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We all know that you have to spend money to earn money, but choosing the right product or asset to realize the best return is a gamble for any investor.
Very few stocks would have beat buying prime Dubai beachfront property in 2001 (off-plan) and then cashing in just seven years later. But then, virtually no real estate could have beat the returns you earned if you invested in shares of Microsoft, Johnson & Johnson, Walmart, Dell, Apple or Google, to name a few.
So, do you invest in a piece of a company, or do you stick with property to realize your investment dreams?
Property has been the favored investment “product” for many years now and Dubai, in particular, has been at the top of many investors’ list since 2001, which is when the first sales of villas on Palm Jumeirah were launched off-plan, netting a tidy profit for the more speculative investor.
Buying and selling at the right time is no different from dabbling in the stock market. Get it right and your bank manager will love you. Get it wrong and it can take some time to recover your loss, if at all.
So, what should you consider right now when buying property in Dubai? Well, prices have dropped somewhat, which was to be expected to stabilize the market which had started to gain momentum much too quickly. Rents have risen but have stabilized now and in some places we will see a drop in rental values. Not too much but a correction nonetheless.
So, to sum this up, you could buy now while prices are low as they will not drop much more than they are at present. Now rent it out while prices are as high as they were in 2008 (in most places), offering you a rental yield of up to 7% in a number of places, and in the region of up to 11% for a short-term rental option.
At these rates, no savings account can touch it.
* Property investors should consider buying property now as prices are low
* Those who want to rent out their property can expect a rental yield of 7%
* Dubai rents have stabilized; some places are forecast to see a drop in values
Source: Dawn Draper, Special to Properties