Ask the Agent: The value of a property is mainly tied to its location

There are a few factors which determine the risk in a property investment. Location is oneCraig Hutchins, Client Manager, SPF

What type, price and location should those looking to invest in Dubai be on the hunt for?

There is a real estate investment for everyone in Dubai. The off-plan market offers incredible payment plans with post-handover options, giving interest-free terms beyond handover to pay off the balance. Many first-time buyers now enter the property ladder because they can book a unit with as little as 5 per cent down payment and 1 per cent per month installments post-handover. In the ready property market, many investors choose studio and one-bedroom apartments offering healthy yields of between 6 and 10 per cent net. These are easier to rent out than larger units, giving investors a shorter vacant period if tenants decide to vacate.

Some investors like to stick to established areas. In Dubai Marina, they will get 7 percent net returns on one-bedroom properties, and up to 10 per cent returns in IMPZ and Discovery Gardens.

What are the best-selling locations in Dubai today?

According to the latest reports from the Dubai Land Department (DLD), the majority of transactions remains in Dubai Marina followed by Jumeirah Lakes Towers (JLT), Downtown Dubai, Palm Jumeirah and Dubai Sports City (DSC). Dubai Marina has always been popular amongst young professionals seeking a luxurious lifestyle. The new Metro line brings the beach in Jumeirah Beach Residence closer. JLT has been popular with buyers looking for affordability and location. It offers slightly higher returns than Dubai Marina. Downtown Dubai has some of the most luxurious apartments, with some offering views of iconic features. It has seen a slight reduction in prices so investors are picking up rented units with already high yields. Palm Jumeirah has always been an iconic place to own a property. DSC offers a lot of square footage for your dirhams, with its large built-up areas and great access to schools.

I plan to invest in Dubai. What other areas should be considered?

Consider the proposed developments of surrounding areas which the government will be funding including future metro links, road connectivity, rail networks, tourist attractions, waterways and future real estate. These have recently made Meydan and Mohammed Bin Rashid City very popular investment and end-use options as the government announced an Etihad Railway connection and future metro link along with massive investment in the Meydan District to include Meydan One, the world’s tallest residential building, the world’s longest ski slope, the world’s largest fountains and mall. Another area to keep an eye on is Arjan in Dubailand. It offers high return on investments with buildings enjoying 100 per cent occupancy. Of course, Dubai Marina and Downtown Dubai have always been popular, with the latter already home to world-class attractions and several upcoming projects such as an opera house and the expansion of The Dubai Mall.

What to expect from the Dubai property market this year?

After seeing the house prices correct healthily in certain areas in the past five months, we have also seen some properties beginning to transact at higher prices compared to the previous months. This comes down to the supply in quality areas.

Buyers feel more confident in Dubai’s future, witnessing government investment in infrastructure in preparation for the Expo 2020 which will bring with it considerable job creation, helping occupy the new developments that will be delivered in the same period. There is a great outlook for 2016.

A few investors who had no interest in investing in mid to end of 2015, when they were still assessing the market, have now come out of the woodwork. They are now checking if the prices have corrected so they can make a calculated investment decision with the help of trends and actual transaction data from DLD.

Question of the Week:

How do you assess the risk of investing in a property? How can a real estate consultant help in understanding the difficulties?

There are a few factors which determine the risk in a property investment. Location is one.

Consultants are expected to be always up to date with any developments in a community and surrounding areas that might affect property prices as the value of a property is mainly tied to its location. The consultants’ expert knowledge of an area and investments in varying locations can minimise this risk.

Investing in off-plan property has changed significantly, with RERA implementing strict guidelines for developers and making registration (Oqood) mandatory.

Risk is further minimised with some projects offering post-handover payment plans, especially those in which you only have to pay 35 per cent of the total value up to the point that your property is ready. This gives buyers the confidence that they will physically see their house even if they have only paid 35 per cent. These payment plans encourage developers to finish the projects on schedule as they start receiving payments only after they have reached the handover milestone.

These payment plans were initially offered for small apartments in suburban areas, but these have now been adopted by leading developers in both apartment and villa communities.

Source: Freehold


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