UAE property experts highlight investment sweet spot
DUBAI, September 29, 2018
The UAE property scenario is bustling with activity with the studio, one-, two and three-bedroom apartments valued at a price point below Dh1.5 million ($408,337) emerging the most attractive segment for young professionals and families as they both yield best long-term results, said top industry expert Cluttons Middle East ahead of the Cityscape Global expo.
In their opinion, Cuttons said it currently made more financial sense for hopeful end-users who wished to offset the cost of rent to buy at these levels.
Top real estate analysts are weighing in on the debate to buy or rent property in Dubai for expatriates, identifying the ideal price point in the market which offer the best long-term returns.
Richard Paul, the head of Professional Services for Cluttons Middle East, said: "At this price point one and two bedroom apartments in an established area are dominating most of the activity in the market."
“This is also the case for prospective owner occupiers who wish to cease paying rent. It does depend on where the individual sits financially, but if they have adequate equity, it makes sense for them to contemplate paying off their own mortgage and look at real estate as a mid and long-term investment,” he noted.
The advice comes at a pivotal time as the region’s eyes are on Dubai for the opening of next week’s Cityscape Global, which offers visitors the opportunity to purchase properties from a number of the UAE’s prominent developers.
Cluttons said its advice can also be applied to expatriate families looking to breakeven on rent and invest in multiple assets in Dubai.
“For a family that has money to invest, we would also advise to stick below Dh1.5 million price point, which represents the most stable market segment currently,” remarked Paul.
“At this price point, even if the decision is to lease the property investment out, post-acquisition, a purchaser should expect a 7 to 9 per cent gross yield in some areas and subsequently after interest payment, service charges and upkeep, there is still good profit rent to be achieved,” he added.
Research from JLL suggests that while residential prices in Dubai have fallen around 20 per cent since the last market peak (in October 2014), the market is now approaching the bottom of its cycle, with only limited further declines expected over the next year.
Prices and rents are both expected to soften further in the short term but a solid case can be made for long-term expatriates to purchase property rather than continuing to rent.
Craig Plumb, the head of research at JLL Mena, said: "The majority of expatriates in the UAE have traditionally sought to rent rather than purchase properties."
"As the market has become more mature (with less price volatility than in previous cycles), expatriates can be more confident to buy at close to the bottom of the current cycle to benefit from potential long term capital growth," noted Plumb.
Recent changes to Visa laws (allowing 10 year residency for certain groups of expatriates is also likely to increase demand to purchase property in the UAE for their own occupation, stated the expert.
“The case for purchasing properties is further strengthened by the attractive payment plans that are currently being offered by developers that are keen to dispose of unsold off plan units and the increased choice of low-to-mid market product available for sale,” he added.-TradeArabia News Service
