To buy or not to buy?

FW poses 'the question' to Jeremy Mayhew-Sanders, of Sherwoods International Property Consultants:

"I think it has to be a very good thing and needed too. It will create more transparency and clarity for the buying public. Lack of confidence in the property market has been one of the biggest issues. The global downturn has, of course, affected the Middle East markets but people have also lost confidence in the systems as well ... delivery of product, deposit and money issues (lack of escrow) etc. Greater regulation if delivered rather than talked about will be a good thing.

"Getting lenders back lending is very important and will instill confidence in the market. Banks and other lending institutions have had two main issues they had no money to lend and second, if they did, what is the correct valuation to base the loan off.

With prices now well off the highs of 2007/8 then one can begin to think that we are bumping along the bottom in certain areas and valuers can carry out their due diligence with more confidence. Now we need the money! The Amlak-Tamweel merger, if it happens, will be a good thing. Even if they don't merge, then they should still start lending on their own accounts."

"Off-plan sales still have a part to play once confidence returns and greater protection for the investor is put in place. Right now there is still too much uncertainty on price and deliverability. Many investors in the region are still nursing their own investments rather than re-entering the market but this will come for sure. Time and patience is needed."

The UK remains my first choice probably as I believe it will be the first to bounce back. Why? Because it is a mature market, well regulated and systems/knowledge are in place which will aid a smoother and faster recovery. Greater transparency, honesty and regulation, something that Dubai is working towards but not there yet, means that both investor confidence and owner-occupier confidence will grow quicker. Investors can also take advantage of the weak pound against the dirham. India is also an interesting market. Perhaps more speculative but supply of mid-value homes remains far short of the growing demand. Concentrate on the National Capital Region (around Delhi) and tier two cities in South India and Western India."

Jeremy Mayhew-Sanders's job consists of finding a real home for prospective homebuyers. Yet ironically, given the choice of his own Dubai dream home, he would opt for something that's off the chart an area that's not even designated as freehold. "I would like to live in areas where we are not allowed to buy typical!" he says.

"Just off Jumeirah Beach Road would be good. But for now, I'd probably choose Dubai Marina or Jumeirah Beach Residence then later move to Emirates Hills in a couple of years." Then he adds, "Dreaming, of course!" Jeremy, head of investments and developments at Sherwoods International Property Consultants, says the major dilemma facing many expatriates, given that rental and sales prices have dropped, is how does buying a property weigh up against renting?

"Rents are falling to respectable levels or affordable levels but so are prices too," he says. "If you can afford to buy and can find a home you like and believe is at a competitive price then why not buy if you plan to be living and working in Dubai for a while? I can understand why people are nervous about committing but Dubai, like the rest of the world, it will bounce back, hopefully in a more sustainable and credible manner. Buying your own property is a good investment if taking a mid- to long-term view, renting gives you nothing back."

But given the current climate, does he think it's wise to buy now? "Yes, but there are a number of factors, tick boxes that need to be considered whenever and wherever you buy property. There are the usual questions like the quality and reliability of the developer, the quality of the building, the immediate vicinity (will the lovely sea view be blocked by another tower in the future?), who manages the building and annual service charge levels.

"The big two questions I suppose are, can I afford it, and am I buying at a good price? Because you want to take advantage of the poor market. It's a bit of a generalisation, and this does depend on area and specific developer/development, but if the price today is a good 40-50% less than the quoted price for the same stock in 2008 then this is sensible."

"Look at today's estimated rent as well. At the price you are buying what would the hypothetical rental yield be? Work this out gross and then net, subtracting all outgoings. Then ask, if you had to leave the apartment for whatever reason, could you rent it out and would the rent cover your mortgage payments and outgoings? Not always achievable, but if the answer was yes then I would be pretty comforted by that.

Looking for a mid-range property? Jeremy says properties at the lower end of this spectrum are Dh450-500/ft². Think International City. Low to mid-end are Dh500-650/ft² (eg, Discovery Gardens), mid-range are Dh700-950/ft² (eg, Jumeirah Lakes Towers) and the mid/upper end is Dh750-1,100/ft² somewhere like Dubai Marina or Jumeirah Beach Residences.

"On the high end, I would stick to the three or four quality buildings in the Marina," says Jeremy. "For example, La Reve, Al Fattan or one of the Trident buildings. There are more properties to come that are currently under construction so the choice is pretty large."