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Just as the city keeps on surprising the world with new developments, it also keeps on surprising the property market index.
The see-saw effect between buyers and sellers has given surprises to many who are involved in the Dubai property market.
Overall, there has been a humungous rise in rates, sudden and unexpected rather than steady.
In conversation with Inder Bhagnani of RK Real Estate, we realize there is a lot more to know about what we know of the property market in Dubai during the first half of the calendar year of 2014, and what further surprises are in store.
Ongoing effect of Expo 2020 bid win on Dubai property
With Dubai winning its Expo 2020 bid late last year, one can imagine the soaring number of visitors and investors in Dubai.
Investors wanting to buy into either a business in Dubai or in a commercial or residential property came in bigger numbers.
The initial expectations of investors in Dubai wanting to invest more in properties had been turned down initially, at least during the first half of 2014.
The major factor contributing to this turn-down in the number of investors were the changes that had just been implemented by central planning after the Expo 2020 win.
Most banks that were giving loan amounts of up to 85% for a new property and 80% for a second buy have had to reduce their loan amounts to 75% and 60% respectively.
This means that an interested buyer has to shell out a bigger amount for the initial down payment on the property they want. This is the reason that tops and dominates the reasons behind the slowness seen in the Dubai property market in the first half of 2014.
However, it could be that this is just the initial impact which could make up for itself in the near future.
The newly-developed airport to give flight to prices of property in close proximity
Even though the Expo 2020 win has not initially given a good surprise to the Dubai property market, especially tenants who were faced with rental hikes, the recent development of the Dubai World Central Al Maktoum International Airport is expected to have great surprises in store for the areas surrounding it.
The positive effect of this new development will be noticed in the long term. Because of this development, there is due appreciation in property prices awaiting areas like International Media Production Zone (IMPZ), Jumeirah Village Triangle (JVT), Jumeirah Village Circle (JVC), Dubai Sports City and Dubailand that are currently more pocket-friendly when compared to areas located close to the Downtown Dubai area.
Now is a perfect time for investors looking for good return on their investments to invest in these areas near DWC.
Infrastructure is the key to getting more ROI in any area
The relationship between return on investments (ROI) and infrastructure has been one thing that has not surprised property stakeholders and businessmen. The more development there is in the infrastructure, the higher the ROI. This has been a constant trend, and it is expected to remain that way.
However, what one needs to do in order to ensure maximum returns is to develop the knack of being able to correctly predict which areas will see major growth in infrastructure if one cannot get inside details on development from the big players of the market.
A good example of this is Dubai Marina. Dubai Marina was nowhere close to its pricing originally that it stands at today, it was the infrastructure of the area that has always added value to property there.
The latest development infrastructure-wise is the reach of Dubai tram to Dubai Marina. Anyone who might have invested a certain amount in Dubai Marina right at the start of the development of that area is sure to have close to doubled their investment amount in less than a decade.
Major ongoing projects in Dubai
• The site for the Expo 2020, set to be in close proximity to the new Dubai World Central Al Maktoum International Airport, is all set for construction work scheduled to commence next year.
• A new 1-million-square-foot shopping mall is being built in phases at the International Media Production Zone (IMPZ) – an area that is home to many international companies.
• Dubai Sports City is expected to have a Dubai Marina-like look added to it with the news of canals being built there.
Source: Gaurav Achipalya, Special to Freehold