When is the best timing and season to buy a property?
Many people make the mistake of waiting until the market hits rock bottom before buying their property. Owning a property allows you to better utilize your hard-earned dirhams from covering an expense which offers you no future 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 as your wealth is in the form of property instead of cash. Paying rent can actually inhibit your ability to build net worth. 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 our property’s value. So, as long as you are taking the long-term view, don’t get too hung up on trying to time the market. Focus your energy on getting the best deal and you eliminate half of your perceived risk straight away.
Can a broker be a property manager?
Absolutely, and many times, clients are better off because of it. The best property managers I have encountered in my time in the industry cut their teeth as successful brokers. To be an effective property manager, you need to be able to provide your clients with a complete and realistic property assessment, and strategy and activity plan designed to harness the true financial potential of your property. The scope of consideration should be global,regional and local in nature, and you should have a good understanding of economic factors, societal trends,industry knowledge extending to policy and regulation, finance and market dynamics.
If you expect to provide the range of services expected of a professional property manager, such as marketing, vetting tenants, executing rental agreements, authority and tenant liaison, handling maintenance issues and providing regular reports, market updates and financial statements, then the “on the ground” knowledge, experience and expertise that is accumulated by being a broker will be hugely beneficial.
Is it true that house prices drop by record amount in summer?
There has been a widely-held belief that summer sees significant price reductions. The reason for this is that average prices reduce slightly due to there being less “non-distress” or “urgent” sales during the period. Urgent or distress sales typically cannot wait until the end of summer and, given the lower levels of overall activity, may somewhat sway the statistics. People who are not in a rush to sell property are more likely to exit the market during summer for their holidays, thereby diluting the number of non-distressed sales in the market which lowers the average selling price. There is also a dearth of buyers during summer. High participation rates lead to higher levels of competitiveness resulting in higher prices. The seasonal trend of Dubai’s real estate seems to see participation rates rising in the post -summer period, before starting to fall off again in the middle of the second quarter.
Now that the hype surrounding the Expo 2020 bid has eased, what effect will it have on real estate values?
The effect of Dubai’s successful Expo 2020 hosting bid was significant. The sharp increase in demand for property was not surprising as it was accompanied by a bunch of data, which indicated the significant economic effect that the event is expected to have on the economy. The real or tangible economic effect comes in the form of planned infrastructural investment and the creation of new jobs in preparation for over 25 million additional visitors to the emirate.
The Expo is expected to further strengthen Dubai’s growth prospects going forward with’ the IMF revising its GDP growth figure to 4.5% for the UAE for this year. While a proportion of the effect of the Expo has already been priced into real estate values,l believe the benefits will eventually exceed most investors’ expectations as many underestimate the multiplier effect that the infrastructural investment alone will have on the economy.
Question of the Week
Shall I consider purchasing land and have a house built on it or get it directly from the developers?
It totally depends on what you require and to what extent the current range of offerings from developers can actually meet your needs.
The obvious advantage of appointing an architect to design your home and working with a designer to craft an interior that matches and complements your taste is that you will have a home that suits your desires in terms of layout. style. amenities. ambiance. fixtures and fittings. You will have a home which is truly unique. Of course, choice and preferences come at a cost and the personalized attention that you receive from your architect and interior designer can be expensive. In addition. sourcing, appointing and managing your contractor (or contractors) can be a time-consuming and frustrating process and, given the likely unique requirements of your new house. the construction cost per square meter is bound to be higher. Nevertheless, if you feel that you have the expertise. time and patience. then your new home can be exactly as you envisioned.
The advantage of buying from developers is that most of the hassles with design. approvals. construction, materials sourcing, dealing with the utilities and services suppliers is already taken care of. The trade-off is that the likelihood that the product you are buying exactly matching your tastes and preferences is rather remote.
Estimating value of property considered biggest eligibility criterion for home financing
Parallel to the growth of the UAE’s realty sector is the growth of its home ﬁnance sector. Home financing is a crucial part of the realty market since property appraisal is the biggest eligibility criterion for it.
The ﬁnancier, which is either a bank or a money lender, establishes the security value of the house to be purchased for the buyer to secure a home loan and for the property to serve as mortgage collateral. The lender’s objective is to obtain an estimated selling price of the house in the market in case an immediate sale deed takes place, like repossession.
The lender can assess the value of the property in two different ways. The ﬁnancier can either send a surveyor to physically inspect the property, or use modern methods like online evaluation.
Online valuation is carried out by utilizing online data such as land registry, information on comparable properties in the area, house price indices and Google maps to arrive at a probable market value. Along with online data, a visual inspection of the property may also be performed. Online assessments work for simple residential properties only. However, for quantitative residential purchases or commercial property, physical assessment is the best approach.
The physical assessment of a house includes recording details like the number and type of rooms, the absence and presence of ﬁxture and ﬁttings, and changes required, among others. In addition, the location of the house, its accessibility to public transport, the availability of parking space or garage facilities, the condition or structure of the building or villa, structural faults, ﬁt outs and local council zoning are significant factors in assessing a property.
Once all facts are accumulated, with the latest comparable sales ﬁgures in the neighboring area and current market rates, a comprehensive valuation report is prepared to determine the worth of the property.
Property valuation fees are part of the home loan process and can vary depending on the bank or lender, or it can be waived off.
Reference: Industry Insight – Gulf News Freehold
The city has many development projects that attract foreign investors an important stop on the global sea-air trade and commerce, within an eight-hour ﬂight between Europe and Asia and hosting the 2020, Dubai has exhibited a tremendous transformation over the years.
Large-scale developments have spurred business and investment opportunities, putting the city in the global property market map. To provide city-wide accessibility and promote city as a top economic and tourist hub, developments in Dubai center on airports, transportation networks, canal projects and a lot more.
With an estimate cost of 6.45 billion euros, the Dubai Trade Centre Jebel Ali will be the venue of the Expo2020. It will have Al Wasl Plaza nestled among theme pavilions, entertainment venues, soaks and a housing village. In close quarters the Jebel Ali Port and the Al Maktoum International Airport which will spend Dh120 billion on expansion.
The proposed Dubai Metro 40 kilometer track expansion will add 23 new stations including Al Maktoum International Airport, Mirdif City Centre and a possibility to connect to the Meydan Station of the Etihad Rail. Also, the Dubai Tram, which is expected to start operation this month, will whisk passengers comfortably to the Dubai Metro and the Palm Monorail. Additionally, the RTA Sky Buses, which have large baggage Compartments and catering services on board, will ferry passengers from the Dubai International Airport to 26 hotels across the city.
The colossal Mall of the World will be the world’s ﬁrst temperature controlled shopping complex. It will have a promenade lined with retail shops, an indoor family theme park and wellness resorts. The Dubai Water Canal project will provide various points with a link to the Arabian Gulf. It will feature footbridges, walkways, hotels, restaurants, shopping centers and marine transit stations for water taxis. Dubai holds a formidable record of development projects. No wonder it takes the lead in attracting investors to the country.
Reference: Industry Insight – Gulf News Freehold
A proficient and professional property manager will make your investment work harder for you and the additional returns you receive will outweigh any fees he might charge. The property manager should be able to provide you with a complete and realistic property assessment, strategy and activity plan designed to harness the true financial potential of your property. Considerations start with your objectives and requirements and will include history, current and projected future market factors and risk factors. The scope of consideration should be global, regional and local in nature, and your property manager should have a good understanding of economic factors, societal trends, industry knowledge extending to policy and regulation, finance and market dynamics. Choose your property manager carefully. Ask for referrals and call some existing clients. It is your investment, and you need to ensure it is in good hands.
Can I buy property anywhere in Dubai and can you describe the difference between freehold and leasehold?
N0, you cannot buy property just anywhere m Dubai. As with most real estate markets, the development of land in Dubai is “zoned” or subject to plans depicting intended usage so there are stipulations as to where you can purchase and what you can construct. In Dubai, the two most fundamental and important forms legal property ownership are freehold and leasehold. If you own a property “freehold,” you essentially own any buildings or structures and I stands on outright. You are registered as “freehold” owner with the Dubai Land Department and you will own the property you decide to dispose of it, either through commercial transaction or by transfer of ownership. Leasehold, on the other hand, means you acquire the rights to occupy a property for a fixed period courtesy of a lease contract treated with the owner. The leases are usually germ, and allow the leaseholder to make d “cations, improvements or additions.
I am considering purchasing a property.The seller told me he was about to construct a well on the property to access water for his garden and fountain. Is this legal?
This is certainly not legal without express permission from the authorities. The restrictions placed upon drilling wells are governed by Law No. (15) of 2008 on Protection of Groundwater in the Emirate of Dubai.
Ownership of groundwater within the emirate is considered to belong to the emirate, and that groundwater may only be extracted or exploited by obtaining a license from the Dubai Municipality and an approval from DEWA.
Water is a necessary yet scarce resource in the emirate, and the objective of Law No. (15) of 2008 IS to protect the groundwater of the emirate of Dubai from pollution, depletion and salinization in order to save it as a strategic reserve for emergency use. I suggest you use the tap.
I am an investor. Should I invest in commercial or residential real estate?
A lot will depend on what investments you are currently holding. I believe that the next untapped opportunity is commercial property, specifically office space. There is no doubt that there has been a strong focus on the residential market; however, despite Dubai’s strengthening economy, Investors have been slow to consider office space despite values having bottomed out early in the middle of 2013. Things are looking very promising for new business in Dubai and opportunities exist for commercial real estate investors to benefit accordingly. While office rental returns are in the very early stages of recovery, Dubai office space is still cheap. With a high, albeit shrinking, vacancy rate of around 30%, there are definitely opportunities for value purchases providing strong cash flows increasing with Dubai’s economic momentum over the longer term. Already, there is a relative shortage of Grade A.large floor plate, Single-owner space favored by multinational companies. As Dubai seeks to grow economically, readily available office space is one the factors that new enterprises will consider.
Question of the Week
I have been operating operating my business in Dubai for eight years now. I am in a position to buy my office space, but this will require relocation. Should i do this or continue renting?
The old cliche of “Location, location, location”is critical. It is all about proximity and the convenience and prestige that a well-chosen location can bring to your potential customers, staff and business associates. You will find great value, very affordable and well-constructed office space in Business Bay, which will cost you anywhere between Dh95 and Dh150 per square foot, but it will be pointless if the location is a hindrance to conducting your business. You need to choose your location first and work from there.
Definitely think about purchasing your premises. Do a complete analysis to see if this option will work for you. If you are a business committed to operating long term in Dubai, it makes sense to own your office space, particularly if it is a well- negotiated purchase. There are still excellent deals to be had, but as Dubai’s economy continues to grow, they are getting harder to find.
If you decide to lease your premises, try to get the best deal possible and lock it in for at least three to five years. Lease rates in Dubai will be on the increase going forward and make sure you take advantage of the current rates.