Real Estate in the UAE: Laws and Regulations

The UAE experienced a tremendous building boom up till 2008 when the financial crisis hit.  During that period, foreigners wanting to invest in the UAE were plenty. Today, post financial crisis as the market here is recovering, that appetite to buy new property and lease better property is once again on the rise.

UAE and GCC nationals can own property in the UAE. As a foreigner in the UAE, owning and / or leasing property needs to comply with laws and regulations that change from time to time. That said, in Dubai and the UAE, property law is young and is still taking shape.

In the UAE, each Emirate has developed its own laws. For example, to the best of my knowledge, in Fujairah, foreigners cannot buy property. However in Dubai, foreign ownership of freehold real property is permitted.  There are “free-zones” within each Emirate designated for specific use. Each zone is a tax-free jurisdiction and has its own rules and regulations. A company established in a free zone can be 100 per cent owned by foreign nationals and may own freehold interests in real property within that zone.

Choosing the right real-estate agent is crucial to getting the right information, price and ultimate deal. A bit of your own research on what is out there, and what you are willing to spend over how long would also be beneficial.

You don’t have to be in Dubai to buy the property; it is possible for you to give Power of Attorney to a person to handle all the aspects of the purchase on their behalf but it is advisable that they check all the documentation and ensure that everything is clear before signing the deal.

Legalities regarding freehold ownership by non-UAE nationals and non-GCC nationals are ambiguous, as are the practices and procedures for issuing residence visas to expatriate buyers and their families. Some local banks offer mortgage finance to expatriates wanting to buy property in the UAE. It seems that finance can be arranged through overseas banks if you have assets overseas.

It’s in the UAE’s interest to allow buyers to own property and therefore there I have read about two new real estate laws that will improve protection for buyers, investors and landlords – and they are as follows: A buyer can request the courts to cancel a contract if the developer ‘significantly changes’ the agreed specifications, or refuses to deliver the unit without a good reason. Buyers can also seek legal action if developers do not bind payments to approved construction based milestones or the unit is proved unstable due to major structural defects.

The regulations also stop developers from selling off plan units before taking possession, which includes actual control of the land. Leasing accommodation is most common in the UAE. Contracts normally last a year during which the landlords are not permitted to increase the rent, until its time for renewal. Landlords of leased apartments are normally required to handle the annual maintenance of their property and they are not permitted to evict a tenant without just cause within the tenancy contract time period. All-in-all, the UAE is a great place to live and buy property. However, careful research into laws and regulations in a timely manner is a must.

Kabir Mulchandani
Skai Holdings
Dubai-UAE

Working in the Real Estate Industry

I have worked in many fields throughout my life, but working in the real estate industry has been the most exciting and satisfying. I like it because it is a dynamic environment. It's challenging,and there are no limits to your success.Real estate as a profession offers one of the broadest career selections in the business world today. Helping people buy and sell homes,office buildings, industrial property,property management,real estate counseling, are a few examples of the diverse aspects of a career in this sector. However,residential sales seem to be the most common career path in this sector.

There are multiple advantages of working in this sector. You can earn an income not restricted by a salary, as sales commissions are significant. Real estate sales is a very fast past market and daily sales transactions are directly related to the effort you are willing to put into the process. Once you obtain a license, you can work as an independent real estate agent and organize your own calendar making your diary flexible to accommodate your own arrangements.

Your creative skills as a salesman can be applied in this sector - there is no set rule or way to sell. As long as you are good with people, you are likely to succeed!

Ability to build trust plays a key role in repeat sales and referrals. Word of mouth is the fastest form of marketing and if your reputation is reliable and people have confidence that you can get them the best deal, sky is the limit. Attention to detail and documentation is another asset to have if you want to succeed in the real estate industry. Real estate transactions involve a lot of paper work and legal contracts that need to be filled out correctly. Understanding of the law of where you are selling is also key to your success.

High energy and enthusiasm needs to be maintained all the time. This is not easy, as when you try hard and don't close a deal, depression sits at your doorstep. You have to remain positive and not give up. The real selling starts with the first "no". How do you react? What do you do to change it to a yes?

Successful sales people are good at hearing a no, but are also good in asking follow-up questions to see how they can steer the conversation in another way. When rejections are accepted gracefully, then the odds are you still have a chance with the customer. Most customers keen to buy usually have 50 per cent more objections than people who don't so you can't be afraid of a rejection. You have to overcome it quickly, learn what you can and move on. As a property agent you must believe in your job, be passionate about it and set personal goals. This is closely tied in with self-motivation, which is pretty much a per-requisite for any sales job.

Set high targets and have high expectations and try to live-up to them. Show your customer the value you have to offer them. Real estate is a great profession to be in. If sales is your thing, this is a sector you must explore.

Article by Kabir Mulchandani, entrepreneur and CEO of Skai Holdings Real Estate Investment Firm.

The Choice for Investors in the Middle East

Foreign direct investment (FDI) is the life-blood of any economy. It drives change and growth, brings prosperity, and improves the quality of life. Increased jobs, opportunities, more knowledge sharing and technology transfer alongside the inflow of foreign currency are some of the key advantages of FDI.

The UAE has always lead the Middle East region in terms of investor confidence, and Dubai is the main hub. Dubai’s competitive advantage stems from the fact that it is much safer compared to other Middle Eastern countries; perhaps something that is a result of its political neutrality. It is slightly less bureaucratic and has a sustained high level of investments made in road and rail infrastructure to keep up to speed with the growth in the countries’ economic development.

The global economic crisis has affected most aspects of the economy worldwide. Though FDI levels have certainly reduced due to the global recession, there are signs of recovery and indications of a more positive future, especially in the medium and long term.

Pre-crisis, the UAE economy was booming and business opportunities were limitless. The UAE’s investment climate has always been open to foreign direct investment it allows full repatriation of profits. However, according to the Dubai Economic Department’s FDI survey, despite the recession in the UAE, majority investors have not considered shifting their investments elsewhere, unless they suspect fundamental changes to the growth prospects of Dubai and the region. Respondents of the survey were C-level executives and business heads across a variety of sectors, nationalities and countries.

“I have been in Dubai for the last 8 years or so. Investing in this city has changed by business and my life,” says Kabir Mulchandani, entrepreneur and CEO of SKAI Holdings. “Despite all the challenges, I continue to invest in the real estate sector of the UAE because I believe there are clear opportunities for success.”

The 2010 AT Kearney FDI Confidence Index tracks investors’ affinity to invest in countries over the next few years. The top Middle Eastern destination according to this index is the UAE which ranks at 11. It is also the sixth highest-ranked emerging market in the world, after large growth markets such as China and India.

In addition, Dubai was recently crowed as the Middle East City of the Future 2010 / 2011 by FDI Magazine. According to newspaper Emirates 24/7, in their evaluation, Dubai scored a 100/100 for economic potential. Evaluation was on the basis of aspects such as population, GDP, total number of FDI projects, number of companies in R&D, global competitiveness, etc

According to an article in Gulf News, Foreign Direct Investment (FDI) in the UAE is believed to have reached $13.7 billion in 2010 and FDI flow would grow from $1.5 trillion in 2010 to $1.8 trillion in 2014.

Kabir Mulchandani stated: “There are still many challenges to overcome, but with the strength of existing businesses, and the commitment to develop the UAE further, the future of Dubai and the UAE looks promising”.

Kabir Mulchandani
Dubai-UAE

It’s all about Jobs in Middle East

Not the Jobs who sadly left us too early, but employment. Various recent studies have pointed out how employment in the region and particularly the Middle East is on the rise. According to findings released by The Monster Employment Index (monster.com), Middle East online recruitment in September escalated to its highest levels in the past 12 months.

The findings of the index show that major economies like KSA, UAE and Qatar showed ongoing positive momentum in hiring trends in sectors like retail trade, logistics and their related occupation groups like finance and accounting.

What does this have to do with real-estate?

Increase in job opportunity has a direct impact on the demand for real-estate. One of the reasons why companies are able to attract more talent to the region is because accommodation costs are now affordable. New expatriate workers who had previously found it hard to save in the region because of rising cost of housing, now have a wide variety of options available.

Adding to this is the easier terms for buyers and leasers from banks and real-estate agencies. What was previously thought of as a hassle or nightmare – finding decent accommodation – has now become simple. Government authorities such as RERA in Dubai have also brought more transparency into the paperwork of how contracts are drawn up and implemented. Resident’s associations are becoming more vocal and are monitoring their expenses to keep maintenance costs low. All these factors are bringing in a new found momentum to the real-estate sector.

Sure, there might be some of you out there thinking, Kabir Mulchandani is in the real estate business, he will link anything to show demand is rising. So don’t just take Kabir’s word for it. Let’s see what the California State University Fullerton, has to say about this.
Researchers Youguo Liang and Willard McIntosh found that, “Employment growth contributes to property markets return in the short run.” If employment keeps rising, growth will rise too. In a highly expatriate employment driven market like ours, this has a huge impact on real-estate markets.

On occupation six-month trends, Monster survey shows  that critical areas such as healthcare (up three per cent) have been registering successive month-on-month growth since June ’11. We still have a long way to go before we reach the pre 2008 growth levels but we have certainly crossed the dip.

Adding to this, the UAE improved its global ranking by two to reach 33 this year in the World Bank's annual Doing Business report. The new report by the World Bank and the International Finance Corporation (IFC) — Doing Business 2012: Doing Business in a More Transparent World — assesses regulations affecting domestic firms in 183 economies. The report finds that 11 out of 18 economies in the Middle East and North Africa improved regulations for entrepreneurs in the past year, despite political and economic uncertainty in the region.

The danger of being optimistic is that unlike a pessimist you don’t get the luxury of being pleasantly proved wrong. But it’s one risk Kabir Mulchandani is willing to take. 2008 was a long time ago, jobs and low costs are bringing in more people and this will fuel more demand. And this time we are better prepared to manage our real-estate market.

Kabir Mulchandani
Skai Holdings
Dubai-UAE

Kabir Mulchandani Gets Clean Chit - Gulf News

Dynasty Al Zarooni Real Estate is considering legal action against some Indian publications and those behind an alleged 'smear campaign' to malign its reputation, officials said. The campaign has allegedly been launched by a former employee of Kabir Mulchandani, chairman of Dynasty Zarooni, who was fired for alleged 'wrongdoing', Gulf News has learnt.

Two Indian publications ran reports referring to some investors' complaint that "he [Mulchandani] had misled them by showing a different property and selling them another". One of the reports said "Dubai's Real Estate Regulatory Authority [Rera] is probing Mulchandani's operations after nearly 30 NRIs from India, Russia and UK complained online".

Dynasty Zarooni, formed in 2005, is a joint venture between Hilal Al Zarooni and Kabir Mulchandani. The company has been engaged in developing, buying and selling residential and commercial properties to wholesale investors and cashing in on soaring prices and growing demand that fetched solid returns.

"Dynasty Zarooni, having a real estate portfolio in excess of Dh20 billion, has been the target of a series of false accusations in relation to complaints from investors, with regards to their Ebony & Ivory project in Jumeirah Lakes Towers," the company said in an e-mailed statement.

The project is being developed by Al Fajer Properties, a leading property developer in the UAE, managed by its president Shaikh Maktoum Hasher Al Maktoum.Over the past week there have been a number of internet blog stories and these culminating with a article in the Indian media, incorrectly quoting Rera officials, the company said.

The Ebony & Ivory development project is a Dh2.7 billion project, which was originally sold out within hours of its launch. "To date, the construction of all of the towers being developed by Al Fajer Properties is progressing rapidly," the statement said.Meanwhile, the Rera has given Dynasty Zarooni a clean chit.

"Dynasty Al Zarooni Real Estate has no violations relating to the registration of property brokers until August 25, 2008," Rera said in a letter yesterday, a copy of which was obtained by Gulf News.Hilal Al Zarooni, president of Dynasty Zarooni, told Gulf News, "We are pursuing legal action against those who are behind this campaign that is damaging our reputation."These imposters have not only targeted Dynasty Zarooni, but the UAE real estate market as a whole. The imposters should be brought to justice." he said.

Gulf News - By Saifur Rahman (Business Editor)

Kabir Mulchandani
Dubai-UAE 

To Invest or Not to Invest that is the Question? Kabir Mulchandani

The recent Arab Spring shook the Middle East. However, the UAE remains stable and safe, with business activities at a normal level. There as been no such uprising in the region and the country has become a default refuge from unrest. These aspects have lead to a trend slightly different than the usual: more traffic from Arab countries to the UAE and more business.

Europe’s growing sovereign-debt crisis and the unstable US economy could well be the cause of this “regionalization” – Arabs investing their petrodollars in other Arab countries, the UAE being the centre of such activity. Dubai has seen none of the violence that has destabilized the region. Its hotel, retail and residential real estate sectors are enjoying a boost from general stability of the country.

According to Reuters, anecdotal evidence suggests that Arabs, middle class and above, are buying Dubai property to hedge their risks in other countries. Similarly in India, a weaker currency is encouraging Indian expatriates in the Gulf to invest in domestic markets. According to the Economic Times, non-resident Indians, especially those living in the Gulf, have invested about Rs 75 crore in August and September of this year in the region, the largest pay-in in over 2 and a half years.

Recently, Russell Investments classified the UAE as an emerging market as opposed to the frontier market designation given by MSCI (Morgan Stanley Capital International) and Standard and Poor’s. The UAE is the first Gulf Cooperation Council (GCC) country to graduate from frontier to emerging market status within the Russell Global Index series.

The market in the UAE seems to be welcoming investments. In addition, articles say that those willing to invest in the UAE, have a longer term approach to investing and are not phased by short-term market fluctuations. This clearly demonstrates the relatively higher comparative value of investing in the UAE over other parts of the world.

According to the UAE Investor Attitudes Index as published in UAE daily – The National, about 60 per cent of the investors surveyed said it was a good time to put money in gold, and half said fixed-rate bank deposits were smart investments. The survey was based on interviews with over 750 people in the UAE, who are market investors, majority whom were expatriates.

Dubai’s roar and rumble has always been connected to the real estate market. There is still over-supply in the market and investors seem to not want to invest heavily in real estate. Though there are still a number of challenges to overcome, it seems stability is on its way up.

To add to that my own experience: I transfer property every day. My optimism comes from real demand and real purchasers with real money.  I see a steady growth in prices until 2014 but then I see a significant jump between 2014 and 2016. Then probably in 2017 and 2018, when suppliers are against us to come back, hopefully we will have some stabilization.

Once pending infrastructure projects are near completion, more investors are likely to look into investing in the property market which is certainly taking an upturn.

According to a recent survey of the industry by PricewaterhouseCoopers (PwC) and INSEAD Abu Dhabi, the private equity industry in the Middle East and North Africa (MENA) has emerged stronger from the global financial crisis and the recent political turmoil in the region. In addition, the survey showed the small-and medium-sized enterprises (SMEs) sector has emerged as new investment target for the regional private equity players.

All in all, there seem to be enough good reasons to invest in the UAE in the long-term. The rest, time will tell!

Kabir Mulchandani
Skai Holdings
Dubai, UAE

Kabir Mulchandani at The Arabian Business Forum 2011

I recently spoke at the Arabian Business Forum that took place at the Armani Hotel. It was my first public appearance in over a year — felt good to be out there again. As you may know, I have been through a lot over the last few years. The Forum gave me the opportunity to tell my story to 200 business professionals and media, a story that has often been told incorrectly by others.

It was great to be part of a speaker list that included the UAE Minister of Economy, HE Sultan Bin Saeed Al Mansoori and some of the region’s most prominent business figures: Hussein Dabbas, President of Royal Jordanian, Mohi-Din BinHendi, President of BinHendi Enterprises, Tirad Mahmoud, CEO of Abu Dhabi Islamic Bank, and V Shankar, CEO of Standard Chartered Bank.

Speaking at the Forum was also the perfect opportunity to launch my new company SKAI Holding. At SKAI we aim to identify nearly complete, strategically located developments, inject capital into them, complete them and sell them off. We already have a few projects in the pipeline and I’m really excited about this new venture.

For those of you who would like to read my story — you can check it out here. Am open to questions if you have any!

Hopefully will be able to share a video of the talk from the Forum. Will keep you posted here.

 Kabir Mulchandani Addressing at Arabian Business Economic Forum

Kabir Mulchandani
Dubai, UAE