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  • DUBAI | ABU DHABI | AL AIN | SHARJAH | JORDAN | KSA

    © Asteco Property Management, 2017 asteco.com IN THE MIDDLE EAST FOR 30 YEARS

    ASSET MANAGEMENT SALES LEASING

    VALUATION & ADVISORY SALES MANAGEMENT OWNER ASSOCIATION

    RESEARCH DEPARTMENT

    NEWS BRIEF 49 SUNDAY, 03 DECEMBER 2017

  • DUBAI | ABU DHABI | AL AIN | SHARJAH | JORDAN | KSA

    © Asteco Property Management | 2017 | asteco.com

    IN THE MIDDLE EAST FOR 30 YEARS

    Page 2

    ASSET MANAGEMENT SALES LEASING

    VALUATION & ADVISORY SALES MANAGEMENT OWNER ASSOCIATION

    REAL ESTATE NEWS

    UAE / GCC

    REAL ESTATE RISK AND INSURANCE

    AMLAK REDEEMS DH100M FROM MUDARABA INSTRUMENT

    MUMBAI DEVELOPER TESTS WATERS IN POST-RERA AGE

    MANAZEL EYES SAUDI REAL ESTATE PARTNERSHIPS IN 2018

    'CAN I REMORTGAGE IF MY VILLA NO LONGER HAS 25 PER CENT EQUITY DUE TO

    FALLING PROPERTY PRICES?'

    DUBAI

    DUBAI’S OFF-PLAN SALES TAKE A NOVEMBER DIP

    DUBAI’S HOTEL INDUSTRY COULD DO WITH A TWEAK

    DUBAI’S FREEHOLD OFFICES SEE A SALES SPIKE AHEAD OF VAT

    IDYLLIC URBAN LUXURY

    DUBAI'S TOP AREAS FOR HOUSE SALES AND RENTS

    WHAT IS A LUXURY HOME?

    DLD ORGANISES ROADSHOWS IN MOSCOW, LONDON

    FUNDAMENTALS OF DUBAI PROPERTY ARE IN TOP SHAPE

    WHEN OFF-PLAN SALES DOMINATED DUBAI PROPERTY

    HOW THE YEAR 2017 PANNED OUT FOR DUBAI PROPERTY

    DUBAI PENTHOUSE OR VILLA? FOR DH23.6M YOU CAN GET TWO IN ONE - IN PICTURES

    EXPO 2020 DUBAI SAYS DH10BN OF CONSTRUCTION CONTRACTS AWARDED THIS

    YEAR

    DUBAI LAND SALES SAID TO SOAR BY $8BN SINCE 2012

    THE SANCTUARY: AN OASIS OF CALM IN THE MIDDLE OF THE CITY

    CENTRAL PARK TOWERS AT DIFC ATTRACTS STRONG PORTFOLIO OF OFFICE AND

    RETAIL TENANTS IN 2017

    ABU DHABI

    A BIG-NAME PROJECT’S PULLING POWER

  • DUBAI | ABU DHABI | AL AIN | SHARJAH | JORDAN | KSA

    © Asteco Property Management, 2017 asteco.com

    DEFINING LANDSCAPES SINCE 1985

    Page 3

    ASSET MANAGEMENT SALES LEASING

    VALUATION & ADVISORY SALES MANAGEMENT OWNER ASSOCIATION

    REAL ESTATE NEWS

    ITINERA GHANTOOT NAMED LEAD CONTRACTOR FOR REEM MALL

    UAE'S MANAZEL SET TO HAND OVER ABU DHABI VILLAS

    NORTHERN EMIRATES

    FORUM TO DISCUSS GROWTH OF SHARJAH HOSPITALITY SECTOR

    SHARJAH RULER APPROVES 3.3KM CITY BEACHFRONT DEVELOPMENT

    INTERNATIONAL

    US EAST COAST REALTY OPTIONS FOR GCC INVESTORS

    INDIAN DEVELOPER LEARNS FROM DUBAI ON PAYMENT SCHEMES

    TURKEY, EGYPT PROPERTY BENEFIT FROM SHIFTING GEOPOLITICAL SANDS

    FIVE REASONS WHY THE WORLD'S PRICIEST PROPERTY MARKET KEEPS ON SOARING

    BIG SHIFTS COMING TO THE U.S. HOUSING MARKET IN 2018

  • DUBAI | ABU DHABI | AL AIN | SHARJAH | JORDAN | KSA

    © Asteco Property Management, 2017 asteco.com

    DEFINING LANDSCAPES SINCE 1985

    Page 4

    ASSET MANAGEMENT SALES LEASING

    VALUATION & ADVISORY SALES MANAGEMENT OWNER ASSOCIATION

    REAL ESTATE RISK AND INSURANCE Wednesday, November 29, 2017

    As an owner-occupier, your primary risk would be damage or destruction to your real estate asset. As such your

    insurance will likely be for a lump sum amount or full replacement or reinstatement of the asset. Owner-

    occupiers may also insure for business interruption to cover them for lost income when the premises becomes

    unusable due to damage. This may be important, for example, where the owner has a mortgage and would have

    difficulty in meeting the repayments.

    An owner would generally take out insurance for third-party risks: for example, where a visitor suffers an injury

    caused by or occurring on the real estate asset. In transferring ownership of a real estate asset, the buyer and

    seller will need to establish a clear date for the risk of damage or destruction of the real estate asset to pass. The

    logical time for the passing of this risk is the date the title is transferred. Generally the seller will cancel the

    insurance on this date and the buyer will implement its own insurance. There may also need to be a clear position

    in the sale-and-purchase contract as to what may happen should damage occur between the date of contract and

    the date of title transfer.

    Where a real estate asset is tenanted, the lease contract may expressly address the allocation of risk between the

    landlord and the tenant and require the parties to obtain insurance.

    It is not possible to map out all of the possible variations in such arrangements, however, the following represents

    a fairly typical allocation of risk and insurance in a retail/office unit context.

    Fit-out period

    The landlord will generally require the tenant to have or procure contractors all risk insurance as well as worker’s

    compensation insurance. The landlord will generally require that the landlord is named co-insured and specify the

    level of cover the tenant must obtain or procure.

    Typically the insurance undertaken during the fit-out period will be obtained by the contractor completing the fit-

    out. The tenant will need to ensure that this insurance is obtained and contains the relevant covenants sought by

    the landlord under the lease agreement.

    Damage and destruction of the building

    The landlord would normally obtain all risk building insurance but may require the tenant to insure for damage

    arising out of the tenant’s or occupiers’ negligence. This could result in double insurance and an alternative

    approach would be for the tenant to be named as a beneficiary of the landlord’s insurance. This is, however, not

    the practice in the region.

    Landlords will typically exclude liability for any other types of losses sustained by the tenant — for example,

    economic losses when the tenant is unable to operate from the premises. Were the landlord to face a claim by

    the tenant in these circumstances, it may be that the landlord’s third-party liability insurance provides a measure

    of protection to the landlord. As the landlord will exclude liability for the same, the tenant may wish to obtain

    insurance for business interruption.

    As the landlord will be required to cease charging rent for the period the premises cannot be occupied, the

    landlord may wish to obtain loss of income insurance. It is common in the context of a commercial office or retail

    unit lease that the tenant would meet the landlord’s insurance costs as part of the service charges charged to the

    tenant.

    Tenant contents damage

  • DUBAI | ABU DHABI | AL AIN | SHARJAH | JORDAN | KSA

    © Asteco Property Management, 2017 asteco.com

    DEFINING LANDSCAPES SINCE 1985

    Page 5

    ASSET MANAGEMENT SALES LEASING

    VALUATION & ADVISORY SALES MANAGEMENT OWNER ASSOCIATION

    The landlord may specifically require the tenant to insure the tenant’s contents, fixtures and fittings and to name

    the landlord as co-insured and/or require the insurer to provide a waiver of its right to sue the landlord in any

    case where the landlord’s negligence causes the damage.

    Third-party injury

    Third-party injury claims are civil wrongs and accordingly the party claiming damage or injury does not need to

    establish a relationship in contract with the party causing the harm. Generally, such claims will arise due to the

    party in control of the area not taking due care to ensure that areas are kept safe.

    Accordingly a landlord may wish to insure for any injuries that may occur to third parties in common areas of a

    building. As the tenant may also exercise control over their premises, the tenant should also take out insurance

    for such claims.

    Other third-party risks

    Other third-party risks arise in multi-tenanted buildings in that if a tenant damages the building, this may cause

    losses to other tenants. The landlord can seek to exclude liability for such claims in the contract with each tenant,

    but would very likely also cover such risks through their own third-party policies.

    As a tenant will have no ability to mitigate the possibility of claims from other tenants in contract, the tenant

    would need to obtain its own third-party policy to cover such risks.

    Developers, investors

    Throughout the construction of a project, the contractors will undertake the necessary insurances. As the

    developer will be paying progress payments throughout the construction, it is in the developer’s interest to

    ensure that this insurance is in place and that the developer is also co-insured under the contractor’s policy. It is

    also important to specify clearly under the construction contract when the developer shall be required to accept

    risk for the property following completion of construction and, therefore, should obtain its own insurance.

    If the project involves off-plan sales, then, once the development is completed, the developer will start handing

    over the units to the investors. Generally, in the case of jointly owned (strata) property, insuring the building,

    including the usual fitting and fix