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‘Property investment is your legacy’

Real estate is a game of patience, says Rajiv Ghanekar

Property Weekly

Don’t buy into the hype, advices Keller Williams Real Estate’s senior real estate broker Rajiv Ghanekar. “Real estate is a game of patience, like planting a tree and if invested sensibly and with due diligence, you reap lifetime benefits and leave a legacy for generations,” he says.

Having been in Dubai’s real estate sector since 2004, Ghanekar feels the current market is ripe as prices are bottoming out and every now and then a great deal pops up. So, he feels it’s a great time for homebuyers and investors to grab an excellent deal. “Dubai being the most transparent market in the Mena region, it attracts international investors and is now seeing a huge conversion of tenants into homeowners,” he says.

In an inyerview with PW, Ghanekar talks about rental trends, top selling zones in the market and tips for investors to maximise their rental yields.

Are rents still correcting? What is your outlook for 2017 and beyond?

Rents have been on a downward curve this year. There has been a3-5 per cent drop since the same time last year. As new supply comes in this year, which is estimated to be around 27,000 units between now and December, there will be pressure on rents to sustain at their current levels. However, these numbers are based on estimated completion dates and are likely to get pushed to the second half of next year.

How should buyers plan property investment to maximise their rental yields, especially when rents are softening?

If you are a new buyer, buy rented units (as opposed to vacant), ones that are fetching higher than the average market rent. The tenant’s length of stay plays a crucial role too. A resident who has lived in the property for three years or over is more likely to continue further. Moreover, factor in the yearly outgoings in maintenance and chiller fee before investing.

Another essential tip is to spread your investment across smaller units in comparison to investing a significant chunk in a single apartment or a villa (if your primary motive is to generate steady rental income). Also, as a landlord, if you price it right even in a sluggish market you will have a ready taker. Remember, every day or week the unit stays on the market, it will cost you money. It is smarter to take a marginally lower offer today and seal the deal, rather than wait for the market price.

Today the market offers a number of attractive options. No one particular project appeals to all buyers as real estate investment is always based on a combination of several factors such as individual’s perception, budget, location preference, risk appetite, mortgage financing, ready versus off-plan investment, peer influence, etc. However, Downtown Dubai, Dubai Hills Estate, Dubai South and upcoming townhouse developments in Dubailand are my top picks for investment in the current market.

With several new launches happening in the market, how is the centre of Dubai changing?

The market has had an interesting shift, from a predominantly luxury segment, tilting now towards practicality and affordability. Developers now are closely listening to what the market wants and are accordingly coming up with the right product. Buyers (both resident and international) today have vast choices across the city with newer developments such as Dubai Hills Estate, Sobha Hartland, Dubai Culture Village to name a few — which are centrally located. Developments in and around Al Qudra, Dubai South, Dubailand and Jumeirah Village Circle cater more to the mid market segment. In a couple of years, when these new projects get delivered, I foresee a huge number of people, mostly current tenants, choosing to be homeowners. After all, it surely makes investment sense in the long term

What types of properties are fast selling in the current market?

Looking at the first half of the year, off-plan sales have accounted for the majority of transactions. Top sellers in the off-plan segment are studio, one-, two-bedroom apartments in Dubai South, JVC, Downtown Dubai and Dubai Marina, followed by budget townhouses (priced between Dh1.25m — 2.5m) in Dubailand, Town Square and Dubai Hills Estate.

If we talk about resale, then apartments in International City, Discovery Gardens, Dubai Marina, Downtown Dubai, Shoreline Apartments in the Palm Jumeirah and The Greens and The Views had an overall steady demand. On an average, apartment prices across Dubai continued to trade at Dh1.3-1.4 million.

In the villa-townhouse segment, there has been a continuous demand for The Springs, fuelled by end-users. Reem Community-Mira, which was handed over in the last 12 months, topped the chart in resale transactions.

Should Dubai residents buy or rent?

It is always a good idea to buy — invest in your own home rather than see your yearly rentals go as a pure expense. Sure, many other factors would contribute to this big decision, the important ones being job stability and the availability of funds for the down payment and closing costs, which will be around 31-32 per cent of the property value. So, to begin with, get in touch with mortgage institutions to ascertain your eligibility and accordingly work things around.

For those who prefer to continue to rent for various reasons — think about investing in real estate purely to generate that passive income. The idea is to pay the rent out of your existing apartment wholly or partly through your investment property. For some, it could mean recovering your child’s yearly school fee expense through your real estate. The mantra is creating a real estate investment for every major life expense. I say real estate because Dubai perhaps is the only place that offers net rental returns of 5-10 per cent per annum.

Real estate investments can act as your forced savings plan and the first step on your journey to create a continuous stream of passive income. It is a noted fact that mortgage loans taken for a period of 20-25 years are paid off in full by the ninth year of the loan term — that’s the power of forced savings.

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