property times emagazine july 2014

Property search just got better ...

///// Issue 20 - July 2014

for exclusive listings page Turn to40

REAL ESTATE

Are end-users �nding it di�cult to meet the higher down payment requirement for motgages?

“That’s our dream home, but...”

18pg

Jeevan DMello, Emaar Community Management

OA manager: Roles and responsibilities

26pg

Tel: +971 4 365 7222

[email protected]|www.lannhill.com

901 Marina Plaza, Dubai Marina

facebook.com/lannhillrealestate linkedin.com/lannhill-real-estate twitter.com/lannhillreFax: +971 4 430 5670

ORN 2062

Beauport Tower

Jonathan Shippee|BRN: 27593|+971 50 926 13172 bedroom apartment|full marina view|1,405 sq/ft

AED 3,600,000

REF: S-7964Blakely Tower

Pantea Rokni|BRN: 26076 | +971 50 926 15312 bedroom apartment|full marina view|1,361 sq/ft

AED 3,100,000

REF: S-4018

JBR - Rimal Tower 1


AED 2,800,000

REF: S-6316 Trident Grand Residence

Jonathan Shippee|BRN: 27593|+971 50 926 13172 bedroom apartment|marina & sea views|1,611 sq/ft

AED 3,200,000

REF: S-606623 Marina Tower

Mac Rebello|BRN: 23875 | +971 55 778 11223 bedroom apartment|full sea view|3,085 sq/ft

AED 6,100,000

REF: S-7505

Torch Tower

Mac Rebello|BRN: 23875 | +971 56 254 32902 bedroom apartment|partial sea view|1,258 sq/ft

AED 2,150,000

REF: S-7886Trident Bayside

Pantea Rokni|BRN: 26076 | +971 56 361 49044 bedroom villa + maid|partial marina view|6,900 sq/ft

AED 8,000,000

REF: S-8201

Princess Tower

Pantea Rokni|BRN: 26076 |+971 50 902 04862 bedroom penthouse|marina & sea views|1,866 sq/ft

AED 4,000,000

REF: S-8073 JLT - Green Lakes Tower 1

Mac Rebello|BRN: 23875 |+971 56 140 24382 bedroom apartment|lake & szr views|1,679 sq/ft

AED 2,600,000

REF: S-8154

Attessa Tower

Mac Rebello|BRN: 23875 | +971 55 778 11222 bedroom apartment|marina view|1,550 sq/ft

AED 4,100,000

REF: S-7833

The Address Dubai marina

Jonathan Shippee|BRN: 27593|+971 50 225 98361 bedroom apartment|marina view|880 sq/ft

AED 2,690,000

REF: S-7611

Orra Marina


AED 1,850,000

REF: S-8048

our luxury property agents are ready to help you buy your dream apartment!

to view now call the dubai marina specialistsor email: [email protected]

LANNHILL REAL ESTATE

July 2014 Issue -20 /// 5

propertyonline.ae

FROM THE EDITOR

IS THE MORTGAGE SECTOR SLOWING DOWN?Our cover story this month, put together by our contributor Nicole Walter, focuses on the current scenario in Dubai's mortgage sector, which wit-nessed the introduction of a new set of mortgage cap rules from the UAE Central bank. According to experts featured in the article, the mortgage sector is witnessing less number of transactions primarily due to the high down payments one should pay to secure a mortgage. However, the mortgage cap rules coupled with the increased transfer fee of 4% have successfully curbed flip-ping to a great extent and prevented the prices from rising unrealistically. In the long run, these measures implemented by the Land Depart-ment and RERA primarily to keep flippers at bay will prove to be extremely good for the market as the price and rental growth will continue to be realistic attracting more and more investors.

Also in this issue, Jeevan Dmello, Senior Direc-tor, Emaar Community Management, explains the role and responsibilities of an Owners Associ-ation Manager, shedding some light on this seg-ment of the market. The community manage-ment sector previously lacked reliable sources of information and that's when Property Times decided to dedicate a few pages every month to

Binesh PanickerEditor-in-Chief & Co-Founder

BINESH PanickerEditor-in-Chief & Co-Founder [email protected]

JATIN DeepchandaniHead of Sales, Marketing & PR [email protected]

INDU RavindranathExecutive - Sales & PR [email protected]

NYSAM K ShahulSenior Graphic [email protected]

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ABDUL ManafAdmin [email protected]

KIRAN ReddyE-magazine [email protected]

SHIBINA JasExecutive Assistant to [email protected]

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spread awareness about community manage-ment and educate the buyers and investors from across the globe who own properties in Dubai.

We have our regular expert advice sessions as always while the July issue also carries an exclusive interview with one of the youngest real estate agency owners in Dubai; Alessia She-glova, Managing Director, Dacha Real Estate. With the recent announcement of the Mall of the World by Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, to be developed by Dubai Holding, Dubai is expected to attract mil-lions of tourists over the next few years. In order to cater to the increasing number of tourists, a lot of projects are expected to be announced in the mid-level segment of the hospitality, accord-ing to experts featured in an exclusive article by Nicole Walter.

I am sure our readers will find this issue very informative and interesting!

Cover shoot location courtesy: Cuadro Fine Art Gallery, DIFC

Tel: +971 4 365 7222

[email protected]|www.lannhill.com

901 Marina Plaza, Dubai Marina

facebook.com/lannhillrealestate linkedin.com/lannhill-real-estate twitter.com/lannhillreFax: +971 4 430 5670

ORN 2062

Beauport Tower

Jonathan Shippee|BRN: 27593|+971 50 926 13172 bedroom apartment|full marina view|1,405 sq/ft

AED 3,600,000

REF: S-7964Blakely Tower


AED 3,100,000

REF: S-4018

JBR - Rimal Tower 1


AED 2,800,000

REF: S-6316 Trident Grand Residence

Jonathan Shippee|BRN: 27593|+971 50 926 13172 bedroom apartment|marina & sea views|1,611 sq/ft

AED 3,200,000

REF: S-606623 Marina Tower

Mac Rebello|BRN: 23875 | +971 55 778 11223 bedroom apartment|full sea view|3,085 sq/ft

AED 6,100,000

REF: S-7505

Torch Tower

Mac Rebello|BRN: 23875 | +971 56 254 32902 bedroom apartment|partial sea view|1,258 sq/ft

AED 2,150,000

REF: S-7886Trident Bayside

Pantea Rokni|BRN: 26076 | +971 56 361 49044 bedroom villa + maid|partial marina view|6,900 sq/ft

AED 8,000,000

REF: S-8201

Princess Tower

Pantea Rokni|BRN: 26076 |+971 50 902 04862 bedroom penthouse|marina & sea views|1,866 sq/ft

AED 4,000,000

REF: S-8073 JLT - Green Lakes Tower 1

Mac Rebello|BRN: 23875 |+971 56 140 24382 bedroom apartment|lake & szr views|1,679 sq/ft

AED 2,600,000

REF: S-8154

Attessa Tower

Mac Rebello|BRN: 23875 | +971 55 778 11222 bedroom apartment|marina view|1,550 sq/ft

AED 4,100,000

REF: S-7833

The Address Dubai marina


AED 2,690,000

REF: S-7611

Orra Marina


AED 1,850,000

REF: S-8048

our luxury property agents are ready to help you buy your dream apartment!

to view now call the dubai marina specialistsor email: [email protected]

LANNHILL REAL ESTATE

Mortgage sector slowing down

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July 2014 Issue -20 /// 7

propertyonline.ae

8NEWS & ANALYSIS

Hamptons MENA records 35% growth

9NEWS & ANALYSIS

Damac gets Green Building Certification

10NEWS & ANALYSIS

Dubai residential market H1 2014 by REIDIN.com

12LEGAL EXPERT:

Jerry Parks, Taylor Wessing

14INTERIOR EXPERT:

Adam Riccio, Under One Roof

16MORTGAGE EXPERT:

James Goodman, MortgageMe

32Nakheel to pay off debt ahead of time

40EXCLUSIVE property listings

50COLUMN BY

The Wolf of Real Estate, Mohanad Alwadiya, Harbor Real Estate

Mortgage sector slowing down

OA managers: Jeevan Dmello, Emaar Community Management

Interview: Alessia Sheglova, Dacha Real Estate

Mid-level hospitality sector to get more units18 26 30 34

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July 2014 Issue -20 /// 8

HAMPTONS MENA RECORDS 35% GROWTH IN DUBAI RESIDENTIAL

SALES VALUE

Hamptons MENA, the premier property services company, has reported an impressive 35% growth in the sales value

of residential property in Dubai during the first quarter (January to March) of 2014, compared to the same period last year. Underlining the strong per-formance of Dubai’s property sector, Hamptons also recorded a growth in sales volume by 32% during the same period, with strongest sales reported in Downtown Dubai, Dubai Marina and Emirates Living. A spokesperson of Hamptons MENA, said: “The robust performance of Dubai’s economy is reflected in the positive growth of the property sector. This builds on the growth trends that prevailed during 2013.

During the first quarter, our sales value and volume reported a solid increase, particularly led by an increased

demand for homes in Downtown Dubai and Dubai Marina.”He added: “Down-town Dubai, Emaar’s flagship project, has defined its credentials as one of the most sought-after destinations for residential and commercial property in Dubai. The strong rental yields and returns on investment make Down-town Dubai a preferred choice not only for Dubai residents but also from international investors, as our sales figures highlight.”

Hamptons MENA reported an increase in customer activity for both sales and leasing across other estab-lished neighbourhoods in Dubai including Dubai Marina, the premier waterfront project, and Emirates Living, a collection of integrated communities. The average size of property that was transacted by Hamptons MENA in the first quarter was 1,200 to 1,500 sq ft,

indicating a growing interest by small-size families and professional investors to make property investments.

The demand for villas also continues to grow with Hamptons MENA record-ing significant growth in number of customer enquiries for villas, especially in Arabian Ranches. Hamptons MENA also recorded a surge in demand for serviced residences during the first quarter with enquiries principally from international investors.

Residential property demand was led by a number of factors includ-ing the overall infrastructure support offered by the development, ease of access to Dubai Metro and the ame-nities available in close proximity. Developments with swimming pools, access to park or beach and health & fitness facilities recording good investor response.

Dubai Marina

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July 2014 Issue -20 /// 9

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DAMAC Properties, one of the leading luxury real estate developers in the Middle East, has become the first company

ever to receive a Green Building Certi-fication from the Department of Plan-ning & Development, Trakhees.

Trakhees, the department for Plan-ning & Development, a Dubai-based local regulatory authority and the first to undertake local certification, bestowed the honour on the NAIA at Suburbia Jebel Ali hotel apartments, which will open later this year.

The project demonstrated its com-pliance to Environment, Health & Safety (EHS) Sustainability criteria for the built environment, and became the first proj-ect to ever be certified ‘green’ under the scheme. The EHS In-House Green Build-ing certification involves stringent com-pliance requirements and an exhaustive review process.

GREEN BUILDING CERTIFICATION FOR DAMAC

aspect, Iwish the DAMAC Properties team all success in ensuring that their certified building truly delivers.”

NAIA at Suburbia Jebel Ali was shown to use nearly 30% of its mate-rials with recycled content, and had sourced more than 22% of its materials regionally. The project will also achieve an energy saving of more than 22% and 33% savings on potable water use. “DAMAC Properties is committed to building a lasting, and sustainable environment for our children and it is a great honour to be thefirst company to be recognised in such a way by the Department of Planning & Develop-ment, Trakhees,” said Ziad El Chaar, Managing Director, DAMAC Proper-ties. “The green building certificate is a testament to the hard work and com-mitment of our staff and consultants who have worked tirelessly on this exciting project.”

“I compliment and thank the devel-opers and the stakeholder commu-nity for reposing trust on the EHS and congratulate the team for successfully accomplishing the certification,” said Madiha Salem, Director EHS. “The EHS ‘in- house’ certification program for Green Buildings was announced to pro-vide its clients with a region-specific, appropriate and cost effective alterna-tive. This program focused a great deal on professional reviews and specific interventions that resonate with the urgent needs of the region.”

“We are indeed proud of the fact that EHS, with the rest of the team, has stood up to the challenges that accompanied this massivetask and carved a niche for itself in the arena of sustainable build-ings. Green building certification brings with it challenges for operational sus-tainability and that would be the true test of a performing building. In that

July 2014 Issue -20 /// 10

Property Times in asso-ciation with REIDIN.com takes a look at how the residential

sector fared over the past six months.

By Binesh Panicker

AHMET KAYHANCEO, REIDIN.com

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JLT, Dubai

propertyonline.ae

DUBAI RESIDENTIAL MARKET: H1 2014

July 2014 Issue -20 /// 11

Source : REIDIN.com

REIDIN.com is widely used by real estate agents and investors for reliable, well-researched information on the country’s real estate sector. REIDIN.com, founded in 2007, is a leading real estate information company focusing on UAE, Turkey and other emerging countries. REIDIN.com helps professionals and individuals easily access the real estate information they need to make more informed investment, purchase, sales, rent, mortgage, finance, development and management decisions. REIDIN.com ‘Data & Research Team’ together with a global network of information partners endeavours to provide high-end analysis and research support to its clients.

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sHow has the residential market per-formed over the past six months: both villas and apartments?Last six months have been a period of testing the boundaries and seeing how much it can stretch further. As we cor-rectly predicted the sales volumes are dropping and it’s pressuring already realized high prices. This pressure is more obvious on the Villa segment due to high average deal size and selective demand position. There is also sea-sonal impact of Ramadan and sum-mer that will hammer villa prices and luxury apartments. But the bottom line will not change that is Dubai residen-tial prices are going up.

Which segment witnessed substan-tial rise in prices: villas or apart-ments? Please explain.As seen through our detailed anal-ysis and REIDIN Indices, the apart-ment segment relatively gained more ground and almost doubled the villa segment increase. Average deal size in the apartment segment comparatively lower than the villa segment and the demand metrics are much stronger. In addition, the rental market is hot-ter for the apartment segment that builds a very attractive yield market as well.

Which communities witnessed maximum rise in rents and sales prices?International City, The Views and Jumeirah LakeTowers showed a much higher increase than the rest of the areas. Comparatively International City has been much lower than the rest but also it received astrong demand from owner-occupiers. JLT and The Views received a much higher demand being settled communities.

Rent increases are still strong in most of the freehold areas. Dubai Sports City and Discovery Gardens showed a stronger growth and looks like the trend will continue.

propertyonline.ae

July 2014 Issue -20 /// 12

propertyonline.ae

If you have any legal queries about buying or renting, please email at [email protected]

As a law firm registered in Dubai (with the DIFC authorities, the Economic Department and the Legal Affairs

Department) Taylor Wessing is authorized to advise and assist on legal matters, including real estate matters. Where our assistance extends to representation, we act under Power of Attorney, authorizing us to sign legal documents on behalf of our clients, and to pay out and receive funds on behalf of those same clients. We are bound by strict rules of professional conduct and we carry professional indemnity insurance to protect our clients at all times.

We always suggest that investors con-sider appointing law firms as their attor-neys rather than real estate brokers, if they want the comfort and protection that goes with these important safeguards. How-ever, law firms are neither licensed nor insured to provide property management services. For those services you wouldneed to appoint a property management com-pany properly licensed in Dubai by the Eco-nomic Department and RERA to carry on those activities.

Our expert answers the legal queries about buying and renting properties.

w i t h l e g a l e x p e r t

Do you represent investors in Dubai? I am based in the UK and would like to appoint a represen-

tative to invest in and manage proper-ties? How does it work?

Executive Council Resolution No. (30) of 2013 is the law in question and it states that the transfer fee

shall be borne equally between the buyer and seller, unless otherwise agreed. Most sale agreements provide for the buyer to pay the whole of the transfer fee, and thus when the parties sign a contract containing those provisions they are evidencing their agreement todeviate from the default posi-tion under the law. At the end of the day, if the buyer refuses to pay the transfer fee, and you don’t want to sell unless he pays that sum, you might consider increasing the sale price by 4% and generously paying the whole of the transfer fee yourself.

As per the law, who is liable to pay the transfer fee? I am plan-ning to sell a few of my prop-

erties and the buyer is refusing to pay the transfer fee. What do I do in such a situation?

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Jerry ParksPartner

Taylor WessingDubai has come a long way since the early days of freehold ownership, which were regulated with only the

lightest of touches. Now we have a Land Department and Real Estate Regulatory Agency that are geared up for international investors into a thriving property market. But that said, while measures have been put in place to minimize risks, nothing can be absolutely guaranteed. The escrow law was introduced to ensure that funds paid by investors were applied by the developer to the project in which those investors had invested, rather than being frittered away on less permanent but arguably more exciting distractions. But the Dubai escrow structure doesn’t guarantee the success of a development, and it doesn’t mean there will be any money left in the kitty if the mar-ket crashes. Imagine a repeat of the most recent turn of events – you pay installments into the escrow account; the developer uses those funds to pay substantial marketing expenses (sometimes to a related com-pany); the market falls through the floor; your fellow investors lose confidence and stop all further payments; the developer has no source of funds and goes bust with huge debts to its designers and contrac-tors for works just started; all payments are made out of the escrow account, so that’s been depleted; the project is cancelled; you ask for your money back and point to the empty escrow account. Oh dear. OK, RERA can always seek to sell off the failed devel-

I am an overseas investor and recently I read various reports about regulations for the devel-

opers such as a compulsory escrow account. Will these new regulations make sure that my money is safe ?

propertyonline.ae

opment to try to generate funds, but that’s not a swift process, and after the expenses involved, it’s unlikely there will be anything significant in the pot. So in short, the escrow law provides some protection but is by no means a guarantee of funds for the lifetime of the project. ‘Buyer beware’ is still the advice, along with ‘do your due diligence’.

July 2014 Issue -20 /// 14

Adam Riccio Operations Director

Under One Roof04 323 2722

If you have any queries about renovations or conversions, please email at [email protected]

I would like to lighten up the house by making all the interior doors white. Do you know of any alter-

native to replacing them all, as that is very expensive? This is one of the most popular home improvement requests we get. We recommend not to replace but to reglaze in a white, satin finish. We do this using our proprietary product we import from the USA, called Permaglaze. It is a specialist glaze, which recoats any surface into a contem-porary high gloss or satin finish, which is durable and water resistant. For the process, we come to your home and remove all of the doors and take them to our factory in DIP where our specialist spray painters reglaze them. If you want to reglaze the doorframes as well, we do these in situ as these cannot be removed. In this case, we cover off the affected area and spray them in your home. There will be a slight odour for a day or two but this quickly disappears. We then return to refit the doors when the doorframes are dry. Another popular request is to reglaze dark skirting boards throughout.

Everything you need to know about property refurbishment, conversions and permissions.

w i t h i n t e r i o r e x p e r t

All of the interior doors in my home are a very dark wood finish and make the house feel

very dark?

Yes it is, and this is becoming increas-ingly popular. A number of compa-nies do the glass for this and we work

with and recommend particular companies that we trust for their service, quality and reli-ability, as the glass must be a certain thickness and be safety glass, not normal.

It is quite a disruptive process as you will lose the use of staircase for a couple of days, so it is a job, which is ideally undertaken when the family is away if at all possible. There are a number of different types of effect that are possible to achieve and our designers will be able to create the look and feel you want. Alternatively, you could visit any one of a number of our previous clients who have had this done, to get some ideas of what would work best in your home.

I would like to replace the stair-case in my villa with a glass “float-ing” balustrade effect. Is it possi-

ble to do this?

It is permitted to break walls, how-ever you must obtain permission and a No Objection Certificate (NOC)

from the master developer, not the Owners Association, first. To do this, you first need to obtain your plans from the master developer who will supply CAD drawings on a CD. This is then used by an engineer to determine if the wall you wish to break is a supporting wall and integral to the structure of the prop-erty. If it is, you will not be granted permis-sion to remove. If it is not, then the engineer will draw up the plans of what you wish to do and submit to the master developer for approval. Depending on the complexity of what you want to do, there may be several questions raised by the developer at this stage which has to be answered by the engi-neer. When all queries have been answered by the engineer, approval will be granted. Under One Roof will undertake all of this pro-cess as part of the project costings, using our own in-house engineer and CAD Designers. At this stage, the home owner will need to pay some refundable and non-refundable charges levied by the developer in relation to the approval. These charges differ from developer to developer. At the end of the project the developer will inspect the work to ensure it has been carried out in line with the approval and give final sign off and refund any deposits. Without this sign off you may not be able to sell your property, so it is vital to ensure you only use reputable companies to undertake any work in your home.

A friend told me that as per the laws in Dubai, it is not permitted to break the walls in a villa in order to

combine two rooms without the NoC from the Owners Association? Is this true? Will service providers such as Under One Roof organize such permissions? How long does it usually take for the permissions and also to carry out the job?

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propertyonline.ae

July 2014 Issue -20 /// 16

If you have any mortgage related queries please email [email protected]

James GoodmanMortgageMe.ae

InvestMe Financial Services LLCM: +971 (0)55 4158610

Looking for a mortgage? Our expert answers your queries about securing a mortgage in Dubai.

w i t h m o r t g a g e e x p e r t

Applying for a joint mortgage is common practice for married couples with two incomes and

is as simple as providing two applica-tions and sets of documents generally. The documents required will depend on your specific circumstances such as, are you self employed or employed, resi-dent or no-resident. They fall into broad categories though and need to show your identity (passport and Emirates ID), and financial position (pay slips, salary certificates and or business accounts and bank statements). Monthly install-ments are usually paid by having an account with the lender into which you ensure the required amounts are available but again, this can vary from lender to lender.

Both my wife and I are work-ing and our combined salary is AED45,000 per month. We

don't have any liabilities as such. How do we apply for a mortgage combining both our salaries? What are the documents required? How will we pay the EMIs (through whose cheques: mine or my wife's)?

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That will no doubt vary according to opinion but for me it is, can you afford the payments now and if the

interest rates rise in the future and have you paid a fair and reasonable price!

What are the most important cri-teria one has to consider before finalizing a mortgage?

Some banks do and some don't require a salary transfer to them. The banks will check for black

marks and credit problems lodged with the appropriate record holding bodies but don't have what might be consid-ered comprehensive credit checks such as you would expect in Europe and the USA.

The process is to provide the docu-ments and proof of income and identity from which the lender will make a deci-sion as to whether the application meets their lending criteria. If it does, and there are no bounced checks, Police cases etc on record, they are likely to make an offer of a mortgage in accordance with the UAE Central Bank lending Limits.

Do banks require salary trans-fer for mortgage approvals? Do they conduct a credit

check? Please explain the process from the beginning?

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July 2014 Issue -20 /// 18

RESIDENTIAL SALES SLOW AS MORTGAGES BECOME

LESS AFFORDABLEAre large deposit requirements affecting the mortgage industry? By Nicole Walter/freelance writer

Mar

ket

propertyonline.ae

July 2014 Issue -20 /// 19

Despite banks bringing down interest rates competing for mortgage customers, there are few who can respond

to the offer unable to afford the large deposits, thus slowing down transac-tions significantly and helping to sub-due the rise in property prices.

According to the Cluttons Dubai Res-idential Outlook Spring 2014, residential price growth peaked in Q2 2013 at 23%, and since slowed rapidly to around 3% in Q1 2014.

"We have certainly witnessed a slow-ing in the rate of price acceleration over the past six months. The Federal Mortgage Caps have been the main catalyst behind the cooling in the pace of capital value growth rates and this has been particularly noticeable in the villa segment of the market,” comments Faisal Durrani, International Research and Business Development Manager

July 2014 Issue -20 /// 20

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at Cluttons. “The total upfront costs associated with buying a Dh5.5 million property more than doubled since the Federal Mortgage Caps were intro-duced, going from 20% to 42%. The ensuing impact on households' ability to make the transition to owner occu-pation was significantly impacted and we have seen a 46% decline in the level of villa transactions in Q1, when com-pared to the same period last year,” he adds.

Other factors cooling the market, included Dubai’s Land Department (LD) raising the property registration fee to 4% and many developers either extend-ing the time frame and/or increasing the amount to be paid towards an off-plan property, or down right not allow-ing re-sale, before the property is com-pleted, achieving the desired effect to curb speculation.

“The mortgage market lags behind, it doesn’t drive the market. It is all about affordability, there have been some good moves, such as implementing the debt service ratio so people buy what they can afford and their borrowing

doesn’t get out of control, and the LD’s activities to prevent flipping. We want the property market to rise sustainably like an aircraft, nice and steady,” says Ian-Kennedy, CEO at MortgageMe.

OFF-PLANIt seems the off-plan market just may be stealing away some of the end-users who would have bought in the ready homes market via a mortgage. “We are seeing lots of interest in off-plan devel-opments, however, those transactions aren’t relevant yet in the mortgage arena, because banks will only look at developments, which are at least 80% completed in terms of financing,” Ian says. “End-users are interested in off-plan because they offer favourable payment schedules and they cannot afford the cash mortgage deposits on completed properties,” he adds.

The flipside of the 4% stop-flipping measure has been that it added to end-user buyers’ woes, already dealing with having to put down the large deposits to obtain a mortgage. “The mortgage uptake has definitely taken a hit, the

Dubai Marina

"We have certainly witnessed a slowing in the

rate of price acceleration over the past six months.

The Federal Mortgage Caps have been the main

catalyst behind the cooling in the pace of capital value

growth rates and this has been particularly notice-able in the villa segment

of the market.” Faisal Durrani, International Research and Business

Development Manager, Cluttons.

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July 2014 Issue -20 /// 22

regulatory changes, including the mort-gage cap, from very lax to very vigor-ous, means people are stretched, they have to come up with the 25% deposit plus another 7% for purchase costs, at least a couple of hundred thousand dirham, that is a huge amount, even for someone in a good job, to find,” says Ian.

At the same time the home loans market has become fiercely competi-tive with home loan providers lowering their flat rates to as little as just above 2%, and keeping the variable rate at just below 4%. “Banks have been pro-moting their mortgage offerings quite aggressively, they ramped up their staff in this arena, but the offers these days are becoming more similar, narrowing the products in the market place, a natural sign of a competitive market,” Ian comments.

Banks also have been more creative with helping their prospective cus-tomers to come up with the deposits

by offering personal loans, says Ian. Although a lot less, it isn’t likemort-gage-based sales transactions aren’t taking place at all. “Yes, they are slow-ing down but new expats coming into the country, as well as those wanting to escape the high rents and get onto the property ladder, are still taking up mort-gages, we have also seen an increase in overseas investors,” Ian remarks.

According to Reidin.com data, res-idential sales transactions numbered 3,520, compared to mortgage trans-actions numbering 1,547, over the last three months, the median transaction price for the latter was around AED1.6 million. “Many are also refinancing existing mortgages to a more compet-itive rate, often shifting from 7-8% to 4%, a huge saving, and banks are being fair, they have made the exit easier by lowering exit costs. They used to be 5% of the mortgage but today they have capped them at AED10,000,” Ian points out.

“The mortgage market lags behind, it doesn’t drive the market. It is all about affordability, there have been some good moves, such as implementing the debt service ratio so people buy what they can afford and their borrowing doesn’t get out of control, and the LD’s activities to prevent flipping. We want the property market to rise sustainably like an aircraft, nice and steady,” says Ian Kennedy, CEO at MortgageMe.

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July 2014 Issue -20 /// 23

ALTERNATIVE INVESTMENTSProperty investors on the other hand, Ian noted, have come to realize there were also alternative investments to real estate. “They are pulling equity out of properties they already own and are investing it in something else, or even a new property,” he says.

In the meantime, developers with ready property to offer have been increasingly teaming up with home loan providers again to attract custom-ers, such as or Jumeirah Golf Estates, which recently offered deals for buy-ers of its ready to move in villas in the Whispering Pines and Flame Tree Ridge districts. “We partnered with AMLAK Finance to provide interested buy-ers with a home finance solution that would best suit them, along other val-ued services,” says Yousuf Kazim, Gen-eral Manager of Jumeirah Golf Estates. “The response during the promotional period was positive considering a Finance House is dedicated and cater-

ing specifically to our clients, approxi-mately 80 to 90 people enquired about financing options and were referred to Amlak Finance,” he adds.

Other developers doing the same include Arady Developments teaming up with Dubai Islamic Bank (DIB) for its Central Park development, as well as Dubai Properties (DP), also with DIB at a rate of 3.99%, for its Remraam commu-nity. “Developers offering a financing partner when selling their properties is an obvious way to go, it makes transac-tion easier thus stimulating the mort-gage market,” Ian remarks.

Leaving more expensive mortgages and increased registration fees to one side, the second deciding factor which scared end-user buyers off was the price for their dream home orbiting.

“As property prices were ramping up massively last year in a short space of time buyers got very nervous, and today they are still wondering have prices really stabilized to start feeling confident again,” Ian points out.

PRICESAccording to Reidin.com’s ‘Dubai Res-idential Property Sales Price Index’ for May 2014, prices overall increased 37.1% seen year-on-year, but only up by 1.65% from the month before, apart-ment prices played the ‘bull’ part in May with an increase of 2.16% from April, while villa prices decreased 0.51% seen month-on-month.

The Cluttons report offers hope that prices won’t shoot up again, although it doesn’t predict them to become cheaper either. “Although we don’t expect any notable declines in capital values, overall prices are expected to continue on their normalisation path as the market works through a period of absorbing the "Expo-factor" boost that drove values up by a record 23% during the second quarter of 2013," says Faisal.

Ian looks forward to prices in the market somehow stabilizing from now. “This would have the biggest single impact on mortgage activity, once pro-spective buyers who are watching the market, feel that, probably some time after the summer, there is a clear direc-tion in terms of prices, which are likely to firm up at current levels, they will buy again,” he reckons.

Reidin.com recorded rentals increas-ing less than before between April and May, by 1.76% for apartments and 0.37% for villas, spelling the signs of the times.

Although, according to the Cluttons report, it was too early to say, whether prospective buyers not being able to afford mortgages and therefore having no choice but to rent for longer, was having an impact on rents, it recorded a clear downward trend in rental growth at less than 2% this spring. The authors of the report subscribed rental growth slowing to the ceiling of what tenants could pay having been reached, and even crossed in some areas, which could even lead to extended vacan-cies of over priced properties. “The sheer pace of rental value growth over the course of the past 12 to 18 months has put household earn-ings under strain and we are clearly approaching an affordability threshold,” they concluded.

Downtown Dubai

“We partnered with AMLAK Finance to provide interested buyers with a home finance solution that would best suit them, along other valued services,” says Yousuf Kazim, General Man-ager of Jumeirah Golf Estates.

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Selected members will be contacted by Property Times team in the next few days...

July 2014 Issue -20 /// 26

In the previous article on the Roles and Responsibilities in an Owners Association - The Board (Issue 18, May 2014),

we talked about the functions of the Board of the Owners Association and how vital it is to have the right team in place to make decisions on behalf of all the owners. However, besides the Board, there are many other stakeholders, who are crucial to the successful run-ning of an Owners Association. These include the Association Manager, the Service Provid-ers and most importantly the owners themselves.

In this article, we discuss the importance, duties and respon-sibilities of the Association Man-ager and what is expected of the Association Management profession.

knowledge, ethics, profession-alism and skills with verifiable experience in financial, admin-istrative, and facilities manage-ment in at least one community association, either commercial or residential.

In the context of Dubai and as per the ‘Direction for Asso-ciation Constitution’ issued in accordance with Law No. 27 of 2007, the Owners Associa-tion is required to appoint an Association Manager, which is a company licensed (by the Dubai Economic Department), registered with the Real Estate Regulatory Agency (RERA) and engaged professionally on a contract. Additionally, the Asso-ciation Manager must comply with the ‘Code of Conduct’ set out in the Association Consti-tution. While the Association

ROLES AND RESPONSIBILITIES:THE ASSOCIATION MANAGER

Jeevan D’MelloSenior Director, Emaar Community Management

Who is an Association Manager?The Community Associations Institute, the world’s premier professional body for Associa-tion Managers, defines a com-munity Association Manager as a professional who will have the

Downtown, Dubai

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Constitution allows for the Association Manager to be an individual owner, it can only be in a voluntary capac-ity with no compensation or financial benefits. While it is highly unlikely that an individual would carry out the tasks involved for no compensation, it is also not in the Owners Association’s best interest to have such a person, as the volunteer may, most likely, not have the educational qualifications and expertise needed to carry out the duties assigned.

DUTIES AND RESPONSIBILITIESClause 41 of the aforementioned Asso-ciation Constitution lists all the duties and responsibilities of the Association Manager in some detail, among them are the following:

· working with the Board to develop strategies for management of common areas· creating a sense of community within the community;· negotiating, supervising and recommending the entry into contracts on behalf of the Own-ers Association;· supervising the performance of contractors and suppliers to the Owners Association;

· supervising defect repairs and warranty claims in relation to the common areas;· preparing annual budgets , issuing service charge notices and collecting payments· coordinating and attending Board meetings, Board committee meetings and meetings of the General Assembly of Owners;· Attending to day to day operational matters on behalf of the Owners Association.

There are many more responsibili-

ties in practice but in brief, the Asso-ciation Manager is expected to look after the administrative, contractual, financial, technical, communication and customer service functions of the Owners Association.

WHO MAKES A GOOD ASSOCIATION MANAGER?It’s extremely vital that the Owners Association chooses the right Associa-tion Manager to manage their commu-nity, as the long-term well being of the community’s infrastructure and assets will be dependent on how well they are managed and maintained. Association Managers who quote the lowest price may not necessarily have adequate

Springs, Dubai

qualifications and expertise to manage prestigious institutions and in the long run, this might become an expensive proposition for the Owners Association. Many of Dubai’s communities have state-of-the-art technical infrastructure that needs to be managed properly by experienced and qualified personnel to ensure its value is protected.

EDUCATIONAL & PROFESSIONAL DEVELOPMENTEducation, certification and credentials are very important considerations in the professional Association Management industry. Unless managers continue to develop and enhance their skills and industry knowledge, they risk missing out on career opportunities, growth and increased earning potential.

The Community Associations Insti-tute (CAI), a 41-year old international organization dedicated to building bet-ter communities, provides information, education and resources to all commu-nity association stakeholders, including Association Managers, the Board and homeowners. With a mission to inspire

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professionalism, effective leadership and responsible citizenship, CAI is one institute that Association Managers world-wide look to further their profes-sional careers.

While for many years, managers had to travel to the United States to par-ticipate in the Professional Manage-ment Development Program (PMDP) for Association Managers, in the past couple of years the Dubai Real Estate Institute (DREI) has been offering many of the international courses developed and accredited by the CAI. As such, Association Managers in Dubai can now take the same classes and achieve the same credentials that previously were only available to those residing in North America. Some of the courses include the foundation level M100 – Essentials of Owners Association Management, M201- Facilities Man-agement, M-202 Association Commu-nications and M-203 Community Lead-ership, with many more to come in the near future.

Attending such courses and pass-ing the corresponding exams lead to internationally recognised professional credentials that give employers con-fidence that the managers have the knowledge, experience and integrity to provide the best possible service to their Owners Associations.

MANAGER CERTIFICATIONS AND DESIGNATIONSAny practising Association Manager should strive to earn the ‘CMCA’-Certi-fied Manager of Community Associa-tions designation which is the first step in gaining the fundamental knowledge a professional manager would need to manage any type of community

association. The ‘AMS’ -Association Management Specialist - designation is the second level in the PDMP track for Association Managers that demon-strates a higher level of commitment to their career and the community asso-ciation industry. An AMS designation is recommended for managers who want to enhance their career oppor-tunities by increasing their knowledge and expertise.

The ‘PCAM’- Professional Community Association Manager - designation is the pinnacle of Association Manage-ment and is the highest professional recognition available internationally to managers who specialize in Owners Association management. It is recom-mended for experienced managers who want to demonstrate advanced skills and knowledge and wish to be recog-nized as among the best experienced managers in the world. There are other specialised designations available to

managers once they have achieved all the above, and these are available to those pro-fessionals who would like to delve deeper into a specific area of manage-ment i.e. large scale communities and reserve studies. It is amply clear that Association Managers serve as the professional backbone of the Owners Association as they have the education, skills, expertise and experience that are essential to the successful manage-ment of communities.

Jeevan J D’Mello, GDArch, CMCA, AMS, LSM, PCAMSenior Director, Emaar Community Management

The author is the pioneer of the community management industry in Dubai and the Middle East managing freehold property since 2002. Currently a Senior Director with Emaar Properties, heading its manage-ment company Emaar Community Management LLC, Jeevan has been professionally trained as an architect and has had a wide ranging inter-national career in real estate design, project management, customer service and community management. In his past career he has been an author and illustrator and has several published works internationally.

He was the first professional in the region to receive the prestigious Certified Manager of Community Associations (CMCA®), Association Management Specialist (AMS®) and Large Scale Manager (LSM®) desig-nations by the Community Associations Institute (CAI). In 2012, Jeevan became one of the first international Professional Community Associa-tion Managers (PCAM®).

Winner of several awards both local and international, he recently received the community management industry’s most prestigious honour the ‘Presidents Award’ becoming the first person to receive it internationally.

Greens, Dubai

Further reading:Community Associations Institute - www.caionline.orgCommunity Association Managers International Certification Board - www.camicb.org,Dubai Real Estate Institute – www.drei.ae

July 2014 Issue -20 /// 30

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She is one of the youngest real estate agency owners in Dubai and is extremely proud of the way her company, set up by her

mother, Angelika in 2004, has grown over the years. Alessia Sheglova, Manag-ing Director, Dacha Real Estate (‘Dacha’ means ‘second home’ in Russian), recol-lects the early days of Dacha in Dubai. “My mother set up the company in 2004 as an investment consultancy firm because most of the projects were sold off plan. When the market started booming with the introduction of free-hold laws, she saw an opportunity there and decided to get into the lucrative real estate market of Dubai,” she says, adding, “Those days, the market used to be dominated by individual inves-tors investing in bulk deals. By 2008, my

mother sold full buildings, floors, and even islands. She then started recruiting brokers to help her in the growing mar-ket.” And then the financial downturn crippled the Dubai market. EARLY DAYSI took over the business from my mother by the end of 2008 and early 2009 when the market crashed. It was quite tough early on. The first year was extremely challenging for me. Advertising options were limited for the agents those days. The online advertising industry started picking up later on. Also most of the agencies didn't have a CRM software and we used to rely on excel sheets and emails. Right now, every com-pany has a CRM system and in house client management software. Today,

a lot of enquiries are generated from online platforms unlike in 2004 wherein print media used to generate most of the leads.

”I learned a lot during those initial days and it helped me understand how the market works. Then the market started improving and our team also started growing. We were located in Jumeirah earlier but in April this year we moved to a much bigger office in Dubai Marina as our team of agents keeps growing consistently.” CUSTOMER PROFILE“Today’s market is driven mostly by end users, unlike in 2004 when individual investors used to be our major clients who would invest in bulk deals. Today, we deal with buyers who buy individual units for their personal use. While we were focusing on investment consul-tancy when we started the company, now our focus is on brokerage. End users who buy property for their per-sonal use are now our main clientele, while investors and speculators make up 10-15% of our clients.” SUMMER”Things are positive for us even during

Alessia Sheglova, Managing Director, Dacha Real Estate, shares her expertise on the market and also sheds some light on the history of Dacha, one of Dubai’s

top real estate agencies. By Binesh Panicker

“We are in the customer service business so we have to take care of our custom-ers. For me, it is important that a client should never come back to us dissatisfied.”

“IT’S A MARKET DRIVEN MOSTLY BY END USERS”

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July 2014 Issue -20 /// 31

Mar

ketsummer. May and June have been

excellent months for us. We have been receiving a lot of enquiries for rentals as well as sales. But now only the cheaper properties are selling (below AED5 million mark), while more expensive properties are not moving as much as they used to in 2011 and 2012 possi-bly because of the new mortgage laws and limitations.” PRICES”Since November last year, the prices stabilized in more popular communi-ties such as Palm Jumeirah, Arabian Ranches, Jumeirah Park etc. It is com-mon for a property to be sold 5% less than the advertising price, but 10% less rarely happens. Now sellers are accom-modating to the offers that the buy-ers propose and adjusting the prices accordingly. I don't think prices will go up after summer. I don't see a poten-tial for prices to grow especially with the introduction of 4% transfer fee. The reason why prices went up in 2013 was because flipping started again in the market. It is the speculators that brought the prices up last year, how-ever, there are very few people now buying to flip because of the new reg-ulations. I think prices will be stable for the next six months.” NEW AGENCIES”I think it’s a good sign that new real estate companies are opening up. In fact, apart from real estate, a lot of new businesses are being set up. Our com-mercial real estate division has seen a surge in demand for office spaces; both sales and rentals. It is great news for the market, as it will bring in more people to Dubai, which will push up the demand for properties. Our rental team is now servicing a lot of clients who are relocating from different coun-tries. Very few people are leaving Dubai these days. Also another indicator that the population is growing is the wait-ing list in schools. New schools are being launched and existing schools are expanding in order to cater to the growing demand. These are all positive signs for the market overall.” VALUES AND PRINCIPLES”We are one of the few companies that

have been in the market for over 10 years and have witnessed the good and the bad times. What sets us apart from others is we are very transparent and people trust us. We are also one of the largest Russian speaking companies in the market and we have a team of 10 agents dealing with Russian clients (30% of our clientele). We also have a lot of Indian and Pakistani investors who are top investors in Dubai. It is very import-ant to be ethical and put your client’s interest first. We are in the customer service business so we have to take care of our customers. For me, it is important that a client should never come back to Dacha dissatisfied. We have to think of the long-term relationships and long-term consequences.” IS IT A GOOD TIME TO BUY OR SELL?”If a seller is looking to sell because he is in need of money, then it is a good time to sell because in my opinion, prices have reached peak values but

as an investment, property will offer you better returns than keeping your money in your bank account, so unless and until the seller has a solid reason to sell, it is advisable not to sell now as they can continue to enjoy the rental returns from the property. For buyers, it is a good time to buy because the mortgage rates are extremely attractive these days.”

”If you are an investor, you can invest now in properties that will give you bet-ter rent returns such as Dubai Sports City, Discovery Gardens, and JLT etc., which will offer you 5% to 6% rental returns. Investors should also look at units (Apartments in good quality buildings with good views, location and layout), which will give them good capi-tal appreciation. “If you want to invest in off-plan properties, it is a good oppor-tunity to invest in villas in locations such as Arabian Ranches 2 and Akoya, as villas are always in demand in Dubai and brand new properties will attract expatriate families that are now arriving in Dubai.”

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NAKHEEL TO REPAY BANK DEBT FOUR YEARS AHEAD OF TIME

Palm Jumeirah, DubaiDeveloper pays tribute to Dubai Government as it prepares for early loan repayment

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Dubai developer Nakheel will repay all AED7.9 billion owed to bank lenders with an early repayment in August 2014,

nearly four years before the final loan instalment due in March 2018, the com-pany announced recently. Nakheel’s scheduled prepayment of AED5.54 bil-lion in August will come just six months after its previous early repayment in February this year, when the company paid off AED2.35 billion of its bank loan.

Ali Rashid Lootah, Chairman of Nakheel, said: “This is perhaps the most significant milestone in the history of Nakheel, and is a true testament to the support and guidance of His Highness Sheikh Mohammed Bin Rashed Al Mak-toum and the trust and faith that he and the Government of Dubai have placed

in our company. Without it, we would simply not be in the position we are in today. “Nakheel is also ever thank-ful and grateful to the lenders, inves-tors, business partners and regulatory authorities who placed their trust and confidence in our company, support-ing us throughout this challenging time. They have played a key role in our success since the implementation of our post-restructuring business plan began in August 2011.“It is now four years since the new Board of Nakheel was appointed. During this time, Nakheel has achieved what some con-sidered impossible: completion of one of the largest, most complex financial restructuring exercises followed by the successful execution of a new business plan that has placed us on a path to new growth.” Nakheel is able to prepay all of its bank debt ahead of schedule due to savings of around AED23 billion on its business plan, achieved through vastly improved cash flows gener-ated from property handovers, sales of new projects, leasing, retail, value engineering of on-going projects and amicable settlements with the majority of trade creditors.

The early loan repayment follows a string of other achievements and milestones post-re-structuring, including:· Meeting the targets set out in the business plan within three years – ahead of the sched-uled five year implementation programme· Year-on-year profit growth (2010: AED963 million; 2011: AED1.3 billion; 2012: AED2.02 billion; 2013: 2.57 billion)· The handover of 7,500 units to customers· Launching more than 20 new projects, ranging from neighbourhood retail centres to entire new communities

· Diversifying Nakheel’s business to increase cash-generating assets

Nakheel Chairman Ali Rashid Lootah said: “We are delivering on – and in some cases out-performing – the tar-gets set out in our business plan. Our achievements of year-on-year profit growth, contractor and customer set-tlements and a number of successful new project launches are concrete evidence of investor trust in Nakheel. “The last four years have been an amaz-ing journey, and Nakheel is now firmly re-established as a world-leading devel-oper playing a key role in Dubai’s real estate sectors. Once again, thanks to the Government of Dubai and all of our stakeholders for their support. I look for-ward to continued success and delivery in the years ahead.”

“This is perhaps the most significant mile-stone in the history of Nakheel, and is a true testament to the support and guidance of His Highness Sheikh Mohammed Bin Rashed Al Maktoum and the trust and faith that he and the Government of Dubai have placed in our company. Without it, we would simply not be in the position we are in today.” Ali Rashid Lootah, Chairman of Nakheel

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Dubai is gearing up to offer a wider range of affordable stays to accommodate the large number of GCC business trav-

ellers, as well as families holidaying in the emirate, from economy hotels over

hotel apartments to licensed private homes. “Dubai has been working hard to drive the destination for families, reducing the cost of entertainment for children and there has been a tremen-dous growth in visitor numbers from

DUBAI SET TO WIDEN ITS AFFORDABLE VISITOR

ACCOMMODATION OFFERING

the GCC, as well as Northern African families, they always travel in groups of around six,” says Ali Abu Monassar, Chairman of The Vision Destination Management. “Multiple apartments, villas etc. of private owners are difficult

More units will be launched in the affordable hospitality segment to cater to the rising number of tourists. By Nicole Walter/freelance writer

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modation they are booking has been classified in line with global best prac-tices, while owners of properties will benefit from the expertise and market-ing capabilities of the operator through who they rent out their property,” he added.

INCENTIVES FROM THE GOVERNMENTLast year DTCM encouraged hotel developers to go for the mid-market sector when investing in new hotels, offering a 10% municipality tax waiver for a period of four years, for all 3-star and 4-star properties, which had the construction permit granted before the end of 2017. “The municipality tax waiver, very important to individual investors, is encouraging them to build mid-market hotels, a good move by the government and supported by DPG and TECOM they have just announced dedicated plots for hotels, very good,” Mohammed Awadalla, CEO of Time Hotels Management, remarks.

In May, Dubai Holding jumped onto Dubai’s tourism vision bandwagon selecting 40 plots, 18 within DPG’s dis-tricts and 22 in TECOM’s Investments zones for hotel development. The goal is to add 7,500 to 8,500 new rooms to the existing 14 hotels in the three and four- star segments, which today include Radisson Blu, Express by Holiday Inn Express and Ramada Plaza.

Hotel investors will be able to take advantage of commercial incentive packages, finding well-located plots with easy access and infrastructure at their disposal. “By offering land to a multitude of investors, we are opening the door for investors to bring inter-national brands or develop their own, and in turn increase the options avail-able for Dubai’s tourists in the years up to 2020 and beyond,” said Ahmad Bin Byat, Chief Executive Officer of Dubai Holding.

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to rent sometimes, Dubai has decided to create separate regulations so they can be available as holiday homes to offer a different kind of hospitality. The open market has to be regulated for any hotel segment to guarantee homog-enous quality and value for money,” he adds.

NEW REGULATIONSThe regulations had been mulled over for a while until the Decree No.41 on the ‘Holiday Homes Market’ was issued in December 2013 calling for all residential holiday lets to operate under a license from June 15th. Dubai’s Department of Tourism and Commerce Marketing (DTCM) invited applications for the first

phase of licenses early June. The first phase requires a hospitality professional to become an operator of a portfolio of a minimum of 20 furnished properties, which private owners can use to let their homes for holidays. “Through reg-ulating the use of properties as holiday accommodation, the objective is to broaden the range of options available to visitors, while ensuring that the high standards of quality for which Dubai is known, are maintained,” commented Khalid bin Touq, Executive Director of Licensing and Classification at DTCM, on the recent move.

“Visitors booking their accommoda-tion through licensed operators will have the assurance that the accom-

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FOCUS ON MID-MARKET UNITSAli welcomes the move to offer more mid-market hotels, although he wouldn’t brand the emirate as expen-sive in terms of its hotel offering, point-ing out that five star hotelstays cost a fraction of what they do in Europe, in particular if booked via tour operators. However, he conceded that there was a need to provide alternative affordable accommodation in Dubai to accom-modate the 20 million visitors by 2020 and the 25 million expected for Dubai Expo in 2020 alone. “As a destination we offer the best, people coming to Dubai expect to spend on quality, but we still offer good value for money, as much as the five stars, the budget and econ-omy hotels are also competing in terms of the quality of product they offer,” he remarks. Action Hotels, is a hotel investor who exclusively focuses on the mid-market segment when developing hotels, its CEO, Alain Debare, says there’s not just families visiting the emirate but the regional business travellers to focus on as they make up 70% of an economy hotel’s guest portfolio.

“Business, large corporations are driving the demand,” he says, lauding DTCM’s hotel classification system,

describing it as the most advanced in the region. “Additionally, DTCM’s sup-port with licensing is a major incentive to develop hotels here, the licensing process can be one of the biggest hurdles in the Middle East,” Alain adds. While Guy Wilkinson, Managing Partner

at Viability Management Consultants, welcomes every move to broaden clas-sifications, such as the holiday homes, he laments the absence of boutique hotels within the current rating system. “For example there was a boutique hotel project, combining three villas

DTCM’s support with licensing is

a major incen-tive to develop

hotels here, the licensing process can be one of the biggest hurdles in

the Middle East." Alain Debare,

CEO, Action Hotels

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in Jumeirah, but it was closed down because it couldn’t fit into any of the ratings, so hopefully the new classifi-cations will be more flexible on this,” he remarks. Recent research by the hospitality consultancy revealed that the budget hotel market was still dom-

inated by unbranded products. “This is because brands only recently got inter-ested in developing budget hotels,” Guy says.

However, when it comes to develop-ing more economy and family accom-modation, one would have to talk about

serviced apartments, he opined. “I think of them as a B&B. We have about 200 of them in Dubai and they are actually very popular with tourists. The chains couldfill a gap within the economy seg-ment of hotel apartments, and have a type of ibis or Holiday Inn branded lim-ited service option in the serviced apart-ments market,” he recommends. This is due to intra-regional large family trav-ellers preferring affordable inter-con-nected rooms. “This is a huge market big chains are now getting interested in,” he adds. Time Hotels, as a local hotel brand, is offering this kind of stay. The hotel management company has four Time Hotel Apartment properties in Dubai. The operator’s CEO, Mohammed Awadalla, points out that recently pub-lished research on this type of product

“There was a boutique hotel project, combining three villas in Jumeirah, but it was closed down because it couldn’t fit into any of the ratings, so hopefully the new classifications will be more flexible on this." Guy Wilkinson, Managing Part-ner, Viability Management Consultants

Dubai Marina

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July 2014 Issue -20 /// 38

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JITHEESH THILAKBA, LLB (Hons). LLM (Int. Economic Law)Solicitor (England & Wales),Advocate (Supreme Court of India)e: [email protected]

The hospitality industry is the number one target for computer hackers and, but hotels could be doing more to prevent it. The rise of social media is making it easier for fraudsters to discover guests' details, but hotels are particularly vulnerable because

they store large amounts of sensitive customer details, including loyalty programme information. Similar to retailers, restaurants and others in the service industry, hotel operators tend to collect vast amounts of data from their customers, including names, contact information and credit card numbers. Further more, hotels often collect additional information about a customer’s special needs and interests, so they can offer accom-modations during their stay. Given the sensitivity of this information, it is important that hotel operators keep it out of the wrong hands or risk exposing it through faulty data protection practices.

The UAE does not have a specific data protection law. There are, how-ever, a number of provisions in a number of different laws that relate to data protection and privacy. The principle of a right to privacy of personal information is enshrined in the UAE Constitution and arises again in a number of different UAE laws. Under the UAE Penal Code, the primary source of criminal law in the UAE, it is an offence to publish news, pictures or comments relating to the secrets of a person's private or family life or to use another person's 'secret' for your own, or some-one else's, advantage without the consent of the person to whom the 'secret' relates. Circumstances in which electronic personal information may be accessed or disclosed are also restricted by a number of laws in the UAE.

Further, the UAE Labour Law, the primary source of employment law in the UAE, places obligations on employers in relation to the informa-tion that they must maintain in respect of their employees. In recent months, legislation relating to credit information has also been passed in the UAE.This legislation contains a number of provisions in respect of data protection and privacy issues that relate to the collection, storage and processing ofpersonal credit information. Although there is no spe-cific data protection law in the UAE, it is important that hotels operat-ing in the UAE are aware of, and comply with, their obligations in the UAE in respect of data protection and privacy issues and that they have adequate policies and procedures in place to protect themselves and the personal information in their possession. Hotels in the UAE should also be aware of the implications of data protection legislation applicable in jurisdictions outside the UAE, which may affect the cross-border transfer of personal information. It has been reported that comprehensive leg-islation relating to data protection in the UAE may be implemented in the near future.

Though there is no specific data protection regulations in UAE for the vulnerable hospitality sector, the hotels are making moves to lock down their data security practices with strict internal policies and procedures. There is clearly a great deal of work that needs to be done, but if a hotel can demonstrate it is capable of protecting customer information, it may be more likely to inspire confidence in consumers, which, in turn, could afford the hotel a competitive edge.

EFFECTIVE DATA PROTECTION PRACTICES FOR HOSPITALITY SECTOR IN UAE

was encouraging. “The demand in Dubai for this kind of hotel accommodation is increasing day after day, the services are quite high, we provide a full kitchen etc. and this is what families want, a home away from home together with the security and services and the high standards we can guarantee via our hotel brands,” he remarks. “Location is number one to suc-cess, our hotel apartments are always full, over 90 % occupancy, because they are near the metro, not only a convenience benefit but there are travellers from the region who visit Dubai just to try the metro,” Mohammed adds. Although he concedes the GCC is still number one, especially because of Saudi Arabia, in terms of families visiting, he highlighted the rising number of Lebanese and Egyptians, who these days choose the UAE over Spain for their holidays, and indeed to set up businesses. And they are looking for economy options.

“I believe that Middle Eastern travellers may have not found what suited them in the past, but nowa days brands like Express By Holiday Inn, Rotana’s Centro, and indeed ourselves have adapted the economy concept to this market, totally different to those offered in Europe and the demand is there, both Middle Eastern and international travellers eas-ily accept them, we will do well as long as we offer the services,” he says.

The emergence and network expansion of bud-get airlines marked the trend into direction of afford-ability, according to Wilkinson. “Dubai, and neither Oman, wanted back packers so there was more focus on luxury hotels, but with Air Arabia etc. this kind of tourists are coming and are looking for equivalent hotels, that’s why the brands are getting so inter-ested, and the independent (non-branded) hotels should get concerned,” he remarks.

Mohammed doesn’t quite concur, pointing out that one could fly budget to Dubai and still afford a five-star stay. “Tour operators get special rates for AED500 to AED700. Having said that, DTCM ispro-jecting 125,000 rooms are needed to host the Dubai Expo alone, we will require more economy rooms amongst those, and I trust in their efforts to increase the leisure offering and their marketing activities that we will all have a future after that,” he says.

Viability’s latest research indicates 25,000 rooms are already in Dubai’s hotel pipeline to open by 2020. “Instead of being ego-driven investments like the five stars, budget hotels are driven by profitability estimated at 60% compared to 40% for five star, and hotel serviced apartments 70%,” Guy concludes.

More recently, Dubai Holding’s announcement of its Mall of the World along with 100 hotels cov-ers another 20,000 prospective keys of the projected required pipeline. Its seven kilometres of climate-con-trolled promenades and entertainment options have the power to attract the guests, with the location along Sheikh Zayed Road the ideal feeding ground for mid-market hotels.

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July 2014 Issue -20 /// 50

New law regarding rental price increases has also had an effect, with investors now looking at rental returns

which are essentially driven and lim-ited by a well-publicized and transpar-ent formula backed by law. The incen-tive to obtain superior, sometimes excessive, investment yields was sig-nificantly dampened with the intro-duction of the new law and a signif-icant number of investors have gone elsewhere in search of yields.

Which leads us to the Dubai Stock market. With a gain of 107% in 2013 and having grown 61% ytd, many investors are looking at opportunities otherthan direct exposure to property. Apart from non-property linked stocks performing well, property developers have shown strong growth in valua-tions. EMAAR stocks have more than doubled in value since August last year, providing investors, interested in benefitting from Dubai’s property resurgence, to invest in developers rather than properties directly.

And developer practices have also come under scrutiny. Regulations and restrictions for off-plan sales regard-ing minimum capital requirements, establishment of escrow accounts,

100% land ownership, authoriza-tion procedures, regular audits and investor protection legislation has resulted in a significant decline in speculative development practices and more fundamental analysis and strategic planning by the developers themselves. There is a more disci-plined approach to industry devel-opment and growth lessening the likelihood of inventory imbalances andincreasing the likelihood of mar-ket equilibrium in terms of supply and demand.

The effect of the headlines sur-rounding Dubai’s successful bid to host the 2020 expo was significant. The sharp increase in demand for property as a result of the news was not unwarranted as it was accom-panied by a bunch of data, com-piled from independent sources, which indicated the significant economic effect that the Expo will have on the emirates economy and the logical impact on the property scene.

But while the headline effect may have dissipated, the economic effect has only just commenced, as the planned infrastructural investment of over $US8 billion dollars, and the

creation of over 270,000 new jobs starts to gain momentum in readiness for over 25 million additional visitors who are expected to attend the event. The IMF agrees that the Expo will has further strengthened Dubai’s growth prospects going forward with a revised GDP growth figure of 4.5% for the UAE for this year.

So, given the history of the Dubai Real Estate market in the run up to the Global Financial Crisis and the dra-matic, now infamous, decline in asset values that occurred during the crisis, it is not surprising that the IMF should monitor and comment on the rapid price growth that Dubai’s Real Estate industry has experienced over the past two years.

I believe the latest commentary is simply a case of the IMF highlighting that unbridled growth will result in an “asset bubble”. Recent history would show that responsible industry stake-holders agree that this is to be avoided at all cost and share the vision that the Dubai property market will derive its growth from solid economic and mar-ket fundamentals, not speculation. The long term sustainable and profit-able growth of the industry depends on it.

THE IMF, REAL ESTATE BUBBLES AND MAINTAINING PERSPECTIVE

(Part II)Mohanad Alwadiya, Managing Director, Harbor Real Estate

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