Property Weekly: Homes for millennials

PWRealtors say JLT is a popular destination for millennial buyers l Shutterstock

After seven years of living in a rented Dubai Marina apartment, Jayash Patel, 38, and his wife Nira, 35, decided to plunge into home ownership, purchasing a three-bedroom villa in Jumeirah Park in May last year. With two young kids, aged three and four, they wanted to live in a community where there are facilities for the children to safely play outdoors. 

“We could have rented a villa, but when evaluating the cost, it made financial sense to buy because the mortgage payments in many cases are lower than the rentals,” says Jayash, who works in a bank. “So we invested in real estate with the bank’s fund.” 

The couple have carefully assessed their options and considered all the requirements of purchasing property, including the high down payment that is now required under the law. 

“Self-funding a unit here would mean risking all our savings without diversifying our investments,” says Jayash. “In an expensive market where most people live as an expat and property purchase values are high while the bank is offering low-interest rates on home loans, it makes financial sense to buy property with a mortgage. 

“The most important factor for us is that our children are growing and we want them to enjoy the outdoors, but be close to home so we can watch over them. We know that we are not moving from here for a couple of years, so we decided to live in our private space.” 

The couple chose Jumeirah Park over the other villa communities because of its proximity to Dubai Marina, where many of their friends live. “We wanted a property that was relatively new with excellent amenities and high-standard finish,” says Jayash. “Our unit in Jumeirah Park and the community itself [fulfilled] all of our requirements.” 

The buying experience also gave him a better understanding of how the system works, which he says would need more fine-tuning to attract more first-time buyers. 

“Overall our experience was all right, but there was a lack of integration between the developer, the Dubai Land Department and other agencies, so a buyer in Dubai has to run around a couple of times between them,” he says. “The process should be made seamless with better integration to help and encourage buyers in Dubai real estate.” 

Investment units
Dubai-based Indian businessmen Dhruv Thakkar, 27, and Aman Gyanchandani, 28, are buying real estate as a form of investment. Thakkar, who owns a self-funded studio apartment in Jumeirah Lakes Towers (JLT), prefers ready properties located close to Shaikh Zayed Road. “It is safer for investment,” he says. “[It] gives me returns straightaway and the yields are higher than in properties in the outskirts of Dubai. I am also going to buy a two-bedroom apartment to live in, again along Shaikh Zayed Road in Business Bay, JLT, Dubai Marina or Greens. My priority is mainly a convenient location that has good restaurants and outdoor areas. I don’t want to live in a dead area.” 

Gyanchandani purchased a one-bedroom apartment in Silicon Oasis using bank’s finance mainly to diversify his investments and generate stable rental income. He is also planning to buy another unit next year where he would live and is looking at properties in Business Bay and Downtown Dubai. “I am searching for a four-bedroom, decently spacious apartment that is not too far from the old city,” says Gyanchandani. “I prefer Business Bay or Downtown area in particular as it is well-connected and offers easy access to the mall and many other facilities around it.” 

Rising wave
Like these buyers, Dubai is seeing increased interest from millennials or generation Y (those born between 1980-2000) who are now becoming key players in the real estate industry. According to Mario Volpi, Chief Sales Officer at Kensington Exclusive Properties, the home ownership segment is fast growing as more and more new developments are announced. This has encouraged millennials to take the plunge and invest in property. According to the Dubai Statistics Centre, the millennial population as of 2015 stood at approximately 1.2 million, which is nearly half of the total Dubai population itself, says Volpi. 

“Millennials would all wish to buy, but many do not have the means to do so at the moment, so there is a vast majority that ends up renting instead,” says Volpi. “Young investors that do proceed to buy attach most of their decisions based on location. They wish to be living in established areas like Dubai Marina, Downtown or the Palm Jumeirah. If they are more budget conscious, they go for areas that are up and coming, including Jumeirah Village Circle, JLT, Dubai Sports City and Dubai Motor City.” 

Factors of interest
Millennials are attracted to Dubai because of various factors, but lifestyle facilities and amenities are among the biggest draw. Volpi says he has observed that millennial couples who don’t have children prefer to live close to good facilities such as malls, food and beverage outlets, beach and sporting facilities. He says most of them want to be in the middle of everything. Those with children prefer to live closer to schools, he adds.

Dounia Fadi, CEO of MD Properties, says Dubai’s peace and order situation the safety has been a major factor why millennials are raising their families here. “The unrest that the region has been witnessing lately has also resulted in a lot of the young population choosing the UAE, and Dubai in particular, to be their permanent home,” says Fadi. “They consider it a safer and stable place to reside in, whether they are single or have family and kids. 

“Many have opted to buy because the rents are high. Moreover, Dubai has great potential for growth in property investment, so they also consider it as an investment.” 

She says many Arabs from politically unstable countries do not buy or invest in property in their countries because of the risk involved. They often end up buying property in Dubai. However, other nationalities prefer to save money to invest in their home countries, which creates both an opportunity and challenge for Dubai realtors. Those from the West, she says, would usually first try out the Dubai lifestyle before deciding to buy property or remain a tenant. 

Fadi says millennials are also a price-sensitive market. “Affordability is their first target, and in response to this we are seeing developers in Dubai offering more affordable homes with very attractive payment plans and a lot of perks,” says Fadi. “Most of these buyers prefer one- and two-bedrooms flats, and some also opt for two- to three-bedroom town homes if offered at attractive prices.” 

Source: Hina Navin, Special to Property WeeklyPW


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