Decisions should be based on returns on investment and capital appreciation
What are the best locations for an investor seeking to buy mid-range property in Dubai?
If your primary focus is on securing a high return on investment (ROI), consider areas such as Jumeirah Village Circle (JVC). Presently, JVC stands out as one of Dubai’s regions offering a high return on investment, making it an attractive choice for investors seeking solid income streams.
In the other hand, if your investment strategy revolves around capital appreciation, target buildings that have been recently handed over in prominent districts like Downtown Dubai or Dubai Marina. These areas demonstrate a consistent demand for properties, making them promising locations for potential appreciation in property values.
By aligning your investment objectives with the specific strengths of these areas, you can strategically position yourself for success in Dubai’s mid-range property market.
What would be the criteria to select a mid-range property?
When considering the selection of a mid-range property, several essential criteria come into play, ensuring a well-informed investment decision:
Return on Investment (ROI): The ROI is a fundamental metric that assesses the potential profitability of the property. It involves analysing factors such as rental income, property appreciation, and associated costs. A mid-range property should offer a competitive ROI that aligns with your investment goals.
Net yield: Net yield is a crucial indicator of the property’s income potential. It accounts for factors like rental income, service charges, and other expenses. A mid-range property should deliver a healthy net yield that justifies the investment.
Service charges: Service charges are an often-overlooked aspect of property ownership. Assessing the service charges associated with a mid-range property is essential, as they can significantly impact your overall returns. Lower service charges can enhance your net yield.
Area: The location and area of the property are pivotal considerations. Evaluate the neighbourhood’s growth prospects, accessibility to amenities, and the overall market dynamics. A mid-range property in a promising area is more likely to yield favourable returns over time.
What should be the ideal timeframe to hold on to a mid-range property before selling it?
The ideal time frame for holding a mid-range property before selling is contingent upon various factors, primarily your investment goals and market conditions. If you are generating a substantial rental income and the property is performing well, it may be advantageous to retain it for an extended period. However, if demand starts to stabilise for the property it might be better financially to sell at a profit and reinvest into newer projects.
In the case of Downtown, an illustrative example is BLVD Heights, where one-bedroom units experienced a significant surge in demand over the last six months. Prices escalated steadily, exceeding Dh2.1 million, compared to around Dh1.8 million the previous year. Recognising the heightened demand, property owners capitalised on the opportunity to sell at a profit and reinvest in more promising ventures.
In essence, the ideal holding period hinges on your investment strategy, market fluctuations, and the property’s performance. Regularly assessing these factors will help you make informed decisions about when to capitalise on profitable opportunities.
What is the outlook for the mid- and lower range property in an area such as Downtown Dubai?
The current market outlook for mid- and lower-range properties in Downtown Dubai reveals an interesting trajectory. Many of these properties have rebounded to the price levels observed back in 2014, demonstrating a remarkable resurgence. However, it’s important to note that certain unique apartments, such as those nestled in Old Town with gardens or featuring additional study spaces in newer towers, have not only regained their previous value but have also generated healthy profits for investors.
Looking ahead, the prospects for future growth in this segment are notably promising. Anticipated growth is largely driven by heightened demand, particularly in the primary property market. This increased demand is a result of government incentives, including the Golden Visa programme, which grants extended residency periods based on investment amounts. These government initiatives, along with various other factors, are paving the way for continued growth in the mid- and lower-range property market in Downtown Dubai. Investors and homeowners can look forward to a thriving and dynamic real estate landscape in the coming years.
News Source: Khaleej Times