Every week, we invite you to have your property questions answered by an expert. This week, Mohanad Alwadiya* tackles the task.
Q.. With banks willing to offer financing for apartments, I’m thinking of buying somewhere like The Residence in Downtown Burj Dubai. Do you think this a good ove? Can I expect a decent appreciation over, say, a five year period?
A.. I would say it’s definitely a good move. The Residence, Downtown Burj Dubai represents fantastic value at this time and with the market approaching the ‘bottom’,
the opportunity to make solid capital gains, particularly with a five-year investment horizon is very strong. In addition, with the Burj Dubai approaching completion, your
capital gain in the short-term will be accelerated. Remember that your future capital gain, regardless of property, will be heavily influenced by the decisions you make today. The fundamentals still apply and considerations such as the view, location, fit and finish, configuration and overall quality will have a big bearing on your ability to command a premium when you decide to resell in the future.
Q.. I’m thinking of buying an apartment in a reasonably priced new development, maybe Discovery Gardens. I’m just wondering if there are any hidden charges should I be aware of?
A.. First of all, you need to consider the charges associated with the transaction itself. If you purchase an apartment through a real estate agent, you will normally need to pay a 2% agency commission at the time of purchase. In addition to this amount, transfer fees of 2% will be payable to the Land Department and registration fees of Dh5,000 will apply. If you are financing your purchase, there are additional charges payable to your finance provider. These will vary between 1% and 1.5% of the total loan amount. Once you have moved into your new Discovery Gardens apartment, you will then need to pay an annual maintenance fee, which is currently about Dh30/ft², and includes your central cooling charges. However, this amount is currently under review and is expected to reduce significantly according to April 2009 press reports. Additionally, a further reduction is expected once the Owners Association is formed in accordance with the new strata title legislation. Alhough they’re not really‘hidden charges’, don’t forget that you will need to budget for property and contents insurance and, unless you want to live in the dark, you will need to account for DEWA (Dubai Electricity and Water Authority) expenses as well.
Q.. I’ve been told prime investment properties such as villas on Palm Jumeirah have suddenly become difficult to buy, as prices have dropped and sellers are withdrawing their properties from the market. Do you think prices have bottomed out there?
A.. By and large, yes. I think prices for villas have reached a bottom on Palm Jumeirah and it is extremely difficult to breach this floor.