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Dubai holds 103 world records regarding the biggest and the best and the count continues, says SPF Real Estate’s COO Kalpesh Sampat, who is a chartered accountant and lawyer by qualification but has been a realtor for the past 12 years in Dubai. “About 140 nationalities have invested in real estate out of the 200 living in Dubai,” he says. The Dubai real estate market offers ample investment opportunities. Sampat adds that if buyers are investing with a long-term view of 5-10 years, this sector has a lot to offer. “I foresee the property prices in Dubai appreciating by 50 per cent in five years. The market has been under pressure before, but I do not see that continuing now. In fact, in the fourth quarter, I expect the market to become strong again.”
Here Sampat shares insights and trends with PW.
* We hear mixed views about the property sector such as rents falling, the demand being weak, transactions rising while demand remains low and so on. What do you think?
The real estate market conditions cannot be generalised as the sales and rentals situations vary on a case-to-case basis. However, I do not believe rents are on a downward trend. In developed and matured communities, rents are stable and in some emerging areas, I expect a slight drop of around 5 per cent or a little more depending on the amount of new supply coming in.
Similarly, I see transaction prices going up. There are more end users buying units because the prices have become reasonable and more choices are now available within their budget. Recently, I sold a Type 3e villa in Springs without views for Dh2.65 million, while market analysts would value the price of that villa to be a maximum of Dh2.4 million. A deal such as this shows the market has buyers who would pay more for the product they want, provided the owner is willing to wait for a little while.
* What are the things investors should look at with Expo 2020 in mind when investing in Dubai real estate?
When you go through the numbers, you will note that Dubai offers property at reasonable rates compared to the world markets. Properties are available at $4,482 (Dh16,463) per square metre, versus $26,000 per square metre in Hong Kong, $16,000-$18,000 per square metre in London/Paris and $7,782 per square metre in Mumbai. Dubai’s other plus points include safety and security aspects, huge infrastructure and development expenditure and the no-tax regime.
Dubai is a cosmopolitan city. It offers the best of all worlds and is a place where you should have a portfolio based on your appetite. I recommend buyers to look at Mohammad Bin Rashid City that is about seven minutes from Burj Khalifa, Business Bay. It will be a third hub of Dubai Metro. The UAE’s national railway Etihad Rail will be go through Meydan, and Meydan Racecourse, and Meydan Hotel are also here.
Opportunities are going to be huge in Dubai for investors and end users, provided they look at the market from a long-term view of 5-10 years. I foresee property prices appreciating by 50 per cent in five years.
There is a trend of investors, REITs and funds looking for assets with a higher ROI. However, a common mistake buyers tend to make is to look at the percentage of return in isolation, instead of looking at it in conjunction with the price per square foot. For instance, if a developer promises a 13 per cent guaranteed return on investment but you purchase the asset for, say, Dh1.5 million when other similar properties in the market are available at Dh600,000, then you are already paying 2.5 times more than the actual value of the unit. Therefore, getting a 13 per cent return does not make sense, as the guaran teed returns are usually for a limited period of 3-5 years and after that, the returns may differ.
Therefore, I advise buyers to buy smartly looking at area that is potentially suitable for investment. Understand the demand and supply factor in the community, its facilities, a comparable market price that Rera has indicated for similar types of properties in that area, and a good payment plan, along with the returns to ensure it will make healthy gains in the long run.
* What are your views about the competition in the brokerages market in Dubai?
The market has slowed down and the last quarter has been tough for us as well as others in the brokerage business. In the market, I see a lot of consolidation. Many players are restructuring and I feel this would continue as some smaller players and mid-size firms will start looking at merger options.
However, regarding competition, SPF is not worried, but we remain alert to see what is going on in the market. Our company has made a place in the market by the quality of our customer service and we inculcate these values in all our staff, as we believe a satisfied customer automatically refers ten more clients to us.
SPF has expanded from 60 staff a year ago to 95, has opened two offices in India during the last year and is considering options for China in 2017.
* Do you think marketing Dubai projects in the international markets has become a growing trend among developers and brokerages?
Both brokerages and developers are now looking at international marketing channels to capture global buyers than before, but their reasons may differ. For instance, prominent developers such as Emaar and Da-mac do it because they have several projects to sell.
For us, we want to expand our client database from local to a mix of domestic and international. We had international clients earlier as well, but the majority of our customers were Dubai-based; therefore, we are now focusing more on getting foreign investors.
SPF has several road-shows in the pipeline, wherein we are going to Hong Kong, China and India. In Africa, we have gone to Kenya and are now looking at Nigeria. Earlier in India, we went to Mumbai with Sumansa Exhibitors and in Delhi we had an event organised by Hindustan Times and now we have plans to go to Mumbai again.
We also opened two offices in Cochin and Delhi and in Mumbai we are looking at partnering with an existing company because Mumbai is too vast to cover.
In Hong Kong, we went with Sumansa Exhibitors and in China we went with Juwai, a Chinese property portal known for international collaboration, to their shows and are now looking at collaborating with a local real estate company that has a nationwide presence.
* What are the various properties SPF is marketing and selling?
We have Murano Residences by Ghreiwati Properties in Al Furjan, Artistic Tower in JVC, Viridian at The Fields by G&Co in Mohammad Bin Rashid City, Monte Carlo Residences by Portofino Development in JVC, and international projects with UAE exclusivity include Four Seasons Private Residences Mumbai and Dorsett by Malaysia Land, K.L.
* Are mortgage queries on the rise this year?
Compared to last year, we have seen some increase in mortgage buyers. Volume wise there are more buyers in the affordable to midrange segment (below Dh5 million).
We also see a lot of competition in the mortgage bro-ker/advisor business as a lot more agents are coming into the market. This is a good development as mortgage brokers can educate buyers in a much better way, allowing customers to see and compare all the different products.
Source: Hina Navin, Special to Propety Weekly