Ask the experts

Q. I am working in Abu Dhabi and my wife works in Dubai. We are currently renting a two-bedroom apartment in Dubai. We are considering buying an apartment but are unsure whether to invest in Dubai or Abu Dhabi. Do you think it will be wise to invest in the capital because some major developments there are expected to be handed over soon?

A. Both cities offer excellent investment opportunities and, as with all investments, there are some fundamentals which you must consider. You need to pay attention to the current and future demand and supply dynamics of both cities. Abu Dhabi seems to offer better returns for investors who are after expected yield and projected capital appreciation. Yet, your initial capital requirement will probably be higher in Abu Dhabi which means you need to be watchful for downstream effects which may hinder capital growth. On the other hand, the oversupply situation that Dubai is facing has pushed prices down to affordable levels which is good news for end-users who wish to enjoy the fantastic lifestyle that Dubai has always been popular for. There now exists a greater range of choices and you can succeed in obtaining true value and quality in the property you purchase.

Q. I have a three-bedroom apartment in a Dubai beachside development. Since the rental income from this property is not as lucrative as it used to be, I am planning to sell it and invest in a villa instead. I read some reports which suggest villa rentals are holding up. Is this true? If yes, which is the best development in Dubai can I invest in now?

A. The rental rates of villas seem to be holding up better compared to apartments. Perhaps this has to do with the fact that the current and future supply of villas is marginal compared to apartments. In addition, villas will always have a strong devoted base of tenants who aspire to the unique lifestyle the homes offer. I believe villas at The Villa project, Cedre Villas and Victory Heights offer an excellent opportunity for investors. They are freehold projects that boast a fantastic masterplan and first-class designs. Villas in these locations are available today at very attractive prices, some at below Dh550/ft², which is very low. The handover in these projects started a few months ago, and as more families start moving in and the landscape of these projects is realised, these villas are going to gain more momentum and popularity which will translate into higher rental yields and capital appreciation.

Q. I am a British expat and have lived in this country for ten years. I used to live in rented units until I bought a two-bedroom villa in Dubai in 2007. I have now decided to go back and settle down in my home country. I wanted to sell my villa but my friends suggested that I rent it out so that it will be a source of income for me. Given the current market conditions, is it a good idea to rent it?

A. In 2007, prices of properties in Dubai reached sky high levels. Having said that, you will not be able to regain the capital you invested back then in your villa if you sell it now. You should instead consider renting your villa for three to four years until the property market realises its full recovery. Only then you will be able to achieve a positive price point. You can appoint a certified property management company to supervise the rental and maintenance of your villa while you are in the UK.

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