Saturday, February 24, 2018

Motorists in Dubai urged to upgrade licence plates

License plates across Dubai are getting a facelift as part of a new regimen being introduced by the Roads and Traffic Authority (RTA).

In a new campaign rolled out by the RTA in a public announcement, roads officials are asking vehicle owners who own registered number plates and those who don’t own their plates to upgrade to new-look plates.In its announcement, the RTA said it “would like all car owners with owned registration number plates from A to Z to upgrade to the new plate design. And from May 2018, all car owners with unowned A, B and C number plates are requested to upgrade to the new plate design.”

The RTA encouraged drivers to sign up for the new regimen.

“Be first to upgrade your car look,” it said in its announcement.

Details regarding upgrade costs for owned registered plates were not revealed. But for unowned plate holders of A, B and C, the RTA said there are minimal costs.

For example, for short-length plates, upgrade cost is Dh35 per plate while for longer plates, the cost is Dh50.

For new plates, the cost will be Dh400, the RTA said, while luxury licence plates will cost Dh500.

For more details, visit rta.ae or call 800 9090.

New series up for auction

The RTA, meanwhile, said in a statement on Friday that it is offering a new series of licence plates at an auction next month.

The Licensing Agency of Roads and Transport Authority (RTA) is intending to offer 300 licensing plates comprising four and five digits in its 52nd online auction. Plates on offer bear the Codes J, K, L, M, N, O, P, Q, R, S and T. Registration of bidders starts on Sunday.

The bidding will start at 8 am on March 4 and continue for five days.

“Numbers sold in this auction will be subject to a five percent VAT. The wide public participation in online or open auctions and the positive competition to grab such numbers underscore the importance of holding these auctions in bringing happiness and satisfaction to number plate enthusiasts,” said Sultan Al Marzouqi, director of Vehicle Licensing, Licensing Agency.

“Participation in the auction requires the client to have an account opened through RTA’s website (www.rta.ae) or use the ‘New User’ link to obtain a username and password. For a new registration, the user is required to have either a vehicle registered in Dubai or a driver licence issued from Dubai. For participating in the auction, the bidder is required to issue a security cheque to RTA amounting to Dh5,000 and deposit it at one of RTA’s Customer Happiness Centres at Umm Al Ramool, Bur Dubai, Deira or Al Twar Municipal Centre. For payment by a credit card, the client must also deposit Dh5,000 as security. Clients also have to pay Dh120 as participation fees through the website (www.rta.ae)” said Al Marzouqi.

Friday, February 23, 2018

Dubai’s Land Department retains status quo on off-plan sales percentage

Dubai’s real estate authorities have decided to retain the status quo on the percentage developers should put up in escrow before launching off-plan sales. But there could still be significant differences between what developers used to put up earlier and what they have to do now.

In a statement issued Thursday, the Dubai Land Department said developers need to place in escrow 20 percent of the “total project value”. Developers until now had been used to putting up a bank guarantee of the “value of the construction”.

Clearly, there will be a marked increase in developer guarantees if the “project value” is enforced. Project value is much more than the sum of the costs related to construction.

Developers will be awaiting further clarification from the real estate authorities on what this might mean.

There is a strong demand from developers to “deposit the 20 percent escrow of the total value of the future projects they intend to launch”, the Land Department statement had added.
Dubai’s real estate authorities have decided to retain the status quo on the percentage developers should put up in escrow before launching off-plan sales. But there could still be significant differences between what developers used to put up earlier and what they have to do now.

In a statement issued Thursday, the Dubai Land Department said developers need to place in escrow 20 percent of the “total project value”. Developers until now had been used to putting up a bank guarantee of the “value of the construction”.

Clearly, there will be a marked increase in developer guarantees if the “project value” is enforced. Project value is much more than the sum of the costs related to construction.

Developers will be awaiting further clarification from the real estate authorities on what this might mean.

There is a strong demand from developers to “deposit the 20 percent escrow of the total value of the future projects they intend to launch”, the Land Department statement had added.

Wednesday, February 21, 2018

50 per cent completion required before off-plan sales in Dubai

Dubai’s developers may no longer be able to rush out with their off-plan sales — they will need their projects to reach the 50 percent mark before they do so. The earlier requirement was for a project to be 20 percent ready before sales could be launched.

The provision that developers must have paid off all the costs related to the land remains in effect. (The changes do not apply to government-owned real estate companies, according to informed sources.)

Such a move could have far-reaching consequences for developers — especially the smaller ones — as they would have to wait longer to get funds flowing back into their operations. But the latest changes would be for the greater longer-term benefit of the market, sources add. This would prevent those developers trying to get sales pushing projects with bare minimum down payments and extended post-handover instalment periods for buyers.

Last year had seen a flood of off-plan launches and sales and with the majority of these projects expected to take three to five years to complete. Many had been expecting the pace to be maintained this year as well.

Leading developers such as Damac had been warning the market that these handover terms could have serious consequences if, in a future downturn, buyers stopped payments and developers were left with “dead” stock.

How would more stringent requirements on off-plan launches play out? “The proposal to amend the developer’s law could spur consolidation among (smaller) investor-developers,” said Sameer Lakhani, Managing Director at Global Capital Partners. “A second benefit would be to improve confidence among investors that these projects would be completed — once you reach the 50 percent mark, there’s every incentive to finish the rest.”

According to estimates by JLL, the consultancy, more than 95,000 residential units were launched in Dubai and with likely completion dates before end-2020.

“This is approximate twice the average demand over the past five years,” said Craig Plumb, Head of Research — Mena at JLL. “If all these units were to be delivered, there would be a likely oversupply and which would have a negative impact on sale prices and rentals.

“Tightening the restrictions on the supply of off-plan units is a welcome response to concerns about a potential oversupply.”

Developers will also need to have a serious think about when they complete a project and how the sales are faring on it. Because any unit left unsold three years after construction will be subject to VAT.

Apart from oversupply, market watchers were also getting anxious about the quality of build of some of the new projects. They warned that cash-strapped developers could start cutting corners just to get the project off their hands.

“The new policy, if it comes into full effect, will reduce the systemic risk that is currently building up on the back of a few developers flooding the market with sometimes poor quality products at heavily discounted prices,” said David Godchaux, CEO at Core Savills.

“The (50 percent requirement) will act as a screening mechanism for developers. They will now have to ensure they are in a stronger cash flow position to sustain the development risk without the help of capital guaranteed from off-plan sales.

“There will be less short-term pressure on property prices as some developers were competing to quickly attract buyers in the very early phases of their projects.”

Developers sources were unavailable for comment. But the fact that the leading master-developers will not be impacted will ensure that a steady flow of off-plan launches will continue. As for private developers, they will now have to show more “skin in the game” in terms of putting in their own funds and on the project site.

Some developers had privately been voicing concerns that the pace of off-plan launches last year meant a return of speculative buying in Dubai’s property market. For the greater and longer-term good of the marketplace, this had to be nipped.