Those tenants who cannot or choose not to purchase their Greens apartments now face the prospect of their homes being put on the open market. If the apartment is sold promptly as Emaar clearly intends, you can expect notification shortly of who your new landlord is.
It is important that tenants in the Greens apartments that Emaar is selling understand their rights. Due to the rent cap laws, the new owner will almost certainly want the tenant out at the earliest possible opportunity in order to either take possession for himself, or rent to a new tenant at the market rate. But this is exactly the kind of act that the Rent Committee was set up to prevent. While we have been unable to get Emaar or Hamptons to state on the record what their understanding of the laws are, the reason may well be because they'd rather potential purchasers not know.
Here is an article demonstrating the protection that the Rent Committee can offer tenants not just against eviction, but even against having their tenancy limited via the proliferation of 'one year' clauses:
The rent committee steps in to protect a tenant in the Springs
Tenants (and potential purchasers) take note: the rent committee is not a toothless talking shop, but wields real power to protect tenants rights. It can not only prevent rent increases above the government's rent cap limit, but can prevent evictions and can even stop the landlord trying to impose a new lease agreement that gives him possession after one year.
Since the vast majority of Greens tenants wish to stay put, it is important for potential purchasers of our apartments to understand what they are buying: a property with a sitting tenant who will do whatever he or she can to stay put, with the protection of the rent committee. Most tenants will resist any attempts at eviction, unlawful rent increases or changes in the terms of their leases that require them to vacate the property after one year.
Potential landlords beware! Emaar is selling you an apartment at market rate, but you have a sitting tenant who might enjoy capped rent and tenancy protection for years to come. It doesn't look such a good investment now does it? Especially when for a similar price you could buy an empty apartment somewhere else and get 40-50% more income immediately, and just the same capital growth.
Sunday, March 4, 2007
Thursday, March 1, 2007
If you're worried about eviction by new landlord, you can leave now!
Some of us met with Jeevan J D'Mello of EMAAR regarding feedback on our previous requests. It seemed that despite the job title of 'Director' he was not actually a company director, more a manager, lacking the authority required to negotiate deals and sign off agreements on behalf of his company without recourse to his bosses (who *are* actual company directors presumably). Anyhow, we appreciated him meeting us even if he wasn't really allowed to do anything except repeat the EMAAR PR releases.
He did at one point generously state that if tenants were worried about having a new landlord who might evict them, EMAAR would (probably) accept them terminating their tenancy now, with a refund of outstanding rent. In other words, if you are worried about eviction and higher rents from a new landlord in a few months time, you always have the option of facing that now instead. What a deal!
Regardless, we pushed EMAAR to try to get some movement on the points at issue. In particular:
1. That EMAAR extend the leases of existing tenants who wish to, such that any new owner would be bound to accommodate the tenant for at least the duration of their current tenancy plus one year
Amazingly, despite Hamptons being self-styled property 'experts' and EMAAR being the country's largest property developer and 30% owned by the Dubai Government, both claimed not to know with certainty what the rent laws actually were! And these are the 'experts'!? By this evidence, Dubai has some way to go in terms of legal development and business competence. Despite assuring us that they think you would have to be offered at least another year, they would not put it in writing and said that despite their understanding of the laws "there are no guarantees". Indeed.
Despite insisting that they have a waiting list of investors interested in capital growth not evictions, Mr D'Mellow stated absolutely that his bosses would not permit any lease changes to provide any more security (such as a year lease extension) to tenants other than what the law provides for (which they were unsure of anyway). The Rent Cap Laws aimed to stabilize rents, yet average rents in Dubai continue to climb at double digit rates. Despite the Dubai Government's stated aims to stabilize costs in Dubai and stem rampant inflation, it appears the 30% Dubai Government shareholding in EMAAR has not been used to influence EMAAR's decision towards preserving a large amount of reasonably priced rental accommodation in the Emirate.
2. That EMAAR offer more incentives, more time and more flexible payment plans for those who might be interested in buying.
It seems that only a tiny minority of affected tenants will actually buy. The few who do buy will largely do so through having succumbed to the "buy now or else" bullying tactics employed by EMAAR. After all, if people wanted to buy apartments at market rate, there are plenty of those for sale in Dubai already. Far too many in fact, with more coming on stream all the time.
Mr D'Mello agreed to raise the point regarding further small discounts with his directors, but since EMAAR is about to start its 'closing down' style sale imminently, it seems that they are more interested in money now regardless of who it comes from than in repaying the loyalty of customers with several years standing.
On a lighter note, Mr D'Mello assured us that the reason for the snap sale is nothing to do with any impending shock to the market in the next couple of months that EMAAR management have got wind of (think floating currency and massive interest rate hikes to fight inflation or the potential for Iranian military responses against US interests in the region). But then again, EMAAR also stated that the decision to sell was based on requests from tenants and just a couple of weeks ago that there were no plans to dump Lakes stock into the market in a similar fashion to the Greens sale.
So in the end, it's every tenant's choice. EMAAR is not going to change its mind and you must pin your hopes on a successful visit to the Rent Committee if you don't plan on buying, because it's pretty clear the new buyer will see you as a liability not an asset and do whatever they can to get you out as soon as the law allows.
Such uncertainty and instability has become part of the Dubai experience, and it's something we all have to factor in when making decisions about our future. As inflation rages, the calculations most of us made to justify coming here increasingly don't add up. Those who came a few years ago have seen costs double or triple since then. Many companies will be doing the same calculations and looking for more stable cost bases elsewhere.
The problem for Dubai is that on the one hand it is trying to convince real estate investors that property prices and rent receipts will rise impressively forever, while on the other hand telling international companies that costs will stabilize. There is an obvious contradiction, but at this point it's difficult to see which argument is going to give out first.
He did at one point generously state that if tenants were worried about having a new landlord who might evict them, EMAAR would (probably) accept them terminating their tenancy now, with a refund of outstanding rent. In other words, if you are worried about eviction and higher rents from a new landlord in a few months time, you always have the option of facing that now instead. What a deal!
Regardless, we pushed EMAAR to try to get some movement on the points at issue. In particular:
1. That EMAAR extend the leases of existing tenants who wish to, such that any new owner would be bound to accommodate the tenant for at least the duration of their current tenancy plus one year
Amazingly, despite Hamptons being self-styled property 'experts' and EMAAR being the country's largest property developer and 30% owned by the Dubai Government, both claimed not to know with certainty what the rent laws actually were! And these are the 'experts'!? By this evidence, Dubai has some way to go in terms of legal development and business competence. Despite assuring us that they think you would have to be offered at least another year, they would not put it in writing and said that despite their understanding of the laws "there are no guarantees". Indeed.
Despite insisting that they have a waiting list of investors interested in capital growth not evictions, Mr D'Mellow stated absolutely that his bosses would not permit any lease changes to provide any more security (such as a year lease extension) to tenants other than what the law provides for (which they were unsure of anyway). The Rent Cap Laws aimed to stabilize rents, yet average rents in Dubai continue to climb at double digit rates. Despite the Dubai Government's stated aims to stabilize costs in Dubai and stem rampant inflation, it appears the 30% Dubai Government shareholding in EMAAR has not been used to influence EMAAR's decision towards preserving a large amount of reasonably priced rental accommodation in the Emirate.
2. That EMAAR offer more incentives, more time and more flexible payment plans for those who might be interested in buying.
It seems that only a tiny minority of affected tenants will actually buy. The few who do buy will largely do so through having succumbed to the "buy now or else" bullying tactics employed by EMAAR. After all, if people wanted to buy apartments at market rate, there are plenty of those for sale in Dubai already. Far too many in fact, with more coming on stream all the time.
Mr D'Mello agreed to raise the point regarding further small discounts with his directors, but since EMAAR is about to start its 'closing down' style sale imminently, it seems that they are more interested in money now regardless of who it comes from than in repaying the loyalty of customers with several years standing.
On a lighter note, Mr D'Mello assured us that the reason for the snap sale is nothing to do with any impending shock to the market in the next couple of months that EMAAR management have got wind of (think floating currency and massive interest rate hikes to fight inflation or the potential for Iranian military responses against US interests in the region). But then again, EMAAR also stated that the decision to sell was based on requests from tenants and just a couple of weeks ago that there were no plans to dump Lakes stock into the market in a similar fashion to the Greens sale.
So in the end, it's every tenant's choice. EMAAR is not going to change its mind and you must pin your hopes on a successful visit to the Rent Committee if you don't plan on buying, because it's pretty clear the new buyer will see you as a liability not an asset and do whatever they can to get you out as soon as the law allows.
Such uncertainty and instability has become part of the Dubai experience, and it's something we all have to factor in when making decisions about our future. As inflation rages, the calculations most of us made to justify coming here increasingly don't add up. Those who came a few years ago have seen costs double or triple since then. Many companies will be doing the same calculations and looking for more stable cost bases elsewhere.
The problem for Dubai is that on the one hand it is trying to convince real estate investors that property prices and rent receipts will rise impressively forever, while on the other hand telling international companies that costs will stabilize. There is an obvious contradiction, but at this point it's difficult to see which argument is going to give out first.
Wednesday, February 28, 2007
New meeting with EMAAR
We are trying to arrange another meeting with EMAAR in order to follow up the points raised at the last meeting. However, EMAAR's decision to sell the Lakes (despite previous denials made at the time the Greens sale was announced) has rather let the cat out of the bag. It is pretty clear now that EMAAR is extremely anxious to liquidate its rental assets with almost immediate effect.
7days - EMAAR at it again
Speculation on the 7days comments is clearly rife, but it is pretty clear that the manner and rapidity of this sale seems to verge on 'panic selling'. Few organizations would embark on such a hurried sale and attract the inevitable bad headlines that result without good reason. The fact that EMAAR would approach the Lakes sale in a similar way after the outcry over the manner of the Greens sale is quite telling. EMAAR, it appears, must sell everything and it must sell now regardless of public opposition, bad headlines or the apparent contradiction with the Dubai Government's stated aims of stabilizing rental prices.
When it comes to precise reasons, it's anyone's guess. Possibly best to avoid the world news if you don't want to scare yourself too much. But whatever it is, it's probably going to happen in March or April judging by EMAAR's short deadlines. By then, it might all make more sense.
7days - EMAAR at it again
Speculation on the 7days comments is clearly rife, but it is pretty clear that the manner and rapidity of this sale seems to verge on 'panic selling'. Few organizations would embark on such a hurried sale and attract the inevitable bad headlines that result without good reason. The fact that EMAAR would approach the Lakes sale in a similar way after the outcry over the manner of the Greens sale is quite telling. EMAAR, it appears, must sell everything and it must sell now regardless of public opposition, bad headlines or the apparent contradiction with the Dubai Government's stated aims of stabilizing rental prices.
When it comes to precise reasons, it's anyone's guess. Possibly best to avoid the world news if you don't want to scare yourself too much. But whatever it is, it's probably going to happen in March or April judging by EMAAR's short deadlines. By then, it might all make more sense.
Thursday, February 22, 2007
EMAAR to sell Lakes too
As predicted here previously, EMAAR appears to be dumping the whole of its rental stock into the market for urgent sale. Lakes tenants of EMAAR are being informed in similar fashion to those of us in the Greens that they have just three weeks to decide to buy, or their homes will be sold from under them.
EMAAR press release
The speed and timing at which EMAAR wants to get rid of its stock of rental properties has obviously raised eyebrows. One can only speculate at the reasons for the almost unbelievable urgency and EMAAR's insistence that everything must go one way or another within a few short weeks. With most of the properties having leases of several months remaining, there seems no obvious reason why a more carefully planned sale could not be phased in at the point each lease is due for renewal.
EMAAR's PR states that with the freehold laws, people prefer to buy rather than rent. But the reaction of tenants in the Greens, and the tiny number who're actually considering buying, suggests otherwise. It seems disingenuous for EMAAR to suggest that their decision to sell is driven by the wishes of tenants, when it's virtually impossible to find a tenant who welcomes the EMAAR decision and hardly any tenants seem to be taking up EMAAR's offer.
Why the desperation to sell now rather than in a few months time? Many market pundits have viewed the oversupply of middle and high-end property in Dubai that will emerge in 2007 as a possible turning point for prices, but any declines are likely to be drawn out affairs, so that alone does not seem to explain the sense of urgency.
So, on the face of it there doesn't seem to be any particular reason for the urgency to dump the whole rental portfolio into the market in a matter of weeks for a snap sale. Perhaps EMAAR knows something we don't?
EMAAR press release
The speed and timing at which EMAAR wants to get rid of its stock of rental properties has obviously raised eyebrows. One can only speculate at the reasons for the almost unbelievable urgency and EMAAR's insistence that everything must go one way or another within a few short weeks. With most of the properties having leases of several months remaining, there seems no obvious reason why a more carefully planned sale could not be phased in at the point each lease is due for renewal.
EMAAR's PR states that with the freehold laws, people prefer to buy rather than rent. But the reaction of tenants in the Greens, and the tiny number who're actually considering buying, suggests otherwise. It seems disingenuous for EMAAR to suggest that their decision to sell is driven by the wishes of tenants, when it's virtually impossible to find a tenant who welcomes the EMAAR decision and hardly any tenants seem to be taking up EMAAR's offer.
Why the desperation to sell now rather than in a few months time? Many market pundits have viewed the oversupply of middle and high-end property in Dubai that will emerge in 2007 as a possible turning point for prices, but any declines are likely to be drawn out affairs, so that alone does not seem to explain the sense of urgency.
So, on the face of it there doesn't seem to be any particular reason for the urgency to dump the whole rental portfolio into the market in a matter of weeks for a snap sale. Perhaps EMAAR knows something we don't?
Wednesday, February 21, 2007
Initial meeting with EMAAR representatives
We were unable to meet with the managing director of EMAAR today and met with a representative "Jivan D'mello" and Hampton's representative Wahida karama.
Intially they were not willing to compromise on any topic - except that there is a possibility of extending the deadline (but even that they were unable to confirm by how much).
We stressed all our points as follows:
- Extension of time is a must FOR ALL and not on one to one basis. They must revert asap as people are already are chasing for update and must clarify way forward.
Their response was that they cannot confirm anything until they discuss with management but would confirm by tonight - they have since called us and said one week extension confirmed. We have stressed that this is not sufficient and minimum of 2weeks should be considered.
Wahida the Hampton's representative has agreed that she will discuss with management and revert to us by tomorrow if management have accepted 2 weeks extension.
- EMAAR should clarify the law to those tenants who will be faced with new landlords - we suggested that they contact the rent committee in the municipality on behalf of the tenants (since it would cost us 2000 dhs to file a claim) and then issue statement addressing the several scenarios possible - i.e. tenancy expires in one month, tenancy expires in 1year, landlord wants to rent what maximum increase can he impose, landlord wants to move in what increase can he impose etc.
They have responded that they will not state anything on behalf of the municipality as the law might change(!) our response was that they should at least clarify what the law is currently. They have agreed that they will contact the rent committee and circulate if they get a WRITTEN response from them - otherwise they will not state anything formally.
- EMAAR explained that by default our contracts will be renewed by another year - the law states that tenants must be given 12months notice if contract is not to be renewed hence we will get automatic renewal. They will not state this in writing since they don't have it in writing from rent committee. We have requested that they clarify on our behalf from rent committee. As we all know, the law in Dubai is sometime vague in places. It is obviously rather hard for EMAAR to claim tenants won't face huge cost increases or rapid eviction while on the other hand stating that they won't put to us in writing what they believe the law is. How can they be sure tenants will be protected from rapid eviction if they cannot actually confirm the law in writing?
We have pushed them to include a clause in the tenancy agreements which obliges the new landlords to renew tenancy for another year even if they believe that the law states that he has to anyway. They said they will discuss internally and let us know. From a logical standpoint, if they genuinely believe that the law does provide that the landlord renew tenancy for at least another year, then they should have no hesitation explicitly adding this to tenancy contracts for tenants prior to selling the properties, which would safeguard the tenants against a change in the law or some other interpretation of the law to what EMAAR claims to understand. This alone would greatly assist tenants, as well as ensuring that Dubai's vital steps to reduce inflation are kept on track, something that will not happen if the rent cap laws can be easily bypassed. Reducing inflation is critical - some surveys suggest the cost of living in Dubai is increasing by 28% per year, something that will destroy Dubai's competitive business position if tough measures are not taken and enforced. The future prosperity of Dubai should not be sacrificed for short term gain - it is vital that the economy is brought under control and that companies can make long term investments here knowing that the cost base is stable. At present, the biggest deterrent to companies is not just the high level of costs, but the lack of clarity in what costs might rise to this year or next.
- We have requested that they offer tenants who move (after 12months given the above) they offer further assistance e.g. waiving the estate agency commission - they agreed
- We have requested that they contact DIC re disconnection penalities which applies to TV/internet/phone. They have refused saying that this was not their concern
We strongly feel that they can come to some agreement with DIC re the above. If even 100 tenants move from one block to the next and need to reconnect with DIC surely there is a way to come to an agreement so tenants don't have to pay disconnection fees and then reconnection fees!! These are perhaps the least of the expenses but none the less important.
- We have discussed that they should offer those who buy either 20% discount or deduct their total paid rent. They have not agreed to any of these suggestions but will discuss.
In summary all we have received from them is the following:
- extension of deadline by 1 week with possibility of another week
- Contact Rent committee on our behalf and IF THEY RECEIVE ANYTHING IN WRITING they will forward to tenants
- Discuss with management any other concessions for Tenants who wont buy
- Discuss with management further reductions on price to those interest to buy - either 20% discount or deduction of rent
- To arrange another meeting next week to follow up
- To circulate any concessions etc to tenants once above meeting takes place
We understand that some tenants are obviously keen to get a running commentary of efforts, but given time and other constraints this is not necessarily possible. However we are doing our best to post information as and when we have it to keep fellow Greens tenants up to date. We hope that further meetings will take place and that we will get information back and some progress on the points raised above.
Intially they were not willing to compromise on any topic - except that there is a possibility of extending the deadline (but even that they were unable to confirm by how much).
We stressed all our points as follows:
- Extension of time is a must FOR ALL and not on one to one basis. They must revert asap as people are already are chasing for update and must clarify way forward.
Their response was that they cannot confirm anything until they discuss with management but would confirm by tonight - they have since called us and said one week extension confirmed. We have stressed that this is not sufficient and minimum of 2weeks should be considered.
Wahida the Hampton's representative has agreed that she will discuss with management and revert to us by tomorrow if management have accepted 2 weeks extension.
- EMAAR should clarify the law to those tenants who will be faced with new landlords - we suggested that they contact the rent committee in the municipality on behalf of the tenants (since it would cost us 2000 dhs to file a claim) and then issue statement addressing the several scenarios possible - i.e. tenancy expires in one month, tenancy expires in 1year, landlord wants to rent what maximum increase can he impose, landlord wants to move in what increase can he impose etc.
They have responded that they will not state anything on behalf of the municipality as the law might change(!) our response was that they should at least clarify what the law is currently. They have agreed that they will contact the rent committee and circulate if they get a WRITTEN response from them - otherwise they will not state anything formally.
- EMAAR explained that by default our contracts will be renewed by another year - the law states that tenants must be given 12months notice if contract is not to be renewed hence we will get automatic renewal. They will not state this in writing since they don't have it in writing from rent committee. We have requested that they clarify on our behalf from rent committee. As we all know, the law in Dubai is sometime vague in places. It is obviously rather hard for EMAAR to claim tenants won't face huge cost increases or rapid eviction while on the other hand stating that they won't put to us in writing what they believe the law is. How can they be sure tenants will be protected from rapid eviction if they cannot actually confirm the law in writing?
We have pushed them to include a clause in the tenancy agreements which obliges the new landlords to renew tenancy for another year even if they believe that the law states that he has to anyway. They said they will discuss internally and let us know. From a logical standpoint, if they genuinely believe that the law does provide that the landlord renew tenancy for at least another year, then they should have no hesitation explicitly adding this to tenancy contracts for tenants prior to selling the properties, which would safeguard the tenants against a change in the law or some other interpretation of the law to what EMAAR claims to understand. This alone would greatly assist tenants, as well as ensuring that Dubai's vital steps to reduce inflation are kept on track, something that will not happen if the rent cap laws can be easily bypassed. Reducing inflation is critical - some surveys suggest the cost of living in Dubai is increasing by 28% per year, something that will destroy Dubai's competitive business position if tough measures are not taken and enforced. The future prosperity of Dubai should not be sacrificed for short term gain - it is vital that the economy is brought under control and that companies can make long term investments here knowing that the cost base is stable. At present, the biggest deterrent to companies is not just the high level of costs, but the lack of clarity in what costs might rise to this year or next.
- We have requested that they offer tenants who move (after 12months given the above) they offer further assistance e.g. waiving the estate agency commission - they agreed
- We have requested that they contact DIC re disconnection penalities which applies to TV/internet/phone. They have refused saying that this was not their concern
We strongly feel that they can come to some agreement with DIC re the above. If even 100 tenants move from one block to the next and need to reconnect with DIC surely there is a way to come to an agreement so tenants don't have to pay disconnection fees and then reconnection fees!! These are perhaps the least of the expenses but none the less important.
- We have discussed that they should offer those who buy either 20% discount or deduct their total paid rent. They have not agreed to any of these suggestions but will discuss.
In summary all we have received from them is the following:
- extension of deadline by 1 week with possibility of another week
- Contact Rent committee on our behalf and IF THEY RECEIVE ANYTHING IN WRITING they will forward to tenants
- Discuss with management any other concessions for Tenants who wont buy
- Discuss with management further reductions on price to those interest to buy - either 20% discount or deduction of rent
- To arrange another meeting next week to follow up
- To circulate any concessions etc to tenants once above meeting takes place
We understand that some tenants are obviously keen to get a running commentary of efforts, but given time and other constraints this is not necessarily possible. However we are doing our best to post information as and when we have it to keep fellow Greens tenants up to date. We hope that further meetings will take place and that we will get information back and some progress on the points raised above.
Monday, February 19, 2007
Response from EMAAR
The Homeless Tenants group has received contact from EMAAR asking for a meeting to discuss tenants concerns. It's not clear at this stage whether the intention is to offer any material concessions that will help the dire effect that this sale will have on many tenants, or just to further explain EMAAR's position and reasoning. We will of course keep you informed when we have any news.
Thursday, February 15, 2007
No meeting tonight
It was agreed at the last tenants meeting that the group should meet again today, Thursday 15th February, to discuss progress.
At present there is no progress to report. Emaar's PR bods have been busy telling the newspapers that they are offering concessions and sweeteners, but as anyone who has seen the newspapers will realise, they are offering nothing more than was originally suggested and nothing that eases the plight of the affected tenants.
We still hope that the letters to prominent and influential local figures will yield results. But as yet, there appears to be no change in Emaar's position that it wants to sell all the affected apartments by the end of February at current market prices.
It appears too that there are also plans to sell off other Emaar leased properties in the Lakes in a similar fashion once the Greens tenants' homes have been dispatched. So this story may well have implications for far more people than it currently appears to affect.
We will post more news when available.
At present there is no progress to report. Emaar's PR bods have been busy telling the newspapers that they are offering concessions and sweeteners, but as anyone who has seen the newspapers will realise, they are offering nothing more than was originally suggested and nothing that eases the plight of the affected tenants.
We still hope that the letters to prominent and influential local figures will yield results. But as yet, there appears to be no change in Emaar's position that it wants to sell all the affected apartments by the end of February at current market prices.
It appears too that there are also plans to sell off other Emaar leased properties in the Lakes in a similar fashion once the Greens tenants' homes have been dispatched. So this story may well have implications for far more people than it currently appears to affect.
We will post more news when available.
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