I would like to invest in apartments in Dubai, and I need advice as to where the best rental yields may be found.
If it’s yield you are after, it will be hard to ignore the more affordable areas of Dubai which are performing extremely well.
Properties in Dubai’s Skycourts, International City, Dubai Sports City, Discovery Gardens and JLT are all benefitting from Dubai’s recovering economy and toe associated internal migration, as people are now seeking more affordable accommodation as areas such as Dubai Marina, Downtown Dubai, The Greens and JBR have become more expensive. You can expect a rental return in the more affordable areas of at least 7% with 10% rental yields not uncommon.
Demand is being driven mainly by first home buyers and investors such as you seeking the increasing yields on offer, and both rental yields and property values are expected to continue increasing further as the year progresses.
Given the relatively low cost of entry, the opportunities that reside in the more affordable, end of the market are becoming more lucrative everyday .
Given the lingering office oversupply situation, do you expect prices in this sector to increase significantly?
The benefits to be generated for the UAE economy by hosting the World Expo 2020 will be enormous, with 7 billion dollars worth of infrastructural investment. over 270,000 jobs and a massive increase in tourist revenues – all sure to attract new businesses and drive an upsurge in demand for office or commercial space as existing businesses expand and new business entities set up operations to support the conduct of the event or service the bevy of new business operators or the millions of additional visitors.
Demand will grow more as the event approaches especially for space located close to the Expo 2020 site in Jebel AIL However, demand will eventually spread to other areas of the city as businesses look to cash in on the massive increase in tourist dollars that will accompany the actual conduct of the event.
Can you comment on the introduction of new real estate contracts? Are they mandatory;how will they help?
The introduction of standardized or unified real estate contracts is yet another progressive milestone in the development of the industry.
We have always said that a properly functioning real estate market needs the 3 Cs: Confidence, Clarity and Capital. This initiative by the Dubai Land Department will provide clarity and consistency as to the relationship between the buyer, seller and brokers representing either party while guaranteeing the rights of all parties. This will further enhance the confidence of investors and owner-occupiers alike.
The contracts will be in force from May 2014, and will be mandatory for all transactions involving the buying and selling of property, and are expected to improve processing efficiency as parties will have the option of completing registration procedures without a real estate agent.
As the market continues to grow, the importance of streamlining processes and ensuring ease in effecting transactions is important.
I have a property portfolio of a mix of l BR and 2 BR flats located in JLT and Dubai Marina. With this in mind, how do I capitalize on what I have?
You need to seek professional advice as to how to manage your real estate portfolio, Many landlords across Dubai are bound to miss out on the revenu- generating opportunities that Expo 2020 will bring because of poor or non-existent planning.
A competent property manager will provide you with the best opportunity to maximize your financial gains by providing you with an assessment of the opportunities, and a strategy and activity plan designed to harness the true financial potential of your property.
Do not make the mistake of leaving your planning too late. You will need to comprehend current and likely future market conditions and events, likely risk factors that may enable or inhibit revenue growth, inflation and cost increases, and a complete comprehension of financial modelling and the ever developing area of industry policy and regulation.
Question of the Week
With Expo 2020 coming , Is there anything I should do differently with my two apartments in Dubai Marina from a leasing point of view ?
Timing will be critical to the decisions that you make regarding the management of your property.
First of all, you need to get professional advice as you require a skilled and knowledgeable property manager to help you harness the true financial potential of your property during this unique period in Dubai’s real estate history. You need to appreciate that there will be some nuances and important considerations when looking at the opportunities that the World Expo 2020 will provide.
For example, overall values will rise but differing asset types and locations will not necessarily move in unison as Expo preparations move from the analytical and planning phases through to implementation and eventual launch and operational phases.
Initially, it is likely that investor demand will drive much of the value appreciation to be followed by an increasing rate of end-user demand for accommodation, both for villas and apartments.Those areas in close proximity and with easy access to the Expo 2020 site itself will attract initial attention. However, as the event draws closer, demand for more centrally located property will also increase. One can expect both the rental return and capital return curve to steepen as we move closer to the event launch.