If you think it's all over for Dubai's property market, then think again. Despite the absence of hype, activity is picking up and this time it's for real because the investors are real. Agents claim there has been a definite rise in the number of enquiries in the market over the past few months.
Tim Boswell, managing director, Ocean View Real Estate, says, "People who have recently invested in Dubai, especially expatriates, have been demonstrating a substantial change in their confidence levels in the market, and are more committed to reside on a long-term basis .
"Some of our investors have been with Ocean View for a number of years, and it is interesting to note their comments, to see their recognition, that now is actually a very good time to buy, especially if they are considering long-term investment. If you are thinking of investing in Dubai, focus on areas where there's no oversupply, and still high demand. For example, Downtown, Palm Jumeirah, Emirates Hills, Arabian Ranches and Dubai Marina, as well as other areas now coming to completion, like Al Barari and The Villa. In particular it is advisable to only focus on completed properties, registered at the Land Department."
So, has confidence actually returned to the market?
Property spoke to some investors and owner-occupiers who have recently invested in the emirate's real estate sector to shed some light on what's happening.
Crisis or opportunity?
Edita Hruba fell in love with this city back in 1999 when Dubai was nothing like it is today. Edita, an Italian, has been associated with Dubai's real estate sector for a few years now. An ardent believer in the potential of the market despite the crisis, she says, "I have invested in a lot of properties in Dubai and will continue to invest in this market."
The first property Edita — who also has properties in Italy and Prague — invested in was a one-bedroom apartment in Jumeirah Beach Residence about five to six years ago. "It was cheap and the payment plan was quite convenient, so I decided to go for it."
Since then Edita has bought and sold many properties, especially during the boom time. What makes her different from other investors is that she has inspired many of her family members and friends to invest in this market.
"When I first bought a property here, my friends, who just love the weather in this country also wanted to invest in this market. Dubai is only five hours away from Italy and Prague.
"Another reason why it's good for them to invest here is that they visit Dubai at least four times a year and they prefer to stay in nice hotels which can be an expensive proposition, especially during April and May. So it makes sense to have your own property here which will work as an investment as well as a place to stay when you come to Dubai."
Edita, who loves beachfront properties, has invested in Dubai Marina (MarinaScape) and Palm Jumeirah (Oceana and Tiara Residence).
"Most of my friends also prefer beachfront properties. I have rented out my properties on the Palm. I bought these units at a very good price soon after the crisis and the rental returns are pretty good. I think I bought the Oceana unit for Dh1.6 million and the current rent it fetches is Dh150,000. The Tiara unit was purchased at Dh2.9 million and the rent is Dh180,000, which is likely to go up to Dh200,000 soon.
The good thing is the rentals for Tiara and Oceana are going up now because of an increase in demand. My brother and some of my friends also have invested in Oceana," says Edita.
She added that she has also invested in a villa right in front of a golf course in Jumeirah Golf Estates, a project, that , she feels, will be the best in town after Emirates Hills when it is completed
Edita's piece of advice to prospective buyers is that there is no point in waiting, expecting prices to come down any further as they are now at a good level.
"I think that now prices are really good in the market. I invested in Tiara and Oceana soon after the [global] crisis at really good prices but now the projects are doing well and prices are holding up. In Oceana, we have even seen a rise in prices. So many of my friends wanted to invest in MarinaScape in Dubai Marina where I live now, but there are no units available."
She also highlights the importance of working with a good real estate agent to get the best deals on the market.
"I have been working with Andrew Cleator of Ocean View Real Estate for quite some time now and today he is more like a friend to me."
While Edita was attracted to Dubai primarily because of its sunny weather, Kenyan property investor Mohammad Jeneby likes the emirate for its infrastructure. He first invested in a property in 2007 in Emirates Gardens developed by Damac Properties in Jumeirah Village, and is now planning to invest in more properties.
"My first investment in Dubai was a one-bedroom apartment in Emirates Gardens," says Mohammad.
"I was impressed by Dubai's focus on infrastructure. Back in 2007, when I purchased my first property, the government had big plans for Terminal 3 at Dubai airport, Jebel Ali Port was growing and expanding and there were plans in place for the Dubai Metro. Dubai was establishing itself as a regional, strategic hub and there were a growing number of multinational companies moving their offices to Dubai. In addition, there are tax advantages of buying property in Dubai, and it's easy to open a bank account."
The biggest change he noticed in the market is its transformation from a seller's market to a buyer's market.
"The prices are pre-2007, and there are some of the best deals available. Rental returns are low at the moment, but they will pick up, maybe not to the rates of 2007, but still to good levels. I believe there will be very attractive capital gains in the future. And for end users, now is the best time to invest because the rent in most cases is equivalent to loan repayments," he explains.
Mohammad says investors looking at short-term gains are in for a big disappointment as the market has nothing for them.
"Investors will realise gains in the mid to long term. Dubai is no longer a market for short-term investors," he says. He has already invested in a property in Business Bay, where he plans to invest again in the future as he feels it is the ‘gem of Dubai'.
"Once the infrastructure around the area is complete, those who miss out on the opportunity today will regret it."
Dreams turn into reality
During the boom, the very purpose of property as a place to live in was lost as property was primarily looked at as a means of making money. In 2007, prices were beyond the reach of many people and their plans to buy a pad were put on hold indefinitely.
Lalith Haboubi, a British citizen, has spent 21 years of his life in Dubai, but it's only been a year since his dream of owning a home in Dubai has been realised. He, like many other residents, had been waiting for the right time to buy property in a market where prices had shot through the roof and were continuing to climb.
"I was waiting for the right time, the right property and the right location. If you look at the past few years there was an escalation of prices which put buying a property out of the reach of most people.
"I think unless you were prepared to a few more risks, which I wasn't, you couldn't buy a property here. When the prices came down post- [global] crisis, properties became much more affordable and I knew that I could find properties that would suit my budget".
"I bought a villa at Arabian Ranches. I chose to invest because I am looking at staying here for the long term, so I just wanted to make sure that I had some roots in the country," he added.
Lalith's decision to buy a property was never from an investor's point of view. He simply wanted a ‘home' for himself and his family, so his requirements were limited to quality, location and access. He was least bothered about capital appreciation and rental returns.
"I bought it in 2009 to 2010. I didn't consider rental returns or capital appreciation while buying this property. For me it was a family home. "I did consider a few factors such as the school at the Ranches and the distance to my office. I lived at the Ranches for more than four years prior to that. So I was definitely happy with Arabian Ranches. Since the time that I bought the property, the prices have gone down a bit more," says Lalith. "Because I am here for the long term, I am not looking at short-term gains. I am relatively stable and settled in my job, so my objectives are being met."
Lalith spent almost a year looking around for his dream pad before zeroing in on the Arabian Ranches villa.
"I had a look at The Villa project in Dubailand, MotorCity, the Green Community, etc. But I think out of all these places, that Arabian Ranches is the best option for me. It is an Emaar Properties development. Emaar is very solid and its services are very well defined and you know exactly what you are getting. Quality is also pretty good. Communal areas are very well managed and maintained, so it ticks a lot of boxes."
While Lalith has no plans at the moment to invest in another property in Dubai, he says he knows many people who are planning to do so.
John Blanch, a British citizen, who owns a villa in The Springs, bought in August 2009 when the prices had fallen by 30 per cent from November 2008. He says he wasn't prepared to wait any further as he and his family were in love with the house the moment they saw it.
"We purchased our property in The Springs. Although the market price has dipped since, the fact is if we had waited, that particular property would have been bought by someone else. It is a unique and very attractive villa which has one of the largest plot sizes in The Springs (7,000 sq ft); it has a large swimming pool and is at the end of a cul-de-sac and so there is no through traffic - it is very desirable."
"I think now is the right time to invest in the Dubai property market because market prices have gone to very attractive levels and are unlikely to fall much more. So if you buy now, there is a very good opportunity over time there will be significant capital appreciation. I have been told the demand for purchasing property in Dubai has now started to increase, and the banks have reduced their mortgage rates which have stimulated the market. For end users, there may never be the same opportunity again when you can find your dream house at an affordable price".
