As the Dubai property market seems to be stabilising in some pockets, what are prospective homebuyers in the city looking at? Is villa a preferred option as compared to apartments now that the prices of individual house seem to be within limits of many?
According to latest data from Better Homes for the third quarter of this year, apartments still make up the choice of the majority buyers. A good 60 per cent of buyers are opting to buy apartments in comparison to 40 per cent of people who go for villas.
Experts believe that many factors determine the choice of a buyer. “Buyers are looking to buy either category of property , what is important to understand is what point of view buyers are coming from , are these properties that they want to live in themselves or are they for investment purposes only?” Charles Neil, CEO Landmark Properties told Emirates 24|7.
Elaborating on this, Neil commented on those properties which are bought just for investment. “The driver behind an investment property is purely financial, and it is not necessarily a property which the investor himself would choose to live in. In fact many amateur investors make a big mistake by trying to combine the two and end up overspending on the property to make it look nice and bring down yields accordingly.
“An investor should be looking primarily at rental yield vs. price, with capital appreciation being a secondary consideration. The reason for this is that often the investor will have some form of borrowing to leverage his investment and is looking primarily at rentals to cover his expenses and interest costs and come away with some cash flow at the end of it. In this case it is important to invest in projects that the banks in the UAE find acceptable, although it is more difficult to persuade a bank to lend against an investment property nowadays than an end-user. An investor will be looking for the best price he can purchase for and at the moment an apartment would probably win out over a villa. Other key considerations are location, location, location, low service charges and maintenance charges. Within the apartment genre liveability factors such as parking, amenities etc. are less important to the investor as he is not going to live in the property. The investor is after pure yield. Yields on villas are generally lower than apartments because typically villas are more expensive to buy and the rental yields are lower.”
On the other hand, a person who wants to own to live in will think different. “Owner/occupier will be more concerned about quality, space and liveability, i.e. near shops, schools etc. They are also looking for something that is likely to appreciate in value in the long-term. Location is an important factor, but often the trade-off is you get better value in terms of space if you live further out of town. For families, villa living is the preferred option and they will want to live near the schools their children go to. Something like the Dubailand villa project, while it may be out of town is near the schools and has potential for capital appreciation once all the community facilities, landscaping etc. are in place, or say Victory Heights once all the community facilities are in place. There is a difference of Dhs100-200 per square foot between these properties and say Arabian Ranches, which is a well-established community,” he added.
Finally, according to the Landmark expert, there is another category of people who want to buy to live in but do not have families in Dubai. These people will have different priorities, which will determine their choice. “For the owner who does not have a family then locations like the Marina /JBR/JLT apartments offer good value particularly now as prices will fall as a lot of new supply is coming on to the market. Downtown is also very popular because of its location, but is more expensive. Buying apartments further out do not make a lot of sense as their prices are likely to decline further this year as so much supply is coming on to the market, rental is a much more attractive option in these areas than buying for the time being,” he explained.