When investing in Dubai real estate, the diversity of choices remains an important attraction. “Whether you want to stay in a golf villa or next to a clubhouse, live by the beach, seafront, island living or canal living, or looking for horse riding nearby or need to live close to theme parks, the beauty of this city is that it has everything and anything that a buyer might desire,” says Emad Haq, vice chairman of Haqsons Group.
Dubai’s off-plan market is a key area, according to Haq, particularly for overseas investors. “2019 is the best year for off-plan sales in Dubai,” Haq declares, noting how H&S Real Estate Dubai, a subsidiary of Haqsons Group, is gaining traction from international real estate buyers.
“In the earlier years, developers were not offering any post-handover payment plans on apartment and villa sales, hence, the buyers had to pay 100 per cent at the time of handover. Now payment plans are given by most developers, making property investment in Dubai attractive for overseas buyers. For an international buyer, a developer’s payment plan makes property buying more lucrative as otherwise foreign investors are unable to obtain a bank loan.”
Post-handover payment plans from developers allow investors to pay “overtime” to increase their rental income.
Dubai also offers solid rental yields, which is an important factor for investor-buyers. “Per-square-foot prices of property in Dubai is much lower than most of all developed markets,” says Haq. “For example, Downtown is the centre of Dubai, where the average cost for a property in Burj Khalifa is Dh1,500-Dh1,800 per square foot, whereas in central London it is not less than Dh3,500. Then for a seafront property anywhere in the world, you will get not less than Dh3,000, but in Dubai it is Dh1,300-Dh1,600 per square foot, which is again less than half.”
Haq highlights the critical industry trends in an interview with Property Weekly.
Which price point is attracting most property buyers at the moment: less than Dh1.5 million or higher?
The trend on the type of properties a buyer wants changes every month. Some months the properties for a mid-income group like those at Dh1 million to Dh1.5 million is selling the most and sometimes those Dh6 million to Dh7 million and above are selling a lot. It generally varies from launch to launch but off-plan sale is thriving in 2019. Emaar has done its highest number of sales and broken all its records for the first quarter when compared to the same period in the previous year. Meraas has also broken its [records], and even other small developers are doing well.
H&S Real Estate Dubai also made the highest numbers of sales this year in the first two quarters – combined sales were over Dh1 billion, up by 20 per cent compared to the same period last year. We are hoping to break last year’s sales numbers this year. The most significant factors for this are attractive payment plans, and what the rulers of the country have done by bringing in new visa rules like the golden visa and making business environment easy, creating Dubai as investor’s haven. Dubai is the most lucrative place to do real estate investment as the rental yield is highest in the world right now.
What do people want? More space or less space but well-designed homes?
Everyone would want a spacious villa or apartment to live in, but if it is vast, it’s going to be more expensive. So ideally, the practicality of the space is what matters the most to the buyer these days. In the past, people did not care about the ticket sizes (the price of the property) and would buy big homes when they have enough cash. However, now developers are building small-size, well-designed spaces, making the market affordable and attractive to the needs of the broader population.
For instance, previously the market saw studios with an average size of 450-500 sq ft and now developers are coming up with a 550-sq-ft one-bedroom apartment, so small families can affordable it. These well-designed properties are attractive for end users and investors alike.
Tell us about the payment plans and offers in the market.
Big developers are giving up to five years post-handover payment plans, wherein the buyer pays 40 per cent over the next three years till handover and the remaining amount to be paid post-handover in instalments for up to five years. This also increases the buyer’s return on investment (ROI) exponentially.
For example, when someone buys a villa for Dh2 million without a post-handover plan and the property is rented out for Dh120,000 per year, the rental income will be 6 per cent. When the same Dh2 million property is purchased with a payment plan of 40 per cent on handover and the rest for three to five years post-handover, the buyer pays only Dh800,000 up to transfer. And when this property is rented for Dh120,000, the buyer gets a much higher rental income.
Developers, in some cases, are also offering to waive service charges for three years, which is another significant savings for the buyers. Schemes offering zero service charges for three years amount to savings of Dh10,000 to Dh25,000 depending on the size of the property.
Moreover, Emaar also gives a six-year payment plan to its signature clients, like someone who has Dh60 million to Dh70 million in investments with Emaar. These types of loyalty programs by big developers make buyers feel like a VIP. These in-house payment plans from the developers benefit the people, especially the non-residents without a visa, who cannot be eligible to bank finance. Moreover, the developers here have not added the interest in the price when offering payment plans.
Some private developers, along with their five-year payment schemes, also offer net guarantee rental return of 8-9 per cent for five years. For example, if you bought a property for Dh1 million, you pay only Dh500,000 up to the handover, and for next five years, the developer guarantees you 8 per cent rental yield on your Dh500,000, that is Dh40,000 per year and Dh200,000 over the next five years. This also means you get Dh200,000 on the purchase price of Dh1 million, plus the advantage of a five-year payment plan.
With Emaar, you get a payment plan like 25 per cent till handover and the balance in three to five years post transfer. Meraas’ Bluewaters offers 20 per cent till transfer and 80 per cent in three to five years. These post-handover payment plans are like rent-to-own schemes, where you are paying rent for five years and become the owner of the property. For the investors, it’s a way of paying overtime to increase your rental income.
What trends have you seen in the rental market?
Tenants who were earlier living in two-bedroom units have moved into three-bedders at the same price, and those in three beds have moved into a four-bedroom property for a similar price. This has worked out in favour of the tenants, and we are also seeing a lot of people from other emirates moving into Dubai. The only properties you will ever see empty in Dubai are the ones where landlords are asking for unrealistic rents. Otherwise, nothing is vacant. Over the last six to seven months, we have seen even the hardest of landlords have realised that they have to come to actual rental prices and they have done that.
What are the services you offer to your clients?
When the buyer purchases property, we manage the entire payments, and once the property is ready, we take care of the handover, renting it out and maintaining it. And we are the only company in Dubai that will not charge for these services if you bought the property with us, as this is part of the package.
I have never thought of myself as a real estate agent but have a mentality of an investor. We view what problems or issues a homebuyer faces, and we take care of all those issues. Last year was very good for us; H&S Real Estate Dubai was number one with Emaar in number of sales. Again in 2019, we are still at the top with Emaar. With Dubai Holding and Meraas, we were number three for the number of sales last year. The reason this is happening is that the market is good and is getting better.