Dubai Real Times Apr 09

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SALES AND MARKETING

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Message f r om t he CEO

Eng. Marwan Bin GhalitaCEO, Real Estate Regulatory Agency

OFFICIAL MAGAZINE OF REAL ESTATE REGULATORY AGENCY

RERA neither takes responsibility nor accredits any studies, research or statistics that are not issued by it.

In the real estate sector there are so many participants and interested parties, just like in any other industry. Regardless of how big or famous other parties are, the customer is always the most important. Customers are the heart beat of our real estate sector. Customer satisfaction creates an energetic and interactive industry that

makes customers feel safe and more open to real estate transactions which boosts growth and development in the market.

Developers, brokers, and even real estate experts, are taking investors for granted. They do not care about the customer concerns or wants. They don’t give investors the treatment they deserve and ignore their concerns and enquiries. These developers and brokers are losing the most important part of today’s real estate equation: satisfied customers are necessary to develop a safe, sustainable and active real estate market.

Cherish your clients, make them a priority in all your dealings, listen to them, and recognize that customer satisfaction will bring great benefit and interaction into the market.

Any disregard or underestimation of the investor’s thoughts, abilities and actions, will result in distrust and a weakening of our sector.

Remember that without investors or customers, our market is stagnant. Cherish your customers and you will see the difference.

Cherish your customer

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CONTENTS

4 COVER STORY

12 Communities

Real Estate Communities

14 Rera Personality

Khawla Mohammed Altamimi

17 Market Trends & Analysis

Residential service chargesHigh occupancy in managed buildings2009’s first company on DFMDistressed assetsFlexible payments Sukuk awardSale of cement company

26 Comments

Dubai HotspotsEmergence of a mature regulatorBuyers marketSelling homes or buying a listing?Mortgage market – dead or alive?Reinforcing core business values

11 News Partnerships

Sealed with a handshake

35 Dubai Focus

Reality check Expansion plans for building supplierSuccessfully raising fundsTailoring payments solutions for customers

36 Infrastructure Let the good times role

38 Under Construction

Upwards and onwards

40 Appointments

Promotions in turbulent times

43 Law & Regulations

Questions & Answers

44 Law & Regulations

Overview of property laws in Dubai

46 Law No. 16 of 2007

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59%

41% 44%56%

22%

78%

Number Values (AED million) Area (million square feet)

Sealed with a handshake Land and property sales from the beginning of 1963 to the end of 2008

The Dubai Land Department was established on January 24, 1960 / 26 Rajab 1379H when His Highness Sheikh

Rashid bin Saeed Al Maktoum, the late Ruler of Dubai, signed a decree, stating: “We have decided to estab-lish a committee to oversee affairs related to land and private proper-ties in the emirate, in order to register these lands and properties in a sys-tematic and effective manner and to safeguard the rights of our people.”

Since then, the Land Department (LD) has kept pace with the great strides the UAE has made towards modernisation. In days gone by, the sale of land was based on trust, and sealed with a handshake. Now, these traditional methods have been re-placed with contracts and paper-work. All matters of legalisation of sale and purchase of lands have been entrusted to the LD. This has served to regulate the registration process and protect property from misap-

propriation. It has also facilitated transactions between landowners and buyers, and their heirs, when ap-plicable.

LD has developed in sync with the rapid growth of Dubai. The process of registering real estate data is entirely computerised. All procedures related to sale, purchase, and mortgage are conducted electronically. The LD has left the era of manual work behind, keeping pace with advanced tech-nology, which allows the depart-

ment to provide clients with quality and time-efficient service.

The cumulative number of the ac-tions of sales from the beginning of 1963 until the end of 2008 amounted to 145,770 worth Dh451 billion. And the cumulative number of mortgages during the same period amounted to 51,739 worth Dh620 billion.

The number of landowners in the emirate of Dubai, at the end of 2008, was 48,033 and the total number of property owners was 66,243.

Trading: LandDuring the period from 1963 to 2008 results show that the trend was for cash sales in the trading of land, but mortgages increased in numbers in terms of area and value.

Number values (AED million) Area (million square feet) Number Values (AED million) Area (million square feet)

Sale 25094 180358 658

Mortgage 17243 227670 2402

Total sales and mortgage 42337 408028 3060

STATISTICS

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443613774

48033

Villa Flat Land

90%

10%

84%

16%

87%

13%


Trading: ApartmentsDuring the period from 1963 to 2008, results show that the trend was for cash sales for apartments


Sale 14,140 13,820 16.7

Mortgage 1,506 2,648 2.5

Total sales and mortgage 15,646 16,468 19.2

Number values (AED million) Area (million square feet)

Number values (AED million) Area (million square feet)

Trading: VillasDuring the period from 1963 to 2008 results show that the trend was to use a mortgage on villa sales, more so than for apartments

71%

29%

70%

30%

73%

27%



Sale 3,337 6,251 11

Mortgage 1,339 2,733 4

Total sales and mortgage 4,676 8,984 15

The total number of owners During the period from 1963 to 2008 results show that the number of owners who have registered amounted to 66,243. Of this 4,8,033 of them are land owners.

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STATISTICS

Transactions and sales during January 2009

Land Flat Villa

Total number of transaction 665 3120 188

Total value (AED) 5 billion 2 billion 1.3 billon

Total area (sq.ft) 13.9 million 2.78 million 612 000

Total transactions for the month of January/2009 were Dh8.43 billion

Land Sales TransactionOverview of land sales transaction for the districts in Dubai:

Total number of sales in all districts was 231 with a total value of Dh1.58 •billion for 4.15 million square feet.Palm Jumeirah has the highest number of sales at 130 and the highest •value at Dh446.62 million. The highest area value price per square foot was in Al Humriyah district •with Dh50,77.2.

Total Value of Sales Transaction (Dh Million) – Top Ten

Value Price/ sq.ft:

Total number of land mortgage transactions of the districts was 334 •with the total value of transactions being Dh1.81 billion for 3.60 million square feet•Arabian Ranches has the highest number of mortgages at 14•The highest value of mortgages achieved by Sheikh Zayed Road district •was Dh127.2 million The highest area value price per square feet was Al Nahda 1st district •with Dh4,000

Mortgage Transactions :

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Total Number of Mortgage Transactions – Top 10

Value Price / (sq.ft):

Sales Transactions: FlatsOverview of flat sales transactions for districts in Dubai:

Total number of sales transactions was 2970 with a total value of Dh1.85 •billion.Warsan First has the highest number of sales at 2031.•The highest value of sales achieved by Warsan First district with •Dh654.23 millionThe highest area value price per square feet was in Sheikh Zayed Road •district with Dhs1,325.29.

Total number of Flats Sales Transaction

Total Value of Sales Transactions (Dh.million)

Value price per square feet

Mortgage Transactions Overview of flat mortgage transactions for districts in Dubai:

Total number of mortgage transactions was 132 with a total value of •Dh181.82 Million.Sheikh Zayed Road has the highest number of mortgage with 45 mort-•gages.The highest value of mortgages achieved by Sheikh Zayed Road district •with Dh76.30 million.The highest area value price per square feet was in Sheikh Zayed Road •district with Dh1276.14.Total number of mortgage transaction:•Dubai Marina, Sheikh Zayed Road, Emirates Hill 2nd , Emirates Hill 1st •

Total value of Mortgages Transaction (Dh.million)

Total value of Mortgages Transaction (Dh.million)


Villa Sales Transactions Overview of villa sales transactions for the districts in Dubai:

Total number of mortgage transactions of the districts was 117 with a •total value of Dh 688.13 million. Emirates Hill 3rd has the highest number of sales at 78.• The highest value of sales achieved was by Sheikh Zayed Road district •with Dh504.12 million.The highest area value price per square feet was in Emirates Hill 2nd •with Dh2,895.

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Total number of Villa Sales Transactions

Total value of Villa Sales Transaction (Dh.million)

Value Price per square feet

Mortgage TransactionsOverview of Villa mortgage transactions for districts in Dubai

Total number of mortgage transactions was 63, with a total value of •Dh630.36 million.Emirates Hill 3rd has the highet number of mortgages at 42.•The highest value of mortgage achieved was by Sheikh Zayed Road •district with Dh529.17 million.The highest area value price per square feet was in Sheikh Zayed •Road district with Dh2,094.

Total Number of Mortgages Transaction


Data supplied by RERA, Real Estate Sector Development, Data Section

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Total value of sales transactions (Dh.million)

Apartment sales value price per square feet

Transactions and sales during February 2009

Note: total transaction are represented by sales, mortgage, evaluation … list of services

Total Transactions for the month of Feb. 2009 was Dh7.51b

Land Flat Villa

Total number of Transaction

533 2144 106

Total value (Dh) 6 billion 1 billion 173 billion

Total area (sq.ft) 8.78 million 1.94million 252 thousand

Land sales transactionOverview of land sales transaction for the districts in Dubai:•Total number of sales in all districts was 234 with a total value Dh2.46 •billion for 2.82 million square feet.Palm Jumeirah had the highest number of sales at 47. •The highest area value at Dh514 million was achieved by Al Jadaf.•The highest area value price per square foot was in Al Ras district with •Dh4168.

Total number of sales transaction - Top 10

Total value of sales transaction (Dh Million) – Top Ten

Land sales value price/ sq.ft:

Total number of land mortgage transactions of the districts was 285 •with the total value of transactions being Dh2.25 billion for 4.97 million square feet•Al Warqa Third had the highest number of mortgages – total 35 •mortgagesThe highest value of mortgages achieved by Nad Al Sheba district was •Dh375 million The highest area value price per square feet was Al Muraqabat district •with Dh4645

Land mortgage transactions

Apartment mortgage transactionsTotal number of sales transactions was 2040 with a total •value of Dh1.32 billion for 1.82 million square feet.Dubai Marina had the highest number of sales at 1329.•The highest value of sales achieved by Warsan First district •with Dh456 million.The highest area value price per square feet was in Sheikh •Zayed Road district with Dhs1364.

STATISTICS

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Total number of apartment mortgage transaction

Total value of apartment mortgages transaction (Dh.m)

Villa sales transactions

Total number of mortgage transactions of the districts was 14 with a •total value of Dh21.86 million for 33 thousand square feet. •Arabian Ranches had the highest number of sales at 7.• The highest value of sales achieved by Arabian Ranches district with •Dh12 million. The highest area value price per square feet was in Emirates Hill 2nd with •Dh1357.

Total number of villa sales transactions:

Total number of villa sales transaction (Dh.million)

Villa sales value price per square feet:

Data supplied by RERA, Real Estate Sector Development, Data Section

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Officials of the Dubai Land De-partment received Mr Tony Kloschy, Academic Director of

the Centre for the Study of Real Estate, Massachusetts Institute of Technology (MIT), Boston – a leading research cen-tre on the real estate market.

During the meeting - which was chaired by Mohammad Sultan Thani, Assistant Director-General for Excel-lence and Governance, Dubai Land Department - Mr Kloschy briefed of-ficials on the latest research work at the centre, which is keen to provide

To regulate land and property dealings in Dubai, a forum of coordinators of various Dubai

government departments held its first meeting on March 16 to open channels of communication be-tween themselves and create a working group of all departments under one roof. The initiative came out of Dubai government’s keenness to activate institutional partnerships

its best knowledge on the real estate sector. The centre holds a number of lectures aimed at enhancing profes-sional practices in the real estate in-dustry, besides developing the skills of workers in the sector.

The meeting also discussed the real estate market in Dubai and re-viewed the latest developments. It felt workers should be provided with real knowledge about the sector, and they should be educated about their rights and duties.

Mohammed Sultan Thani said: “To

educate workers in the real estate sector is one of the priorities of the Dubai Land Department.” He pointed out that knowledge of real estate has become an urgent need for those who wish to learn how to conserve their land and familiarise themselves with the laws and organisation of the market.

Tony Kloschy expressed MIT Cen-tre’s desire to cooperate with Dubai Land Department to enhance real es-tate education in the light of efforts made by the department to achieve

stability and prosperity in the local market and encourage a climate of investment to support the sector.

Kloschy remarked: “No one can deny the efforts made by the Dubai Land Department in the mainte-nance of property rights and the creation of a legislative framework, which is badly needed at this time by investors in particular.”

During the meeting, they dis-cussed aspects of cooperation and exchanged experiences about real estate education.

Dubai government facilitates inter-department communicationat the level of government services and private institutions.

Abdel Bari Soqat, Director of Partnerships in the Management of Land and Property, said: “The meet-ing aims to strengthen the bonds of cooperation, consultation and coordination between different government departments so as to achieve their common interests. It encourages the exchange of visits

between officials of various govern-ment departments in Dubai, and asks them to hold seminars for de-veloping methods of work, improv-ing services and exchanging experi-ences.”

Soqat added that such partner-ships encouraged the exchange of knowledge and experience gained through cooperation with interna-tional organisations and regional ad-

ministrations in various spheres.He further said: “Such partner-

ships will help us in identifying the most important problems facing departments in carrying out their functions, while proposing solu-tions and working with the system to harmonise laws and regulations.” He also expressed his happiness at the response to the initiative of the Dubai government.

RERA NEWS

The Land Department, Dubai’s Real Estate Registration and Regulatory Agency, has re-

vealed that the online provision of data will spearhead its latest strategic initiative targeting transparency in the emirate’s real estate market. The announcement follows a ‘think-tank’ meeting at the department’s Deira headquarters earlier this week which highlighted investors need for accu-rate and timely information to have a sound basis for investment decisions.

Delegates at the meeting re-sponded to Mr. Ahmed Kayhan, CEO

Online data bank heads Land Department initiative to boost information flow to property investors

of online property data provider Rei-din.com, who said information is an essential tool for investors if they are to make informed decisions and gen-uine choices. Mr. Mohammed Sultan Thani, Assistant Director General at the Land Department, confirmed the official view that: ‘Proper provision of information is crucial to the op-eration and integrity of the real estate market, which is why we make all the necessary data available through the online site Dubai Focus.

”All the information provided there is extracted from the Land De-

partment’s registration system. The richness of the information available is one of the features peculiar to the Dubai real estate market and one which has ensured it is most trans-parent.”

Guest speaker at the think-tank meeting Mr. Kayhan, who is one of a long line of experts co-opted by the department in a programme that constantly reviews the effective-ness of its operations, said: “Dubai is a very strong market which, on the evidence of the numbers and size of transactions, remains strong

and growing stronger. Such a market can only benefit from providing the information property investors need to make long-term investment deci-sions. Real estate is affected by so many factors and all of these should be taken into account when deci-sions involving large sums of money are being made. The legal framework and the rights of property owners can have as much of an effect as price movements, and investors need this type of data to have a solid basis on which to make decisions that are, in general, long term.”

DLD to cooperate with MIT centre

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PROPERTY PRICESMARKET TRENDS & ANALYSIS //COMMUNITIES

Formation of Real Estate Professional CommunitiesT

he Dubai Land Department and RERA reiterate their ef-forts to make 2009 the Year of Regulation by launching

the ‘Real Estate Communities’ ini-tiative which will improve the per-formance of the Dubai real estate market and will raise the level of transparency all around. Sultan bin Mijrin, Director General of the Dubai Land Department said that, “The Real Estate Regulatory Agency has played an important role in regulat-ing the real estate sector in Dubai, for the overall economic growth, through a series of programmes and initiatives which have made RERA a pioneer in this field on a lo-cal and international level.”

This initiative to create separate real estate communities for devel-opers, brokers, investors and valu-ers falls under the umbrella of RERA. These communities will contribute towards regulating the market and raising the level of communica-tion and cooperation between all real estate stakeholders which will

boost investor confidence further, spurring Dubai’s economic growth and strengthening the industry.

Bin Mijrin said that, “These com-munities will establish a clear vision for all parties in the real estate sector by ensuring their active participa-tion and collective aim of achieving the ultimate success in real estate. These communities aim to provide a united place for all real estate play-ers, on a national and international level, to communicate further, share expertise, knowledge exchanges and establish mutually beneficial agreements. This will all be spear-headed and supported by the Real

Estate Sector Development Depart-ment at RERA.”

Bin Mijrin emphasised that the priorities of the community are to discuss all of the issues related to development, to facilitate stake-holders work enabling them to bring better services to the market which are in line with the vision and mission that RERA and the real es-tate community are adopting, and to specify the areas of cooperation between the real estate commu-nity members allowing them to set forth action plans for these points of cooperation. Added to that, the communities will study industry

laws and regulations and propose positive suggestions to enhance opportunities in the market, en-courage real estate investment, and raise open communication be-tween community members and decision-makers to bring about the necessary recommendations to better serve the real estate market and build trust. Recommendations will be implemented through co-operation of government and non-governmental bodies.

The community focuses on contributing to the growth of the national competencies in the real estate market by enhancing RERA’s plan for such national benefit. Fi-nally, these communities will com-municate with similar communities in the GCC and the Arab world to establish the Arabian Real Estate Society which will have deeper and more widespread goals to help investment growth in the Arab world through expert exchanges between local and international authorities

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The features of real estate community plan

Developers

Investors

Brokers

Initiative by the Real Estate Regulatory Agency

The general plan to establish the real estate community

The Real Estate Community Vision

Pledging the active participation of all stakeholders in Dubai’s real estate sector to embark on a pioneer initia-tive here in Dubai.

Goals of the real estate community: Providing a united place for real es-tate players, on a national and inter-national level, to communicate and exchange expertise with the direc-tion and support of the Department for Real Estate Sector Development in RERA.

Discuss all of the issues related •to development, to facilitate the stakeholders work enabling them to bring better services to the market which are in line with

the vision and mission that RERA and the real estate community are adopting.Specifying the fields of coopera-•tion and action between the real estate stakeholders and RERA.Study all the laws and regula-•tions related to real estate, and putting suggestions in place to enhance the opportunities in the market.Encourage investment in real •estate and create opportunities for cooperation between com-munity members.Maintain communication with •the decision makers in real es-tate and offer recommendations to serve the real estate com-munity by boosting trust. Such suggestions will be executed in cooperation with governmental

and non-governmental bodies.Pursue issues that face the real •estate sector and provide deci-sion-makers and stakeholders with consultation and sugges-tion.Contribute to developing na-•tional competencies in the real estate sector by cooperating with RERA and contributing to its plans on this subject. Work on communicating with •similar communities in GCC and Arab world to establish the Arabian Real Estate Society which will have deeper and more widespread goals to help economic growth in the Arab world.Exchange expertise with local •and international authorities on this subject matter.

The Real Estate Community StructureThere will be four committees, one executive committee, and a board of directors. The four committees will be:

Real Estate Developers commit-•tee: All members of this commit-tee will be from development companies. Real Estate Brokers Committee: •All members of this committee will be from brokerage compa-nies.Real Estate Owners & Investors •Committee: All members of this committee will be property in-vestors or directors of Owner’s Associations.Valuers Committee: All members •of this committee will be either lawyers or consultants.

The Executive Committee has four members. Each committee will sub-mit one representative to this com-mittee. The board of directors will include:

President•Vice-President•Secretary•Representative from RERA•

Specify the vision and the missions of the real estate

community

Categorising real estate sectors

Steps to execute plan

Establishing a communication plan

between the community & RERA

The real estate communityConsultants

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MARKET TRENDS & ANALYSIS //PROFILE//REAL PERSONALITY

She is one of those free spir-its who cannot be tied to places or positions. Con-sidering her as a promis-

ing leader is not a surprise because she kept her standards higher than all of the difficulties and challenges that have come her way, and stuck to them no matter what she was facing

The dream is the real begin-ning...Because she believed that she has something different to offer in life's journey, she pictured the future in the way she likes and accepted all its opportunities knowing that she can have it all if she tries the hardest that she can.

She is different, for sure, and that leads her to glow and stand out in this ordinary world.

Khawla Mohammed Altamimi is one of the promising leaders in the Real Estate Regulatory Agency. Working as a senior statistical ana-lyst doesn’t describe what she re-ally does here or how important it is. When your work becomes so at-tached to your identity and when you work like a leader, even if you’re not the head of the section, you will do what it takes to satisfy your eager heart.

She graduated from UAE Uni-versity as an economic major and started her career as an accoun-tant in the Arabic United Bank in the central operational unit. She stayed like this for six years gain-ing experience and the trust of her managers and colleagues.

The dream is the real beginningBy Amal Abdul Rahim Al Sahlawi

Believing that she has more potential made her seek a much more creative and effective ca-reer, so she joined Dubal for a few months. She then accepted an offer in the Real Estate Regulatory Agency knowing that this is the place to be, and starting with only five other people in the agency meant that she is one of RERA's founders

Believing in the importance of this place was beyond career loy-

alty. She was working passionately for the sake of Dubai (her native city) and that forced her to feel so responsible for the real estate sec-tor. These feelings made her work harder and actively in the agency’s projects such as the Dubai map; it made her so proud to be one of the people who shaped the features of Dubai.

She always insists that RERA has the most valuable data system in Dubai about stakeholders of the

sector and she told us that she was one of the founders of this data base; and updating this information is one of her responsibilities.

Khawla is preparing to take her master's degree in real estate man-agement. She chose this field be-cause her constant desire is to be number one in her area.

Far from the real estate sector, she has the ability to live like any other girl who reads and watches movies but her biggest addiction is shopping, shopping, shopping!

She admits that the art of apply-ing makeup is her thing, and she is really good at it, which makes a lot of sense when you see her.

I noticed that she is always quot-ing from her mother and asked her about this wonderful bond. She told me that her mother has been gone for a long time now. I figured that this is the reason to the sad eyes she has.

To change the direction of our conversation I asked her about young leadership. She said that a leader without a vision is just like a knight without his horse. She added that Sheikh Mohammed has given us a good example of leader-ship and success.

She insists that all the people that she has met in her life, even the ones who hurt her, have made her a better person. She was so grate-ful to be one of the people who can discover life and beat challenges.

That was only the beginning of her rising star … and that is Khawla.

She graduated from UAE University as an economic major and started her career as an accountant in the Arabic United Bank

Khawla Mohammed Altamimi

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Mega projects success largely determined by strength of internal assetsDubai’s mega projects create their own forward momentum, as component assets become integrated to provide an investment value that is greater than the sum of its parts, says a Dubai Sports City (DSC) spokesperson. Speaking at the MEED Dubai Mega Projects forum, Malcolm Thorpe, a senior spokesper-son for Dubai Sports City, said that the development’s ‘city within a city’ con-cept allows the various assets within the city to build on each others strengths.

“It is the integration of a mega project’s different elements which propels the whole project to completion,” said Thorpe. “There are often asset-specific time delays for various reasons, but here it becomes an overriding col-lective confidence that the project will be de-livered and be a success as planned.”

Dubai Sports City is a $4 billion, 50 million square feet mixed-use development which will be the world’s first integrated purpose-built sports city.

“The sheer size and scale of integrated projects encourage completion and delivery despite what can be considered short-term worries,” added Thorpe.

Recently completed projects include the first handover of properties in the Victory Heights development at Dubai Sports City and The Els Club Golf Course, which has already celebrated its first year of operation.

The coming months will see a wide range of programmes on offer at DSC Academies.

“Dubai Sports City is providing a lifestyle choice for families to live, learn, work and play. People are now making this their home, and as more areas of the project open, we will see a thriving community developing,” concluded Thorpe.

The development is being built around five major sports venues and feature a series of major sports academy facilities. Included within the DSC Academies Campus is the Dubai Sports City Football Academy–the home of Manchester United Soccer Schools, Dubai; the World Hockey Academy, a firs-of-its-kind partnership with the International Hockey Federation; a Swimming Academy with a 50-metre training pool; a Rugby Academy and the Interna-tional Cricket Council’s own ICC Global Cricket Academy.

In addition, Dubai Sports City is home to a David Lloyd Tennis Academy and the first Butch Harmon School of Golf outside the United States.

Area Dubai’s Hot Property Zones to Rent

1 The Springs 22.69%

2 Discovery Gardens 19.28%

3 The Lake 8.75%

4 Dubai Marina 7.72%

5 Arabian Ranches 6.66%

6 JLT 5.81%

7 Palm Jumeirah 4.36%

8 SZR 3.83%

9 Jumeirah 3.38%

10 Mirdif 3.60%

Dubai’s 2009 Property HotspotsA

UAE real estate website propertyfinder.ae has recently released findings revealing Dubai’s top locations to rent and buy in 2009. The findings reveal that both renters and buyers are moving fur-ther out of Dubai’s traditional residential hubs to areas such as

The Springs, Jumeirah Lake Towers and Discovery Gardens, with new com-munities high on the priority list for both renters and buyers.

The findings are based on approximately 500,000 unique page visits to the website over the month of February 2009 and highlights ongoing activ-ity in the Dubai real estate market despite the economic downturn.

Commenting on the survey results, Marcello Sambartolo, Head of Mar-keting at propertyfinder.ae, said: “This survey has revealed some interesting statistics. We are seeing a real shift in rental interest towards new residential areas such as Discovery Gardens and Jumeirah Lake Towers where rents are more competitive. This data also shows that there is still interest from end users looking to invest in Dubai real estate which is now offering opportuni-ties to capitalise on the recent drop in house prices.”Propertyfinder.ae’s property hot zones include:

Hot Zones in Dubai To Buy Hot Zones in Dubai To RentArea Dubai’s

Hot Property Zones to Buy

1 The Springs 13.52%

2 Jumeirah Lake Towers 11.21%

3 Dubai Sports City 8.03%

4 International City 8.69%

5 Dubai Marina 7.85%

6 Palm Jumeirah 7.77%

7 Discovery Gardens 6.68%

8 Meadows 6.78%

9 Emirates Hills 5.29%

10 IMPZ 5.48%

Palm Jumeirah

Victory Heights overlooking the Ernie Els golf course

DUBAI FOCUS

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MARKET TRENDS & ANALYSIS

The mid-market and budget segments of the hotel industry are expected to perform rela-

tively better in 2009, according to a review by Jones Lang LaSalle.

Hotels most at risk are those in the upper upscale category, as Eu-ropean tourists cut back their travel budgets along with the apprecia-tion of the dollar, it says.

According to the leading real estate consultancy, the outlook for 2009 is expected to be less optimis-tic than previously anticipated, with visitor arrivals well below the Dubai Tourism and Commerce Marketing (DTCM) target of 13 per cent annual growth. Visitor arrivals to Dubai over the first half of 2008 were up by 8.5 per cent on the same period in 2007 according to DTCM. Although no official results have yet been re-leased for the second half of 2008, anecdotal evidence suggests tour-ist arrivals have slowed down significantly, JLL points out.

Over the period be-tween July and Decem-ber 2008, occupancy rates fell by approxi-mately seven per cent. This came as a result of the new supply in the market, as well as the

Budget hotels doing betterJLL review says upper upscale category faces the maximum risks

softening in demand from key Euro-pean source markets brought about by the dollar appreciation and the financial crisis. The occupancy rate of 79 per cent experienced in 2008 is the lowest recorded in the Dubai market since 2004.

Over the second half of 2008, approximately 3,245 new rooms were added to the stock of quality hotel rooms in Dubai, with the larg-est completion being the Atlantis hotel on Palm Jumeirah. This brings the total to approximately 40,000 rooms, representing an increase of 10 per cent from the first half of 2008.

Although announced supply could add a further 40,000 new rooms to the market (doubling the current total) by 2012, it is likely that the future supply will be consider-

Over the second half of 2008, approxi-mately 3,245 new rooms were added to the stock of quality hotel rooms in Dubai, with the largest completion being the Atlantis hotel on Palm Jumeirah

ably less than the announced pipe-line due to the impact of the prevail-ing credit crisis on the financing of many projects, especially those that are still in the planning stages, ac-cording to the JLL report.

Most of the announced new sup-ply is currently under construction

and is expected to enter the market in 2009 and 2010. There remains a continued over representation in the upper upscale category, accounting for 36 per cent of proposed addi-tional supply.

Over the second half of 2008, average daily rates (ADRs) were mar-ginally higher than the same period in 2007 at Dh1,027. However, revenue per available room (RevPARs) was

slightly lower at Dh782. Market wide RevPAR’s grew roughly by four per cent in 2008 compared to 15 per cent in the previous year. However, RevPAR decreased by 27 per cent in September, 12 per cent in November and 18 per cent in December 2008, thus marking the lowest results in

five years.The financial downturn has

caused delays in many projects, especially those in the early plan-ning and starting phase. However, most projects under construction for scheduled delivery in 2009 and 2010 are expected to reach comple-tion, adding a significant number of rooms to a market already facing challenges, JLL noted.

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PROPERTY PRICESMARKET TRENDS & ANALYSIS //

For most of the world’s prime residential markets, 2008 was a year to forget. Prices fell in almost half of all global hot

spots and sales volumes all but dried up in many markets. From Europe, to the Middle East, to the Americas and Asia, few places had much to celebrate, according to Liam Bai-ley, Head of Residential Research at Knight Frank.

The impact of the credit crunch was felt first in the prime new build and investment-led markets. By the summer of 2008, off-plan sales in Europe, North Africa, the Caribbean and Middle Eastern resorts struggled to maintain traction and develop-ment plans were either scaled back or put on hold.

It was perhaps obvious in ret-rospect that investment and some over-inflated second-home markets would be hit hardest. In areas where local demand for prime property is limited or even non-existent – es-pecially those with an abundance of stock – investors have created an artificial market, Bailey points out in a report that is part of Citibank’s 2009 edition of the Wealth Report.

Without them there is nothing to support prices. As returns from equi-ty and commodity markets plunged, even HNWIs and UHNWIs cut their discretionary expenditure. But the worsening global and local mar-ket conditions meant that through the year even the prospects for the world’s most expensive first-home

Most desirable property markets also hit hardThe results of the 2008 Knight Frank Prime International Residential Index show widespread price falls in the world’s most desirable property markets

markets – including London, New York, Hong Kong, Sydney and Sin-gapore – weakened sharply.

The results from the Prime In-ternational Residential Index reflect these trends. Of the 55 locations covered by the index, 23 saw prices fall over the course of 2008, six saw no change and 26 saw growth. But data for the final quarter of the year is more telling, revealing how the downturn has gathered pace. Com-paring Q4 against Q3 2008, 35 loca-tions saw prices fall as opposed to only 14 showing growth. The big-gest losers were the prime districts of the big cities: Hong Kong (-25 per cent) and London (-17 per cent) led the decline, but several other cities saw double-digit price falls, includ-ing Singapore (-15 per cent) and

Sydney (-12 per cent).The most resilient prime markets

last year tended to be found in the emerging economies – notably Mos-cow (+13 per cent), Jakarta (+18 per cent) and Bangkok (+23 per cent).

Even Dubai, which has been tipped for a crash for almost as long as it has been developing, managed to record growth of 11 per cent in 2008, although by Q4 prices were slipping substantially and our data revealed a 19 per cent decline be-tween Q3 and Q4, the report notes.

Price rises in prime Asian loca-tions have been driven by a lag between wealth creation and slow growth in new high-specification housing. But evidence is mounting that in these locations, where an-nual double-digit price growth has

become the expectation, perfor-mance has weakened noticeably in recent months and there is talk of steep price falls this year as wealth creation falters. Different parts of the world are at different stages of the global downturn, but now here will be immune from a significant fall in property values.

Tax-efficient locations, which proved to be market leaders dur-ing the boom years, have begun to come under pressure. Zero growth was recorded during the year for both the Cayman Islands and Ber-muda, whereas in Monaco a re-spectable rate of growth in the first half of 2008 was reversed by a sharp downturn in Q3 – before values sta-bilised in the final quarter – leaving prices 2.1 per cent up on the year.

Following rapid price adjust-ments, in addition to currency fluc-tuations, the league table for the world’s most expensive residential markets has changed substantially since the 2008 Wealth Report. De-spite recent price falls, Monaco stands out at the head of the field – with an average value of €50,000 per square metre for the best properties. London, where values have been hit hard by the slide in the value of ster-ling, slips down the ranking to num-ber two. Manhattan is in third place, while Asian cities (Hong Kong, Tokyo and Singapore) compete with Euro-pean centres (Moscow, Rome and Paris) for the remaining positions in the table, with Sydney bringing up

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the rear. The impressive showing from Moscow (fourth) is influenced by the relatively small size of the city’s prime market area – and the rapid growth of HNWI purchasers over recent years – although recent evidence is that price growth has slowed and turned negative in the final quarter.

Depending on where you were in the world, 2008 saw prime mar-ket conditions range from ‘challeng-ing’, to ‘difficult’, to ‘awful,’ the report points out. Looking ahead to the rest of 2009 and beyond, it is very easy to become despondent about the prospects for prices and sales volumes throughout the luxury market. Rather than being immune from the wider market downturn, as many felt would be the case 12 months ago, the luxury housing sector is potentially more vulnerable to economic shocks than the main-stream market, although the most desirable and established prime lo-cations will retain their liquidity and long-term values better than the ar-tificially inflated newcomers to the prime arena discussed earlier, the report asserts.

The element that gave the sec-tor its impetus for growth over the last decade was the expansion of global trade and economic linkages. This factor contributed to the rapid growth of a footloose and wealthy global elite, giving the global luxury market a substantial raison d’être. This trend saw an explosion in demand

The majority of HNWIs appear to be sitting on the fence at the moment, with 57.1 per cent making no change to their property portfolios, al-though over 90 per cent have seen their property portfolios decrease in

value during the credit crunch, with about a third of those hit by a substantial decrease. The illiquid nature of property probably goes some way towards explaining this lack of action, the Citibank report said.

“While an entire portfolio of stocks and shares can be sold with just a few taps on a keyboard, it is more difficult – and sometimes almost impossible – during an economic downturn to sell property quickly. Many investors also acknowledge the long-term nature of property investment: even if values fall your asset is unlikely to disappear completely. Despite this, a significant num-ber of HNWIs have either increased or reduced their exposure, with a very small percentage increasing it substantially.”

According to the report, this ambivalence is probably a reflection of the di-versity of the property market and the attitude of the wealthy towards it. While stock markets around the world have all been heading one way only, property markets have not reacted homogeneously.

According to a survey quoted by the report, performance has varied wide-ly. In those areas where values dropped fastest and furthest, canny HNWI in-vestors are sensing the bottom of the downturn is imminent and are slowly reinvesting.

Experienced investors realise we are firmly into the bargain-hunting stage of the property cycle, especially in the commercial and new build sectors, the report noted.

A number of survey respondents said their clients were actively looking to take advantage of distressed sales to cheaply acquire stable assets with good yields. Many fortunes have been property-based and a large proportion of the HNWI community has a passion for property ownership. According to the sur-vey, property accounts on an average for 30 per cent of their asset portfolios. But even this enthusiasm has been dented by recent events. Although the at-titude of almost 60 per cent has either remained unchanged or become more positive towards property as an investment since the credit crunch, that still leaves a significant number who now have a more negative outlook. It may be that these are relatively new or over-geared investors who have only invested in rising property markets and whose confidence has been knocked by the realisation that not even bull runs with seemingly boundless energy can carry going on for ever, according to the report.

Most commentators are also predicting that prices will start to stabilise, bringing some certainty to the market. By nature, many investors fear buying an asset that has further to depreciate in value, but by waiting for the bottom of the market they also risk missing out on the best opportunities. These will already have been snapped up by those prepared to take more risks.

Commercial property is also set to grow in popularity, with just under half of HNWIs showing their understanding of the market by planning to increase their investments in this area. This sector has been particularly hard hit by the recession, and is arguably well placed to offer growth potential in the near future for the shrewd investor. Quality stock in the best locations with good clients has probably been devalued too much and this is reflected in some very tempting yields for those with funds to spend now. But investing in com-mercial property does generally require a more in-depth understanding of specific industries and markets to minimise risk. Perhaps acknowledging this, over 20 per cent of the survey sample is planning to cut its exposure to the sector.

Real Estate Investment Trusts (REITs) have suffered horribly during the credit crunch. With the market for new homes stagnant, cash flows have all but dried up for developers and construction firms, sending their stock into freefall. Al-though nearly 20 per cent of HNWIs feel bullish enough about a future recov-ery to recognise some value in this kind of investment, 27.5 per cent are less confident and plan to scale back their exposure.

HNWIs sitting on the fence and resulting economic downturn slowed this process.

The question to answer is wheth-er the downturn is leading to a simple re-pricing of assets that had become overvalued through the late boom period, or whether something more fundamental has occurred in the global economy that will mean prime market pricing will be further suppressed and take a long time to recover. The evidence from one market at the epicentre of the down-turn is that the former is more likely. London’s top-end market saw the downturn accelerate in late 2008 as the market accepted that 10 per cent or 15 per cent price reductions were insufficient to get sales underway, the report says.

By early 2009, the 30 per cent dis-counts being offered triggered a rally in market activity and allied to a 20 per cent decline in sterling against the major world currencies, offered the potential of savings up to 50 per cent on peak prices for international buyers.

The response has been dramatic: wealthy international buyers who considered the market too hot a year earlier have come back strongly and the early evidence is that this demand has acted to place a floor underneath prices. An additional fac-tor supporting prices is that supply is constrained when low prices are of-fered – the very wealthy do not need to sell their prized assets in a weak market.

The desire to own good property in the best markets is an enormous driver for the prime residential sec-tor. The lesson to draw from the last two years is that no market, no matter how luxurious, can escape a bubble-and-bust scenario. Howev-er, when the market believes prices have returned to offer good value, activity will rise and the perennial factors that make a true prime mar-ket desirable will endure, says Bailey.

for multiple residences by those who ran their business in, say, Rus-sia, raised finance in New York, and spent August in St-Jean-Cap-Ferrat and February in Courchevel.

The demand for property to fa-cilitate this lifestyle grew substan-tially. As late as the summer of 2008, Knight Frank sold more European properties priced at or above 10 mil-lion euro in three months than in the whole of 2006. The credit crunch

The biggest losers were the prime districts of the big cities: Hong Kong (-25 per cent) and London (-17 per cent) led the decline, but several other cities saw double-digit price falls, including Singapore (-15 per cent) and Sydney (-12 per cent). The most resilient prime markets last year tended to be found in the emerging economies – notably Moscow (+13 per cent), Jakarta (+18 per cent) and Bangkok (+23 per cent)

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PROPERTY PRICESMARKET TRENDS & ANALYSIS //MARKET TRENDS & ANALYSIS

There has recently been widespread publicity about increases in service charges and the lack of transparency

in the budgeting processes under which they are calculated. Dubai's Real Estate Regulatory Authority (RERA) recently announced a freeze on service charges and Average Ser-vice Charges by Location foreshad-owed new regulations to regulate them. This freeze anticipates the early commencement of regulations under the Jointly Owned Property Law (Strata Law).

There are three types of charges that potentially make up service

Dubai’s residential service chargescharges: – master developer com-munity charges, building related charges and utility related charges (such as for district cooling). The building related charges will eventu-ally be replaced by Owners Associa-tion service charges and the future of master developer community charges will be determined by the new regulations and any existing ar-rangements, to the extent that these arrangements can be transferred to the new Owners Association. This needs to be understood when con-sidering the results of this survey.

In February 2009, PRDconducted a nationwide service charges survey

of approximately 140 buildings in key development hotspots across Dubai. The survey found that ser-vice charges varied from Dh7 per ft² up to Dh25 per ft². The overall average was approximately Dh17 per ft². The highest service charges at Dh22.5 per ft² were in the Down-town Burj Dubai area followed by

Jumeirah Beach Residence (JBR) at Dh21.5 per ft². JBR was equivalent to Dh45,000 per annum service charge for a two-bedroom apartment with an approximate floor size of 2,000 ft². The lowest reported fees were in the Dubai Marina which aver-aged Dh14 per ft². There are many first time sub-developers in Dubai

The overall average was approximately Dh17 per ft². The highest service charges at Dh 22.5 per ft² were in the Downtown Burj Dubai area followed by Jumeirah Beach Residence (JBR) at Dh 21.5 per ft²

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Marina and most appear to have es-timated service charges rather than calculating them using a budgeting process. Service charges have a rela-tionship to the number/level of facili-ties offered within a particular devel-opment and the survey established the general rule that “the lower the service charge the lower the level of facilities and services”.

The survey found that the major-ity of service charges included mas-ter community services, building ser-vices (such as security, cleaning and maintenance) and building insurance (but not public liability or contents in-surance). Chilled water is usually not included and is billed separately to the home owner. The cost of chilled water ranges from Dh 350 per month upwards depending on the location or building. Master Developers such as Emaar, Nakheel and Dubai Proper-ties and a few sub-developers have established sinking funds. Other de-velopers have used estimates rather than actual budgets to determine their service charges and have not allowed for reserve funds. Where es-timates have been used, the service charges are significantly lower than those in established developments where budgets are used.

Service charges for villas are much lower per ft² than apartment building charges. The overall average charge for villa communities is Dh2 per ft² multiplied by the plot size. The Palm Jumeirah has the highest ser-vice charges at nearly Dh4 because of the beachfronts and the high level of services offered. According to Na-kheel, a garden home comprising four bedrooms and with a plot size of 6,500 ft² would cost approximately Dh 17,000 per annum.

The next part of the survey con-sidered the number of developers who accurately budgeted for their service charges against those who relied entirely on estimates. The av-erage service charge where proper budgeting occurred was around Dh 18 per ft² whereas the average where estimates were used was Dh 8 per ft². Chilled water was another factor highlighted by the survey. Of the 140 buildings surveyed we were unable to determine whether chilled water was included in the service charges for 12 buildings. Of the remaining

128 buildings, 79 per cent did not have chilled water included in the fees and 21 per cent had it included. Generally speaking, the higher the service charges, the higher the level of building services and mainte-nance.

In relation to sinking funds or re-serve funds, 69 per cent of surveyed

properties budgeted for a reserve fund. A reserve fund is usually a per-centage of the recurring expenses that make up the service charge. The fund is set aside each year to allow for long-term maintenance and restoration of the building. The survey found that this charge aver-ages Dh1 to 2 per ft² and that it is usually included in the headline ser-vice charge. Surprisingly, 31 per cent of the properties surveyed did not

have a reserve fund, thus exposing owners to potential special levies in the future.

The survey revealed a general lack of available information in rela-tion to some properties; difficulties obtaining information when it was available; discrepancies in informa-tion provided, and a general lack of

understanding of service charges on the part of the real estate in-dustry. For example, when agents were questioned about the level of service charges on The Palm Jumei-rah, responses included Dh0 per ft² , monthly payments of Dh2500 per ft² and annual payments of anywhere between Dh 15,000 to 30,000 per ft². Nakheel subsequently advised that current service charges are paid as a fixed annual fee per villa type. In fu-

ture, Nakheel may impose their ser-vice charges either quarterly or twice yearly. However, the most disturbing statistic showed that only one in seven agents surveyed were able to correctly advise potential buyers of the service charges applicable to the product being sold. Agent edu-cation has therefore surfaced as a critical factor in the future credibility of the Dubai property market.

With potential new regulations on service charges and the pending commencement of the Strata Law Regulations, it is difficult to predict the likely effect of these on the level of service charges. However, the sur-vey shows that there are a significant number of properties that do not raise money to a reserve fund. It also shows that properties that do have a reserve fund are probably accumu-lating insufficient funds when com-pared to the 10-year reserve fund budgeting process expected to be applied to them by the Strata Law. Add to this the discrepancies caused by estimating service charges rather than determining them by a proper budgeting process and the future outlook for some buildings appear very bleak. Indeed, the likelihood is that building related service charges (which will become the responsibil-ity of Owners Associations) are likely to increase substantially in many cases when the Strata Law takes ef-fect.

PROPERTY PRICES//

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MARKET TRENDS & ANALYSIS

Occupancy is still high in managed buildingsRyan Mahoney, Managing Director of Better Homes talks to Janine Crisp, Department Head of the company’s Property Management division

Janine was asked how prop-erty managed building occu-pancy levels are fairing in this

new market.“Our occupancy levels haven’t

changed since last year in both our established property man-aged buildings. I’m surprised as the changes in the property market seem to have hit all areas of Dubai. I attribute this to the solid relation-ship we have with our landlords who have remained loyal to us in spite of market changes. Tenants in both the established residential and commercial buildings consistently want professional management and dependable maintenance. Land-lords who have retained their high occupancy levels have maintained affordable rental rates, even with the new 2009 Rent Decree, that would have permitted a rent hike.

Established commercial build-ings have undergone much price fluctuation as landlords have been undecided on whether to raise or maintain rental rates. Adding to this, commercial business owners started moving to better priced properties with improved facilities, such as free parking, so occupancy rates have destabilised. Of late we have seen rates return to a 95 per cent occupancy rate as newly amended prices have started to stabilise.

However, compared to the es-tablished properties, the newer properties are struggling with higher rental rates because many

landlords built their cash flow pro-jections on the higher rental rates of 6-12 months ago.”

When asked “What is surprising about the levels?” she replied: “This new market has opened up a wide choice of affordable options in a range of locations around Dubai and newer buildings with decent facilities are aplenty; but, many cli-ents are ‘sticking to their roots’ and opting to stay faithful to depend-able property management with very little shopping around.”Why has it not been easy to main-tain these high levels of occupan-cy?“We spend a great deal of time strengthening our team, our land-lord/tenant relationships and our knowledge of the market. We have experienced more difficulty with the individual units because land-

lords, who are often non-Nationals, based outside Dubai, do not un-derstand what has changed in the market. They are therefore reluc-tant to look at maintaining rents and/or working with tenants on a long-term payment plan; however, with regular dialogue between landlord and BH, landlords feel better informed on new market practices and many now consider a rate reduction and/or amended payments, where a client requires a renewal and has the option of mov-ing to a more affordable property. They have noticed that ‘amended payments’ are becoming the ‘norm’ in this new property market.What kind of marketing has been involved in maintaining these levels?

“Our biggest tool has been main-taining an open dialogue between our tenants and our landlords, with regular updates so they’re better

able to make informed decisions. In addition, we make the property available as soon as notice is given which allows us a two-month buf-fer to fill the space and encourage Landlords to complete their own viewings of the property within that time period. We faced diffi-culty with break leases as landlords saw this as an opportunity to raise the rent. However, through our con-sistent open dialogue, the majority of our residential landlords can see the long-term advantage of rate maintenance and reductions.”

The Property Management Di-vision was created in 1993, though the company has been in business for 25 years. In that time property management has been a huge selling point for both tenants and landlords as tenant and landlord feedback indicates dependable property management generally means more ‘value for money’.

Janine Crisp

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PROPERTY PRICESMARKET TRENDS & ANALYSIS //MARKET TRENDS & ANALYSIS // FINANCIAL ROUNDUP

Ahead of its first day of listing on the Dubai Financial Mar-ket (DFM), Drake & Scull Inter-

national PJSC (DSI) announced that it had been awarded its largest IWP (Infrastructure, Water & Power) proj-ect to date – a 65 tonne district cool-ing plant in Durrat Al Bahrain which it is to design and build. The scheme comprises two plants, the first of which will hold 65 tonnes of refriger-ation and is DSI’s largest IWP project to date. The scope of the project also includes reticulation pipe work, an energy transfer station and all meter-ing systems.

DSI Executive Director of IWP, Tawfiq Abu Soud, said that the an-nouncement of this project, which coincided ahead of its DFM listing date, reinforces DSI market leadership in IWP projects across the region and supports the financial strength DSI is currently experiencing.

“We have big plans for the future,” he said. “We are already working on over 35 projects across Dubai, Abu Dhabi and the greater Mena region. As both time and our shares begin to mature, we will continue to expand and launch new projects.”

DSI is a leading UAE-based end-to-end service provider of mechani-cal, electrical and plumbing (MEP) contracting, infrastructure, water and power (IWP) and civil contract-ing services and the first specialist contractor to become a public com-pany. In July 2008, DSI offered 55 per cent of the company to the public. The shares were priced at Dh1 each

First company to list on DFM in 2009

plus an offering cost of Dh0.02 per share, with a minimum subscription of 20,000 shares. The IPO, which was closed on July 17, was 101 times over-subscribed. Around 45,600 subscrib-ers applied for DSI shares, investing funds of approximately Dh124 billion.

DSI will use the proceeds from the IPO to enhance its market-leading position in the UAE and expand its activities in the Middle East and North Africa. The company has a clearly defined strategy to grow both hori-zontally and vertically. DSI is currently evaluating a number of companies as potential acquisitions to extend its geographical presence in leading regional construction markets, in ad-dition to companies that will help DSI of secure access to raw materials.

DSI has completed many pres-tigious projects in the UAE. Recent completed projects include Shangri-La Abu Dhabi Hotel, Park Place Tower, Indigo Tower, Rashid Hospital Trauma Centre, Zayed University Campus, Dubai Police Headquarters building, Jumeirah Beach Residence district cooling plant and Dubai Festival City district cooling scheme.

Some recent projects DSI are cur-rently working on include Abu Dhabi National Exhibition Centre (Adnec), The Palm Anantara Hotel Resort & Spa, Fairmont Palm Hotel and Resort, Fairmont Palm Residences, Golden Mile, Laguna Hotel and Residential Tower, Ocean Heights Tower, Yas Is-land Rotana Resort and Centro by Rotana Abu Dhabi and the Sahara Mall Expansion.

Cirrus Developments LLC, is set to launch an opportunity fund to acquire distressed and income-producing real estate and hospitality

assets or companies, in the region as well as in the UK and the US.

The fund is to take advantage of the vast opportu-nities in the respective sectors due to the economic downturn and liquidity crises. The fund is being set up to acquire a number of distressed assets locally while at the same time is closely looking at companies out-side the region, particularly ones hit by the economic slowdown while still possessing prime real estate as-sets. There is a great appetite from a certain class of investors that have profited from the Dubai real estate boom and who are now looking to invest their funds in the slowing property sectors of the United States and the United Kingdom

Behnam Eshragh (CEO) said: “We believe that with our inhouse development expertise and reach in the market, we are strategically placed to find, acquire, and manage distressed assets locally and internationally. Despite the current price correction, Dubai continues to be unique in offering attractive opportunities and standards of living unrivaled in the region and would therefore always attract demand and investments.”

Opportunity fund to acquire distressed assets and companies

Khaldoun Albari, Vicechairman & CEO, Drake & Scull International

Behnam Eshragh

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Emerald Apartments, a luxury property of spacious one and two-bedroom units, located

opposite Wafi and next to Dubai Healthcare City, is offering flexible payment options for leases be-tween three and 12 months. Man-aged and owned by Better Homes, Emerald Apartments was previous-ly offered as a 5-Star, short-term ser-viced apartment concept, and has been adapted to fit in with the cur-rent market conditions. The prop-

Flexible payment options for long-term leaseserty’s facilities come equipped with all the necessary appliances along with a contemporary fully furnished package, catering to Dubai’s profes-sional and leisure-based tenants.

“We have decided to offer ten-ants flexible payment terms on short-term leases at Emerald Apart-ments” said Janine Crisp, Head of Property Management, for Better Homes. “Many of our short-term cli-ents have chosen to stay on with us; they like the home away from home

atmosphere we’ve worked hard to create here, whether it be short-term business tenants, couples or even families.”

The strategy behind offering flexible payment options and ex-tendable lease periods to tenants is to provide a comfortable and afford-able solution for expatriates who do not want to commit to annual rental contracts given the economic situ-ation both in the region and glob-ally.

Location is key to both business and leisure-based clients. The apartments offer convenience, ac-cessibility and affordability in a lux-ury setting, including a stunning swimming pool, gym and sauna for residents. They are in close proxim-ity to all the business and leisure nerve centres in and around Dubai, with an upcoming Dubai Metro station on the property’s doorstep, enhancing convenience.

Badr Al Islami, the Islamic Banking Division of Mashreq, won the ‘Sukuk Deal of the Year 2008’ award from the Islamic Finance News Awards, for being the Joint Lead Manager and Bookrunner in the AED 1.1 Billion Tamweel Sukuk. The Awards were given at the annual ceremony of Islamic Finance

News in Grand Hyatt, Dubai on the 3rd of March 2009 to Badr Al Islami, Dubai Islamic Bank and Standard Chartered Bank as Joint Lead Managers and Bookrunners.

Mubashar Khokhar, CEO, Badr Al Islami, said: “Tamweel’s sukuk was an innovative structure which the Joint Lead Managers and Bookrunners were able to bring forth, and will pave the way for similar issuers to use such an innovative structure. We are very proud of this international award that recognises the efforts of the experienced team behind the Sukuk in this bank, especially as this was Badr Al Islami’s first Sukuk as Joint Lead Manager & Bookrunner”.

Publisher of Islamic Finance News, Andrew Morgan noted that: “The Sukuk deal of the Year was a hotly contested category with more contestants than ever. The Tamweel sukuk deal was rated ‘A3’ by Moody’s Investor services and ‘A’ by Fitch ratings, and pools Ijarah and Istisna transactions to generate a yield of Eibor plus 225. The deal was closed in July 2008 at the height of the market meltdown. The five-year deal matures in 2013 and was over-subscribed”.

Mr. Moinuddin Malim, Head of Corporate & Investment Banking in Badr Al Islami said, “Tamweel required a Sukuk Structure which would enable them to use the proceeds for their General Corporate Purposes. The Investment Sukuk structure was used for the first time in the UAE. The Portfolio Assets comprised the Original Leased Assets and the Original Istisna Assets in addition to any asset replacing the Portfolio Assets, including Sharia Compliant Income Generating Assets. Therefore, the innovative Investment Sukuk structure gave full flexibility to Tamweel for raising financing for General Corporate Purposes.”

The sale of UAE cement company Orimix Concrete Products LLC (Orimix) by Bahrain-based Unicorn Investment Bank (Unicorn)

has been named the ‘Islamic Finance Deal of the Year’ by pre-eminent international financial mag-azine Euromoney. In citing the transaction, the magazine noted the outstanding return to inves-tors achieved by the Unicorn Global Private Equity Fund I upon its exit from the transaction following a holding period of under two years.

The fund acquired a controlling stake in Orimix in November 2006 for a price of $17.2 million and sold it in February 2008 for $44.9 million to Al Safat Investment Company, a Kuwait listed investment group. This represented a return on capital of 160 per cent and an Internal Rate of Return (IRR) of 98 per cent.

Commenting on the award, Aamir Khan, Man-aging Director of Global Private Equity at Unicorn, said: “Our team worked closely with the manage-ment of Orimix to almost double it in size, by ex-panding capacity and improving profitability. The sale of this single investment allowed us to distrib-ute over 50, per cent of the fund’s initial invested capital to Unit holders in less than two years.”

Sale of UAE cement company

Badr Al Islami wins award for sukuk deal

Mubashar Khokhar, CEO, Badr Al Islami accepts the award for Sukuk Deal of the Year 2008

Aamir Khan, MD of Global Private Equity at Unicorn accepts the award for Islamic Finance Deal of the Year

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PROPERTY PRICESMARKET TRENDS & ANALYSIS //COMMENTS

The Real Estate Regulatory Agency of Dubai (better known as ‘RERA’) was consti-tuted by Law No. 16 of 2007

issued on 30th July 2007. Since that time RERA in conjunction with the Dubai Land Department has presid-ed over changes in the legal frame-work of one of the fastest growing and dynamic real estate markets in the World.

In this article we review RERA’s constitutional make up and accord-ingly its obligations and powers.

We also review the changes in the law and regulatory framework brought about with RERA’s involve-ment and the role RERA has played in balancing the interests of all parties in the real estate industry, increasing transparency and creating a platform

RERA The emergence of a mature regulator

By Jeremy Scott, Associate - Property Department, Al Tamimi & Company

for sustainable development.We discuss the role of RERA as a

mature regulator. In particular we comment on how RERA is exploring the creation of a fully regulated and cohesive real estate industry through the use of professional associations and other industry associations over whom RERA has jurisdiction.

Finally we include Al Tamimi & Company’s views on the regulatory changes being explored and those that may assist RERA in discharging its duties and completing a compre-hensive regulatory framework.

The legislative backgroundRERA was constituted by Dubai Law No. 16 of 2007 which was issued on the 30 July 2007. Article 3 establish-es:

A public corporation called 1. the Real Estate Regulatory [Agency].RERA has legal personality and 2. an independent financial and administrative structure. RERA has full authority to 3. perform legal acts in accor-dance with its stated objec-tives including the capacity to contract and may, in its own name, sue and be sued and appoint others to represent it for this purpose.

RERA is attached to the Dubai Land Department.

The objectives of RERA are set down in Article 5. They are stated as ‘the regulation of the real estate sector in the Emirate of Dubai, an-ticipating and devising strategies

for the real estate sector and devel-oping and executing the necessary work plans.’

The objectives include those items in Articles 5(1) to (13) set out in full below:

Proposing the necessary legis-1. lation to regulate the work of real estate brokers and owners associations;Issuing regulations for the 2. training and certification of real estate brokers;Licensing all activities relat-3. ing to the real estate sector in Dubai;Accrediting banking and fi-4. nance institutions to manage guarantee accounts on behalf of real estate developers in ac-cordance with applicable legis-

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lation;Monitoring and overseeing 5. real estate brokerage activities;Licensing and regulating com-6. panies and establishments that manage real estate and residential developments and monitoring and overseeing their activities;Registering and attesting leas-7. es for various real estate units in Dubai in accordance with such legislation as may be is-sued in this regard;Monitoring and overseeing 8. the activities of owners asso-ciations and auditing their ac-counts and records;Keeping track of property 9. advertisements that are pub-lished in the various media op-erating in Dubai including the free zones;Providing support and advice 10. on property valuation in ac-cordance with the latest ac-credited standards;Issuing statistical reports and 11. specialised research and stud-ies on the property market including any publications and information that aid such stud-ies and offer insight into the property market in Dubai;Preparing and executing pro-12. gramme and projects that enhance the role of Nationals in the real estate sector and encourage their involvement in that sector;Developing and implement-13.

ing education and awareness programme on the rights and obligations of parties involved in the real estate sector.

By Article 8 of Law No. 16 of 2007 the following functions of the Dubai Land Department were transferred into RERA’s jurisdiction:

Regulating the work of real es-1. tate brokers;Preparing studies and research 2. on real estate;Managing and regulating guar-3. antee accounts of real estate developments;Regulating and overseeing 4. owners associations.

The role of the Dubai Land De-partment set out below may be contrasted with the above. The Land Department’s role is set down in Law No 7 of 2006 and is to:

Determine areas for survey and 1. resurvey and approve maps prepared;Determine the rules in connec-2. tion with the survey, inspection and issue of maps related to real property units;Prepare standard contracts in 3. relation to real property trans-actions;Lay down the rules in con-4. nection with the organising, maintaining and destroying of documents;Lay down the rules in connec-5. tion with the use of computers for saving and registering data;Lay down the rules in connec-6. tion with the evaluation of real

property;Lay down the rules in connec-7. tion with the sale of real prop-erty at optional public auction and the supervision thereof;Determining the charges pay-8. able for services provided by the department;Establish branches for the de-9. partment as the manager may deem fit.

RERA’s obligations and powersIn this section we consider the role of RERA as opposed to that of the Dubai Land Department. We also discuss briefly those real estate re-lated matters excluded from RERA and the Dubai Land Department’s jurisdiction. Finally we discuss in more detail the scope of RERA’s powers and responsibilities.

RERA and the Dubai Land De-partment comparedIt is clear that RERA shares responsi-bility for a number of matters with the Dubai Land Department. In particular, both will be responsible for proposing necessary legislation. The Land Department’s jurisdiction (with some exceptions) is related to maintaining the register and real property issues such as the rights and obligations of the parties as owners of property.

RERA’s jurisdiction in contrast ex-tends towards the regulation of the relevant stakeholders in the real es-tate industry. RERA’s role could more particularly be seen as balancing

the interests of stakeholders such as developers and brokers against the need for protection of consumers and investors.

Exceptions - property related matters outside of the jurisdic-tion of the Dubai Land Depart-ment and RERA

With only two real exceptions the Land Department and RERA exercise an administrative jurisdiction over the full range of real estate matters in Dubai.

The first exception relates to the ability for RERA or the Land Depart-ment to preside over some Land-lord and Tenant matters. Landlord and Tenant disputes are resolved through the Rent Committee, a ju-dicial committee set up to hear ten-ancy disputes pursuant to Decree No 2 of 1993. The Executive Council of the Government of Dubai also plays a substantial role in determin-ing Dubai rent cap policy which is enforced by the Rent Committee.

The second exception relates to the courts’ jurisdiction. RERA or the Land Department will not be able to adjudicate in legal matters but may, as part of their administrative pow-ers, give guidance or settle matters within their jurisdiction. RERA and the Land Department will also not be able to exclude the jurisdiction of the courts to review the basis for any of their administrative decisions though it would also be typical for the courts to show a measure of deference towards the decisions of an administrative entity specifically charged with presiding over such matters.

The scope of RERA’s powers and responsibilitiesThe two exceptions aside, it is clear that RERA’s jurisdiction and discre-tionary administrative powers are broad.

RERA’s broad powers are estab-lished by virtue of Article 3 of Law No 16 of 2007 giving RERA ‘legal personality and an independent fi-nancial and administrative structure’ combined with having ‘full authority to perform legal acts in accordance with its stated objectives.’

The objectives of RERA are set

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out in Articles 5 (1) to (13) and Article 8 as listed above. We emphasise the following:

The opening wording of Article 1. 5 which states ‘The objective of the [Agency] is to regulate the real estate sector in the Emirate of Dubai by participating in de-vising strategies in this sector and developing and executing necessary work plans.’Article 5 (3) concerning the li-2. censing of all activities relating to real estate development in Dubai.

RERA’s powers are not limited to only those ‘objectives’ set down in Article 5 (1) to (13), as Article 5 states that these are ‘include[ed]’ as objectives. The use of the word ‘include’ estab-lishes that the listed items are not intended to be exhaustive and are simply to assist in establishing that which RERA must exercise jurisdic-tion over.

The exercise of any discretionary power however must be ‘in accor-dance with [RERA’s] stated objec-tives’ as required in Article 3. As this is defined as the ‘regulat[ing] of the real estate sector in Dubai,’ RERA’s jurisdiction and discretionary admin-istrative powers are broad.

A complete analysis of RERA’s powers as an administrative entity is outside of the scope of this article and is best considered on a case by case basis having regard to the deci-sion under review. The importance however of such an analysis can be illustrated by having regard to recent administrative decisions of RERA and the Land Department.

The most prevalent of these administrative decisions is the con-troversial Administrative Circular of 10th November 2008 interpreting the provisions of Law No 13 of 2008 as these relate to termination of con-tracts. Another example has been an administrative decision prevent-ing developers from selling off plan unless they have paid for their plot and have completed at least 20 per cent of works. More recently the well received Administrative Circular of 2nd February 2009 has been imple-mented restricting developers from collecting more than 30 per cent of the value of the unit if the developer has not commenced construction

Article 16 of the Escrow Law specifies penalties of incarceration or a fine of not less than Dh100,000 or both should any person conduct any of the listed, restricted practices

works.

In simple terms we consider the role of RERA could be broken down into four broad categories as fol-lows:

Recommending legislative 1. changes and promulgation of regulations.Enforcement and measures to 2. increase accountability.The collection and analysis of 3. data.Social objectives, including 4. increasing education and awareness in the wider com-munity and promoting Emirati involvement in the real estate industry.

Below under each of the four cat-egories above we consider RERA’s role and the significant steps taken by RERA towards performing its ob-ligations since July 2007.

Recommending legislative 1. changes and promulgation of regulations.

Recommending legislative a. changes

Since the creation of RERA the fol-lowing legislative changes have been made:

Law No 8 of 2007 Concerning 1. Guarantee Accounts of Real Es-tate Developments in the Emir-ate of Dubai.Law No. 26 of 2007 Regulat-2. ing the Relationship between Landlords and Tenants in Dubai.Law No. 27 of 2007 Concerning 3. Strata and Community Title in Dubai.Law No. 13 of 2008 Concerning 4.

Interim Registry of Real Estate in the Emirate of Dubai.Law No. 14 of 2008 Concern-5. ing Mortgages in the Emirate of Dubai.Law No. 33 of 2008 Amending 6. Provisions of Law No. 26 of 2007 Regulating the Relationship be-tween Landlords and Tenants in the Emirate of Dubai.Promulgation of regulations.b.

In addition to the laws listed above, we understand that the following regulations are drafted and shortly to be implemented pursuant to Law No 27 of 2007:

The Jointly Owned Property 7. Regulations.The Survey Regulations.8. Forms and Guidelines.9.

Enforcement and measures to 2. increase accountability.

Implicit in the existence of the above laws and regulations is the require-ment that these are enforced. In gen-eral terms, RERA’s obligations relating to enforcement could fall into two categories. The first is a direct re-sponsibility to supervise, investigate and ensure compliance. The second is a supervisory role over various in-dustry groups or professional bodies who could, in conjunction with RERA agree upon their own professional and ethical standards and disciplin-ary procedures. We consider below these two means in which RERA could exercise its regulatory obliga-tions and give examples where avail-able:

Direct jurisdiction in order to a. ensure compliance.

Contrary to public perception there

are very few direct obligations on RERA to enforce the Property Laws. RERA has in a commendable way chosen to engage as a watchdog and mediator on the many issues in its administrative capacity. Some ex-amples of RERA having a direct juris-diction are set out below.

The best example of RERA hav-ing a direct jurisdiction in order to ensure compliance arises out of Law No. 8 of 2007 (Escrow Law) and Law No. 13 of 2008 (Pre-Registration Law). The Escrow Law places an obligation upon developers to open escrow accounts and for these to be super-vised by an account trustee being a bank or financial institution certified by the Land Department as suitable for managing the escrow account.

Article 16 of the Escrow Law specifies penalties of incarceration or a fine of not less than Dh100,000 or both should any person conduct any of the listed, restricted practices. By Article 8 of Law No 16 of 2007 RERA is responsible for ‘managing and regulating the Escrow Accounts of real estate developers.’ The refer-ence to ‘managing’ these accounts strongly suggests that RERA must also be responsible for any neces-sary enforcement. We understand that RERA does as a matter of fact undertake this task.

The Pre-registration Law provides another example of RERA exercising a direct jurisdiction. Article 10 states that developers who do not com-ply with the pre-registration regime may have their contracts avoided by purchasers where they have not obtained the approval of the ‘Com-petent Authorities.’ Competent Au-thority is defined as the authority ‘concerned with licensing and reg-istering real estate projects in the Emirate.’ This reference is therefore to RERA due to Article 5(3) of Law No 16 of 2007.

A third example arises out of Article 5 (9) of Law No 16 of 2007 which requires RERA to ‘keep track of property advertisements that are published in the various media op-erating in Dubai including the Free Zones.’ The Escrow Law, Brokers Law and Pre-Registration Law all place restrictions on the marketing of proj-ects unless certain regulatory provi-sions are complied with. As RERA is

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required to monitor property adver-tisements it is contended that RERA is also required to ensure compli-ance with the relevant provisions of these Laws.

In addition to the existing leg-islation it is understood the jointly owned property regulations will create additional disclosure require-ments upon developers in order that purchasers buying units within de-velopments are better informed as to what common facilities, common areas, fittings, fixtures and finishes may be employed or used. Purchas-ers must also be informed of other costs and liabilities associated with ownership in any particular develop-ment.

In this instance failure to comply by developers may once again cause contracts to be avoided by purchasers. In this regard we anticipate RERA’s direct involvement will be in assisting developers conducting their own checks to ensure compliance.

Whilst the above are some specif-ic examples where RERA is required to involve itself directly, our view is that RERA may, as part of its discre-tionary powers, enforce the Property Laws and Regulations notwithstand-ing that the Legislation may not ex-pressly impose upon RERA an obli-gation to do so.

Supervisory jurisdiction.b. There are no current examples of RERA having a supervisory jurisdic-tion. It has been proposed that a Committee and Council be set up pursuant to Law No. 85 of 2006 (Bro-kers Law) but we understand that the Committee and Council are yet to be constituted. The framework to do so is however in place.

Once constituted RERA could supervise these delegated bodies being the Council and the Commit-tee to ensure professional standards are maintained and appropriate dis-ciplinary measures taken. RERA in exercising this jurisdiction may con-sult with the Council and Commit-tee to ensure that Code of Ethics set down in the Brokers Law and other laws and regulations are adequate. To the extent that changes may be required, RERA may recommend to the Land Department that these changes be adopted.

We support moves towards establishing mandatory membership of professional associations in certain industries

We understand that RERA is considering indirectly regulating a range of professional and industry groups through the use of associa-tions and the requirement of man-datory membership. These profes-sional associations would engage in a measure of self regulation but re-main subject to regulatory overview by RERA in a manner similar to that proprosed for brokers.

We understand there are a variety of industry and professional groups that RERA is considering regulating in this manner. In particular valuers, surveyors, strata managers and pos-sibly conveyance professionals.

The collection and analysis of 3. data.

Clearly the Land Department and RERA are in the best position to col-lect data that may be pertinent to the real estate industry and many statistics are now published by RERA through its magazine Dubai Real Times and on its website. An-other very visible use of such data has been to publish the rental index creating a more dynamic means of determining fair rentals for any given area and resolving disputes. The index also formed the basis for the range of acceptable rents per defined area used in the current rent

cap, Decree No 1 of 2009.We see very real benefits arising

out of the easy access to the raw data by professionals. In particular, this being made available to pro-fessional and accredited and valu-ers may play an important role in stabilising the market and giving banks the confidence to lend on the strength of this objective data. Valuers can also assist in a range of disputes and arbitrations and can give certainty to contractual matters such as rent reviews.

To have an accurate picture of demand and supply of real estate stock also enables developers and other stakeholders to better predict their business requirements. This ensures sustainability and efficiency. In this category we consider RERA has once again greatly contributed to the overall transparency of the Dubai real estate sector.

Social objectives including 4. increasing education and awareness in the wider com-munity and promoting Emirati involvement in the industry.

Commenting on the social objec-tives in depth goes beyond the scope of a legal article as it falls more within the realms of policy rather than legal principle.

We do note that significant ad-vancements have been made in terms of the objective of increasing public awareness and the overall transparency of the industry due to RERA’s preparedness to work with the media and through the use of the internet and RERA’s website.

In terms of increasing education we understand that RERA currently requires brokers to undertake cours-es through RERA as part of obtaining

their brokers license.We consider that requiring man-

datory membership of professional associations may also facilitate more organised and structured profes-sional involvement in the real estate industry. This could be achieved by requiring these associations to have social objectives as part of their con-stitutional framework. These objec-tives could be achieved through requiring these organisations to of-fer accredited courses and training and disseminate information to the wider public.

We consider it likely that all profes-sional associations would welcome increasing education in the wider community and Emirati involvement in the real estate industry amongst their constitutional objectives and would work collaboratively with RERA to achieve these objectives.

In this way we may see the vision for Dubai as a place of great endeav-our and achievement within real es-tate development, architecture and engineering fields to also become a centre of learning in relation to such fields and take advantage of the local and international talent that will continue to involve itself in the Dubai real estate sector.

Scope for reformThe importance of regulation and transparency is now well recognized. In order to cope with the challenges increased regulation may bring we make the following observations.

Firstly, we support moves towards establishing mandatory member-ship of professional associations by those working in certain industries.

We see a pivotal role in a mature real estate market for the regulation

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of some industries. In many cases regulation will be the best means of ensuring a level playing field whereby the diligent and profes-sional organisations are not preju-diced by the less scrupulous offering similar services. Such regulation also ensures consistency in the delivery of services and boosts public con-fidence. The profession of valuers is a good example and would ben-efit significantly from a mandatory regulatory framework incorporating standards and ethics and backed up by disciplinary procedures.

It is also considered that in order for such associations to enjoy the mandate of their members each industry should (within limits) be involved in settling their constitu-tive structure and setting the stan-dards which their members will be required to meet.

We emphasise here that it is not the suggestion of Al Tamimi & Com-pany that RERA surrender any of its jurisdiction over such matters but rather that the legwork and associ-ated costs be the responsibility of the relevant association and indus-try. RERA would need to maintain a watching brief and control over any fundamental changes to any rules and bylaws of any association. RERA will also need to ensure that each as-sociation meets the standards jointly agreed.

We consider nonetheless that a measure of self regulation is justified as most industries are focused on the long term fundamentals and are well placed and motivated to direct

their industries in a sustainable way, including disciplining individuals who may damage their industry as a whole.

The use of professional asso-ciations has been shown to be ef-fective. Well known examples of industries regulated in such a man-ner are valuers and surveyors who are members of the Royal Institute of Chartered Surveyors and practic-ing Solicitors in the United Kingdom who are required to be members of the Law Society of England and Wales. Many other examples exist as it is a very widely employed regula-tory model.

Having an association as a focal point for each industry will also en-able greater and more immediate take up of any directive RERA may implement through requiring these associations to offer their members ‘Continuing Professional Develop-ment’ courses and training.

Having associations as a focal point also ensures RERA will receive focused and mandated feedback from the associations themselves as to the issues and challenges they may face. Such interfaces will likely assist in the creation of regulations where required.

Requirements could be put on as-sociations to set up fidelity funds in order to fairly compensate the public where no compensation would oth-erwise be available. Mandatory audit requirements on members can also be included (where necessary) and be overseen by RERA and account-ing or other professionals further

safeguarding the public interest. The second observation we make

relates to RERA exercising its direct jurisdiction.

In exercising RERA’s direct juris-diction it would be useful for RERA to have a range of tools to assist it in carrying out any investigations and disciplinary proceedings and mak-ing industry players accountable.

Such tools may be the ability to require any industry player to ac-count to RERA. In the event of non-compliance RERA should also have a range of discretionary penalties

Many statistics are now published by RERA through its magazine Dubai Real Times and on its website

which they may apply. We consider having a range of discretionary rem-edies will actually protect the devel-opers and other stakeholders from what could be very harsh penalties due to contracts being avoided or the developer being removed from the register (to use current ex-amples). RERA will in fact be able to tailor the penalty to fit the infringe-ment thereby ensuring that minor technical defaults do not result in unjust harm.Our final observation relates to fine tuning RERA’s role once the full regu-latory framework is settled. Clearly RERA having very broad powers

remains necessary whilst the sup-porting regulatory framework is put in place. Once the full regulatory framework is in place some revision of RERA’s constitutive laws and the Property Laws should take place in order that it is clear which matters RERA will exercise direct jurisdiction over and which matters shall be sub-ject to RERA’s less direct supervisory role or left to the market to decide. It may also be useful to clarify (where the confining of a discretion is use-ful) when and how discretions may be exercised and to what extent the courts may supervise the use of any such discretion. This fine tuning and clarification will provide greater com-mercial certainty whilst the process of review or appeal ensures account-ability and safeguards the stakehold-ers in the unlikely event that RERA oversteps its jurisdiction.

ConclusionsIn our view RERA in conjunction with the Land Department has, over a very brief period, implemented a modern real estate regulatory framework in relation to developers and brokers.

In the absence of a comprehen-sive regulatory framework RERA has also shown itself prepared to act

as issues arise and has accordingly mitigated some of the problems brought about by the international difficulties in the credit markets.

We consider that RERA is justi-fied in exploring the constituting of professional associations and other industry associations and allowing these industries to engage in a mea-sure of self regulation. The estab-lishment of such regulated bodies, when combined with some revision of the Property Laws and RERA’s constituting laws will see a cohesive and comprehensively regulated real estate industry and round out RERA as a mature institution.

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COMMENTS

Professional advice in a buyers’ marketBy Martin Ashkuri, Sales Director, Cirrus Real Estate Brokerage

A Buyers’ Market can be plainly defined as a mar-ket which holds more sellers than buyers. The

resulting outcome is low prices from an excess of supply over de-mand. In fact, the buyer/seller scales in Dubai’s property market are cur-rently imbalanced, with a small select few making up the buyers’ corner who pack a hefty punch in negotiations.

So how did we end up in this buyers’ market? Ambitious develop-ment plans and estimated popula-tion growth statistics encouraged an abundant supply of housing units. Naturally property investors and home owners alike took ad-vantage of the investment oppor-tunities available. This has today resulted in a manic disequilibrium. Scarce pre-approval letters and cash buyers lacking confidence in price stability have left a very small proportion of buyers who are ready to put down deposit cheques and sign MOUs.

For those who are fortunate enough to be considering a prop-erty purchase despite the current economic climate, it’s time to con-sider an upgrade in your quality of life. Affordability has kept many constrained in the last few years and with villa prices soaring, many families were compromised into buying or renting smaller homes. The price of villas is now down as much as 60 per cent since the peak in 2008. As a result homes that fam-ilies could only dream of before are now very affordable.

Apartment sales have not fa ired as well as villas. This may indi-

cate that there is still some price movement expected. For young professionals living in Dubai there is an equally attractive opportunity to improve their quality of life by availing themselves of the price corrections in apartment sales.

Given the benefits already pre-sented and the limited availability of ready buyers, sellers in most cas-es are the weak link. Buyers are in a position to take full control of ne-gotiations provided offers are con-sidered reasonable. So what advice can we give to the buyers?Cash is king - cash offers in a buy-ers’ market can have sellers fighting over you. A buyer with the full pur-chase price immediately available will dictate the speed at which the transfer can be done. Sellers look-ing to accept hearty price cuts are usually interested in a speedy sale.Know the market - Obtain gen-eral knowledge about the home-buying process and the real estate market. This will give you a com-petitive edge in negotiations. It is important to know of other homes that have been sold in the area and at what price. If no recent transac-tions have been carried out, you should question the location. Your purchase could leave you with a home that immediately loses val-

Cash is King - Cash offers in a buyers’ market can have sellers fighting over you. A buyer with the full purchase price immediately available will dictate the speed at which the transfer can be done

ue. Home buyers should make the same price checks a seller makes to price their property. Seek com-parative prices from newspapers and websites with online listings to keep tabs on asking prices. Finally, employ a good real estate agent to highlight and explain market trends and statistics. Don’t abuse your power - In a buyers’ market, buyers who don’t educate themselves about prices tend to massively undercut sellers and ask for too many concessions. This will only alienate the seller, es-pecially those less motivated with more sought after homes. The sell-er will simply look elsewhere for a more reasonable buyer.Finance buyers be wary - Cau-tious lenders are rejecting many

loan applications and down valuing properties due to the credit crunch and significant price fall in the last six months. Be sure not to engage in any deal believing that finance approvals are a ‘given’ and have sufficient funds to top up deposits should the valuation fall short.Rent - Renting now and waiting

out the market is a gambit, but so is buying a home if you don’t think you can stay put long enough to weather the change. Renting could pay off in a buyers’ market that hasn’t bottomed. Find out rents within the area and calculate rental yields. Any-thing that shows a particularly high yield is a good sign that you should buy rather than rent.Maintenance fees – Some loca-tions have suffered in popularity in light of high and rising maintenance and service charges. Before entering into a sale and purchase agreement be sure to find out about associated costs as this may affect the future price of your homeCosts of buying – A number of other transactions amounting to as much as 5-7 per cent of the total

sales price are incurred at transfer. Broker commissions, RERA transfer fee, RERA registration fee, service charges, developer transfer fee are some of the various costs involved. In a buyers’ market it may be possi-ble to better the value of your pur-chase by negotiating the payment of these costs by the seller.

Martin Ashkuri

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COMMENTS

Despite the ongoing dis-cussions about how much prices have re-duced and if and when

the market will revert, any experi-enced realtor knows that whether market conditions are good or bad there is still always a market out there.

Currently, some agencies refuse to enlist a potential client’s prop-erty if they “feel the asking price is too high” and, conversely, others still are telling consumers that they can get more for their property than the market will actually take – with the sole intent of getting the listings.

Given this background, the ques-tions our industry should be asking are, “who is leading the market in the correct direction?” and “why are

Are real estate agents selling homes or buying listings?

service delivered to a client and whether the agent’s role actually responds to their needs and, more importantly, is in their best interests.

The listing/selling agent is the most common model internation-ally. Contracted by the seller of the

a willingness to get the potential buyer to purchase at a higher price.

Some consumers, realising this fact, want a knowledgeable person with no conflicts of interest helping them to navigate the market. Thus, they will contract an estate agent who can give them professional ad-vice for a fee. This person is called the ‘buyer's agent’. Any agent can provide this function, and some do both, but for enhanced credibility, many buyer's agents are exclusively that, and do not list and sell.

With adherence to the new regu-

estate agencies not adhering to the buying agent and selling agent dy-namic?”

For anyone looking to buy or sell a property, as well as those of us working in real estate, it is critical to understand the difference in roles between selling/listing agents and buyer’s agents. We need to know how this representation affects the

property to market it on their behalf, the agent will be paid a commission by the seller, proportional to the fi-nal selling price. Many consumers who contact a broker to look for a house don't necessary realise that the agent advertising the property isn't actually working towards the buyer’s interest but is essentially representing the seller – and so has

For anyone looking to buy or sell a property, as well as those of us working in real estate, it is critical to understand the difference in roles between selling/listing agents and buyer’s agents

lations introduced by RERA, consum-ers will be more at ease with prop-erty transactions, and will ultimately know who is representing them. I am sure many who transacted prop-erties in the UAE have heard a story whereby four agents were involved in a single transaction…at least. It’s

time we consigned those stories to history.

If a client is selling their home - especially now, in the current market – they should not automatically go with an agent who promises them access to ‘the cash buyers’. Instead, they should be looking for an agent who can back up their price with ac-tual comparable sales. An agent who is a specialist in an area. Who can give them a proper plan of how they will market their property, its features and uniqueness. From a company with a solid track record. If not, they

may find that an agent who simply wants to buy their ‘listings’ ends up costing them a lot more.

Fine & Country is an international real estate agent network specialising in premium properties with offices in the UAE. www.fineandcountry.ae

Cecilia Reinaldo, MD of Fine & Country

As the property market becomes more mature and the UAE starts to follow real estate agency practice that reflects international standards, many changes are in progress. With this in mind, it is high time consumers started paying close attention to what these changes really mean for them, whether they are buying or selling a property, says Cecilia Reinaldo, Managing Director of Fine & Country, UAE.

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The Dubai Mortgage Market

Dead or Alive?By Chris Dommett, CEO of John Charcol Dubai

Contrary to popular belief, it is still possible to find a mortgage in Dubai. The former key players such

as Amlak and Tamweel may have closed their doors for new business, but others are prepared to lend on a conservative basis to good quality end-users. Ninety per cent finance might be a thing of the past, with average Loan To Value (LTV) ratios of around 70 per cent, but with prices falling to more reasonable levels, some buyers can still afford the down payment.

Banks are generally blaming a lack of liquidity for their reluctance to lend. However, their confidence has been dented by seeing prop-erty values fall for the first time in Dubai, and they fear that the market has some way to fall before it sta-bilises. When the market was rising they were confident that in the time between a valuation and the loan disbursal, the value of their security would have increased. In a falling market, the opposite is true, and most banks will not even rely on the original price of a property as the ba-sis for their lending.

In contrast to most of the West-ern world, interest rates in the UAE remain very high, and this is deter-ring potential property buyers and at the same time as squeezing the repayment ability of existing bor-rowers. Borrowers who took out mortgages when the rates were around six per cent are now paying around nine per cent, and in terms of monthly installments this is a significant increase. Add to this the likelihood of negative equity and job

insecurity, and it is not hard to see why people are reluctant to commit to a mortgage.

So what can be done to bring interest rates down to more accept-able levels and to encourage the banks to open their doors at least tentatively for mortgage lending? The key concerns of liquidity and confidence need to be addressed, and in some ways the liquidity is-sue is the easier of the two. A direct injection of deposits by the Federal government or the central bank into the banking system, with a proviso that at least a percentage of the deposits need to be made avail-able for sensible mortgage lending at reasonable rates could be done quite quickly. Unlike many of the Western banks, banks in the UAE do not need bailing out yet. They are well capitalized, and have generally

avoided the sub-prime derivatives and other toxic assets that have brought down banks like Lehmann Brothers. Their loan portfolios are still performing reasonably well, but this will change unless the economy stabilises and rates come down.

Restoring confidence in the prop-erty market could take time, but in the meantime the government could assist by guaranteeing a portion of each mortgage. This would reduce the bank’s exposure on each prop-erty and give it the cushion it feels it needs to cover the risk. An alternative would be to establish a government backed institution along the lines of Fannie Mae in the United States to guarantee loans and to facilitate se-curitisation of the banks’ mortgage portfolios, thereby increasing both liquidity and confidence in the sys-tem. Of course, this institution would

have to avoid the sub-prime pitfalls which have caused so much damage to Fannie Mae and Freddie Mac, but this should not be difficult in a mar-ket which has traditionally been con-servative in its mortgage lending. It has been suggested that the merged Amlak-Tamweel entity could be used for this purpose once it is back on its feet.

The other major issue facing banks is that of defaults. The Mort-gage Law-which came into being last year-covers foreclosure, but the process has yet to be fully tested in practice. Banks will need to deal sym-pathetically with borrowers facing difficulties in their mortgage pay-ments, to avoid forced sales, legal dis-putes and reputational damage. The tactics used in recovering credit card or auto loan debts will just not work in the case of mortgages, and the threat of arrest and jail for a bounced security cheque could well encour-age potential defaulters to skip the country. Repayment breaks, resched-uling of loans and even interest rate reductions would help genuine bor-rowers to avoid defaulting, and if these are not possible, an agreed sale of the property is much better than a forced or disputed sale. Inevitably, banks will suffer some losses, particu-larly on those properties financed at 90 per cent in the latter part of 2008, but given that mortgages represent only a small portion of each bank’s total assets, these losses should not be life-threatening.

The mortgage market is still alive in Dubai, but it is in urgent need of resuscitation before the cost of res-cuing it becomes too high.

…in the meantime the government could assist by guaranteeing a portion of each mortgage

Chris Dommett, CEO of John Charcol Dubai

COMMENTS

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COMMENTS

Despite being a relatively new concept in the Middle East, facilities management (FM) has

been steadily gaining solid ground as the region gradually adopts a new business paradigm in real es-tate development: building for the long-term. Partly owing to the re-gion's unique environmental con-ditions, property development was, for a stretch of time, viewed primar-ily as a short to medium-range in-vestment, with developers target-ing a lifecycle of 15 to 20 years for their building projects.

More recently, however, the in-dustry has witnessed a change in perspective, largely because of sev-eral emerging factors. For one, the advent of advanced technology has allowed developers to utilise more durable materials and adopt more sophisticated construction techniques to significantly improve the lifecycle of their property de-velopments. In addition, the cost of construction has gradually in-creased, while the changing needs and demands of society have led to a boom in construction of mega facilities, which require extremely high costs to build.

"Developers are now focusing on long-term property develop-ment and it is easy to see this hap-pening all over the region. For in-stance, look at the fast emerging skyline of Dubai: simply factoring in the extremely complex process of building these structures and their prohibitively high costs, you can be sure that these buildings are being created to last for a very long while," said Wahid Atallah, Chair-man of Sungwon OBO.

This change in attitude towards real estate development, Atallah points out, has made it easier for the

Reinforcing core business value

region's property sector to appreci-ate the importance of the relatively new concept of facilities manage-ment. The Sungwon Chairman fur-ther explained that FM is more than just hiring a building caretaker; it is a critical strategic investment that

sis has even acted as a significant growth catalyst for the FM sector. According to Atallah, a growing number of building owners and developers are now adopting these solutions in a bid to enhance sale or rental value, streamline overall costs and ultimately cushion the impact of the economic downturn.

"Although facilities manage-ment is directly involved with the real estate sector – one of the worst hit by the economic downturn – we have actually benefited from the prevailing conditions. This is because developers and building owners now appreciate the consid-erable benefits of effective facilities management services. When fancy business strategies consistently fail to deliver concrete results in light of the major economic downturn, companies are left with no other resource but to focus on their core businesses and naturally seek the required expertise from facilities

dicts the UAE's facilities manage-ment sector to further grow to $10 billion by 2012 from its current val-ue estimated to be between $8-9 billion.

"The real value of this sector could actually be greater as our esti-mate does not include public facili-ties such as airports, free zones, and all the projects of the municipal-ity and the RTA such as the Dubai Metro. All these require facilities management services. Moreover, we are confident that the sheer size of the real estate market of the UAE and the entire region will ultimately outlast the financial crisis. Even with an expected slowdown in construc-tion, there are still several projects that are on schedule for construc-tion and delivery within the next few years, representing excellent future business prospects for the facilities management sector."

In addition to fundamental fa-cilities management services such as maintenance, cleaning and secu-rity, Atallah underscores the impor-tance of incorporating premium value-added offerings to its port-folio as part of its strategy to maxi-mise business potential. In this re-gard, the company has integrated a consultancy service during the de-sign of the development projects of its clients – a key feature that will help it better deliver maintenance services throughout the structure's lifecycle.

Sungwon OBO, the pioneering facility management company in South Korea and the Facilities Man-agement Division of Makateb Hold-ing, delivers a full range of integrat-ed facilities management services, including mechanical and electrical maintenance for buildings, clean-ing, security, FM consultancy and energy management.

strengthens the core business of building owners and developers.

"It's all about maximising busi-ness value. It is not enough to just create an exceptionally strong and long-lasting facility; it must be properly maintained for it to stay perfectly fit to serve its purpose throughout its extended lifecycle."

The ongoing global financial cri-

management providers." Although it targets a relatively

modest growth forecast of 10 to 15 per cent for 2009, Atallah said the company is confident of achieving more gainful business opportuni-ties in the long-term as possible corrections brought about by the ongoing economic downturn are settled. In fact, the company pre-

Wahid Atallah

The real value of this sector could actually be greater as our estimate does not include public facilities such as airports, free zones, and all the projects of the municipality and the RTA such as the Dubai Metro

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IN FOCUS

Real Estate Darwinism is how experts are defining the cur-rent phase of the sector in the UAE. They predict that

with a tectonic shift in the function-ing of the market, the ‘bad objects’ will be wiped off and it will ultimately benefit the end user who will get to choose quality and attractive offers. This will in turn bring back a func-tional market.

“Dubai and the UAE were not meant to be built on real estate. A building is built only once, but the tenant operating the shop in the building is to stay and do business year on year,” says Dr Ronald Zibell of ADI Consulting, a logistics expertise provider for the real estate sector.

Diversification was the back bone of the strategic plan with focus indus-tries being energy, petro-chemical, construction material, equipment, machinery, healthcare, pharma, food, beverage, banking, tourism, telecom-munication and media sectors.

The boom in the real estate mar-ket sidelined these focus industries and with it sustainable development for the economy. But in the aftermath of the economic crisis and the real es-tate crash, it is assuming significance particularly in Dubai. Experts are warning that if due attention is not given to this arm of development; it will be difficult for the real estate sec-tor to get back on track.

Infrastructure and logistics are seen as ‘enabling industries’ in sus-tainable development, however the returns on investments in these sec-tors is not instant but a slow process. Industry experts recommend a con-solidation to enable a steady growth for the real estate sector.

From an architectural point of view, sustainable development in-volves making facilities energy effi-cient. With the UAE leading the world

Reality checkBy Ambily Vijaykumar

in carbon footprint levels, it is impera-tive for it to take corrective measures to sustain a realistic growth in the real estate sector.

“The tools and technology com-ponents are available to bring down operational costs for existing facilities. The need is to implement them,” says Franz Emig, an advisor to the Urban Development Committee of Abu Dhabi and also the head of the archi-tectural division at KN International.

“Operational aspects should be included in the design and planning phase of any project. The aim then should be to improve noise control in buildings. If implemented with a long-term perspective in mind, then the costs for cooling, electricity and water consumption in a facility can be brought down by at least 50 per cent,” Franz Emig informs.

This is the reason Dr Uwe Forgber, co-founder of Conject International, believes “some of the buildings that were erected in a short term will have to be torn down” because they are not in synch with the need for sus-tainable development.

Dr Forgber is involved in mak-ing information relating to building transparent. He believes that infor-mation technology can be used in managing massive data required for large number of buildings that need to be maintained over a long period.

According to him, the present crisis in the real estate sector is like a thunderstorm. It is only after the storm that the temperature cools down and the weather is pleasant. “The real estate industry heated up too much. This crisis will cool it down. The gamblers have left the scene. Whoever has a genuine interest in good infrastructure has already given a thought to what will happen with the buildings when they are com-pleted,” Dr Forgber adds.

Experts say it is absurd to design buildings that are intended for a quick flip, because finally there might be a case when a seller is unable to find a buyer. So the aim now should be look at property as long-term investment.

Part of that long-term plan is facili-ties management. Dr Ralf Zerenner of Berkley Services recommends indig-enous means of maintaining assets. “Operational costs can be reduced and loss of value can be avoided in non-rented buildings by choosing the right maintenance strategy. The need for stake holders however is to have a tailor made solution that caters to in-dividual needs,” he says.

The real estate sector that has failed to wake up to the need for a long-term strategy for growth so far is now opening its eyes to a new reality. Saving on costs of operating a facil-ity is as important as making a profit on the facility itself. “We know that investing in facilities management at an earlier stage can save up to ten per cent of the investment costs and we will be able to save up to thirty per cent of operations costs,” says Werner Maluck, of ACI Real estate.

In the words of the experts, the sector that is in a state of emergency needs to be redirected towards trans-parency and sustainability. But that is possible only when the seriousness of the present problem subsides.

With the sector undergoing a se-vere cash crunch, developers are find-

ing it difficult to deliver on promised projects. How then would facilities management as a requirement be sold to those who are unsure of the future of their projects?

“Even if the existing owners go bankrupt, the building that has been built will still be there and needs to be maintained. Even in the hands of the banks, these buildings can be maintained and used,” says Werner Maluck.

Facilities management can be combined, with the requirement of the end user so that the customer can keep the property and keep it

Facilities management is receiving the attention that was denied to it so far

Panelists explained the need for sustainable development

profitable as well. Some experts say they are noticing a change in the at-titude of developers who are waking up to the need to not just erect huge structures and earn quick money, but also invest in maintenance so that they benefit in the long term. Finally, the beneficiaries will be the tenants who will receive more quality for a lesser cost in the future, thereby en-suring that facilities remain profitable for the owners.

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INFRASTRUCTURE

Eng. Hussain Nasser Lootah, Director General of Dubai Municipality, was recently interviewed for a German

television channel. He explained about the cooperation between various civic bodies and their plan-ning for the many infrastructure developments that must be main-tained, updated and installed, de-pending on whether they were talk-ing about established areas of the city, newly built ones or about to be built projects. "When we speak of infrastructure, we talk about the role of Dubai Municipality (DM) to man-age the steady increase in demand for its services," Lootah said.

He said the municipality's abil-ity to perform its functions through well thought out plans and accurate programmes of work include urban planning in accordance with strate-

Let the good times rollNow is the time for pipes and cables, plumbers and electricians. As construction work on many projects slows down due to financial constraints, now is the time to think ‘out of the box’ and do all those jobs that will need doing in the future. Prepare for the good times – they are bound to come soon. Dig that hole and mend that fence. Infrastructure for both existing and future projects can be laid down now when the work will not get too much in the way of Joe Public, i.e. the ordinary man and his family. Let’s aim to do away with red cones and plastic ribbons. Let’s do the job properly, once and for all

gic programmes for the preserva-tion of the environment.

Challenges facing the Municipal-ity include the increased amount of waste water. "We are keen to raise the level of hygiene. We have im-plemented plans for drainage and stormwater projects to cover needs until the year 2020. This was planned by dividing sewage needs into urban areas as per future expansion plans. The plan will serve each of the areas with a main pumping station that pumps the sewage water to the existing sewage treatment plant in Al Aweer or to the future station at Jebel Ali. The city has been witness-ing a number of infrastructure proj-ects in this field," he stated.

He also spoke on the sewage wa-ter pumping station project "X1" and the pipelines to the main treatment plant in Jebel Ali, which are currently

being implemented, and a project to establish a huge sewage treatment plant in Jebel Ali which is expected to be completed in 2010.

He also spoke about the Quran park project, which is one of the most creative initiatives of the DM in the establishment of parks and increasing the green areas in the emirate. "This park is a wonderful opportunity to explain the mean-ings of the Holy Quran and the

Municipality’s ability to perform its functions through well thought out plans and accurate programmes of work include urban planning in accordance with strategic programmes for the preservation of the environment

many miracles mentioned in it in the areas of science and medicine, the plants how modern medicine is highly dependent upon this for the treatment and its benefits to the environment. The integration of all services required in the park was also taken into account. We are also keen to ensure the Islamic nature of the park in all its components and the nature of the life of the desert as it was described in the Holy Quran."

Hussain Nasser Lootah being interviewed for a German TV programme

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He also expressed his delight at the release of the municipality's initiative, ‘Green Roofs’ during the Green Dubai Forum held recently. "This project is being applied on the roofs of DM buildings to mea-sure and see the positive impact." He said the city conducted an ex-tensive study that confirmed the success of this project in other countries. "So the Municipality had decided to apply this idea in the area of environmental conserva-tion, reducing of temperature and purification of air from pollutants. The Municipality had selected ap-propriate plants appropriate for this project in addition to the beautiful designs in coordination with the Department of Public Parks and Horticulture in Dubai Municipality," said Lootah.

The Director General also point-ed out the Municipality's care in applying its strategic plan for 2007 - 2011, especially in the provision of green spaces. It aims to raise the per capita green area to 23.4 square metres, and raise the ratio of the area planted in urban areas in Dubai to 3.15 per cent by the end of 2011.

Lootah said DM has placed spe-cific targets for the total area to be cultivated annually, stressing that it will develop legislation defining land uses for agriculture and for beautification purposes so as to ensure the cultivation of these ar-eas.

The municipality currently over-sees the study and implementa-tion of many recreational areas and landscaping projects includ-ing neighbourhood parks, public squares in general and pond parks

in particular, because it is the natural outlet for citizens or residents and a safe place for children to practice many activities through the use of park facilities in addition to shaded places to sit.

"The majority of such parks have been provided with rubberised jog-ging tracks.”

He noted that modern Dubai is the product of the past twenty years of continuous development, prior to that, Dubai was a small traditional community situated on the banks of a creek, added that the civic body is working hard to conserve the heri-tage of the city so we do not to for-get its rich history.

Approval of land use at Bawadi has led to a flurry of activity to the the study of density of buildings, the Gross Floor Area (GFA), procedures related to service facilities by the de-

velopers all over the hospitality and shopping project which extends over a distance of 10 kilometres.

The project had obtained the approval of Dubai Municipality with regard to areas of major con-struction within the master plan. The land use plan aims to enhance efficiency and effectiveness of eco-nomic development, including secure and easy traffic flow, promo-tion of safety measures, attention to the provision of sufficient quantities of light and air, focus on urban de-sign, support and means of energy conservation, and the establish-ment of service facilities.

According to the masterplan the project will be divided into five geographic regions reflecting the unique characteristics of the link between the buildings, the road network and cross-cuttings. Among the other distinctive elements of the project is a high-level transport system, which includes areas dedi-cated to pedestrians and transpor-tation carriages.

Credit is now being reaped for jobs that have been done well in the past. Palm Utilities (PU) has an-nounced that Palm Water (PW) has been nominated for an award in the GWI Global Water Awards 2009, which will recognise outstanding achievers in 11 different categories during a special ceremony on April 27 at the Zurich Marriott Hotel,

Switzerland. Winners of this year's Awards will receive their prizes from former US Vice-President Al Gore.

PW’s Palm Jumeirah Crescent project has been selected as one of the candidates of the Global Water Awards 2009's "Membrane Desali-nation Plant of the Year" category, having been recognised for its tech-nological breakthrough and enor-mous potential for future seawater projects in the region using UF pre-treatment membranes for seawater desalination on a large scale in the Middle East.

The Palm Jumeirah Crescent is the first of a pair of seawater reverse osmosis desalination plants in the resort, which will have a combined capacity of 64,000m3/d. The project combines ultrafiltration (UF) and re-verse osmosis (RO) membranes in a design that has proven itself to be robust against tough environmen-tal conditions.

Palm Utilities, through its two primary divisions of Palm District Cooling and Palm Water, has been established to address the region's unique requirements in the dis-tinctly critical areas of cooling and water. With its aim of sustained long-term growth, PU intends to pursue new core business activities within other utilities, including do-mestic gas, power distribution, sus-tainable energy and environmental waste management.

Bawadi

Desalination plant

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UNDER CONSTRUCTION

Work is carrying on despite the current global turmoil. In Dubai, contrary to

gossip and blogs, not all the cranes have stopped - as can be seen on various building sites around town. Many projects are still progressing and new contracts are being award-ed for engineering and fit-out works on those that have recently been built. It may not be a fast-paced march anymore - it’s more of a quick walk - and any forward movement is welcome.

The Address, Dubai Mall, a five-star premium hotel, is progressing on schedule for opening later this year with structural and exterior cladding work already completed. Interior fit-out operations of the ho-tel, serviced apartments and central podium are nearing completion. This luxury, contemporary hotel is linked to one of the world’s largest shopping and entertainment desti-nations – The Dubai Mall. The hotel is strategically located to offer ease of access to many attractions within Downtown Burj Dubai, as well as

Going upwards and onwardsagreement, which both have signed for ‘Champions Tower II’ and ‘Cham-pions Tower III’. The developer also revealed that its aim to strengthen its partnership with the industry-leading supplier is in line with its UAE-wide expansion strategy.

The agreement involves the installation of four high-speed, state-of-the-art Mitsubishi elevators within the 20-storey tower. The en-tire process is expected to be com-pleted within a 20-week period after the delivery of materials at site and completion of the hoistway. Armed with cutting-edge features in eleva-tor systems, the Mitsubishi-branded lifts will incorporate ‘Variable Voltage Variable Frequency’ (VVVF) technol-ogy.

“As we steadily inch towards our goal of extensive expansion across the UAE, we have embraced a prov-en strategy of cultivating lasting rela-tionships with organisations that are highly capable of further enhancing the value we offer to our investors.

Through this agreement, we are confident that we have taken the convenience, security, and overall safety of the tenants within ‘Cham-pions Tower IV’ a notch higher,” said Rizwan Shaikhani, Joint Managing Director, Memon Investments.

The new elevator system will also feature ‘Advanced Group Con-trol with Artificial Intelligence and Fuzzy Logic’ technology, which will facilitate energy efficiency and reduced waiting time through effective car allocation. Further-more, an unoperation and service feature called the ‘Automatic Hall Call Registration’ will automatically assign another car if one car can-not carry all waiting passengers, while a peak traffic control directs cars across the 20 floors to where traffic is heaviest. In addition to its guarantee of top quality installa-tion, ETA MELCO will also deliver free routine maintenance and 24/7 emergency breakdown support for two years.

other leisure and business locations in Dubai.

As the next hotel set to open in The Address Hotels + Resorts port-folio, this one will uphold the ‘one-size-fits-one’ philosophy of the hotel brand, and offer tangible guest ben-efits such as a complete 24-hour stay service in all suites. With a unique location adjacent to The Dubai Mall, the hotel will offer special shopping packages to its guests, as well as a variety of first class dining venues. It will also feature a five-star Spa, infin-ity pool and state-of-the-art fitness centre.

Construction work is progressing as planned, with several key mile-stones already achieved. There has been remarkable progress in exte-rior landscaping which is around 60 per cent complete. Simultaneously, mechanical and electrical work is being undertaken and will be fina-lised shortly. The interior fit-out op-erations of the hotel are 95 per cent complete, with the serviced apart-ments and exterior podium near-ing 80 and 85 per cent completion respectively.

The interior of The Address, Dubai Mall will feature a Mashrabia-patterned design across its façade, along with a 21 metre-high water wall – unique architectural elements adding to the overall experience of the first-class hotel. The hotel con-tains 245 guest rooms and 449 ser-viced residences, most of them over-looking Downtown Burj Dubai.

Dubai based property developer, Memon Investments, has awarded ETA Melco, a leading supplier of top quality vertical transportation systems, a Dh1.52 million elevator contract for its ‘Champions Tower IV’ project. This partnership marks the third contract to be awarded by the leading developer to Eta melco, fol-lowing a recent elevator installation

The entire process is expected to be completed within a 20-week period after the delivery of materials at site and completion of the hoistway

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Going upwards and onwards

Danube Building Materi-als, a leader in construc-tion, building materials and shop fitting industries,

has outlined an expansion plan to construct Buildmart retail complexes across the GCC. The move follows the recent inauguration of the first one in Ras Al Khaimah, which caters to interior designers, consultants and homeowners by giving them ac-cess to more than 15,000 high qual-ity products. This Dh75 million retail complex in RAK features products that are installed in an actual home set-up, thereby allowing for greater convenience and a customer-friendly shopping experience. It stands on a 150,000 square feet. plot and incor-porates a 20,000 sq. feet showroom, a 40,000 sq. ft. warehousing section, and a huge open area for additional shops and parking. The store is di-vided into 20 different sections in-cluding kitchens, bathrooms, tiles, shower rooms, Jacuzzis, flooring for both ceramic and wood, ceilings, doors, paints, decorative glass and wallpapers.

In line with its aims to satisfy the building material needs of customers across the region, the company re-vealed that its plans to establish more retail complexes mark only the begin-ning of a new phase in their strategic expansion, which will unfold within a two-year period and is expected to culminate in Dubai. The shift in the focus of the company from rec-ognised construction hubs to new potential-laden markets underline its commitment towards establish-

Inspite of the knocks and falls in Dubai’s property market, business is rising as quickly as some companies are falling. Those who did not do their homework, or follow a business plan, have either thinned down or gone home, leaving a small gateway open for others to jump in. Investors are looking around the world, and many eyes are now on the Middle East where financial reserves are healthier than in other parts of the world. Projects that have been put ‘on hold’ can be taken off the ‘to do later’ list if interested parties come along to discuss a resurrection of plans and movement of cranes. Mergers between companies is being encouraged too, as another way to build up productivity. There is still life in this part of the world, and in Dubai in particular.

Planning for the future

ing stronger ties with customers by providing personalised services and high quality products that address their specific needs.

Palm District Cooling (PDC) has announced that it recently raised a Dh519 million bridge financing fa-cility, in line with its growth strategy within the UAE. This financing com-mitment comes at a time when the region is experiencing severe liquid-ity constraints and will be utilised for capital expenditure requirements of the company and is part of a wider financing strategy that will include accessing the syndicated loan and capital markets in the future.

PDC specialises in the Build-Own-Operate model of development of-fering design, construction, opera-tion and maintenance services in the district cooling space and has pio-neered the concept of using treated sewage effluent for its district cool-ing operations. The company’s cur-rent capacity 450,000 TR is expected to increase to one million TR over the next few years. Some of the key clients it currently services include developments such as the Palm

Jumeirah Island, Discovery Gardens, Jumeirah Lake Towers and Ibn Bat-tuta Mall.

Deyaar Development PJSC has presented details of its 2009 business strategy, including specific projects to be considered for consol-idation and total area of units to be delivered over the next three years. The strategy has already been rolled out across all business units and is fo-cused on safeguarding its customers and cash flows, the company’s chief executive said.

Under the development strategy, the total area of units within all cur-rent projects in the UAE is estimated at 16 million square feet. Of this, seven projects accounting for four million square feet (25 per cent) will be deliv-ered in 2009. Projects accounting for four million square feet (25 per cent) are on track for delivery in 2010 and 2011. Deyaar Park, Mirar Residences and Deyaar Enclave, which together constitute to an estimated four mil-lion square feet (25 per cent), will be consolidated within the rest of the Deyaar portfolio. Investors in these projects will be given the option to transfer their ownership to projects that will be completed on a fast track basis. The transfer option will be ex-ercised purely on a voluntary basis and will give customers the option to transfer their ownership to premi-um projects in prime locations. It will also allow customers to consolidate their total outstanding payments.

Unannounced and unsold proj-ects are estimated at four million

square feet (25 per cent). Customers will be contacted in-

dividually in order to develop a tailor made solution that meets their indi-vidual needs.

As part of the financial strategy, Deyaar will reduce the sale price for some projects that have already been sold. This is in line with the company’s objective of passing on the benefits of its reduced cost of construction to customers. This includes 30 per cent price reduction on Bristol Office Tower, and 25 per cent on Bristol Resi-dential Tower, 30 per cent on Oxford Tower, an office tower development; and 25 per cent on Fairview Resi-dency. All three projects are located within Business Bay.

The company will also provide soft payment plans to customers, replac-ing the original payment schedule with smaller payments to be paid out over an extended period. This will al-low customers facing liquidity prob-lems to avoid defaults and meet their obligations. This strategy has already proved successful on Deyaar’s Al Seef II project in Jumeirah Lakes Towers, which was delivered earlier this year.

The financial strategy has been developed to safeguard customers by stabilising their cash flows and helping them secure easier access to finance. This, in turn, will result in lower risk of defaults and lower re-ceivables risk for Deyaar, maintaining the company’s healthy cash flow.

Rizwan Sajan, Chairman, Danube Building Materials

DUBAI FOCUS

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APPOINTMENTS

New CEO at Dubai HoldingAlGergawi: “Bin Byat will help prepare the group for the next growth phase”

His Excellency Mohammad Al-Gergawi, Chairman of Dubai Holding has announced the

appointment of Ahmad Bin Byat as the new Chief Executive Officer of

Dubai Holding.Al Gergawi said: “As the Execu-

tive Chairman of Tecom Invest-ments, a member of Dubai Holding, and an integral member of Dubai Holding’s leadership, Bin Byat has accomplished many achievements since the launch of the group. I am confident he will have a significant impact on the future growth of

Dubai Holding, especially during this important period.”

Bin Byat will work closely with Dubai Holding’s Executive Com-mittee, under the leadership of HE Al Gergawi, towards the conclusion

of the consolidation process of the back office operations for the real estate and investment companies. He will also put together the strate-gy and implementation mechanism to increase the efficiency of the group and its effectiveness towards the next growth phase.

Bin Byat occupies several high-ranking positions including, Chair-man of the Emirates Integrated Telecommunications Company (EITC); Chairman of the Dubai Real Estate Corporation and Chairman of the Aswaaq Founding Committee. He is also a member of the Zayed University Board ofTrustees.

Cluttons has appointed Steven Morgan ([email protected]) as Head of

their Dubai operation. Steven has spent five years in the Gulf with the firm and prior to his new role, was heading up the UAE valuation func-tion. Prior to that he was with DTZ in the UK.

Commenting on the Dubai mar-ket in general, Steven said: “Although the Dubai market has not escaped the global financial turmoil with most sectors of the property market being affected; in the medium to long term the current downturn will be a posi-tive for the market. This is an oppor-tunity for Dubai to catch up with the construction of the city’s infrastruc-ture and the chance to implement fi-nancial and real estate regulation, cre-ating a more sustainable platform for future growth. To this end, we are cur-rently working in an advisory role with various government entities relating to the development and execution of new property law and regulations.

Cluttons Middle East appointment

This region is well placed to recover quickly.

Cluttons has been in the Middle East for over 30 years and currently has eight offices across the Gulf. As a firm, they are committed to the region and plan to expand further as soon as mar-ket conditions permit. The company is an independent partnership of char-tered surveyors founded in 1765. With a network of offices in the UK, Europe, Middle East and South Africa, it offers a wide range of professional property management, agency and consultan-cy services across the commercial and residential sectors, for both investors and occupiers.

Ahmad Bin ByatHE Mohammad AlGergawi

Steven Morgan

Northacre Plc is delighted to announce the ap-pointment of Mohamed

Abdulsalam AlRafi, an eminent Emirati property developer and entrepreneur to its board. Mo-hamed AlRafi will partner with the company in the Gulf, working with all three of Northacre plc’s subsidiary companies – Northacre Developments, Intarya (Interior Design) and Nilsson Architects.

The company’s success has been built on experience and a strong skill base for generat-ing added value with passion for quality at every stage, qualities Mohamed AlRafi echoes in his

Northacre’s ambassador in the Gulfown company in Dubai - Abdul-salam AlRafi Group. Following in his father’s footsteps, Mohammed AlRafi as CEO of Abdulsalam AlRafi Group manages over 26 different national and international companies, which have completed many impressive and renowned projects in his port-folio. Mohammed brings to Northa-cre more than 22 years experience in real estate in the Gulf.

The initial project of this new ven-ture will be to establish a platform to expand Northacre’s existing interior design business, Inatrya, across the Gulf region. Intarya’s Managing Director, Kamini Ezralow has many private clients in the Gulf. The part-nership with Mohamed AlRafi will al-low for multiple new opportunities, pairing excellence in building design with the highest quality craftsman-ship, design and decor.

Mohamed Abdulsalam AlRafi

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Leo Sterling, a dynamic property management company aims to expand its team of skilled

and qualified sales executives by in-viting dedicated sales professionals to join its workforce. The company has been buoyant in the current economic condition, by offering a higher quality of products and ser-vices. It targets the upper echelon of regional and international investors, while aiming to be both a progres-sive and a trend setting company in this industry. With wealthy clients from the USA, Europe, Australia, and

Leo Sterling increasing staff strength to bolster expansion plansCompany holding open days for RERA-certified sales candidates

Russia among other countries, sales executives must have the ability to deal with those clients as investors and not just customers.

Leo Sterling invited RERA-certified professionals to get in touch during its open recruitment days on March 21, 25, 28 and April 1. The company feels that it has the right credentials to offer interested candidates look-ing to tackle the challenges of the present day real estate market.

“The middle of a recession may seem an odd time to talk about re-cruitment. But, with steady business

flowing in, we have been able to beat all odds and competition and go ahead with an expansion in office space and headcount. While most companies are laying off their staff or shutting down, we are proud to be recruiting people and expanding. We believe in calculated growth and have strong business fundamentals. That is why the focus is on contin-ued investment in skilled personnel,” commented Laura Martorano, CEO, Leo Sterling.

“The real estate industry tests your capacity in a variety of areas each and

every day. This is an opportune mo-ment for us to access the right kind of talent and experience which is in surfeit. We are looking to recruit top end professional candidates, who are great deal makers, with a reli-able sales track record of results and a large network of hot prospects, positive attitude and heavily driven to business development,” she said.

LEO Sterling Real Estate deals with prestigious properties such as Burj Dubai, The Palm and The World islands, Jumeirah Golf Estate and Business Bay.

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For bookings and enquiries please do not hesitate to contact Radhika on 050 - 5646069

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Q&AYour questions answered by Jacqueline Latham, DLA Piper Middle East LLP

As a developer, I would like to know how I am supposed to use the in-terim register?

The Land Department has set up an online system called Oqood, through which a developer is to register all of the units in its project. To access Oqood, a developer must have completed a training course with the Land Department and have a password. Once the registration process is com-plete, a confirmation receipt will be produced by Oqood as proof of reg-istration.

I bought an off-plan property in Dubai directly from the developer last November, in a tower that is due to be completed in 2011. I now want to sell the property but will I need to inform the developer, so that the developer can amend the interim register?

As the first buyer of the property, you will need to contact the developer but only in order to obtain a no objection certificate (NOC) and at pres-ent the Landlord is entitled to charge an administration fee of Dh5,000 in respect of the no objection certificate. You, along with the prospec-tive buyer, will then need to approach the Land Department, in order to complete and register the transaction in the interim register: both parties to the resale transaction are each required to pay a fee of one per cent of the purchase price. As a seller, you will also have to pay a knowledge fee of Dh10, whilst the buyer would pay a knowledge fee of Dh380.

I am currently involved in a heated dispute with regard to a sale and purchase agreement I entered into last summer. Is mediation a pos-sibility?

It is understood that a law will be issued this month, which shall establish a

// LAWS & REGULATIONSUPDATES

new mediation centre to settle real estate disputes and shall subsequently avoid the need for parties to resort to the Property Court. The Property Court will in fact oversee the mediation centre, which is intended to be operational in April, but the mediation centre will speed up the process of settling disputes, since it is intended that cases can only be heard within a maximum time-frame of one month.

I work in an advisory position for a developer, which intends to start selling units off-plan although no groundwork has commenced on the project. I have heard that there are some new measures being intro-duced and would like to know how our project will be affected?

There is a possibility that new legislation may be implemented, which would link the sale of off-plan units to the actual achievement of certain construction milestones. It has been suggested that at least 20 per cent of the construction works should be completed before a developer can ob-tain RERA's consent to commence sales and that in respect of payments, a developer can collect an initial payment of 20 per cent of the purchase price of a unit, with subsequent payments to be linked to the construction timetable.

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MARKET TRENDS & ANALYSIS //LAWS & REGULATIONS//UPDATES

Most observers would agree that Dubai has experienced phenomenal growth in its real estate industry, especially during the last five years. Everywhere one looks, the evidence of this growth can be seen in the amazing display of glittering

hotels such as the Burj Al Arab, office buildings such as the Burj Dubai, which will be the tallest building in the world when completed, and shopping centres such as Mall of the Emirates with its indoor ski slope; in the creation of man-made islands such as the World Islands and Palm Jumeirah; in the development of free zones, such as the Dubai International Financial Centre, where companies can be 100 per cent owned by non-UAE nationals; and the list goes on.

Especially exciting to lawyers who have chosen to practice in Dubai is the constantly developing legal and regulatory framework that is neces-sary to provide the legal protection and clarity that property ownership and investment require in order for the Dubai property industry to be suc-cessful. In Dubai much of this framework in the real property area has only been in place since 2006. This article provides a brief overview of the major laws of this legal framework,

Registration of TitlePursuant to Dubai Law No. (7) of 2006, only United Arab Emirates ("UAE") and Gulf Cooperation Council ("GCC") nationals and companies wholly owned by such nationals have the right to own property interests in all areas of Dubai and can register their rights at the Dubai Land Department (the "Land Department”). Public joint stock companies and other companies that are listed on the Dubai Financial Market also are allowed to own property in all areas of Dubai and to register. Other nationalities and their companies are granted a right to own a freehold interest, a right of usufruct or a long term lease of up to 99 years in designated areas of Dubai. These designated areas are set forth in Regulation No. (3) of 2006 and include the

Overview of the real property laws of DubaiBy Raymond J. Termini, Esq.

World Islands, Palm Jumeirah, among others. Dubai Law No. (21) of 2006 sets forth the amended registration fees and provides that the purchaser shall pay a fee equal to 1 per cent of the sales price and the seller 1 per cent of the same.

Off-Plan Laws Dubai Law No. (8) of 2007 (the "Escrow Law") was enacted to provide leg-islative protection to purchasers in off-plan (i.e., pre-construction) transac-tions. A developer, that is a natural or legal person licensed by the Real Estate Regulatory Agency ("RERA") to carry on the activity of buying and selling properties for developing, who intends to sell off-plan units in Dubai and receive payments from buyers or financing parties, must regis-ter in the Register of Developers prepared at the Land Department before it can carry out these real estate development activities. The Law provides that this license can be cancelled if the developer does not commence construction within six months of the date it was granted approval to sell off-plan without an acceptable excuse. In addition, the developer must apply to the Land Department to open a Guarantee Account through which sums paid by buyers of units off the plan or paid by financing parties shall be deposited. As a general rule, monies can only be paid out from the Guarantee Account to settle the invoices of contractors and consul-tants engaged in the project; however, not all of the expenses incurred by the developer may be paid from the Account. For example, only five per cent of the proceeds in the Guarantee Account may be applied toward the costs of marketing the project, and no part of the proceeds may be used to meet the developer's general business overhead.

Dubai Law No. (13) of 2008 (the "Pre-Registration Law”) seeks to sup-plement the financial protection granted to the purchasers under the Escrow Law by introducing new mechanisms aimed at providing con-tractual protection for the purchas-ers. It provides for the creation of an Interim Real Estate Register to record all transfers of real estate units off-plan. Any sale or other disposition that transfers or restricts title or any ancillary rights shall be void if not re-corded in that Register.

As of March 2009, there are uncer-tainties with respect to some of the provisions of the Pre-Registration

Law. Although the Law states that any sale and purchase agreements that

Raymond J. Termini

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are not registered by October 30, 2008, are technically null and void, the Land Department is considering an extension to this deadline. In addition, if the purchaser defaults in its payment obligations and the developer elects to terminate the agreement, it is unclear whether the developer is entitled to 30 per cent of the purchase price or 30 per cent of the monies paid by the purchaser, as the Pre-Registration Law states; or 30 per cent of the purchase price plus 30 per cent of any further monies paid above 30 per cent of the purchase price as provided in the Administrative Circular issued by the Land Department. It is anticipated that an amendment to the Law will be issued that will address these issues, but until then, these issues will be determined by the Property Court applying the Pre-Regis-tration Law and the UAE Civil Code.

It is anticipated that future regulations will confirm that the maximum permitted variation in the size of a unit from that set forth in the sale and purchase agreement will be five per cent, so that if the unit as constructed is larger than five per cent, the developer cannot increase the purchase price, and if the unit is smaller by more than five per cent, the developer must compensate the purchaser for the difference.

On December 30, 2008, RERA announced that a developer would be restricted from collecting more than 20 per cent of payments on develop-ments until the developer had started construction. It is understood that RERA intends to recommend that two new laws be introduced that will provide that the developer will (a) be precluded from selling off-plan until it owns the land to be developed and has completed at least 20 per cent of construction, and (b) ensure that its payment plans under its agree-ments with its purchasers will be linked to milestones in the construction of the development, rather than be time-based.

Strata Laws Dubai Law No. (27) of 2007 provides for registration of jointly owned property, which covers two concepts of subdivision, namely (i) subdivision within buildings where common areas will be created, and (ii) subdivi-sion within conventional methods of horizontal subdivision of land where common areas will be created.

Tenancy Laws Dubai Law No. (26) of 2007 requires tenancy contracts to be in writing and registered with RERA. Certain tenancies, such as hotels, were excluded. Dubai Law No. (33) of 2008 amends the earlier 2007 law in several respects. All tenancy contracts, except free accommodations provided by employ-ers to their employees, are now required to be registered with RERA. The 2008 law also sets forth the procedure for amending the terms of the re-

newal tenancy a g r e e m e n t and permits f o r f e i t u r e rights to be exercised at any time during the term under certain circum-stances.

Dubai Decree No. (1) of 2009, which applies to both residential and non-resi-dential properties, prevents increases in rents during 2009 for tenants who are renewing rental contracts signed in 2008, as long as the rent value in 2008 was equal to or less by a maximum of 25 per cent than the average rents in the Index compiled by RERA. It also clarifies that RERA is the body to deal with any procedural matters regarding tenancies in Dubai and the Rental Committee is the appropriate body to hear any dispute re-lating to Dubai tenancies.

Mortgage Law Dubai Law No. (14) of 2008 stipulates that mort-gage contracts must be registered with the Land Department and must specify the size of the loan, the repayment period and the value of the property to which the loan is linked. It provides that mortgage lenders obtain prior-ity over unsecured lenders in the case of en-forcement and provides for a "court-assisted" process, rather than a "self-help" remedy which permits the lender to sell the property without having to go through a court process.

Conclusion These laws are positive moves in protecting the players in the ever-expanding real estate

development in Dubai. It is hoped and expected that their passage should inspire increased confidence to further the Dubai government's objectives as the real estate market continues to develop and mature.

Raymond J. Termini, Esq., is the resident partner in charge of the Dubai office of Patton Boggs LLP, [email protected]

Especially exciting to lawyers who have chosen to practice in Dubai is the constantly developing legal and regulatory framework

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MARKET TRENDS & ANALYSIS //

Law No. (16) of 2007Law No. (16) of 2007

LAWS & REGULATIONS//UPDATES

Law No. 16 of 2007Establishing the Real Estate Regulatory InstituteWe, Mohammed bin Rashid Al Maktoum, Ruler of DubaiAfter taking cognisance of Law No. 7 of 2006 regarding real estate registration in the Emirate of Dubai; and The Decree concerning the formation of the Land Affairs Committee 1960 Issue the following Law:

Article (1)This Law shall be called “Law No. 16 of 2007 Establishing the Real Estate Regulatory Institute.”

Article (2)

The following words and expressions shall have the meanings set out opposite unless the context shall require otherwise:

Ruler: HH The Ruler of Dubai Emirate: Emirate of Dubai Government: Government of Dubai Executive Council: The Executive Council of the Emirate Institute: The Real Estate Regulatory Institute Executive Director: The Executive Director of the Institute Department: The Lands & Property Department Owners Association: A membership organisation for owners of real estate units whether flats, floors or parts of land, in a joint property

Article (3)There shall be set up under this Law a public corporation called the “Real Estate Regulatory Institute” with legal personality and an independent financial and administrative structure. The Institute has full authority to perform legal acts in accordance with its stated objectives including the capacity to contract and may, in its own name, sue and be sued and appoint others to represent it for this purpose. The Institute shall be attached to the Lands and Property Department

Article (4)The head office of the Institute is to be situated in Dubai. The Institute may open branches in the Emirate and elsewhere

Article (5)The objective of the Institute is to regulate the real estate sector in the Emirate by participating in devising strategies for this sector and developing and executing the necessary work plans, including:

Translation and views supplied by Al Tamimi & Company and do not necessarily reflect RERA’s point of view

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Law No. (16) of 2007

Proposing the necessary legislation to regulate the work of real estate brokerage offices and owners 1. associationsIssuing regulations for the training and certification of real estate brokerage offices2. Licencing all activities relating to the work of the Institute including activities relating to real estate 3. development in the Emirate Accrediting banking and financial institutions which are certified to manage guarantee accounts 4. of real estate developments on behalf of real estate developers in accordance with applicable legislation Licencing and regulating real estate brokerage offices and monitoring and overseeing their 5. activities Licencing and regulating companies and establishments that manage real estate and residential 6. developments and monitoring and overseeing their activities Registering and attesting leases for the various kinds of real estate units in the Emirate in accordance 7. with such legislation as may be issued in this regard Monitoring and overseeing the activities of owners associations and auditing their accounts and 8. records Keeping track of property advertisements that are published in the various media operating in the 9. Emirate including those operating in free zones Providing support and advice on property valuation in accordance with the latest accredited 10. standards Issuing statistical reports and specialised research and studies on the property market including 11. any publications and information that aid such studies and offer insight into the property market in the EmiratePreparing and executing programme and projects that enhance the role of nationals in the real 12. estate sector and encourage their involvement in that sector Developing and implementing education and awareness programme on the rights and obligations 13. of parties involved in the real estate sector

Article (6)The Executive Board of the Institute comprises an Executive Director appointed by decision of the Chairman of the Executive Council and a number of staff in respect of whom Dubai Law No. 27 of 2006 on human resource management will apply

Article (7)The Executive Director of the Institute shall oversee the work and activities of the Institute and shall represent the Institute in relation to third parties including but not limited to:

Adopting the strategic plan and work plans of the Institute and submitting them to the Executive 1. Council for approvalImplementing the general policy that is approved by the Executive Council and its decisions in this 2. regard Proposing initiatives, programme and projects concerning the work and activities of the Institute3. Proposing an organisational structure and financial, administrative and technical regulations for the 4. Institute and submitting them to the Executive Council for approval Overseeing the work of the Executive Board of the Institute and hiring staff for the Institute 5. Preparing the Institute’s annual budget and submitting same to the Executive Council for approval 6. Exercising any other powers conferred on him by the Executive Council or under a decision issued 7. pursuant to this Law

Article (8)There are hereby transferred to the Institute the following functions of the Department:Regulating the work of real estate offices and real estate brokers Preparing studies and research on real estate Managing and regulating guarantee accounts of real estate developments Regulating and overseeing owners associations

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Law No. (16) of 2007

Article (9)Subject to the Article 6 of this Law, the Institute may, in its discretion, transfer staff engaged in the regulation of real estate at the Department to the Institute

Article (10)The Institute shall keep regular accounts and records that conform to commercial accounting standards. The financial year of the Institute shall run from 1st January until 31st December. The first financial year shall begin on the date on which this Law comes into effect and end on 31st December of the next following financial year

Article (11)The financial resources of the Institute consist of the following: Subsidy allocated to the Institute in the Emirate’s budgetFees the Institute charges for its services to the publicAny other resources approved by the Executive Council

Article (12)The Chairman of the Executive Council shall issue the regulations and decisions necessary to implement this Law

Article (13)Any contrary provision of any other law or legislation is hereby repealed

Article (14)This Law shall be published in the Official Gazette and shall come into effect on the date of publication

MOHAMMED BIN RASHID AL MAKTOUM RULER OF DUBAI

Issued in Dubai on 30th July 2007 Corresponding to 16 Rajab 1428 AH

RERA REGISTRATION NO 153

Dubai Real Times Apr 09

Documents

Transcript of Dubai Real Times Apr 09