minimum Real Estate Purchase for a Visa
12 Reasons to Invest in Greece 1. Strategic location between Europe, Africa and Asia. 2. Schengen zone country Passport holder can travel around Europe without visa. 3. Lowest tax rate in the European Union. 4. Clear perspective plans for future development. 5. High degree of safety and very low rate of crime. 6.
Advanced level of education and health services.
7. Hospitality and respect to all religions and cultures. 8. In one year the Greek FTSE 20 ETF has gained more than 50%. 9. Offers the cheapest EU Visa Residency among all other European countries and is renewable for as long as you own a property. 10. Greek Islands are awarded every year among the best travel destinations in the world. Santorini has been awarded as the No1 Global Travel destination and the most beautiful island in the world many years in a row by BBC, Lonely Planet, USA Today and more. Mykonos, Crete, Athens, Thessaloniki are among the top European destinations. 11. Buying a luxury house in Crete, Mykonos, Santorini, Halkidiki and rent it out to tourists. This way you both get EU Visa resident permit for you and your family but also make a profitable investment. Luxury houses in these areas can be rented out to tourists for 4-5 months during the summer season for 300600 Euros per night! 12. English is spoken by the majority of the population.
FOR MORE DETAILS
T +971 4 329 8333 / E nathalie@rootsland.com
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BOUZNIKA Oasis Villas Live the Luxury in Morocco
فـــــيالت الواحـــــــة يف بــــوزنيقــــــة عــــــــش الـــــرفـــاهيـــــة يف املغــــرب
Features • LANDSCAPE GARDEN • PRIVATE AND COMMUNITY POOL • BEACH ACCESS • CLOSE TO THE GOLF COURSE • CHILDRENS PARK & PLAY AREA • WATCHMAN ROOMS • 24 HOURS SECURITY casablanca
50 KM, Approx. 30min drive Bouznika
40 KM, Approx. 20min drive
for Sale READY TO MOVE-IN AND PAYMENT PLAN T +971 4 329 8333 / M +971 50 557 4145 E leila@rootsland.com 34 www.rootsland.com /oasis-villas-bouznika-morocco
Rabat
PEACE OF MIND INCLUDED
BUYING, SELLING, RENTING PROPERTY MANAGEMENT, VALUATION MARKET RESEARCH, CONVEYANCING
POB 215273 Dubai, UAE T +971 4 329 8333
HQ. Sheikh Zayed Road
F +971 4 329 8997
BR. JLT
BR. Downtown
E info@rootsland.com
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PALAZZO VERSACE DUBAI A waterfront setting, spectacular architecture, Italian furnishings, extraordinary service and an ambience of pure glamour… Set in the heart of Dubai, the Palazzo Versace Dubai Hotel and Condominiums is magnificently located on a premium waterfront plot with unobstructed views of the Dubai Creek. Furnished with the exclusive Versace Home Collection, surrounded by landscaped gardens and only a few minutes drive from Dubai International Airport, it is Dubai’s most prestigious waterfront address, with condominium residents’ having access to the Hotel’s luxurious amenities.
THIS IS LUXURY DEFINED LIVE THE VERSACE LIFESTYLE.
FOR SALES INQUIRY
T +971 4 329 8333 / E nathalie@rootsland.com
www.rootsland.com