ASK THE AGENT - Given the recent rise in demand, are there any advantages now by buying “off plan”
06-Oct-2012 - Gulf News - Freehold
Q 1: Given the recent rise in demand, are there any advantages now by buying “off plan”?
Michael P. – Dubai
A 1: Off plan opportunities should not be dismissed and an increasing number of astute buyers are buying properties which are nearing completion, usually within the ensuing six months.
These buyers are very discerning. They are usually looking for certain property types which they believe will be keenly sought in the future, and villas are now heavily in vogue for the “off plan” opportunists.
Relative to other property types, demand for villas has been grown rapidly in the last 18 months and, given the current short supply and limited number in the pipeline, that trend is expected to continue going forward.
By buying “off plan”, the buyer hopes to reap the benefits of price rises once the villa is completed and making an immediate return on investment of anywhere up to 20% just 6 months after purchase. The key is to picking the right asset type, in the right development at the right price.
Q 2. which would be the better investment, purchasing a 2 bedroom apartment in the Dubai Marina or something similar in JLT?
A 2. Apartments in Dubai Marina have witnessed strong capital appreciation of around 15% since the start of 2012. This growth is a continuation of a trend which began early in 2011 and we expect it to continue as demand for properties in prime locations continues to strengthen so, if purchased wisely, you are likely to enjoy healthy capital growth going forward.
You can purchase a good quality apartment in a well managed building for around AED1000 to AED 1,300 per sq. ft. Once owned, you can expect to pay around AED15 per sq. ft in service charges and can expect to generate anywhere between a net return of 5.5% and 7.0%.
Apartments in JLT have not fared as well as their Marina counterparts. While cheaper at anywhere between AED750 and AED950 per sq. ft., the rate of capital growth in JLT has been nowhere near that of the Dubai Marina. Service charges will be lower at around AED11 per sq. ft. and net rental returns of 5% to 7% can be achieved particularly if you purchase in one of the better quality buildings.
On balance, I believe Dubai Marina, particularly those buildings located within easy walking distance to the JBR walk, to be the better alternative.
Q 3. The Rental Scam in Dubai has been all over the news recently. What precautions should I take to ensure I don’t get scammed?
Mike H, Dubai
1. If renting directly from the owner, verify the owners identity
2. Make sure the person claiming to be the owner actually does own the property
3. Utilize a standard form of contract. See www.ejari.ae/PublicPages/DownloadPdfTemplates.aspx
4. Ask to see the agent’s Dubai Real Estate Institute registration credentials or go to www.dubailand.gov.ae/English/Real_Estate_Licenses/EngLessons.aspx
which displays a complete list of registered Real Estate Agents
5. If the broker is a signatory to the rental contract, make sure that you see a notarized Power of Attorney from the owner
6. Check out the Real Estate Company credentials by accessing www.dubailand.gov.ae/English/Real_Estate_Licenses/EngLessons.aspx
7. Ensure the name of the owner on the contract is the same as the owner on the title deed
8. Ask to see proof that Service Charges have been paid and are up to date
9. Make sure you register new rental contracts with the Land Department on www.ejari.ae/TenantCertificate/Tc_certificate_registration.aspx
10. Read the contract terms and conditions carefully and understand your rights and liabilities as a tenant. These can come directly from the landlord or imposed by the OA of the community you rented within