Is a Dubai property bargain always a win?
When people ask me “How is the market doing?” I often ask them “which market?” Because there are always multiple markets within each city. There are areas each with distinct price ranges, styles of property, facilities, transportation links, proximity to lifestyle amenities and unique advantages.
Like the rest of the world, Dubai’s real estate market was knocked around post the downturn. However, today, house prices in the city have stormed ahead of some of the world’s biggest property markets such as Hong Kong and London.
With property investors re-entering and adding to the market’s momentum, the question today has shifted from “should I buy property?” to “what should I buy?” Homebuyers always want the best possible value for their money, so it is tempting for investors to assume that the best way to achieve this is to keep an eye out for and eventually snap a bargain — a property that is priced at a much lower level than the current market value. In this hunt for bargain properties, buyers sometimes lose sight of what real value actually entails.
My suggestion is, don’t just look for bargains, because bargains are usually properties that are cheap because no one wants to buy them. As the market continues its upswing, it will be wise to look for a fair market value property that comes with capital growth opportunities and telltale signs of future price growth instead of just a low price.
We all know that Downtown is a great community to buy in, but what is the next Downtown for Dubai? As you explore neighbourhoods, have a look at the areas in the vicinity. Which neighbourhoods have the earmarks of a great capital growth area? See where the trendy new cafés, retail outlets and shopping avenues are starting to move in. Ask what areas are proximal to shops, transport and schools and are going to benefit from infrastructure that’s about to be put built into the city. Is there going to be a new transportation link or a new roadway that might make an area better or more accessible to the city centre? Find out what is happening in these areas. Are they industrial but becoming more residential? Or do they seem like they will remain heavy industrial districts? Is there a development in a popular community that will spark interest in a nearby and an up-and-coming suburb? So, get out there, drive around, speak to different buyers and do your due diligence. If you want to know what real value is, then doing your groundwork is extremely important.
Sometimes, properties situated on the fringe of prized real estate patches may hold rewarding capital gain prospects because price ripples from top-end properties can drive up the value of real estate in neighbouring districts. Huge infrastructure or development projects can also benefit bordering areas. Over the past few years, Dubai has seen the launch of a wide range of new developments, both big and small. Not only do these projects include homes in prestigious neighbourhoods and on glitzy waterfronts, they also include properties in the city’s up-and-coming locations and potential growth areas — districts that haven’t quite had the polish put on them yet but where new transport links are providing more mobility — and where prices have not yet reached their full potential. This means rewards for early bird buyers who can foresee changes to come and benefit from future price rises. Potential hotspots in Dubai tipped to experience an upward price march could include Dubai Sports City, which is only a twenty minute drive to Dubai Marina and Media City, is equipped with community centers, banks, restaurants and international schools and is also 40 per cent less expensive than buying in a popular area such as the Marina.
So, keep an eye out for opportunities to buy early into a neighbourhood on the up, instead of just going after a cheap property. If you decide to embrace a new frontier, then you need to be patient to receive the full benefits of investing in a neighbourhood that may be less expensive and not so fashionable today, but possibly solid, hip and more expensive in a few years.
By: Renan Bourdeau The writer is the managing director of propertyfinder.ae. Views expressed by the author are his own and do not reflect the newspaper’s policy
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