April 2013 - eZine

Last month at a glance: • • • • • •

Dubai property sees a drop in number of investors, but value increases Women invest AED 13.3b in Dubai real estate market DAMAC Properties to develop in Dubai Maritime City Growing investor interest in health care real estate Property buyers should look closely at the sales contracts from developers Flight to quality in UAE’s office mart Issue No. 4 - April 2013

International property market

Canada

Latest from the economy

Trade to support Dubai’s Islamic economy plan Record performance for Dubai World Trade Center in 2012 Dubai can become Islamic finance hub

Emirates Living: Emirates Hills, The Lakes Dubai Freehold Property

Canada: “a mari usque ad mare” International Property Markets

Smarter way to jump in real estate Real estate Investing Lessons

Prepared by: Mo. Asadian

VALORAN MEMBER

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Valoran Real Estate Brokers Issue No. 4 - April 2013

News Digest: Last month at a glance Dubai property sees a drop in number of investors, but value increases As per the Dubai Land Department statistics, the total number of overall property investors has dropped steadily in the last three years but the value of transactions increased in 2012. Last year, there were 21,310 investors in the market with transactions worth AED 56.766 billion. In 2011, the number of investors was 24,657 with investments totaling AED 47.362 billion. In 2010, a total of 27,785 investors spent AED 50.195 billion on properties in Dubai. The top selling areas by land plot were Barsha South 5 with 262 transactions, Wadi Al Safa 6 with 247 transactions and Wadi Al Safa 5 with 237 transactions. The best-selling units were Burj Khalifa with 1,026 sales transactions, Al Thaniya area 5 with 803 sales and Dubai Marina with 709 transactions.

Women invest AED 13.3b in Dubai real estate market Female investors spent AED 13.3 billion on properties in Dubai in the year 2012, representing 23 per cent of the Emirate’s real estate market.

According to data from the Dubai Land Department (DLD), 5,434 women invested in properties. Personal finance advisers and property analysts say they have seen an increase in demand by female investors for real estate, recently. Some

of this interest is coming from women who made their money from business. Greater access to market information, the desire to be financially independent and banking services directed towards women are all contributing to women’s interest in the property market.

DAMAC Properties to develop in Dubai Maritime City Damac Properties plans to develop a prime real estate in Dubai Maritime City. Damac’s plot of land on the sea-front in Dubai Maritime City will become home to a high-rise luxury tower of serviced hotel residences and further expand the company’s project portfolio in the Emirate. Damac Properties has been on an aggressive growth path over the past six months. Since completing Marina Bay, its first project in Abu Dhabi, the company has announced strategic partnerships with both the Italian luxury fashion house Fendi, and the iconic movie makers, Paramount Pictures. Consumer confidence is back, prices are rising and yet there remains a more sensible approach to the way developments are being brought to the market in Dubai. Serious investors are taking a medium to long term approach and this stability is helping to make Dubai one of the most profitable real estate markets in the world.

Growing investor interest in health care real estate Property and retail markets could stand to benefit from growing investor interest in the UAE’s niche health care real estate segment. It’s a sector of the market that traditionally has not been catered for by real estate investors, but now there’s more investor interest in this segment. A combination of government spending and a crowded traditional property market in the region is prompting

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Valoran Real Estate Brokers Issue No. 4 - April 2013

investors to seek opportunities in health care real estate, which includes hospitals, clinics, medical universities and medical towers. The UAE and Saudi Arabia are driving investments thereby boosting the Mena region’s health care sector. The UAE’s health care market is projected to become a AED 44 billion industry by 2015, according to the Dubai Chamber of Commerce and Industry.

Forecasts for the GCC indicate a $60 billion health sector over the next decade. The rise in this sector can be witnessed by the growth taking place the Meydan Group announced details of a ninespecialty private hospital at Meydan Racecourse district, in partnership with Mir Hashem Khoury (MHK) Group and the Korean health-care provider Bobath Memorial Hospital, a specialized medical center with extensive experience in multidisciplinary rehabilitation. Another project, the $115 million private hospital - Emirates Health Care Development Company with a 315-bed capacity, was constructed by International Hospitals Construction Co (IHCC).

Property buyers should look closely at the sales contracts from developers Investors purchasing on the secondary market should read SPAs carefully to ensure that the original investor has the right to sell, under the SPA. If the investor tries to sell the property to a secondary investor, such a sale may not be considered valid under the SPA unless a minimum number of installments has been paid. It is important to note that any off-plan sale of a property which is not registered in the Interim Real Estate Register is not valid under Dubai real estate laws.

Dubai is seeing a steady outflow of new off-plan projects, but property buyers should look closely at the sales contracts from developers. Previously, developers had imposed conditions to the effect that any secondary market purchaser is required to make a certain amount of accelerated payments to the developer, upon purchasing the property and before being permitted to sell. The new restrictions go beyond this - there is a requirement now, in certain Emaar SPAs, that an investor pays

a percentage of the sale price and/or number of installments before being able to sell the property on the secondary market.

Flight to quality in UAE’s office mart The Dubai and Abu Dhabi Office markets are currently oversupplied, with vacancy rates in Dubai at 30 per cent and higher in certain parts of the city. There is some very good, ‘Grade A’ office accommodation and plenty of indifferent and secondary accommodations available to let. This is good news for occupiers looking either to relocate or expand into more space. Increasingly, it will be the better specified properties which will be leased up as the economy recovers and businesses in the UAE come to expect higher specification standards in their buildings. Driven by a demand for higher standards of service and a desire by corporate occupiers to manage their operational costs more effectively, greater transparency in operating costs is increasingly occurring, especially in the higher quality office stock.

Other headlines in brief •

Turkey makes strong case for its property market: Wooing GCC investors with sweet deals and visa incentives

•

Meydan and G&Co launch AED 1.2b luxury Millennium Estates villa development: Prices of properties in the gated community near Meydan’s grandstand range from AED 5.74m to AED 7.2m

•

Property inheritance still presents an opaque picture: Foreign investors in the local property market will need to watch out for legal fine print

•

Dubai gets a permit for 23,000 buildings in 2012: Numbers indicate the revival of construction industry

•

Emaar apartment sales revenue soare to AED 2.5b in 2012 Source: Gulf News

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Valoran Real Estate Brokers Issue No. 4 - April 2013

Latest from the economy Trade to support Dubai’s Islamic economy plan A surge in exports boosted Dubai’s total non-oil trade by nearly 13 per cent to an all-time high in 2012, and such steady growth supports the Emirate’s plan to become the world’s Islamic economy hub. From around AED 1,089 billion in 2011, Dubai’s total non-oil trade, including free zone commercial activity, swelled to a record high of AED 1,235 billion in 2012, maintaining its position as the main commercial and business center in the oil-rich Gulf. The increase was mainly a result of a 47 per cent surge in exports to a record AED 163 billion in 2012, while imports grew by 12 per cent to peak at AED 737 billion, indicating a steady recovery in the business in Dubai and the UAE as a whole. In addition, re-exports increased by 5 percent to a figure of AED 334 billion. Official data showed trade, excluding that of free zones, accounted for nearly 65 per cent of Dubai’s commercial activity last year, standing at around AED 808 billion. Free zone commercial activity was estimated at AED 417 billion with AED 10 billion contributed by customs warehouses in the Emirate. Trade through air transport stood at AED 628 billion, while shipping trade was estimated at AED 442 billion and land trade at AED 165 billion.

Record performance for Dubai World Trade Center in 2012 A record performance was recorded for Dubai World Trade Center in 2012, with more than 1.85 million visitors using the events as a trading, promotional and sales platform for the MENASA region. Dubai World Trade Center continues to be a pillar of prosperity and growth for Dubai. Strong performance has been witnessed throughout the previous five years. During a period when the global exhibitions industry experienced difficulty

prior to its more recent stabilization, Dubai World Trade Center has delivered year on year growth. The www.valoran.ae

Valoran Real Estate Brokers Issue No. 4 - April 2013

2012 results affirm DWTC’s position as the Middle East’s premier platform for business networking and international trade.

The swell in exhibitor numbers saw 36,996 companies from over 130 countries participate in events at DWTC during the year, while the record visitor numbers were drawn from 186 countries.

38 per cent of the total attendance to DWTC’s major exhibitions and conventions in 2012 was comprised of foreign visitors, who, per person, contributed 11-times the economic value to Dubai compared to locally based visitors. Estimates show that over the next 5 years the city’s trade traffic will grow by an average of 5-7 per cent per annum, with a substantial amount of business coming in by virtue of being on the arterial routes, linking growth economies across Latin America, Africa and the East. DWTC will continue to play a major role in stimulating trade, as it remains focused on delivering not just a world-class trade event, but a world-leading experience too.

Dubai can become Islamic finance hub His Highness Sheikh Mohammad Bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, earlier this year announced plans to make Dubai the center of the global Islamic economy and finance industry. In a demonstration of quick and efficient implementation of development programs in Dubai, he launched an executive plan to transform Dubai into the center for Islamic bonds. The initiative will see the creation of a center for issuing, listing and trading sukuk. It will encourage companies and countries to issue sukuk instead of conventional bonds. A key part of the initiative is the creation of a unified government Sharia board that will create common standards and regulations for the Islamic finance industry. The lack of common standards and regulations has been one of the weaknesses in governing the international industry, thus far.

There is a growing market for Islamic bonds. Besides investors who are looking for safe havens, there is 6

an increasing demand for finance infrastructure and other investment projects in emerging markets, according to financial experts. Dubai is especially well-positioned to serve the countries of the Middle East and Africa. The plan to make Dubai the center of the global Islamic economy will also see it emerge as a hub for halal food industry and Islamic contract arbitration, among others.

Other important headlines •

UAE-France trade to grow up to 15% this year: Exports and imports between countries amount to $6.7b

•

UAE urged to invest more in scientific research: National Research Foundation launches second cycle of funding competitions

•

Emirates airlines lists sukuk worth $1b: Sukuk issued to finance the upcoming aircraft deals

Valoran Real Estate Brokers Issue No. 4 - April 2013

Dubai Freehold Property: Emirates Living In our last month’s report, we featured ‘Emirates Living’ and major areas constituting this beautiful community by emphasizing on ‘The Springs’, and ‘The Meadows’. In this issue, we will highlight ‘Emirates Hills’ and ‘The Lakes’.

Emirates Hills Emirates Hills, known as Dubai’s most prestigious address, provides the height of luxury living. Dubai is home to many luxury property developments, but Emirates Hills is unquestionably the most exclusive. A place of paramount wealth and beauty, each of its villas are unique, reflecting the lives of the people that live there. Featuring a harmonious balance of well-appointed villas, handsome neighborhood and lush landscaping, make Emirates Hills the undisputed “Beverly Hills” of Dubai.

Emirates Hills is a gated community located in Dubai, United Arab Emirates. It has been named after Beverly Hills. Emirates Hills is largely home to the expatriate community of Dubai, as it consists

of the first freehold properties to be sold in the city. While the project was classified as freehold and open to anyone to purchase, the majority of owners hail from the Indian subcontinent, Iran and Western Europe.

Although the developer, Emaar Properties, pioneered the idea of freehold property in Dubai, this is Emaar’s only project where land was sold per square foot to individuals to build the house of their choice.

Emirates Hills’ exclusive properties look out over the lush green fairways of the Montgomerie. The world-class Montgomerie 18-hole Championship Golf Course, created by master architect Desmond Muirhead and seven-time European Order of Merit winner, Colin Montgomerie, makes living in Emirates Hills a golfer’s paradise.

Rental Price Range (in AED per annum) Emirates Hills

5 Rooms

420,000 - 700,000

6 Rooms

500,000 - 800,000

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The major features of the properties in this Living are 24hr security, 24hr maintenance, Pedestrian walkways, Golf Club House and Spa. The Hills mainly contain the plots and ready-made villas with the plot size of 12,000 sq ft - 45,000 sq ft.

Major project listings: Dyaar Al Hambra Al Hambra is a group of superlative villas seamlessly integrated into the established landscape of Emirates Hills and the rolling fairways of the Montgomerie Golf Course. Influenced by traditional Arabian style architecture and incorporating contemporary innovations, the properties of Al Hambra incorporate unique design features to provide exclusive signatures to each home.

In addition, the superb quality of construction, interior design and stylish finishing has ensured an incredible cluster of well-appointed family villas.

The property constitutes of villas with the plot size of 8,112 sq ft - 9,818 sq ft.

The villas are stylishly fashioned, from spacious open interiors to outdoor living spaces. Distinctive features of the Al Hambra property portfolio include: grand entrance halls and formal entertaining areas; superbly appointed living and dining areas; master bedrooms; spacious family rooms; guest quarters; state of the art kitchens and bathrooms; broad balconies; terrace areas and alternative villas are enhanced by an internal courtyard and complemented by a well-appointed Majlis.

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Montgomerie Maisonettes A stone’s throw away from the fast paced, vibrant life of Dubai, The Mongomerie Villas and Maisonettes are nestled comfortably within the exclusive and private Emirates Hills community. Exclusive in their setting and style to take advantage of the expansive golf course views, it’s a perfect setting to enjoy the serenity of Emirates Hills. The property constitutes of villas with the plot size of 2,159 sq ft - 4,119 sq ft.

The Villa styles have been designed by international architects and designers, incorporating a touch of Arabian influence. All the villas have been tastefully designed and built with attention to detail and super quality of construction, with private gardens. A usable roof top with expansive golf-views and open parapets, partly covered with a timber pergola, provide an ideal place for enjoying the magnificence of Emirates Hills.

Signature villas These world class villas are designed by worldrenowned architect, Sir Michael Hopkins. The word “Signature” describes something individual, different, one-of-a kind and that is precisely what Emirates Hills Signature Villas are. Set in the idyllic surroundings of Emirates Hills, each villa draws attention through its distinctive style, modern sophistication and contemporary Arabian design.

The special features of these villas are Spacious rooms, High ceilings with clear storey in main living area, expansive gardens and cool, deep balconies.

Valoran Real Estate Brokers Issue No. 4 - April 2013

The Lakes The Lakes offer family freehold homes from 3 to 5 bedrooms. Tranquil and scenic with waterways, parks and landscaped greenery, the Lakes set the tone for family living in Dubai. Its villas are situated between two world-class golf courses, The Montgomerie at Emirates Hills and Emirates Golf Course, the scene of the prestigious Dubai Desert Classic tournament. The Lakes has 5 established communities - Deema, Forat, Maeen, Zulal, Hattan - and a new community, Ghadeer, which was handed over in 2009. The property constitutes Detached Villas & Townhouses with 3 to 5 Bedrooms. Some of the special features of Emirates Lakes are landscaped common areas, parks and children play areas, swimming pools, lakes and water features, BBQ areas, half basketball courts, football fields and 24 hour security.

The Lakes, Hattan Traditional yet modern with the latest state-of-theart technology, The Lakes Hattan Villas embody the best of Arabian living and a uniquely private yet communal way of life. Facilities include private swimming pool and a mature landscaped garden.

Community facilities include swimming pool, children’s play area, tennis courts and a lot more. It

is an exclusive enclave of The Lakes district within the Emirates Living Community, focused around Emirates Hills, and in terms of design, spaciousness, and comfort – these single-family detached homes are among the most sought-after in Dubai.

Rental Price Range (in AED per annum) Forat

3 Rooms

160,000 - 220,000

Ghadeer

3 Rooms

160,000 - 200,000

3 Rooms

230,000 - 250,000

4 Rooms

250,000 - 280,000

3 Rooms

160,000 - 240,000

2 Rooms

110,000 - 140,000

3 Rooms

160,000 - 200,000

4 Rooms

200,000 - 230,000

5 Rooms

250,000 - 280,000

4 Rooms

370,000 - 400,000

5 Rooms

400,000 - 450,000

6 Rooms

500,000 - 600,000

Deema Zulal

Maeen

Hattan

The Lakes, Forat Forat is adjacent to the ‘Emirates Living Community’ between ‘The Montgomery’ and ‘Emirates Golf Courses. The inter-connected side walk system in The Lakes enables residents to have easy access

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to nearby amenities and to The Lakes club. This is a slightly modified villa community and it is very conveniently located close to The Lakes club which is an advantage for any leisure activity. Not far from pool and park either, it is a must see development.

lawns in a palette of earthy tones, they echo the sense of warmth that the neighborhood offers.

The Lakes, Deema Located in The Lakes, Deema villas are very well positioned offering great accessibility to transport links and local amenities. The Lakes is one of the finest residential areas in Dubai, situated between two world- class golf courses in the Emirates Living Community, just few minutes from Interchange 5 of Sheikh Zayed Road, Dubai Marina, Dubai Internet City, Media City, Knowledge Village, TECOM, public beaches, shopping malls and many of Dubai’s most luxurious hotels and resorts. The community also has an easy access to both the main highways, Al Khail and Emirates Roads.

The Lakes, Ghadeer Inspired by the gentle sound of flowing water, Ghadeer is located up the north east edge of The Lakes community. Ghadeer offers complete access to all of the neighboring retail, education and recreational amenities. Making friends should be a breeze as people in the area have called the place home for years. Five types of Mediterranean town homes jostle for your attention, with three bedrooms, verandas, gardens and spacious layouts. The town homes have balconies or terraces to make sure you’re always in touch with the outdoors. Standing in neat rows along manicured

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The Lakes, Zulal The villas in this gated community are carefully designed and integrated between neighborhood parks, barbeque areas, swimming pools and a sidewalk system ideal for walking and jogging.

Located within the Emirates Living community, The Lakes is ideally located between the world class Montgomery and Emirates golf clubs. The lakes also benefits from its own clubhouse providing members with their own fitness center, squash and tennis courts, a super-sized swimming pool, restaurant and supermarket.

Valoran Real Estate Brokers Issue No. 4 - April 2013

The Lakes, Maeen It’s beautiful and tranquil location in the heart of the Lakes community, Maeen, allows it to have easy access to shopping and leisure facilities. The villa is in an immaculate condition and is situated next to a park and pool. The white beaches of Dubai are only a ten minute drive away and all major shopping and business hubs of the city can be easily reached. Also, the Lakes community is extremely convenient for families as there are numerous well known schools and kindergartens in the area.Â

Emirates Living: Price Index Community

SubCommunity

Average Sales Price AED per Sq Ft (Average)

Studio

1 Bed

2 Bed

3 Bed

4 Bed

5 Bed

6 Bed

-

-

-

-

-

600,000 800,000

-

-

-

-

250,000 270,000

-

600,000 700,000

700,000 800,000

Deyaar Al Hambra

-

-

-

Maeen

-

-

110,000 140,000

160,000 200,000

200,000 230,000

250,000 280,000

-

Zulal

-

-

-

160,000 240,000

-

-

-

Deema

-

-

-

230,000 25,000

250,000 280,000

-

-

Ghadeer

-

-

-

160,000 200,000

-

-

-

Forat

-

-

-

160,000 220,,000

-

-

-

Hattan

-

-

-

-

370,000 400,000

400,000 450,000

500,000 600,000

The Meadows 1-8

-

-

-

210,000 250,000

240,000 290,000

260,000 330,000

310,000 500,000

-

-

-

185,000 250,000

225,000 270,000

240,000 290,000

290,000 300,000

-

-

110,000 125,,000

150,000 220,000

-

-

-

-

-

85,000 115,000

150,000 220,000

-

-

-

Signature villa Emirates Hills

Montgomerie Maiisonette

The Lakes

The Meadows

The Springs

The Views

The Greens

Average Rental Prices (AED)

1,200-2,500

1,100 - 1,250

The Meadows 9 The Springs 1-2 The Springs 3-15

1,400 - 1,625

900 - 1,200

Golf Towers.

Arno Mosella, Tanaro, Fairways, Links, Trawo, Turia

1,000 - 1,200

50,000 65,000

70,000 90,000

100,000 145,000

135,000 200,000

210,000 220,000

-

-

Una

950 - 1,050

-

-

120,000 140,000

-

-

-

-

1,000 - 1,100

42,000 55,000

60,000 75,000

85,000 115,000

125,000 165,000

165,,000 195,000

-

-

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Valoran Real Estate Brokers Issue No. 4 - April 2013

International Property Markets Canada: “a mari usque ad mare�

Economic Outlook- Era of slow growth The slowing trend observed in the Canadian economy, which emerged in the first half of 2012 and continued throughout the balance of the year, ushered in a new era of conservative expansion. As the year wore on, growth forecasts were steadily downgraded to below the 2.0% mark. Initially, forecasts ranged anywhere from 2.2% to a high of 2.5%, which was in line with the 2011 result.

The 2011 and 2012 rates represented a significant slowing trend relative to the 2010 level and what was observed prior to the 2009 recession. To a large degree, less robust economic activity was caused by events that took place beyond Canadian

borders. The unfolding financial crisis in the Eurozone has registered with the business sector, resulting in a reluctance to hire staff and expand operations. A weaker than expected recovery in the US has dampened export activity, which has also impacted expansion results. Financial market turmoil and recession-like conditions in Europe have also weighed heavily on the economies of the emerging world. The decline is but one of the causes of what has been a more conservative economic growth outlook in Canada that is expected to last for at least the next year.

Vancouver B.C., Canada

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Valoran Real Estate Brokers Issue No. 4 - April 2013

Canada’s economy is expected to generate moderately positive results over the next 12 to 24 months. However, continued turbulence beyond its borders will temper growth. The domestic economy is expected to generate modest growth of slightly less than 2.0% in 2013, followed by a modest rise in the overall rate of expansion in 2014. Gradual stabilization in Europe and the US will produce steady demand for Canadian exports.

However the major trading partners, both near and far, will continue to wrestle with abnormally

large debt loads, both public and private, and tepid economic activity overall. Despite limited overall growth, resource-rich provinces like Alberta and Saskatchewan will continue to outperform, with more modest results forecast for eastern provinces.

The net outcome for the Canadian economy over the next two years will be mediocre performance, with a mildly positive growth outlook. Growth rates will rest below the decade’s average until at least 2014.

Montreal, Canada

Economic Growth

Real GDP Growth - Historical & Forecast 6.0

5.2 4.1

4.0 1.8

2.0

%

3.1

2.9 1.8

1.9

3.5

2.5

3.0 3.1

2.8

3.2 2.7

2.2

2.4

1.9

1.1

2.4

1.8 1.8

2.3

2.3

2.4

2.7

0.0

-0.3

-2.0 -4.0

-2.8

00

01

02

03

04

Canada

05

06

07

United States

08

-3.1

09

10

11

12F

13F

World

Source: Conference Board of Canada; International Monetary Fund - October 2012 Outlook

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Valoran Real Estate Brokers Issue No. 4 - April 2013

This should be sufficient to drive positive demand in the office sector. Even modest expansion activity should continue to result in tight conditions. The resulting lift in occupancy will be supported by relatively little new vacancy added to the market as a result of new construction. Few new construction completions are scheduled until 2014.

Commercial Property The steady increase in Canadian office property values has been a key component of the sector’s ongoing recovery during the current cycle.

Evidence of this trend was exhibited in the annual sector average total return of 16.8% for properties tracked in the IPD Index for the period ending on June 30th, 2012. The result was markedly better than the previous period, as the rate at which values increased accelerated. Vacancy was in relatively short supply in office markets across the country, against the backdrop of generally positive demand characteristics. Prices for “core” and secondary assets peaked, reaching beyond the previous cycle peak in 2007. Buyers have been attracted to the sector by yields that remain sufficiently better than low-risk instruments, such as the often compared 10-Year Government of Canada (GOC) Bonds. The continued low interest environment has provided additional leverage, adding to an already compelling investment story.

Toronto Lakeshore, Canada

The outlook for Canada’s office property sector is largely positive. Canada’s economy is expected to expand by roughly 2.0% in both 2012 and 2013.

Annualized Returns

Rolling 1-Year RCPI/IPD Office Performance 30.0 25.0 20.0 15.0

%

10.0 5.0 0.0

-5.0

Office Sector

Jun-12

Jun-11

Jun-10

Jun-09

Jun-08

Jun-07

Jun-06

Jun-05

Jun-04

Jun-03

Jun-02

Total Real Estate

Source: RCPI/IPD

14

Jun-01

Jun-00

Jun-99

Jun-98

Jun-97

Jun-96

Jun-95

Jun-94

Jun-93

Jun-92

Jun-91

Jun-90

Jun-89

Jun-88

Jun-87

-15.0

Jun-86

-10.0

Valoran Real Estate Brokers Issue No. 4 - April 2013

CMA Real GDP Growth 2013-2016 Forecast

0

1

2

Calgary Edmonton Saskatoon Vancouver Regina Toronto Canada Winnipeg Halifax Montreal Victoria Ottawa

1.9

3

2.5 2.3 2.2 2.2

2.9

4

3.5 3.4 3.3 3.2 3.1

3.7

Source: Conference Board of Canada; SREA; CMHC

Residential Property Canada’s multi-unit residential rental sector continued to exhibit generally healthy investment sector performance over the past year, in keeping with the recovery that had already reached into its third year. Values tested new highs in all subcategories of the asset class and in virtually every market. This trend translated favorably in terms of sector returns. An average annual total rolling return of 14.2% was registered for the 12-month holding period ending on June 30th, 2012, for the subset of assets tracked in the IPD Index. This was the third strongest showing in 12 years, falling just short of the 2007 peak. The prolonged recovery was supported by largely positive rental growth trends. Tight conditions, coupled with the lack of a broad-based construction cycle, have created an environment where landlords have been able to push rents higher.

years. The shortage of vacant units translated into marked reductions in incentives offered by landlords, which supported increased Net Operating Income (NOI). Coincidentally, average rents increased in most markets, across the range of unit sizes. Bachelor and one-bedroom unit sizes posted average monthly rental inflation of 4.8% Montreal, Canada

National occupancy increased to a three-year high of 97.5%, up 20 bps year-over-year, as of the spring of 2012. Tighter characteristics in most urban centers presented a challenge for families looking to rent. The relative shortage of vacant units was exacerbated by a general lack of new construction activity, a trend that has been in place for several

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Valoran Real Estate Brokers Issue No. 4 - April 2013

Annualized Returns Rolling 1-Year RCPI/IPD Office Performance 25.0 20.0 15.0

%

10.0 5.0 0.0 -5.0

Multi-Residential Sector

Jun-12

Jun-11

Jun-10

Jun-09

Jun-08

Jun-07

Jun-06

Jun-05

Jun-04

Jun-03

Jun-02

Jun-01

Jun-00

Jun-99

Jun-98

Jun-97

Jun-96

Jun-95

Jun-94

Jun-93

Jun-92

Jun-91

Jun-90

Jun-89

Jun-88

Jun-87

Jun-86

-10.0

Total Real Estate

Source: RCPI/IPD

and 4.3% respectively, for all Census Metropolitan Areas (CMAs) combined as of April 2012. More modest increases were noted for larger unit categories, though the trend was the same. Increased occupancy and rents resulted from broadly stable demand. Generally positive economic and labor market trends boosted international immigration, which translated into positive rental sector demand overall. Demand strength coupled with constrained supply was key drivers of what has been steady improvement in the nation’s rental market over the past several years.

Canadian Housing Market Pricing vs. Demand

600,000

$400,000 $350,000

500,000

$300,000

400,000

$250,000 $200,000

300,000

$150,000

200,000

$100,000

100,000

Housing Starts (RS)

Housing Sales (RS)

2013F

2012F

2011

2010

2009

Average Housing Prices (LS)

Source: Conference Board of Canada; SREA; CMHC

16

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

$0

1990

$50,000

0

Valoran Real Estate Brokers Issue No. 4 - April 2013

Overall, the Canadian Real Estate sector is on the path of recovery and is expected to stabilize by 2014, followed by the trend of growth at a faster pace.

Source: Morguard Research

Vacancy Rates To Second Quarter - 2012

9.9

Edmonton

9.8

Winnipeg

9.3

Halifax

8.5

Montreal

8.2

National Vancouver

8.0

Toronto

8.0 7.2

Ottawa

7.0

Calgary 0

2.5

5

7.5

10

Source: CBRichard Elis

CMA’s Rental Vacancy Rates For Structures of 3 units+

Edmonton

3.3

2.5 2.5

Montreal

2.3 2.4

Halifax

2.2 2.2 2.1

National Victoria

1.6

Calgary Toronto Vancouver

1.1

Ottawa Winnipeg 0 Source: GMHC. Housing Market Outlook

1

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Valoran Real Estate Brokers Issue No. 4 - April 2013

Real Estate Investing: Lesson 3: Smarter way to jump in real estate Finding Foreclosures One of the best ways to maximize your chances of earning a good return on your investment is to buy a property at foreclosure or as an REO (real estate owned). Such investments are generally a better value than a conventional purchase. Foreclosures are simply properties for which the owner has failed to meet their loan payment or other loan term obligations, forcing the lender, if they want to get some of their money back, to take over legal ownership and control of the property (or foreclose and take title). Although more formal in a legal sense and more time consuming, a real estate

foreclosure is similar to a lender repossessing the car from an owner who fails to make their monthly car payments.

After completing the foreclosure process, the lender takes title, at which point they own the property. The lender has to maintain and manage the property, so it turns the property over to asset managers in the lender’s in-house real estate owned (REO) department. The asset managers may keep the day-to-day property management in-house as well, but most lenders hire local property management firms to inspect the property, repair any emergency items, and essentially operate the property until the lender can sell it - usually within a few months unless the borrower has redemption rights. Typically these properties are spruced up and then sold quickly for as close to the appraised value as possible.

When considering foreclosures and REOs (REOs shall be discussed in the next issue), be sure to perform the necessary research: • Inspect the property and determine the physical condition and the cost of any needed work. Be careful to rule out environmental concerns. • Review a preliminary title report to see

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Valoran Real Estate Brokers Issue No. 4 - April 2013

whether the property has any unpaid tax liens or encumbrances.

• Appraise the property and establish your target price and a firm maximum bid so that the emotions of bidding do not lead you to overpay.

The term foreclosure actually describes a process by which a lender takes title to a property on which a loan is in default. The two most common high risk mistakes homeowners make that lead to foreclosure are:

or other breach, the holder of the mortgage must go to court and seek legal remedies including judicial foreclosure.

Technically, there are four steps, and thus four buying opportunities, for a property subject to the typical foreclosure process. Knowing these steps and the techniques or negotiating points necessary at each step to motivate the owner or lender is essential to mastering one of the best strategies of buying real estate at below market or wholesale prices.

• Failing to make the mortgage payments as required • Borrowing too much when refinancing Other reasons could be: • Owners fail to meet other loan requirements • Absentee owners are unable to effectively manage the property • Owners walk away from serious problems Before you pursue foreclosure properties, determine the type of foreclosure process commonly used in your state. Check with your favorite lender, real estate agent, real estate attorney, or title company representative to find this information. Your state falls under one of two categories: • Deed of trust state: When a loan is placed in a deed of trust state, the property title is held in the name of a third party or trustee. If the loan payments are not made as promised or the loan is in default for another reason, the trustee can foreclose or take back the property. This process is referred to as nonjudicial foreclosure.

• Mortgage state: In a mortgage state, no trustee or third party is named. When a mortgage goes into default for nonpayment

Pre-foreclosure Every potential foreclosure begins when the owner misses a payment on their debt service or is notified in writing by the lender that a condition or a term of their loan is not being met. The pre-foreclosure stage is the period of time before the lender formally files the Notice of Default, which triggers the legal foreclosure process.

The period of time before the formal foreclosure begins is an important buying opportunity: You can get in ahead of competing investors, to identify properties on which the owner is delinquent on mortgage payments or violating other conditions of their loan. The key is to track and locate these defaulting owners.

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Valoran Real Estate Brokers Issue No. 4 - April 2013

common scenario is that the borrower does not respond and the lender receives a judgment by default and can proceed to have a referee appointed by the court. The lender then advertises the sale for four to six weeks and then, if full payment hasn’t been made, a public sale is held.

Notice of Default The first formal legal action in the foreclosure process is the filing of a Notice of Default. If the owner was not concerned when he first began missing loan payments, the filing of the Notice of Default should be a real wake-up call. An owner who has received the Notice of Default is likely to be motivated to sell because they know that the lender has begun the formal steps toward repossessing their property.

Many of the problems that occur in buying foreclosures can be avoided by structuring the purchase offer to require the owner to vacate the property immediately. It is difficult for an owner to lose their home, and it is often even more difficult for them to accept the fact that they are no longer the owners while still living in the property.

Foreclosure sale Although the foreclosure process varies from state to state, the main difference is whether the loan is secured with a mortgage that requires a judicial foreclosure or by a deed of trust.

• Judicial foreclosure: In a judicial foreclosure, the lender files a lawsuit against the borrower to get the property. Like any other lawsuit, it begins with the serving of a summons and complaint upon the borrower.

If the borrower responds, the court holds a hearing and rules that either the borrower has presented a legitimate issue or the lender is permitted to foreclose. The most 20

• Non-judicial foreclosure: In a non-judicial foreclosure state, lenders are allowed to foreclose without a lawsuit, using the power of sale provisions of the deed of trust. The deed of trust actually has three parties to the original loan agreement — the borrower (grantor), the lender (beneficiary), and the trustee who actually holds title during the term of the loan. In the event the borrower defaults, the trustee files a Notice of Default and a Notice of Sale in a legal newspaper.

If the loan in a non-judicial foreclosure is not fully reinstated prior to the date and time of the trustee’s sale, the public auction or sheriff’s sale occurs on the steps of a prominent public location in town such as a courthouse. If no one bids, the lender bids the amount of its loan plus accrued penalties and fees and takes title to the property.

Bidding on and purchasing properties at the foreclosure sale can be exciting and even profitable if you do your homework and know everything about a property before you bid. But getting a little lazy or going with your gut feeling can lead to a disaster, and it often takes quite a few home runs to offset even one disaster.

Valoran Real Estate Brokers Issue No. 4 - April 2013

Rent

Rent

Rent

Rent

Properties of the month Community

Emirates Living - Springs 5

Property Name

Villa Type 4E

Price (AED)

115,000 - 1 CHQ

Number of Bedroom(s)

2

Floor

-

View

Single row and Back View

Status

Vacant and Ready to Move in

BUA (in Sq.ft.)

1,794

Reference Number

VI969

Agent Name

Miad

Contact Number

055 2275515

Community

Downtown Burj Dubai

Property Name

Burj Khalifa Tower

Price (AED)

260,000

Number of Bedroom(s)

2

Floor

High Floor

View

Sea View

Status

Vacant

BUA (in Sq.ft.)

2,053

Reference Number

AP950

Agent Name

Mehdi

Contact Number

055 5075040

Community

Dubai Marina

Property Name

Al Sahab 2

Price (AED)

159,000 - 1 CHQ.

Number of Bedroom(s)

2

Floor

Above 30th

View

Full Marina

Status

Ready, Furnished

BUA (in Sq.ft.)

1,461

Reference Number

AP992

Agent Name

Alex

Contact Number

055 5075020

Community

Dubai Marina

Property Name

Elite Residence

Price (AED)

125,000 - 2 CHQs.

Number of Bedroom(s)

2 (4 Units)

Floor

Between 15th - 41st

View

Partial Sea

Status

Ready, Upgraded Unit

BUA (in Sq.ft.)

1,329.34

Reference Number

AP1005

Agent Name

Alex

Contact Number

055 5075020

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Rent

Rent

Sale

Sale

Sale

Valoran Real Estate Brokers Issue No. 4 - April 2013

22

Community

Dubai Marina

Property Name

Princess Tower

Price (AED)

2,600,000

Number of Bedroom(s)

2

Floor

Above 75th

View

Partial Sea

Status

Vacant, Unfurnished

BUA (in Sq.ft.)

1,765.01

Reference Number

AP1011

Agent Name

Alex

Contact Number

055 5075020

Community

Dubai Silicon Oasis

Property Name

Silicon Gate

Price (AED)

380,000

Number of Bedroom(s)

Studio

Floor

-

View

-

Status

Brand New, Handover end of April

BUA (in Sq.ft.)

441

Reference Number

AP1030

Agent Name

Miad

Contact Number

055 2275515

Community

Emirates Living - Springs 8

Property Name

Villa Type 3E

Price (AED)

2,750,000

Number of Bedroom(s)

3 + Study

Floor

-

View

Small Lake

Status

Vacant on Transfer, Unfurnished

BUA (in Sq.ft.)

2,246

Reference Number

VI813

Agent Name

Alex

Contact Number

055 5075020

Community

Business Bay

Property Name

Bayswater

Price (AED)

90 per Sq.ft. or 152,550

Number of Bedroom(s)

Office

Floor

15th Floor

View

Lake View

Status

-

BUA (in Sq.ft.)

1,695

Reference Number

OF1024

Agent Name

Maya

Contact Number

050 9324788

Community

Jumeirah Lake Towers (JLT)

Property Name

Dubai Metals and Commodities Center

Price (AED)

62 per Sq.ft. - Negotiable

Number of Bedroom(s)

8 Offices, Shell & Core

Floor

High Floor

View

Beautiful Jumeirah Island View

Status

-

BUA (in Sq.ft.)

Full Floor 12,500; Each Min 1,250 / Max 1,880

Reference Number

OF967

Agent Name

Miad

Contact Number

055 2275515

Valoran Real Estate Brokers Issue No. 4 - April 2013 Community

Dubai Marina

Property Name

The Waves Tower

Price (AED)

2,300,000

Number of Bedroom(s)

3 + Maid Room

Floor

-

View

Marina and Sea View

Status

Rented out until Sept. 13

BUA (in Sq.ft.)

2,035

Reference Number

AP935

Agent Name

Miad

Contact Number

055 2275515

Dubai Marina has quickly become one of the most sought after residential and tourists addresses with a large selection of fivestar resorts, boutique hotels, restaurants and coffee shops, retail and malls and all with easy access to the main highways of Dubai.

The Waves blends modern design and international sophistication with an array of the most advanced amenities and a breathtaking view of the Marina, makes it one of the most desired residential addresses in the city.

Rent

Sale

Sale

Facilities: • • • • • • • •

Luxury swimming pool 24-hour concierge and help desk facility Children’s play room Residents lounge Luxurious spa with Sauna and steam room State-of-the-art Gymnasium Barbeque area Tennis Court

Community

Jumeirah Lake Towers (JLT)

Property Name

HDS Tower

Price (AED)

942,242

Number of Bedroom(s)

Office Space (Shell and Core)

Floor

High Floor

View

Lake View

Status

Vacant

BUA (in Sq.ft.)

1,258

Reference Number

OF946

Agent Name

Miad

Contact Number

055 2275515

Community

Jumeirah Lake Towers (JLT)

Property Name

Mazaya Business Avenue 2

Price (AED)

60 per Sq.ft.

Number of Bedroom(s)

Fitted office space

Floor

11th and 17th floor

View

Beautiful Jumeirah Island View

Status

-

BUA (in Sq.ft.)

11th Floor 1,354 - 17th Floor 1,880

Reference Number

OF968

Agent Name

Miad

Contact Number

055 2275515

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Rent

Rent

Rent

Rent

Rent

Valoran Real Estate Brokers Issue No. 4 - April 2013

24

Community

The Greens

Property Name

Samar 2

Price (AED)

115,000 - 1 CHQ

Number of Bedroom(s)

2

Floor

-

View

-

Status

Vacant

BUA (in Sq.ft.)

1,126

Reference Number

AP1045

Agent Name

Miad

Contact Number

055 2275515

Community

Jumeirah Lake Towers (JLT)

Property Name

X2 Tower

Price (AED)

92,862 - 4 CHQs

Number of Bedroom(s)

Office Space (Fitted Out)

Floor

High Floor

View

Lake View

Status

Vacant

BUA (in Sq.ft.)

1,238

Reference Number

OF1027

Agent Name

Miad

Contact Number

055 2275515

Community

Dubai Marina

Property Name

Dorra Bay

Price (AED)

130,000 - 1 CHQ

Number of Bedroom(s)

2 B/R Duplex Podium Villa

Floor

-

View

Full Marina and Partial Sea

Status

Ready unfurnished

BUA (in Sq.ft.)

1,412

Reference Number

VI186

Agent Name

Alex

Contact Number

055 5075020

Community

Dubai Marina

Property Name

Elite Residence

Price (AED)

115,000 - 2 CHQs

Number of Bedroom(s)

2

Floor

43rd

View

Side Sea View

Status

Vacant, Ready to move in

BUA (in Sq.ft.)

1,599

Reference Number

AP1043

Agent Name

Miad

Contact Number

055 2275515

Community

Jumeirah Lake Towers (JLT)

Property Name

Global Lake View Tower

Price (AED)

120,000

Number of Bedroom(s)

2

Floor

High Floor

View

-

Status

Vacant on contract date, Fully Furnished

BUA (in Sq.ft.)

1,010

Reference Number

AP1032

Agent Name

Miad

Contact Number

055 2275515

Valoran Real Estate Brokers Issue No. 4 - April 2013 Community

Emirates Living

Property Name

The Lakes - Deema 3

Price (AED)

290,000

Number of Bedroom(s)

4 + Maid room

Floor

-

View

Full Lake View

Status

Available

BUA (in Sq.ft.)

6,011

Reference Number

VI944

Agent Name

Mehdi

Contact Number

055 5075040

The Lakes offer beautiful homes for families of all sizes.

Tranquil and scenic with waterways, parks and landscaped greenery, the Lakes set the tone for expatriate living in Dubai. The Lakes also feature a Community Centre, bicycle pathways and 24-hour maintenance and security.

Its villas are situated between two world-class golf courses, The Montgomery at Emirates Hills and Emirates Golf Course -scene of the prestigious Dubai Desert Classic tournament.

Rent

Rent

The Lakes offers its residents 24-hour security, landscaped common areas including a community park, neighbourhood parks, tennis and squash courts, gymnasium, children’s play areas and a swimming pool. An interconnected sidewalk system links residents to other amenities which include a community centre, a grocery shop, health club, restaurant, cafes and a nursery school. On-site management, leasing and maintenance facilities are also available.

Community

Jumeirah Lake Towers (JLT)

Property Name

Saba Tower 2

Price (AED)

65,000

Number of Bedroom(s)

1

Floor

-

View

Lake View

Status

Ready to move in

BUA (in Sq.ft.)

1,050

Reference Number

AP1034

Agent Name

Mehdi

Contact Number

055 5075040

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Valoran Real Estate Brokers Issue No. 4 - April 2013 Community

Dubai Marina

Property Name

Elite Residence

1,850,000

Number of Bedroom(s)

2

Floor

Above 55th

View

Partial Sea

Status

Vacant, Unfurnished

BUA (in Sq.ft.)

1,330.52

Reference Number

AP895

Agent Name

Alex

Contact Number

055 5075020

Community

Emirates Living, Springs 7

Property Name

Spring Type 4M

Price (AED)

1,850,000

Number of Bedroom(s)

2 + Study

Floor

-

View

Partial Lake View, Landscape Garden

Status

Rented till July 2013

BUA (in Sq.ft.)

1,690

Sale

Sale

Price (AED)

26

Reference Number

VI931

Agent Name

Miad

Contact Number

055 2275515

Valoran Real Estate Brokers Issue No. 4 - April 2013

VALORAN REAL ESTATE

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