The UAE is a popular investment destination for property buyers, given the scope for good capital appreciation and attractive rental yields. But if an owner eventually plans to sell the property, there are a few cardinal rules to keep in mind.
First impressions count – and can affect a property’s value. Real estate agents and property valuers say many homeowners tend to commit a common mistake of making changes to their home that do not increase its value. In fact, they say that certain alterations could even reduce the value of a property, while poor maintenance can also be damaging to the eventual offer price.
We have compiled a list of factors that could negatively affect the value of your property. Keep them in mind before listing your property on the sales market.
Failing to keep up with maintenance and repairs
Keeping up with general maintenance of your property is integral in ensuring that it doesn't fall into a state of disrepair. This, in turn, could lead to bigger and more expensive issues down the line. A neglected property will also motivate a potential buyer to bid less.
“Should a potential buyer view your property and there are clear signs that it requires costly repairs, then they will be less willing to purchase it at a higher price,” says Brendan Kennelly, senior mortgage consultant at Mortgage Finder.
When you decide to sell, it is essential to fix all faults with the property, such as painting the walls, re-grouting the bathrooms and getting snags fixed so potential buyers don’t see these as a negative, Lewis Allsopp, chief executive of Allsopp & Allsopp, a Dubai-based real estate broker, says. “Get the property deep cleaned and brighten everything up. Appearance is everything,” he adds.
Even investors who own vacant properties are advised to continue maintaining them to preserve value.
While some renovations can add value to your property, such as incorporating a pool, other niche additions could devalue it. Real estate experts recommend that property owners avoid making drastic changes to bedrooms and bathrooms as these are generally viewed as spaces that add value.
“A bedroom tends to be more valuable than a bathroom. So, converting a bedroom into a bathroom would be more likely to reduce the value of your property than increase it,” Mr Kennelly says.
Similarly, removing a bathtub or wardrobe space can be detrimental to a home’s value.
“Some buyers like to have the option of a fully functional bathroom and nearly everyone has storage space at the top of their ‘essential property attributes’ list. Taking this away to extend the space in a room or to extend a bathroom can turn potential buyers away,” Mr Allsopp says.
Converting the garage into an additional living room or games room can also affect a property's value. “A secure, locked-up garage can be considered as a value-forming attribute for most discerning investors today who drive luxury cars,” says Cheryl McAdam, director of residential valuation at consultancy Valustrat.
Approvals for renovations
Once an owner decides to make major alterations to their home, they must get professional help to draw the plans and obtain a no-objection certificate from the developer before commencing work. The additions also need to be legally permissible and compliant with community architecture rules. Illegal structures and encroachments will make it hard to list the property on the market.
“One of the most common omissions homeowners make is to change the internal layout of a unit, such as incorporating a balcony area into a bedroom or living room to increase liveable space without following proper procedures and securing the necessary no-objection certificate from the developer first,” Ms McAdam says.
When it comes to getting a valuation of your property for a potential sale, the valuer will note down any changes that are unusual and check that the relevant NOC was obtained.
“If the changes are not approved, the area may have to be rehabilitated to its original layout, leading to financial loss,” she adds.
Buying near potential construction sites
When buying a property, experts recommend that you look at the surrounding area and check if there are any open spaces that could potentially become construction sites for future developments.
“This can be off-putting for buyers and can cause the value of your property to fall slightly while construction is taking place,” Mr Kennelly says.
Wallpaper and brightly coloured walls can be a turn-off for prospective buyers. While it's understandable that homeowners decorate their properties to reflect their personal tastes, property experts say they should return walls to a neutral colour when it’s time to sell the home.
Mr Allsopp warns that in some cases, buyers can be put off by aesthetics and disqualify the property as a potential home. “They can’t see past the décor to imagine the home as their own,” he says.
It is also worth updating the property to ensure that it looks modern. Mr Kennelly says if a property was purchased several years ago, certain aspects will need to be refreshed. “Painting the walls and updating the kitchen or bathroom could help to ensure your property retains its value,” he says.
Going overboard for the area
Real estate experts always recommend homeowners to not go overboard with alterations as it can change the home’s comparable value in the community. This could result in the home being a pricey outlier in the area.
Owners must talk to a trusted appraiser and ask for an appraisal without improvements and another with them. If it doesn’t fetch a premium, the renovation is not of good value, experts say.
“Owners tend to over-capitalise with elaborate changes to a property, taking the capital investment to above the value usually commanded by a property in the same community,” Ms McAdam says.
She adds that each community usually has a benchmark price range and once this has been exceeded, it is not easy to re-coup additional capital outlay. “Ensure that modifications are economically viable and within the investment range for the area.”
Not landscaping the garden
Curb appeal is important when selling a property and a garden is the first thing a potential buyer will see, giving them an idea of the general attractiveness of a house.
“An overgrown or non-landscaped garden can devalue a home, especially if others in the community are kept well,” Mr Allsopp says.
Sub-letting, poor tenant upkeep
If renting your property, make sure your tenants take care of it properly. Ms McAdam warns that allowing sub-letting and increasing the unit occupancy of a property can be detrimental to the good standing and condition of a property.
“Wear and tear is normal. However, having particularly careless or destructive tenants can cause additional issues,” Mr Kennelly says.
If a potential buyer views your property with tenants like this and without any necessary repairs being carried out, it could cause the buyer to avoid purchasing the property or making an offer below the asking price, he adds.
“Make sure you arrange regular inspections to check the property’s condition on an ongoing basis so you are able to sort any maintenance and repairs before any issues worsen and cause more lasting damage,” he says.
Experts add that home sellers must arrange for easy and flexible viewing timings for potential buyers. If not, the property could be at risk of remaining on the market for longer.
Not removing clutter
When potential buyers come to view your home, it is essential to clear away clutter to make the property look as clean and spacious as possible.
“Clutter tends to make rooms look smaller and can take attention away from features in the property that are a selling point,” Mr Allsopp says.
Inflating the listing price
Sometimes owners tend to list their property for sale at a higher price to test the market for a few weeks and then reduce the price if a suitable offer does not come through.
“The risk is that the property sits on the market, which means it will take longer to sell,” Mr Allsopp says. “This can give a negative impression to potential buyers and either put them off viewing, or if they do view and are interested, lead them to coming in with lower offers.”