18 September, 2011

Dubai real estate terms explained

Here some real estate terms you may come across specific to the Dubai market:

Abbreviation for Dubai’s land department, often see written as, DLD – Dubai Land Department but not correct

Abbreviation for Real Estate Regulatory Agency, this is Dubai’s authority to regulate the real estate sector with the land department.

Distressed Sale
Seller is desperate to get rid off the property to raise cash for whatever reason, selling far below market price.

Private Sale
No agency involved, privately advertised.

Built up area (BUA)
The gross floor space of the building measured as floor plate by height

Abbreviation: Broker Registration Number

Abbreviation: Developer Registration Number

Comparative Market Analysis

Class ‘B’ registered real estate brokers
Real estate agencies and brokers have to be licensed by the Real Estate Regulatory Agency (RERA) and will carry a number on their adverts and other correspondence. Each person working as a broker within an agency should have passed a RERA certified training course and carry as proof a corresponding broker’s card as an ID, name, photo, licensed activity. Report those who don’t carry it to licensing@rera.gov.ae

Class ‘A’ registered real estate brokers
Brokers registered on the official list, which do not require a license from the authorities, but are approved to operate by consent of the Ruler of Dubai and certified by the Chairman for exemptions of certain registration requirements

DED Activity Codes
Due to the different areas (around town) and specializations in real estate, the Department of Economic Development (DED) in cooperation with RERA classifies activities and hands out licenses accordingly. Always check that the person one is dealing with is duly licensed for the activity they are carrying out with both authorities. The professional broker’s ID should certify legality in the first instance.

Broker’s Special Register
This refers to By-Law (No) 85 of 2006, a log of all transactions carried out between all players in the real estate market (buyer/seller – owner/tenant etc.)

Escrow Account
Also known as trust or guarantee account, is the account where all payments towards a property should be banked. (This applies to developers and brokers). The account is overseen by the appointed account trustee of the bank where the account is held, which should guarantee the money is safe and only spent according to RERA guidelines to facilitate construction of a unit. In case of a completed property it can safeguard the money until the property and title deeds are handed over.

Name of licensed real estate office

Exclusive Agent/Agency
As the term implies it refers to an exclusive relationship between one agent and one client regarding one property. In Dubai, exclusivity regarding an agent or agency taking on only one property has been rare, whether that is sales or rentals.

Open Listing
Respected agencies have in the past noted that rogue property dealers are the cause of many a deal falling through, trying to sell at unrealistic prices to get the deal, despite them not necessarily being able to keep this promise. Rogue dealers have been largely weeded out, several licensed agencies dealing with one property does provide competition. The recommendation is to only deal with licensed agencies and individual brokers to be on the safe side.

Multiple Listing
Some licensed agencies, however, agree to each market the same property but work together on showing it around. Brokers then split the commission.

These are the areas where a foreign investor can buy property and own it outright without time restriction. Foreigners cannot own but only lease property outside those areas in Dubai. Note: In Abu Dhabi 99-year leasehold applies in freehold zones.

Not to be confused with freehold, these zones are reserved for the setting up of businesses also 100 percent ownership. There are some areas like Jumeirah Lake Towers, which is a mixed freehold/free-zone, so both zones’ rules apply.

Abbreviation: For Sale By Owner

Ejari is the on-line system where landlords should register the tenancy contracts. Tenants cannot register contracts themselves and should therefore ensure the landlord complies. Failure to do so could raise issues in case of disputes.

Rent Committee
Rental disputes, as long as registered in Ejari, are heard by this committee, which falls under Dubai Municipality. It has proven very useful for tenants regarding evictions connected with an unfair rent raise. More info can be found in legal terms explained.

Rental Index
Created by RERA on its website to give a guideline to what rent is fair in what area. In practice maybe not the most reliable as it’s based on registered contracts only. Some landlords don’t register contracts and secondly it reflects pre-boom, boom and post-boom contracts. This means prices registered vary wildly. Although it seems that the index follows what reputed agencies are publishing as a medium rent. The rent committee will take the index when taking decisions.

Tip: Our 'market price live' tool will also give you the average listing price for a property type in a specific area.  Take a look here.

Land Register
The land department holds the electronic records proving land ownership and registering transfers since its existence.

OQOOD (Interim Real Estate Register)
Is the register, also overseen by the land department, where off-plan property must be registered to protect the sales & purchase agreement (SAP). Registration fee is Dh1,000 (subject to change). The developer usually takes care of registration but may pass the fee on to the buyer.

Title Deed
Proof of outright ownership of a property after it has been fully paid off provided by the land department. It should include parking spaces, where applicable. Fees: two percent of purchase or market price. By law developer and buyer share the fee, in practice the buyer may have to pay the full amount depending on what is specified in the SAP.

Selected projects by RERA, with a construction progress of minimum 40 percent. The government is confident in backing these projects to a certain extent fostering timely completion.

Islamic lending institutions, such as Tamweel and Amlak, finance a property under Ijara, treated like a mortgage but it isn’t the same as with a conventional bank. The reason is the structure, as making profits on interest is not allowed in Islamic financing. It works out to be pretty much the same than a mortgage, but terms are different. The property is essentially leased to the buyer (loan holder). It could throw up questions in regard of registering in Oqood as legally it’s a leased property, not a bought property.

Abbreviation for post dated cheques, these are very important in the Dubai real estate market, as PDCs are used in sales and rentals as a guarantee of future payment. Therefore, risking default on a cheque can have serious criminal consequences.  Some brokers, such as Landmark Properties, have started a new mechanism whereby tenants can choose to pay rent by credit card.

Quantity Surveyor
Quantity surveying is a profession in itself, costing projects under development and completed ones in regard of cost of renovation.

Valuation (registered valuer)
A valuer will, as the word says, value the real worth of a property taking market prices and the circumstances of the individual unit into account. This sector is under constant development, currently focused on achieving a unified standard of measurement for all properties.

Real Estate Activity
Authorities use this term to describe all activities/professions related to the sector.

Real Estate Development
Refers to the development of new real estate

Abbreviation: Rera Reference Number printed on all official RERA forms, downloadable from their website  www.rpdubai.com

Sellable Area
The gross square footage area of a unit for sale, excluding common areas

Abbreviation for Special Transactions Register

Standard Forms
Standardized official forms related to real estate transactions in Dubai

A developer of individual buildings within a master-development, they must adhere to the norms of the master-community when constructing.

The developer, who is in charge of developing a master-community with all its facilities and utility connections. Often they also build their own individual development within.

To let by owner

Transfer settlement
The final payment to transfer ownership of a property, which until then remains under contract

Un-Conditional sale
A sale of a property usually as seen and often used in cash sales

Service or maintenance fees or charges
The fees raised to maintain the building, including security

Chilling or cooling fees
The fees raised by district cooling companies to provide chilled water for air-conditioning

Master-community fees
Fees raised by the developer to maintain and develop common areas, as well as rubbish collection etc.

Mixed-use development
A community with multiple use, can include residential, offices and retail

Abbreviation for home-owners associations, increasingly registered to take over management and raise the fees to maintain buildings and master-communities

Abbreviation for real estate investment trust

Abbreviation for Return on Investment

Yield (rental yield)
Often used to refer to what profit/ROI a property can achieve per year comparing achievable rent and property price (value) – should include outgoings like service fees


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