The distressed property market has seen big business globally over the last year, at least for those with liquidity and a long-term outlook of the real estate market, especially banks, auction houses, real estate companies and investors.
Within the UAE, as the real estate market continues to correct itself, it’s obvious to have doubts about this being the best time to buy. But for those that missed the Abra the last time round, there is also a nagging fear that property prices, which are looking extremely attractive in Dubai, could once again gallop out of reach as and when recovery gains solid ground.
So how does one decide the ‘when’ in Dubai property investment? And as important if not more is the ‘where’ question. For, as experts agree, property prices in Dubai will now, more than ever, hold on the basis of location and quality than anything else.
To answer these and other million-dirham questions, Emirates 24|7 picked the brains of experts in the field to bring you the definitive guide of what to buy in Dubai and when.
First, the most pressing – and almost impossible to answer in black and white – is the question of whether the Dubai property market has bottomed out.
“I have wrongly predicted the bottom of the market a number of times already over the past two years and if anyone could accurately forecast, they would stand to make a lot of money,” a candid Kosta Giannopoulos, Manager Residential Sales and Leasing at Better Homes, told this website.
“There are too many variables for any one of us to know with confidence,” he explained. “I’m sure we have all heard a version of the contrarian advice: ‘if they are crying I am buying; if they are yelling, I am selling’ which suggests that when sentiment is very depressed in a market, it is a signal of good buying opportunities.”
Property investor sentiment is, definitely, depressed when it comes to the UAE. According to the latest Investor Sentiment Survey by property advisory firm Jones Lang LaSalle (JLL), real estate investor sentiment towards the UAE in general has fallen significantly over the past 12 months from 16 to 7 per cent for Dubai, and from 26 to 14 per cent for Abu Dhabi.
The JLL survey highlights that sentiment towards the UAE lags other Middle East and North African (Mena) markets. “Across the Mena region, negative changes in real estate values are the highest in Dubai at -18 per cent, followed by Kuwait, the Levant, Bahrain, Abu Dhabi, Oman and Qatar,” the JLL report said.
That should be invitation enough for the contrarian to invest, says the Better Homes expert. “Investing always involves an element of risk and this cannot be ignored or overstated,” he said, advising speculators to stay out.
Speculators excuse; welcome homeowners
While he says that, in the current environment, “only brave investors, or those with the deepest pockets, will be willing to accept the risks,” he adds that for wannabe-homeowners with a medium-term outlook, the time is ripe to make the switch from being a tenant to owner-occupier.
“Investing is not for everyone. What is for everyone is housing – everyone needs a place to live. Anyone who plans to spend 10 years in Dubai should buy a property because they will be financially better off after the 10 years than they would be if they rented for that period of time,” he stated.
But even for those with a medium- to long-term outlook, experts advise getting the location right. Get the location right, watch out for quality, and you should have nothing to worry about – a number areas in Dubai are ‘safe haven’ investments, argue experts, and they believe that despite the corrections witnessed by these localities, these areas will continue to give much better returns over some of the other, overhyped developments.
Recently, this website reported on key Dubai properties available for under a million dirham bracket. We set the same million-dirham threshold for our panel of experts, and they provided us with their choice of locations for apartments and villas that they maintain should provide reasonable returns in the medium term.
Vineet Kumar, Head of Leasing & Sales at Asteco Property Management, stresses on location as the key factor that would determine future returns. For apartments, Kumar’s pick is Jumeirah Lake Towers.
“We believe there is appetite for capital appreciation in this location as prices have bottomed out and infrastructure has improved. The location and its surrounding definitely, connection to the Metro etc, will see that the investment made will grow in the mid-term. Even if the property is bought for rental investment, there is a strong demand for leasing in this location and Dh1 million could buy you a nice two-bedroom apartment in JLT,” he told this website.
For those with access to liquidity and an inclination to invest, Giannopoulos of Better Homes recommends to keep quality high on the list. "[Invest] into established and quality communities. The flight to quality will continue," he said. His picks in the apartment category are quality developments such as the Dubai Marina and Downtown Dubai.
Both the experts picked these locations over other areas such as Jumeirah Beach Residence, International City, The Greens, Green Community and Motor City.
As far as the villas are concerned, Emaar’s The Springs community seems to the obvious choice of experts within the million-dirham range.
“For villas my pick is the Springs,” said the Better Homes expert. Kumar of Asteco also recommends investing in the Springs for those looking at affordable villas. “No brainer, well-established master plan, schools, retail, clinics all in one place. Perfect for family living, landscaped areas and [the] advantage of a well-connected road network. The price range starts from Dh1.2 million for two-bed townhouses in Springs but rather pay slightly more and be in an established neighbourhood,” he suggests.
Jumeriah Village too could prove to be a winner. “Jumeirah Village could prove to be a dark horse,” said Giannopoulos.