How Banks Managing their own Properties are hurting their ROI?

If you are a bank or financial corporation, it makes less sense for you to manage your properties as it is a very time-consuming task and costly affair too. Furthermore, if the leadership of the bank is not an expert in managing properties, it can have a serious impact on the bank’s Net Operating Income (NOI). NOI is a calculation done to analyze the profitability of income-generating real estate investments. It equals all revenue from the property, minus all reasonably necessary operating expenses.

The secret behind the success of several top international banks is that they hire experienced property management firms to manage their properties and allocate their entire workforce with the task of maximizing profits and expanding the asset portfolio. This way these banks achieve optimum utilization of resources and boost their portfolio.

Let’s find out how hiring a property management firm can act as a catholicon for the UAE Banking sector –

1. Managing the Properties Occupied by Banks Due to Loan Defaults

Banks & financial institutions keep assets or homes as collateral security while issuing a home loan. When a borrower is unable to pay the loan, banks take over the property as a measure for recovery or reconstruction to reduce their non-performing assets (NPAs). However, considering banks neither have the expertise nor experience resources to manage these properties, they end up losing their value as time passes. And it’s no surprise when banks sell it to the third party to recover the loan amount they don’t get the value equal to the loan amount. This results in massive losses for the banks.

It is of utmost importance for the banks to hire a property management firm to manage these properties to ensure they stay in better shape and their condition doesn’t deteriorate. Property management firms perform timely maintenance, repairs, upgrades, renovation and leverage their unconventional expertise and technologies like (PropTech) to ensure property always looks news and its value doesn’t decline.

2. Overcoming the Knowledge Gap

Along with time & resources, managing a property also requires extensive knowledge to ensure not a single aspect is left out. The process of managing a property is almost a journey that involves a vast range of activities. If a bank manages the property itself, it will be a very costly affair for them. Furthermore, even a tiny error committed by them due to lack of expertise can take a toll on their NOI as well as their valuable brand image, and customer confidence. 

3. Countering the Legal Risks 

If a bank fails to manage the property in the desired manner, might be due to lack of expertise or time constraints, it can invite several legal challenges for them. Hiring the right property management firm can play a great role in ensuring that high levels of compliance are met and property remains up-to-date through timely repairs. Property management firms also provide a dedicated technical inspector to analyze and fix any potential defects well in advance.

4. Economies of Scale

Another great advantage of recruiting a property management firm is they have access to a vast number of bonded, insured, and licensed contractors who can offer substantial discounts for consistent workloads. This will not only save money for the banks on repairs & damages but will also result in an increase in the value of the property.

5.  Effective Management of Finances

Property management ensures that all the payments of the banks related to the building such as – rent, service charge, utility bill, etc. are made on time which not only assists banks in effectively managing their finances. Property management firms also ensure that banks follow all the terms stated in the lease agreement pertaining to payment guidelines and late fees or any other important thing to avoid financial penalties. In this way, property management firms allow banks to boost their NOI.

6.  Wide Reach with High Returns

It is no secret when the banks manage their real estate investment; they restrict themselves just to investing in the nearby locations. This way banks miss out on numerous profitable opportunities which can benefit them and also elevate their NOI figures.  Hiring a property management firm can work wonders for the banks in easily managing their real estate investments. Furthermore, the high reach of property management firms also facilitates banks in setting up their branches in any part of Dubai or the UAE. More number of branches prominently at profitable locations has a favorable impact on the net operating income of the bank as well as in boosting its cash flows. It is always difficult for banks to manage their properties from long distances, creating an urge to hire a property management firm. For example – if a bank has one office in the Dubai South area and another branch in Hatta and the third one is Deira, it will be ‘nigh on impossible for the bank to manage all its branches. 

Thus, it makes sense to hire a property management firm as they have a wider reach and workforce to manage each property based in any part of the emirates. It will cost banks a fortune if they try to manage all the properties themselves in terms of operational cost, time, and manpower. It can also result in high customer turnover due to poor management of the property as well as the services.

7. Making Your Investments More Profitable

A right and an experienced property management firm can take care of most of the aspects currently managed by the banks which will allow them to focus more on making more profitable investments and growing their investment portfolio. This has a profound impact on the bank’s NOI.

Property management also manages all the responsibilities related to the bank’s premises in a more professional & timely manner to enhance its condition as well as boost the profitability of the bank’s income generated through real estate investments. 

Summary

Property management firms can play a vital role in boosting the net operating income or NOI of a bank. They assist the banks in overcoming the knowledge gap by leveraging their wealth of experience in making the properties real ‘cash cows’ for all the associated stakeholders. Furthermore, property management firms also enable & empower banks in countering the complex legal & final challenges which can result in hefty lawsuits and loss of revenues. Property management firms also ensure that all the business payments or bills are paid on time which provides a transparent and real picture to the banks on their financial position. They also make sure that banks always abide by the terms stated in the lease agreement pertaining to payment guidelines and avoid any unforeseen situation which can adversely impact the NOI of the building.

The top reason for the banks to choose a property management firm to improve their NOI is their wider reach as they have offices or property managers in every part of Dubai. Thus, they can manage a large number of branches of the banks in a more professional and cost-friendly manner which will have a profound impact on its net operating income and make their investment more valuable. As they say,  ‘ a penny saved is a penny earned’  – a property management firm will not only allow banks in saving the money but will open a reservoir of sources for them to expand their investment portfolio, maximize the revenues, and enhance the NOI.

For a more informative article like this, please visit – https://www.kaizenams.com/blogs/. Follow Kaizen AMS on Social media – LinkedIn, Twitter, Facebook & Instagram

Top 7 Mistakes Corporate Tenants Make While Leasing Commercial Real Estate

Signing up for a commercial lease is the most complex financial commitment made by any entrepreneur. With the passage of time, leasing a commercial real estate activity has become even more strenuous. Thus, the corporate tenants must not refrain from asking any number of questions from the commercial landlord while leasing a property.

Before negotiating the lease, it is of paramount importance for the corporate tenants to consider their financial position and evaluate their requirements accordingly. Corporate tenants must also make sure that the lease terms align with their long-term business strategy. It’s always wise to plan for the future – for both good and bad times. Thus, lease terms must be flexible enough to have provisions for both. In case the business succeeds, the lease term must have an option for expansion and if it doesn’t, the lease terms must also have an option to counter any sort of uncertainty. It is vital to note that leasing a commercial real estate space is more difficult compared to leasing an apartment. A large number of commercial tenants end up getting into trouble in the later stage by not asking the requisite questions and taking the process lightly. To safeguard the corporate tenants from making costly errors while leasing commercial real estate, we have compiled a list of common gaffes they should avoid making it a win-win situation.

Here are Top 7 mistakes corporate tenants make while leasing commercial real estate –

Not Understanding the Lease Terms

It is always advisable to not sign a commercial lease agreement until you read & understand all the terms & conditions. This practice will allow corporate tenants to avoid any potential conflict with the stakeholders such as: landlords, agents, or other tenants in the property. Usually, several corporate tenants find it challenging to comprehend the legal language or jargon used in the agreement. To counter this situation, they must hire an experienced attorney who can provide them clarity on the type of lease term they are signing up for, the frequency & nature of rent increase, subletting obligations, and provisions related to repair & maintenance. 

Most of the landlords design the lease agreements which favor them or according to their interest. Thus, hiring an attorney becomes crucial to ensure the interests of the corporate tenants are not compromised. Negotiation is a very integral aspect while signing a commercial lease agreement. If the tenants come across any type of condition to which they don’t agree, they should negotiate with the landlord to get a fair deal that is in line with their business requirements.  

Not Planning Effectively

It might be surprising for many people to learn that most of the firms don’t have an idea about their exact space requirements. At times, tenants are also subjected to unforeseen circumstances which change their space requirements swiftly. The right property manager or expert can guide the corporate tenants in evaluating their exact space requirements. They can also forecast the dynamic space requirement of the tenants based on the current & future business climate. A property manager can also assist the corporate tenants in planning for any unforeseen circumstances such as – in case of outgrowing the space requirement before the lease expires or during the phase of downsizing. 

Not Conducting Preliminary Research

Many corporate tenants often lack in resources or expertise required to conduct preliminary research to analyze which commercial property will be the best fit for them to lease. They also procrastinate from spending time to search for the best property options, secure legitimate financing from financial institutions, negotiate the terms of the lease, and analyze the rentals. 

It will surely pay you either today or in the future. While shortlisting the property it is fundamental to start your search process 12 months before your existing lease expires. Negligence shown during this process can result in signing up for higher lease terms for less space.

Lack of Inspection

Many corporate tenants make this common mistake of shortlisting a commercial property in a rush as they are in rush to start their business. They often forget to conduct a detailed inspection of the property which costs them dearly in the later stage. 

While shortlisting any property, it is pivotal to check the condition of every part of the property, lighting, flooring, HVAC, and every minor snag and get it repaired from the owner before commencing the business. Identifying these snags in the later stage might cost thousands of dirhams which will hurt the cash flows of the corporate tenants.

To know more about how Kaizen performs inspection and ensure an impeccable handover, read our case study – The Ideal Property Handover Process

Prioritizing Price over the Location

Many corporate tenants make this common mistake of shortlisting the commercial property only based on its rent and ignore other important factors such as: location, accessibility, presence of basic amenities, infrastructure, closeness to competition, and versatility of the office space. They believe that they should choose those commercial properties with lower rents as rent is a fixed cost and must be kept minimal. However, that notion is miles away from the truth. 

Prioritizing a commercial property based only on the rent while ignoring other important factors often leads to choosing an unfavorable location. This results in ineffective targeting of the customers & hefty business losses. Thus, is of utmost importance for every business to be there where its potential customers are.

Not Considering the Future Requirements

A vast majority of corporate tenants often make the mistake of not considering their future requirements while leasing commercial real estate. What if their business succeeds and their requirements for space increase or vice-versa. Terms of the lease must always align well with the future prospects of the business to avoid any trouble in the future. 

Not Hiring a Property Management Firm

Unless you are an expert in the leasing space with years of experience, it is always advisable to hire an experienced property management firm that possesses knowledge of the prevailing market situation and future trends.  Property management firms can play an integral role in negotiating the lease terms to your advantage. To know more about the factors to be considered while hiring a property management firm, read our blogKey Factors to Consider When Choosing Property Management Firm

Kaizen AMSa tech-enabled property management firm in Dubai, possesses over 15 years of experience in serving some of the biggest corporates in Dubai on leasing commercial space or property.

The key highlights of the services offered by Kaizen AMS to the corporate tenants under commercial real estate leasing include-

  • Representing the client as its non-exclusive leasing agent and act as the representative in identifying and securing suitable tenants.
  • Managing, tracking lease critical dates, options, and renewals
  • Leasing collection, monitoring, and enforcing client/tenant performance against lease commitments.
  • Conducting full tenant profile verification (KYC)
  • Managing the registration of the lease agreements, assisting tenants with Municipality processes and certificates (Ejari, etc.)

Key Takeaways

  • Always read the lease terms thoroughly
  • Wisely plan your space requirements 
  • Do in-depth research on the pros & cons of the property you are leasing
  • Ensure your commercial property is well-inspected before you shift
  • Prioritize the location over rents
  • Always  make your decision based on the future requirements 

and the most important point to remember is –

  • Always remember to hire the expert that can save you from making costly mistakes –because ‘One Stich at right time saves another nine’

Hope you liked the article. For more informative articles, visit https://www.kaizenams.com/blogs/

How Dubai Land Department is Leading the Real estate Sector Towards Digitalization

Dubai Land Department (DLD) is embracing digitization like never before. The year 2020 marked a landmark year for the real estate legislative body surpassing 1.4 million digital services for its customers through its smart channels including – DLD website and Dubai REST app. Digital services are a fundamental aspect of DLD’s digital transformation process.

This exponential surge in the number of digital services is perceived as a big boost for the Dubai Land Department in its commitment to establish Dubai as the world’s premier real estate destination. The increase in the number of digital services will play a vital role in fostering digitization and bringing more efficiency and transparency in the operations of the Dubai Land Department.

How is Dubai Rest is Fostering Digitalization in the Real estate  Sector?

Dubai REST  app. is an integral aspect of promoting digitization at the Dubai Land Department. This revolutionary platform was launched during Cityscape Global 2018, as a comprehensive smart solution to facilitate a vast array of real estate services. 

DubaiREST is a smart real estate platform that provides quick access to all real-estate services to the associated parties. It is a mobile application that offers valuable insights into the UAE real estate market including property verification through facial recognition. DubaiRest application is widely popular among property owners, real estate brokers, developers, tenants, real estate valuators, investors, property management firms, and all beneficiaries of the real estate sector. 

What Makes DubaiRest App. Distinctive?

The unique features of DubaiRest App. Include:

  • Empower all the beneficiaries of the off-plan projects to obtain real-time information about the projects such as:
    • The percentage of completion, the actual pictures of the project
    • Payments due on the owners in the projects that they invested in addition to the possibility of activating the feature of the favorite projects to be able to follow-up the details of these projects.
  • DubaiRest is a full-fledged real estate wallet for real estate owners available on smart devices includes all the services that enable them to conduct property transactions (sale, purchase, lease, and mortgage).
  • DubaiRest provides comprehensive information about real estate brokers and their performance levels, data of real estate offices and their classifications, valuation companies, management companies, consultancy companies and certified developers.
  • The real estate services offered by DubaiRest includes: selling, leasing, submit rental dispute cases and follow up them, submitting applications for issuing a valuation certificate, letter To Whom It May Concern and issuing map through the application.
  • The application provides for all of the real estate market beneficiaries with multiple services such as: the rental index and the sale house price index in Dubai and the service charges index of the property with the ability of payment through the application.
  • Electronic payment through the electronic payment portal – Noqodi
  • The system is available in Arabic and English on iOS and Android.

Launch of Electronic No Objection Certificate (e-NOC):

In its revolutionary decision, Dubai Land Department (DLD) has made it much easier for the property owners to obtain no-objection certificates digitally by launching an e-NOC system at its office on 20 April 2021. 

e-NOCs are now only applicable for owners for the buildings where the budget of the current year is not approved or the current quarter of that building is not invoiced for any reason. Owners can now directly proceed with the transfer after clearing all the service charges which are invoiced through Mollak. The owners can go to the Trustee’s office directly since their employees have access to the Mollak system and they can check the system and advise accordingly.

The foremost reason for introducing the e-NOC system was to minimize the additional cost on the sellers as developers & strata management firms demand & get a fee for the NOC issue irrespective of how old the property is. Only ready properties managed by Owner association management companies and owners receiving service charge invoices from the Mollak system are eligible for e-NOC.

The  New Fee:

Dubai Land Department has not mentioned any fees yet for property sellers for e-NOCs in its press release. This is perceived as a welcoming move by the owners.  

Until now, developers & strata management firms charge between AED 1,500 – 3,000 for the service. In exceptional cases, getting the NOC can cost the owner up to AED 5,000.

Reason behind the Launch of e-NOC:

Owners were unhappy with the fact that whether its one-year-old property or 10 years, developers and owners’ association firms were demanding and getting a fee for the NOC issue. Many of them were charged with AED 1500 even though they didn’t have any outstanding payments with the developer or the property management firm. Owners perceived as an unwarranted charge and as an additional burden on the seller.

Documents required:

The service will be provided by the Real Estate Registration Services Department – Real Estate Registration Assurance Services.

The key documents required for e-NOC includes – sale contract, copy of the owner’s ID or Passport for non-residents, certificate of settlement of payments for the property, attendance of the owner in person, or attendance of an attorney authorised by the owner pursuant to an official notarised document, no objection certificate from the maintenance company, in case of resale of the property in addition to a copy of the ID or passport of the buyer and the sale contract agreement MOU.

The Process:

To obtain e-NOC, the customer must complete the registration assurance application form by visiting the Dubai Land Department Website through electronic services. Alternatively, customers can visit the Dubai Land Department main Office at the Registration Assurance Section, enclosing the documents. DLD  will notify the customer of the readiness of the certificate by email. The time period for e-NOC service is between 14-18 days. There are no updates on the service fee. This link will take you to the PDF which provides instructions on obtaining e-NOC.

The Impact of DLDs Digital Measures on the Real estate sector:

This exponential surge in the number of digital services will also boost Dubai Land Department’s confidence in swiftly adopting emerging technologies such as Artificial Intelligence (AI) & Cloud. This will lead the real estate sector towards complete digital transformation and will create a more supportive and transparent business environment for property investors. This increase in digital services will also strengthen the capabilities of the Dubai Land Department in supporting its ambitious ‘Smart Dubai’ vision in line with the goal of the Dubai Paperless Strategy.  

‘Smart Dubai’ initiative was launched with a vision to make Dubai the happiest city in the world. It involves participation from all city stakeholders which includes – residents, visitors, business owners, parents, and families. The primary goal behind the ‘Smart Dubai’ initiative is to foster a culture of innovation, and creativity in the nation. The initiative will fortify Dubai in keeping pace with the modern global systems.

Furthermore, the launch of the e-NOC system will facilitate the customers in the hassle-free transfer of the property. It will not only bring agility to the process but will also curtail the cost for the seller. At present, NOCs are issued by the developer or a concerned strata management firm.

e-NOC service will also facilitate customers in applying for issuing a No Objection Certificate to register a property in the interim or permanent registration system in case the developer refuses to register the same in the interim registration system (Off-Plan Sale – Initial Sale Form – Initial Sale Contract – Title Deed Issuance). In the case of resale, the No Objection Certificate may be issued if the developer refuses to issue the certificate without legally valid reasons.

Both the initiatives being taken by the Dubai Land Department (DLD) are welcoming news for the real estate sector. This will bring transparency in the process, ease the current legislative framework for the real estate sector and increase the number of transactions every month.

Summary:

  • Dubai Land Department (DLD) reached 1.4 million digital services in 2020 for its customers on its website and DubaiRest App. This is indeed a great step in fostering digitalization in the Real estate sector.
  • Dubai REST app. is a smart real estate platform that provides quick access to all real-estate services to the associated parties.
  • Dubai Land Department (DLD) has also launched electronic no-objection certificates or e-NOC system at its office on 20 April 2021 to minimize the additional cost on the sellers as developers & strata management firms demand & get a fee for the NOC issue irrespective of how old the property is.
  • Eligibility: Only ready properties managed by Owner association management companies and owners receiving service charge invoices from the Mollak system are eligible for e-NOC.
  • Fees: Dubai Land Department has not mentioned any fees yet for property sellers for e-NOCs in its press release. 
  • How to Obtain e-NOC?: To obtain e-NOC, the customer must complete the registration assurance application form by visiting the Dubai Land Department Website through electronic services. 
  • The time period for e-NOC service is between 14-18 days. There are no updates on the service fee. 
  • Both DubaiRest and e-NOC are welcoming news for the real estate sector. It will make the process of real estate transactions more transparent, simply the legislative framework to boost the real estate transactions. 
  •  The e-NOC system will also boost Dubai’s ambitious ‘Smart Dubai’ initiative in line with the goal of the Dubai Paperless Strategy and will allow the customers in the hassle-free transfer of the property to bring efficiency to the process and reduce the cost for the seller

For more informative articles related to UAE real estate industry, please visit https://www.kaizenams.com/blogs/ or Follow Kaizen AMS on LinkedInFacebookTwitter, and Instagram

Why Your Building Won’t Last for 30 Years?

There is always much more to a building than meets the eye. A wide gamut of factors determines the lifespan of a property. It might be interesting to know that buildings are also just like any electronic device or your mobile phone. The way every part of your mobile phone (battery, display, visual display, RAM, etc.) has a different lifespan, the same concept applies to the buildings too. Strong structures and design lay the strong foundation of a building. All the key “organs” of the building like – kitchens, appliances, floor covering, bathroom, and paintwork usually last between 10-15 years. Windows, roofs, and pipes can last for a maximum of 30 years.

The structure of the building is a key factor in determining the lifespan of the building. Many people think that with the advent of technologies, the life of the building has been improved. However, that’s not true. Modern skyscrapers are made of materials such as insulation products that have far lesser expectancy than stone & wood. Furthermore, constructing a building also involves the usage of lots of adhesives & chemical compounds being used, and still, there is a dilemma on their expectancy.  

An Integral Role of Maintenance: 

Timely maintenance and upgrades act as a booster in increasing the life expectancy of the building. Several building experts suggest that the building owner must invest 1% of the building’s value each on its renovation. The ideal way to make the best use of these funds is to hire a professional property management firm that ensures buildings remain updated and its cost of operations remains minimal by introducing leading property technologies or PropTech.

To know more about the best practices of  maintaining and operating a skyscraper or a building, go through our informative whitepaper – “The Economics of Operating a Skyscraper

Factors Impacting the Life-span of the Building:

Here are the top factors that impact the life-span of the building –

  1. Lack of Effective Management:

Poor or ineffective management is a serious threat to the triumph of the project, the reputation of the developer, and above all the safety of the employees & the residents. It also has a profound impact on the life span of the building, revenues of the developer as well as on its market perception to attract more business.  

As they say, ‘better safe than sorry, it is crucial to eliminate ineffective construction management practices which increase the risk to the building, irrespective of the amount of money & time invested in making it happen. Some of the biggest threats that have adverse impacts on the life span of a building include – usage of low-cost material during the construction to save money which often leads to hefty lawsuits, poor supervision of activities, delays in completing the tasks or not meeting the deadlines, not hiring an experienced contractor and consultant during the construction, etc.

  1. Lack of Comprehensive Risk Assessment:

The risk assessment engineers work under very rigid timelines. This often impacts their capacity to evaluate and analyze the risks which are typical of a specific project and those which are unique to the situation. Lack of comprehensive risk management can create construction defects that have an adverse impact on the quality and life of the building.

  1. Homogeneity:

Homogeneity of either structural or load-bearing elements is the most crucial feature of the building, which deals with the capability of the building to survive against load without failure.  The load-carrying capacity of the building components is reduced due to a series of factors such as – wear & tear, environment, and aging. These factors can drastically impact both the homogeneity and the integrity of the building components and reduce its life span. 

  1. Flaws in Design:

The impeccable structural and architectural design is the foundation of the sound building performance. Defects in the design of a building not only reduce its lifespan but also can lead to its high operational & maintenance cost. Lack of effective design decisions often results in a decline in the quality of the construction. Several developers across the world have been found guilty of violating codal provisions to curtail the cost and ensure economical design. However, these practices might save 10-20% of the cost in the beginning but in the long run; they are an invitation to faulty designs which often result in expensive repairs and a damaging impact on the life of the building. Some of the most common errors made in the building’s design include – drawing with a printing mistake, incorrect line, not marking the dimensions in the drawing, frequent revisions made to the design.

To know more about how Property Managers can assist real estate developers in overcoming the challenges that arise during the design and construction phase, visit our informative article Why are developers not consulting Property Managers during design and construction?” by our Director – Mr. George Malakos 

  1. Using Substandard Construction Materials to Cut Cost:

At times, developers authorize the usage of substandard construction materials to minimize the cost of the construction. Substandard construction material here refers to those which lack in size, weight, density, or any other physical property. The usage of substandard construction materials minimizes the load-bearing capacity which has a detrimental impact on the strength of the building as well as on its life span.

  1. Environmental Factors:

Environmental factors such as – heat can have a serious impact on the lifespan of a building. In Dubai, where temperatures reach up to 45-49 degrees celsius, it is a key factor that impacts the building. Higher temperatures also increase the risk of building collapse which can put the lives of the residents and everyone at risk. 

The risk of heat is much higher for those buildings that do not meet the building code’s safety requirements and will take a serious toll on their lifespan.

  1. Lack of Timely Maintenance & Repair:

Corrosion of concrete or structural components hampers the stability of the building and reduces its strength and lifespan. The lack of timely maintenance and repairs results in water leakages, cracks, loose plaster, spalling of concrete, etc. Repair and renovation work conducted on a timely basis can significantly minimize the risk of corrosion of metal items or carbonation of concrete. 

  1. Excavation:

In the last decade, there has been an exponential surge in excavation activities. At times, excavation for the foundation in a property adjoining your building can result in its movement of the foundation due to sliding of the soil below the foundation of adjoining property which results in the sink of the footing of the existing building. This weakens the foundation of the building and also minimizes its life span.

  1. Gaps in Construction Process:

The placement of heavy building machinery, materials, and other additional loads during the time of the construction process weakens its base. Buildings are usually designed for pre-designed loads prominently due to construction materials, furniture & loads that may arise due to earthquakes or any other natural disaster, and also due to loads of the occupants. Furthermore, to make a building a profitable deal, several developers build additional stories without properly assessing the strength and the capacity of the existing building. Any sort of horizontal & vertical expansion is not properly evaluated in the original design and leads to overloading which negatively impacts the life span of a building.

  1. Mistakes in Structural Configuration:

At times, developers or design architects make a list of changes in the structural configurations such as – basic horizontal or vertical load path which often results in the deviation of load path from shortest load path. This drastic change in the load path mostly increases the stress in the component and weakens the building. 

Furthermore, during the time of natural disasters like earthquakes, these forces produced at various floor levels are not transferred to the ground by the shortest load path due to the unsymmetrical configuration of the building which often leads to a lack of stability of the building with a drastic impact on its life span. A large number of developers are using expansion joints to overcome unsymmetrical configuration to offer more stability and life to the building.

  1.   If You Consider Hiring ‘Property Management’ Firm as Cost:

Hiring a property management firm can act as the oxygen to the lifespan of your building. Property management firms can play a key role in performing timely repair and maintenance of the building which acts as a panacea in boosting its life span. A property management firm also provides their unparalleled expertise during the design and the construction phase of the building to build robust designs that increase the life span of the building. Property management firms perform a comprehensive risk assessment to eliminate all possible risks that can deter the building’s performance. They also guide developers on the type of construction material to be used for better stability and longer life of the building. To know more about the factors to be considered while shortlisting a property management firm, read our article – Key Factors to Consider When Choosing Property Management Firm

Founded in 2006, KAIZEN Asset Management Services is amongst the top tech-enabled property management firms in Dubai. Being the first ISO 9001:2015 certified provider, KAIZEN AMS offers end-to-end solutions in Property Management, Owners Association Management, Community Management, Lease Management, Handover Services, and Investment Advisory. KAIZEN AMS has an asset management portfolio valued at over AED 15 billion across 12,000+ units and is also a proud corporate member of the U.S. Green Building Council. 

Summary:

Here is the recap of the top reasons your building won’t last for 30 years are as follows:

  • Poor or ineffective management of the building
  • Lack of Comprehensive Risk Assessment
  • The decline in the load-carrying capacity of the building components due to wear & tear environment, and aging
  • Defects in the design of a building leading to its high OPEX & maintenance cost, and lower life span
  • Usage of substandard construction materials
  • Environmental factors such as – heat
  • Negligence shown while performing timely Maintenance & Repair of the building
  • Excavation in a property adjoining your building
  • Flaws in the Construction Process like the placement of heavy building machinery, materials, and other additional loads during the time of the construction process weakens its base
  • Mistakes committed in Structural Configuration and above all
  • Not hiring the right property management firm

Hope you liked the article. For more informative articles related to UAE real estate industry, please visit https://www.kaizenams.com/blogs/. Follow Kaizen AMS  on LinkedIn, Facebook, Twitter, and Instagram

District 2020: The Future of Expo Site Post-completion of the Grand Event

Hosting Expo 2020 was not a cakewalk for Dubai. Billions of dollars have been spent in building the infrastructure and thousands of workers have worked tirelessly to make this grand event a reality. If we look at the past, we will find that most of the expo sites across the globe were turned into entertainment venues or exhibition spaces once the event was over. However, that is not the case with Dubai Expo 2020. 

The UAE government doesn’t want Expo infrastructure for one-time use but to keep everything permanent. It wants to convert the Expo site into a place that can host other major Expo’s in the future and can cater to the rising demand of corporates, tech. firms, & the entertainment sector for the city’s expansion. The organizers are working on retaining 80-85% of the infrastructure developed for Expo 2020 to construct the next-generation smart city – District 2020.  

District 2020: Aim

District 2020 is aimed to create a sustainable way of living through smart infrastructure. It will be built from the infrastructure developed for Expo 2020 and reshaping it into high-tech, environment-friendly, and sustainable urban community living. The transformation plan of the Expo site also includes – developing green areas, residential areas, smart mobility, and coworking spots. 

Joining Hands with the Tech. Leaders for Seamless Functioning:

District 2020 is joining hands with the worlds’ best technology companies and entities to empower the community with emerging technologies like AI, IoT, Blockchain, 5G, Cloud, Big Data, Robotics, etc. for faster, and seamless functioning of the businesses and residential living. Some of the anchor tenants of District 2020 include – Terminus Group, DP World, and Siemens.

The partnership of the real estate firms based in the Dubai South area with these technology giants will lead to the development of advanced PropTech platforms which will ensure the property is well maintained every time and resident’s experience remains at the pinnacle. The technology will make the living experience better and will make communication swift and transparent with the help of advanced and innovative digital channels for better living. 

The partnership will also lead to technology transfer and will minimize the operating costs at the buildings and optimize their efficiency to create an ultimate value of money for residents, developers, property management firms, and all the associated stakeholders.

Scale2Dubai:

Scale2Dubai is a unique programme designed to foster the growth of the businesses in District 2020 with special emphasis on Startups. It is a global entrepreneur’s programme which provides an opportunity to successful startups, and small-scale businesses from across the globe to expand and scale their business in Dubai. Scale2Dubai also has a provision to offer a soft landing to the entrepreneurs to start & establish their business in District 2020. 

Which Industries are Eligible?

Scale2Dubai programme prioritizes those industries which align with District 2020’s ecosystem. These industries include – real estate & construction, logistics & transport, travel & tourism, and education. 

Priority will also be given to the companies which are in the business of technologies which is very crucial for the growth of District 2020.

Benefits offered:

The firms selected for the Scale2Dubai programme will be offered a list of benefits. These include – two years visa, business set up, two years of free workspace, community lifestyle, access to special rates for service providers, two years of subsidized urban living, and a chance to participate in various high-profile social & networking events.

‘District 2020’: When Will the Construction Begin?

The construction of District 2020 will start just after the completion of Expo 2020 on March 31 of 2022. It will be a smart city of its kind with the presence of several landmarks. The District 2020 area will emerge out of the Expo site which spans over 2.5 kilometers. 

How long will it take to Transform Expo Site to District 2020? 

The question for which everyone wants to know the answer is – how long will it take to Transform Expo Site to District 2020? The answer is within less than a year after the completion of the Expo.

In an interview with The National News, Mr. Ahmed Al Khatib, Chief Development and Delivery Officer for the Expo stated, “we will start handover of some of the permanent Expo 2020 builds immediately. Our buildings are built for the Expo and [thereafter] as its legacy. It will take about 4 to 6 months for the actual opening of the first phase. Within a maximum of 1 year, the entire city – District 2020 Phase 1 – will be available.” He further said, “we are putting together the strategy of how to phase in the other buildings,”.

The Impact of District 2020 on Kaizen AMS:

District 2020 is indeed a glad tiding for property management firms like Kaizen AMS – the top 3  property management firms in Dubai.  The initiative will lead to an increase in the number of companies and residential properties in the Dubai South area which will create robust demand for the services offered by the Kaizen AMS such as – owner’s association management, community management, property management, lease management, handover services, and investment advisory, etc. District 2020 will also improve our capabilities to onboard new clients to our vast clientele. 

The idea of District 2020 aligns with Kaizen AMS’ core philosophy & values to support the future of working and living and foster connection and collaboration. District 2020 is a boon for Kaizen AMS’ agenda of promoting an inclusive and diverse community to offer a more balanced and blissful life to our residents and make our managed communities a place that prioritizes the well-being and inspires new ideas for Creating Memorable Experiences for them.

5 Ways Your Property Manager is Decreasing the Value of Your Property

Successfully managing a property is indeed not a ‘walk in a park’ or an easy task. It requires a specialized set of skills proven with years of experience to do that.  Several developers consider hiring a property management firm as an additional cost. There is a common notion among many developers that if they manage their own property, it will result in more savings and a reduction in the operational cost of the building, thus maintaining its property value. However, that’s miles away from reality

Several developers don’t have the necessary experience as well as complete know-how on various landlord-tenant laws and other laws regulating the real estate sector. This often costs the developers and landlords dearly in terms of legal penalties. Furthermore, many developers fail in the adoption and implementation of building management technologies or PropTech which costs developers a fortune in terms of poor maintenance of the building, high operational cost, surge in service charges for the residents, decline in tenant retention rate, and lower occupancy. These factors also have a profound impact on their Return on Investment (ROI) for the developer. Thus, in all fairness, it makes sense for the developers to hire a professional property management firm as they can assist developers in making wise decisions and taking care of their tenants while they focus on the ‘greater good of their business.

It is also crucial to hire an experienced property management firm to manage your assets as an inexperienced property manager can cause equal damage to the property value. Several developers prioritize the service fee while shortlisting the property management firm, however, that’s not a wise practice. A saving of AED 30,000 in service fee can cost developers 10-20 times more if the property manager fails to address tenant grievances, satisfaction rate, service charges, operating cost, occupancy rate, sales & marketing of the units, and timely maintenance and upgrades of the building due to poor management. Thus, it is always important for the developers to prioritize the experience, and expertise of the property management firm or property managers over the service charges. 

How Can an Inexperienced Property Manager Devalue Your Property?

Here are the common mistakes committed by the many property managers which can adversely impact the value of their property:

1. Lack of Maintenance & Upgrades:

Timely maintenance and upgrades can ameliorate the condition of the property and ensure its value stays stable. However, developing a viable plan to ensure timely maintenance is still trivia for global property managers as well as developers. 

Due to the lack of effective management or negligence of your property managers in conducting timely maintenance & upgrades, the property can fall victim to wall crack, ceiling, peeling paint, dampness, timber decay, fungi, sagging or deformation, erosion of mortar joint, insect or termite attack, roof defect, etc. Lack of timely maintenance & upgrades is to blame. This will result in a substantial decline in the condition and the value of the building. 

As an experienced property management firm, Kaizen AMS addresses the following issues through effective planning. Our highly experienced property experts do a well-thought analysis of the costs involved in performing the maintenance & upgrades and design a well-analyzed budget to manage future expenses. Kaizen AMS’ experts always make sure that they come up with a plan that is in the best interest of the building’s performance as well as the pockets of the developers.

2. Higher Time to Market:

Marketing the property has become quite challenging in the last decade. Earlier, developers used to rely on the traditional methods of promoting the property, either through networking or newspaper advertisement. However, the advent of technology has completely disrupted the real estate industry. Unsurprisingly, many developers are still struggling to comprehend technological changes. Today, most of the properties are sold online in their initial construction phase and on social media in their initial construction phase. Developers are losing big for missing out on attracting buyers to their properties by not embracing the technology and by working with an inexperienced property manager. This is resulting in properties being sold at lower prices which are negatively impacting the property value.

Furthermore, several traditional developers & their property management firms neither have technology nor systems in place to document the details of property and buyers nor have the knowledge of the right platforms to market their property. This is resulting in higher time to market (TTM) which has a drastic impact on the cash flows & the overall revenues of the developers. 

3. Lack of Proper Tenant Screening & Document Management:

Tenant screening is another ‘boil the ocean’ task for several traditional & small developers and landlords. They don’t have a viable process to conduct tenant screening which is an integral responsibility of a developer. This is maximizing their potential liabilities and possibilities of handing over their properties to the wrong tenant. Furthermore, lack of tenant screening is also an invitation to rent payment defaults & delays which can impact the revenues and brand image of the developer and ultimately results in the decline of the property value.

Several developers & landlords with a lack of technology usage in their business operations also face challenges in managing the documents submitted by the tenants for screening purposes. This often leads to missing out on or losing important tenant information which can create a problem for the developer in the long run. Lack of document management process can also lead to an inaccurate accounting of rental income and poor planning and strategic decision making.

It is also crucial to screen retail tenants in accordance with the retail strategy/tenant mix plan. A viable and well-thought tenant mix plan can play an important role for the retail sector in designing a strategy to attract tenants. If a property manager identifies an anchor tenant prior to the completion of a commercial property or a new mall or series of shops it can attract several new tenants. The property manager must also brainstorm on the concepts that will complement other concepts to multiply the tenants and increase the occupancy rate of the property.

4. Lower Tenant Satisfaction & Retention Rate:

For decades, several traditional developers and landlords have managed their properties themselves. This was easier back then as there was not much competition. Moreover, due to the limited number of developers in the market, tenants also didn’t have much choice. However, with the passage of time, the industry has become much more competitive with the entry of several world-class developers in the UAE. Thus, it has become pivotal to adopt newfangled technologies to offer higher value to the tenant within limited rent & service charges. This will uplift the level of tenant satisfaction score and retention rate and allow the developer to gain a competitive edge over rivals.

All this might look simple on paper but accomplishing it has been a ‘hard nut to crack’ for several property managers globally, creating an urge to choose Kaizen AMS’.

5. Invitation to Legal Problems’

With the advent of technology, it has become much easier to access information in a few clicks. This has empowered the tenants & residents more on their rights. 

Although it is good practice to know more about your rights in many cases, it has also given an invitation to several legal challenges for the developers. 

A minor error of the property manager has resulted in tenants filing hefty lawsuits against the developers, resulting in a serious loss of revenue and reputation. Thus, it makes sense to hire a property manager who possesses a thorough knowledge of local laws & regulations to comprehend these situations.

The Kaizen Difference:

Without a shadow of a doubt, hiring an experienced property management firm can assist the developers in overcoming all the pressing challenges discussed above, to keep increasing the value of a property:

Here are some ways through which Kaizen AMS’ Property Managers Enhance the value of the property:

1. Ensuring a Robust & Compliant Building Design:

Hiring the right property management firm during the construction & design phase can assist the developers in constructing robust building infrastructure which stands tall on compliance. During pre-occupancy, property managers assist developers in procuring all necessary operating contracts.

Kaizen AMS’ Property managers are well-equipped with advanced property management technology to overcome many issues that arise during the design & construction phase. We continuously invest in developing as well as in investing in PropTech software to curtail any possibility of defects as Kaizen AMS understands that such errors can seriously damage the reputation of a developer, and can adversely impact the value of the property. Furthermore, our property managers always keep an ‘eagle’s eye control’ on the budgets allocated by the developers to ensure the construction of the building is completed within the assigned budget by developing a well-thought budgeting plan.

To know more about the crucial role property management firms can play during the design and construction phase of a building, kindly go through an insightful article titled –Why are developers not consulting Property Managers during design and construction?” by Mr. George Malakos – Business Development Director at Kaizen AMS.

2. Timely Renovation & Maintenance:

 ‘Old is gold’ – unfortunately this phrase doesn’t stand right in the case of property. Irrespective of how better the property looks today, as time passes the building gets exposed to wear & tear which is very much noticeable by the buyers and has a detrimental impact on the value of the property. Building infrastructure, plumbing, and electrical arrangements & setups get obsolete which reduces its charm among the potential buyers & tenants. 

With the passage of time, buyers have now become more aware and conscious and they closely inspect for defaults and patchwork done on the property. They also thoroughly check for ventilation and sunlight. These factors have a deep impact on the value of the property. Conducting timely up-gradation and home renovations are the ‘cherry on the top’ as they transform the condition of the property and prevents it from going outdated. 

The significance of timely renovations can be understood from that statement that a two-decade-old property can attract more buyers and price compared to newly furnished if it is well-maintained. An experienced property manager can play a major role in keeping the property up-to-date and as per the dynamic requirements of the buyers & the industry. Furthermore, property managers can work around renovating and upgrading all available amenities such as – swimming pools, community centres, gyms, children’s parks, etc. to galvanize the value of the property and keep it as per the dynamic requirements of modern buyers.

Kaizen AMS’ property managers ensure timely renovations of the building to maintain its elegant interior & exterior. In this journey, our property managers also tie up with the building maintenance specialists such as – contractors, plumbers, technicians, and electricians and also leverages the power of advanced Building Automation System (BAS) to get timely updates on the current condition of the building and perform renovations accordingly. 

Kaizen AMS’ Property managers also conduct manual inspections to identify any snagging issues in the building. They often prioritize those parts of the building for renovation which are either out of date as per the building’s current code requirements or have the biggest impact on the value of the property with minimal investment. 

3. Minimizing Rent Defaults through Effective Screening & Documentation:

Kaizen AMS conducts an in-depth screening and background verification of the tenants and asks for both electronic & hard copies of all relevant documents before the final handover of the property. This significantly minimizes the possibility of rent defaults or delays. Furthermore, Kaizen’s property managers work around framing viable policies & frameworks to curb any practice that can adversely impact the revenues of the developers as well as the value of the property. We professionally address the cases of payment arrears, forms of breaches, and dishonored cheques and also make recommendations to the developers on the best ways to collect arrears from the tenants. 

In some cases, some of the property management firms also engage with collection agencies to assist with legal actions taken by the client against tenants. They also communicate & arbitrate all settlement arrangements with tenants.

4. Working on Reducing the Service Charges to Boost Tenant Satisfaction:

Higher service charges have been the biggest culprit in deteriorating the tenant’s satisfaction with the residence and his length of duration at the property. To ensure minimal service charges at its managed communities, Kaizen AMS’ property managers continuously invest in Property Technology or PropTech to minimize the operational cost of the building which results in lower service charges and energy bills for the tenants and homeowners.

Tenant satisfaction also has a direct impact on the property value as well as the brand image of the developer. It also positively impacts the ability of the developer to attract more tenants to their properties, resulting in more revenues for the developers.

5. Making Properties ‘Smarter’

Kaizen AMS’ property managers lay special emphasis on making the properties smarter. They liaise up with building automation firms to perform advanced technology upgrades to increase the value of the property. 

Some of these upgrades include – voice control, remote access over a home, a wirelessly controlled network of devices, installing advanced security features like home surveillance systems to send intelligent notifications, lighting control, and automated window treatments. Our managed communities are under the surveillance of CCTV and monitoring devices 24×7 to ensure the utmost security and convenience of the residents. 

Smart properties have a positive impact on tenant satisfaction, occupancy rate, revenues of the developer/landlords, and above all the value of the property.

6. Marketing of the Property:

Kaizen AMS’ property management team starts marketing the property even before its construction is completed or ideally when it is 50-60% completed. This practice ensures targeting the buyers in the initial stage before they make their mind to go with the other developer. It also ensures property doesn’t stay vacant for long and the developer doesn’t incur a loss. Kaizen’s Property managers try to create a buzz about the property to attract more buyers and ensure the property is sold at its highest value and fetch rents that are at par with the industry’s average. 

Some of the ways a Kaizen AMS’ Property Manager does marketing of the property are as follows:

  1. Posting an advertisement on the prominent property websites to capture most of the buyers during the initial stages of construction
  2. Working on the Search Engine Optimization (SEO) rankings of the property advertisements to get it more attention on the internet
  3. Spreading a positive ‘word of mouth’ about the property to build a favorable brand image of the developer and attract more buyers through referrals
  4. Marketing the property in  the local real estate portals and newspapers to target buyers from every segment
  5. Promoting the property on signage as well as through local bulletin boards
  6. Tie-up with developers or media companies to advertise the property in weekly & monthly news publications 

7. Prevent Legal Challenges: 

Undoubtedly, hiring a professional & experienced property management firm like Kaizen AMS can protect the developers from several legal issues which can prove extortionate for them. Kaizen AMS’ property managers are very much familiar with State and Local tenant-landlord laws and safety codes. Furthermore, we also have a large team of lawyers or legal experts who have decades of industry experience. They guide our property managers on the next steps in case the developer faces any legal issues. 

Summary:

The top ways in which your property managers are decreasing the value of your property are –

  1. Not performing timely maintenance & upgrades
  2. Lack of technology adoption leading to higher time to market 
  3. Lack of effective tenant screening & document management which is leading to frequent defaults and delays in the rent payment. This is adversely impacting the revenues and brand image of the developer and the value of the property
  4. Ineffective management of tenant grievances leading to lower tenant satisfaction & Retention Rate with lower occupancy
  5. Inviting legal issues & hefty lawsuits by not managing the property in a professional manner

The Need for you to Choose Kaizen AMS – (a top 3 Property management firm in Dubai)

Kaizen AMS property managers:

  1. Assists developers in procuring all necessary operating contracts during pre-occupancy and provides their valuable advice during the design and construction phase
  2. Performs renovation & maintenance of the property on a timely basis
  3. Conducts an in-depth screening and background verification of the tenants and also asks for both electronic & hard copies of all relevant documents before the final handover of the property. 
  4. Continuously invest in Property Technology or PropTech to minimize the operational cost of the building which results in lower service charges
  5. Liaise up with building automation firms to perform advanced technology upgrades to increase the value of the property. 
  6. Market the property even before its construction is completed or ideally when it is 50-60% completed to ensure the majority of units are sold by the time building is completed.
  7. Backed by a large team of lawyers & legal experts protect the developers from complex legal challenges.

Is Your Property Attractive Enough for Tenants?

In the last decade, Dubai has emerged as the biggest hub for business. Global investors are lining up for an opportunity to invest in the city and take the advantage of its tax-free environment. Dubai has also witnessed a huge increase in tourism with millions of tourists experiencing the feel of its modern infrastructure, luxury, and exotic food & beverages every year. This rise in Foreign Direct Investment (FDI) in Dubai and surge in tourism has boosted the demand from tenants in the residential & commercial property sectors. 

According to the annual transaction report of the Dubai Land Department (DLD), despite the pandemic and global economic slowdown, the real estate market in Dubai continued to be attractive to local and global investors in 2020. The sector recorded 51,414 transactions representing a value of over Dh175 billion, according to the annual transaction report issued by the Dubai Land Department (DLD). It is of paramount importance for both commercial & residential sector head honchos to understand the tenant behaviors and the key trends that are going to impact the sector.

Here are the type of properties and options which will attract residential & commercial real estate tenants in the coming years –

Short-term Rentals

Every year, millions of tourists and business travelers visit Dubai for a shorter period of time. To avoid getting into a contract or paying advance rent for three months, or facing challenges with cohabitation, etc., tenants will prioritize alternative accommodations which are available on short-term rentals for everyone including – singles, families, couples, partners, and corporate groups. 

Another factor that makes short-term rental accommodations a preferred choice for the tenants is they are fully furnished. Thus, there is no need for them to spend money on buying furniture or other daily routine items such as – air conditioners, refrigerators, ovens, etc. Thus, short-term rentals are a cost-effective option for them.

Short-term rental accommodations have more space compared to hotels which offer more privacy to the expats & holidaymakers. They also have a private garden, kitchen, and a personal door which make expats feel like they are at home. Furthermore, short-term rental accommodations are usually based in the downtowns which makes it easier for tourists to travel to the major attractions of the city. 

The rising demand for short-term rentals among tourists & expats has also attracted the attention of global investors. There has been a significant rise in investments in short-term rentals as they are more profitable due to lower operational costs, fewer restrictions, and no contracts involved. 

The rents across Dubai declined between 9% and 17% in 2020. Thus, thousands of Dubai homeowners converted their properties into short-term rentals to generate good & quick income. While landlords are accepting more cheques, tenants are still using the option of paying in one or two cheques to drive the price down further. 

Another reason behind the rising popularity of short-term rentals is job uncertainty and rising layoffs due to the situation created by Covid-19. Several residents have expressed an interest in short-term lettings as they face uncertainty about their job and their future and are giving themselves a little time to decide by renting monthly as opposed to signing a lease contract for a year.

Properties with Garden & Pool are in High Demand:

Tenants are now prioritizing the properties with a garden, pool, and balcony. According to Lynnette Abad, Director at Property Findera real estate website with a wide range of residential and commercial properties for sale and rent, stated – “Our website recorded significant month-on-month growth in people using keywords such as – pool, garden, and balcony. If you look at rental contracts that have closed over the last few months, you have more in the villa townhouse sector than you do in the apartment sector, when you compare it to previous years.”

The buyers are prioritizing homes that are equipped with all sorts of amenities for recreation as they will be spending more time at home due to an increase in work from home culture amid covid-19.

Tenants Prefer to Move to Suburbs due to Cost & Safety:

There has been a rise in the trend of tenants moving into suburbs or in the outskirts of Dubai due to cost & safety. The amount of rent tenants pay for a flat in Dubai Marina or Jumeirah Lake Towers (JLT) is quite higher than the rent for a three-bedroom townhouse in the outskirt areas. It was noticed in 2020 that a large number of tenants moved to suburbs such as – Mudon, Dubailand, and Dubai South in search of better living at a much lower cost.

Furthermore, downtowns have a very high density of population due to the presence of high-end commercial & residential properties.  Therefore, from both cost & safety standpoint, it makes more sense for the tenants to move to suburbs. In 2020, there was a huge increase in the tenant inquiries for the properties with outside space with real estate agents reporting an uptick in villa inquiries since May 2020.

Increase in Cheque Payments:

There has been a rising trend among tenants to make cheque payments and lockdowns exercised to curb the growth of coronavirus have given a further boost to this trend. The majority of property owners are understanding the benefits and the need of offering an option of cheque payments to the tenants. As per Allsopp & Allsopp report, 2021, the real estate brokerage firm has witnessed a significant rise in the trend of tenants paying their rents using cheques. 

According to Lewis Allsopp, CEO of Allsopp & Allsopp “Pre-Covid-19, we were seeing more of a trend to increase cheque payments and the lockdown accelerated that. Some owners are now asking for fewer cheques again but overall more owners are appreciating that they need to offer increased cheque payments – gone are the days that companies pay for rent in one cheque. In 2021 so far we have seen one cheque rental payments decrease by 28.3% compared to the beginning of 2020.” The brokerage firm reported an emerging trend of short-term, month-by-month rental inquiries as a result of job losses or financial strains. 

Rise in the requirements for Office Space:

In 2020, Dubai’s office market witnessed a total of 194,000 sq. m of office gross leasable area (GLA) delivered, majorly at prime locations such as – Dubai International Financial Centre (DIFC) and Downtown Dubai, increasing the total stock to 8.9 million sq. m.

In Abu Dhabi, a 40,600 sq. m of office stock was added, bringing the total supply to 3.8 million sq. m. To sell this massive office space at a fair cost, the office space developers continue to remain tenant-friendly with landlords coming up with beguiling offers and lease terms. The office sector is getting ready for the post-Covid-19 office environment, which will consist of collaborative spaces, masks, sanitizers, lower seating densities, more meeting rooms, and at least 8m to 12m space between the workstations to maintain social distancing.

Surge in the Demand for Leisure Properties from the Corporate Tenants:

There are numerous listings in Dubai that are specifically developed to meet the requirements of the corporate sector. Moreover, they are also available for short-term lets. Despite the unfavorable economic climate, accommodation for leisure outpaced corporate demand in 2020.

Villas are becoming popular due to the rising demand for luxury accommodation available on short-term lets and at lower annual rates. To earn good revenues in the current phase of slowdown, landlords prefer to lease villas for the short-term. Villas are the best bet for landlords as tenants are willing to pay a higher amount to rent them on short-term rentals.

The Impact of Positive Q2 Performance of Real Estate on Property Management Companies

Dubai’s real estate and property management sector is going through an interesting phase of transformation. Effective planning has enabled the city to navigate through the global economic slowdown and strengthen its property sector reforms. While the global property real estate sector was battling for its survival in 2020, Dubai’s real estate market was thriving like never before. The second quarter of 2021 has come up with more reasons to cherish for the real estate head honchos. Due to a decline in property prices & rental rates, the sector witnessed the highest number of transactions in the last two years. 

Dubai’s real estate market set a new benchmark, the highest in the last four years by value of real estate sales transactions. According to the Q2, 2021 Performance report by Dubai Land Department (DLD), 15,638 sales transactions worth AED 36.86 billion were recorded in Q2 2021. There was a quarter-on-quarter increase of 46.76% in sales value and 33.26% in volume.  A 5% of sales transactions were in the secondary/ready market and 38.5% were off-plan.

Dubai Real Estate Sector: Q2 2021 Performance Analysis

The bulletin issued by Dubai Land Department highlights the sector’s continued positive results in Q2 2021. Compared to Q2 2020, Q2 2021 showed an increase of 183.4% for volume and an increase of 237.79% for the value of sales transactions. When compared to Q2 2019, Q2 2021 showed an increase of 78.27% for volume and an increase of 102% for value.

In Q2 2021, 61.5% of all sales transactions were for secondary/ready properties and 38.5% were for off-plan properties. As far as volume of sales transactions is concerned, the off-plan market transacted 6,025 properties worth a total of AED 9.17 billion, and the secondary market transacted 9,613 properties worth a total of AED 27.68 billion. Comparing this to Q1 2021, the number of off-plan sales transactions in Q2 increased by 53.93% and the secondary/ready property sales transactions increased 22.91%.

June Performance Analysis:

Dubai’s real estate sector has maintained an increasing pace of performance, reflecting the vitality, flexibility, and attractiveness of Dubai’s property market by recording 6,388 sales transactions worth AED 14.79 in June 2021, which is the highest in value in eight years, specifically since December 2013 according to the 16th edition of Mo’asher, Dubai’s official sales price index, launched by Dubai Land Department (DLD) in cooperation with Property Finder

The sales transactions in June 2021 are 44.33% higher in terms of volume and 33.2% in value compared to May 2021. Compared to June 2020, June 2021 increased by 173.46% in terms of volume and 204.55% in terms of value. When compared to June 2019, June 2021 increased by 140.87% in terms of volume and 179.13% in terms of value. In June 2021, 62.2% of all sales transactions were for secondary/ready properties and 37.8% were for off-plan properties. 

The top areas of interest in terms of sales transactions for villas/townhouses in June 2021 were – Green Community, Mohammed Bin Rashid City, Dubai Hills Estate, Arabian Ranches 3, and Akoya. As for apartments for the same period, the top areas of interest were – Meydan, Jumeirah Lake Towers, Dubai Marina, Business Bay, and Downtown Dubai.

Dubai’s Skyscrapers are Standing Tall on the Expectations of New Investors:  

Despite all market uncertainties, the Dubai real estate sector has not lost its charm. The Dubai property market has been highly successful in winning the trust of both local & international investors. 

The areas that remained attractive for investors to buy villas/townhouses in Q2 2021 were – Mohammed Bin Rashid City, Dubai Hills Estate, Dubai Land, Green Community, and Town Square as per the bulletin. The areas that remained the top choice for apartment sales were – Jumeirah Lake Towers, Dubai Marina, Meydan, Jumeirah Village Circle, and Downtown Dubai. 

2021 has so far proved to be more positive for the industry as the demand-supply ratio is heading towards stability and is expected to remain relatively resilient to the effects of 2020.

Growth Drivers:

Rising cases of Covid-19, strict travel restrictions, lengthy lockdown phase, economic slowdown, and massive business losses due to lack of demand & job losses, were the top reasons for the global investors especially from Europe, India & North America to invest in the Dubai real estate market. There has been an enormous rise in the number of affluent investors from Britain, Italy, France, and Germany buying villas and holiday homes in Dubai due to rising cases of coronavirus in their respective nations. Even in the middle of the pandemic in 2020, the Dubai real estate market got a big boost from foreign investors. According to the data posted by Gulf News, in 2020, Dubai’s real estate market attracted 19,757 foreign investors, who concluded 24,666 investments worth over Dh35.6 billion.

The triumph of the UAE real estate sector is also attributed to its visionary national leadership for coming up with business-friendly measures like FDI laws, restoration of relations with Qatar, fastest and well-executed Covid vaccination drive, digitization, reduction of interest rates, Expo 2020, increase in LTV ratios for the first time buyers of the property, long-term residency visas, and launch of golden visa to offer a quick pathway to citizenship. 

What Does it Mean for Property Management Companies?

This exponential increase in the number of sales transactions to 15,638  worth AED 36.86 billion in Q2, means a large number of new properties will be ready to welcome their residents in coming months. Without a shadow of a doubt, it is a  sterling opportunity for the property management sector. The increase in the number of new units coming up will also create the demand for more property management and owners’ association services to professionally manage their communities & tenants. The glittering future belongs to those property management firms that can bank on this opportunity. Undoubtedly being a top 3 property management firm in Dubai with over 15+ years of industry experience and a brigade of over 100+ professionals, Kaizen AMS has an upper hand.

Kaizen AMS has always been well-prepared to cash this opportunity. The credit goes to ‘KAIZENers’ and  our continuous investments in adopting novel technologies such as: chatbots, AI, blockchain, Cloud, and big data to always be a front runner in the industry. Furthermore, Kaizen AMS hires world-class property managers who possess decades of industry experience to ensure the tenant satisfaction score in our communities always exceeds our expectations and industry benchmarks. All these efforts have enabled Kaizen AMS in becoming the first thought which comes to the mind of the developers when they think of an ideal property management firm.

Banking on its experienced, dedicated, and skilled workforce, brand image, and strategy, last year, Kaizen AMS witnessed a large number of prestigious real estate clients who came up with new units choosing us for their Property Management & Owners Association requirements in 2020. This is the reason that despite all market uncertainties due to Covid-19 & market slowdown, Kaizen AMS has witnessed a substantial increase in its profitability and new clients. We thank the UAEs visionary leadership for building a favorable business climate, fostering real estate spending, approving 100% ownership of businesses by expats , fastest ever covid-19 vaccination, and introducing business-friendly laws to drive foreign investments which have reflected positively on our balance sheet. There is absolutely no question mark on our great future. Kaizen AMS is all set to thrive and expand its client portfolio several fold in 2021 and in the years to come.

Villas, Apartments or Townhouses – Which one offers the Best Rental value?

Dubai allures the world with its sky-high residential properties. The city’s villas, apartments, and townhouses are becoming the most sought-after options amongst tenants due to their varied styles, location, and budget-friendliness. However, tenants are still in a dilemma about which property has the best rental value. 

It is pivotal to know the rental value of each property before making your mind to choose among an elegant rental apartment at Dubai Marina, a spacious villa in Arabian Ranches, or a European-styled townhouse at Jumeirah Golf Estates.

This article will guide you in making a better choice which type of property offers the best rental value –

Living in Villas symbolizes luxury due to high space, and a list of private amenities. This is the prime reason villas attract a higher price and rental rates across the globe. However, it is not always the same.  It depends on several factors such as the location of the property, proximity to essential places, number of rooms, space available in the property, etc.

Factors Determining the Rental Value of the Property:

The location has a profound impact on the rental value of a property. Although villas attract higher rents, however, if the apartment is rented at a prime location, the average rent can be much higher than the villa located in a suburb or a very remote area. 

The proximity of a property from essential places such as schools, colleges, hospitals, etc. is also a key factor that determines the demand for the property. Tenants who prefer these establishments nearer to them choose to live in apartments, while those who prefer space, luxury, and living peaceful life away from the city’s crowd prefer to live in villas.

Another key factor that influences the price or the rental value of the property is the number of rooms rented. Generally, villas attract higher rents due to a more number of rooms compared to an apartment or a townhouse, and also offer more privacy. Furthermore, villas offer more private amenities such as pools, gardens, etc. It is also important to note that while renting villas or apartments, there are several additional expenses on top of rent that are incurred by the tenants. These additional costs include – maintenance charges, electricity charges, and the cost of furniture. It is always recommended to buy your furniture if you are staying for long to cut on those costs. Considering villas are larger in size with more rooms, the cost of running a villa is much higher. Even if you are lucky to find a villa with lower rent, after adding maintenance & electricity charges, cleaning costs, cost of hiring a plumber or gardener, cost of maintaining the backyard, and other additional expenditures, you will still find villas several fold expensive compared to an apartment.

Rent Value for Villas, Apartments, and Townhouse:

According to Bayut, the annual rents for 2-bedroom houses start from AED 50k and go up to AED 170k per annum for more luxurious units in an upscale neighborhood like Palm Jumeirah. 

For tenants looking to rent 3-bedroom villas in Dubai under AED 115k per annum, the most relevant options are Mirdif, Akoya Oxygen, Reem, DAMAC Hills (Akoya by DAMAC), and International City. The rental rate for a 4-bedroom villa ranges between AED 90k to AED 800k. 5-bedroom homes are priced from AED 70k in Akoya Oxygen to AED 1.1M in Palm Jumeirah. 

The average rent for a 2-bedroom apartment in Dubai ranges between AED 40k – 70k annually. As per Bayut data, there is a vast range of cheap 2 BHK apartments for rent in Dubai. The top area for 2-bedroom apartments for rent in Dubai in the range of AED 70k includes – Al Nahda (AED 47,000), Bur Dubai (AED 65,000), Jumeirah Village Circle (AED 65,000), Al Warqaa (AED 46,000), and Dubai Silicon Oasis (AED 59,000).

The average rent for a 1-bedroom apartment in Dubai is between AED 21k to 65k per annum.  One-bedroom apartments for AED 21k can be rented for AED 21k in areas like Al Nahda and Dubai South. The rent for a 1-bedroom apartment in Downtown Dubai and Palm Jumeirah then the rent for a 1 BHK is between AED 45k and AED 65k, respectively. 

The rental prices for 2-bedroom apartments in Dubai range from AED 30k to AED 525k. The higher-priced properties are found in exclusive neighborhoods such as Business Bay, Downtown Dubai, and Jumeirah. 3-bed units are priced upwards of AED 45k in the Al Qusais and Jebel Ali communities. 

The average price for renting a 3-bed flat in JLT is AED 121k and it is AED 137k in Business Bay. 4-bed units can be found for AED 65k in Deira and go up to AED 800k yearly in Downtown Dubai. A 5-bedroom apartment in Dubai is not that common and prices start from AED 150k in communities such as Dubai Sports City, Jumeirah Lake Towers (JLT) and Jumeirah Beach Residence (JBR). 

The latest data from Bayut reveals that average rent for a 1-bedroom townhouse starts from AED 20k in locations like Dubai Industrial Park and goes up to AED 80k in Jumeirah Village Triangle (JVT). The annual rent for a 2-bedroom townhouse would be around AED 40k to AED 130k, depending on the location and whether the property is fully furnished. A 3-bed townhouse for rent in Dubai costs around AED 90k in areas like Noor Townhouses in Town Square with areas spanning over 2,000 sq.ft.  The rent for a bigger townhouse with 4-bed and 5-beds is between AED 100k to AED 300k, annually. Data from Property Monitor reveals that the most popular areas to rent a townhouse are – Dubai South, Mohammed Bin Rashid City, Reem, and Town Square. 

Apartments Emerge as a Clear Winner in the Rental Value:

Living in apartments is far cost-effective compared to living in a villa or townhouse. Furthermore, the service charges and other maintenance costs are also low.  Apartments are also the most desirable option for the tenants as they offer better security compared to any other property type. Proximity to the downtowns and city center is another factor that makes apartments ‘a perfect ten’ for the tenants and boosts their rental value.

Dubai Rent Freeze Law – How it will Impact the Landlords & the Tenants?

For decades, the world has known Dubai as a city, popular for launching distinctive initiatives to attract residents & expats towards its glittering property sector. These measures always had a profound impact on the UAE economy and acted as a catholicon for the residents and tenants in safeguarding their interest while paying rents and security deposits, signing up for contracts, etc. To support those struggling in paying rent due to unforeseen circumstances such as job losses or salary cuts, Dubai has come up with a new draft of rent freeze law to keep the rents in the city fixed for three-years. The rent freeze law is expected to act in the best interest of both landlords & tenants and will make the Dubai property market ‘a perfect ten’ or ‘tantalizing’ for the world. The law is yet to come into effect.

Objective of Rent Freeze Law:

The primary objective of this rent freeze law is to offer relief to tenants and guide them towards greater stability in relocating within Dubai.  Every year, the residential tenants in Dubai face an inevitable challenge of frequent rent increases. The rent freeze norm is expected to curb the pace at which rent increases and will also boost the occupancy rate, making the Dubai property market more attractive for tenants.

An Effort to Boost UAEs Rankings in the ‘World Happiness Report’:

Without a shadow of a doubt, the year 2020 was indeed a tough year for the UAE. The tenants were forced to move or downsize due to rent increases. However, in 2021 things have stabilized, with the Dubai property market again becoming attractive as earlier for the global investors. 

The rent freeze law is also perceived as Dubai’s push to become the happiest city to live in the world. Both Dubai and Abu Dhabi are the happiest cities in the Arab region according to the 2020 World Happiness Report. This allowed the UAE to maintain its first place in the Arab world for the sixth consecutive year. Dubai & Abu Dhabi stands at 39th & 35th spot globally in the prestigious World Happiness report. The introduction of rent freeze regulation will further improve the UAEs ranking in this report and will attract more tenants & investors towards the property sector in the years to come.

How is Dubai Rent Freeze Law Different from other Emirates?

A similar rent freeze has been implemented in the other emirates of the UAE, however with modifications. In other emirates, the rent freeze law doesn’t require a commitment from a tenant to sign-up for a three-year lease. Instead, they set out the rental terms if tenants did remain in the same property for such a period. For example – The rent freeze regulation in Sharjah has a similar rent freeze with a very limited increase within leases of three years or less. However, there are no penalties applied on tenants who are not interested in signing up for three years. Several tenants are waiting for the same thing to be implemented in Dubai.

Points which Needs More Clarity:

Both landlords & tenants like to learn whether the Dubai rent freeze law will apply to one particular type of property or all types such as -residential, commercial and industrial. Another point which remains unclear so far is whether the cap will finish after three years or will continue. DLD is yet to shed light on whether this freeze will apply to new rental leases and existing contracts and by when this law will be signed. Both landlords & tenants also need clarity on whether there will be any lock-in periods, coverage of free zones, or any specific types of residential property which will be carved out.

Who will be the Biggest Beneficiary of Rent Freeze Law?

Residential landlords will be the biggest beneficiaries of the rent freeze law. They will now be able to attract many new tenants who were earlier hesitant to rent better and luxurious properties due to the frequent rent increase. 

Furthermore, rising work from home culture due to Covid-19 will further boost the demand of the residential property sector as tenants are spending more time at home. These are signs of glad tidings for the residential sector in the coming years.

Impact on Investments:

Real estate industry experts believe that the rent freeze law will drive colossal investments into the Dubai property market and will also have a favourable impact on the occupancy rate. Furthermore, the law will eradicate all elements of uncertainty and boost tenant’s confidence by allowing them to plan their finances more effectively. The law will also channel more investments into the sector.

According to the Director-general of Dubai Land Department (DLD), Sultan Butti bin Mejren, “the law would ensure that tenants need not move frequently due to rent increases. He said the law would also give landlords a clear idea of income that could be expected. Experts have said the planned changes would steady the market.”

Win-Win Situation for Both Tenants & Landlords:

The draft law to freeze rents has been widely appreciated by both tenants and landlords. According to the Dubai Land Department (DLD), the proposed law will stabilize the market for both tenants & property owners and will minimize rental disputes. 

Several Dubai residents are anxiously waiting for more information on the draft law. The law will provide assurance and peace of mind to the tenants that their rent won’t increase, which will ultimately lead to higher tenant satisfaction. Rent freeze regulation will also provide stability to the tenants in managing their finances. 

Dubai rent freeze law will also act as a boon for the landlords in overcoming the challenges involved in securing tenants due to the oversupply of rental properties. This regulation will also boost the occupancy rate of the properties as most of the tenants leave the properties in search of low-rental accommodations, majorly due to frequent increases in rents. Once the tenant leaves due to an increase in rent, it becomes an uphill battle for the landlords to find a replacement. Furthermore, the losses incurred by the landlord due to vacant property until they find a new tenant are much higher than the profits from the increased rent. It makes sense for the landlords to watch the market as well as the competition while negotiating rents with the potential tenants.  The best bet for the landlords is to convince the tenants to pay a fixed rent for three years to ensure the property remains occupied for the whole term.

The experts view the rent freeze law as a step further to Dubai’s rent cap law which exercises restrictions on increasing rents at renewal. The rent freeze law will facilitate tenants in effectively managing their rental liabilities as the rent will remain constant for the specified term. Furthermore, fixed rent will also encourage the tenants to continue at the same property after three years.