Rise and fall: Ten years of freehold

DUBAI: It's been ten years since May 2002 when foreigners were allowed to buy properties in Dubai.

But memories of the manic frenzy of the early days is still fresh in many minds.

Recalls Indian businessman Sudhir Kartha: "I had to stand in a queue from 7am to buy a house in Dubai. I was third in line. But once the doors opened for sales, chaos broke out. People pushed and shoved to get inside. Around 25-30 guys jumped the queue and ran ahead of me. By the time my turn came, all prime properties had been sold out. I had to make do with what was left."

Eventually Kartha, then 34, settled for a six-bedroom villa in The Meadows for Dh1.9 million. It was not his first choice. But he has no regrets.

The villa has been home for the Karthas for ten years and is now valued at around Dh6 million. "My family loves it here," he said.

Highs and lows

Over the past decade, Dubai's real estate sector has seen many highs and lows. After peaking to ridiculous levels, prices hit rock bottom between 2009 and 2011, pummelled by global recession and scepticism

Many distress sales were made during this period. But many investors like Kartha who bought early in prime areas held on to their properties and are now seeing a noticeable appreciation.

A case in point is Iranian Mina Iravani who invested around Dh5 million in three properties at The Springs, Shoreline Apartments and Jumeirah Park between 2003 and 2007. They are worth around Dh7 million now and Iravani is no hurry to sell them.

"I live in The Springs, my Shoreline Apartment is rented out and the Jumeirah Park one is yet to be handed over. I have no plans to sell any of them," she said.

Undeterred

Long-time Australian investor Susan Dinor also remains undeterred by the recent market slump.

"I have invested a substantial amount in Palm Jumeirah apartments and commercial spaces in Dubai Silicon Oasis. If you have something fundamentally sound and it goes through a slump — just sit tight and wait for the market to pick up. If you have invested in a good property paying a good price, you are bound to see a good return on the property sooner or later."

Also holding on to her investment is Dubai lawyer Ludmila Yamalova, 37, who bought properties in Tiara Residence in Palm Jumeirah and Al Murjan in Marina Walk in 2007. "I am not selling them," she said.

But such success stories are few and far between. Ask Kenyan Harith Ben Shahball, 60, who forked out Dh630,000 for a one-bedroom apartment in Discovery Gardens in the fervent hope of getting good rental returns.

"My first rent from May 2009 to May 2010 was Dh55,000 per annum. But now the apartment barely fetches Dh36,000 per annum. After I have paid Dh16,000 for service charges, there's not much left.

"If that were not bad enough the property price has also dropped to Dh450,000," he said.

"Ten years of freehold is a long time in the life of Dubai," said Craig Plumb, Head of Research, MENA at Jones Lang LaSalle.

"Trigger factor for a surge in property demand in the initial years came from the freehold law which made people feel confident of their investment. The years 2002 to 2006 saw a steady growth. While 2007 and 2008 marked a boom phase, 2009 to 2011 saw the market slump following a recession. Now in 2012, as pockets of the sector recover, Dubai is a more mature market than in 2002."

Dubai Land Department (DLD) records show that 6,403 investors bought Dh12 billion worth of properties in Dubai last year. Emiratis, Indians, and Britons. topped the list of investors.

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