Buying property is definitely a better option over renting. The current property prices and the exponential growth expected in the coming years will give a very good capital appreciation. The home loan rates offered are very conducive too, so the actual outgoing for the property EMI is almost equivalent to the average monthly rent being paid by the individual.
All of the above is clearly understood by the investors; however, the fear of uncertainty has held back many of them. In that case, they need to look back in time and they will clearly see that the current market dominated by end-users and investors. Earlier, it was speculators who did not have the means to pay the entire amount of the value of the property. Also, the value of any property being bought now is very good and sustainable, so I would advise people to leave the fear factor aside and buy as this is the right move ahead.
What is the percentage of return on investment an investor can achieve?
An investor can always get maximum leverage from his investment. There are three calculations to determine a property’s return on investment (ROI) depending on the investors understanding of the various factors. Investments in the residential segment can have an ROI of 5 and 9 percent per annum depending on the location and type of property. For commercial properties, ROI ranges from 6 to 10 percent per annum; in the industrial segment, it is 9 to 14 percent per annum. The major point here is that capital gains are over and above the rental income and have not been taken into the consideration. Investors can expect a good appreciation on that front. However a much higher ROI can also be achieved through systematic planning and expert advice. In short, there is no dearth of investment options in Dubai and other Emirates. If the planning is right, then the sky is the limit.
What is the current scenario of investments in Dubai?
With the major planned infrastructures and zonal developments being undertaken by the government of Dubai, the city is well equipped for the next century.
The Al Maktoum International Airport is now ready for the scale-up in tourism in which is expected to come in beyond the year 2030. The metro is being made ready with a long term view. All the other developments are planned with the same perspective. Look at the Hyperloop, the solar energy plants and other infrastructures setups. It is clear that the city is geared up for the long term, not just for EXPO 2020.
Looking all the above factors, a lot of corporates from across the world have started buying properties in Dubai. There are a number of investments and commitments to invest happening between the Dh100 million and Dh1 billion categories. These corporates are seasoned investors, so it is a clear sign for the small to medium investors to start buying now.
What is the criteria for selecting the right brokerage firm for the right advice on investment options?
Selecting the right brokerage company is very crucial for every investor. The right brokerage company always looks at the long term benefits for investors. Its key concern is to carefully understand the investment aspect of the investor and propose the right options, not only from the point of buying a property but also at the point of planning a systematic exit in case the investor wants to liquidate his investments. It should be a complete circle, and a planned entry and exit an only be provided by seasonal real estate companies. The company should also be able to justify the proposed investment to the investor; the selection of location is subjective to the short and long term goals of the investor as well. All of the above factors are crucial, but most investors do not look beyond the location and price per square foot. It is the broker’s job to look at the above aspects to ensure that it is always a win-win situation for the investor.
What types of investor are currently looking at investing in Dubai?
Basically, there are three types of investors. The first type is the end users who buy properties for personal residence or business. Their investment capacity is between Dh 350,000 and Dh 5 Million. They are safe players and prefer to buy ready or under construction properties which are near completion. The second type are the bulk buyers who buy multiple units. They have an average budget between Dh 5 Million and Dh 50 Million. They usually buy off plan and under construction properties after price negotiations with developers, and later sell the units at premium prices. The third type are corporate investors who are further divided into three segments: the corporates who have a budget of Dh100 million to Dh300 Million going all the way up to Dh3 Billion per project. Interestingly, all these three never increase or decrease their budgets no matter how lucrative an investment option is. Corporate investors buy properties for rental returns. They wait for a decade for a decent capital appreciation and sell them off. Developers registration data released by the Land Department indicates the entry of 55 new developers into the real estate market, with the launch of 134 new projects worth over Dh100 Billion and the completion of 62 projects in 2016. This is just the beginning; there is more to come.