Let’s cut right to the chase: is 2016 really the best time to pool your investments into Dubai’s real estate? Absolutely! However, a genuine question you need to ask yourself is when and where?
Just to keep you current, property prices and transactions have gradually declined in the last 18 months – the government introduced certain cooling measures to keep sales prices from ‘overheating’ because of the announcement to host the Expo 2020. During the final quarter of 2015, it became widely known that a large number of property units were expected to be finished but weren’t. It appears the same trend may more or less carry forward into 2016, as we have yet to see the total number of units which will be ready in 2016.
If this number hovers around the high end of the spectrum, we may see sales pricing dipping further down the scale. So you need to know when to make a purchase. We could very well see prices bottoming out in the next few months.
2015’s price softening has been a welcome change because the market has had a breather while coming to terms with the residential sales market as it represents really good value, particularly in contrast to other global property markets.
As an investor, you should have your eye on Dubai rental property to enjoy the best yields, which are averaging just over 7%. This is a very attractive proposition from an investment perspective, since other cities like Hong Kong, for example, are averaging between 2 and 3% while London is at 3-4%. Some parts of Dubai will see you enjoying yields as high as 10% – property in Palm Jumeirah, Anantara and the Dukes, for example.
Why are yields growing more in these areas? On one hand, we have had a cooling of sales values, on the other, the rental market has more or less remained robust. People still need a place to live; combine this with Dubai’s increasing population, thanks to creation of jobs, renting continues to be an ideal choice for most single professionals and families alike. So again, to enjoy the fruits of your investments, you’re best off investing in rental properties – villas for rent in Mirdif and Dubailand properties for rent also being hot commodities.
The Dubai property market is currently undergoing a stabilization phase which is directly tied to strategic government regulations, including higher property registration fees and caps on mortgage. There could not be a better time to invest in Dubai than 2016.
Gross returns on small as well as large apartments for instance, are between 6% and 7.2%, which again, is noticeably higher than Singapore, Hong Kong and London. So where do you start investing then? Assuming you are ready to go in with AED 1 million, go for studio apartments in a “grade A” location where the rental returns are strong: Dubai Marina, Downtown Dubai, apartments for sale in JBR, and Arabian Gate Silicon Oasis.
There is currently a shortage of studio apartments around the Downtown area, so this is a good place to invest in order to drive high yields.
Properties in Marina District like Burj Damac Waterfront are also well worth the investment.
Investing in off-plan projects also means a lower cash outlay over the construction phase. You can take advantage of this since the market is recovering and you won’t have to pay back everything right away. Pacific Ventures Dubai is a good place to start when it comes to off-plan property investments.
Keeping track of all your investments and yields can be a cumbersome process, but it doesn’t have to be. Hire a Dubai property expert who has been in the trade for several years and fully understands the ins and outs of property investments in Dubai.