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19 April 2024

Key money-making factor in Dubai property… and it’s not just location

By Parag Deulgaonkar

In real estate parlance, “location, location, location” is everything, but in Dubai, you have will have to get your “exit time” right as well to make money from real estate.

Though property prices in Dubai may not rise at the same pace as seen in 2013, i.e. 22 per cent increase, prices will continue to rise in 2014.

Jones Lang LaSalle, a global property consultancy, said on Monday that prices were still 15 per cent below the 2008 price levels and would reach the previous level in the coming 10 to 18 months.

Craig Plumb, JLL. (Supplied)

So can you make money today from real estate?

“Of course, you can make money,” Craig Plumb, Head of Research, JLL Mena, told Emirates 24|7.

“…and that’s why so much money is flowing in.

“There is definitely a lot of investment being made and there is no doubt about that.”

Dubai predominantly has cash buyers and they can still make a good return on their investment.

International investors have invested over Dh162 billion in 2013 in Dubai’s property market with Indians, Britons and Pakistanis doubling their property investment in 2013 compared to 2012.

Plumb, however, states making money from property sales will depend on one’s investment horizon.

“If you want to stay here for the long-term then, of course, there is no problem, you ride out the cycles, but if you just want to come in and sell again, at some point, you have to get the ‘timing’ right.

“You have to make sure that you have obviously sold before the market corrects.

“And so if you have to make money in real estate, it’s just not location, location, location, it’s timing, timing and timing as well,” Plumb asserts.

The Wealth Report 2013, produced by Knight Frank, a global property company, had said that prices of Dubai’s prime luxury properties were 10 times lower than Monaco, the world’s most expensive residential property market despite prices rising by 20 per cent in 2012 and 2013, respectively.

In an interview with Emirates 24|7, Dubai Investments Chief Executive Officer Khalid bin Kalban said that the growth cycle in Dubai's real estate market had just begun and prices were still far below the peak of 2007-2008.

"Prices fell from the peak of 2007 and 2008 by a maximum of 60 per cent and a minimum 40 per cent; we even haven't reached that 40 per cent.

“Though we have seen increase of up to 20 per cent, we haven't really come back to the value of 2008.

“Generally, it's a five-year growth cycle... we are just at the start of the first year and so you still you have four years of growth.”

UAE’s safe haven status brought in a number of investors in the real estate sector, he said, adding, “Nothing can beat the capital appreciation on the property market except the stock market.

“An investor here can expect nothing less than 7.5 per cent return.”