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.

New Rule for hiring Sri Lankan domestic workers in UAE

The UAE and Sri Lanka have signed a memorandum of understanding (MoU) to foster cooperation in the labour and manpower fields. The MoU was attached by a protocol agreement that aims at facilitating the process for approving and recruiting domestic workers.

The MoU was signed by Nasser bin Thani Al Hamli, Minister of Human Resources and Emiratisation, and Sir Lanka's Minister of Foreign Employment, Thalatha Athukorala, in the presence of a number of officials from both parties.

Al Hamli lauded the close relations binding the two countries in labour-related fields. He also emphasised that the MoU paves the way for a new stage of cooperation between both countries to ensure a balanced and effective management of the contractual work cycle in line with the laws and regulations applicable in the UAE. He also pointed out that the MoU is meant to regulate the activities of recruitment agencies working in both countries to ensures that Sir Lankan workers are recruited in line with principles of transparency and respect for the law.

The Sir Lankan minister said that the MoU underscores both countries keenness on developing cooperation to ensure transparency between the contractual parties at all stages.

As for the protocol attached to the MoU, both countries agreed to facilitate the process of recruiting and employing domestic workers from Sir Lanka in accordance with the laws and regulations, which are enforced in both countries.

Under the agreement, only recruitment agencies registered at the ministry are able to offer recruitment and employment applications for domestic workers that have been submitted by employers.

UAE to Create Job portal for hiring Indian workers

The UAE is creating an exclusive online portal for the recruitment of Indian workers under a memorandum of understanding [MoU] signed between the two countries during Indian Prime Minister Narendra Modi’s visit early this week, a senior official told.

Dr Omar Al NuaimiIndian workers seeking jobs in the UAE will be able to submit their job applications and review terms and conditions of the job contract on this portal from India, said Dr Omar Al Nuaimi, Undersecretary of the Ministry of Human Resources and Emiratisation, and assistant for International Relations and Communications.

This UAE system will be linked with India’s similar online system, eMigrate (an online system controlling emigration of blue-collar workers, qualified nurses and sailors), the official said.

Dr Al Nuaimi said: “The MoU with India has ushered in a new chapter of cooperation. This will ensure a balanced and effective management of the (workers’) contractual work cycle in accordance with the laws and regulations, which are enforced in both countries, serving the common interest.”

He pointed out that a joint committee will be formed to ensure the proper implementation of the MoU.

The Ministry of Human Resources and Emiratisation will provide the Indian Ministry of Foreign Affairs with details of the available jobs in the UAE and their contractual terms and conditions.

After the joint-technical committee completes the required technical measures for linking both systems, a specific procedure will be created. A model job offer and job contract will guide the workers to review the descriptions of jobs available on the system, the official said.

Navdeep Singh Suri, the Indian Ambassador to the UAE, told Gulf News that the integration of both nations’ systems is expected to be done in the next three to four months.

“The MoU provides a much better framework for ensuring that Indian workers are recruited in accordance with principles of transparency, ethics and fairness. It endeavours to standardise contracts in a format that is in consonance with UAE laws so that workers can get due protection in the event of a dispute,” he said.

A senior official at the Indian embassy told that the MoU will pave the way for abolishing contract substitution, a major problem faced by Indian workers. Unscrupulous agents in India give workers contracts with exaggerated salary and perks, but when they reach the UAE, a substituted contract takes the place of the earlier contract. As the substituted contract is legally valid, workers cannot redress their grievances.

When the systems of both countries are integrated, workers will get a uniform job contract, without leaving any room for contract substitution.

In 2015, India introduced eMigrate, an electronic system that controls emigration of ECR (Emigration Clearance Required) category passport holders. India issues ECR category passports to those who have not passed Grade 10 and hence they need emigration clearance before going to work in 18 ECR countries that include the Gulf nations.

Recently, India brought sailors’ recruitment also under the purview of eMigrate, following complaints about sailors being mistreated and abandoned abroad.

eMigrate was made applicable to qualified Indian nurses also when India banned their recruitment by private agents for overseas jobs since April 30, 2015.

A Government of India order on August 2, 2016, further extended the ban to all female workers including domestic workers and authorised seven official agencies for the recruitment of all female workers including nurses. None of the 1,200 registered private recruitment agents in India is authorised to recruit nurses and female workers under ECR category.

The embassy official said a protocol on domestic workers was also signed between both nations as an annexure to the MoU. This was needed as rules and regulations of domestic workers are slightly different from other workers, he said.

How does it work

•     The UAE will create an exclusive portal
•     The UAE portal will be linked with India’s eMigrate
•     Once both systems are integrated, Indian workers seeking jobs in the UAE can submit their job applications and review the terms and conditions of the job contract on the portal from India
•     The integration of both systems will abolish contract substitution The integration is expected to be done within a few months

UAE and India sign agreement for direct trade in Dirham and Rupee

The UAE and India have reached a historic agreement which will enable businesses on both sides to bypass the US Dollar or any other foreign currency and trade directly in UAE Dirhams and the Indian Rupee.

The agreement will mean large savings for business communities on both sides as trade between the UAE and India soars to new highs.

India’s Ambassador to the UAE, Navdeep Suri, said that this is in addition to the agreements and memoranda of understanding which were signed during Prime Minister Narendra Modi’s just-concluded two-day visit to Abu Dhabi and Dubai.

"There were two other agreements that have been finalised. One is a currency swap agreement where India and UAE – it is an agreement between the two Central Banks – and the agreement has been completed and it is going to be exchanged through letters. Under this, businesses from the two sides will be able to trade directly in Rupees and in Dirhams and not have to go through US Dollars which means that there is a saving for the business community. It makes trade between the two countries more competitive," Suri said while reviewing Modi’s visits to the UAE, Jordan and Palestine along with India’s new Foreign Secretary, Vijay Gokhale, for Indian reporters.

Although the Dirham has a fixed peg to the US Dollar, the currency swap agreement between the UAE and India could favourably impact trade between the two countries as the Trump Administration in the US cements further an expansionary fiscal policy and the US Federal Reserve considers rate hikes.

The impact of US policies on the Indian Rupee would be greater and favourable to trade with the UAE since the Indian currency’s value is not pegged to the US Dollar but is determined by a basket of currencies.

The rationale for the currency swap agreement is evident from UAE-India trade figures. From a mere $182 million in 1982, the current level of bilateral trade amounted to about USD 53 billion, according to a joint statement released at the end Modi’s visit.

Another agreement which has been finalised and will be signed this week is "between the Financial Intelligence Units which commits both countries to work more closely together in money laundering, in preventing money laundering that takes place," Suri said.

About this agreement, the joint statement said: "the two sides welcomed the finalisation of an MOU on cooperation in the exchange of financial intelligence related to money laundering, associated predicate offences and terrorist financing."