ChatGPT has taken the world by storm and quickly became a global success. The latest addition to the GPT series of massive language models, ChatGPT from OpenAI, has generated a lot of excitement. As technology advances, it’s not only e-commerce that is embracing the use of chatbots and artificial intelligence (AI). This revolutionary app is transforming every industry. 

Real Estate developers, management companies, and owners are starting to see the benefits of ChatGPT and are beginning to implement it into their business operations. ChatGPT has come as a blessing for the real estate sector. Since its launch in November 2022, this app has played a pivotal role in improving the operational efficiency of every process such as – resident service, data analysis, document creation, and decision-making. This has resulted in improvements in buyer/resident satisfaction, faster sales of the units, improved occupancy rate, and more revenues for the developers.  

What is ChatGPT?

Launched on 30 November 2022, ChatGPT is an artificial intelligence Chatbot developed by OpenAI – (a renowned artificial intelligence research laboratory). ChatGPT is a Natural Language Processing (NLP) tool driven by AI technology. It generates natural and fluent text based on given prompts, making it a versatile tool to accomplish most of the administrative and business development tasks for the real estate sector. 

Within just 6 months of its launch, ChatGPT has shown great potential. According to the latest article by Polymer Search, as of April 2023, ChatGPT is used by over 100 million people worldwide. It gained over a million users within a week of its launch and has processed around 300 billion words on approximately 175 billion parameters. ChatGPT receives around 10 million daily queries and is forecasted to earn revenue of USD 200 million in 2023 and about USD 1 billion by the end of 2024. Realizing the massive potential of ChatGPT, technology giants are investing significantly in its developer, OpenAI. Recently, Microsoft Corp. invested USD 10 billion in OpenAI to get access to some of the most popular and advanced artificial intelligence systems.

Implementation of ChatGPT in Real estate Operations

ChatGPT is touching the lives of every real estate stakeholder. With the use of ChatGPT, Property management firms are automating their customer service processes. They are deploying ChatGPT to answer common questions, provide property information, and even schedule property viewings. This allows them to devote time to more strategic tasks like reducing operational costs, creating community guidelines, designing plans to boost community engagement and resident satisfaction, focusing on Environmental, Social, and Governance (ESG), Sustainability, negotiating contracts and effective management of property portfolios. Management companies are also leveraging ChatGPT to streamline their operations and offer more personalized experiences to clients. 

As the adoption of AI continues to grow in the real estate industry, it’s likely that ChatGPT and other AI-powered tools will become even more integral in managing a diverse range of its operations such as – customer service, marketing, content creation, and data analysis. Today, more and more real estate developers are adopting ChatGPT and we can expect to see even greater impacts on the workplace in the future. ChatGPT has already outsized the impact on real estate and the extent of its potential application still remains unmapped.

AI technology is indeed enabling the real estate sector to prepare comprehensive industry reports and empowering decision-makers to analyze complex data quickly. With the assistance of AI, real estate professionals can gather and process vast amounts of data related to property performance, market trends, and buyers’ preferences. This enables them to make informed strategic decisions and stay ahead in a competitive market.

Additionally, AI-powered chatbots like ChatGPT are assisting real estate professionals in content creation and marketing efforts to reach a wider range audience and engage effectively with potential buyers and sellers. ChatGPT provides personalized recommendations; answers common questions, and offers 24/7 support to enhance the overall customer experience and increase customer satisfaction.

Top 10 Ways ChatGPT is Positively Impacting the Real Estate Sector

ChatGPT is viewed as the most powerful tool in improving the efficiency of the real estate industry. It has assisted the sector in automating most of the operational tasks to provide faster responses to resident queries with ease and 100% accuracy. 

Here are the Top 10 Ways ChatGPT is Positively Impacting the Real Estate Sector –

1. Simplifying the Communication Process with the Stakeholders

ChatGPT is being used by real estate professionals to provide round-the-clock customer services to the residents, real estate agents and representatives. It assists real estate developers and management companies in explaining rental or purchase processes and providing general guidance to potential buyers. 

ChatGPT is being programmed to answer all the queries and Frequently Asked Questions (FAQs) of the residents related to billing, service, sales, financing, leasing, buying or selling a property, documents required documents, and complaints to name a few. ChatGPT has proved to be a valuable tool in enhancing customer support by enabling the real estate sector to provide prompt responses to their customer’s queries. 

2. Lead Generation and Business Development

ChatGPT emerges as a powerful catalyst, propelling the real estate industry forward by facilitating expedited access to critical information for stakeholders. Seamlessly integrated into real estate websites and applications, this advanced AI technology empowers potential buyers and sellers to effortlessly acquire instant details about properties, ranging from essential elements like pricing, location, and features, all without the requirement of human intervention. The inherent ability to provide prompt responses to customer inquiries not only piques the interest of prospective property buyers but also fosters their inclination to revisit the platform. By introducing an unparalleled level of convenience, speed, and efficiency to the process, ChatGPT’s invaluable assistance not only drives customer engagement but also cultivates an environment conducive to heightened lead generation, sales conversions and business development which fuels the company’s growth & expansion.

3. Making Interactions with Residents More Personalized

Artificial Intelligence (AI)-powered chatbots like ChatGPT have the ability to generate unique patterns based on client behavior. Furthermore, when trained on individual interactions and preferences, ChatGPT can provide personalized and tailored outcomes. Research indicates that leveraging AI in the form of chatbots has emerged as an effective solution for real estate businesses, as it provides a swift and more personalized response to customers. This smart utilization of AI-powered chatbots not only enhances operational efficiency but also has a profound impact on customer satisfaction.

4. Overcoming Language Barriers

The UAE is home to more than 200 nationalities with native Emiratis only accounting for 10% of the overall population. This unique demographic composition also creates language challenges as not everyone knows Arabic or English. 

As a language model, ChatGPT is trained to perform various natural language processing tasks such as – language translation, summarization, question answering, text classification, and more. It is capable of translating the content into 95 languages. ChatGPT leverages deep learning techniques and large datasets to understand the context and generate relevant responses. The model has been trained on a vast amount of text data and can recognize patterns and relationships between words and phrases to generate coherent and contextually relevant responses. With its capabilities, ChatGPT is assisting the real estate sector in various tasks related to text and language processing to overcome language barriers.

5. Unconventional Analytics Capabilities to Facilitate Business Decisions

Property development projects require extensive research and maintenance, which can be time-consuming and expensive. ChatGPT’s analytical capabilities can also play a decisive role in assisting real estate developers in performing data analysis, gathering crucial insights on upcoming market trends and analyzing buyer behaviour & preferences. This will assist the real estate leaders in strategic decision-making. ChatGPT is also equipped with advanced analytics features to reduce the time and resources spent on potential developments. It can also analyze the sentiments of the text to determine whether it is positive, negative, or neutral.

6. Writing Business Proposals and Marketing Content 

ChatGPT is equipped with AI technology’s NLP component, which assists Business Development (BD) and Marketing teams in analyzing transaction-related business proposals for errors. It also enables them to transform documents into useful information which reduces the time spent on due diligence in real estate purchases. ChatGPT has made it much simpler for the BD teams to analyze enormous amounts of competitor and industry data involved in real estate business deals.

Real estate executives often struggle in creating engaging marketing content due to time constraints and writer’s block which often leads to missed business opportunities, lost leads and lower search engine rankings. The implementation of ChatGPT empowers them to generate highly customized, crisp and SEO-friendly marketing content within a few seconds. This not only boosts the lead generation process but also has a profound impact on the company’s brand image and reputation.  

7. Automating Administrative Tasks

Within a short span, ChatGPT has been instrumental in automating a vast majority of administrative tasks which used to consume a lot of man-hours.  ChatGPT can handle routine inquiries and tasks from both internal staff and external stakeholders. It can provide information about office hours, address common queries related to administrative processes, and direct individuals to the appropriate department or personnel. ChatGPT can also help in scheduling appointments, managing calendars, and sending reminders to ensure efficient coordination of meetings and events within the Administration department. It can also assist in rescheduling or cancelling appointments whenever necessary.

ChatGPT also allows the administration department to organize the documents, and retrieve, and the extraction of general information. It can assist in locating specific files, and offer guidance on document submission procedures. ChatGPT can help in training new administrative staff by providing information on standard operating procedures, company policies, and best practices. It can also serve as a resource for ongoing knowledge transfer and continuous learning within the department.

By leveraging ChatGPT’s capabilities, the Administration department in a real estate company can enhance efficiency, streamline communication, and improve overall productivity in various administrative tasks.

8. Generating Accurate Valuations for Properties

The implementation of ChatGPT algorithms allows research teams to generate accurate valuations for properties. ChatGPT has advanced capabilities to analyze vast amounts of data to quickly provide comprehensive insights and predictions. This assists real estate professionals in accurately analyzing property values and upcoming market trends. The implementation of ChatGPT can improve the overall accuracy and efficiency of the real estate industry and lead to better outcomes for buyers, sellers, and investors.

9. Improved Residence Experience

ChatGPT can retrieve vast quantities of diverse information and solutions much faster than manual methods. This assists real estate industry leaders in swiftly analyzing the performance and taking timely actions to meet the resident’s expectations and foster efficiency in the process.

10. Estimating ROI on the Property to Make Informed Investment Decisions

ChatGPT has proven to be instrumental in assisting real estate investors in estimating potential returns (ROI) associated with real estate investments. It also serves as a resourceful assistant in helping users calculate the anticipated financial outcomes of property ventures. Moreover, users frequently rely on ChatGPT to generate comprehensive tables and charts that illustrate long-term investment scenarios. By inputting various variables such as property price, rental income, expenses, and market trends, users can obtain a clearer picture of how different factors might influence their investments over time. This way ChatGPT is empowering real estate investors to make informed investment decisions.

The last half-decade has witnessed a colossal rise in Cybercrimes across the globe. Right from a Fortune 500 organization to a small-scale business to a consumer, everyone has faced the brunt of cybercrime in some way or another. This has not only cost the companies a fortune in terms of financial losses but has also put their brand value and reputation in jeopardy.  

As per the latest studies conducted by Cybersecurity Ventures, Cybercrimes are predicted to cost the world US $8 trillion in 2023. If it were measured as a country, then cybercrime would be the world’s third-largest economy after the U.S. and China.  The studies also predict that global cybercrime costs to grow by 15% per year over the next five years, reaching $10.5 trillion USD annually by 2025, up from US $3 trillion in 2015. 

Common Cyber Crimes Residents Must be Beware of 

The realm of cybercrime encompasses tactics such as phishing, business email compromise, and other cyber-attacks wherein criminals adopt disguises to access sensitive information. This digital extension of traditional crime targets personal financial data, often involving high levels of sophistication by individual or organized cyber criminals. Techniques employed are varied; some operate phishing scams to cast wide nets, relying on volume, while others focus on high-net-worth individuals, investing substantial time in profiling targets based on public and private data. This entails using hacked credit information, property records, and social media details to orchestrate asset theft. 

A recurring pattern involves sending deceptive emails containing links or attachments that, when engaged, infect the victim’s computer with malware. This malware can be exploited to pilfer login credentials or control the victim’s computer remotely, allowing unauthorized entry to financial accounts for profile changes or fund transfers.

How Can Residents Mitigate the Cybercrime Risk?

Cybercrimes have witnessed a substantial increase across the built environment in the last decade. They have adversely impacted the lives of every real estate stakeholder. Thus, it is pivotal to remember these 8 points to avoid falling prey to cybercrimes.

1. Use a VPN with a Strong encryption password

Starting with a robust encryption password and a virtual private network (VPN) is crucial for online security. A VPN encrypts your device’s traffic and safeguards it from cybercriminals. Even if they breach your connection, only encrypted data would be intercepted. It is always advisable to use a VPN on public Wi-Fi networks to ensure protection while browsing.

Your online security is paramount. We recommend never sharing your passwords as Kaizen AMS will never request this sensitive information. Always check the sender’s email address, which should only come from kaizenams.com. If you receive emails about new accounts or bank details, contact 800-KAIZEN or community@kaizenams.com for verification. It is pivotal to stay vigilant and protect your personal information.

2. Allocate a Dedicated Device for Financial Transactions

To prevent any cybercrime related to financial transactions, residents must assign a dedicated device solely for the purpose of financial transactions (i.e., rent payments, service charges, payment of DEWA bills, and other invoices) to minimize the exposure to malware and breaches.

3. Avoid Phishing

The report by Deloitte reveals that 91% of all attacks begin with a phishing email to an unsuspecting victim. On top of that, 32% of all successful breaches involve the use of phishing techniques. Residents must refrain from accessing financial or e-commerce sites through email links. Instead, they must use saved links and confirm secure connections starting with https. to verify the requests for money transfers by phone.

4. Social Engineering 

It is of paramount importance to secure personal and private information, as cybercriminals can trace data points through social engineering. Residents must limit sharing private and confidential information like their mother’s maiden name or pet name on social media as this could expose answers to common security questions. 

Social threats contributed to almost a third of confirmed data breaches, primarily through phishing (92% of social-related attacks). Attackers use deceptive emails with malicious attachments or links to access sensitive data, like banking credentials and trade secrets. Vigilance is key to preventing such breaches and safeguarding critical information from spear phishing and related tactics.

5. Installing Security Software on Smartphones

With the proliferation of sensitive data stored on mobile devices and the growing trend of using them for tasks like online banking, the occurrence of new mobile malware variants has surged exponentially in the last few years. However, users continue to overlook safeguarding their devices against these threats. It is crucial to equip mobile devices with security software offered by reputable providers, regularly updating this software. This proactive approach is imperative to counter the rising risk of mobile malware and ensure the protection of sensitive activities conducted on these devices, such as – online banking.

6. Create Distinctive User IDs and Activate 2FA

Residents must create distinct user IDs, and passwords, and activate two-factor authentication (2FA) uniquely for each online portal they access to add a layer of protection against potential breaches. This multi-tiered strategy will significantly bolster the defence mechanisms against various forms of cyberattacks. This additional security layer also enhances the level of safeguarding, elevating the overall security posture and deterring unauthorized access.

7. Regularly Updating the Systems

Residents must regularly update the devices and software to evaluate and address any vulnerabilities. They must set up regular updates and download legit antivirus software. Furthermore, residents must back up data frequently to thwart ransomware attacks.

8. Avoid Using Public Wi-Fi

Residents should establish secure home Wi-Fi networks and must steer clear of public Wi-Fi networks due to potential vulnerabilities. Public Wi-Fi networks often lack encryption and can expose your data to malicious actors. When travelling, it is prudent to opt for a paid hotspot provider to maintain secure access. By implementing robust security measures for your home network, residents can create a shield against unauthorized access and potential breaches. Public Wi-Fi networks often lack encryption and can expose your data to malicious actors.

In the last four years, Dubai’s property market has experienced remarkable growth which was greatly influenced by the implementation of the Golden Visa. In 2019, the UAE government introduced the Golden Visa Programme, a long-term visa system aimed at attracting foreign residents to contribute to the country’s economy and society. By offering an extended and flexible visa option, the UAE aims to attract individuals who can bring expertise, investment, and talent to the nation, fostering growth and development in various sectors. 

The Golden visa has come as a ‘blessing in disguise’ for those who were in search of a better future abroad. Many perceive that the Golden visa has come as a ray of hope for global investors and working professionals in light of several developed nations like the US, UK and the EU phasing out or tightening their residency and work visa programs.

Golden visa has simplified the process for investors and residents to acquire long-term residency through property investments. Consequently, there has been a significant increase in the demand for Golden Visas. 

What Makes ‘Golden Visa’ Unique?

The ‘Golden Visa’ is a highly sought-after long-term residence visa that offers a range of exclusive benefits to foreign talents looking to live, work, or study in the United Arab Emirates. 

1. No Need for Sponsorship

One of the key advantages of the Golden visa is that it eliminates the need for a sponsor, providing individuals with greater independence and flexibility in their professional pursuits. Golden Visa holders can sponsor family members, including parents, spouses and children of all ages. Additionally, there is no limit on the number of domestic helpers that can be sponsored, further facilitating a comfortable and convenient lifestyle.

3. Privilege of Staying Outside the UAE for Extended Periods

Golden visa holders are granted the privilege of staying outside the UAE for extended periods, exceeding the usual six-month limit, without jeopardizing the validity of their residence visa. This is particularly advantageous for international individuals who may need to travel frequently for work or personal reasons.

Criteria for Real Estate Investors

According to the UAE government website, if an investor owns one or multiple properties, he/she can be eligible for a 5-year Golden Visa, which is renewable under the same conditions and without a sponsor. 

The requirements for this type of visa include:

• Provide a letter from the Land Department of the relevant emirate confirming ownership of one or more properties with a total value of at least AED 2 Million.
• Alternatively, purchasing a property with a loan from specific local banks that have been approved by the competent local entity.

The UAE has recently reduced the minimum property investment required to qualify for the Golden Visa. The new regulations no longer specify the type of property transactions eligible for the visa, whether they are off-plan, ready, purchased with a mortgage, or paid in cash. 

Process

The process to apply for a Golden visa is very simple. All the real estate investors need to do is follow the four steps below:

Step 1: Visit one of DLD’s Service Centres

Step 2: Submit the necessary documents and pay the applicable fees

Step 3: Undergo a medical examination at the designated centre. 

Step 4: Have the Golden Visa stamped on your passport

Documents Required to File for Golden Visa

Required documents for the application include:

• Passport
• An electronic copy of the title deed certificate
• Passport-size photo
• Valid health insurance
• Original Emirates ID

By providing these documents and following the application process, real estate investors can apply for a Golden Visa through property investment.

The Impact of Golden Visa on the Real estate Sector

The launch of the Golden Visa has made Dubai’s real estate sector more attractive than ever for global investors and has substantially accelerated the demand to buy property in the city. This is very much evident from the colossal increase in the real estate transaction year-on-year. 

1. Exponential Rise in Real Estate Transactions Since 2019

Within a few months of its launch in 2019, Property sales transactions in Dubai hit an 11-year high, recording a growth of 20% compared to 2018. This positive trend continued in 2020, 2021, and 2022. Despite the global economic slowdown in 2020 due to COVID-19, Dubai’s real estate sector recorded 51,414 transactions representing a value of over AED 175 billion, according to the annual transaction report issued by the Dubai Land Department (DLD). The success story continued in 2021 as well with Dubai’s real estate market witnessing 84,772 real estate transactions valued at AED 300bn in 2021 – a 65% growth in the number of real estate transactions and a 71% increase in value compared to 2020. 

In the year 2022, Dubai’s real estate surpassed all its previous records and recorded real estate transactions worth AED 528 billion in 2022, which is the highest figure ever. This was a 76.5% increase from 2021 according to the Government of Dubai Media Office. These figures reflect the positive impact of the Golden Visa program on property sales and its role in amplifying the performance of Dubai’s real estate sector.

2. Increased Demand for Holiday Homes and Short-term Rentals

Dubai’s Golden Visa program has not only created a staggering demand for Residential and Commercial real estate but also for holiday homes and short-term rentals. There has been an influx of visitors staying in Dubai on a short and mid-term basis which is generating substantial revenues for the real estate sector. Golden visa has also accelerated the demand for ‘second-home’ admirers.  Freelancers, remote workers, and entrepreneurs always prefer a “home away from home” experience which makes short-term rentals their preferred choice. Short-term rentals offer flexibility and stability, with fully furnished accommodations and amenities that enable digital nomads to maintain their preferred lifestyle while working remotely. 

3. Incentivise the Tenants to Buy the Property

The length of the residency period in Golden Visa also incentivizes real estate tenants to consider buying a property instead of continuing to rent. Over a period of several years, the cumulative rent payments can approach the cost of purchasing the property itself. This makes owning the unit a more financially attractive option, especially considering that real estate is often seen as a good long-term investment. Furthermore, the option of obtaining a dedicated loan from specific UAE banks for purchasing a property simplifies and expedites the buying process. This can be advantageous for investors who may not have the full amount required for an outright purchase but still want to take advantage of the benefits associated with property ownership and the Golden Visa.

‘Rent-to-own-units’ offerings are gaining ground in Dubai like never before. However, there is still a lot of confusion surrounding this concept. Developers often come up with rent-to-own options when the supply of the property exceeds its demand. They want to use rent-to-own as a second option to sell the property in order to move the stock, which is more common in projects located far from the city.

What is ‘Rent-to-Own Units’?

In simple terms, rent-to-own properties involve the buyer purchasing the property from a developer by paying on a monthly, quarterly, or annual basis, as specified in the agreement. 

Rent-to-own Unit is a property arrangement which enables individuals to lease a unit for a specific time with the option to buy it later, where the rental payments act as a down payment. The agreement is made between the buyer and developer, operating under tenancy laws in the UAE. This option appeals to aspiring homeowners in the UAE. The developer and buyer must agree on the ownership timeline, which can extend up to 20 years, and the rental amount during this period. The upfront payment is typically around 5% or less, eliminating the need for a mortgage with a 25% down payment. Though rent may be higher than market rates, it offers convenience for buyers struggling to save for a deposit.

Rent-to-own unit agreements are completely legal. Dubai Land Department (DLD) has launched a rent-to-own service through its portal, which is the registration of a specific title of deed to provide a clear legal framework to facilitate such transactions. DLD has issued guidelines and fees related to registration, financing, transfer, and cancellation of rent-to-own contracts. While there are established guidelines, it’s worth noting that the rent-to-own schemes in practice have been individually developed to suit each specific case.

‘Rent-to-Own Units’ – A Faster Way to Become a Homeowner 

There has been a change in consumer buying behaviour towards ‘Rent-to-own’ units in the last few years The ‘2022 Annual Market Watch Report’ by Property Finder finds out that consumer buying behaviours have been rapidly evolving towards more long-term investments, with tenants preferring ownership over rental properties which is majorly driven by the surge in average market value by 25%.

Agreements Available in ‘Rent-to-own units’ 

The two available agreements in ‘Rent-to-own units’ includes – a.) Possibility to Purchase  b.) Purchase Agreement.

a.) Possibility to Purchase: In this arrangement, the buyer pays an ‘option fee,’ a mutually agreed percentage of the purchase price, securing the right to purchase the property in the future. If the purchase isn’t pursued, the option fee is forfeited. This approach allows for careful consideration of property ownership before committing, acknowledging its significance.

b.) Purchase Agreement: All terms are mutually agreed previously with the buyer and developer deciding on a fixed purchase price or choosing to determine the price with a future valuation at an agreed date.

Which Type of Properties is Popular in ‘Rent-to-own’ Option?

Some of the most popular properties in rent-to-own arrangements are single-family homes or townhouses. Buyers are typically looking for properties that they can eventually own and that meet their long-term housing needs.

Several buyers have also shown interest in rent-to-own options for larger, more expensive properties such as – multi-family homes or even commercial properties. However, these types of arrangements may be less common, and the eligibility requirements may be more stringent.

Buyers who are interested in rent-to-own options are typically looking for properties that meet their current and future housing needs and that they can eventually own. Mostly, buyers who are opting for the ‘Rent-to-own’ Option are from India, Russia, Pakistan, and the Middle East.

Developers offering ‘Rent-to-own units’ Option

Some of the major developers offering the ‘Rent-to-own units’ option include –

• Dubai South Properties offers Rent to Own for 2- & 3-bedroom apartments in the Pulse community with a flexible payment plan over 10 years. The offer includes 2 months of free rent. The tenant can rent and own the property after 10 years.

• California Village offers a ready-to-move-in and post-handover payment plan that can go for 5 years and a few other options.

Key Factors Influencing ‘Rent-to-own Units’ Option

The rent-to-own trend in real estate is influenced by various factors that can lead to its rise or fall. Economic conditions, such as job growth and unemployment rates, play a significant role. In a stable economy with a strong job market, more people can afford rent-to-own options, leading to a rise in the trend. Conversely, during an economic downturn with high unemployment rates, fewer people can afford this option, causing a decline in the trend. 

The availability and affordability of housing also impact the trend. A shortage of affordable housing or rising home prices may increase demand for rent-to-own, while an oversaturated market or falling home prices may decrease it. 

Interest rates also affect the attractiveness of rent-to-own options, with low rates potentially reducing the trend and high rates increasing it. Additionally, demographics play a role, with a large population of millennials struggling to save for a down payment leading to a rise in the trend, while a population of older homeowners may decrease demand for rent-to-own options.

Is ‘Rent-to-own units’ a Right Option for you?

Purchasing a property on a mortgage from a bank provides long-term stability and ownership but requires a larger down payment, a strong credit history, and a steady income. 

The main differences between renting-to-own schemes and home mortgages in Dubai lie in the down payment amount and eligibility conditions. For home mortgages, a minimum 25% upfront payment of the property value is required. In contrast, rent-to-own programs offer more flexibility, allowing you to try the unit before purchase and have simpler criteria and procedures. Rent-to-own schemes also increase the chances of owning a home in Dubai at reasonable prices, as the first payment is not as costly, and rental payments serve as a form of instalment to collect your capital indirectly.

Things to Remember Before Renting-to-Own Unit

When considering a renting-to-own scheme, it’s important to keep in mind the following points:

• Thoroughly understand all the clauses, rules, and conditions in the tenancy contract before signing
• Be aware of price differences based on market changes during the contract period
• Ensure you have the title of the deed throughout the entire contract duration
• Understand the time frame for payment and termination clauses otherwise, you might end up paying a higher upfront amount compared to the going rate for similar properties not under a rent-to-own scheme.
• If you decide to buy the property, check your eligibility for a mortgage to complete the buying process.

Documentation required

• The value of the property that the buyer and developer agreed on
• The time frame of the lease contract, according to both parties’ confirmation
• The title of deed ownership throughout the contract duration
• Exit terms
• Penalty clause for defaulted repayments
• Percentage of down payment (if any) to be refunded in case you decide to terminate the contract 
• A clause related to sudden job loss, missed repayments, or mortgage rejection at the time of purchase (once the lease term ends)
• Property maintenance terms to define who is responsible for the upkeep of the property throughout the contract duration

To register for the rent-to-own scheme in Dubai, the following documents are required –

Individuals: a copy of the buying contract, a copy of the Emirates ID. For non-residents, a copy of a valid passport.

For Sole Establishments: a copy of the trade license. For the license’s owner, a copy of a valid Emirates ID and passport. Power of attorney if available.

For Limited Liability Companies: Copy of a valid trade license. For the license’s owner, a copy of a valid Emirates ID and passport. Power of attorney if available.Copy of the company’s Memorandum of Association ( MOA) and its appendices (legally translated into Arabic) and a copy of the shareholder certificate.

For Foreign/GCC Companies: a Copy of a valid trade license. For the license’s owner, a copy of a valid Emirates ID and passport. Power of attorney if available. Copy of the company’s Memorandum of Association and its appendices (legally translated into Arabic) and authenticated by the Ministry of Foreign Affairs. A copy of the shareholder certificate. No Objection Certificate from the Free Zone areas, with one-year validity (for foreign companies).

Final words

Undoubtedly, the ‘Rent-to-Own Units’ option has come as a ‘blessing in disguise’ for those buyers who are unable to secure a traditional mortgage due to factors such as poor credit, lack of down payment, or a high debt-to-income ratio. It is a suitable option for those buyers who want to become homeowners but may not have the financial means to do so immediately. Furthermore, rent-to-own options also involve lower upfront costs with more relaxed eligibility requirements.

However, it is also important to remember that the ‘Rent-to-Own Units’ option often comes with higher monthly payments and a premium for the purchase option yet it is much lower than the interest value. This makes rent-to-own a great option for those who can afford high instalment value.

Dubai’s real estate sector stands as a paragon of excellence, captivating global attention with its state-of-the-art, opulent, and awe-inspiring properties. This alluring combination has proven to be a magnet for investors worldwide, beckoning them to participate in Dubai’s real estate market and savour the bountiful rewards offered by its ultra-luxurious properties. Boasting an unmatched return on investment (ROI) of 7-8% makes Dubai’s real estate unparalleled in the global arena. Notably, the second quarter of 2023 witnessed a continuation of this remarkable trend, solidifying Dubai’s position as a beacon in the real estate realm.

Driving this unequalled performance are several key factors that have propelled the city’s property market to new heights, ensuring its constant evolution with groundbreaking developments. Foremost among these factors are the distinctive quality and innovative designs of the properties on offer, lower taxes for corporates, world-class infrastructure, highest return and rental value, and above all safety are some of the factors which are setting Dubai apart from any other city in the world. This uniqueness has undoubtedly contributed to attracting investors seeking premium offerings and superior returns.

Real estate transaction in Q2, 2023

Q2, 2023 has been the most successful Second quarter in the last 10 years in terms of both the number and value of the transactions. According to DXB Interact, in Q2, 2023, a total of 30,264 sales transactions worth AED 91.2 billion (US $24.8 bn) were recorded. The number of transactions in Q2, 2023 increased by a whopping 34.8% compared to Q2, 2022, however, compared to the previous quarter (Q1, 2023), the number of transactions decreased by 2.1%. 

In terms of sales value, there is a 2.8% increase in Q2, 2023 compared to the previous quarter and a colossal 54.4% increase in Q2, 2022. 

Out of 30,264 sales transactions – 23,244 apartments were worth AED 47.5 billion, 4,808 villas worth AED 20.9 billion, 925 commercials worth AED 1.6 billion, and 1,287 plots worth AED 21.2 billion.

Compared to Q1, 2023, there was a 1.4% increase in the number of apartments while Villa’s sales plummeted by 19.9% in Q2, 2023. The number of Commercial properties increased by 4% and the number of plots sold also surged by 18.7%.

When compared to Q2, 2022, there was a 54.1% increase in the number of apartments sold while the number of villas sold decreased by 12%. The number of Commercial properties surged by 30.6% and Plots by 8.2%.

Decline in Off-plan Property Sales Transactions

According to DXB Interact, the number of property sales transactions in Q2, 2023 stood at 15,889 worth AED 40.8 billion. This was a 10.4% decline from the previous quarter but a 44.2% increase from Q2 2022. 13,023 apartments were sold worth AED 30.2 billion. This was a 74.7% increase in the sales of apartments compared to Q1, 2022 but a 3.9% decrease from Q1, 2023. 

Sales of villas in Q2, 2023 were 2,739 worth AED 10.2 billion. This was a 22.2% decrease compared to Q2, 2022 and a 33.5% decrease from Q1, 2023. 127 Commercial properties were sold worth AED 369.5 million in Q2, 2023. This was a 209.8% increase compared to Q2, 2022 and an 81.4% increase compared to Q1, 2023. 

Surge in Ready Property Sale Transactions

According to DXB Interact, there were 14,375 ready property sale transactions took place in Q2, 2023 worth AED 50.4 billion. This was a 9.2% increase from the previous quarter and a 25.7% increase from Q2, 2022. 

The number of ready apartments sold in Q2, 2023 was 10,221 worth AED 17.3 billion. This was a 9% increase from Q1, 2023 and a 33.9% increase compared to Q2, 2022. Sales of villas in Q2, 2023 were 2,069 worth AED 10.7 billion – a 9.8% increase from the previous quarter and a 6.4% increase compared to Q2, 2022. 

798 Commercial properties were sold worth AED 1.3 billion in Q2, 2023. This was a 2.6% decrease from the previous quarter however, an impressive 19.6% increase compared to Q2, 2022. The sales of plots in Q2, 2023 was AED 21.2 billion – an increase of 18.7% compared to the previous quarter and 8.2% compared to Q2, 2022.

Off-plan vs. Ready Property Sales 

Going by Sales volume, 45% of the real estate transactions that took place in Q2, 2023 were for ready properties, while 55% are for off-plan properties. 

In terms of Sales value, 42% of the transactions are for ready properties and 58% for the off-plan.

Surge in Mortgage Transaction

A total number of  8,009 Mortgage transactions worth AED 32.8 billion happened in Q2, 2023. Compared to Q2, 2022, there was a 38.1% increase in the number of transactions and a 29.2% increase in total value.

Property Prices Witnessed an Upward Trend

Property prices also witnessed a rise in the second quarter of 2023. According to DXB Interact, the median price for the property increased from AED 1,150 per sq. ft. in Q2, 2022 to AED 1,336 in Q2, 2023. This was a 16.2% year-on-year (YoY) increase in property prices. When compared to Q2, 2014, the property prices in Q2, 2023 increased by 29.1%.

The price per sq. ft. for an Off-plan apartment in Q2, 2023 stood at AED 1,810 while the prices for an Off-plan villa were AED 1,207 per sq. ft.  For the Plot, the price per sq. ft. was AED 615. The price per sq. ft. for the Ready apartment was AED 1,140 while the price per sq. ft. for the Ready villa was AED 978.

Demand for Luxury Properties Remains Resilient

Q2, 2023 was one of the best quarters for the sales of luxury properties. 62% of the total properties sold in the second quarter of 2023 were above AED 1 million.

• 38% of the properties sold were the priced below AED 1 million
• 28% of the properties sold were in the price range of AED 1 million-2 million
• 14% of the properties sold were in the price range of AED 2 million-3 million
• 12% of the properties sold were in the price range of AED 3 million-5 million
• 8% of the properties sold were above the price of AED 5 million

This sales value proportion does not include mortgage transactions.

Most Expensive Properties Sold in Q2, 2023

Villas: The most expensive villas sold in Q2, 2023 were at Emirate Living (AED 150 M), MBR District 1 (AED 90 M), Dubai Hills (AED 82M), Palm Jumeriah (AED 76M), and The World (AED 74M)

Apartments: The top 5 projects with the most expensive apartments sold were – Bulgari Lighthouse Dubai at Island 2 (AED 137 M), BV Residences 3 at Jumeira Bay (AED 122 M), Six Senses Residences The Palm at Palm Jumeriah (AED 105 M), Bluewaters Residences 7 at Dubai Marina (AED 80 M) and Private Residences Dubai at Dubai Water Canal (AED 78 M).

Most Expensive Areas 

According to DXB Interact, the top 5 most expensive areas to buy an Apartment by per sq. ft. in Q2, 2023 were – Dubai Marina (AED 3,565 AED per sq. ft), Palm Jumeirah (AED 2,729 per sq. ft.), Downtown Dubai (AED 2,361 per sq. ft), Dubai Creek Harbour (AED 2,059 per sq. ft.), and Dubai Hills (AED 1,983 per sq. ft).

The top 5 most expensive areas to buy a Villa by per sq. ft. in Q2, 2023 were – Tilal Al Ghaf (AED 1,496 per sq. ft), Arabian Ranches 3 (AED 1,429 per sq. ft.), Damac Lagoons (AED 1,328 per sq. ft.), Damac Hills (AED 1,219 per sq. ft.), and Mudon (AED 1,125 per sq. ft.)

The real estate sector in Dubai is recognized worldwide for its state-of-art, luxurious, stunning, and extravagant properties. These attributes attract investors from across the globe to invest in Dubai’s real estate and reap the benefits of its ultra-luxurious properties and enjoy the highest return on Investment (ROI) of 7-8% – the highest in the world, and Q1, 2023 was nothing different. The city’s property market has set a new high and is constantly evolving with new one-of-its-kind developments.

Distinctive quality and design, high return on investment (ROI), and favourable government policies and initiatives supporting the real estate sector like – Dubai Economic Agenda (D33), Masterplan 2040, and District 2020 have been the key drivers behind this exceptional performance. The property market is also gaining from the after-effects of Expo 2020, which has led to a huge proliferation in the demand for real estate in Dubai.

Real estate transaction in Q1, 2023

According to DXB Interact, in Q1, 2023, a total of 30,898 sales transactions worth AED 88.7 billion (US $24.15 bn) were recorded. There was a 60.46% YOY increase in the property sales value in Q1, 2023.

Out of 30,898 sales transactions – 22,922 apartments were worth AED 45 billion, 5,682 villas worth AED 22.1 billion, 889 commercials worth AED 1.6 billion, and 1,405 plots worth AED 19.9 billion.

Compared to Q1, 2022, there was a 72.1% increase in the number of apartments sold and a 0.2% surge in the number of villas. Sales of plots increased by 77.4% while sales of commercial property witnessed an increase of 19.8%.

Substantial Increase in Off-plan Property Sales Transactions

According to DXB Interact, 13,548 apartments were sold in Q1, 2023 worth AED 29.4 billion. This was a 94.8% increase in the sales of apartments compared to Q1, 2022. Sales of villas in Q1, 2023 were 4,076 worth AED 13.7 billion. This was a 6.3% increase compared to Q1, 2022. 70 Commercial properties were sold worth AED 312.2 million in Q1, 2023. This was a 15.7% decline compared to Q1 2022.

Surge in Ready Property Sale Transactions

According to DXB Interact, 9,374 apartments were sold in Q1, 2023 worth AED 15.7 billion. This was a 47.3% increase in the sales of apartments compared to Q1, 2022. Sales of villas in Q1, 2023 were 1606 worth AED 8.5 billion – a 12.5% decrease compared to Q1, 2022. 819 Commercial properties were sold worth AED 1.3 billion in Q1, 2023. This was a 24.3% increase compared to Q1 2022. The sales of plots in Q1, 2023 increased by 77.4% compared to Q1, 2022 to reach 1,405 worth AED 19.9 billion. 

Off-plan vs. Ready Property Sales 

Going by Sales volume, 60% of the transactions that took place in Q1, 2023 were for ready properties, while 40% were for off-plan properties. 

In terms of Sales value, 63% of the transactions were off-plan, while 37% are for ready properties.

Rise in Mortgage Transaction

A total number of 8,889 Mortgage transactions worth AED 31.4 billion happened in the first quarter of 2023. This was a 62.9% increase in terms of the number of transactions compared to Q1-2022 and a 24.6% increase in total value when compared to the first quarter of 2022.

Property Prices Witnessed an Upward Trend

Property prices also witnessed a rise in the first quarter of 2023. According to DXB Interact, the median price for the property increased from AED 1,131 per sq. ft. in 2022 to AED 1,285 in Q1, 2023. This was a 13.6% year-on-year (YoY) increase in property prices. When compared to Q1, 2014, the property prices in Q1, 2023 increased by 31.5%.

The price per sq. ft. for an Off-plan apartment in Q1, 2023 stood at AED 1,776 while the prices for an Off-plan villa were AED 1,172 per sq. ft. For the Plot, the price per sq. ft. was AED 700. 

The price per sq. ft. for the Ready apartment was AED 1,148 while the price per sq. ft. for the Ready villa was AED 911.

Surge in Demand for Luxury Properties

For a long time, Dubai has been witnessing a continuous rise in the demand for luxury properties and Q1, 2023 was no different. 65% of the total properties sold in the first quarter of 2023 were above AED 1 million.

• 27% of the properties sold were in the price range of AED 1 million-2 million
• 19% of the properties sold were in the price range of AED 2 million-3 million
• 11% of the properties sold were in the price range of AED 3 million-5 million
• 9% of the properties sold were above the price of AED 5 million

This sales value proportion does not include mortgage transactions.

Most Expensive Properties Sold in Q1, 2023

Villas – Palm Jumeirah remained the top choice of ultra-rich and HNWIs to buy premium villas. The most expensive villas sold in Q1, 2023 were at Palm Jumeirah worth AED 183 million, followed by Emirate living (AED 70 million, Dubai Hills (AED 47 million), Tilal Al Ghaf (AED 45 million), and MBR District 1 (AED 31 million).

Apartments – The top 5 projects with the most expensive sold apartments were Bulgari Lighthouse Dubai at Island 2 (AED 410 million), AIRE Dubai at Al Wasl (AED 119 million), One Canal at Dubai Water Canal (AED 73 million), ORLA by Omniyat at Palm Jumeirah (AED 65 million), and BV Residences 4 at Jumeirah Bay (AED 65 million).

Most Popular Areas

According to data from the DXB Interact, the top 5 areas in Dubai that witnessed the highest real estate transactions in Q1, 2023 were Jumeirah Village Circle (3310 transactions), Business Bay (2,750 transactions), Dubai Marina (2,287 transactions), Dubai Creek Harbour (1,758 transactions), and Damac Lagoons (1,351 transactions).

The most popular areas to buy villas were Damac Lagoons, Arabian Ranches Iii, The Valley, Villanova, Tilal Al Ghaf, Al Yelayiss 2, The Field, Emirate Living, Damac Hills 2, and Nad Al Shiba First.

The most popular areas to buy apartments were Jumeirah Village Circle, Business Bay, Dubai Marina, Dubai Creek Harbour, Burj Khalifa, Dubai Hills, Sobha Heartland, Town Square, Arjan, and Jumeirah Lakes Towers.

Outlook for 2023

Dubai’s property market is expected to lead the global price charts in Q2, 2023. This will attract ultra-rich and high-net-worth individuals (HNWIs) investors to the luxury property market.  

1.) Dubai will Lead the Prime Price Growth

According to the 2023 report by Savills, Singapore, and Dubai will lead the global price charts in 2023, both with projected prime price growth of between 6% to 7.9%. Both cities will continue to see sustained inflows of high-net-worth individuals. However, Dubai’s capital value growth, which will be similar to Singapore’s and will be around 12%. 

2.) Demand for Luxury Properties will outpace the Supply Resulting in Price Rise

The demand for luxury villas and apartments in Dubai has remained competitive and is expected to outpace the existing supply. This will lead to an increase in property prices in the coming months. Palm Jumeirah and the Dubai Residence complex have seen significant gains in the value of villas where prices have increased by up to 30% over the past year. This trend is expected to continue throughout 2023.

According to the latest report by Knight Frank, Dubai’s mainstream residential market is expected to register a price increase of 5-7% in 2023. The demand for luxury villas in Dubai will continue to grow as more foreign investors enter the market.

3.) Interest Rates will vary

The effects of higher interest rates on the real estate market in Dubai are expected to vary. Despite the uncertainty of a rising interest rate in the UAE, the real estate sector will continue to grow strongly. 

4.) Increase in Rents

The increase in property prices will result in a lack of affordable housing which will shoot up the rents and result in an overall increase in the cost of living in Dubai.

With an aim to transform Dubai into a global digital hub, in July 2022 Dubai Land Department (DLD) joined hands with one of the top banks in UAE, Emirates NBD  to automate the process of rental cheque payments and digitize the rent collection process using the Central Bank of the UAE’s Direct Debit System (UAEDDS). This year, Dubai Land Department has gone the extra mile to foster and expand digitization in the real estate sector with its new ‘Ejari update’ feature.

In January 2023, Dubai Land Department announced rent payments via. Direct debit through its innovative new Ejari update which features the Noqodi Ejari Direct Debit Service (DDS). The Direct Debit System (UAEDDS) by the Central Bank of the UAE (CBUAE) will facilitate tenants in paying their rent automatically, via direct debit. 

DLD’s Noqodi Ejari

Dubai Land Department will now fully integrate the Ejari with the Noqodi Direct Debit system (UAEDDS). According to Noqodi Ejari DDS Manual released by the Dubai Land Department, the Direct Debit System (UAEDDS) by the Central Bank of the UAE (CBUAE) will provide the residents of Dubai with an automated payment method that will facilitate recurrent payments from their bank accounts. 

The new system will allow tenants to manage the schedule of their rent payments during the renewal and contract creation process. The Noqodi Ejari DDS Manual will guide the users on the steps they need to follow to set up a DDS in Ejari and Noqodi.

The Need to Digitize Rent Collection Process  

Historically,  rent payments have been dominated by cheques for decades with many residential communities not offering the option for direct debit. This has resulted in payment delays for the landlords and management companies and has adversely impacted their abilities to conduct renovation or development work. But today, a vast majority of rent payments are done digitally. Thanks to the supportive policies introduced by the UAE Government to turn the nation into one of the world’s biggest cashless economies. According to the article titled – ‘Cashless Countries’ by the UK’s financial firm – Money.co.uk, the UAE is ranked at 8^th Spot in the World in terms of a cashless economy with 83% of the population owning a debit card/bank account.

A vast list of measures and distinctive policies introduced by the Dubai Land Department in the last few years has accelerated the pace of digital payments. Today, every real estate stakeholder (i.e. Landlords, Tenants, Management companies, etc.) prefers to accept and receive rent payments digitally. Another factor which makes direct debit payments favourable for tenants is it is always easy to curate the payment terms agreed upon in the contract. 

The Impact of Rent Payments by Direct Debit on Property Management firms 

Dubai Land Department’s decision to encourage rent collection by direct debit has come as a blessing for property management firms. It is a win-win situation for tenants and property management firms as it will make the process faster and introduce operational efficiency to the process.  

Here are the top 5 ways Rent Payments via. Direct debit Boosts the Revenues of the Property Management firms

1. Reduces Late Payments

Paying rent via. Direct debit minimizes the possibility of late payments. It ensures timely and uninterrupted cash flows for the property management firms which increases their abilities to spend on the development & welfare of the community as well as the residents. Under the Direct debit process, once the tenant authorizes the rent payment, Property management firms receive it without going through any hassles.  This saves time & money spent by the PM firms in chasing the payments as well as from the stress of sending threatening eviction letters. 

Landlords and property management firms collecting rents through post-dated cheques have to rely on traditional and manual payment processes which are very time-consuming and difficult to reconcile. It requires them to manage cheques from a large portfolio of communities and deposit them in a bank account. Furthermore, it also takes time for cheques to clear which delays the payments. PM firms also have to spend time tracking income payments on the CRM portal and maintaining the records and reconciling them which is both time-consuming and prone to manual errors. Rent collection by direct debit overcomes these hurdles by facilitating easy reconciliation digitally and tracking any missing rent payments.

2. Minimizes Administration Cost 

Managing cheque payments involves huge administrative costs. Cheque payments require managing a lot of paperwork, reconciliation, hiring more administrative staff, dealing with the cheque bounces, and managing post-dated cheques which are both time-consuming and costly-affair for property management firms. On the contrary, direct debit payments automate the entire process of rent collection. Once the tenant sets a date, rental payments are taken automatically on the specified date each month. This prevents property management firms from investing huge money in collecting rents and maintaining tons of paperwork.

3. Overcomes Manual Errors

Cheque payments are also subjected to human errors. On several occasions, cheques used to make payments get bounced or dishonored by the banks due to human errors, such as – insufficient balance in the bank account, signature mismatch, discrepancy in dates, overwriting, or a cheque being damaged. This results in payments getting canceled and tenants incurring late payment charges despite making their payments on time. Delays in payments also adversely impact the operations of property management firms. Rent payments by direct debit overcome all these issues as bank payment portals inform tenants about insufficient balances or incorrect bank details in advance. This minimizes the possibility of bounced payments and reduces delays for homeowners in receiving timely payments.

4. Maximize the Occupancy Rate

With rising competition and several quality residential developments being added to the industry every month, flexibility is the only key to success for landlords. The more flexible landlords will be with rent and rent payments the wider the choice of tenants will be interested in renting their property. This creates an urge for the landlords to come up with more flexible payment options to attract tenants and one such option is – collecting the rent via. Direct debit.

Collecting rents via. Monthly direct debit from the tenants instead of a series of posted cheques will make the community more attractive for the tenants, especially for those who are finding it difficult to pay a large sum upfront for the initial rental cheque payment. It will also provide tenants with the flexibility to make rent payments from anywhere when they are outside the country and prevents them from any penalties related to late payments. 

Rent payment by Direct debit also assists property management firms in the swift collection of rent and ensures timely payments and saves them from the hassles involved in cheque payments. Prioritizing the financial needs of the tenants will also allow landlords and management firms in building a customer-centric image and gaining a competitive edge in the industry through a positioning strategy.

5. Secure, Reliable, and Flexible

Rent payments by Direct debit are highly secured as they place on highly secured payment networks established by recognized banks. Rents are deducted as per the instructions specified in the rental agreement. Direct debit payments also offer flexibility to the tenants and allow them to set up their rent payments in line with their rental agreement. This has a profound impact on resident satisfaction and attracts new tenants to the community which results in better occupancy rates and more revenues for the property management firms. This additional revenue is further invested in the resident welfare programs which further improves their experience of living in the community. Thus, rent collection by Direct debit is a win-win situation for both residents and the management firms.

The last few years have been challenging for Property management (PM) firms as they had to navigate through the complexities which arose due to the Covid-19 pandemic, rising inflation, climate change, regulations, and increasing energy prices. The sector has successfully overcome all these hurdles through effective planning, ensuring timely measures to safeguard the residents, focussing on energy-efficiency practices to reduce operation costs, implementation of digital technologies to offer faster & improved services to the residents, and adopting environmental-friendly practices to combat issues arising due to climate change.

2023 has come up with all new priorities for them. This year we are expected to witness an increased focus of the property management firm on delivering more value to the landlords and residents and coming up with new initiatives to boost resident satisfaction and safety to stay the frontrunner in the competition.  

Let’s find out what we perceive as the Top 5 trends to watch out for in 2023 in the Property Management sector –

1.  ESG

Sustainability has become a key agenda for the UAE ahead of the 28th session of the Conference of the Parties (COP 28) Summit in the UAE. HH President Sheikh Mohamed bin Zayed Al Nahyan has announced that 2023 will be the ‘Year of Sustainability’ and has emphasized the UAE’s commitment to support innovation in the field of sustainability. There will be an increased focus of the PM firms on ESG and sustainability to minimize the impact of building operations on the environment. 

“ESG” is an acronym used for “Environmental, Social and Governance”. It is a framework against which the sustainability and social responsibility of companies are measured. Due to climate change, ESG has become an important business consideration across the globe. The report titled – ‘What ESG investing means for MENA’s real estate’ by Cityscape Intelligence reveals that a vast number of studies have linked companies’ ESG performances to long-term profitability & financial resilience. ESG investing has emerged as a lucrative asset class for portfolios in the MENA region. There has been a surge in the number of real estate stakeholders who are prioritizing ESG standards like never before. ESG will be at the pinnacle in the priority list of property management firms this year. 

 Here is what ESG initiatives look like in 2023 in the Property Management sector-

a.) Environment

The property management sector will adopt and embrace environment-friendly and energy-efficient practices to minimize the adverse impact of their operations on the environment. They will achieve this goal by focusing on two major aspects.  

1.) Improving Energy efficiency

Improving energy efficiency significantly minimizes carbon emissions and has a profound impact on reducing the energy cost as well as the overall operational cost of the community. 

To improve energy efficiency, property management firms will emphasize – installing 5 Star energy-efficient equipments and LED Lights & relay switches to improve energy efficiency and performance, installing more solar panels to meet most of the building’s requirements through solar energy, deploying Building Automation Systems (BAS) to keep a tab on energy consumption, creating awareness among the residents about best ways to save energy, leveraging technology to improve air quality, minimize carbon footprints, promoting biodiversity, building more greenhouses to promote greenery and reduce carbon emissions, and preventing natural resource depletion.

 2.) Improving their Waste Management Process

Property Management firms will focus on improving their waste management process to reduce expenses for disposal and minimize the effect of waste on the health of the residents and environment. 

Some of the ways PM firms will adopt to reduce waste production includes – building advanced recycling and waste management facilities, working towards a zero waste approach by ensuring the reuse of recyclable waste, deploying technology to track waste collection and reduction, utilizing reusable waste items on-site, composing the organic waste, and encouraging direct community member engagement and accountability. 

b.) Social

As a part of the Social aspect, property management will be working towards launching more wellness and mental health programs for the residents, hosting community events & engagement programs, strengthening data protection and security to maintain the privacy of resident’s personal information, and working towards maximizing the impact of their initiatives on the local communities in which they operate and serve.

c.) Governance

Property management firms will be strengthening their governance by designing policies, and standards which support corporate governance practices and principles and promote ethical behavior, and compliance. They will achieve this by launching robust compliance programs, promoting diversity, and inclusion, providing necessary training to the employees and service providers on compliance and governance, engaging with vendors/suppliers based on their recognized ESG standards, implementing AI-powered reporting platforms to build greater transparency for the stakeholders, leveraging technology to accurately report the residents’ issue, conducting a timely assessment of the risks arising from the climate change, prioritizing sustainable practices in the operations, and launching training programs to build a sustainable development mindset.

2. Increased Usage of Technology to Offer a ‘Personalized’ Experience  

Creating an ‘Awe-inspiring’ resident experience will be the top priority of property management firms. A single instance of unit turnover costs heavily to the PM firms with more efforts required to boost the occupancy rate. As the general rule of customer acquisition suggests that acquiring a new customer can cost 5X times more to a business than retaining an existing customer. Resident retention will be the primary focus of property management firms. To achieve this, they will be focussing on automation and deploying advanced technologies to overcome the challenges faced by the residents. PM firms will also strive to offer more personalized experiences to make their managed communities a preferred choice for the residents.

Here are some of the ways PM firms will boost the residents’ experience –

a.) Proactive Maintainance: Studies conducted across the globe have emphasized the need to conduct proactive maintenance of buildings. It helps to create mechanisms to prevent and control the deterioration of the building and implement maintenance actions that are both reliable and economic. Proactive maintenance significantly minimizes the number of maintenance requests and ultimately leads to an increase in resident satisfaction. 

c.) Streamlining the Lease Renewal Process: There will be an increased focus on streamlining the lease management process by sending renewal notices in advance and offering incentives to those renewing early.  This will encourage renters to lock in rates with a longer lease term with property upgrades and improvements at the time of the lease renewal. 

Streamlining the lease management process will reinstate the buildings and units which are now aging and enable the sector in getting new supplies.

d.) Building a more Connected Environment: Property management firms will be investing more in building a more connected environment by offering faster Wi-Fi and installing IoT devices. PM firms will also work towards modernizing other touchpoints within the community such as – access control and package delivery.

To learn more about how Kaizen AMS leverages technology to bring personalization in its communication with its 40,000+ residents in its 130+ managed communities, read our case study-5 Ways to Achieve Resident Satisfaction with Personalization through Technology 

 3. Working closely with the Family Offices 

Family offices are rising at an exponential pace in Dubai growing because there is a demand for a corporate-like structure from wealthy Emirati families to manage their growing real estate, wealth, and assets. Dubai has a connection with Family offices for 90 years since the discovery of oil in the region. According to an article titled – ‘How to revitalise traditional family businesses in the Gulf’ by The Arabian Business, family offices account for more than 90% of the private sector. 

Favourable decisions taken by the UAE government have made Dubai an epicenter for global elites. According to the Henley Private Wealth Migration Dashboard, the UAE was at the pinnacle in the world in terms of attracting High-Net-Worth Individuals (HNWIs) in 2022 and projected net inflows of 4,000 HNWIs. To cater to this substantial increase in HNWIs, Dubai International Financial Centre’s Authority Board approved the opening of a Global Family Business and Private Wealth Centre in the UAE in 2022 in a bid to welcome more Family Offices in the nation. This step has augmented the demand for Family offices and has encouraged several family offices from across the globe to open their headquarters in Dubai as many of these HNWIs moving to Dubai will be requiring their services to manage their real estate portfolios. 

Family offices will be requiring the services of property management firms to ensure effective management of the properties. In 2023, we will witness PM firms working closely with the family offices to meet the demand and ensure the utmost client satisfaction.

To learn more about Family offices, read our blog – ‘7 Reasons for Rising Allocation of Family Offices in Real-Estate’

4. Investing in Research to Offer Excellent Customer Delivery

A vast number of property management firms will focus on increasing their spending on research & analysis to understand the dynamic requirements and expectations of the residents. They will invest in setting up research wings or centres to capture valuable insights into the expectations & preferences of the residents. PM firms will be regularly conducting online surveys and personal touchpoints to gain first-hand insights into resident behavior. Post that, Property managers and their teams will work on analyzing the best ways to implement residents’ suggestions captured through online surveys in the community to improve the living experience. Keeping an eye on the dynamic expectations of the residents will allow property management firms in taking timely measures to minimize tenant turnover and boost occupancy and resident satisfaction. 

5. Increased Focus on Building Cybersecurity

With an increasing clientele and resident base, property management firms will be increasing their reliance on digital technologies to manage personal & confidential information. However, increased dependence on technology will also create an urge for property management firms to build a robust Cybersecurity network to prevent any unwanted & unforeseen cyber-attacks or security breaches. This year, Property management firms will be investing more in strengthening their cybersecurity. 

Some of the ways to build effective Cybersecurity are as follows –

• Conducting Vulnerability assessments to evaluate the capability of their current Cybersecurity network to identify the vulnerability of their technology to cyber threats and ransom wares. 

• Organizing Annual Staff Awareness Training to prevent internal error, privilege misuse, cyberattack, phishing, ransomware, and data loss as a result of employees not understanding their information security obligations.

• Performing Penetration testing to deploy the white hat and ethical hacking techniques to uncover holes in your existing Cybersecurity solution during a penetration test.

• Increasing IT budget to boost cyber security. Technology teams will work towards analyzing possible security threats, conducting timely assessments of their current security level, timely updating the systems, limiting access to the information to only those employees who need it to do their job, setting goals and outlining tactics, creating back up files, developing a robust security framework, and establishing plans for monitoring schedules, detections, and scientific ways to deal with data breaches or theft.

• Regularly reviewing Data-handling policies and procedures to ensure employees, customers, residents, and all business stakeholders understand their security obligations.

To learn more about the steps Kaizen AMS takes to safeguard the personal information of its stakeholders, read our case study – ‘Testing Kaizen’s Technology Infrastructure to evaluate its Vulnerability to Data Breach’.