Wednesday, 16 July 2014

Rising rents increasing the cost of living in Dubai and Abu Dhabi



Dubai had experienced the worst financial crisis and market slowdown in 2009 due to global economic recession in year 2008. After experiencing huge drop business and real estate sector moves towards stability and eventually started showing signs of recovery with gradual increases in property prices and rents in Dubai. Steep hikes in leasing rates have been observed over the past 18 months. Stable political conditions, rise in tourism, trade and business activities attracted people and investors across the world. Now the city has successfully regained its position and strong economic conditions have enabled this city to serve the region again as business and trade hub. The overall progress of business and trade sector pushed the property rents and prices in the city. Rises in accommodation cost significantly increases the cost of living in the city. It is expected that rising rents will be soon stabilized with fresh supply of units after restarting of projects that were paused due to lack of funds.

Rising cost of living in Dubai and Abu Dhabi

Significant surges in leasing prices have significantly boosted the cost of living in Dubai and Abu Dhabi. Previously ranked on 90th and 79th position in Mercer Cost of Living Survey, Dubai and Abu Dhabi moved to 67th and 68th position respectively. The survey includes 211 top cities across the world and estimate the relative cost of more than 200 items for every location. Important items include housing, food, transportation, household goods, clothing and entertainment. Substantial changes have observed during March 2013 to March 2014. The huge rise in price of Mercer items pushed the capital city and trading hub of UAE ahead. Moreover, other Middle Eastern cities also faced notable escalations in their rankings due to price rises and cost decline in other locations. The robust increase in accommodation cost, especially in Dubai and Abu Dhabi is the key factor making these cities most expensive cities to live in. Furthermore, the recent win of Expo 2020 to become the host of this international event drag more investors towards this emirate and increase the rent rates the city.

Factors supporting rises in rents 


Besides tourism and business, launch of mega real estate and infrastructure projects have also played great role in amplifying emirate economy. Furthermore, the successful bid to host world Expo 2020 also support the launch of several real estate projects. Despite its profits and progress, experts are showing their concerns for inflation and new bubble. Having considered such concerns, State authorities have implemented several regulations like mortgage caps and rental caps to control overheating of real estate sector again.

Being the major part of total cost of living anywhere accommodation expenses has great impact on total cost of living in the city. Accommodation expenses further subdivided into house rent, access to transport, retail and health. The economic progress in the region directly affected on accommodation cost in the city which escalates the cost of living in the city making Dubai an expensive place to live.

Wednesday, 2 July 2014

Apartment rents on rise near Dubai Metro Stations

Hefty rent rises up to 34% had been observed across communities near Dubai metro stations since its opening in year 2009. Affordability and convenience to commute with in the city efficiently dragged residents towards communities located near metro stations. Especially expat workers who are living and working in the city prefer living in areas that provide easy access to public transport. As this will allow them to save significant amount of money they will be spending on taxis and fuel. Despite being an important criterion for searching home, initially proximity to metro stations failed to increase the asset prices drastically due to global economic recession. However, relocation at substantial rates to communities near metro stations was observed among tenants looking for affordable accommodation.

Having observed the property price hikes and rises in property demand to date since opening of Metro in the city, experts forecasted further price rises with upcoming Metro extensions. After the successful bid to become the host of world event EXPO 2020, Roads and Transport Authority (RTA) has declared extending Red and Green lines to meet the needs of commuters. After being extended, Dubai Metro will have total 70 stations. It is the backbone of public transport system which allows travelers to enjoy state-of-the art facilities and comfort.

Proven contribution of Metro benefiting the real estate sector of Dubai reveals that transportation and connectivity is equally important for the success and progress of real estate projects. The Metro system is efficiently connecting communities in rapidly expanding city by providing a time saving alternative to busy highways. Not only residents but also the entrepreneurs started relocating from older buildings and secondary locations to prime locations providing better car parking and easy access to Metro stations. 

Rising apartment rents near Dubai Metro Stations

Native preferences to live near metro stations have greatly increased the Dubai apartment rents near Metro Stations. Jumeirah Lakes Tower indicated 26% increase and you can rent two bedroom apartments at 130,000 AED per annum. Rent rises are also observed for other prime locations in the city including Dubai Marina, Downtown, Business Bay, the Greens and Palm Jumeirah.  Now you can rent one and two bed room apartment in Downtown on 110,025 AED pa and 178,020 AED pa respectively.  On the other hand Dubai Marina offers one bedroom apartments at 95,000 AED. The Palm, another prestigious project supplies one and two bedroom apartment units at 140,011 AED pa and 185,000 AED respectively.  The Greens, an emerging community located near Dubai Internet City, Media City and Emirates Golf Club provides perfect accommodation for single and families. Two bedroom apartment can be rented at 150,0000 AED pa. All of these communities are located in close proximity with Metro stations.  Better Homes experts review about rent rises among famous communities have also revealed this fact that proximity to Metro station is one of the important reasons for rises in rents.

Experts have already predicted the expected future rent rise in communities that are going to be connected with Dubai Metro-Green or Red Line after their extension. These communities include Festival City, Ras Al Khor, International City, Silicon Oasis and Dubai Academic City going to be served by Green line whereas as Red line will connect neighbourhoods of Mirdiff, Jebel Ali to the Expo site near Al Maktoum International Airport. Stations are planned to align with existing residential communities in these areas.

Tuesday, 10 June 2014

Decree No.41 and DTCM benefiting Tourism and Real estate in Dubai


Deeming to achieve its targets to welcome 20 million visitors by 2020, while providing quality accommodation facilities to everyone visiting and staying in the city is the major aim of Dubai authorities.  After considering the emerging demands of short term rentals and holiday homes, His Highness Shaikh Mohammad Bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai and leading authorities like Dubai Department of Tourism and Commerce Marketing agreed to implement a new Decree No.41 of 2013 to better regulate holiday home market in Dubai. At initial stages, candidates who are willing to obtain license to become an authorized operator should possess at least 20 properties in the emirate. They are required to submit their application for Initial Approval. After getting initial approval, applicants will have time of three months to complete the requirements to get final license.

What is Decree No.41?

The Decree No.41 of 2013 authorized DTCM to issue licenses to parties who are planning to rent out their furnished residential property on daily, weekly or monthly basis. Everyone intending to rent their home as a holiday home had better meet the defined standards and procedures. DTCM has established a proper database to synchronize the whole process. Applicants can submit their requests to obtain license however, their application could be accepted or rejected after conducting inspections on their properties to confirm the residential unit to meet the essential standards. After considering the emirate area for which licenses are issued, grouped holiday homes in Standard and Deluxe categories adding Holiday Homes in existing Hotel Classification in Dubai. The system is now functional and receiving applications to issue licenses to parties willing to become a licensed operator to rent residential units for short period of time. It has been officially announced that from June 15, 2014 residential property home owners in Dubai who are willing to rent their property as holiday home must possess a licensed operator to lease their home. While their property will become the part of the operator portfolio.

How it benefit tourism sector?


Restricting renting of holiday homes only to licensed operators will significantly benefit the Dubai key industries tourism and real estate. While providing protection against scams the system significantly increases the supply of quality accommodation in the form of holiday homes. Although, DTCM is working with private sector to provide financial incentives to deliver more, five, four and three star hotels; the holiday homes is an efficient addition among short term rental accommodation options. Qualified licensed parties to manage such residential units eliminate visitor concerns. Now visitors can book a private apartment, townhouse or villa for their short stay without worrying quality standards and amenities provided.

How it benefit real estate sector?


On the other hand this decree enables homeowners to earn potential revenue from their second or multiple properties. Renting conventional homes as holiday homes could be a profitable alternative to renting out property on annual leasing. After becoming the part of Hotel Classification scheme, emirate homeowners will become eligible to take advantage of growing number of visitors visiting Dubai in coming years.

Being the business and trade hub of UAE and Middle East, Dubai is already facing continuous rises in total number of visitors every year. The recent success of becoming the host for world event Expo 2020 significantly increases this number. Estimates showed that more than 11 million guests have stayed at Dubai hotels last year which is 10.6 greater than 2012.  If you look at the supply the total number of hotel rooms and apartments at the end of 2013 were 84,534 (611 establishments) with an increase of 5 percent as compared to 80,414 (599 establishments) in 2012. Furthermore, DTCM estimated the requirement of 140,000 to 160,000 rooms to accommodate guests visiting Dubai for 2020.

Tuesday, 27 May 2014

Flipping to resell or hold to rent property in Dubai-how to decide?

Renting or reselling real estate assets is an old tradition among buyers and landlords for earning profits. Whether being conventional buyer or professional investor, flipping to resell or hold to rent are the traditional ways of earning profits which are being practiced worldwide. Primary difference between the two strategies is the length of time frame required to receive profits. Reselling after flipping is considerably faster way to generate profits whereas renting gives profits in long run. Choosing the right strategy totally depends on market conditions, asset prices and rental rates. Further the ease of earning good money with real estate investments have made it popular alike among local and overseas investors on international levels.

Especially, if you are investing in Dubai property market, you need to identify what is most suitable option and how you can maximize the profits, while reducing cost.



Identify your motive

If market analysis reveals uncertainties in long run or you need quick money, it will be better buying a property to flip and resell quickly to earn profits. Investing money to renovate and repair existing structure surprisingly enable buyers to earn profits in shorter period of time. Rather it is a complicated process as it involves several important things which are difficult to handle, especially for an inexperienced buyers.  On the other hand buying a residential unit to rent will provide you guaranteed income. If you are more interested in buying a property to rent, you will essentially need to consider your primary source of income and available finances. It is better not to depend completely on rental income. Depending on your needs, time and available funds it is better to identify your motives.

Fix and Flip residential properties in Dubai

Choosing the right property to flip is difficult and most crucial step. When buying a house to flip it is better buying an inexpensive property, as you are going to spend significant amount on its renovations and repairs. Buying an expensive house to flip for earning profits is too risky. Repairing can be very expensive and it’s not necessary that reselling will cover the repair expenses while giving profits as well. Applying to get personal loans from bank to invest in property flipping could be very expensive, banks are charging higher fees and interest on issuing short-term loans. Despite possessing funds, renovating and repairing home can also be difficult for many. It is obvious that everyone should prefer buying an inexpensive property to flip.


In most of the cases such properties are not in good condition. And buyers have got to invest money and time to earn profits. However, it is believed that flipping is believed to generate profits quickly; investors should keep the probability to face losses. The losses are expected when investor doesn’t find suitable buyer for longer duration. He has already invested significant amount of money in buying property. In case of buying property to flip, cost of buying property encompasses cost of bank loan interest payments, agent fees and commission, housing fee and property transaction fee. Further the rising prices of residential property in Dubai have made it hard to find a suitable property to flip within your budget. Market observation revealed that there are more listings for sale as compared to rent. Such market conditions clearly depicts that investors should wait for distressed sale.

Rent residential properties in Dubai

Like flipping to resell, renting property in Dubai has its own benefits and drawbacks. Renting will not give you profits immediately, provided that you continue renting that property for 5-7 years. Furthermore, your asset has been appreciated during 7 years and you can even sell it for good money. Longer you keep your rental assets higher will be its value.  Buying property unit with aim to rent in future is not simple buying of assets. Investors need to consider the demand of rental properties in specific neighborhoods.  Prefer buying assets to rent after observing the demand in that neighborhood. Current market analysis showed that rent prices in Dubai are on the rise again making buying to rent profitable option. You can further get useful information about Dubai rent prices to enhance the profits with your investments.


Flipping to resell or hold to rent, depends on several factors including current market conditions, type of property, financial aspects like income you are expecting with them.  It depends on buyers preferences whether he wants to earn good amount of money in short period of time or willing to build equity.

Tuesday, 20 May 2014

Rent Rises in Dubai backing Sharjah in 2014





Rising rents in Dubai during the first quarter of 2014 have increased the accommodation expenses in the city. After observing the escalations in cost of living several budget conscious residents in Dubai started relocating to neighbouring emirates of Abu Dhabi and Sharjah in the search of affordable accommodation. Growing trend of relocation has remarkably altered the demand of residential property in Sharjah. Occupancy levels notably enhanced in residential projects located in popular areas. Furthermore, market figures revealed that rental hikes of 30-40 percent have been observed in all leading locations across the city during the first quarter of 2014. It has been observed that steep rent rises are worrying residents and prospective tenants equally. Having considered latest market trends, experts predicted that rises in rents could be higher in coming months. Projects located at prime locations like Al Nahda, Mina and Al Wahda exhibited rental hikes of 11 percent at the end of Q1 of 2014.



However, climbing rents of residential properties in Dubai is not only the single reason for sharp rental hikes and rising property demand in Sharjah. There are other reasons as well for exponential growth of residential property market. After being motivated from the great success of Expo 2020, Government of Sharjah started taking interest in investing infrastructure, transport, retail, tourism and leisure projects. Their primary aim is to provide world class life style facilities for everyone living and visiting this emirate. 


Infrastructure boost

 

Key projects which are backing Sharjah include expansion of Sharjah City Centre, Sahara Center,  a Roman style amphitheater (total area of 7,000m2) with capacity to accommodate 4,500 people has also opened near Majaz Island are major tourism projects led by government. Other important developments which are expected to boost travel and tourism include Al Khan and Al Qasba. Specifically, development of infrastructure and transportation projects has transformed the face of city. Enormously improved road network notably benefit residents and everyone traveling from Sharjah to Dubai. National Paints Bridge the fifth interchange is an example of development plans that are being taken to reduce traffic congestion on Mohammad Bin Zayed Road. Such expansion projects will positively affect everyone living and visiting this emirate.. 


Residential Sector





Sharjah property market is deeply influenced by its southern neighbour. Whether, it is the time of post financial crisis or it is the post event economic and financial boom, changes have been observed. Previously at the time of global financial crisis considerable number of residents migrated to Dubai increasing the occupancy levels of residential projects. Whereas, recently the steeping rental rates in Dubai cause residents to relocate to Sharjah. Even the older apartment buildings have shown rental increase of 6%. Having considered the market standards, prime residential projects like Al Nahda and Al Tawun are capable to compete with luxury communities in Dubai Silicon Oasis, International city and even Jumeirah Beach Residence.

Real estate investors are not only looking to invest in new projects rather they are also showing great interest in buying existing projects. Their primary focus is just to obtain income generating stock with lesser risks. Major advantage of investing in existing project is that investors don’t need to wait for earning. As far as tenants already living in the city will probably hit by rising rents in the city upon renewal of latest lease after completing three years of their lease.   



Commercial and retail sector


Moreover, commercial and retail sectors are also showing progress with demand surge of residential units. As people are flocking here to find affordable accommodation will also need suitable retail and business facilities. Over the past few years major retailers like Majid Al Futtaim (MAF), through Sharjah Holding, and Al Safer Group, have opened up community retail centers to serve local residents.  Such retail outlets are working well in association with Carrefour supermarket and some other stores. 

Being the hub city of United Arab Emirates, economic and business trends in Dubai are capable to transform business and real estate sectors of neighbouring emirates.  

Tuesday, 29 April 2014

Unified Mandatory Dubai Real Estate Contracts, latest regulatory regime by DLD


Dubai Land Department (DLD), the chief regulator of Dubai real estate sector is always trying to take logical initiatives to provide better regulatory infrastructure for everyone involved in property transactions. The current announcement regarding mandatory enforcement of unified real estate contracts from May 1st 2014 is expected to benefit all three parties involved in any real estate deal; the buyer, the seller and the broker. Basic aim of implementing standardised property contracts is to better monitor emirate property market. 


Standard contracts have already been published earlier in 2008 to proffer some level of regulation to asset market. Although, brokers were not bound to follow rather they were allowed to make their own choices to follow these standard contracts or not.  According to the latest announcement by Director General of DLD, Mr. Sultan Butti bin Mejren, the mandatory contracts will also help to limit fake brokers and get rid problems occur because of lack of clarity and misinterpretation among parties. 

The unified mandatory Dubai Real Estate Contracts


Having considered the in-depth analysis of DLD services for betterment of customers, authorities have identified the need of mandatory implementation of standard real estate contracts for proper organisation of relationship between parties involved in buying and selling deals of Dubai properties. The newly designed unified real estate contracts include three types of contracts, Form (F) a contract between seller and buyer, Form (A) a contract between seller and broker and Form (B) a contract between buyer and broker. All of these models are available to download from Dubai government E-mart website (www.emart.gov.ae). After that forms are filled by parties involved and contract becomes formal once it has recorded and documented at DLD. Consider executing their primary aim to enhance the transparency and professionalism of emirate real estate sector via measurable standards, the latest regulatory regime is perfectly aligned with their primary motif.


Expected Benefits      
   


Furthermore, the new contracts are expected to improve the market confidence by speeding up the overall process of property transactions. The regulatory regime will also facilitate buying and selling asset in the emirate as it allows buyers and sellers to complete the registration process without an agent. This will give more freedom and reduce dependency of buyers and sellers upon real estate agents. Moreover, the regulatory move is welcomed by all property agents in Dubai. In addition to avoid misunderstandings of articles, the unified contracts will also guarantee the rights of all the stakeholders involved. 


The primary aim behind such regulatory regimes is to avoid another property bubble by limiting sky rising property rents and prices in Emirate, which could lead market to experience another crash. 

Monday, 24 March 2014

Host an Open House-for efficient property selling

Being an old tradition for selling residential properties, open houses also help homeowners to find suitable tenants. Normally such events are organized on weekends to receive more visitors as most of the people are free on weekends. People have different perceptions about such real estate activities. Few of them think that it’s just an easy way to find new clients for real estate agents and doesn’t help homeowners to sell or rent their home. However, other thinks that it is the right way to find authentic buyers. The activity can be subdivided in to two types Public Open House (general public) and Broker Open House (real estate agents). Independent to its type basic aim of this pursuit is to expose any property to prospective buyer or tenant. It will also help homeowners to get value able feedback about their home which they can consider using to improve their home. Property owner can make essential improvements in their house to get good returns upon selling and renting.



Despite different viewpoints of people, the activity could not be neglected completely. The real estate activity has its own benefits. It is very fruitful, when people are showing strong interest in buying home over renting. It enables property owners to save their time, after allowing them to show their home to multiple buyers and tenants in short period of time. Once you have decided to get your house registered for the next event in your neighbourhood, it is necessary inspecting your house to identify essential touchup to make your house presentable and appealing before staging this event.

Following are few easy tips to help everyone thinking to host an open house to sell their home efficiently.


  • Easy Open House Tips for Residential Property Sellers
  • Detail cleaning to remove clutter and a fresh coat of paint could be a wonderful way of enliven your living space. Even you can do it on your own or a professional will help you if you are thinking to carryout detail maintenance of gutter lines, electricity wiring and water pipelines. Such minor improvements prove to be magical and perk up your living space.
  • If you are going to host this event living in your house, it will be better making necessary rearrangements in furniture and decorations to create better impression. Consider removing unnecessary things to represent your house more spacious. Minimizing decorative will let serious buyers and tenants to conceptualize and visualize their ideas about your place. This can greatly enhance chances of successful deal.
  • Choosing a suitable time is crucial for the success. It is suggested to schedule the event when there are other open houses in your area. This way you may get more viewers visiting to your home. Moreover, you can also list your house in online listings of reputable property management firm.
  • Its better stay out during viewing. This will allow you avoid answering too many questions that visitors usually ask during the activity. Don’t provide too much information to every visitor during the activity as it could spoil future negotiation with buyers and tenants.
  • Side line your emotions while selling or renting your home sweet home. Visitors may directly ask about the quality and age of home fixtures and appliances. Act like a professional and answer such questions with a smile to satisfy your clients. Don’t get harsh while answering and give realistic reply to their queries. Avoid answering questions about the local community and things you are not sure.
  • Don’t hesitate asking about mortgages with genuine buyers. The best way to identify real buyers among all visitors is to observe carefully the visitors to know how many of them making queries about your house. Visitors, who are asking questions, could be the serious buyer or tenant. Don’t spend your time in meeting and private viewing to visitors who failed to show proofs for approval of finances.
  • Follow up is essential for finding serious buyer or tenant among numerous people visited your house during open house. Sending an email to every visitor on the same day of this event is the best way to know about their intentions. Only those who have some interest in your property will proceed further by replying you email. Moreover, you can also make suitable offers to interested candidates, while asking them for suggestions to make your house more appealing. Making a sign in sheet will be a great help to maintain the complete record of visitors that you will use to follow up with them.


You don’t need much to follow these simple tips. What you need to do is to act accordingly and keep your house organized. Having followed these simple tips you will be able to host open house for efficient property selling. Especially if you are in asset market like Dubai property market, then proper staging of open house is mandatory due to high competition levels.

Tuesday, 18 March 2014

New rent cap law in Dubai




Dubai property market is recognized for its profits. Whether you are investing to flip or rent, you may earn profits in the form of regular rental income or reselling assets on higher prices. After showing gradual recovery from economic downturn in year 2012, asset market completely recovered in year 2013. Further the winning bid to host an intentional event Expo 2020 has significantly increased the value of this Middle Eastern city in the eyes of prospective investors and entrepreneurs. The huge number of people visiting this city has increased the demand of Dubai property for rent. The emirate has already possess plenty of accommodation options like hotels, resorts, serviced, studios and hotel apartments to execute the needs of tourist. Moreover, the event is expected to generate more than 277,000 jobs in UAE, which can eventually increase the number of expats coming Dubai for job. Such employment and economic outlook will positively increase the demand of short term leasing accommodation in the city.

The increase in demand in residential properties for rent gives clear signal to developers to supply more property units. However, city developers have already been initiated projects across the emirate and most of them they are going to deliver before this event. Having considered the rising demand of short term accommodation, landlords can think to increase rents. Some of the experts have predicted that sky rocketing property prices and rents may lead to another property bubble. In order to avoid another property bubble, His Highness Sheikh Mohammed bin Rashid Al Maktoum has issued a new Decree No. 43 of 2013. 

About the new Rent Cap

According to the Decree No. 43 of 2013 landlords of public and private sectors are allowed to increase rent to a certain extent. The primary aim is of implementing new rent cap is to benefit both tenants and landlords.

The new decree has allowed tenants to increase rents of their property units to a certain limit. Maximum 20% increase is allowed on annual basis. Previously landlords were not allowed increasing rent upon renewal if the difference between existing leasing amount and current market rates is less than 25%. The new decree has reduced this edge for rising rents to 10 percent.

The new cap law has come into effect on 18th December 2013. Instead of public and private sectors, the law is applicable on free zones and Dubai International Financial Centre as well. It is applicable upon lease renewal after considering the difference between the property rental value and the average market rate for properties in specific city communities. Average rent rates in market are set according to rent index which is produced and updated by RERA Real Estate Regulatory Agency on regular basis. 

Layered Structure of Rent Cap

The Articl1 of the New Decree gives complete layered structure of new rent cap to establish percentage increase in rent upon lease renewal. Below is the brief description of new rent cap.


  • If a property rent is less than 10% below the average rental rate in market no increase is allowed.
  • If the difference in existing property rent is between 11% and 20% below the average rental rate in market 5% increase is permitted.
  • If the difference lies between 21% and 30% below the average market rental rate maximum 10% rent increase is permitted.
  • With the difference between 31% and 40% below the average rent rates in market total of 15% increase is allowed.
  • For more than 40% below the average market rental rate maximum 20% increase in rent is allowed.
  • In spite of this argument, that the New Decree for rent cap is totally in the favour of landlords, it has been implemented and tenants and landlords are supposed to understand its connotation to better prepare their leases.

Monday, 10 March 2014

Pros and cons of owing freehold property in Dubai



Dubai has not only been recognized as business and trade hub in the region rather it is also famous for its cosmopolitan environment. Being the abode for expats, the emirate’s population possesses an unusual mix of foreigners and locals. Estimates showed that nearly80% of Dubai residents are non-UAE nationals. Political and economical stability and tax free earnings have pulled attention of foreign professionals, investors and second home seekers towards Dubai. They prefer finding job and investment opportunities here to improve their profits and standard of living. After considering the enormous interest of international investors and buyers, State Government implemented freehold property law to enable foreign buyers to purchase property in Dubai in designated free hold areas.

Freehold Areas in Dubai

The Palm Jumeirah, The Meadows, Emirates Hill, The Springs, The Meadows, Dubai Marina and Jumeirah Lake Towers are the leading freehold areas in Dubai. Only non-GCC nationals are allowed to buy assets in these designated areas.

Buying assets in designated freehold areas enable foreign buyers to become the property owner with complete ownership rights to keep it forever or to resell or transfer to another person in family like genuine owner in Dubai. Freehold property ownership in Dubai can be acquired in different ways. Following are different types of property ownerships in Dubai available in freehold areas.

Individual ownership is extensively acquired entitlement that directly registers property in the name of an individual. Rapid process and simplicity are the major benefits. Buyers are required to go Dubai Land Department with passport to sign documents. A power of attorney can also sign documents for original buyer. Inheritance is the only con of possessing individual ownership as owner will be facing uncertainties of Dubai Courts on issues regarding property. Even for some countries there are certain tax implications on rental income and net capital gains on selling.

Joint Individual ownership married couples are usually acquire this kind of ownership. The benefits are same like the individual ownership. The difference only lies in number of individuals you are dealing with. Rest of the things remains same. Again the cons are same inheritance and taxes on rental income and capital gain. Moreover, if one among the two shareholders is passed away the shares of deceased will passed on to the heirs of deceased not to the surviving spouse.

Traditional offshore company ownership is very suitable for investors that allow entrepreneurs to register assets in the name of their corporate. It protects owners from uncertainty of local succession laws. There are no issues regarding inheritance as the company never dies. It has observed that commonly companies transfer the shares to the buyers in contrast to transferring property. This will let them avoid 2 percent transfer fee for DLD. Besides its advantages, the primary con is the long duration of the process. Lot of paperwork is required along with an amount as set-up fee and annual fees to maintain good position of company in offshore register. Moreover, it is not possible to get assets registered with DLD in the name of offshore company. Only Jabel Ali Free Zone offers this kind of ownership for companies.

Jebel Ali Free Zone (Jafza) offshore company is the latest available option for offshore company holders that allows investors to register assets in the name of company. In year 2011 DLD has issued guidelines to ban new property registrations in the name of foreign offshore companies. They are allowed to buy in the name of Jafza offshore companies. Offshore companies established in traditional offshore jurisdiction can own Jafza offshore companies. Other benefits are same like traditional offshore company ownership. Time and cost are the main cons associated with corporate structures.

After considering the benefits and detriments of these freehold ownership types of property in Dubai, you can choose the best for you. It is advised to consider time frame, cost, taxes and locals laws before making final decision to become property owner in Dubai.

Tuesday, 4 March 2014

Property Ownership Types in United Arab Emirates

United Arab Emirates has transformed itself into an ultra modern well constructed city from an undeveloped community of pearl divers and fishermen. UAE consist of seven emirates, Abu Dhabi, Dubai, Sharjah, Ajman, Ras Al Khaimah, Umm Al Quwain and Fujairah. Among them Abu Dhabi and Dubai have been recognized on international level for their tremendous growth and development in business, real estate and tourism sectors. Soon after the discovery of oil reservoirs in 1962, State Government started investing its petro dollars to built-up city infrastructure and real estate projects in commercial, residential and retail sectors to provide comfortable living space and modern lifestyle amenities for everyone living and visiting the country. With aim to reduce its dependency on oil export, government has taken several initiatives to improve business, finance and travel and tourism sectors.

UAE has been an ancient trade route for Asian, African and European countries, as it is located on the cross roads of these continent. After observing the rapid progress thorough out different sectors, governmental authorities implemented policies to facilitate foreign investors and entrepreneurs so that they consider making investments in UAE. Moreover, developers also constructed holidaying spots, entertainment and leisure activities to attract tourists across the world. Having considered the business, investment and entertainment opportunities, foreigners or non UAE nationals started choosing UAE as their second home for business, entertainment and career growth.


Why expats are showing interest in buying assets in UAE?

Strategic efforts enabled UAE to drag huge number of expats, travelers and entrepreneurs every year. Developers have constructed a wide variety of short stays and accommodation options to cater the needs of its visitors. Short stays can be rented for few hours to several days, weeks, months or even years. Such options are perfect for those who don’t have plans to stay for longer period of time. Usually second home seekers, investors and entrepreneurs are willing to buy residential and commercial units to accommodate themselves for longer periods of time. The primary reason to think about becoming the property owner in UAE is to save money in long run because rents are tending to rise.

Initially foreigners were not allowed to buy properties anywhere in UAE. What they were allowed to do is to rent or buy properties with 99 year lease. Having considered the interest of expats in buying residential and commercial assets in UAE, Government started thinking to give freehold ownership to foreigners in designated areas all over the UAE. Currently there are no federal property laws in UAE. Rather, emirates have individually developed their own rules and regulation for real estate sector.


Dubai and Abu Dhabi credited to be first to offer free hold property ownership for foreigners

Dubai and Abu Dhabi are the two leading emirates of UAE in terms of business and overall economic growth. It has been observed that most of the expats and foreign entrepreneurs prefer moving to anyone of these emirates for job, business and investment purposes. In fact, Dubai shows a unique mix of 80% expats and 20% locals in its population. It has been recognized as true melting pot of cultures. Dubai is the first UAE emirate which allows foreigners to purchase residential and commercial assets with complete ownerships rights like a local. Furthermore, Abu Dhabi has recently announced in January 2014 to offer freehold ownership for residential assets in specific investment zones of this emirate.


Current Property Ownerships in UAE

Currently there are other property ownership types in UAE. Tenants and buyers are suggested to find the right category accordingly to acquire certain ownership to use property. In addition to in freehold property ownership, other ownership rights include the following types:

Leasehold: It’s kind of contractual right that allows tenant to use existing property without giving any right on the piece on land on which it is built. You can’t sell or transfer lease on your own to another. Leases are issued for 99 years.
Usufruct: It is a real property right, which grants holder to make profits from property which is actually the property of another person. As long as the unit is not damaged or destroyed. Usufruct is usually issued for 50 years.
Muastaha: To some extent is similar to usufruct. It grants user a right to construct the unit to earn profits. Usually real estate developers are more interested to obtain this kind of ownership for their projects.

Dubai and Abu Dhabi have designated special areas for foreigners or non-GCC and non UAE nationals where they can avail freehold ownership for properties.  Dubai Land Department and Abu Dhabi Municipality are the real estate regulatory bodies to regulate real estate and property ownerships issues for foreigners and locals.