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- I want to invest in apartments and I have been considering Dubai Marina and Downtown Dubai. Are there any other areas you recommend?
I suggest you consider more affordable areas of Dubai as well. Properties in Dubai International City, Dubai Sports City, Discovery Gardens and JLT are the places where people are now seeking more affordable accommodation as areas like Dubai Marina (including JBR) and The Greens have become too expensive.
Properties located within International City and Discovery Gardens have shown 23% and 26% increase, respectively in rental income since the 3rd quarter of 2012, outperforming virtually all of their more expensive peers. Meanwhile, a wide variety of apartments in Dubai Sports City, Skycourts and JLT achieved YTD average growth of 20.5%, 23% and 21%, respectively with demand driven mainly by first home buyers and investors such as yourself seeking the increasing yields on offer. There are definitely opportunities in the more affordable end of the market.
- Is it too late to buy or should I wait until prices come down again?
Trying to time property cycles is difficult. If you are buying your first property for personal use, and you are taking a long-term perspective, it is still the right time to buy as you will be making your first proactive move towards building your equity or net worth. Paying rent hinders your ability to build net worth. For a start, your rental payment is increasing somebody else's wealth, not yours. There are other factors, too.
Inflation is a problem because you are consistently being asked to pay more. Conversely, as a property owner, inflation is working in your favor because, in all likelihood, your property is increasing in value and, if kept for a number of years, you will enjoy an inflationary compounding effect on property value.
Owning property allows you to change the application of your hard-earned dirhams from covering an expense, which offers you no financial return, to an investment which does. In a way, it's a forced form of saving which will reap benefits for you in the future.
- I am thinking about buying an apartment off-plan. Can you advise on what considerations I should be taking into account?
Buying off-plan means you can benefit from capital appreciation exceeding the market average in the period just prior to launch and over the ensuing 12 months.
As always, you must be thinking location, and anything which is close to the beach (especially with a sea view), a golf course view or situated near the downtown area is a good place to start. If you have close access to a metro station, even better. Study plans carefully, and ensure you are satisfied with spatial details, views, car parking plans, access to buildings and building amenities.
Get details of the planned infrastructure, utilities, surrounding amenities, expected service charges, and owners association formation, building delivery timings and payment plans including full disclosure of all costs associated with the purchase. Make sure you have a legal expert review any contracts before signing them and have them explain the latest investor protection laws to you.
- What are the functions of the Tenancy Dispute Centre?
The Rent Dispute Settlement Centre is part of the Dubai Land Department and consists of two sections.
The Judicial Section, chaired by judges, provides legally binding decisions based upon majority vote, and the Administrative Section is responsible for the operational and administrative requirements of the section of the center. One of the core aims of the new center is to provide timely resolution to disputes and, where possible, have disputes resolved amicably without the need for escalation.
Its Arbitration and Reconciliation department is tasked to settle rent disputes within 15 days from the date of the appearance of both parties, while all disputes must be settled in 30 days or less. Deadlines may be extended in accordance with the rules and procedures adopted by the chairman of the Centre while appeals will be allowed only in cases where the value in dispute is over Dh100,000. In all other cases, judgments are considered final and legally binding.
- Question of the Week: I heard that build quality is not too good in some Dubai developments hurriedly built during the boom times, and they are already showing serious quality problems. I want to buy off-plan but how can I guard myself against ''buying a lemon''?
First of all, you need to make sure you are dealing with a reputable developer. One positive effect of the global financial crisis was that a lot of poor developers were exposed and are no longer in business. Ask around or seek professional guidance, as those in the industry have a good appreciation of who the reputable developers are.
Make sure you query directly what proactive measures are taken to ensure the end product has been built to an acceptable standard, and take the time to inspect buildings already completed by the developer.
Warranties and any quality assurance policies should be discussed in detail. Have the sales and purchase agreement reviewed by a professional, to ensure you have legal recourse should any quality issues arise.
Upon completion, you have the right to inspect (snag) your apartment and report any legitimate issues to the developer for rectification. Items which can be remedied in the short term should be fixed immediately; and remember, once you have taken ownership of the apartment, the developer is obliged to fix any issues that may arise for a full 12 months following the transfer of ownership.
Source: Mohanad Alwadiya, Special to Freehold
The writer is Managing Director - Harbor Real Estate