Ask the Agent - What is a better investment in Dubai, commercial or residential?

Ask the Agent - What is a better investment in Dubai?Sanket Khanna - CEO and Founder, SNS Properties

- I am looking to buy a house for my own personal use. Should I buy a ready unit or an off-plan property?

Off-plan properties still attract new investors and end-users because of their attractive payment plans. The slowdown in the current real estate market has started the trend for the development of affordable housing. If you are looking for off-plan apartments, projects like Glitz, Midtown and Nshama are decent options offering flexible payment plans. You can also look at townhouses like Mira and Arabella with options like 70% payment at the time of handover. Some use creative marketing strategies and offer payment plans of up to two to three years post-possession. If you want to buy a property and move in immediately, look for ready properties. The market offers good distress/value for money deals compared to 2013-2014. Banks also offer flexible mortgage options. It is a good time to buy as you have more options to choose from.

- I am looking to buy an off-plan property. How secure is my payment? What if the developer fails to deliver?

Buying an off-plan property is a good decision in the present scenario as the market situation offers loads of options with attractive payment plans, making it more affordable than ready properties. Developers are offering down payments starting from 1% to 15% and 70% to 80% on handover or post-handover. Offers and prices may vary depending on the developer and location. As far as the security of payment is concerned, RERA has implemented strict regulations to protect investors. This is the reason why all payments are held in an escrow account. RERA audits and manages the account. As per the proposed Investor Protection Law, investors can apply for contract cancellation if the developer fails to hand over the unit on the agreed period or has taken more than eight months beyond the promised handover date. The investor can seek partial or full refund after all details have been looked into.

- My cousin is moving to Dubai from Australia and wants to buy either a townhouse or villa. Which community is good for her and her family?

Some established options like Arabian Ranches, The Springs and The Meadows will give her good options of two, three and four-bedroom homes depending on her budget. They offer lakes, parks, community areas, adjoining golf courses and a lot of greenery. If the target is to live in a nature-friendly place with walking/cycling paths, ponds and lakes, then Arabian Ranches will be an amazing option. There are more options available in Jumeirah Village, Green Community MotorCity and Victory Heights. Upcoming communities like Jumeirah Park, Mudon and Al Furjan are also doing really well. It all depends on what your expectations and preferences are, but the most important factor is the budget assigned to the investment. Hire a reputed real estate agent and tour all these communities to decide the best fit.

- I am an India-based investor with properties in Dubai giving me good rental returns. What should I do to make sure they are taken care of?

For owners staying overseas, the best option is to appoint a company which has a licence for ''real estate management supervision services.'' These firms specialise in managing and supervising properties including contracting the firms in charge of maintenance, cleaning and security; handling administrative issues; and coordinating with lease brokers to find tenants for vacant units in the building. Such firms sign a contract with the property owners to completely take care of their properties. These companies can appoint a good real estate agent to look and identify a tenant with solid background. They are also allowed to collect cheques on the owner's behalf. For maintenance and other issues, they can represent the owner at relevant authorities. Overall, they offer a holistic solution to one's property management needs. For overseas investors, such contracts ensure peace of mind.

- Question of the Week: What is a better investment in Dubai? Should I look at commercial or residential property?

Any investor will measure an investment decision based on two parameters: 1) return on investment (ROI) and 2) capital appreciation.

''Commercial or residential'' is a usual debate playing in an investor's mind. A large number of first-time investors end up buying a residential property because of the obvious reason of eventually using it for personal occupancy.

In Dubai, the rental return on commercial assets is usually comparatively higher if we compare these with established and central residential areas. However, in certain areas of low-ticket size residential blocks like Jumeirah Village Circle, International Media Production Zone and Discovery Gardens, it has been noticed that the returns on both commercial and residential assets are almost similar.

It is always better to have a portfolio of both residential and commercial options. Use the expertise of a reputed real estate agent to make a portfolio for you, with the correct mix of both asset classes. A sound agency will ensure your assets grow as per your expectations.

An ideal investment portfolio should have 40% commercial assets (20% retail + 20% office), 60% residential properties with a mix of small units (with 8% to 10% return) and bigger apartment or villa units (with 4% to 5% returns).

Read more as yields strengthen, new opportunities emerge

Source: Sanket Khanna, Special to Freehold

The writer is CEO and Founder - SNS Properties

Send in your property issue-related questions to be answered by industry experts, mentioning 'Ask the Agent' in the subject line, to:


For Rent


View more properties

For Sale


View more properties