Mario Volpi is head of brokerage at Novvi Properties and has worked in the property sector for 40 years in London and Dubai
Question: I don’t have the down payment needed to buy a property in the UAE. However, I’m interested in benefiting from the property market’s price growth. I’m considering fractional ownership in UAE property. Is this a good way to invest in property?
What are the risks I should know about? What are the benefits and disadvantages of this model?
SC, Dubai
Answer: Fractional ownership is a good way to enter the property market and enjoy its current price growth without needing the full amount of money for a traditional property purchase. Other benefits include sharing additional costs like maintenance with other owners.
Another advantage is that it allows you to diversify your investments. You can invest in several properties in different areas and asset classes. This way of buying property is also flexible, as it’s easier to get in and out compared to full ownership.
However, there are some disadvantages. Financing options are limited if you need a mortgage, and securing a loan might be difficult. All decisions regarding the property must be agreed upon by all owners, which could lead to disagreements or delays.
The sale of a fractional unit might also have restrictions on when you can exit the investment. Additionally, some fractional ownership models might prevent owners from using certain property management companies, which can limit flexibility and control over property decisions.
As with any real estate or financial investment, it’s important to do your research and understand the risks involved. Carefully analyzing the expected financial gains is key to ensuring profitable returns.
You should also consider rental returns and potential price increases. While the market is currently strong, it may stabilize or even decline in the future. Be sure to gather all available data, such as market studies or reports from reputable real estate companies.
There are only a few regulated companies in Dubai that offer fractional ownership to investors. With these companies, you can invest as little as Dh500 ($136) and currently expect returns of around 8% to 12%, which is a good return.
Question: My wife and I moved into a property as renters in 2020 and have renewed each year with the maximum rent increase allowed by the Real Estate Regulatory Agency. We know that our rent is below market rates. The landlord has now given us an eviction notice, saying he plans to sell the property, and the notice will end in December 2024.
Over the past four years, the property has had leaks, air-conditioning problems, and water heater issues. The landlord’s agent has often been slow to respond to our complaints, and at times we’ve had to fix things ourselves.
Despite these problems, we’ve fallen in love with the property and turned it into a home. We are also expecting a new baby in January 2025. After working and saving for years, we finally started a conversation about buying the property on September 11, 2024.
The agent said they relayed our offer to the landlord, but when we made a counter-offer on October 3, it’s been almost a month and we still haven’t heard back. The agent says they can’t get in touch with the landlord, which makes us worried that the negotiations are being delayed on purpose, leaving us with little time. We suspect the landlord wants to either re-let the property for a higher price or force us to buy it at a price he chooses.
We just want a stable home for our new baby, but we’re not sure what to do next.
GS, Dubai
Answer: First, it’s important to know that a landlord cannot evict a tenant to sell the property and then rent it out to someone else. If this happens, you can file a case at the Rental Dispute Settlement Committee for compensation.
The landlord has served the eviction notice because they plan to sell the property. Since you made an offer to buy, it shows that you are serious about purchasing.
While you didn’t mention the asking price or your counter-offer, I’m sure you’ve done your research to help make your offer competitive.
As for the situation with the agent, unfortunately, delays like this can happen. However, since the landlord is an important client for the agency, they should have a way of reaching him to clarify your offer and determine whether he is serious about selling.
As the expiration of your lease gets closer, the landlord will need to respond, and you should get some resolution before the deadline.
If you do have to move out, be sure to keep an eye on the property in case the landlord unlawfully rents it to another tenant. If this happens, you can file for compensation.
Mario Volpi is head of brokerage at Novvi Properties and has worked in the property sector for 40 years in London and Dubai. The opinions expressed are for informational purposes only and do not constitute legal advice. Please send any questions to mario@novviproperties.com.
