By Mohanad Alwadiya
Special to properties
One emerging characteristic of Dubai real estate in 2012 is the steadily increasing value that buyers and tenants alike can get for their hard-earned dirhams. Many of the headlines that we see in the business news have empowered buyers with information. Consumers have more choices available before deciding on properties which are consistent with their aspirations and value expectations.
The emergence of value in the marketplace doesn’t just drive higher levels of transactional activity. It also drives changes in buyer behavior and, logically, the composition of the transaction set.
The reason why villas appreciate in value in areas like Emirates Living, The Villa Project, Arabian Ranches and the Palm Jumeirah is because the premium they offer is superior to whatever exists in the market.
There are different types of buyers driving the demand. The first buyer type takes the opportunity to upgrade from apartment style to villa style living. This has driven demand for two-bedroom villas. This buyer is seeking the extra space and privacy that a villa provides and recognizes that, given the predictions on apartment supply going forward, it is likely to provide greater capital growth.
The second buyer type upgrades in villa type, style, size and location. While the existing home may have provided satisfactorily for the family’s needs, this buyer type takes the opportunity to upgrade to a better location.
From a pure investment point of view, the appeal of quality villas in well-located established areas is undeniable. The Dubai real estate market is still somewhat imbalanced with the oversupply of apartments approximating 23%, with more affordable accommodation projects to be completed in the next 18 months.
From an investment point of view, these apartments can still offer good income returns with gross returns of anywhere between 7% and 9% , with relatively minimal capital outlay when compared to a villa. Careful planning can still make investing in apartments lucrative. However, patience may be required if capital growth is sought.
The writer is the Managing director, Harbor Real estate
Handy Hints
• Business news empowers buyers with information
• Careful planning can make investments in apartments Lucrative
• The appeal of quality villas in well-located established areas is undeniable