Question: I currently rent an apartment in Dubai with a tenancy contract that expires on November 29, 2024. I have been paying Dh55,000 ($14,974) as rent.
On August 27, my landlord emailed me a renewal offer for 12 months until November 29, 2025, at Dh60,000.
I accepted this offer on August 31 after confirming with Real Estate Regulatory Agency that the increase was within the allowed limit.
However, on September 3, I received a Dubai Courts notice stating that the landlord wants to sell the property and is not renewing the contract. I need to, therefore, vacate the property by September 15, 2025.
When I phoned the person I deal with, he claimed he had no control over the owner’s decision and they just manage the property. He also said their renewal offer and my acceptance would be “voided”.
I find it inconceivable that a landlord can offer a renewal and then produce an eviction notice saying they want to sell within the space of seven days. It seems implausible that this sudden change in plans is not motivated by a desire to evict me in order to re-rent the property at a higher rate.
The going rate for units in my building is Dh80,000; my rent is low because I lived there during Covid when rents were dropping, and the Rera restrictions mean the landlord has not been able to raise the rent back up as fast as the market has moved.
Can I get a 12-month notice period during my existing contract? Does the landlord not have to wait until the end of the current contract (November 29) and apply the 12 months from that date?
Does the exchange of offer and acceptance have any legal standing? I don’t have a signed contract for next year, but can this exchange be voided?
Doesn’t the landlord have to provide a reason for evicting me beyond wanting to sell the property – for example, because they (or a family member wants to move in)? Or, if they want to sell to another landlord? Don’t I have the right to remain as a tenant? I know a lot of this applies to private landlords. Is it the same if the landlord is a company? RMG, Dubai
Answer: As per law 33 of 2008, which amended parts of law 26 of 2007, a landlord can serve a tenant with a 12-month notice to vacate the rented property. Normally, this notice is served upon expiry of the existing contract term, thus allowing the tenant one more year at the property from the renewal.
Having said this, most judges at the Rental Dispute Centre now allow the 12-month notice to be served at any time, which sometimes can cause a bit of confusion and would need further agreements.
For the difference in time between the contract and the 12-month notice period (as in your case), the difference of approximately two months would need to be negotiated further if an agreement to stay beyond the 12-month notice period can be reached.
Any agreement can be overturned by a change of heart or circumstances, which would answer why the email now is potentially voided.
The owner does have the right to sell the property or do whatever he wishes with it, although it does seem strange that the change of heart came in that short period from confirming the renewal initially to now.
If the owner is selling to an investor, you have the right to negotiate with that person because the landlord is not allowed to evict a tenant simply to re-let to another tenant in order to get a higher rent.
Unfortunately, if the buyer is an end-user, you will have to vacate at the end of the notice period or if you can convince the buyer to wait until your official contract expires in November.
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 do not constitute legal advice and are provided for information only. Please send any questions to mario@novviproperties.com
Company%20profile
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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.”
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