Ask the Agent - What attracts international investors to Dubai?

What attracts international investors to Dubai?Hasnain Bahrainwala

- How to evaluate a good real estate agent/agency?

To evaluate a good agency, you have to go back to basics. Check the history, experience, reputation, profile of the management and the quality of the company's services.

For landlords, check if they use different advertising platforms such as print ads, online portals and outdoor advertising, among others. A healthy advertising budget demonstrates a strong balance sheet.

For buyers, work with someone not too pushy and who does not only give you a positive product pitch but also has the integrity to give you the downside of your available options. The truth is what you need to know.

Real estate agencies orient their agents to be consultants trained for the market and not salesmen trained for the product. An agent's job starts when someone enters the arena; it does not stop even after the transaction is completed.

- What attracts international investors to Dubai?

Dubai is an ideal base for expansion in the Middle East. It has the infrastructure, a thriving business environment, a strategic location and the right investment opportunities for organizations and individual investors. It has managed to keep its economy growing due to tourism and the service industries, and create an economy that is not completely dependent on one particular resource.

The UAE Foreign Minister mentioned that political stability, economic growth and a balanced foreign policy are key factors for leading businesses to establish regional offices here in the UAE.

The dirham's peg to the dollar supports currency stabilization. Many foreign investors benefit from this as their home currency is prone to depreciation against the dollar.

The Dubai Land Department, together with RERA, provides a neat platform for real estate transactions. Regulations are in place to avoid disputes and create a straightforward and transparent process for buying and selling.

- What is a more beneficial investment, equity or real estate?

Each of the investment tools has its own advantages and drawbacks. Both the tools are part of the cyclical markets and the level of returns varies on the basis of products.

A simple comparison between the two would show that equity investments have high liquidity in comparison to real estate, but real estate ranks higher in terms of stability since it is a tangible asset and its value can never fall to an absolute zero.

So my advice to investors would be to understand their own appetite for risk, or consult with specialists and not to put all their eggs in one basket as it is always good to diversify.

Real estate agents are trained to ensure that their clients make the right decision even if it means steering them away from a particular real estate trade if the agents feel that it does not suit the clients' investment appetite.

- Is it beneficial to go through an agent when purchasing a property directly from the developer?

There are many benefits of buying through an agent mainly because he works for you, not the developer. Agents usually have established relations with many developers, which equip them to individually assist the client from the point of sale to after-sales services. As the new build progresses towards completion, there is a great deal of administrative work that agents can handle on behalf of their clients.

For an investor, a direct sale with a developer may be a one-time transaction, but a sale with an agent is never the last transaction because agents feel it is their responsibility to help the investors with the resale or renting out of a purchased property. There are no additional costs when buying a property from a developer through an agent as the latter's fees are covered by the developer, but you, as an investor, end up gaining a lot more in terms of the exceptional service provided by agents of reputed brokerage firms.

- Question of the Week: What are the benefits of the evolving payment plan to end-users?

Since Q3 of 2014, the Dubai real estate market has seen a lot of evolution in payment plans. The percentages of amounts payable after the handover at completion have risen from 20% (an average) to almost 70%.

The recent success of the 1% per month plan by Danube clearly shows that, if given flexibility, there are a lot of buyers in the market who wish to own their own house in Dubai. Developers have to become more innovative with payment plans to demonstrate their own cash flow and at the same time ease the financial burdens of buyers.

The benefit of a higher amount payable after handover to an end-user is that they can make the initial payments on their own, and finance the balance once the property has been handed over (this varies from bank to bank).

We have seen that in this current quarter of 2015, the number of end-users buying their own property without any intention of flipping or monetary growth has increased.

Securing a home on a payment plan without needing to necessarily finance the property is what is fundamentally important at the moment. Several developers also offer purchasers a payment plan that allows them to continue paying even after completion. This not only shows the strength of the developer, but also works in favor of, once again, the purchaser.

Find out why now is a great time to invest in real estate

Source: Hasnain Bahrainwala, Special to Freehold

The writer is Property Consultant - Candour Real Estate


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