Investors making a comeback?

Name:  Dawn Draper
Position: Head of operations, Ocean View Real Estate
Nationality: British
Profile: Prior to moving to Dubai three years ago, Dawn's previous experience covered investment and project consultancy. She has 26 years of experience in the international residential property sector.

You thought the end-user is all that matters now in Dubai's real estate market? But ask Dawn Draper of Ocean View Real Estate, and she will explain how during the last few months investor activity is again gaining visibility in the market.

"If you compare today to a year ago, it was predominantly the end-user in Dubai. Now we are witnessing a return to the investors," she contends.

"The buyer profile is a combination of two types — you have got people who are looking for good rental returns and then there are end-users who are looking to buy homes to live in.

A lot of investors are looking to buy in Downtown Dubai — particularly the Burj Khalifa — Victory Heights in Dubai Sports City, Dubai Marina and Palm Jumeirah, both villas and apartments. Basically they are looking at properties that are going to have some kind of capital appreciation in four or five years and these are long- term investors."

A recent report stated the number of people investing in properties that cost less than Dh1.5 million is on the up, which Draper believes, is an indication of the presence of short-term investors in the market.

"For properties to register capital appreciation in this market, it could take up to three years, so people who are looking to buy low priced properties are looking only at rental returns because rentals are holding. Properties in the prime, most sought-after locations can fetch upwards of seven per cent rental yields. If you can buy with a lower bank rate of less than six per cent and get a rental return of say eight to nine per cent, then you have got a good investment."

While the return of investors indicates a positive future, there has been a rise in the number of sales enquiries and transactions this quarter. "We have seen a clear increase, particularly in sales over the last two months, which cements our cautious optimism in the long-term stability of the UAE property industry.

"This increased activity is not only from the end-user, but also from the investor looking at long-term capital growth and to maximise on rental yields gained over the long term. Improved access to credit, with loan to value up to 85-90 per cent, coupled with historically low bank interest rates are also defining factors in this well received market turnaround."

Draper says now is a good time to buy. "A savvy investor knows when is the best time to invest — just as the prices hit the bottom or as they start to come up again. I think everybody would agree that's where we are right now. We have already seen some prices rise, but not on any great scale yet."

Dawn on...

... winning Arabian Property awards

We received three awards this year, — a five-star award for Best Real Estate Agency Dubai, Best Real Estate Agency Abu Dhabi and the overall winner of Best Real Estate Agency Arabia. The Abu Dhabi office, a partnership with SPK Holdings which is the holding company of Dr Shaikh Sultan Bin Khalifa Bin Zayed Al Nahyan, Member of the Abu Dhabi Executive Council, also won the award for the best real estate agency for the whole of the UAE and the nomination for the best international real estate agency.

Since last year, we have been using the award entry process as an exercise to evaluate the operations of the company, see what we are doing well and what we can improve on. Taking into account the changes that have taken place in the market over the last two years, this has proved to be a very valuable exercise. We are continuing to invest in highly skilled, experienced staff, implementing new structured procedures and maximising our market exposure with innovative marketing strategies.

... mortgages and end-users

More and more end-users will come to the market if banks offer better rates of interest and that's definitely happening now. Banks are, in fact, dropping their interest rates now. Banks such as HSBC and Standard Chartered have cut their rates. Barclays is now offering a rate of 5.99 per cent to new customers. Nakheel and Emaar Properties' projects get about 85 per cent of loan to value ratio. Banks have been lending for about six months much more freely than they were a year ago and it is improving all the time. A lot of the banks are now trying to get people fixed at 5.99 per cent for the next three years, which is a clear signal that they expect the rates are going to drop even more.

... oversupply

In certain areas, demand is high compared to supply. It will take several years to clear the oversupply as far as studios and one-bedroom apartments in low demand areas are concerned. For example, Jumeirah Lakes Towers has an oversupply of studios, one-bedroom and two-bedroom apartments. However, there is a very limited stock of waterfront properties available now. For example, Palm Jumeirah has only 1,500 villas, and demand for these remains high.

Popular options for waterfront apartments are Jumeirah Beach Residences, Trident Grand Residence, Oceana and the Tiara Residences. The Shoreline Apartments are also still a popular choice and demand remains strong.