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- There are many opportunities to invest in off-plan properties, but the values in the secondary market have improved significantly. Are there still advantages of buying off-plan?
Purchasing a property off-plan can provide you with superior capital gains by the time of completion, providing you are buying at a discount to today's finished inventory and the market strengthens up to the completion date for the particular property that you are considering. This will depend on an estimation of economic growth, population expansion, the number of competing projects in the pipeline and eventual industry inventory position. Be smart about the ''product'' that you buy and try to avail yourself of a payment plan. Look for certain property types complete with amenities and facilities in locations you believe will be sought in the future. Deal only with reputable developers and check the status of the escrow account.
- I am planning to invest in Dubai real estate. As this would be my first property investment, can you give any useful tips?
First of all, know why you want to invest in property. You must have a clear understanding of what you are trying to achieve and what role your property portfolio will play in building your wealth. Then you must set your financial objectives carefully. Success in property investment can only be attained when (and if) those objectives have been realised. Always think long term for your greatest success. Those who have had the greatest success possess the ability to think long term, make rational, well-researched and carefully thought-out decisions with the end objectives in mind and understand that every real estate industry globally will go through cycles of growth and contraction. Make sure you know your stuff by being able to communicate intelligently and knowledgeably with the experts. Always strive to eliminate risks. Plan your finances, cash flows, capital requirements and debt levels carefully.
- I wish to sell my villa, but the garden needs a little bit of work. Is it worth investing in improving the garden? Am I likely to get my money back?
For your garden to become a selling point, you need to establish a low-maintenance, functional landscape that is highly appealing to the potential buyer. Resist the temptation to clutter the landscape with every species of flora known to man. Plants grow and you need to keep that growth in check as your garden can look unkempt and create a negative impression. Ensure that all landscaping elements must be coordinated carefully. If you don't know or understand the differing qualities of certain soils, it's time to call your landscape gardener and have him produce an impressive garden for you. Even if you don't plan on selling your home for another five or 10 years, now is a good time to lay the foundation for a great landscape design that will win over your future homebuyers.
- While the correction in the Dubai property market is broad, certain segments have undergone a greater correction than others. Are there greater opportunities in some segments in terms of long-term ROI?
Definitely! We are encouraging everyone to invest in the lower priced, higher value, affordable segment of the market as there are some great opportunities. There are many high-performing yet affordable developments spread all across Dubai, giving investors a wide range of options to choose from. Apartments in some developments have seen excellent capital growth with some residences growing by 35% over the past two years, with rental premiums of at least 7% not uncommon. Demand for this type of affordable accommodation continues to grow especially as Dubai's population swells in the run-up to the Expo. Invest in an apartment and retain ownership for at least five years as you will benefit from superior capital growth and enjoy a healthy net annual rental return.
- Question of the Week: Recent reports have suggested that the current property correction in Dubai has bottomed. Would you agree with this and is it a good time to buy?
It is always difficult to pick peaks and troughs in real estate cycles.
Having said that, there are definitely opportunities available and advantages to be gained from purchasing now as the next few years are expected to see strong economic growth.
Start your property search immediately as a property investment requires the same approach regardless of the state of the market. If you have the cash, pay for it outright, but do consider taking out a mortgage as long as you understand the impact of interest rate rises in the future.
Think carefully about location, surrounding infrastructure, construction quality, and developer reputation and building amenities. Properties with attractive views, close to the beach, with golfing facilities, are part of an iconic development and have close access to the Metro generally provide good returns.
You also need to consider the effectivity of the owners association, the service charges and the quality of maintenance services as these will affect the long-term value of your investment.
Be purposeful, patient and pragmatic and you are well on the way to making a very good investment decision.
Ask the Agent - Would it be better to stay in a rented accommodation?
Source: Mohanad Alwadiya, Special to Freehold
The writer is CEO - Harbor Real Estate
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