Dubai Property & Real Estate Blog

What to do as a Real Estate investor in present Dubai economic conditions

2009-06-29T21:56:00.001+04:00

Once the apple of real estate investor’s eye, Dubai has now become a thorn in the flesh for many of them. Especially for those who jumped the gun by ignoring all instructions and precautionary measures repeatedly thrown at them by Dubai regulatory authorities, as well as many real estate veterans, as they made some investment blunders whilst they were enchanted by the remarkable growth of real estate sector. Putting in Dubai real estate was certainly not a bad investment decision, but being incautious was. Even though the stupendous growth made Dubai look like an out-of-this-world place, in reality it wasn't, which means the rules of economics were as applicable to Dubai market as they are to any other market in the world.

So what’s there for investors, now when the Dubai dream is over …?

Before we continue to answer this question, let’s respond to this one. Is the Dubai dream really over? To tell the truth, all negatives reports and stories coming from the Dubai circles are having a little bit of hyperbole, there’s no denying that Dubai real estate market is dealing with some serious setbacks, but such problems were always expected. Dubai was never going to escape the consequences of global recession, especially when it mostly depends on tourism and finances coming from the west in form of real estate investments, as it is not oil-rich like its neighboring Emirates (e.g. Abu Dhabi).

Investors, who invested in off-plan properties without checking the credibility of the developer or real estate brokers with RERA, are probably the most grief-stricken group, as more and more developers are running out of finance to carry on with construction work, at the same time they are unable or reluctant to pay back. These investors are left with no choice but to file a suit with Dubai real estate court.

For those, who are worried because of sharp decline in prices, the best option is to hang around. Chances are that we will see recuperation as soon as we recover from financial crunch. It's only a matter of people getting out of their saving mode and touring Dubai (after all tourists attractions like burj-ul-arab or shopping malls have not vanished, they are pretty much there). Dubai is also looking towards a bail-out from Abu Dhabi, while Dubai government is also working to keep the damage caused by recent crisis in check, even if it requires the implementation of the new villainous media law.

Skyscrapers – History and future

2009-06-24T23:03:00.001+04:00

Architecture is the alphabet of giants; it is the largest set of symbols ever made to meet the eyes of men. A tower stands up like a sort of simplified statue, of much more than heroic size. (Gilbert Keith Chesterton)

Man has always been daunted by exceptionally tall buildings (or structures), that’s the reason that more or less, all Seven Wonders of the World are essentially man-made structures and each of them has to do something with structural significance. Gigantic structures known as skyscraper are looked upon as a symbol of power, prosperity and pride for the city or the emperor. From the first skyscraper (Home Insurance Building, Chicago) to the latest jaw-dropingly tall Burj-Dubai, these building have continued to amaze the spectators and inspire other architects to dream of coming up with an even taller structure. The race continues, and we can’t really predict on how tall will be the ultimate skyscraper.

History:
We don’t know much about the very first construction in the human history or first man-made building for that matter, but we can safely assume (going by the human nature) that from the very first construction, man had this desire to build and posses the biggest or the tallest one. Apart from being a status emblem, skyscrapers also comes handy in the urban cities where land is scarce and the demand of residential and commercial building is high. Even though we find many examples of tall or exceptionally large buildings from the ancient times, it was actually the scarcity of land that prompted the construction of these concrete giants. The construction of skyscrapers kicked in from the Chicago city back in late nineties and the trend was followed by almost all major cities in the world.

Present & Future:
Now days, skyscrapers are looked upon as an average building in well developed cities unless they are exceptionally high or brilliantly designed. Hong Kong is said to have the most skyscrapers in the world, other cities with a considerable number of tall buildings include New York, Tokyo, Chicago, Sao Paulo (Brazil), Manhattan, Shanghai, Toronto, etc. The major break through in skyscraper history came when the old model, which was supported by steel frame, was replaced by frame-tube structure (and many other models) by Fazlur Khan, probably the most influential architect in the history of skyscrapers. Some of the worth mentioning skyscrapers of present and future are Burj Dubai, Sears Tower, Taipei 101, Empire State Building, Shanghai World Financial Center, Jin Mao Tower and Bank of China tower.

Role of recently initiated Dubai Real Estate Court

2009-06-15T22:15:00.001+04:00

At last some relief for investors, as Dubai Real Estate court (AKA Dubai property court) in its first and extensively publicized ruling has ruled in favor of the investor, asking the developer (Mizin) to reimburse the payments made to them by the plaintiff. Prior to this decision, many investors were stuck after they've decided to invest in some off-plan properties, where the construction works never begun or were brought to a standstill in preliminary stage. At a time, when the investors were getting alarmed to a greater extent after listening to similar stories coming from everywhere, it was very important for regulatory bodies to restore investor’s trust and tone down the “scam developer’s mafia”. Bear in mind that RERA is also going to introduce a new rating system for developers, these ratings will be based on their projects, financial stability and presence in the market.

Dubai property court has been looked upon as a ray of light by investors; remember Mizin is a subsidiary group of Tatweer that happens to be one of the biggies in Dubai real estate market. If Dubai Real Estate court can continue to serve justice in the same manner (with a little more speediness though), it’ll give a huge boost to investor’s trust.

Role of Real Estate Court:
Despite the continuous words of warnings issued by RERA for investors to be on your guard when dealing with developers or brokers who are not licensed by RERA, or when there’s no Real Estate Trust Account involved, many investors still fell in the trap. Sometimes, because they were too impatient to check into these details and sometimes because these forewarnings never reached them, as a result more and more disgruntled investors were creating a negative buzz about Dubai real estate market.

In its early days, role of Dubai Property Court will most probably be limited to dealing with these displeased investors and developers, as both parties find themselves in hot waters because of ongoing financial crisis. Developers are struck by the lack of finances to carry out constructions, while investors are getting panicked even if there’s a little postponement in the completion date of the project. Also, among these genuinely victimized investors, there are speculators who do not want to make further payments because the prices are not rising to their liking. Therefore, the court has to walk on a fine line, as both developers and investors are equally important for a vibrant real estate market and upsetting any one of them can prove to be counter productive for Dubai market.

Dubai real estate market putting up with recent setbacks

2009-06-02T23:08:00.000+04:00

Dubai would have been able to get away with these setbacks, if there was just one or two at a time, but they arrived in such succession, that Dubai real estate market was left in the lurch by the severity of these setbacks. Some of these debacles could have been avoided, while others were almost unavoidable. Let's look at some of these disasters holding up the growth of Dubai real estate market for the time being.

Financial crisis effecting global economies:
Financial crisis hit Dubai in many ways. There was so much construction work going on in Dubai, majority of these development have to be stopped because of serious shortages of finance. So many expatriates who were directly involved as the labors or working in another capacity at these construction projects were discharged from their duties, as a result they were forced to leave as per the Emirate laws. The exit of these workers resulted in further lessening in demand, which was already dwindling. Some other reasons for low demand include the completion of numerous residential and commercial units improving the supply side, abnormally high prices, and investors taking more and more interest in the neighboring emirates like Ajman or Abu Dhabi real estate. Plus, as it happens in recession, people are spending less on leisure activities like shopping or touring the high-profile places like Dubai.

Low Oil Prices:
Although, Dubai do not depend too much on its oil exports but the region surely does, especially its neighbor Abu Dhabi with considerably large reserves of oil. Dubai always anticipated a bailout in case of financial crisis. Now, Abu Dhabi whose economic stability largely depends on crude oil export (the prices of which are going down), is a little reluctant to support Dubai with a large enough financial aid. That is one of the main reasons why Dubai is left high and dry.

Amplification of the crisis by reporters:
Dubai has always been fortunate (and now unfortunate) enough to inspire reporters and journalists to put in a little bit of exaggeration when reporting about Dubai. The whole growth scene was covered like there's nothing stopping Dubai, and now the debacles are projected as the tragic end to Dubai's fairytale. It's funny to see how quickly the number of cranes at Dubai's skyline has been replaced in the news coming from Dubai, by the number of abandoned cars at airport parking.

Still there’s a silver lining in the cloud for serious investors and that is after experiencing abnormal highs and lows, Dubai will eventually become a rather normal real estate market, once the speculations are decelerated and the prices settle on a more realistic levels, it'd be much safer for the serious investors.

UAE real estate regulatory agency (RERA) - Purpose and Functions

2009-04-07T23:05:00.000+04:00

Dubai government has been proactive from the day one in dealing with the problems related to real estate market; issues are seriously dealt with before any of them can damage the confidence of investors in Dubai real estate market. Since 1960 Dubai land department has been keeping an eye on all the real estate sales and purchase matters in Dubai. On 31st July 2007 RERA (Real Estate Regulatory Authority) was launched as an agency under the Dubai land department by his highness Sheikh Mohammed Bin Rashid Al-Maktoum, ruler of Dubai.

Although it was launched under Dubai land department, it is more of an autonomous body, with main objectives being monitoring and regulating Dubai real estate market. People tend to mix these two, though the objectives are same, RERA and Dubai land department differs in their priorities, functions and authorities.

Regulatory measures and standardization of the market:
Dubai attracts investors from all four corners of the earth; also there are expatriates coming from all over the world, then there are UAE locals and developers, all adding into the numbers of stakeholders in Dubai real estate market. Keeping in mind the countless developments, purchases, sales, rentals, investments and all sorts of transactions going around in Dubai, a highly efficient and focused regulatory body was needed to look into all of the problems arising from these transactions. RERA works towards managing Dubai real estate market in a way that guarantees the interest for all of the concerned parties.

Protecting investors through legislations and registrations:
RERA is working for the security of investors and transparency for all by registering real estate agents, developers, and brokers, etc with them, till date 823 developers, 1790 brokers and more than 950 projects are registered with RERA. Investors are advised to deal with these registered developers (RERA also manages developers trust accounts) and brokers with complete sense of security.

RERA and Dubai real estate:
Since its launch, RERA has been busy laying out rules and legislation for all sorts of agreements, contracting parties, licensing, compiling standard agreement forms for real estate transactions, keeping a check on all parties involved in Dubai real estate market including buyers, sellers, investors, advertisement agencies, agents, brokers and developers. The official website of RERA (www.rera.gov.ae) is a great source to get all the authentic information regarding Dubai real estate laws (many new laws have been introduced recently), code of ethics, news, list of approved developers, brokers, projects or trustees, research studies and survey reports. You can also sign up and submit your complains with them.

UAE - An insight into one of the most developed economy

2009-03-30T23:42:00.000+04:00

Whether we call it a recession or not, one thing is sure, we are going through a severe economic crisis, which will be discussed (once over) in the Economics syllabus and debates, in coming years. In this global economic crisis, where the likes of United Estates or European economies are feeling the heat, United Arab Emirates economy continues to head into positive direction. All the economic indicators and reports are also confirming to the fact that there will be no slowdown in near future. Let's have a look at this thriving economy and the contributing factors.

Oil & Gas reserves:
UAE has almost 10 percent of world’s oil (proven reserves), while the gas reserves amount to 4 percent of global reserves. According to UAE government portal, these reserves can last well over 150 years. Recently when soaring oil prices took a toll on all and sundry, this part of the world remained mostly unscathed. Among the seven estates, Abu Dhabi is the biggest producer, producing more than 80 percent of the total UAE oil and gas production. There’s hardly any chance that oil consumption and demand will go down in future, so the black gold will continue to fuel economic growth of UAE.

Construction & Real Estate:
Dubai has done remarkably well as far as real estate market is concerned. Grand projects like “The Palm”, “Burj ul Arab” or “The World” managed to draw investors from all over the world. Abu Dhabi and other estates are also working in this sector. The demand will be much stronger than the supply even after the completion of ongoing projects. Real estate investors are now much more interested in UAE real estate, after the credit crunch in US market, considering it a safer option than others.

High-Class Tourism Industry:
Biggest shopping mall, tallest building of the world, indoor ski resort, white beaches, deserts, man-made islands, some of the most luxurious hotels in the world, crime free environment, rich cultural heritage, international sports event, to sum up, UAE has got tourists attractions in abundance. Tourism industry contributes significantly in over all GDP of UAE and it will continue to do so in the coming years. Many development projects are in progress; world-class airports, bridges and other infrastructure programs are about to complete.

It’s not that UAE is somehow immune to whatever happens globally, but with ample oil reserves, strong real estate market, foreign investments and an exuberant tourism industry, UAE is better equipped to put up with such situations.

Dubai real estate becoming home to celebrities

2009-03-25T19:40:00.000+04:00

Not that Dubai needs some celebrity endorsement to gain popularity; the "city of gold" is a star in itself. When a celebrity purchases some villa, island, or just put his/her name to some building, it's hard to determine who's being promoted? Dubai? The star? or both of them? Dubai has got a celebrity status, that is why celebrities are more than happy to attach their names with the developments going on, some have done it by purchasing a piece of property, others by giving their names to some development, while some are trying their luck in designing hotels or golf courses. Although, the property has got to deliver what it is supposed to deliver (yields on investments, luxurious lifestyle or world class business facilities), still nobody minds paying a little more when they know they will be getting a villa in the neighborhood of David Beckham or Brad Pitt.

Big names from Sports world:
Sheikh Mohammed bin Rashid Al Maktoum presented a whole island (in "The World") to Michael Schumacher at his retirement, probably one of the most expensive publicly known gifts to an individual in recent times. Schumacher involvement doesn’t end there; we have got a whole Michael Schumacher Business Avenue at Business Bay as well. Similarly Boris Becker has a 19-storey building named after him. ACI Real Estate recently launched "Boris Becker tower" in the same district. Talking of tennis celebrities, everybody knows the famous friendly match played between Roger Federer and Andre Agassi at the helipad of Burj Al Arab hotel. Then we have "Tiger Woods Dubai", a golf resort designed by non other than Tiger Woods himself. David Beckham represents the football stars at Dubai, who owns a luxurious Villa at Palm Jumeirah (though for the time being, his in-laws are more likely to occupy it).

Showbiz Biggies:
Dubai government is trying to make Dubai the prime destination for tourists, and what better way to attract people all around the world than bunching up some of the most famous showbiz names in Dubai, one way or another. Brad Pitt, Angelina Jolie, Hillary Swank, Kylie Minogue, Giorgio Armani, Carlos Santana, Shah Rukh; the names are big enough to pull crowds on their own. One of the hottest couple in Hollywood (at least among those, who are still together) Angelina Jolie and Brad Pitt have reportedly bought an island in "the world" Hillay Swank and Shah Rukh Khan are endorsing some property developments (While SRK owns an address in Palm Jumeriah as well). More than 2000 celebrities from all over the world flocked to Dubai for a grand opening ceremony of Hotel Atlantis, where Kylie Minogue and Michael Jackson performed.

With so many celebrities, VIPs and super starts showing up at Dubai, Dubai will soon become an ideal spot for investors, businessmen and tourists alike (oh and paparazzo’s as well).

Year 2008: A peep into the future of Dubai property prices

2009-02-16T15:47:00.000+04:00

Before we look into Dubai real estate prices and try to draw conclusions on what we can expect in future. Let's have a look at some basic factors, which helps in assessment of property prices and real estate valuation. These factors are

1. Demand & Supply
2. Cost of building
3. Buyer's income
4. Cost of financing
5. Competition

Real estate prices are hugely affected by the principles of demand & supply. If the supply surpass demand, the prices will start going down, in other case where demand is higher than supply, we will see an upsurge in prices. Cost of financing comes next, in majority of mature real estate markets; most buyers rely on mortgage and other means of home finance to purchase a home or property. Rate of interest on these loans can influence the property prices. Same is the case with building materials and labor cost. Average income of potential buyers and competition can also have an impact on prices.

Coming back to Dubai, the property prices have been on a rising streak ever since the Dubai Government allowed the foreigners freehold ownership in some areas. The demand was much higher than what the existing developers were able to supply at that time. More and more expatriates meant a constant rise in rents that also fueled the property prices and they kept going up. Dubai and other estates enjoy a very good per capita income (thanks to all those petrodollars), plus Dubai had no immediate competition from neighbor estates in the beginning (Abu Dhabi, Ajman, etc have only recently started to offer an alternate to Dubai real estate), these factors combined with the hype some of the mega developments (Palm islands, Burj ul Arab and Dubai mall to name the few) got, helped the market to maintain the price increase all along those years. Prices not only increased, they actually doubled or tripled.

Things have started to change a little bit now, as more and more developers have entered in the market and lots of projects are now in completion phase, supply is quickly catching up with the demand. Expatriates are forced to find a residence outside Dubai because of some abnormal rises in rents. Ajman and Abu Dhabi are now offering the investors some equally profitable opportunities. Keeping all these factors and changing scenarios in mind, we can safely conclude; that while it will take some time before we see a drop in Dubai property prices, the rate of growth is about to slow down in coming years.

Property flipping in UAE and its consequences

2009-02-09T15:13:00.001+04:00

Property flipping occurs when an investor purchase some property and immediately sell it to another buyer for profits. Technically the property owner just flips it over to the next buyer and secures profits. Fix and flip procedure is the same except that the investor will go through some basic construction or maintenance work, just to make it sellable or improve its price (adding no value).

Property flipping is also used for mortgage fraud (often with the help of property appraiser and buyer), which is illegal and unethical. Property flipping is a practice commonly observed in real estate investors at rapidly growing real estate markets. Where investors are keen to gain the maximum profits with the growth, this type of speculation based property flipping is bound to happen in thriving markets but things can get out of control if it goes unchecked for a long time. Abnormal hikes in real estate prices and increase in cost of living are associated with property flipping.

Property flipping differs from the usual real estate sales and purchase. Property flippers are essentially looking to resell the property as soon as possible, in case of fix and flip the maintenance work is also of a very basic or temporary level. They are looking to skip through all of renovation and paper work swiftly; main focus is on reselling as quickly as possible rather than adding value. Property flipping is like a fast-forwarded process of normal real estate buying and selling. It has been observed that if the property flipping is not controlled, all stakeholders will suffer including the buyer, lender, residents, government and the real estate market itself.

UAE real estate market is one of the most dynamic markets these days. The kind of growth it has witnessed in recent years has made it an ideal spot for those who rely on property flipping to make quick profits. Property flippers do not like uncertainty, and unlike other major real estate markets, Dubai and UAE real estate markets are not going through the normal uncertainty seen everywhere else. That is why; laws are now introduced to rein in the practice of property flipping in UAE to protect serious investors and developers. A new law in Dubai makes it a compulsion to register with the land department before the owner resells. The delay caused by this registration work will discourage the non-serious property flippers. Also, there are some tax charges that you must pay when flipping property in UAE.

Dubai Real Estate & Investment Events and Conferences

2009-02-02T14:33:00.000+04:00

Investment events are a great place for “business to business” and “business to customers” interactions. An investment event at the place like Dubai makes it even more useful for participants. Ever since Dubai started on its way to become a real estate force and a tourist's heaven, the investor’s interest has only mounted with the passage of time. Dubai is probably the most sought after destination in terms of property investments. Other estates, especially Abu Dhabi, Ajman and Sharjah have also shown interest in developing their real estate industry on same lines and with equal intensity. If you are looking to get a hold of what's going on in Dubai & UAE real estate markets and what's on the radar, then these real estate & investment events are the place to be.

Cityscape:
The largest real estate investment and development exhibition in the world, Cityscape 2008 got more than 50,000 industry professionals in 2007. This year event, expected to be held from 6 - 9 October, 2008 is all set to record an even bigger success. According to an announcement made by organizers this year's event is a guaranteed sell out, all the major developers like Nakheel, Aldar Properties, Tameer, Saraya holdings have already signed up. Another highlight for this event will be the Cityscape Architectural Awards 2008.

Real Estate Investment World Middle East 2008:
If you want to equip yourself with a better understanding of UAE real estate market in global perspective, private equity investment prospective, financing, major developers in Middle East market, then you should attend the Middle East real estate investment conference at Dubai, with some real experienced and knowledgeable speakers providing insights into these sectors.

Private Equity MENA 2008:
Private Equity Mena 2008 conference will be focusing on private equity industry in Middle East and North African countries. More than 60 speakers specializing in their own specific fields will speak to the participants. Investors looking to invest in Middle East private equity industry should attend this conference, which will take place in Dubai from 17 -20 November.

Some other worth mentioning events are “Facilities and Asset Management Conference”, “World Architecture Congress”, “Hotel Tourism Investment and Development Conference”, “Real Estate Leadership and Strategy Summit”, “Construction & Building Materials Quality Conference” and “The Residential and Commercial Interior Design and Decoration Conference”. Apart from being highly informative, these events can be a great place to meet like minded people and make business relations.

Cost of living in Dubai and its effects on Dubai real estate

2009-01-27T11:37:00.000+04:00

You’ve got a job offer from some Dubai based company and you are confused if your salary is good enough to support you and your family, in case you decide to shift? Are you mesmerized by the spectacular developments going on in Dubai and you are planning to tour Dubai in your vacations? Or you are interested in investing in Dubai real estate and you need to know the cost of living before you finalize your investment decision? In any of the above scenarios, you must be looking to get an idea of cost of living in Dubai. Cost of living is generally described as the cost of basic necessities of life. Let’s have a look at what kind of prices you can expect for these basic necessities like residence, food, transportation and entertainment.

Food & Drink:
Dubai has got a variety of food, both in terms of cost and cuisines. Fast food chains (McDonalds, KFC, etc) are still relatively cheaper than other big cities; also the South Asian food restaurants offer quite inexpensive meals. If you are living on a limited budget then going for the locally made food items can be a wise move, instead of buying imported stuff. You don't need to worry about quality in either way. Similarly, the prices of drinks also differ; Alcohol is expensive (and available only at licensed bars and restaurants) however soft drinks are not that costly.

Shelter:
Dubai is regarded an expensive city mainly because of it's ever increasing rents and real estate prices. The chief reason behind these hikes is the demand factor. If you are visiting Dubai as a tourist, you will be spending a big part of your budget on your hotel stays. If you need to save on that, try searching for some less expensive hotels in the old city. If you are going there to work, chances are that your employer will provide you with accommodation. If not, you can share residence with someone or get a place to live in Sharjah or Ajman, which are not far away.

Transportation & Entertainment:
United Arab Emirates has got some of the largest oil reserves so oil is quite cheap in this part of the world. If you are having your personal conveyance, you’ll find traveling quite easy on your pocket. Other options include bus service, metro or taxis (they can be expensive though). Dubai is not short of entertainment options either, which may seem a little bit expensive but given that they are often once in a lifetime experiences, they are well worth it.

Real estate prices & rents:
Someone coming from London or Tokyo will not find the city extremely expensive but the prices do hurt expatriates arriving from countries like Pakistan or India. Sky rocketing rents and high prices are making it hard for lower class (which mainly consists of labors) to reside in Dubai. More and more workers are now looking to settle in the neighboring estates where rents are much lower than Dubai.

Comparing Chinese real estate and Dubai real estate markets

2009-01-21T15:21:00.000+04:00

Chinese and Dubai real estate markets have many things in common. They both kick started at almost the same time, the amount of construction work seen in Dubai and China at that time was seen nowhere else, both economies have seen a constant upsurge despite recession all over the globe and a healthy growth rate has been witnessed in both Dubai and Chinese property prices throughout these years. By comparing these markets, we can get an idea on what sort of changes we can expect in near future.

The beginning:
Dubai real estate market soared in 2002 when foreigners were allowed to purchase and own properties on freehold basis. Chinese real estate market started to show signs of growth in 2001 when China was all set to enter WTO and Beijing was announced as the host of Olympics 2008. The governments of Dubai and China have invested heavily on infrastructure since then and many investors’ friendly laws were introduced.

Acceleration:
Since the beginning, both the economies and real estate markets of Dubai and China have grown in tandem. The sustaining factor in Dubai economy has been its oil reserves and tourism industry, while the China excels in exports. Both of them have seen stacks of foreign investment coming into their economies.

Great momentum:
Real estate markets in China and Dubai have shown a robust progress in demand and prices. Both have their mortgage markets performing really well unlike the mortgage crisis seen in major real estate markets like United States. As stated above, there has been a lot of spending on building infrastructure like roads and airports. Governments are actively involved in making all the right moves needed to maintain this momentum.

Amazing Architectures:
If Dubai has amazed the world by some of the most marvelous designs in real estate, China has not been far behind. Dubai has Burj Dubai as the world’s tallest building; China came up with a magnificent 101-story Shanghai world financial center. Ski Dubai is regarded as one of the largest indoor ski resort, while National Swimming Center “Water Cube” is equally unique. Dubai rotating skyscraper stunned people all around the world, so did the design of Central Chinese Television CCTV in Beijing.

What the future holds:
The boom is almost over in Chinese real estate market, while Dubai market is also showing signs of losing the pace to some extent. Although, there are predictions of growth getting a little sluggish, there is still some room for growth in both real estate markets.

Benefits you can get by investing in Sharjah Real Estate

2009-01-12T10:43:00.000+04:00

Covering 2600 km, Sharjah is the third largest emirate in the United Arab Emirates, known for its rich cultural heritage, mosques, museums, souks and cricket matches. Like all other emirates, its economy is powered by oil and gas reserves that were discovered back in 1971. Since than it has made a lot of progress but it differs from other estates in a unique manner. Sharjah has preserved the cultural roots and values all along. If you are visiting UAE as a tourist and finding it hard to explore the real Arab and Islamic culture in places like Dubai and Abu Dhabi, try visiting Sharjah for that purpose. You will not be disappointed.

Pros and Cons of Sharjah Real Estate:
Sharjah hasn't joined the real estate race as yet; although it is picking up but huge skyscrapers and mega structures are not sprinkled all over the place as yet. Property prices and more importantly rents are much lower than Dubai; this is the reason why most of the expatriates working in Dubai now choose to live in Sharjah. Sharjah has a relatively strict decency law in effect that prohibits from alcohol consumption and other similar activities. So some conventional religious families will also prefer to reside in Sharjah as compared to Dubai or other estates.

Sharjah has not introduced freehold property zones like Dubai, Ajman or Ras Al Khaimah, and 99-years leasehold is the best form of ownership foreigners can acquire. But there are possibilities that Sharjah Government will do so in the future, and as it happened in the case of Dubai or Ajman, it will be followed with immediate investments and price hikes. With all these positives and negatives, Sharjah provides a different set of opportunities, which may not be as lucrative as Dubai or Abu Dhabi in short terms but can be equally or even more rewarding in some years.

Nujoom Islands:
A mega project by all means, this is the largest residential and commercial project going around in Sharjah with an estimated cost of $4.9 billion. Nujoom Island is a set of 10 islands, separated by water channels. A refreshingly positive change is its landscape division; just 40% land will be used for buildings while the remaining 60% of space is allocated to canals and green spaces, grounds and parks. These islands are located at the coastline of Al Hamrya, which is really close to Sharjah international airport. The developers, Al Hanoo Holding Company is expecting to complete the work by 2010.

Ajman freehold properties - Advantages and Demand

2008-12-29T11:55:00.000+04:00

Freehold ownership gives the owner absolute right over land or property. He can build anything (which does not violate the country's law in other ways), resell to anybody, or rent it on whatever conditions. Unlike most other parts of the world, not everyone was granted the freehold ownership in UAE sometime ago. Foreigners were only allowed to rent properties, or at most a 99-years leasehold was all they could get. Most investors were reluctant to invest in UAE real estate back then, given the limited set of benefits they were able to obtain out of that investment. It was the Dubai government, who broke the shackles and came up with some freehold property zones. Foreign companies and individuals were allowed to acquire freehold ownership in these areas. Although the owners were not granted permanent residence visas, as advertised by some developers, still the step really worked for Dubai real estate and an investment boom followed. After that, it was just a matter of time that other estates started to follow in Dubai steps.

Ajman, the smallest in United Arab Emirates was the second one to follow in 2004 after Ras Al Khaimah. Ruler of Ajman, Sheikh Humaid Bin Rashid Al Nuaimi Amiri has recently issued new law under Decree No. 7 and 8 for Ajman real estate regulations. The introduction of the new law resulted in immediate price hikes as Ajman cemented its place in the real estate investor's next priorities list. Such investment opportunities are quite rare these days where capital appreciation can show a 200% growth with seemingly less risks involved than any other investment alternates. Growing population, high demand, low prices, investor-friendly regulations, these are the reasons that despite being the smallest of all seven estates, Ajman is next only to Dubai and Abu Dhabi in terms of real estate growth in UAE.

Ajman actually bypasses Dubai and Abu Dhabi as an investment prospect in terms of short-term gains because the prices are significantly low as compared to Dubai. More and more people are looking to live in Ajman, which is only at 30 minutes drive (approx 35 km) from Dubai. Being so close to Dubai and anticipated to grow significantly in coming days, Ajman presents an excellent opportunity for those who were priced out of Dubai property market. Great location, Freehold properties, more than 20 years of tax-free operations, no personal income tax and many other advantages have helped to set Ajman property demand in the right direction.

Recession looming at "Recession Proof" economies – A UAE Perspective

2008-12-23T11:36:00.000+04:00

A different economy, different parameters, and a different scenario altogether, recession is here and apparently it's here to stay. If you are an aged fellow, you'd know that these calamities come and go, but if you are relatively young (or someone affected by it), you'd be feeling like a deer caught in the headlights while listening to the news of economic crisis sprawling all over the world. A recession like situation in US was always on radar when the credit crunch began, and the aftermaths were supposed to be seen in other economies as well. But some economies were considered resilient enough to pass through this phase unaffected. One of these "thought-to-be" solid economies was UAE, which thrives on its oil reserves, real estate and tourism.

Not that the earlier estimates were wrong, and UAE economy is deemed to go down with the recession, but then we are living in a global village and you can't just detach an economy from those who are having trouble. All things considered, UAE may well be able to put up with the ongoing recession, but this economic unrest will definitely weaken the economy pillars.

Real Estate & Construction:
In past three years, we saw magnificent growth in Dubai real estate market. Properties were sold like hot cakes; mega projects announced one after another, land reclamation projects, world's tallest buildings, huge shopping malls and what not. Is it over? You'd ask. Well, certainly not, however the things (e.g. property flipping) are going to calm down to some extent. Construction will not come to a halt anytime soon but will surely drop (you'd have been reading a lot about those 25 percent of world total cranes operating in Dubai, a few of these giant machines can have a break now). Same is the case with real estate prices, they will continue to rise but not at that maddening speed.

Financial Market:
Hardly anyone would have suspected it to reach UAE, but the financial crisis that started from US has been spreading like jungle fire. Even now, the situation in UAE is not that dismal by any means, and it's unlikely to get that worse (oil exports will keep bringing in the much needed capital, particularly in Abu Dhabi). But the banks and other conventional lenders are already panicked, which has resulted in high interest rates. Unavailability of finance will most likely be a problem that Dubai government has to sort out (Dubai has recently got a huge financial aid from Abu Dhabi).

Tourism:
It's not much of a brainteaser for anybody to realize that recession will have a negative affect on tourism industry, especially when most of the tourists coming to the Emirates are from regions that are believed to be the most affected ones (UK, America or Europe). Instead of spending on traveling, people will be looking to save more for tough times ahead. Among all Emirates, Dubai will be hardest hit by this plunge in tourism.

Generally speaking, the picture may not be that rosy in UAE but it will look a lot healthier when judged against the wobbling economies of US or Europe.

Leading developers in UAE real estate industry

2008-11-24T15:52:00.000+04:00

Real Estate Developer companies in United Arab Emirates are well known for their stunning innovations, ground breaking designs and swift completion of the projects. Credit goes to Nakheel, Emaar, Damac, etc for delivering projects like Palm Island, Business Bay, Dubailand or Burj-Ul-Arab. These developers have grown in tandem with Dubai real estate market. Some of these much admired developers operating in UAE markets are discussed below.

Al Nakheel Properties:
Nakheel Corporation is the most prominent developer in UAE. Their trademark work is the land reclamation projects they have carried so far. Palm Trilogy, The world or Dubai water fronts, each of them is a milestone, achieved by no other company as yet. Other notable properties include Jumeirah Lake Towers, The International City or Jumeirah Village. Nakheel's vision has provided Dubai with the much needed edge in design and structures over other parts of the world.

Emaar Properties:
Regarded as the largest real estate company of UAE, having projects like Burj Dubai (anticipated to be the tallest man made structure in world), Dubai Marina, “Emaar Misr” and “Emirates Livings” on their portfolio, "Emaar Properties" means business for sure. The company is just 11 years old and already aiming at becoming one of the most valuable companies by 2010. Apart from UAE, Emaar properties has extend their business to more than 30 countries all over the world including Saudi Arabia, Egypt, Morocco, India, Pakistan, Turkey, USA, Canada and United Kingdom.

Damac Properties:
Another big name, Damac properties won the title in five categories of CNBC Arabian Property Awards 2008. They have a long list of residential and commercial units on their credit such as ocean Heights, The Waves, Burjside Terrace, Business Square, Solitaire, Damac Heights, Business Heights and Park Towers, all situated at strategically selected exclusive locations. Damac Properties are also appraised for their great payment plans and investment offers.

Dubai Properties:
“Dubai properties” is the name behind projects like Jumeirah Beach Residence, Business Bay (accredited as the best master development in Arabian Property Award 2008), Culture Village, The Executive Towers and Mudon. This company is a member of Dubai Holding, which belongs to the government of Dubai. The company is now looking to extend themselves internationally.

Dheeraj & East Coast, Deyaar, Tameer, Diamond Investments, ETA Star Property and Vakson Freehold Properties are some other chief developers actively contributing in UAE real estate market, which continues to get bigger and better.

Dubai properties continue to set sales record

2008-11-17T15:59:00.000+04:00

Investors are eager to get into Dubai real estate market. This is evident by the fact that properties are sold within weeks and in some instance days or even hours of their launch. These sales are boosted by the fact that Dubai real estate actually delivers what it promises. High demand has created a magnet-like affect, drawing investor's money into Dubai from all around the world as soon as a project is launched. Let's look at some of these quick sales.

Entire Building “sold” in hours:
"Dubai properties", a subsidiary of "Dubai properties group" recently announced that it has sold an entire 8 floor building within hours (yes, hours) of release. This building is a part of "Bay Square" project and the remaining buildings will be sold during the course of this year.

Santeview Project:
The urgency in the investor's to grab a piece of property in Dubai was seen when it took just one day for Santeview project by Sungwon to be declared "sold out" after it was launched. Sungwon Corporation is among the biggest construction company in South Korea and it is extensively involved in construction works in GCC now. Their Korean origin mixed with an Arabian touch gives the building an edge over others in technology and design.

800 Villas sold within a week:
Nakheel, another key player in the Dubai real estate arena got an amazing response of 800 villas sold within a week. These villas are a part of "Al Furjan" project, a set of beautifully designed villages that promises to provide its residents a comfortable family life.

Tameer breaking records at Cityscape 2007:
Cityscape Dubai 2007 proved to be a milestone for Tameer, a major real estate developer. 3 days of this largest real estate investment event saw the launch of three latest development projects by Tameer and record sales of Dhs1.9bn. Also in this exhibition Tameer sold 100% of "Platinum Tower’s" office space in less than one hour.

The Wave Business Towers:
Dubai real estate industry doesn't give you a lot of time to mull over, you need to react quickly or you would be left regretting, as the properties are taken by investors in no time. The same happened in the case of "The Wave Business Towers" by "High Rise Real Estate". The three commercial towers were sold right away and the company announced that their investors have already started to see yields on their investment.

Concluding Remarks:
Deyar's Mirar Residences sold in hours, First Dubai Real Estate development company making record sales from its Morina Residence, Silver Tower sold within 2 weeks of its launch, Quartet residential towers in Dubai Lagoon development sold in less than 2 months, all this and many other immediate sales indicate that anybody willing to invest in Dubai real estate market needs to be quick and well aware of all the new anticipated developments.

Abu Dhabi Real Estate - Can they catch up with Dubai

2008-11-11T09:31:00.000+04:00

There's good news for the investors who thought they were a bit too late in entering Dubai real estate market. Another "Dubai" is in making and this time the stakes are even higher. So far, Abu Dhabi has been quietly observing the growth of Dubai in terms of real estate like a sleeping giant. Government of Abu Dhabi has now started to take initiatives towards Abu Dhabi's transformation into becoming or ever surpassing Dubai. Right now Abu Dhabi's real estate market has everything working in its favor.

Rising Economy:
The biggest Emirate by size, Abu Dhabi is one of the world richest cities in terms of Gross Domestic Product (GDP) and Per Capita Income. With crude oil & gas reserves projected to last another century, Abu Dhabi is the 4th largest supplier of oil. Also Abu Dhabi contribution to the United Arab Emirates economy is more than 60%. All of these indicators prove that Abu Dhabi’s economy can withstand the demands of upcoming boom in real estate industry.

Real Estate Projects:
Some major projects include Saadiyat Island, Yas Island, Al Raha Beach, New International Airport, Desert Towers, Khalifa City and much more. Some of these projects are really huge like Yas Island or Khalifa City. Over $450 billion worth of real estate development projects are planned for this year.

Investing Perspective:
Abu Dhabi holds many positives from investor’s point of view. According to the “Plan Abu Dhabi 2030” assessments, population will grow from less than one million to 3.1 million in 2030, while the number of tourists visiting Abu Dhabi will increase to 7.9 million from the present figure of 1.8 million. Population is largely made of expatriates, so the rents are increasing steadily. As HSBC research report shows, Abu Dhabi real estate prices have an approximate growth of 58%, compared to 37% growth in Dubai real estate prices.

Abu Dhabi government looks quite committed to diversify its economy; it’s only a matter of time before Abu Dhabi real estate market will reach the grandeur of Dubai real estate. Even after the present upsurge, the prices are still relatively low from international standard. News like “Abu Dhabi will be hosting the Formula 1 Grand Prix in 2009” show that Abu Dhabi is investing largely on its tourism sector as well. Investor who can invest and hold their funds for some time, Abu Dhabi real estate will surely bring them great yields in coming years.

Dubai Real Estate Investment – Investor’s Concerns

2008-11-10T15:22:00.002+04:00

In terms of real estate business, Dubai in itself is a hot selling brand. With Government taking keen interest in execution and completion of so many amazing projects, and the last decade showing a constant growth, Dubai economic future looks bright. Investing in Dubai property is becoming every investor’s dream, although some raise questions on issues like high demand vs. low supply and infrastructure problems. Let’s have a look at what’s positive and what’s not with investing in Dubai real estate.

High Demand:

One thing is for sure, Dubai properties are in demand. Investors from all over the world are flocking to Dubai, to get a share in huge profits. Since non-residents of Dubai have been allowed to buy the property in Dubai, Dubai is flooded with interested investors. Everybody seems excited and exuberant about on going development plans. It will take some time before these jaw dropping constructions can be matched at some other place of the world.

Lower Prices – Higher Value:

Rapid increase in property prices has created the impression that real estate prices are high in Dubai, which is completely wrong. One has to consider the rates of equally deluxe apartments and offices in other main cities of the world. Comparison will reveal the true picture. Dubai property is still under valued if we take into amount these factors. Dubai is going through an economic boost and with properties prices hiking quickly; the perfect time to invest is now.

Tax Free Zones:

Dubai government has offered so many incentives to attract investment, tax free zones are one of them. Free zones like Jebel Ali free zone, Dubai international financial centre, Airport free zone and Maritime city, presents great opportunity for investors. Dubai offers unsurpassed tax incentives in the world for businesses. More and more companies from all over the world are setting up their business in these free zones.

Tourism:

Dubai is a dreamland for tourists. It has everything, from mysterious deserts to exhilarating beaches, marvelous hotels and resorts. Approximately 6.5 million tourists will be visiting Dubai annually by 2011. World’s biggest arts & entertainment events are held here, making it even more attractive.

Political Situation:

Dubai enjoys political stability and steadiness which is rare in most parts of the world. Since its establishment, Dubai has never been under political chaos, riots or disturbance. Policies are not shuffled and you can invest with the sense of certainty which you will hardly find anywhere else.

Crime:

It’s hard to believe but crime rate is almost zero in this part of the world. With no reports of robbery or theft going around, Dubai is a safe place to live. In today’s world, this kind of peaceful place appeals everyone desperate to live a life, free from anxiety.

Dubai Real Estate Business and New Strata Law

2008-10-31T15:48:00.000+04:00

Strata title is a type of real estate ownership where some parts of building (called lots) are owned by the individuals, while the remaining portions (called common areas) are owned and managed by all individuals jointly through owner’s association. This type of ownership usually exists in case of apartment buildings, also known as flats in sub-continent. This is termed as “condominiums” in US and most parts of Canada. Residential units are owned by individuals and common area including stairs, parking, gardens, lifts, roofs, etc are used by all residents jointly.

Call for Strata Law:

The need for strata law arises out of the fact that these types of buildings often have disputes going around over issues like parking, keeping pets that disturb other owners, privacy, alteration or maintenance of common area, etc. Though Strata law cannot stop these disputes altogether, it can surely help in solving them before these quarrels can ruin the environment and peace of residence. Australia was the first one to come up with laws addressing the Strata title issues. Several regions like South Africa, Indonesia, and Singapore then followed with implementing their own set of Strata laws. Such legislations were long anticipated in Dubai where huge sky scrappers and tall buildings containing a big number of apartments and offices are becoming a norm now.

Dubai’s Strata Title Law:

The Dubai Strata title law, signed by the ruler of Dubai, requires the proper division of property according to Strata plan. This strata plan, along with a drawing which marks out the boundaries of lots, entitlement of these lots and other required documents should be registered with the registrar. The law covers almost all areas, from major one like common property, easements, buying and selling of such real estate to comparatively smaller ones like membership of corporate body and keeping pets.

Possible consequences:

Like every new law, Dubai strata law has been greeted with a mix response from its stake holders. However, experts believe that as soon as people get familiar to this law, it will be having a positive effect on growth of real estate as well as facilities management market in Dubai. This law provides detailed yet uncomplicated description of rights & obligations for lot owners, making Dubai real estate more appealing for the investors from all over the world. In short, Strata law is a good attempt by Dubai government, which shows their commitment in making Dubai real estate industry a better and hassle free investment option.

Dubai Mortgage Market

2008-10-22T15:18:00.000+04:00

With ever growing prices of property in Dubai, it is becoming increasingly difficult for a normal buyer to pay the entire amount in one go. Mortgage facility comes in handy for such buyers. In mortgage loan, creditor possesses the title of purchased property till the debt amount, along with interest is paid off. In case the debtor fails to repay, creditor can retain the property. In Dubai, mortgage market is all set for an upsurge. Some important features of Dubai mortgage market are discussed below.

Growth Potential:

Dubai mortgage market is on the rise since 2002 but according to the experts and research reports, we still have to witness the real expansion boom. EFG-Hermes has predicted a growth of up to 10 times by 2012 in a recent research report. Dr Sabahuddin Azmi, an Islamic finance expert reaffirmed, while speaking to a summit held by the support of Shaikh Saud Bin Saqr Al Qasimi, the Crown Prince and Deputy Ruler of Ras Al Khaimah. The growth trend by far has been parallel to real estate market.

Shariah Compliant:

Amlak Finance and Tamweel, the leaders of Dubai mortgage market, with 60% market share collectively, are both shariah compliant. Given that the majority of the Dubai residents are Muslims, and Islam prohibits any kind of interest on loans, shariah compliant lenders are likely to capture the larger market share in future as well. Some people argue that Islamic mortgage is high-priced. The fact is that you may be paying a bigger amount as “down payment” compared to conventional mortgage, but you are also getting a better payment plan afterwards. This is the reason that non-Muslims are also getting increasingly interested in this type of home finance.

Interest Rates:

Interest rate (or profit rate in case of shariah compliant mortgage) is slightly higher when compared to rest of the world, but with competition getting bigger and intense, soon one company or other will be cutting its interest rate to gain competitive advantage over it’s competitors. Commercial bank of Dubai has already slashed its interest rates, soon other banks will have to catch up with similar reductions or they will loose their business to CBD in no time.

Dubai real estate market along with its mortgage market is getting larger day by day. With expatriates and foreigners taking more interest in buying property, competition in Dubai mortgage market is heating up. This competition will surely help in resolving issues like processing delays and making it more consumers friendly.

Dubai New Tenant Law – A Brief Introduction

2008-10-09T16:01:00.001+04:00

According to a survey conducted by Statistics Center of Dubai in 2006, about 85% of Dubai population was made of expatriates. Majority of them lives in rental units. That leaves them solely on landlord’s mercy. Rising rents have long been the biggest worry for these expatriates, with rents getting doubled and tripled in no time. This relation between tenants and landlords became more tensed with issues like landlords vehemently asking tenants to vacate house without any prior notice. Dubai Government first reacted by putting rental caps and now a new law signed by His Highness Sheikh Mohamad bin Rashid Al Maktoum on 26th November 2007 has been introduced. Read on to see what kind of changes it will make.

Tenant’s Point of View:

Tenants are relieved in many ways by this particular law. For instance

• Addressing the issue of abnormal raise in rents, this law prevents any increase or amendment made in tenancy contract for first two years.

• Decided rent will include the usage of utilities like car parking or swimming pools. Landlord must provide the property in sound quality.

• Article 16 of this law puts the responsibility of property maintenance on landlord. But very next article states that landlord shall not make any change which will affect the tenant benefit in any way.

• The landlord cannot force tenants to leave before the expiry of contract with exceptions like tenants failing to pay rent value or if tenant starts using the property for some immoral purpose, etc.

• If the reason disclosed for eviction is possible collapse of property, because of its poor condition, landlord must provide a technical report confirmed by Dubai Municipality.

• Another noteworthy clause of this law is that if landlord restores the property for his/her own use on expiry of contract, he/she cannot rent the property to anyone else for one year. If it happens, the tenants can take legal action against him.

• Tenants should keep in mind that only those contracts are valid which are in written form and registered with RERA.

Landlord’s Perspective:

• Landlords will be restricted to decided rent at the time of contract for two years. Keeping this in mind they can decide a reasonable rent, taking into account factors like inflation rate and time value of money.

• After two years, rent can be modified. If both parties cannot settle on revised amount, this dispute will be forwarded to judicial committee, who will then decide the amount of rent.

• This law is not valid for hotel establishments and any accommodation provided to employees from their companies.

• The landlords are entitled to receive rent value on agreed dates.

• Tenants cannot make any changes to property without landlord’s consent.

• All taxes due to Government will be paid by tenants.

This new law would definitely keep a check on alarmingly increasing tenant problems. However there are some flaws, which will be dealt with, in near future hopefully.

Dubai - Architectural and development dreams coming true

2008-09-25T13:28:00.002+04:00

First it was China, who became the center of attention by starting some of the most amazingly designed architectural project. Now it is Dubai’s turn to arrest the world’s attention, with a vision to make it an ultimate destination for tourists from all over the world, backed by the power of petrodollar, Dubai is keen to achieve every landmark that exists in architectural world. Be it the tallest building, biggest shopping mall, largest hotel or biggest man-made islands. Every development going on in Dubai has a unique tag linked to it. Dubai is to architectures as Hollywood is to story tellers, giving the license to free your mind and come up with something out of this world. If you think this is an exaggeration, just have a look on some of the constructions going on in Dubai.

Palm Islands:

Palm Jumeirah, Palm Jebel Ali and Palm Deira, collectively known as “the palm islands” will be (when completed) the world’s largest man made islands.
Containing hotels, restaurants, shopping malls, apartments and commercial buildings, these islands will add more then 500km of land to Dubai’s coastline.

Burj-ul-Arab:

Another landmark, this is the world tallest hotel till now (“Rose tower” is all set to take this distinctive position of being the world’s tallest hotel, once it is open, and guess where is it located? Yes, you got it right, it is also in Dubai). Apart from being the tallest, Burj-ul-Arab is a spectacular building, often used as an iconic image for Dubai and deservedly so.

Dubai Mall:

This shopping mall, projected to be completed in 2008 will be the biggest shopping mall in the world. Visitors will find the world’s largest gold souk, more than 1200 stores, a grand aquarium, top-notch Cineplex, Sega indoor theme park and much more.

The World:

A true master piece when it comes to the idea and its execution. “The world” is a set of 300 artificial islands, created in a way to look like the map of the world. For those who think that this is a far-fetched idea, the news is that more then 90% work of land reclamation has already been completed. If you want to invest in something really exclusive then “the world” is for you.

Arch Bridge:

An arch bridge, one mile long and 670 feet tall, the world’s tallest and longest arch bridge is scheduled to be completed in 2012. The thing that is most surprising about this project is its estimated budget, said to be of $817 million. That’s not a great deal for a bridge as large as this. A metro train service will also run through this bridge.

These are just few pickings, out of an array of truly magnificent developments going on in Dubai. There are many, many more on this list, once completed they will surely add to that old list of Seven Wonders of the World.

Key ingredients to Form a Real Estate Contract

2008-09-16T12:19:00.000+04:00

Negotiation is a powerful skill you must possess, if you want your Real Estate contract to be successful. You need to communicate with the seller to create an environment of understanding and co-operation. Successful buyers or sellers are often very good negotiators. The key goal of negotiation is to get a fair agreement, in which, the interest of both the parties (buyer and the seller) is well considered.

For most Real Estate buyers, the focal point of Real Estate deal is ‘price’ that the seller expects them to pay. A good analysis of the conditions prevailing in the Real Estate market will help you to know about the rates of the Real Estate property. This study will help you arrange the funds accordingly. For the seller, such research will help pricing the property well, as only a reasonable priced property has the potential to sell fast.

Seek Professional Help
It is thoughtful to take the help of Real Estate agents as they are experienced in property transactions. In most of the cases, agents try to negotiate best rates, but it certainly pays well to keep oneself well-informed. If you are aware of the market trends, you can monitor the actions of your agent well, which will make sure that the output is striking.

However, if you are planning or buy or sell a house, it is important for you to realize that it is not just the professional help which counts. There are certain traits that parties involved in the transaction must possess to ensure that the deal happens in an extremely professional manner.

Check your emotions
First, the parties involved in a deal should be able to control their emotions well. Let us suppose that you are buyer and you happened to like a house. Now, you need not explicitly express your desire to buy that house, else the seller may quote high. Second, if a party is talking, listen carefully to what it says, try to interpret its meaning right, and let it finish. Do not interrupt or argue in between. You need to be always very polite; even the slightest of your mistakes can hurt the buyer’s sentiments and make him call off the contract.

Do effective communication
You should always try to communicate in writing with your prospective buyer or seller, instead of resorting to hazy verbal conversation. This will enable effective communication and can even serve as proofs in the court of law, if any sort of dispute emerges.

Make sure that the buyer is the only legal owner of the Real Estate property you are planning to buy. Also study the area where the property is located in terms of its infrastructure and amenities.

Risks in buying and selling of property and real estate

2008-09-09T13:03:00.001+04:00

Investment in Real Estate is indeed very profitable and the sooner you get to buy a property the better it is for in terms of investment point of view. Moreover, the price of Real Estate is quite favorable these days, which make Real Estate investment, be it residential or commercial, very tempting. One must however realize that there are significant risks involved in a Real Estate transaction and all the details pertaining to the property as well as the agent need to be thoroughly verified.

First of all, in this market there are agents who are neither licensed nor bonded, and there could be many who do not know the market well and do not even care to check if the property they are trying to sell is problem-free. A number of them are fakes; there have been many instances where the agent has fled with the down-payment cash he received from the buyer or the seller, whomever he is serving. Property buyers or sellers are therefore advised to use an escrow or third party services of similar nature. Stewart Title in Houston and Fidelity Title in New York offer escrow services. These agencies hold your money in one of the US accounts until funds are disbursed based on your offer terms and conditions.

Secondly, you must check the title of the property before finalizing a deal. Nowadays a large number of properties have title problems. You may also hire an attorney to get you title clearance of a particular property. Also check whether the seller has a US title clearance and a Fideicomiso. If he doesn’t, there are possibilities that the land or property has title issues. However, even if the seller has a Fideicomiso, it doesn’t guarantee clear title of the property. You need to therefore play safe and get title insurance. But then, even this is risky. You may have applied for the insurance and paid a lump some to your agent for the same purpose, but it may happen that you never receive those insurance papers. By dealing through the escrow agents, you can however avoid this problem. These escrow agents are recommended by the genuine Real Estate agents and enjoy attractive incentives to ensure that your cash is disbursed righteously and you deal hassle-free.

Third, the deal closure is both complicated and expensive. Foreigners buying properties near coastal regions or borders are required to obtain a permit for foreign investment and hold the land/property title through a bank trust (the earlier discussed Fideicomiso). These trusts for doing the necessary services charge about $300-500 annually. This amount is very well mentioned in your trust documents, therefore, ask your agent to shop around to get the best possible deal. Moreover, there is a huge transfer tax. You may be expected to pay nearly $7,000 as closing fees, which cannot be recovered while selling that property. There is no point underreporting the transfer values because that would be considered illegal and huge fines can be imposed if caught. If you do this or allow the seller to do this, then you will be yourself accountable for the seller’s capital gains. It is simple, if the seller doesn’t pay the stipulated capital gains, then you are liable to pay the same. You need to therefore mention in your contract that the seller doesn’t receive any money from your end until he has paid all his capital gains.