Dubai Sunrise

Shot this a few weeks ago as we took a trip down the water at Dubai Marina. 

Hassan Abbas Sharbatly Masjid

Constructed in 2018, this is a new addition to the Motor City neighborhood.   

For directions to the location click here

To visit Al Rustmani Masjid, click here

Time to prepay that mortgage?

As EIBOR rates continue to gallop northwards, is it time to consider early settlement or partial settlement of the outstanding mortgage loan?

Over the last decade, the property market in Dubai has provided its residents a very interesting investment opportunity. Property has been one of the most interesting investments in recent years and many residents have profited from it. While many of the larger investors have taken the cash route, a large percentage of current investors have taken the mortgage route to ownership. Hence as we come to the end of the low interest rate regime and we anticipate a sharp increase over the next few year, it is important to review the possible scenarios that mortgage holders face at this time.

Before we get into the possible scenarios and options facing the investors, let us first look at the interest rates over the last few years and quarters. A key benchmark in the country remains EIBOR or the Emirates Inter Bank Offered Rate and many of the mortgage loans are linked to this key reference rate. The EIBOR itself is a daily reference rate published by UAE Central Bank based on the average interest rates at which UAE banks offer to lend to other banks in UAE. So how has the EIBOR changed over the last few periods? For the sake of comparison, we have looked at EIBOR over the last 3 years from the period January 2015 to Mar 2018.

You will note that relatively slow rate of change since 2015 until the last quarter of 2017. Since the last quarter of 2017 you will also note the sharp increase in the rate moving from 1.56% to 2.30% within a period of 6 months. This trend is expected to continue as US Fed Reserve continues to suck out money and trim down its balance sheet with at least 2 more rate hikes expected this year.

Looking forward into the future, what could be the possible options available to the mortgage holder in UAE? Every individual’s situation and circumstances are very unique and hence the final decision needs to be carefully thought through based on your own risks and opportunities.  This blog does not in any way make any recommendations but only presents a few possible options available.

The first and foremost consideration for any individual needs to be setting aside emergency funds. Have you set aside the required funds aside for the possible extreme emergency like situation? It would be important to set aside at least funds to cover your day to day living for a period of 6 months. This includes your rent, car loan, utilities, school fees, grocery bills etc. Only once you have set aside emergency funds should you consider any scenario related to prepayment of your mortgage.

Most experts would advise you to never prepay your mortgage given that it is possibly the cheapest loan you have in your portfolio. This holds completely true so long as the excess funds can be deployed into more profitable investments. If possible avenues for investment and expected returns exceed the cost of loans, it would be prudent to deploy the funds into other investments like equity or equity related funds. As an example, if the cost of your loan is 4% and potential returns from investments is say 5%, it would be good to continue with your investment plans subject to cost of your loan remaining the same over a reasonable period. If the return on other investments and cost of your loan (after assuming any increase in costs of loan over the near future) are the same or if the return on investment is lower than the cost of finance, it would be worthwhile to prepay your outstanding loans. Based on the fact that we seem to be at the latter part of a business expansion cycle, it would be worthwhile to factor potential investment risks in the future.  

If you have excess funds available and do not see interesting investment opportunities in the near future, you may consider using part of the funds to prepay an outstanding loan. Remember excess funds refers to all funds after the emergency fund has been set aside. Once needs to calculate all costs and benefits based on your own unique situation. However I have made assumptions to illustrate the situation below.

Assumptions:

• Current Outstanding loan: AED 700,000
• Cost of finance: 4.75% with a potential increase to up to 5.25% over next 12 months
• Remaining tenure of loan: 7 years
• Hence the EMI is approx. AED 9,812/-

Based on the above, the total payout amounts to AED 824,184/-. This includes a payment of finance cost of AED 124,184/-.

Assuming that you have AED 200,000/- unutilized ‘excess’ funds in your account and assuming that you have ticked off all potential investment opportunities, what is the potential impact in case you consider repaying part of the outstanding loan amount? If you decide to make a prepayment of AED 200,000/- and the EMI remains the same, there is a potential saving in finance cost of approximately AED 64,740/- as compared to the current cost of AED 124,184/-. For details refer to the table below.

Total savings on making a prepayment of AED 200,000 amount to AED 64,670/- while also reducing the tenure from 84 months to around 57 months.

As mentioned previously, each individual’s situation is unique and any decision related to prepayment needs to be taken by you based on your unique situation. In my case, I see merits in making a prepayment as I have unutilized funds in my bank which can better utilized by making a partial payment of my outstanding mortgage?

How does this compare to your situation? What are your thoughts on this strategy? Leave your comments below.

This post is in no way intended to be advice to any individual. Each reader needs to analyse his or her unique situation and take the most appropriate decision that suits him or her. 

Calculate your gratuity

This is only a broad guideline and does not represent the UAE law. Please refer to the concerned authorities and your lawyer for accurate information. 

Calculating your end of service gratuity is something that comes up very frequently in conversation between Dubai residents? And why not? It is extremely important to be aware of the rules for calculation of gratuity so that one can clearly manage one's financial plans and also be up to speed in case the situation arises. 

The starting point is the type of contract one has with his or her employer. There are 2 types of contracts and yours will fall into one of the types. Either an unlimited contract or a contract for a limited time. Before we get into the details of gratuity let us first differentiate between the 2 types of contracts. 

A limited contract is one where both parties have agreed that the contract for employment is for a set number of years with a start and end date. In this case, the employee is not allowed to resign prior to the end of the contract. An unlimited contract as the name suggests is for an unlimited number of years and therefore has no end date. 

An employee is eligible for end of service gratuity after completing a minimum term of 1 year with the employer. The below applies to onshore companies only. Free zones may follow their own set of rules. 

Gratuity in case of a limited contract

Service between 1 and 5 years
Gratuity is calculated at 21 days basic salary multiplied by number of years in employment
Service between 3 and 5 years
Gratuity is calculated at 30 days of basic salary multiplied by number of years in employment


Gratuity in case of an unlimited contract

Service between 1 and 3 years
Gratuity is calculated at one third of 21 days basic salary multiplied by number of years in employment
Service between 3 and 5 years
Gratuity is calculated at two thirds of basic salary multiplied by number of years in employment
Service beyond 5 years
Gratuity is calculated at full 21 days of basic salary multiplied by number of years for the first 5 years. thereafter gratuity is calculated at full 30 days of basic salary multiplied by number of years in service for the years after the first 5 years. 

A Passport to the world?

It's been a long time since I've really felt excited about Blackberry's new launches. My love affair may have fallen apart after a short brief relationship with the then new Blackberry Bold. But I guess the new launch of Blackberry Passport may finally get me interested. 

Blackberry's Senior Vice President for Marketing, Mark Wilson was in town today to launch the new Blackberry Passport at Armani Ballroom at the Burj Khalifa. Dubai was one of the 3 cities across the world which were part of the global launch.

Let me set the record straight. I have never published a post about a commercial product on Dubai Photo Story. It's always been about bringing Dubai to the world in the form of pictures. It could well have been the new IPhone 6. Or Samsung's newest gizmo. But there is a strong reason for having finally broken my own rule today.

The Blackberry Passport is not your new bright mobile handset that's going to impress the girls. Its something a lot more serious. Serious technology. Serious productivity. Serious work.

The first thing that strikes you is the very odd square 1440 x 1440 high resolution HD screen. The square screen lets you read a lot more than most mobile handsets. It's wide screen gives you a real laptop experience unlike the long rectangle screen where one needs to keep scrolling from one side to the other. 

But what brings out it's pedigree is the true Blackberry keyboard that also works as a scroll pad. Besides all the good things Blackberry keyboards are known for, this one lets you scroll up and down the screen. Want to scroll to the bottom of the page? Just swipe your finger downwards on the keyboard. Want to delete the last few words you typed? you can swipe the finger sideways on the keyboard. But what I did find annoying about it is that its now limited to 3 rows only. But then again, its an intelligent keyboard with a fourth virtual row of keys at the bottom of the screen. The device seemed quite intelligent to predict what I was going to type and generated additional keys on the virtual row. Serious productivity. 

Another big win is that one can download all the apps from Amazon's Appstore. This is an area that has always been a sore point for Blackberry users in the region. But now the Passport comes with a pre loaded Amazon Appstore to download all your favourite apps. 

I guess that best new thing blackberry brings to the table is Blackberry Blend. With blend one can seamlessly access content from your Blackberry Passport on any other device including Windows PC or and Android tablet. Its almost like using your Passport on your laptop or tablet without ever being disconnected from your mobile device. 

The build quality is phenomenal. This is probably the best build quality that Blackberry has brought to the market in a long time. 

I've been waiting a while to get a new smartphone. Its a busy time with some big launches jostling for mind space and big brands fighting to get the consumers' attention. I think Blackberry has managed to get mine.

Al Tayer Mosque

Al Tayer Mosque is located at Umm Suquem 1 and can accommodate approximately 280 people. 

Al Gargash Mosque, Jumeirah

Located off Al Wasl Road in Jumeirah, Gargah Mosque is another of the most beautiful mosques of Dubai. The mosque is located in the vicinity of Kings School Jumeirah and is in the area opposite Burj Al Arab and Jumeirah Beach Resort.

While I refer to it as Al Gargash Mosque I am not really sure that's the official name. I asked at the nearby stores and cafeteria and was informed that the mosque is referred to as Al Gargash mosque. If you know the official name for the mosque and it is something else please let me know

Heritage Village

Its like time stood still. An old world charm right in the middle of a bustling city. Heritage Village recreates the Dubai of yore, a testimony to the Govt's efforts to show case history. Located near the Shindhaga end of Dubai creek on Bur Dubai side, the village provides views of Dubai's traditional lifestyle and culture. 

Jumeirah Lake Towers - JLT

Ramadan - A spirit of giving

Ramadan is here. 

The holy month of Ramadan, the ninth month of the Islamic calender, is a time for for fasting for the Muslim population. Each day of Ramadan, Muslims abstain from food, drink and smoking from dawn to dusk. The time is also spent in increased spirituality, humility and devotion. During this period, Muslims also refrain from all forms of entertainment or enjoyment.

This is also the time for selflessness and charity towards the needy. It is amazing to see the momentum towards charity across all areas of Dubai. From individual efforts to very organised large scale charity events, charity takes center stage in Dubai during Ramadan. One of the most common form of charity is distribution of food to the needy during Iftar, the meal that signifies breaking of the fast at sunset. Lots of organisations distribute food to need workers in the city.

I had the opportunity to witness one such event organised by Axiom Telecom, a local company based in Dubai. Axiom has plans to distribute over 1500 meals everyday during Ramadan across several points in Dubai. 

Dubai scores another first - Blackberry Q5

Dubai scored yet another first and continues to take a leadership position in the global mobile devices business. Blackberry laucnhed its latest introduction to its portfolio, the Blackberry Q5, at a global launch in Dubai today. Customers in Dubai will be able to buy the model 2 weeks before the rest of the world where the model is expected to launch in the first week of July. This is the first of Blackberry's BB10 offerings in the mid segment with the new model expected to retail at AED 1,499/-. Based on a dual core 1.5 GHz processor and Blackberry's popular keypad, a whole new segment of customers will now be able to experience the new BB10 operating system.

The Blackberry Q5 is available exclusively at the new Blackberry store being opened at Dubai Mall. The launch of Blackberry Q5 also coincides with the opening of the first Blackberry store in the Middle East. As per media reports the store is being operated locally by Axiom Telecom. The store was opened by Blackberry's COO Christian Tear today. Huge queues were seen at the store in Dubai Mall, with customers all waiting to pick up the new Blackberry Q5 while it lasts. 

Sikh Gurudwara in Dubai

A gurudawara, meaning The Gateway to the Guru, is a place of worship for Sikhs, the followers of Sikhism. This Gurudwa is located off Ibn Batuta Mall near Jebel Ali