With eyes on Asia, Investcorp eyes 10 private equity, real estate deals

Published : 9 Aug 2017 ,      Source : The National

Investcorp's assets under management doubled in its last financial year that ended in June. Courtesy Investcorp

The Bahrain-based firm wants to woo more Asian investors

Investcorp, the Bahrain-based alternative investment firm, expects to close at least 10 private equity and real estate deals this year with an eye to courting more Asian investors for fundraising after it secured a record US$4.1 billion from clients in its last financial year, a top executive said.

Investcorp, in which Abu Dhabi’s Mubadala Investment Company is the largest shareholder with a 20 per cent stake, announced yesterday a 34 per cent year-on-year increase in net profit to $120.3 million from $90.1m in the financial year that ended in June.

In the second half, net profit more than doubled to $84.6m from $39.2m in a year-earlier period.

The company’s assets under management (AUM) doubled to $21.3bn at the end of the financial year, compared with a year-earlier period.

“For the coming year we are targeting 10 in aggregate (deals) across private equity and real estate and the pipeline that we have in each of those areas across the three continents (of Europe, North America and the Arabian Gulf) is a very healthy pipeline,” said Rishi Kapoor, co-chief executive of Investcorp.

He declined to give a value for the deals expected to be struck this financial year.

Investcorp is expanding its client coverage and its product lines as part of a 2015 strategy of reaching an AUM of $25bn over a five-year period, with a long-term objective of taking AUM to $100bn, he added.

The ‘sweet-spot’ for deal size in private equity is between $200m to $500m, he said.

For the real estate business, it invested last year $530m, with investments expected to be split 80 per cent in North America and 20 per cent in Europe, which is a recent addition to its property portfolio.

The firm typically makes $5bn to $7bn in investments a year across its four businesses of private equity, real estate, alternative investment solutions and credit management, a new line of business that was added with the acquisition of UK-based 3i’s debt management business for £222m in October of last year.

Investcorp opened in April an office in Singapore as part of plans of expanding its client coverage, particularly from Japan, mainland China, Hong Kong, Thailand, South Korea and Singapore, said Mr Kapoor.

“We are looking to build out a broader client coverage capability for Asia out of Singapore office in the first step,” he said.

“Over the long term as a second logical step, we would probably look to expand that capability to include some direct investment capability into some select economies into Asia.”

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Related News

How UAE Investors Can Diversify their Portfolio

The UAE’s economy is looking a lot stronger than it was at the beginning of the year. The IMF recently raised its growth projections to 3.4 percent in 2018, up from 1.7 percent in 2017. The oil price has also recovered to above $50 a barrel, which is encouraging for anyone in the Middle East. While this is all good news for investors in the UAE, it doesn’t mean there are no further risks on the horizon.

Why Diversify?

The UAE economy is very closely tied to the energy industry and to Dubai’s Real Estate Sector. Both industries have had their ups and downs in the last decade. While things are looking up, it’s still a good idea for residents of the UAE to consider diversifying their investments. Investors can diversify by region and by sector or industry. Almost any investment in the UAE is going to be influenced by the Real Estate and Energy market – so diversifying means looking at other regions and other sectors.

How to Diversify

There are several avenues investors can go down to invest around the world. Some brokers offer trading in contracts for difference (CFDs), which are a really simple instrument to gain direct market exposure. The advantage of a CFD account is that one platform gives an investor access to several
asset classes, including shares, forex and commodities. Since the AED is pegged to the US Dollar, investors may want to diversify into currencies like the Euro and Japanese Yen. As far as sectors go, investing in large tech companies is a good way to diversify away from energy and real estate. Companies like Amazon, Google and Tesla are disrupting industries around the world. Their performance is driven by innovation rather than global growth. That’s important for UAE investors, as the local economy is closely linked to global growth and energy demand. Breaking free of those links can mean your investments are safer.



A good way to get diversified exposure to a country or sector is by investing in an ETF, or exchange-traded fund. The following are a few of the ETFs to consider. The Nasdaq 100 ETF, which is traded on the share code QQQ, gives investors exposure to some of the biggest tech companies in the world. It’s a great way to invest in global tech companies in one trade without having to pick and choose individual companies.

For exposure to Japan, the iShares MSCI Japan fund (share code: EWJ) invests in the 370 largest companies in Japan. While the fund is priced in US Dollars, the exposure is in Japanese Yen. That means the fund performs well if Japanese stocks are performing, or if the Yen appreciates. The Japanese currency is often viewed as a safe haven that does well when volatility increases.


The European economy is now recovering well and any investor with a global portfolio should own some European investments. A good ETF with Euro exposure is the SPDR STOXX Europe 50 ETF. This fund invests in the largest 50 companies in Europe, including Nestle, Novartis and HSBC.

Any investor should hedge their bets. And, when doing so they should look at the types of investments they don’t already own, and that differ from what they do own. For UAE investors, the ETFs listed above provide a good mix of sectors and regions that may still perform if the UAE economy hits another bumpy patch.

21 Nov 2017

Bounced cheques in UAE: new rules ‘a progressive step for the justice system’

Financial and legal experts in the UAE called the decision by Dubai Courts to issue fines instead of jail sentences for bounced cheques a “step in the right direction” to ensure those in chronic debt can resolve their issues.

Under a new criminal order issued by the Dubai Attorney General Essam Al Humaidan, a range of minor offences – including bouncing cheques and failing to pay rent – will no longer be put through the court system and instead be treated as a misdemeanour subject to a financial penalty.

The new ruling, which will come into effect in December, means those responsible for bounced cheques of up to Dh50,000 will be fined Dh2,000, while those who bounce cheques of between Dh50,000 and Dh100,000 must pay a Dh5,000 fine, with a Dh10,000 fine for cheques between Dh100,000 and Dh200,000.

Diana Hamade, a lawyer and the founder of International Advocate Legal Services, said the move “relieves people of the fear they have been subjected to” in the past when a bounced cheque was penalised by a jail term.

She added that she was among those “advocating the decriminalisation of bounced cheques due to the wording of the provision in the penal code related to the offence which presumes bad faith at the time of issuing the cheque”.

“The fine penalty is quite sufficient since the legislator obviously did not want to go all the way to decriminalise such offences and render them tortuous offences entailing civil damages,” she said.

Ms Hamade added that in the past the law had been “misused by many to blackmail others by filing complaints with the police and withdrawing them after receiving payments”.

Michael Routledge, who runs the debt advice site savememoney.ae to help chronic debtors find solutions to their credit woes, said the new ruling “is definitely a step in the right direction”.

Mr Routledge said many of the debtors who contact his site for help are worried about going to jail.

“The threat of going to prison for the inability to cover a cheque often can make people flee the country, with this new ruling there is a good chance that people will instead stick around to settle their debt,” he said.

“The banks do not gain anything from having someone sent to jail, as they have almost no way of getting their money back once this process is under way. This step will hopefully push lenders to work with consumers to help them restructure their debt.”

Debtors welcomed to the news, although they had concerns over how the new order will be implemented.

Manuel, a logistics coordinator from the Philippines, owes Dh185,000 on nine debts with seven banks. He and his wife bring in a joint income of almost Dh12,000.

“This is good news for us. My only question is, if the defaulter paid the fine imposed, will the loan be closed or can banks file a civil case for the repayment of the loan?” said Manuel, who also wanted to know if travel bans imposed on debtors going through the court process would also be lifted.

The Dubai resident, said the new ruling may stop banks threatening him with jail, but added that it would not stop the threats completely.

“The harassment I have received from collection agents has been offensive and it is demoralising; even thinking of what they said is too painful to bear.

“I wish that financial institutions also are ready to offer a solution that can be met by the defaulter as per his/her capability to repay. Until now, I am struggling to repay my debt and cover my basic needs as almost all my salary is going to repayments.”

keren bobker

Keren Bobker, an independent financial adviser with Holborn Assets, said the change in how bounced cheques are handled will offer debtors some “breathing space”. Mona Al Marzooqi/ The National

Keren Bobker, an independent financial adviser with Holborn Assets, said too many banks threaten people unnecessarily when payments are missed and that better results could be obtained by working with those in trouble.

“If debt collectors are no longer able to threaten people with the consequences of a criminal case, then they will have to find other options, and I hope that will mean offering solutions instead,” said Ms Bobker. “If someone is scared of going to prison, they will often avoid speaking to the bank for fear of the consequences. If they know that can’t happen, at least for smaller debts, then there can be constructive dialogue.”

Ms Bobker said the new order would offer those in chronic debt “a little breathing space”, although a fine on top the unpaid debt will “not make matters any easier”.

“Often a cheque will bounce as a person has not been paid themselves, rather than for a deliberate reason, and I think many residents have felt that the consequences have been a little harsh, especially when there are extenuating circumstances.

“In most countries bouncing a cheque, especially for a relatively small amount, does not result in a criminal case and this is yet another step to fall in line with global financial practices, as well as allowing the legal system to focus on the more serious cases,” she added.

Mario Volpi, the chief sales officer for Kensington Exclusive Properties, said the ruling will help to modernise the real estate business.

“The whole rental system is due an upgrade, starting with the tenant’s deposit. In time, this will no longer be paid directly to the landlord but instead paid into an escrow account to be used by the landlord under a controlled manner when appropriate,” he said.

“Further down the line, tenant referencing and credit checks must also come into play, eliminating rental payments in one go to more manageable monthly payments, but I stress that this may still take some time before it happens.”

However, Mr Volpi did not expect the measure to increase the number of people intentionally bouncing cheques.

“I’m sure the initial reaction from landlords was one of dismay, given the severity of writing out a cheque that then bounces has now been removed,” he said.

At Dubai’s One Day Court, set up to handle minor cases earlier this year, Ayman Abdul Hakam, its head, said fewer debtors will need to hire a lawyer for debt cases, estimating that 35 to 45 per cent of cheque-related cases will drop in the first month.

Ms Hamade said: “This move will be a relief for misdemeanour court judges since they are in fact overwhelmed, but the prosecution judges together with the police would also need to have a time frame set for such cases.”

However, she said that now that the “outcome is limited to a fine, things will definitely be less ambiguous and the certainty which is what is sought by all, including lawyers, is what will be more prevailing, which the legal system especially the criminal one in the UAE will benefit from”.

15 Nov 2017

A case of over supply or under demand for UAE’s hotel sector?

While the UAE has been busy building its hospitality sector, it seems demand may not be keeping up. The UAE clearly acknowledges hospitality as a core strategy to attract both tourism and business travelers to the Emirates, but are Dubai and Abu Dhabi feeling the strain of oversupply, especially with the recent influx of mid-scale hotels opening their doors.

Is it simply a case of too many rooms, instead of too little demand? That’s the question Jones Lang LaSalle (JLL) asked in its Q3 report on the UAE hospitality market. In short, too many rooms are affecting the revenue per available room (RevPAR).


“The coming few years will see a number of mid-scale hotels open, which will lead to the diversification of the hotel market and will result in the city becoming a more attractive place to visit to a broader range of visitors. However, it is also likely to result in further declines in average financial returns going forward,” JLL reports.

“A further 1,800 keys were added to the market in Q3, bringing the total stock of quality hotel rooms in Dubai to almost 82,200 keys, primarily focused on four- and five-star properties.”

The real estate research company said that apartment refurbishments added 1,539 keys to the market in Q3. It said that August RevPAR at AED503 was the lowest level seen in the last decade.

Abu Dhabi

JLL said that Abu Dhabi’s hospitality market registered an eight per cent drop in Average Daily Rates (ADRs) to reach approximately $111 and a two per cent drop in occupancy levels to 68 per cent, compared to the same period last year. RevPAR declined 11 per cent to reach $76.

While 700 keys are expected to be delivered by the end of 2017, there were no major completions in Q3, with the total room supply remaining at 21,200 rooms.

Increased competition

Deloitte’s recent Middle East Real Estate Predictions report stated that increased competition between operators had driven a reduction in ADR in 2016, with a market-wide average fall of 11.5 per cent between November 2015 and November 2016. A total of approximately 16,600 keys were under execution and due for delivery by 2020, with 23 per cent of these in the mid-market sectors.

“Dubai’s hospitality market will continue to face challenges in 2017, including slowing economic growth in key source markets and a strong local currency, making Dubai a more expensive destination for many visitors. Despite this, Dubai is likely to maintain its position as one of the world’s top tourism markets in 2017, both in terms of visitor numbers and hospitality performance metrics.”

“We predict that market wide hotel occupancy in Dubai in 2017 will be approximately 75 per cent, still among the highest in the world.”

It mentioned that strong infrastructure spending in tourism, such as Expo2020, the Dubai Water Canal, Dubai Parks and Resorts and IMG Worlds of Adventure, would support these expectations.

“Between 2017 and 2020, we predict that 23 per cent (4,000) of hotel rooms developed in Dubai will be in the mid-market sectors, as developers look to capitalise on this market which has been undersupplied historically.”

A promising Q4 in Abu Dhabi

Despite the decline in RevPAR and occupancy, according to the Abu Dhabi Tourism & Culture Authority, Abu Dhabi welcomed more than 420,000 hotel guests in August 2017, representing 13 per cent growth compared to the same month last year. It said that the lifting of visa restrictions for Chinese travellers contributed to the rise in hotel guests, with the Chinese now being Abu Dhabi’s largest overseas source market, heading India and the UK.

JLL said that Q4 was traditionally a strong period for the Abu Dhabi hotel market and that the November Louvre opening, together with the Abu Dhabi Grand Prix would be rewarding to many hotels in these events’ vicinity.

24 Oct 2017

Owners must have a bigger say in building management

The building reviews section on propertyfinder.ae is full of colourful anecdotes about the professionalism, or lack thereof, of building management services around the country. It is by far our single most commented theme and makes for entertaining reading. Some of it, unfortunately, is unfit for publication. But what’s clear is that for residents here in the UAE, good building management equals a good building.

The breakneck pace of development in this exciting part of the world comes with its own unique set of challenges. The vast majority of Dubai’s freehold housing stock is less than 10 years old. The laws governing them are even younger, and the application of these laws are younger still.

How your building is managed and by whom is important. It can make a big difference to your quality of life. For owners, the short and long-term viability of your investment lies in the hands of those responsible for its ongoing maintenance. Technically, that’s the owners themselves (for everything within the boundaries of their apartment) and the Owners’ Association (OA), which is responsible for all common areas of the building such as lifts, fire and safety equipment, lighting, and power.

The OA is a representative group of owners who act on behalf of all owners. They are also responsible for the setting and collection of building fees from owners, managing the budget, making payments to suppliers and the administration of the communal reserve fund to cover any future maintenance costs. Not a small responsibility and one which increases significantly for taller and older buildings.

Strata law regulation, based upon international best practice, aims to protect the interests of all stakeholders and has existed in Dubai since 2010. Once a new project is complete and handed over, the developer is required to register a Jointly Owned Property Declaration with Dubai’s Real Estate Regulatory Agency. You can check with Rera to make sure your property developer has done so. Thereafter, homeowners then manage their property through an OA.

The OA may assign a building facilities manager of their choice, and may choose to raise fees or lower fees as they see fit to properly manage and maintain the building. At least that’s how it’s supposed to work.

Owners’ associations do exist but in practice their influence is limited, and legally they are not a registered recognisable entity, which makes it almost impossible for them to recoup unpaid building fees from owners via the courts.

Developers continue to yield the most power and commonly make unilateral decisions; assign building manager rights to their preferred suppliers without the input, or in direct contradiction to the wishes of the OA. All of which frustrates owners and raises legitimate questions about whose interests are being served. Particularly if the developer no longer owns property within the development.

Proponents may claim that while OAs are good in theory and should be part of the discussion, in practice, individual owners lack the education, experience and expertise to handle such a responsibility. Dubai is full of the world’s tallest skyscrapers jam-packed with complicated, expensive machinery and facilities. Oversight and maintenance of fire safety systems for a 90-storey building is not for the faint-hearted.

Many of Dubai’s freehold property owners are non-residents and others are less than fully engaged in their building and community. OAs have reportedly struggled to achieve enough attendees at annual general meetings to reach the minimum required for a quorum.

Technical expertise
Undoubtedly, the developer knows the building intimately and from a technical expertise perspective is far better equipped to service its needs. And regardless of how much stock within the project they retain, developers will forever hold a vested interest in the building as it carries their brand and reputation.

Critics will claim that developers maintaining such influence is illegal, a serious conflict of interest and is prone to abuse. Much has been written about unreasonable fee hikes, residents being locked out from buildings and facilities, pools being drained in ongoing battles between developers and owners over the years, mainly over unpaid maintenance fees and NoCs.

Requiring NoCs for building work should be a safety mechanism to protect the building from faulty workmanship for major work being done. But when building security who have been appointed by the developer request an NoC for a single curtain rod installation by Ikea, extortion is the word that comes to mind.

The good and bad guys in this debate depend much upon your perspective, but these are clear examples of what happens when the interests of owners and developers don’t align. For now, developers are winning most of these arguments and more needs to be done to legitimise OAs, their legal status and rights of owners.

OAs need to play the role that they were intended to do: Represent owners’ interests in the ongoing management and policies of their building. The system is not perfect but it is evolving. Positive strides have been made but there is clear room for improvement.

24 Oct 2017

UAE buildings to get centralised fire alarm system

The UAE plans to deploy a centralised fire alarm system that connects all buildings in the country to speed up emergency responses and limit damage.

The UAE Ministry of Interior announced on Monday it had formed a partnership with Injazat Data Systems to launch the ‘Hassantuk’ integrated alarm system.

Hassantuk – which translates as the Smart Monitoring, Alert and Control System – was unveiled at Dubai World Trade Centre on Monday.

UAE officials claim it will be the largest automated and integrated fire and life safety monitoring system of its kind in the region.

The alarm system will connect more than 150,000 existing UAE buildings – including apartment blocks, commercial properties and, at a later date, villas.

The system picks up on smoke or other abnormality in buildings and alerts the civil defence’s nearest unit “within milliseconds”, the government claimed.

A team of professional operators will verify if the alarm is genuine and report valid emergencies to the Civil Defence Main Operations Room so firefighters can be dispatched straight away, it added.

The partnership with Injazat has been formed in line with the UAE Vision 2021 goal to become one of the safest countries in the world.

10 Oct 2017

Landmarks long gone but not forgotten

Change is perhaps inevitable in a country that is as rapidly developing as the UAE. The skyline of Dubai, a kaleidoscope of wonder, is nothing like what it was as recently as a decade earlier, or even a couple of years ago. As new buildings, streets, flyovers and roundabouts keep springing up in place of once-celebrated landmarks, there are many places that are lost in the sands of time. Yet, some names have proved to be an exception. Having withstood the vagaries of time, they are routinely used even today to describe the areas around where they once stood, whipping up nostalgia in some and confusion in others.According to studies, landmarks and roundabouts have a great recall value when it comes to deciphering a route or giving directions to a certain place. The name of a vivid and distinctive building has been found to lend itself to better recollection than say, the name of a street. This is true with erstwhile buildings and places too. XPRESS brings you some locations in Dubai where the landmarks may have disappeared, but their names haven’t. From Defence and Falcon Roundabouts and Al Nasr and Strand Cinemas to the more recent Metropolitan, Hardrock Café, Ramada and Sana signals, the sense of déjà vu is unmistakable in Dubai as it marches on.

Defence Roundabout

Falcon RoundaboutView of the Falcon Roundabout

 Hard Rock Cafe

Metropolitan Hotel Metropolitan Hotel

Al nasrAl Nasr Cinema

Ramada HoteRamada Hotel

Deiras old souq,Deiras old souq,

Strand Cinema in Bur Dubai.Strand Cinema in Bur Dubai.

Emirates Centre building Emirates Centre building


30 Aug 2017

Look: New photos of Dubai’s flying taxis revealed

Dubai: By the end of the year, trial runs are expected to start on the world’s first automated aerial taxis (AAT).
But before the flying taxis operate in Dubai, here is an idea of how the unmanned aerial vehicles will look like in a big city.

Dubai Media Office has shared a series of photos of how the AAT will change the way we see the city’s skyline.

The Roads and Transport Authority (RTA) is collaborating with German firm Volocopter, which specialises in manufacturing Autonomous Air Vehicles (AAV).

Over the next five years, the two-seater AAT will undergo test flights and safety checks while the RTA and Dubai Civil Aviation Authority (DCAA) will be working on rules and regulations for the new transport system.
Capable of achieving maximum airspeed of 100 kilometres per hour, the AAT will have a maximum continuous flight time of 30 minutes.

Powered by electricity, the AAT will be equipped with 18 rotors and nine independent battery systems which can be charged within 40 minutes.

9 Aug 2017

With eyes on Asia, Investcorp eyes 10 private equity, real estate deals

Investcorp, the Bahrain-based alternative investment firm, expects to close at least 10 private equity and real estate deals this year with an eye to courting more Asian investors for fundraising after it secured a record US$4.1 billion from clients in its last financial year, a top executive said.

Investcorp, in which Abu Dhabi’s Mubadala Investment Company is the largest shareholder with a 20 per cent stake, announced yesterday a 34 per cent year-on-year increase in net profit to $120.3 million from $90.1m in the financial year that ended in June.

In the second half, net profit more than doubled to $84.6m from $39.2m in a year-earlier period.

The company’s assets under management (AUM) doubled to $21.3bn at the end of the financial year, compared with a year-earlier period.

“For the coming year we are targeting 10 in aggregate (deals) across private equity and real estate and the pipeline that we have in each of those areas across the three continents (of Europe, North America and the Arabian Gulf) is a very healthy pipeline,” said Rishi Kapoor, co-chief executive of Investcorp.

He declined to give a value for the deals expected to be struck this financial year.

Investcorp is expanding its client coverage and its product lines as part of a 2015 strategy of reaching an AUM of $25bn over a five-year period, with a long-term objective of taking AUM to $100bn, he added.

The ‘sweet-spot’ for deal size in private equity is between $200m to $500m, he said.

For the real estate business, it invested last year $530m, with investments expected to be split 80 per cent in North America and 20 per cent in Europe, which is a recent addition to its property portfolio.

The firm typically makes $5bn to $7bn in investments a year across its four businesses of private equity, real estate, alternative investment solutions and credit management, a new line of business that was added with the acquisition of UK-based 3i’s debt management business for £222m in October of last year.

Investcorp opened in April an office in Singapore as part of plans of expanding its client coverage, particularly from Japan, mainland China, Hong Kong, Thailand, South Korea and Singapore, said Mr Kapoor.

“We are looking to build out a broader client coverage capability for Asia out of Singapore office in the first step,” he said.

“Over the long term as a second logical step, we would probably look to expand that capability to include some direct investment capability into some select economies into Asia.”

9 Aug 2017

Latest News

Data Shows It’s Time to Buy in Dubai

Dubai’s weakened luxury market is offering major value, with cheaper prices than most major global cities, according to a report from Core Savills.

Prime prices in Dubai have been in freefall since 2014, when the collapse of oil prices hit wealth in the region and many high-end buyers in the city. Recent market data show the emirate’s housing market has hit the bottom of its downslide, meaning that now is the time to invest, according to the report out Sunday.

“The top segment may provide better prospects for investors in the coming few years,” according to the report.

For instance, prices in a few luxury quarters, like the towering Burj Khalifa, are down 70% from their peak in 2014, Mansion Global previously reported.

Prices are now cheaper than almost all comparable luxury hubs. High-end homes are around 40% less expensive than Singapore and 50% less expensive than Moscow and Paris, according to the report.

Asian capitals like Tokyo and Shanghai are 60% to 70% more expensive than Dubai when it comes to luxury property.

Buyers get more space for their money, as well.

In elite Monaco, US$1 million will get you only 22 square meters of luxury home (236 square feet)—or a modest dining room, according to the report. That amount will get you 52 square meters (560 square feet) in London, 55 square meters (592 square feet) in New York and 78 square meters (840 square feet) in Paris.

In Dubai, $1 million gets 150 square meters (1,615 square feet)—triple the space in New York or London.

The taxes you pay to buy and own a home in Dubai are less than in most other luxury hubs, according to the report.

In New York, for example, owners spend around 13% of the purchase price in taxes to buy, hold and sell a home over a five-year span, according to the Core Savills report. Owners pay a whopping 33% in Hong Kong and 27% in Vancouver.

In Dubai, owners spent about 7% of the purchase price in taxes over a five-year ownership period—the best of the cities Core Savills measures apart from Moscow, there the cost is closer to 3%.

6 Mar 2018

Dubai’s Ultra-Wealthy Population Poised for Boom

Ultra-wealthy residents of Dubai will grow by 60% over the coming decade, refueling the currently depressed luxury property market there, according to a report released Wednesday by Knight Frank.

The city’s ultra-high-net-worth population—those worth over US$30 million—is expected to bloom thanks to Dubai’s foundation as a Middle Eastern hub for corporations and strengthening ties with China. The city already has one of the highest concentrations of millionaires in the Middle East—they account for two-thirds of Dubai’s population, according to the report.

The research on Dubai is part of the global brokerage’s annual “Wealth Report,” covering trends in the living and buying habits of the world’s wealthy.

Since 2014, global and local factors have held Dubai’s prime property market back despite the large population of well-heeled buyers. The oil-price meltdown paired with stricter mortgage regulations and an oversupply of luxury development have caused several years of declining prices in the city. In 2017, prime prices fell 5%, according to Knight Frank.

But recent data points to the beginnings of a recovery, as prime prices bottom out and the government logs increased activity. Luxury transactions were up 6.6% in the third quarter of 2017 and up 5.7% in the fourth quarter, according to the report.

The predicted increase of wealthy residents, particularly a cohort of Chinese, in the United Arab Emirates is expected to help turn around the slumped luxury market in Dubai.

Over the past two years, the Dubai Investment Development Agency has forged closer commercial relations with Shanghai—bringing the wave of new ultra-wealthy in China to Dubai. The number of Chinese worth more than $30 million has nearly quadrupled over the past decade, according to the report.

Where will the newest wealthy live?

Established luxury neighborhoods in Dubai include the man-made archipelago Palm Jumeirah, Downtown Dubai—home to the Burj Khalifa— as well as Emirates Hills and The Lakes, according to Knight Frank. New infrastructure near these prime hubs is expected to strengthen their desirability and improve prices.

7 Mar 2018

Can I secure life-long residency in the UAE if I buy a property?

I am an Indian citizen and I want to invest in Dubai to secure residency. If I buy property in Dubai, will they give me a lifelong residence visa? What are the criteria to get a visa if I buy an apartment? SS, India

It is not possible for any non-GCC national to get lifelong residency in the UAE, even if they purchase property. While it can be possible for an expat to obtain a residency visa based on property ownership, the rules are very strict and the visas are valid for either six months or two years only. There is no guarantee that anyone buying a property will be granted a visa and they do not permit a person to undertake any form of employment in the UAE.

To make an application, the property must have a purchase price of a minimum of Dh1 million and the outstanding mortgage must be no more than 50 per cent. The applicant must have an income of at least Dh10,000 per month from a verifiable source, but this cannot be not from employment in the UAE. Any application must be made to Dubai Economy and the Dubai Land Department for consideration with visas granted on a case-by-case by case basis – approval is by no means automatic. Visas are issued for up to two years under the current rules. In accordance with standard Dubai rules, applicants must undergo a medical examination and organise their own Dubai Health Authority compliant medical insurance. I would reiterate that a property related visa does not permit an individual to work in the UAE, only to reside here, so if they take up employment the property visa must be cancelled with immediate effect and there is no guarantee that any application will be approved or renewed.

What is the procedure if I want to change jobs? I am on a limited contract visa and have been in my job for six months. SH, Sharjah

Formal notice of resignation is the first step and this should be provided in writing. In most cases 30 days’ notice is required per UAE Labour Law but check your contract as in a few cases a longer period may be required. Someone breaking a fixed contract may also receive an employment ban depending on their level of education and the action of the employer, although this would not apply if changing employer within the same free zone.

As SH will be breaking the terms of a limited contract, he must pay a penalty in accordance with Article 116, which states: “Should the contract be rescinded by the worker for causes not set forth in Article 121, the worker shall be bound to compensate the employer for the loss incurred thereto by reason of the rescission of the contract, provided that the amount of compensation does not exceed the wage of half a month for the period of three months, or for the remaining period of the contract, whichever is shorter, unless otherwise stipulated in the contract.” This penalty is roughly equivalent to income for 45 days.

I will soon complete six year of service with my company and have been on a limited contract. I will be leaving and received the details of my end of service gratuity calculations from the HR department and they state that I am entitled to gratuity of 21 days for the first five years and 30 days for the sixth year. From what I have read in online articles, I am entitled to 30 days each year from the first year as I have completed more than five years and I am on a limited contract. HR will not believe me and say I need to show them the law that proves this. Can you help? GB, Dubai

In this situation the HR department is correct. This is covered in Article 132 of UAE Labour Law which states: “The worker having spent one year or more in continuous service shall be entitled to an end of service gratuity upon the termination of his service. The days of absence from work without pay shall not be included in the calculation of the period of service, and the gratuity shall be calculated as follows: 1 – The wage of twenty-one days for each of the first five years of service. 2 – The wage of thirty days for every additional year. Always provided that the total gratuity does not exceed the wage of two years.” A payment of 30 days is clearly for ‘additional’ years, so for those in excess of the first five years. GB is entitled to no more than the HR department has advised.

Keren Bobker is an independent financial adviser and senior partner with Holborn Assets in Dubai, with over 25 years’ experience. Contact her at [email protected] Follow her on Twitter at @FinancialUAE.

The advice provided in our columns does not constitute legal advice and is provided for information only.

10 Mar 2018

A home in Dubai: Should expats rent or buy?

Irrespective of where you stay or the kind of accommodation you have, we can all agree that rent is the single biggest expense each month for any expat resident in the UAE. For Dubai, experts say that at least 40 per cent of a resident’s income goes into paying rent.

A one-bedroom apartment could cost anywhere from Dh50,000 to Dh90,000 per year as rent depending on where you stay. While rents have reportedly been falling across the country, these ranges still apply in most areas.

Is buying worth it? Yes, if you’re planning to be in Dubai for a really long time – upwards of 15 years we would say. Most people in the UAE end up staying longer than they originally thought. So, unless you’re only planning to stay less than 10 to 12 years, buying might be a great option for you.

Comparing the two: Buying vs. Renting in Dubai
For the purpose of this comparison we are using a one-bedroom apartment near the Al Jafiliya area as a case study. For renting, we are using Dh65,000 as our sample price (based on the RERA Rental Increase Index) and Dh1.3 million as the sale price for our off-plan apartment.

One-time expenses

comparison table

As you can see the initial spend for property purchase is almost 20 times that of a rental. However, most of it is down payment, which acts as initial equity for the asset that will be your home.

Yearly expenses for 20 years
The following are the yearly expenses for 20 years in each scenario. We are going to assume that the rent increases by 15 per cent after ten years (easier for calculation) and that payment of mortgage amount stays the same per year (which is the case usually.)

Total amounts
In 20 years, renting could cost you upwards of Dh2.16 million not including utility bills and other amenities. Buying a house spread over the same period of time could cost you upward of Dh1.76 million not taking into account other incidentals and utilities.
In comparison, everything you pay to buy is directly or indirectly towards something in your own name; unlike rent which is payment for a service with undeniable perks of stability, flexibility and no debt issues.

For buying: At the end of 20 years you end up paying less for buying overall even after the initial spend. Your average monthly rent is at a stable low of around Dh4,166. Not to mention that you would then be a proud owner of Dubai property, which could be sold or rented out to earn back all your investment with profits.

The 40 per cent you spend on living in Dubai comes back to you in another form. The loan doesn’t require any collateral other than the property itself.
For renting: Owning property comes with the financial pressure of having to stay and work in the UAE until your mortgage is paid off. Unlike for your home country, this means having valid employment (and residency) to keep your monthly payments going. Selling your property is not as easy as you would think and this means you may not be able to leave at a moment’s notice. The loan or mortgage uses the property as collateral, so in case you can’t pay off the loan, the property goes to the bank.

Disclaimer: This is a guide only and uses approximate figures and current expense items for the comparison. Gulf News is not responsible for any new items of expense being added or changes in fees at any time. The costs and rents used are averages to illustrate the differences.

13 Mar 2018

Dubai’s Danube launches new $81m Jewelz project

Dubai-based developer Danube Properties has announced the launch of its 10th project called Jewelz.

The AED300 million ($81 million) project has been announced following the sales success of its previous developments, the developer said in a statement.

Jewelz was unveiled by Rizwan Sajan, founder and chairman of the Danube Group and Atif Rahman, director and partner, Danube Properties.

The new project offers 463 residential units, ranging from studio, and- and two-bedroom apartments, and features amenities including a health club, swimming pool, steam and sauna room, jogging track, and sports courts.

The project dedicates 50 percent space to open areas with an emphasis on greenery and landscapes, the statement added.

Sajan said: “I am extremely proud to announce our 10th project Jewelz next to Miracle garden at Arjan. Dubai is a lucrative and transparent market when it comes to investment. You will get the highest return on investment, high capital appreciation, and ease in doing business and strong economic growth.

“The current property prices are in favour of those who want to buy their own home. It is cheaper for a person to buy a property in Dubai than to rent one, especially if they are planning to settle in the country long term.”

Rahman added that Jewelz takes Danube’s portfolio to AED3.14 billion.

7 Mar 2018

VAT launch has ‘no impact’ on Dubai office market so far

Office rents in Dubai have continued to moderate during early 2018 as occupiers “rightsize” to suit their business needs, against the backdrop of rising inflation and global economic factors, according to a new report.

Cluttons said that while the level of office market activity remains mixed throughout Dubai, its Spring Office Market Bulletin indicates growing maturing and a healthy outlook for the sector.

It also noted that the introduction of VAT has not had any real impact on landlord behaviour so far since its launch in the UAE on January 1.

The report showed that headline rents in the city’s top tier free zones have remained largely steady, bar one or two low quality buildings.

Away from prime Grade A buildings, which remain well let and in high demand, landlords are demonstrating greater flexibility and are largely receptive to rent reductions at renewal, Cluttons said.

Faisal Durrani, head of research at Cluttons said: “Global economic factors continue to have a direct impact on the real estate market in the UAE. In the office market, upper limit headline rents have been affected, with occupiers either sitting tight, regearing leases, or continuing to consolidate operations.”

Just five of 24 submarkets registered minor downward adjustments during the final quarter of last year, with the weakness persisting into 2018, he said, adding: “It is our view that this will continue for the remainder of the year with rents set to fall AED5-20 per sq ft. However, core free zones are likely to buck this trend, with rents holding steady.”

Cluttons’ latest report also indicated that while overall conditions may seem flat, landlords are not yet at the stage where large discounts and extensive incentives need to be offered.

Paula Walshe, director of International Corporate Client Services at Cluttons added: “So far, the introduction of VAT has not had any real impact on landlord behaviour but we are monitoring this closely. While absorbing the 5 percent VAT costs does not appear to have been considered yet, this may well emerge as an option should rental weakness linger into 2019.”

8 Mar 2018

Dubai developer Azizi to award $5.44bn of contracts this year

Dubai-based Azizi Developments has said it is accepting pre-qualification applications for Dhs20bn ($5.44bn) of contracts related to new real estate projects in the city.

The contracts come in addition to its current project pipeline, according to the firm, with construction scheduled to commence in two months and be delivered by 2020.

“This will be a tremendous year of growth and expansion for Azizi Developments,” said Mirwais Azizi, chairman of Azizi Group.

“The new tenders are our largest number released so far and will contribute to our already packed portfolio of projects which we aim to deliver on schedule by 2020.”

The company said it is working on more than 200 projects this year including Azizi Riviera in Meydan One and Azizi Victoria in Mohammed Bin Rashid Al Maktoum City.

Last week, the developer said phases one and two of Azizi Riviera would be pushed back from completion in late 2018 to the first quarter of 2019.

Its other projects include Royal Bay by Azizi and Mina by Azizi on the Palm Jumeirah, Azizi Aliyah Residences and Farhad Azizi in Dubai Healthcare City and Azizi Farishta and Azizi Plaza in Al Furjan.

11 Mar 2018

Dubai seeks Chinese investment to boost real estate sector

Dubai’s once-booming property market is firmly in a slump.

House prices have been falling in Dubai in recent years, with S&P Global Ratings warning that the trend is expected to continue until at least 2020.

House prices in 2009-2010 plunged more than 50 percent from their peaks, pushing Dubai close to a debt default.

To try and turn things around, officials are planning a series of road-shows in key international markets this year, like the US, Russia and in particular, China.


7 Mar 2018

Dubai’s Nakheel returns to Cannes with real estate investment opportunities worth $2.5bln

DUBAI: Dubai-based master developer Nakheel is heading to MIPIM, the world’s premier property summit, for a third consecutive year to showcase a host of real estate opportunities, collectively worth more than US$2.5 billion.

Creator of the world-famous Palm Jumeirah and other globally renowned Dubai real estate projects, Nakheel is in Cannes, France, to encourage more international investors who already account for more than 28,000 Nakheel customers with investments reaching almost $30 billion to become part of Dubai’s growing real estate sector.

Nakheel comes to this year’s show with a new range of real estate investment opportunities at prime locations across Dubai. Among them are residential units some ready for occupation offering rental yields of up to nine per cent, and land plots for commercial, residential or hotel development.
Regarding this year’s show, Sanjay Manchanda, Chief Executive Officer of Nakheel, said, “The figures speak for themselves. Innovative thinking and bold ambition has turned Dubai into one of the most successful and fastest-growing cities in the world.

“Nakheel is proud to play a key role in the city’s achievements and continues to spearhead ground-breaking, landmark developments that set new standards in creativity, engineering and design. Our large and diverse range of existing and upcoming projects is pivotal to further enhancing Dubai’s position as a global hub for living, trade, tourism, leisure and investment. “We are delighted to return to Cannes and honoured to represent Dubai for a third consecutive year. We look forward to building on the success of our previous visits, as we further highlight Dubai’s ever-growing, unrivalled investment opportunities for investment to MIPIM’s highly knowledgeable, influential audience.”

© Copyright Emirates News Agency (WAM) 2018.

11 Mar 2018

Dubai Land Department values 8,000 properties worth $78bln in 2017

Press Release
Dubai, United Arab Emirates: Dubai Land Department (DLD) has confirmed that it successfully conducted 8,173 real estate valuations worth over AED 287 billion — the highest value ever recorded — in 2017.

According to a report issued by Taqyeem, Dubai’s Real Estate Appraisal Centre, valuations are done for a variety of reasons such as: investor visas, gifted transfer, auction sales, zakat calculations, sale estimates, and company annual audits. Customers include private owners, develpers and government entities.

His Excellency Sultan Butti bin Mejren, Director General of DLD, commented: “Taqyeem relies on the data and information available in DLD’s records, and operates according to advanced standards for valuation. The Center’s valuation work is undertaken with meticulous attention to accuracy, transparency and professionalism, which reflects DLD’s outstanding performance in providing customer services.” DLD’s work is governed by the International Valuation Standards Council (IVSC) that is the world-governing body for valuation.
Property valuation complements many other activities, and helps gauge the growth of investments. Accurate and regular valuations help prevent random prices in the market which leads to reduced speculation.

The valuation contributes to the organisation and management of land values and supports the supply and demand equation, which is used by Dubai’s Rental Dispute Centre to issue judgments based on confirmed figures issued by specialised entities.
Developers can also benefit from the findings of the valuation committee to make well-thought out market presentations, ensuring that they create campaigns based on reasonable long-distance pricing forecasts.


About Dubai Land Department:

Dubai Land Department (DLD) was found in May 1960 to establish the most prominent real estate sector in the Middle East and in the world.

DLD provides outstanding services to all its customers whilst developing the necessary legislation to propel the real estate sector in Dubai, organizing and promoting real estate investment, and spreading industry knowledge. DLD seeks regional and worldwide innovation in real estate with the aid of its active organizations that include: Real Estate Regulatory Agency, the regulatory arm, Real Estate Investment Management & Promotion Center, the investment arm, Dubai Real Estate Institute, the educational arm, and Rental Dispute Center, the judicial arm.

10 Mar 2018

Dubai Land Department conducts valuations worth $78bn in 2017

The Dubai Land Department (DLD) conducted 8,173 real estate valuations worth more than AED 287 billion ($78.1 billion) in 2017, the highest value ever recorded.

According to a report issued by Taqyeem, Dubai’s Real Estate Appraisal Centre, valuations are conducted for a number of reasons, including for investor visas, gifted transfers, auction sales, zakat calculations, sale estimates and company annual audits. Customers include private owners, developers and government entities.

“Taqyeem relies on the data and information available in DLD’s records, and operates according to advanced standards for valuation,” said DLD director general Sultan Butti bin Mejren.

“The centre’s valuation work is undertaken with meticulous attention to accuracy, transparency and professionalism, which reflects DLD’s outstanding performance in providing customer services.”

Additionally, the DLD noted that property valuation helps gauge the growth of other investments, and helps prevent random prices in the market.

The valuations also contribute to the organisation and management of land values, and supports the supply and demand equation used by Dubai’s rental dispute centre to issue judgements based on confirmed figures.


11 Mar 2018

Dubai among world’s best for FDI in real estate sector

Dubai is among the world’s top destinations for foreign direct investment (FDI) in the real estate market, according to new research from consultants JLL.

In a new report entitled “World Cities: Mapping the Pathways to Success”, JLL identified Dubai as one of a new group of ‘hybrid’ cities that have attributes of either ‘emerging world cities’ or new world cities’.

According to the report, Dubai has been making progress in improving real estate transparency, and as a result has seen high levels of foreign investor activity in the last cycle.

The report identified Dubai – which was named the most transparent real estate market in the Middle East in JLL’s 2016 global real estate transparency index – was termed ‘hybrid’ due to a number of initiatives designed to improve transparency and after witnessing a transformation in the quality of its commercial real estate market.

‘Hybrid’ cities, as defined in the report, are medium-sized and compete in specialised markets, which benefit from access to large domestic markets. They are durable in the medium-term and are among the top real estate investment destinations, as seen in the case of Dubai.

Additionally, ‘hybrid’ cities have a “superior live-ability” equation compared to their national and regional peers, JLL noted.

“Dubai and Abu Dhabi top the list of being termed hybrid cities,” said Craig Plumb, JLL MENA’s head of research. “They share characteristics, aspirations and priorities in terms of the specialisms that they nurture, the talent and businesses that they attract, and the style of quantity of real estate required.

“With this in mind, it makes sense to assess cities in the Middle East as it allows room to evaluate the competitiveness of the market,” he added.

11 Mar 2018


All you need to know about registering for VAT?

Dubai: According to the executive regulations on value added tax (VAT) published last week, the mandatory registration threshold is Dh375,000.

This means that anyone with a turnover of Dh375,000 or more is required to register their business for VAT, the Federal Tax Authority (FTA) and Ministry of Finance (MoF) said in the recently release regulations.

The voluntary registration threshold is Dh187,500, with companies of that size or above able to register for VAT too.
The failure of a taxable person or business to submit a registration application within the time frame specified in the tax law is liable for a Dh20,000 fine.

Also according to the executive regulations, companies are able to register as a tax group.

Through this mechanism, more than one company can register for VAT as a group, under a single common control, according to Dubai-based Jitendra Consulting Group. They say that the main benefit of group registration is to simplify the procedures and save costs through consolidated tax returns and a single VAT registration.

The group’s tax returns and payments are carried out by the member who acts as a representative of the group, the FTA has stated. All the members are jointly liable, however.

VAT rules VAT rules

VAT rules


6 Dec 2017

UAE’s Federal Tax Authority announces full VAT supplies list

The Federal Tax Authority (FTA) has announced the supplies that will be subject to Value Added Tax (VAT) as of January 1, 2018, revealing selected sectors that will be assigned zero-rated tax, such as education, healthcare, oil and gas, transportation and real estate.

Selected supplies in sectors such as transportation, real estate, financial services will be completely exempt from VAT, whereas certain government activities will be outside the scope of the tax system (and, therefore, not subject to tax).

These include activities that are solely carried out by the government with no competition with the private sector, activities carried out by non-profit organisations.

The UAE Cabinet is expected to issue a decision to identify the government bodies and non-profit organisations that are not subject to VAT.

The below table outlines all supplies that will be subject to the 5% Value Added Tax, as well as zero-rated supplies and exempt supplies:

VAT in education

UAE vat in all sectors


6 Dec 2017

Can you buy a home with Dh10,000 salary in Dubai?

There is a property for every income bracket in Dubai. The lower sales prices and attractive payment plans offered by developers in Dubai are resulting in more first-time home buyers hopping on the property bandwagon. The introduction of new innovative mortgage products by some local banks has also contributed towards this increased activity.

Even someone with a salary of Dh10,000 can climb onto the property ladder today, provided they can arrange for the up-front payment and registration charges.

home buying plan

“There are enough properties available to cater across a wide range of salary brackets. Prices and accessibility criteria for a home mortgage, traditionally the two biggest barriers for new entrants to the property market, have been lowered, thus resulting in an uptick in market activity,” says Lynnette Abad, partner and head of Property Monitor/Cavendish Maxwell.

Apartments are the achievable properties for salaries between Dh10,000 to Dh15,000.


“The average one-bedroom apartment in new residential areas such as Dubai Silicon Oasis, Liwan, etc., is worth about Dh600,000 with a down payment of Dh150,000 and Dh30,000 in registration expenses. The buyer has to pay about Dh2,200 a month. This is easily achievable for most people earning Dh15000+ a month. This is much less than their rent,” suggests Sanjay Chimnani, managing director, Raine & Horne Dubai.

This year, the top areas for affordable properties to one with a monthly salary of Dh10,000 are (in order) International City, Jumeirah Village Circle (JVC), Al Furjan and Dubai South, estimates Property Monitor, a real estate intelligence platform.

For someone with a monthly salary of Dh15,000, the top areas with affordable properties are Dubai South, JVC, Business Bay and Dubai Sports City, the consultancy adds.

However, if you are looking to buy a villa or a townhouse, it would require a monthly salary of Dh25,000. “It will fetch you a townhouse in master-planned communities such as Town Square and Reem, Mira. Some of the other top areas in this salary bracket are Dubai Marina, Business Bay and The Lagoons,” informs Abad.

The challenge for most buyers is to arrange for the down payment plus registration costs of about 30 per cent. “If this was to be reduced to 15 per cent, we would see an even greater shift to ownership in this market,” suggests Chimnani.

However, the moot question is whether a person earning Dh10,000 a month is eligible for a mortgage. Provided the customer does not have any major loans (personal, credit card and auto), s/he would be eligible for a house loan of up to 25 years, subject to age criteria which restricts payments to the age of 65.

“People earning Dh10,000 and above can apply for a mortgage. The minimum salary requirement for a mortgage is Dh10,000. However, there are only a few banks who do mortgages for clients with Dh10,000 income and, therefore, options for these clients are limited. Majority of the banks require a minimum salary of Dh15,000 and above,” says Carol Monis, head of mortgages, MortgageMe.ae, a group of mortgage brokers in Dubai.

She adds that “most of our mortgage clients are end-users who fall into an income bracket of Dh20,000 to Dh25,000”.

Dhiren Gupta, managing director, 4C Mortgage Consultancy, adds in the same vein that the average income group buying property in Dubai is around Dh25,000 to Dh35,000 and they are primarily buying mid-priced property worth of Dh1.5 million to Dh2 million.

“With such income, they can easily qualify for a loan, barring they do not have pre-existing liabilities and age limitation is not a barrier. Moreover, banks are more comfortable to funding such profiles wherein the property will be utilised for self-use,” concludes Gupta.

3 Dec 2017

Sheikh Mohammed signs VAT Executive Regulation

The Ministry of Finance, MoF, Monday announced that His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, signed the Executive Regulation for the Federal Decree-Law No. (8) of 2017 on Value Added Tax, VAT.

The Regulation defines VAT as the 5% tax imposed on the import and supply of goods and services at each stage of production and distribution, including what is a deemed supply, with the exception of specific supplies subject to the zero rate and what is exempted as specified in the Decree-Law.

The tax will go into force effective January 2018, and all business have to take all necessary measures to avoid the risk of non-registration by 1st January, 2018, which would entail fines as stipulated in Cabinet Decision No. 40 of 2017 on Administrative Penalties for Violations of Tax Laws in the UAE.

Commenting on the milestone, Younis Haji Al Khoori, Undersecretary of MoF, said, “Today’s signing of the Executive Regulation by the Vice President, Prime Minister and Ruler of Dubai, His Highness Sheikh Mohammed bin Rashid Al Maktoum, marks a new milestone in the application of an efficient taxation system in line with best international standards with the ultimate objective of improving performance of primary sectors and enhancing social welfare.”

The first title of the Regulation includes the definitions of terms used, while the second title deals with supply, which includes articles regulating the supply of goods and services, as well as supplies that consist of more than one component and the exceptions related to deemed supplies.

The third title of the document tackles the subject of registration, such as mandatory and voluntary registration, related parties, conditions to be met to register tax groups and appointing a representative member, deregistration, exception from registration, registration on law coming into effect and obligations to be met before deregistration.

Meanwhile, the fourth title looks into rules relating to supply, including articles on the date of supply, place of supply for goods, place of supply of services for real estate, transport services, telecommunications and electronic services, intra-GCC supplies, the market value, prices to be inclusive of tax, discounts, subsidies and vouchers.

Furthermore, title five discusses profit margins and explains how to calculate VAT based on profit margins, while title six addresses zero-rated goods and services, including telecommunications, international transportation of passengers or goods, investment grade precious metals, new and converted residential buildings, as well as healthcare, education and buildings earmarked for charity.

Title seven clarifies provisions relating to products and services exempt from value added tax, namely: the supply of certain financial services as specified in the Executive Regulation, the supply of residential (non-zero-rated) buildings either by sale or lease, the supply of bare land, and the supply of local passenger transport.

The eighth title of the Regulation then addresses accounting for tax on specific supplies and includes articles relating to supplies with more than one component, general provisions in relation to import of goods and applying the reverse charge on goods and services, as well as moving goods to implementing states and imports by non-registered persons.

In title nine, the Executive Regulation address Designated Zones in article (51), while title 10 provides further detail on calculating due tax, recovery of input tax relating to exempt supplies, input tax not recoverable, and special cases for input tax. The following titles 11 includes article (55) on apportioning input tax and article (56) on adjusting input tax after recovery, whereas title 12 addresses the capital asset scheme in article (57) and adjustments within the capital asset scheme in article (58).

Title 13 of the Regulation includes article (59) on tax invoices, article (60) on tax credit notes and article (61) on fractions of the fils. Then in title 14, the Executive Regulation discusses Tax Periods and Tax Returns, before title 15 goes into recovery of excess tax in article (65). Adding to that, title 16 tackles recovery in other cases and includes article (66) on new housing for nationals, article (67) on business visitors, article (68) on tourists and article (69) on foreign governments.

The 17th title includes article (70) on Transitional Rules, article (71) on record-keeping requirements and article (72) on keeping records of supplies made. Meanwhile, the 18th and final titles discusses closing provisions.

28 Nov 2017

Real estate risk allocation and insurance tips for Dubai property investors

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
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 fixtures in the units, would be the responsibility of the owners’ association (OA). In cases where there is not a legally established OA, then it may be possible for the developer to obtain a policy that nonetheless recognises the interests of investors as beneficiaries of the policy.

The developer or the OA will need to consider the type of policies they obtain. Generally speaking, such insurance will cover, and may be required to cover by law, full replacement and reinstatement, third-party liabilities and could cover loss of income or alternative accommodation costs.

Investors would typically insure their own contents and improvements. Investors may also wish to obtain loss of rent insurance or insurance covering the cost of alternative accommodation if this is not taken out by the developer or OA.

This is a general discussion of the risks in real estate and how they may be addressed in contract and through appropriate insurance. As each property and transaction is different, the risks and insurance solutions may differ so it is important that each transaction is assessed on a case-by-case basis. Accordingly, this article should not be treated as advice as to what is required in any particular set of circumstances.

Reporting by Jeremy Scott and Justin Carroll

Jeremy Scott is partner, real estate, and Justin Carroll is senior associate, insurance, at Al Tamimi & Company. The views expressed here are their own.

29 Nov 2017

Not renewing tenancy contract in Dubai? 3 months notice a must

I have been staying in a rented apartment for around last 12 months and do not want to renew the tenancy for another year. I have notified the landlord by giving one month notice of my intention but the landlord insists a notice period of three months. Further, the landlord is asking me to paint the apartment. Surely that comes under wear and tear of living in a rented apartment? What does the law say exactly as I have been reading contradictory reports?

Pursuant to your questions, we assume that the rented apartment where you are staying is situated in the Emirate of Dubai. All tenancy contracts in the emirate fall under the ambit of the Law no. 26 of 2007, Regulating the Relationship between Landlords and Tenants in the Emirate of Dubai. Subsequently some provisions of the said law have been amended by Law No. 33 of 2008.

Article 14 of the law states: “Where either of the two parties to the lease contract do not wish to renew the contract or wish to amend any of its terms, such party must notify the other party of such intent no less than ninety days before the date on which the lease contract expires, unless otherwise agreed by the parties.”

Moreover, Article 14 of amendment states: “Unless otherwise agreed by the parties, if either party to the Tenancy Contract wishes to amend any of its terms in accordance with Article 13 of this law, that party must notify the other party of same no less than ninety days prior to the date on which the tenancy contract expires.”

In the event your tenancy contract states that you need to provide a three months of notice period not to renew the tenancy contract, then Article 14 of Law No. 33 of 2008 should be applicable.

You are bound to return the apartment to the landlord in the same condition as provided by the landlord at the time of renting it to you, other than normal wear and tear. This is in accordance with Article 21 of Law No. 26 of 2006 regulating the Relationship between Landlords and Tenants in the Emirate of Dubai, which states: “Upon the expiry of the term of the Lease Contract, the tenant must surrender possession of the real property to the landlord in the same condition in which the tenant received it at the time of entering into the lease contract except for ordinary wear and tear or for damage due to reasons beyond the tenant’s control. In the event of a dispute between the two parties, the matter must be referred to the Tribunal to issue an award in this regard.”

Know the law

Where either of the two parties to a lease contract do not wish to renew the contract or wish to amend any of its terms, such party must notify the other party of such intent no less than 90 days before the date on which the lease contract expires, unless otherwise agreed by the parties.


17 Oct 2017