May 2013 - eZine

Last month at a glance: • • • • • •

New Dubai residential clusters tap into buyer interest Dubai Land Department auctions 11 properties for over AED 85m Dubai market sees stellar growth Increased confidence in Dubai’s office and retail property sectors Sharjah unifies building permits Abu Dhabi’s tallest building ready for residents in 2014 Issue No. 5 - May 2013

International property market

Brazil

Latest From the Economy

UAE is Asia’s third strongest economy New Dubai Salik road toll gates make a difference in traffic flow Abu Dhabi to host Global Space and Satellite Forum in May Abu Dhabi oil show to see AED 4bn deals Dubai Freehold Property

Emirates Living: The Greens & The Views International Property Markets

Brazil: “Ordem e Progresso” Real Estate Investing Lessons

Real Estate Investment Funds & Triple Net Properties

Prepared by: Mo. Asadian

VALORAN MEMBER

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Valoran Real Estate Brokers Issue No. 5 - May 2013

News Digest

Last month at a glance

New Dubai residential clusters tap into buyer interest Over the last year and even more recently, new project launches in Dubai have principally been concentrated on the Palm and Downtown Burj. But with the latest launches, developers are now willing to push up the claims of other clusters. Dubai Property Group, which since 2010 was focusing on its build-to-rent portfolio, is now back with fullblown sales campaigns. One such is going on at the Mudon cluster in Dubailand, where the phase one sales involved 348 four-bedroom townhouses.

Dubai Land Department auctions 11 properties for over AED 85m The Dubai Land Department (DLD) sold a total of 11 properties for AED 85.69 million at an auction on 23rd April fetching 11.7 per cent over their base price. A total of 21 properties were on offer at the DLD private property auction. Of the 13 leasehold properties, 11 were sold, while there were no takers for the remaining two.

As per Humaid Omran Al Shamsi, manager of the Public Auction Section the eight freehold properties on offer were put off for the next auction scheduled for June. The most expensive property sold was an apartment building in Murraqabat that went under the hammer for AED 39 million compared to a base price of AED 38 million. www.valoran.ae

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Dubai market sees stellar growth Residential property sales prices in Dubai rose by about 18 per cent in the first quarter of 2013 compared to the year earlier period even as 2,200 units were added to the stock inventory amid rising investor confidence and stronger macroeconomic fundamentals. Dubai apartment prices were up by 18 per cent and villa prices by 17 per cent in the first quarter, according to the REIDIN general Residential Sale Index.

As per the report by Jones Lang LaSalle, the real estate market in Dubai, which now has a residential stock of 357,000 units, became very active in the first quarter of 2013 with a growing number of closing residential transactions. Rents for apartments and villas rose by 10 per cent in the first quarter and are likely to surge further in 2013.

It has been fore-casted that in 2013, Dubai will

add a total of 28,000 units and over the next two years 2013-2015, the residential supply will grow by 42,000 units.

While the villa rental index has achieved its peak value in February 2013, the apartment rental index remained 26 per cent lower than in January 2009. Rentals have increased in the most sought after areas such as Burj Downtown, Dubai Marina and Palm Jumeirah while remaining stable in secondary and less completed locations. While well established residential communities in central Dubai are expected to see further price and rental growth over the rest of 2013, less completed projects in more remote areas will need more time before seeing increased demand and performance.

Source: Jones Lang LaSalle

Dubai, United Arab Emirates

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Valoran Real Estate Brokers Issue No. 5 - May 2013

Increased confidence in Dubai’s office and retail property sectors As per the survey done by the research agency, Cluttons, the first few months of the year have seen increased consumer confidence and demand for office space in Dubai. Despite predictions of price rises, Dubai’s office market is very fragmented, with several sub-markets struggling to attract tenants. However, some locations have seen a rise in rents over the past six months. This has been apparent particularly in areas that suffered most from the property collapse of 2008, including new business districts such as Jumeirah Lakes Towers (JLT), Tecom, Al Barsha and Business Bay, where commercial rents had previously fallen by as much as 50%. JLT and Business Bay, in particular, have seen a significant improvement in both inquiry levels, take up of space and rising rental levels.

Sharjah unifies building permits Sharjah has unified building permits process, in order to save time and hassle for the applicants.

Mohammed Juma bin Hindi, Chairman of Sharjah Advisory Council, said nine departments approving permits for the commercial and residential buildings in the Emirate will be brought under one roof to make it more convenient for the applicants.

Earlier, applicants had to spend several months to get approval for their projects from departments of planning, survey, Sewa, gas, telecommunications, civil defense, environment, sanitation, and the technical section of the municipality. Now, all these licenses can be obtained under one roof, and moreover, half of the evaluation process for building permits is done electronically.

In these locations, rents increased by 10 to 15% in better quality and completed projects. Prime space in buildings, such as Almas Tower in JLT, have recently achieved rental levels of AED 150 per square foot per annum. Moreover, landlords are splitting units into smaller floor plates and fitting out space in an attempt to attract potential tenants.

Rents in newer buildings on the Sheikh Zayed Road, towards the Trade Centre, are now around AED100 to AED140 per square foot per annum with Downtown and Emaar Square still attracting some of the highest rental levels of between AED140 and AED180 per square foot per annum. The retail sector continues to show considerable activity across most locations, including both community retailing and malls. These factors attributed to high wealth levels and consumer confidence.

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Completion of the giant construction project will finally reunite Khalifa Street, which has been split in two during the work over the past seven years.

The mall will be ready later this year and will also include an eight-screen cinema and more than 20 food outlets. Aldar has opened it up to the press for a tour on Monday, to show that work is being completed.

Other headlines in brief • Emaar launches new Burj Vista project in Dubai: Burj Vista features two identically designed towers, one 20 storeys high and the other 65 storeys, with 120 and 520 luxury apartments, respectively.

• Union Properties extends AED 400m debt: Dubai’s Union Properties received shareholder’s approval plans to extend a 400 million dirhams ($108.9 million) loan from Abu Dhabi Commercial Bank by another five years.

The extension of the loan until 20 August 2017 was approved at an extraordinary general meeting on April 11.

Abu Dhabi’s tallest building ready for residents in 2014 Abu Dhabi’s tallest building will be ready for residents early next year. The Residences at World Trade Centre Towers is 382m high and includes 89 floors of apartments. The project is listed as 98 floors because of additional space towards the top of the building. The tower is already well known for its distinctive sloped or “sliced” roof that is visible throughout much of the city.

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• Reem villas for less than AED 1m: Emaar launches 188 villas in Reem, 3-bedrooms at less than Dh1 million.

• Emaar proposes 10% dividend: The board of Emaar Properties has proposed the distribution of 10% of the company’s share capital in dividend to shareholders for the year 2012.

• Damac flats from AED 449,000: DAMAC Properties has launched its latest serviced apartments on Umm Suqeim Road, providing its luxury living concept in the centre of Dubai for units starting from AED 449,000.

Valoran Real Estate Brokers Issue No. 5 - May 2013

Latest from the economy

UAE is Asia’s third strongest economy The UAE’s continuous improvement in competitiveness has helped it to become Asia’s third strongest economy after Hong Kong and Singapore. The Boao Forum for Asia states in its Asian Competitiveness Annual Report 2013, that the UAE’s overall economic strength has surpassed China and has positioned it in the 3rd place.

The results, based on a full-year study by the think-tank, of assessment of 37 Asian and Middle Eastern countries showed that the UAE was the 7th strongest economy of Asia last year, but further improved its ranking in 2012 to place third, surpassing China, South Korea, Taiwan and Qatar.

The UAE’s economy developed more productively compared with other oil-export west Asian countries, despite a mild 5.2 per cent economic growth rate. Additionally, its inflation rate is only 0.88 percent, unemployment rate four per cent and government debts to GDP ratio are as low as 16.89 per cent. With a stable industrial structure and low risky financial environment, the United Arab Emirates ranked high.

Amongst other Middle Eastern and Central Asian resource-export economies, Bahrain ranks 7th, Kazakhstan 9th, Oman 10th and Kuwait, Saudi

Arabia and Qatar from 12th-14th. Jordan performs poorly amongst Middle East economies at 24th.

In the category of competitiveness, the UAE was rated 6th among 37 Asian countries, ahead of China, Japan, Malaysia, Saudi Arabia, Qatar, Kuwait, Turkey and other countries.

The Emirate’s ranking jumped from 14th in 2011 to 6th in 2012. The top ranking is dominated by “East Asian Tigers” namely Hong Kong, Singapore, Taiwan and South Korea and Australia.

The UAE was rated 27th in rankings of Commercial and Administrative Efficiency Indicator for Asian Economies. In the development of infrastructure development, the Emirate dropped three places to be rated 8th in the Asian region. The UAE improved its infrastructure construction somewhat, but its greatly reduced power supply pulled down its ranking.

Regionally, Hong Kong and Singapore retained their first and second positions, respectively, for the second consecutive year. Other economies in the top ten include China, Taiwan, Korea, Bahrain, Australia, Kazakhstan and Oman.

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New Dubai Salik road toll gates make a difference in traffic flow New road toll gates in Dubai improved the traffic flow on Al Ittihad Road between Sharjah and Dubai during morning and evening rush hours on the first day of their operation on Monday. Majority of commuters reported lighter than usual traffic flows on toll roads and above average traffic on alternative routes.

Two new gate systems, called Salik, are now operational – one on Al Ittihad Road near Al Mamzar Bridge and the other on Beirut Road near Airport Tunnel. Motorists with electronic Salik car tags will be automatically charged AED 4 each time they pass through the gates, with an upper limit of AED 24 a day regardless of the number of trips.

Though there are two separate gates on Al Ittihad Road - on both sides of Al Mamzar Intersection motorists will be charged only once (AED 4) for crossing both of them. Commuters without Salik tags, or insufficient Salik account credit, will be fined if they pass through the gates. There are four other Salik gates in Dubai - two on Sheikh Zayed Road and one each on Al Maktoum and Al Gharhoud bridges.

Abu Dhabi to host Global Space and Satellite Forum in May Abu Dhabi is hosting the Global Space and Satellite Forum (GSSF), the Middle East’s premier space and satellite event, on 7 - 8 May 2013, at The Ritz-Carlton Grand Canal, Abu Dhabi. The event will attract over 400 global experts from across a large number of countries to Abu Dhabi for 2 days of intense knowledge sharing and networking.

The Forum provides an invaluable opportunity for international experts to meet with regional leaders and tap into the multi-billion dollar satcom, space tourism, milsatcom and earth observation programs underway across the Middle East, Africa & South Asia region.

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Abu Dhabi oil show to see AED 4bn deals An international oil exhibition opening in Abu Dhabi at the start of next month is expected to generate deals worth nearly AED four billion to demonstrate its position as one of the largest oil events in the world.

The Abu Dhabi International Petroleum Exhibition (ADIPEC 2013) will attract more than 1,500 companies from 59 countries and China is set to be the largest participant in the November 10th – 13th, 2013 event, reflecting its growing reliance on the region’s oil. The event provides an opportunity for exhibitors to showcase the most up to date technology and services, with over 40,000 professionals from 89 countries attending the fourday event. There is a multitude of opportunities to network, promote and discuss industry views and best practices.

Valoran Real Estate Brokers Issue No. 5 - May 2013

Dubai Freehold Property Emirates Living The Greens & The Views

We described the beautiful Emirates Living and its surroundings from the previous two issues. In the last two months’ issues, we highlighted the magnificent Springs, Meadows, Hills and Lakes communities of the Emirates. In this section, we shall focus on the Greens and surrounding Views communities of the Emirates Living.

The Greens The Greens could be described as one of the ‘new Dubai’s all time favourite’. Its low-rise character exudes charm, which it has managed to retain despite some high-rises adjoining it just across a couple of lakes, namely The Views and the Golf Towers complex.

Tecom, The Greens other neighbor, has changed The Greens oasis feel in the desert to that of an oasis amid a myriad of residential buildings. The Greens nucleus however has retained its idyllic character, exuding the feeling of living in a ‘small town’.

Thanks to its parks, the lakes and wide pavements the place feels alive with people walking, jogging or cycling about.

The Greens are mid-rise apartment blocks comprising nine projects in all – Al Sidr, Al Jaz, Al Nakheel, Al Ghaf, Al Samar, Al Dhafrah, Al Arta, Al Thayyal and Al Ghozlan.

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The Views are apartment buildings comprising eight projects in all – Arno, Travo, Turia, Una, The Fairways, The Links, Golf Towers, Tanaro and Mosela.

Location: The Greens is just off Sheikh Zayed Road (SZR), across from Dubai Media & Internet City, and Knowledge Village. Traffic congestion used to be the talk of the day, but new access roads from SZR and Al Barsha have made complaints a thing of the past.

Amenities & facilities: The Greens is a selfcontained non-gated residential area with a community centre housing a supermarket, pharmacy, beauty salon, bookshop and the like, as well as several eateries; the perfect meeting point. Within some of the residential buildings you can find further ground floor cafĂŠs and other eateries with terraces. Located just behind Emaar Business Park, its banks, for example, add to the convenience. Furthermore, essential shopping needs are covered in Tecom, which also offers bars and restaurants based in the many hotels in this neighborhood. Each building cluster has its own pool, play areas for children and a gym. There is a large choice of schools, one within the Greens and others close by in Emirates Hills.

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Rental Index (in AED per annum)

The Views 1 Rooms

70,000 - 90,000

2 Rooms

100,000 - 145,000

3 Rooms

135,000 - 200,000

4 Rooms

210,000 - 220,000 The Greens

1 Rooms

60,000 - 75,000

2 Rooms

85,000 - 115,000

3 Rooms

125,000 - 165,000

4 Rooms

165,000 - 195,000

Property choices: The Greens apartments come in studios and up to three bedrooms, all of them with a balcony and in the case of ground floor units, a terrace/mini garden. Apartments in the older buildings are known to be larger, the ones in the new ones are smaller but at the same time a little more luxurious with nicer foyers and design.

Valoran Real Estate Brokers Issue No. 5 - May 2013

The Views The Views is an exclusive community strategically located on Dubai’s new growth corridor on Sheikh Zayed Road. Located adjacent to The Greens, with Dubai’s Internet City and Media City, Dubai Marina, the American University, several golf clubs and numerous five-star beach hotels and restaurants all conveniently located just a few minutes’ drive away.

Overlooking waterways and the famous Emirates Golf Club, The Views is a vibrant community enjoying superb aspects. Exquisite Riviera style town houses and apartments are arranged amid landscaped gardens and, whether you choose riverside or club side, the emphasis is on living in a location, which overflows with pleasant outlooks.

The Golf Towers complex lives between The Greens/The Views and Emirates Hills, and benefits not only from apartments but also houses as some ‘villas’ overlook the golf club or the canal.

The most salient selling point of The Greens is that it is conveniently located – being both close to Dubai Media City and Dubai Internet City, and on the Sheikh Zayed Road. It has become a wellestablished community and therefore the demand to buy properties here has started to pick up, although the demand to lease remains higher and comes primarily from existing clients in the United Arab Emirates (UAE).

Source: Propertyfinder.ae

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International Property Markets Brazil “Ordem e Progresso”

Top 10 Brazil facts to know 1. Half of the population (95 million people) is now considered “middle class”.

2. A housing deficit exists of 8 million homes across Brazil and there is a forecast requirement for 23 million properties by 2022.

3. Domestic mortgages were available for the first time in 25 years, back in 2007.

4. Mortgage lending is expected to grow 300% by 2014.

5. In 2013, the economy is expected to grow by 4% while much of the western world declines.

6. Buffered to some degree from global recession with over $200 billion in reserves.

7. One of the most peaceful, democratic BRICS emerging economies.

8. The World’s 6th largest economy & predicted to overtake France & reach number 5 soon.

9. Almost $1 billion invested in infrastructure over the past 2 years, with lots more planned.

10. Trade surplus averaging at $40 billion per annum.

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Skyscraper in Sao Paulo, Brazil

Valoran Real Estate Brokers Issue No. 5 - May 2013

Brazilian Property Market Overview Despite the global financial instability and international doom and gloom over the recent years, Brazil’s economy has continued to grow. Its real estate sector offers very good opportunities for investors’ right across the country. Due to a solid and continuously promising economic climate, Brazil is considered a sought-after worldwide property investment destination. With attractive entry prices in certain regions of the country, serious investors are recognizing the high potential for profits on real estate investment in Brazil today.

While prices continue to see a steady growth curve, investors can expect excellent returns in the hotspot areas of Brazil with property values increasing 10%+ per annum over the past few years.

View over Rio de Janeiro , Brazil

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Property Investment Locations There is a property boom going on across all of Brazil’s major cities, which is being fueled by local demand for residential property. Brazil’s largest city, São Paulo, has long since shaken off its past violent image (although violent crimes are still high by European standards), in favor of a thriving city with much business relocation from foreign companies.

For example, high-end jeweler Tiffany & Co. boasts more stores in São Paulo than anywhere else in the world and bag maker, Louis Vuitton earns some of its highest profits per square foot in Brazil. Price Waterhouse Coopers Consultancy expects the rapid growth to continue and that it will propel, São Paulo, from the forty-sixth spot on the world’s wealthiest city list to fifth place in a little over a decade. Rio de Janeiro, with its long history of tourism, has also seen significant growth in terms of real estate development and prices. The Brazilian government is working on a number of areas that require improvement, including its road system and infrastructure, something that Mayor Edwardo Paes is intent on delivering to the city as a result of the 2016 Rio Olympics. In the light of Brazil’s performance over the past years and continued strong economic potential, many investors, both local and international are entering the Brazilian

Central Sao Paulo, Brazil

property market with very real expectations of cashing in on high levels of capital growth over the coming years. Major investment is being made in the North East of Brazil, in the cities of Natal and Fortaleza. In addition to the existing shortage of local residential housing, they boast stunning beaches and a balmy tropical climate, bringing with it increased tourist development projects. Natal and its surrounding area will see more than $1.8 billion being invested over the next 5 years in new hotels, resorts and infrastructure, including a new airport, which will be the largest in Latin America (both passenger and commercial). The North East is proving to be Brazil’s top property hot spot as the location currently offers ideal conditions for those who wish to invest.

To understand the real estate investment opportunities in Brazil, it is easiest to divide the property market into two sectors: residential first homes and tourist / second homes market.

Central Sao Paulo, Brazil

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Valoran Real Estate Brokers Issue No. 5 - May 2013

Housing Investment (R$ bn)

446.7

350 300 250 200 150 100 50 0

1971 1975

1976 1980

1981 1985

1986 1990

1991 1995

1996 2000

2001 2005

2006 2010

2011 2015

2016 2020

2021 2025

2026 2030

Source: EGV

Rio De Janeiro, Brazil

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Residential first homes Supply and Demand: The new wealth is benefiting Brazilian households, with consumption rising even stronger than GDP. As a consequence of the strong economy, prosperity levels are rising fast in Brazil, which sharply increases housing demand. In just two years, 23 million people have risen to prosperity level C (middle class), which now counts 85 million people. This middle class has a monthly income between 2 and 10 times the official minimum wage. With insufficient first home housing stock to satisfy local demand, Brazil currently has an estimated housing deficit of a minimum of 8-10 million properties. The middle classes are expected to purchase between 1,000,000 and 1,200,000 units per year until 2017.

With this in mind it is clear that the first residence market within Brazil’s major cities is a major investment opportunity and no region has seen greater demand that the North East.

It is estimated that there will be a requirement for some 22 million new properties across Brazil over the next 10 years

Central Sao Paulo, Brazil

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Tourist / second homes Supply and Demand: Tourist / second homes are those properties located at desired tourist destinations, composed by second-home units and large tourism and leisure facilities such as hotels, parks, marinas, golf courses, etc. These facilities enhance the tourist experience, induce tourist flows and provide services to guests and owners. Therefore, they improve desirability and leverage prices and sales speed of residential units.

Up until 2007 there was plenty of investor activity in the area of holiday resort property by national and international investors. However, the economic and financial scenarios that emerged as a result of the credit crunch at the end of 2007 interrupted the cycle in which Brazil was increasing its penetration in the world’s tourism real estate market. National demand for second homes remained solid by affluent Brazilians, but this is clearly a much smaller market than the first homes residential market.

2012 saw some evidence that international buyers are returning for second homes / beach property.

Brazil is a stunningly beautiful country, with a sunny climate, direct air services to Europe and for those seeking to enjoy a great quality of life. There are signs that a new cycle of buyers is emerging and this will be fueled further by events such as the 2014 World Cup and 2016 Olympics. Branded, quality beach style resorts particularly in the North East run by international hotel chains, well located plots of land for either land banking purposes, or for building dream villas at competitive prices, offer sound medium to long term investment potential.

Financing and Mortgages: Property mortgages in Brazil are not available for non-residents. HSBC announced back in 2008 that it would offer mortgages to its ‘premier customers’ but at the restrictively high interest rates, no mortgages have been taken up till date. It was initially thought likely that other banks would follow, but this hasn’t happened. Several international banks closely reviewed how they might offer financing in Brazil to non-residents as they see Brazil as a huge growth market, but due to the global financial crisis, it has been put on a back burner.

At present, the Brazilian local banks have little interest in offering non-residents mortgages, as they have enormous local demand to focus on which will be more profitable for them. Access to mortgage finance is fueling consumer demand and has created the construction boom. Massive growth in this sector means that as an investor, there is an opportunity to invest in quality, well located property that has a well defined target market and exit strategy, attracting both middle class and lower income tenants and buyers. In 2011, Banco do Brazil doubled their loan book from 3 billion Reais to 6 billion Reais and continued growth in this sector is expected. At some point in the future it is probable that market forces will prevail and various property financing options will become available in Brazil to non-residents, but for the moment, international investors need to be mindful that finance is not guaranteed at this time and that they should ensure they have alternative arrangements available to them for raising finance for property purchases. The lack of leverage is sometimes viewed as a negative by investors; however the lack of finance has actually protected the market from being entered by speculators.

One thing is for certain, as soon as financing does become readily available to non-residents there will be a huge increase in the number of international buyers and of course this will impact the supply and demand curve forcing prices to go up. As a pure investor, or someone seeking a holiday home with the opportunity to achieve some rental income and long term capital appreciation, there is demand from end users, both national tourists and international and that means good rental prospects and an optional exit strategy.

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Real Estate Investing Lesson 4

Real Estate Investment Funds & Triple Net Properties

It is noteworthy that the concept of Real Estate Investment Funds is more popular in developed economies while in the emerging economies, like UAE, it is gaining popularity. Emirate REIT was established in 2010 to provide market entry opportunities, liquidity and stable long term returns for investors. The first REIT was led on the drawing board on 1st May 2012, which finalized on 3rd July.

Real estate investment trusts (REITs) are forprofit companies that own and generally operate 18

different types of property, such as shopping centers, apartments, offices, warehouses, hotels, and other rental buildings. These property-holding REITs are known as equity REITs. Some REITs, known as mortgage REITs, focus on the financing end of the business; they lend to real estate property owners and operators or provide credit indirectly through buying loans (mortgage backed securities).

Equity REIT managers typically identify and negotiate the purchase of properties that they believe are good investments and manage these

Valoran Real Estate Brokers Issue No. 5 - May 2013

properties directly or through an affiliated advisory and management company, including all tenant relations. Thus, REITs can be a good way to invest in real estate for people who don’t want the hassles and headaches that come with directly owning and managing rental property.

Distinguishing between public and private REITs Public REITs are traded on the major stock exchanges and thus must meet strict regulatory reporting requirements: Liquidity: Public REITs trade every business day on a stock exchange and thus offer investors the ability to buy and sell as they please. Of course, as with other similarly liquid investments (like stock in companies in a variety of industries), liquidity can have its downside. More-liquid real estate investments like REITs may inspire frequent trades caused by making emotional decisions or trying to time market movements.

Independent board of directors: A public company must have directors, the majority of whom are independent of its management.

Shareholders vote upon and elect these directors.

Financial reporting: Public REITs, like other public companies, must file comprehensive financial reports quarterly.

We recommend that you stay away from private REITs unless you’re a sophisticated, experienced real estate investor willing to do plenty of extra research and digging. Because they’re not publicly traded, private REITs don’t have the same disclosure requirements as public REITs. This difference means an investor in a private REIT had better carefully scrutinize the prospectus and realize that the private REIT has the ability to make changes that may not be in the investor’s best interests, but that reward the private REIT sponsors or their affiliates.

Taking a look at performance In the context of an overall investment portfolio, REITs add diversification because their values don’t always move in tandem with other investments.

One final attribute of REITs we want to highlight is the fairly substantial dividends that REITs usually pay. The reason for the high dividends is the legal requirement in REIT charters that they have to distribute 95 percent of their income. In other words, REITs can legally only retain a maximum of 5 percent of their net income; they must distribute everything else to the shareholders.

Investing in REIT funds You can research and purchase shares in individual REITs, which trade as securities on the major stock exchanges. An even better approach is to buy a mutual fund or exchange-traded fund that invests in a diversified mixture of REITs. Some of the best REIT mutual funds charge 1 percent per year or less in management fees.

In addition to providing you with a diversified, low-hassle real estate investment, REITs offer an additional advantage that traditional rental real estate doesn’t. As with traditional real estate investments, you can even buy REITs and mutual fund REITs with borrowed money. You can buy with 50 percent down, known as buying on margin, when you purchase such investments through a brokerage account.

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Triple Net Properties Triple net property is a common term for a type of net lease, where the tenant pays some or all of the property operating and repairs and maintenance expenses, in addition to the rent. Many investors are attracted to the minimal property management and maintenance requirements of triple net properties because the tenant is responsible for the majority of all operating costs and maintenance. Triple net properties are often promoted as another real estate option for investors looking to avoid the headaches of day-to-day management.

These investments may seem like real estate investments, but they’re primarily an investment in the net cash flow (after debt service) from a lease to a credit tenant, and they’re promoted based on the cash-on-cash rate of return or cap rate.

For years, these properties have been the favorites of real estate investors who like the steady income stream and safety usually associated with bonds. But net leases come in all varieties, and though all net leases are often referred to generically as triple net leases, the reality is that there is no standardization of terms or definitions. So, the challenge is always to determine exactly which responsibilities belong to the landlord and which are the tenant’s, and it’s those vagaries that often make it difficult to precisely evaluate these investments.

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Real Estate Investing: Lesson 4 Real Estate Investment Funds & Triple Net Properties

Valoran Real Estate Brokers Issue No. 5 - May 2013

Properties of the month Dubai Marina

Al Sahab 2

Dubai Marina

Marina Quays West

RE

NT

NT

RE

Price (AED)

155,000 – 1CHQ

Price (AED)

141,000

Number of Bedroom(s)

2

Number of Bedroom(s)

2

Floor

Above 30th

Floor

Above 20th

View

Full Marina View

View

Full Marina View

Status

Ready, Furnished

Status

Ready, Unfurnished

BUA (in Sq.ft.)

1,461

BUA (in Sq.ft.)

1,254

Reference Number

AP992

Reference Number

AP1063

Agent Name

Alex

Agent Name

Alex

Contact Number

055 5075020

Contact Number

055 5075020

Dubai Marina

Elite Residence

Dubai Marina

Elite Residence

NT

RE

NT RE

Price (AED)

110,000 – 1 CHQ

Price (AED)

110,000 - 125,000

Number of Bedroom(s)

2

Number of Bedroom(s)

2

Floor

43

Floor

15th – 41st

View

Back View and Side Sea View

View

Partial Sea & Marina View

Status

Ready, Upgraded Apartment

Status

Vacant

BUA (in Sq.ft.)

1,599

BUA (in Sq.ft.)

1,329.34

Reference Number

AP1043

Reference Number

AP1005

Agent Name

Miad

Agent Name

Alex

Contact Number

055 227 5515

Contact Number

055 5075020

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Properties of the month Emirates Living

Springs 4

Downtown Burj Dubai

Reehan 6

RE

NT

NT

RE

Price (AED)

145,000 – 1 CHQ

Price (AED)

125,000 – 1CHQ

Number of Bedroom(s)

2

Number of Bedroom(s)

1

Floor

Ground

Floor View

Back to Back View

View

Sheikh Zayed Road and Community View

Status

Vacant, Fully Furnished

Status

Rented till 15.05.2013, Fully Furnished

BUA (in Sq.ft.)

1,690

BUA (in Sq.ft.)

946

Reference Number

VI1058

Reference Number

AP1067

Agent Name

Miad

Agent Name

Miad

Contact Number

055 227 5515

Contact Number

055 227 5515

Jumeirah Lake Towers

Dubai Gate 1

Mazaya Business Avenue

Jumeirah Lake Towers

NT

RE

NT

RE

Price (AED)

55,000

Price (AED)

84,465

Number of Bedroom(s)

Big studio

Number of Bedroom(s)

Office space – Shell & Core

Floor

1

Floor

22

View

Community View

View

Jumeirah Island View

Status

Vacant

Status

Vacant

BUA (in Sq.ft.)

478

BUA (in Sq.ft.)

1,877

Reference Number

AP1068

Reference Number

OF1069

Agent Name

Miad

Agent Name

Miad

Contact Number

055 2275515

Contact Number

055 2275515

22

Valoran Real Estate Brokers Issue No. 5 - May 2013

Down Town

Kamoon 1

RE NT

Price (AED)

100,000 – 1 CHQ

Number of Bedroom(s)

1

Floor

2

View

Community View

Status

Vacant

BUA (in Sq.ft.)

914

Reference Number

AP1061

Agent Name

Maya

Contact Number

050 9324788

SPECIAL OFFER

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Valoran Real Estate Brokers Your Lifestyle Broker

Properties of the month The Lakes, Deema 3

Emirates Living

Downtown Burj Dubai

Burj Khalifa Tower

RE

RE

NT

NT

Price (AED)

290,000

Price (AED)

260,000

Number of Bedroom(s)

4 + Maid's room

Number of Bedroom(s)

2

Floor

/

Floor

High Floor

View

Full Lake View, Full Land Scape

View

Sea View

Status

Available

Status

Vacant

BUA (in Sq.ft.)

6,011

BUA (in Sq.ft.)

2,038

Reference Number

VI944

Reference Number

AP950

Agent Name

Mehdi

Agent Name

Mehdi

Contact Number

055 5075040

Contact Number

055 5075040

Boulevard Central Tower 2

Down Town

Murjan 1

Jumeirah Beach Residence

SA

LE

LE

SA

Price (AED)

2,300,000

Price (AED)

1,980,000

Number of Bedroom(s)

2

Number of Bedroom(s)

2

Floor

4

Floor

Above 40th

View

Partial Burj Khalifa View

View

Marina and Sea View

Status

Vacant

Status

Vacant

BUA (in Sq.ft.)

1,278

BUA (in Sq.ft.)

1,316.74

Reference Number

AP991

Reference Number

AP1019

Agent Name

Maya

Agent Name

Alex

Contact Number

050 9324788

Contact Number

055 5075020

24

Valoran Real Estate Brokers Issue No. 5 - May 2013

Jumeirah Lake Towers

Lake Terrace

The Address Dubai Mall

L SA

E

E

L SA

Price (AED)

640,305

Number of Bedroom(s) Floor

SPECIAL OFFER

Down Town

Price (AED)

2,400,000

Studio

Number of Bedroom(s)

1

5

Floor

25

View

Lake View

View

Dubai Mall View

Status

/

Status

Vacant

BUA (in Sq.ft.)

516

BUA (in Sq.ft.)

712

Reference Number

AP1055

Reference Number

AP980

Agent Name

Miad

Agent Name

Maya

Contact Number

055 2275515

Contact Number

050 9324788

SPECIAL OFFER

www.valoran.ae

Valoran Real Estate Brokers Your Lifestyle Broker

Properties of the month Business Bay

Executive Tower B

Sheikh Zayed Road

Plot

L SA

E

E

L SA

Price (AED)

1,332,800

Price (AED)

Number of Bedroom(s)

1

Number of Bedroom(s)

Floor

20

Floor

View

Burj Khalifa View

View

Status

Vacant

Status

BUA (in Sq.ft.)

952

BUA (in Sq.ft.)

56,700

Reference Number

AP1064

Reference Number

RL1012

Agent Name

Maya

Agent Name

Maya

Contact Number

050 9324788

Contact Number

050 9324788

Emirates Living

Springs 8

150,000,000

G+44

Dubai Marina

Elite Tower

LE

SA

LE

SA

Price (AED)

2,750,000

Price (AED)

1,850,000

Number of Bedroom(s)

3 + Study

Number of Bedroom(s)

2

Floor

Above 55th

Floor View

Lake View

View

Partial Sea View

Status

Vacant on Transfer

Status

Vacant

BUA (in Sq.ft.)

2,246

BUA (in Sq.ft.)

1,330.04

Reference Number

VI813

Reference Number

AP895

Agent Name

Alex

Agent Name

Alex

Contact Number

055 5075020

Contact Number

055 5075020

26

Valoran Real Estate Brokers Issue No. 5 - May 2013

VALORAN REAL ESTATE

Your Lifestyle Broker

www.valoran.ae