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Buying your home is building your net worth, says Mohanad Alwadiya, CEO of Harbor Real Estate and Senior Advisor and Instructor, Dubai Real Estate Institute. “The essential question is how to use your money to increase your wealth instead of the wealth of your landlord? The accumulation of any asset must be done with diligence and care but, in my experience, the majority of people who have taken the step towards property ownership have benefited significantly.”
What kind of properties are doing well at the moment in Dubai?
As a general theme, properties that are affordable or provide superior value to the marketplace have the best potential at the moment.
Properties in non-prime areas such as Dubailand have done well and are expected to continue that way. They represent great value at today’s prices. With the current market correction virtually at the bottomof its cycle, we have witnessed the more affordable areas of the market provide superior returns for investors as demand from potential owners and tenants has increased dramatically.
Examples of affordable projects providing good rental returns and expected capital appreciation are the Skycourts Towers project (pictured) and adjacent Queue Point project. Apartments in Skycourts have proven popular with tenants and investors alike and have historically delivered excellent capital growth with some growing by 15 per cent over the past 24 months despite the market correction. With rental premiums of at least 8 per cent not uncommon, purchasing an apartment at Skycourts has even been made more affordable with the developer offering units with an easy seven-year payment plan, no registration charges and no service charges for the first year.
Queue Point, though recently released, is also attracting rental yields of 7-8 per cent. Apartments are valued between Dh700 and Dh750 per square foot, representing fantastic value.
Demand for this type of affordable accommodation will continue to grow as Dubai’s population swells in the run-up to Expo 2020 and the demand for well-located affordable housing increases.
If investors are looking for an alternative that’s a little more luxurious but still offers amazing value for money, it’s hard to ignore Green Community in Motor City. One of the best deals I have seen so far this year is being offered by National Properties, the real estate arm of National Bonds Corporation, for its launch of the Green Community Phase 2 in Motor City.
The development will feature the Casa Familia town houses, which are designed and constructed to exacting quality and luxury standards. The town houses provide exceptional value in today’s market and have been made more attainable for buyers with the introduction of a rent-to-own finance scheme. Buyers are required to pay only 10 per cent during construction of the town houses. This will be pledged against National Bonds Corporation, allowing the buyers to accumulate profits on their down payment and triple winning chances at the rich monthly award draws offered to bond holders. The remaining 90 per cent of payment is due over seven years in monthly instalments. There is no commission being applied to the purchase of the properties.
For investors, 15 per cent net rent returns are guaranteed for the first two years with a comprehensive property operations package that includes full professional property management, no service charges and free maintenance.
When do you expect the market to turn around?
We are already witnessing increasing levels of interest in the market. We believe the market has bottomed out in its current cycle and value growth is expected in the latter part of this year. Barring any shocks to the world economy, we are very optimistic about growth in 2017 and expect values, particularly in the affordable segment, to show appreciation of 7-9 per cent by end of 2017.
There’s no doubt a stable real estate market will provide a better launch pad for what will be a period of significant economic and commercial activity over the next five to seven years. The structural shift towards affordable housing will not only serve rapid population growth expected from Expo 2020 but also serve as an important factor in the development of Dubai’s overall economy.
Your rent forecast?
While there has been a correction in rental values, it has essentially lagged the correction in property values and I don’t believe the general rent decline will exceed 10 per cent in most areas. Rents will rise from 2017 as expo preparations gather pace.
Source: Hina Navin, Special to PW