Short Term Lettings in Dubai will be legal for the first time

Dubai Holiday Homes is finally here!!

Some of you out there have known me for a long time and understand the trials and tribulations E&T went through in 2008 when we were told by Tourism ( DTCM) to stop marketing Holiday Homes.

It was a bad day for both the company and a lot of our clients who relied on the self catering option to help finance their home and still give them a chance to use it for personal holidays.

At the time I was told there would be a new law coming out 'soon' which would enable me to offer the holiday home service but until it was official then I should wait or potentially put myself in a position where the company would get fined.

That conversation was in 2009 with the then head of DTCM.

I am finally happy to announce that Holiday Homes is now finally here in Dubai. DTCM have approved a law to regulate this market and are now approving license applications from prospective operators.

So as of October 2014 E&T Holiday Homes will be launched.

We believe there will be a huge response from the owners of property who want to rent out but use the property themselves a couple of times a year and we are already bombarded by potential holiday makers who are constantly looking for short term accommodation.

We are currently preparing the landlord information pack which will be available very soon and this will detail all charges and give a projected income for each apartment and villa.

 With articles like this in the Daily Mail
http://www.dailymail.co.uk/travel/article-595584/Dubai-new-holiday-home-hotspot.html
we believe this segment of the market will be extremely busy and offer owners a great return and extra flexibility.

If anybody has any comments or questions then feel free to either post them here or contact me directly.

Mark

E&T Valuations - October Property Basket

Welcome to the Edwards and Towers Monthly Property Basket. We have selected 8 apartments and 8 villas which are trading frequently in the Dubai marketplace, and have been tracking their values since the start of 2013 as part of the operations of our RICS-qualified Valuation Department.

Each month we will release a new Property Basket with the latest prices, and the percentage changes. The values in the basket are based on actual transactions we have witnessed, and not list prices (which can sometimes be distorted).

Apartments

The residential market in Dubai underwent significant changes during the month of October. The introduction of the 4% transfer fee has imposed a notable restriction on buyers, who are typically being made to pay the full 4% despite the Government guidelines. Additionally, the announcement of the 75% mortgage cap from December 1^st will further increase the initial capital requirements for mortgaged buyers. Already, this has had a negative impact on transaction volumes of certain sections of the markets, specifically the higher-priced properties.

Another notable impact throughout October has been the looming Expo 2020 decision. Ironically, this has had a negative impact on the market because sellers have raised their prices significantly beyond current market levels in the expectation that prices will rise following a successful Dubai bid. However, we anticipate that the impact of a decision either way will have a minimal impact as the event is 7 years away.

As apartments are generally lower in terms of capital required, they have continued to transact at a reasonable rate. One of the most notable patterns emerging is that there has been more of an improvement in properties at the lower end of the price spectrum, which we anticipate is because of the increased transfer fee. The Greens has witnessed the most activity from the basket, as affordability is increasingly becoming the most important factor in the apartment market.

Villas

Activity in the villa segment was notably more subdued than the apartments, primarily because of the higher capital lot size required. First time mortgaged buyers, even for a villa of AED 2,000,000, will have to find AED 500,000 deposit, AED 80,000 transfer fee and AED 40,000 agency fee to enter the market as of December 1^st. This upfront cash requirement of AED 620,000 is simply too much for many young buyers looking to enter the market for the first time.

Additionally, the mortgage cap regulation stipulates that for properties over AED 5,000,000 the LTV will be capped at 65% for expats. This will again increase the capital required for villas in some of the more popular expat areas such as Arabian Ranches and Victory Heights, where the average price is above this level.

Overall, the properties surveyed in the basket remained flat, and the growth since the start of the year is now at a similar level to the apartments as the lower end of the market begins to catch up in terms of growth. The sellers of Garden Homes on the Palm Jumeirah are becoming increasingly ambitious with their price expectations, and volumes here have suffered as a result. At the other end of the market, however, there is still some activity with townhouses where entry levels are lower.

For more details, or to request a copy of the latest research note, contact our Director Simon Kennedy on simon@edwardsandtowers.com or +971504515226.

www.edwardsandtowers.com/valuations