As the industry continues to recover. We expect secondary segments of the market to follow the trend set by the leading segments. A prime example is the Skycourts project. Located along the Dubai Al Ain Road. This project has seen excellent capital growth with some apartments growing by 15% over the past year, and rental premiums of at least 7% are not uncommon.
Looking forward, there will be many influencing factors affecting capital growth in these areas such, as individual segment inventory levels. Project quality and developer reputation in addition to economic growth and population growth.
Much of Dubai’s 2013 new apartment inventory will be located in Dubailand which will stifle capital growth somewhat. However, we see growth accelerating in these areas from mid 2014 onwards, with demand being driven mainly by economically induced population growth – especially in the years leading to Expo 2020, and growing confidence in the industry.
A few of my friends have bought their first apartments recently and I am still undecided as to whether I should continue to rent or buy. Can you provide any insights?
Buying your first property can be a daunting prospect. However, after having done so, the vast majority of people say that, in retrospect, they should have done so a lot earlier. It’s important to start building your equity or “net worth” as an initial step towards financial security.
Paying rent actually detracts from your ability to build net worth. For example, as somebody who pays rent, Inflation is a problem because you are consistently being asked to pay more. Conversely, as a property owner, inflation is working in your favor, because, in all likelihood, your property is increasing in value and, if kept for multiple years, you will enjoy an inflationary compounding effect on your property’s value.
Owning property allows you to change the application of your hard earned dirhams from covering an expense which offers you no financial return to an investment which does, in a way, it’s a forced form of saving which will reap benefits for you in the future.
How has the Dubai real estate Industry improved from a regulatory point of view?
Lawmakers in Dubai have been working very hard to introduce laws that better protect the rights of industry participants. This includes measures to standardize and clarify the relationship between parties to a real estate contract or agreement, and provide recourse where a party has been somehow disadvantaged because of unethical practices.
There has been a lot of progress made in other areas as well, such as the management of investor finances with the introduction of escrow accounts; owner empowerment with the introduction of the
Strata Law, and the introduction/registration of owners associations; investor recourse – where disadvantages caused by delays in the handing over of projects or changes specifications of properties are addressed; or tenant protection with the introduction of regulatory mechanisms to restrict the imposition of ridiculous rent hikes.
In addition, the Dubai Land Department, RERA and the Dubai Real Estate institute are committed to raising the level of professionalism of real estate practitioners by including mandatory training in the required ethical practices, implementation of systems such as Oqood and Ejari, and focusing on the elimination of misleading advertising and people misrepresenting themselves as registered real estate agents.