Please register to access this content.
To continue viewing the content you love, please sign in or create a new account
Dismiss
This content is for our paying subscribers only

Business Analysis

Comment

Why property investors in Dubai need to get math right on floor areas

Property investing is also about mastering all the confusing acronyms



Investors should take a primer on GFA, BUA and FAR before they get anywhere close to buying a property. It will save them money and headaches.
Image Credit: Shutterstock

Planning a journey to buy real estate in Dubai? Brace yourself for a whirlwind of terms and figures that might seem as complex as what’s heard at an astrophysics seminar. Understanding the intricacies of plot pricing in this city of superlatives is key to making an informed decision.

Let's dive into the sea of real estate jargon, starting with plot pricing methodologies. Imagine you come across two plots: one priced at Dh50 per square foot on GFA (gross floor area), and another at Dh2,000 per square foot land.

What does this mean? Such a stark difference can be baffling, but it boils down to understanding some critical terms.

Get the sums right

First, there's the plot size - think of it as your canvas. What you're allowed to paint (build) on this canvas - be it a villa or a 20-storey building - significantly affects its value. This is where the concept of FAR (floor area ratio) comes into play. Multiply the FAR by the plot size, and you've got the GFA, the maximum area you're permitted to build.

In areas with varying floor area ratio, plot prices are calculated based on the GFA. Simply multiply the price per square foot by the GFA to determine the plot price. In contrast, in areas with a fixed floor area ratio - like in villa communities - the price is based solely on the plot size, which explains the wide gap in pricing strategies.

Advertisement

As the plot (pun intended) thickens with the prevailing confusion between GFA and BUA (built-up area). While GFA relates to the permissible construction area, the built-up area is all about construction costs and the total area within the building's envelope, which includes basements, podiums and utility rooms.

Mixing up these terms can lead to distorted price calculations.

Balcony or terrace

Another twist in the tale is the balcony vs. terrace debate. A balcony, part of the main structure with a ceiling overhead, should not be confused with a terrace, an open space without a direct overhead covering. It's crucial to note that terraces, even if included in the title deed area, should not be priced at the same rate per square foot as balconies or the net area.

This distinction affects the valuation and perceived usability of the property.

Lastly, be vigilant when assessing ready villas. Agents might quote prices based on gross areas, but the actual net area – minus elements like parking and terraces – often paints a more accurate picture. To avoid miscalculations, focus on the plot size and floor area ratio, rather than just the quoted square footage.

Advertisement

Armed with this knowledge, you're now better equipped to navigate Dubai's real estate. Whether it's understanding pricing metrics or dissecting property layouts, a little insight goes a long way in ensuring you make a savvy investment in this dynamic market.

Happy house hunting in Dubai – where real estate is not just about buying a space, but stepping into a lifestyle…

Hamzah Abu Zannad
The writer is a Dubai based writer on real estate. He’s an investor too.
Advertisement