Ask the Agent: Be Sure of your Investment

What are the advantages of investing in the Dubai property market?Omer Ali Khan, Senior Property Consultant, SPF Realty

Should I buy a property in Dubai? If so, a villa or a flat? What do property buyers in Dubai prefer?

Deciding on a property investment is a personal choice, but the Dubai market is definitely expecting exciting times ahead. Timely investments will most likely bring investors or homeowners good long-term returns of rental income and capital appreciation. For buyers looking at apartments, they need to take a prudent approach as prices are still in correction mode. A fresh supply of new apartment units is expected in the market, but as the rental yields are still pretty much stable, it makes sense to buy rather than keep renting long term. For buyers looking at villas or townhouses, investors get better value with trade-off in terms of space, and they get to live further out of downtown areas. Hence, community serenity is a key attraction. For many people, a villa or townhouse is the preferred option as they have land to call their own.

Besides the easy procurement of finances, what are the other factors to be considered before buying a home?

Purchasing a home is a big decision. If done right, it can be both a smart expense and good investment.

Not only is buying a home a huge financial investment, but it is also a place where, as an end-user, you will be able to find a community to call home.

The basic factors to be considered when buying a home are location in terms of proximity to work, hospitals, schools, business districts, leisure areas and transport; selection, terms and conditions of the mortgage providers; arrangement for down payment on the house; affordable monthly repayments; freehold or leasehold; and budget for other costs involved such as the Dubai Land Department fees, community charges, agency fees, security deposit and many other related expenses.

Property values came down in Dubai with a number of bargains available. Should I continue to rent or buy?

Whether as an end-user or investor, the best time to buy is when the market is repairing. Every buyer needs to prioritise his endgame from the start. Is the purpose of purchase for personal use or for investment? An investor should look primarily at rental yield vs. price, with capital appreciation a secondary consideration. Complications arise when an individual combines the two so the investment stretches the original stipulated budget to serve both needs. This affects the yield and can spiral off towards an undesired financial trajectory. For the end-user, this presents ripe opportunities. People start out as renters because it does not require a big upfront financial investment. But the downside to renting is that your monthly payments are a pure expense. In other words, once you make them, they are gone forever. On the other hand, when you own a home, a portion of each payment reduces your outstanding loan balance every month.

How do I ensure that my investment in Dubai is secure especially if I am buying off-plan?

The Dubai Land Department has taken all preventive measures to ensure that investments, whether off-plan or ready, are completely secure. When a buyer purchases an off-plan property, his investment does not go directly to the developer’s account but to an escrow account controlled and supervised by RERA. There is only a certain percentage that the developer can withdraw. Until the project is handed over, the developer will not be able to get hold of all the funds. For construction delay, there are penalties and fees associated that the developer has to bear out of; one clause bounds the developer to pay an average rent to the purchaser should the delay take too long. Buyers themselves must also ensure that the project they are investing in complies with RERA rules. The authority has published a list of approved developers and projects on its website and mobile app. This allows investors to assess any project.

Question of the Week: What are the advantages of investing in the Dubai property market?

Due to its global popularity, Dubai has remained the preferred choice among property investors from across the globe. They come to Dubai in large numbers to purchase properties for worthwhile profits. Subsequently, Dubai has been liberalising its policies, encouraging foreign individuals and companies to invest and take part in this exciting and sustainable growth process.

Dubai now holds an enviable place within the world’s tourism industry. This, in turn, rubs off on the property segment. Hence, the real estate sector is geared to become a major player in the economy.

Property investment in Dubai generates a high percentage of passive income. It is one of the most feasible, secure and high-yield-bearing investment opportunities around the globe. Furthermore, the government is exercising stringent regulations to promote a more transparent industry.

Because of this, investors are drawn to both residential and commercial properties within the emirate. The hospitality sector shows great momentum, thanks to Dubai’s ever-increasing popularity as a travel destination.

Timely investment in Dubai properties offers many benefits. One can invest in both commercial and residential units. This, combined with rental yields of 6 to 10 per cent per annum, is a recipe for success for timely investors. This obviously appeals and benefits a broad range of investors.

Source: Freehold


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