The tenant has lived in his Springs villa for 11 years and up until now has had a favourable rental deal. Courtesy Better Homes
The tenant has lived in his Springs villa for 11 years and up until now has had a favourable rental deal. Courtesy Better Homes

Mario Volpi: Dubai tenant wants to know whether to take a lease buyout package



I have a question about the rent of our villa, which we have been living in for more than five years now. The agent has told me that the landlord intends to sell the property and asked if we would be happy to accept a compensation package to vacate the villa. I have two questions:

a. Am I correct in my understanding that the landlord cannot formally issue me with this 12-month notice until November 2017 (when the rental is due for renewal) and then we have 12 months (until November 2018) to formally vacate the property?

b. On the basis that we could (if my assumptions are correct) still be legally living at the villa until November 2018, what level of compensation would be fair to ask from the landlord if we were to vacate, say in April 2017? Our current rent is Dh170,000. I'm not sure of the current market value for this type of villa; we live in a Springs 2M villa, backing on to a park. AR, Dubai

I will quote what Law 33 of 2008 states, which governs the relationship between tenants and landlords. It states that the 12-month notification to evict should be served upon expiry of the tenancy agreement. I would like at this point to add that although this statement reads that the 12-month notice effectively gives the tenant one last renewal of one year before eviction will take place, it has also been shown by some rental dispute judges that when a 12- month notification is served at any time during the tenancy, some judges have upheld the right of this notification for the landlord. To recap, the law therefore is open to interpretation by the concerned judges once a case has been opened because the law is not set on precedent. If you were to ask my opinion however, I would agree with you that you ought to be allowed to stay until November 2018.

With reference to the level of compensation you should request, this is something that only you can decide what is fair to you. What is the hassle factor of finding a new place to live in and actually moving again worth to you? Obviously there are fixed costs like removal charges and agency commissions to consider. The important thing to keep in mind is to maintain communications flowing with the landlord and in doing so, I’m sure an amicable solution will be found.

On the topic of current rental values; for a type 2M in the Springs backing on to a park, the price you are currently paying is much less than the market price for a new tenancy. Dh180,000 would be achievable on the lower side, going up to Dh190,000. For Springs 1 or 2, this could even be much higher (Dh195,000), especially if the villa is upgraded.

My contract ends on April 9 but I left on December 31. My contract doesn't mention any penalty related to leaving early. However, my landlord is refusing to receive the flat and return my deposit. EE, Dubai

As you confirm in your email that there is no mention in your agreement about early termination and the possible consequences should this happen, then the only way to force the landlord to pay back your deposit (assuming there are no legitimate deductions) and for him to take back his property would be for you to file a case at the rental dispute settlement committee at the Land Department in Deira. The judge will then decide on the outcome.

Mario Volpi is the chief sales officer for Kensington Exclusive Properties and has worked in the property industry for the past 32 years in London and Dubai. The opinions expressed in this article are those of the author and they do not reflect in any way those of the institutions to which he is affiliated. It does not constitute legal advice and is provided for information only. Please send any questions to mario.volpi@kensington.ae

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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

Skewed figures

In the village of Mevagissey in southwest England the housing stock has doubled in the last century while the number of residents is half the historic high. The village's Neighbourhood Development Plan states that 26% of homes are holiday retreats. Prices are high, averaging around £300,000, £50,000 more than the Cornish average of £250,000. The local average wage is £15,458. 

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