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THE ANALYST

Craig Plumb is head of research for the Middle East and North Africa at international analysts JLL.

To 2020 and beyond

“While prices in Dubai market will continue to increase for the rest of the year, we are likely to see a slowdown over the next 12 months. While it is likely the market will pass through the peak of its cycle and experience a downturn before 2020, it is extremely difficult to predict its timing or magnitude. However, JLL does not believe another bubble is on the horizon. Expo 2020 will have a positive impact on Dubai’s economy, which will benefit the real estate market. The most direct benefits will be felt in the hospitality and logistics sector of the market. For the office market it will be less significant and direct.

Pitfalls to avoid

“Excess supply. Most developers are now recognising the need to phase projects in line with demand. Excess speculation. The population is growing at about 5 per cent per year while house prices have been increasing much faster — by about 30 per cent in the year to this month — which suggests there is a degree of speculation driving the market. The government and major developers are taking measures to reduce, such as increasing transfer fees and the percentage of payments made before properties can be sold.

Best for a quick buck

“Property is a long-term asset and should not be purchased expecting to make a quick profit. This is the attitude that led to the last downturn in prices, as too many people had purchased real estate expecting to make a quick return. Investors are now more cautious —smarter the second time around — and banks have also learned their lessons from being over-exposed to the real estate sector.

Best for the long term

“All sectors of the Dubai real estate market. Those willing to hold real estate beyond 2020 are likely to benefit from significant long-term growth in values. The hotel market is perhaps the most buoyant. It also offers the most opportunities.”

THE PRIVATE INVESTOR

Sumita De Sarkar is a private property investor based in Dubai and has a mixed portfolio of properties and a residential villa in Jumeirah Islands.

To 2020 and beyond

“Most people think 2020 is a long way away, but construction has started now. Staff have to be housed somewhere, so property prices — even if they don’t shoot up suddenly — will at least stay stable and probably rise steadily, perhaps in a somewhat more controlled way, although they have definitely gone up a lot in the past four to five months. Beyond 2020, I can’t say.

Pitfalls to avoid

“Buyer should stop flipping properties [buying off-plan and then selling quickly for a profit] as it artificially inflates prices, which causes effects such as the bubble seen before.

Best for a quick buck

“Prices are almost at an all-time high, so now is not the time to buy for a quick profit. However, for a steady profit from rental income, buying a studio or a one-bedroom that will be easily rented will get you around 8 per cent return.

Best for the long term

Again, smaller properties, as rental prices appear to be going up and they are easier to rent out.”

THE REAL ESTATE AGENT

Mario Volpi is Managing Director, Prestige Real Estate, a broker in Dubai.

To 2020 and beyond

“Dubai will be heading for very positive growth between now and 2020. Predicting a property bubble is difficult but assuming all the fundamentals are in place — interest from proper buyers (not just flippers), population growth, job opportunities and a continuation of infrastructure improvements, I do not believe Dubai will suffer another large-scale downturn. Corrections may come but at present there is no real threat.

Pitfalls to avoid

“Dubai has to be careful not to out-price itself on the world stage. Some of this is already happening, but there are certain laws in place to prevent this.

Best for a quick buck

“Developments where the government is investing to improve infrastructure.

Best for the long term

“The hotel apartment market as there will be a shortage of rooms, even with all the new hotels being built. The target of 20 million tourists per year will have to stay somewhere, so this new investing concept should bring about a good return from rent and capital appreciation.”

THE DEVELOPER

Mahesh Tourani is Director, Indigo Properties, a Dubai-based property developer with a number of completed developments and a recent launch.

To 2020 and beyond

“Securing rights to host World Expo 2020 has set in motion faster-paced sale and resale activity in Dubai. This trend is expected to slowly accelerate and plateau somewhat towards the end of 2018 into early 2019. Keeping in mind the overall improvement in the world economy as well as its projected growth, the inflow of funds into the UAE from surrounding troubled nations, and with Expo 2020 in the bag, the next five to six years are expected to see sustained growth in the city led by hotels, serviced apartments, commercial and residential buildings.

Pitfalls to avoid

“We recommend keeping a strict budget when looking to buy property; do not get greedy thinking of making a fast buck. As time passes, availability of finance will only become easier and one should not be tempted to avail of a high degree of leverage. The government has taken steps in the right direction with the mortgage cap, but in the end you should let common sense guide you; there is plenty of availability coming on stream in the years ahead.

Best for a quick buck

“Property should never be bought to make quick profits. An investment in property should be made in order to achieve capital appreciation over the long run, while at the same time earning income by way of rental yield.

Best for the long term

“Nothing can beat buying a villa in Dubai. A villa beats out several assets because you own the land itself; service charges are relatively low on a per-square-foot-basis compared to buildings; most freehold villas are available in gated communities offering excellent amenities and security and thereby ensuring good rental yields; and tenants are usually from higher income groups and tend to stay longer. Most importantly, apartments are trading at around Dh1,200-Dh2,800 per square foot whereas the best villas are trading at about Dh600-Dh1,500 per square foot.”

                                                                                     — Special to GN Prime