My wife and I are considering buying a property in the UAE, either to live in ourselves or to rent out as an investment. We've been in the Emirates for three years and have held off until now. However, with prices coming down, we are now considering buying now. Will prices come down even more? Is there more supply coming in? And where do you suggest we buy? We are considering a purchase either in Abu Dhabi or Dubai. VR, Abu Dhabi
Now is always the right time to buy and trying to "time the market" (when prices are at the lowest before rising again) can be dangerous and often leads to disappointment. Speculation as to how much further prices may decline is also very subjective. Ask 10 people the same question and I’m sure you will receive 10 different answers.
During the first half of 2019, rates of decline seemed to slow down in most segments of the market; this indicates that we could be close to the bottom of the market for some areas of Dubai. Traditionally, Abu Dhabi seems to lag behind Dubai so potentially whatever happens in Dubai is often repeated in Abu Dhabi but after several months or even years later.
It is important to understand that buying an investment property is very different to buying a property to live in. While there are some common traits both sets of buyers will look for, one is generally all about potential capital appreciation, rental income and return on investment possibilities, the other more about lifestyle and amenities.
For your question, I will suggest one investment and one end user option in Dubai and Abu Dhabi from the ready market and one from the off-plan pool.
Abu Dhabi
For Abu Dhabi, the most popular areas are Saadiyat Island, Yas Island, Al Reem, Al Reef and Raha Beach. Previously foreign investors were granted leasehold arrangements with a maximum of 99 years but this changed earlier this year through a royal decree allowing freehold ownership, which was previously only available to UAE and GCC nationals.
When considering off-plan property, Abu Dhabi has excellent choices from Aldar — the capital's master developer.
For secondary market properties or off-plan, areas such as Yas Island, located 20 kilometres east of the city centre and only 15 minutes from Abu Dhabi Airport, should be considered. In this location, two-bed apartments start from Dh1.1 million and villas from Dh2.15m. Yas Island is renowned for its entertainment, being home to golf courses, Yas Waterworld, Ferrari World, Warner Bros theme park and Yas Mall.
Saadiyat Island is another popular location. Located north of the city centre, it is a 25-minute drive from Abu Dhabi airport. Two-bed apartments start from Dh1.3m and villas from Dh2.3m. Saadiyat Island is known for its culture, being home to the Louvre Abu Dhabi, Manarat Al Saadiyat, art galleries and for shopping at Galleria Mall on nearby Al Maryah island.
Lastly, Al Reem Island would be a great investment as it is located near Abu Dhabi's northeast coast and close to the National Mangrove Park. Prices for two bedroom apartments start from Dh900,000 and approximately Dh2.6m for a villa. The area has many shopping facilities including leisure facilities such as Gateway Park and Reem Central Park.
Dubai
Starting with an investment purchase, the best return on investment is often from the more affordable end of the market. Areas such as International City give you a very high rate of return, often close to 10 per cent. Secondary market prices in this area start from approximately Dh215,000 for a studio, Dh305,000 for a one-bedroom apartment and Dh520,000 for a two-bed.
International City is also home to Nakheel’s Dragon Towers — two under-construction, 37-storey towers linking Dragon Mart. They represent excellent value for investors not only from a price standpoint but running cost too, as the service charges are very low when compared to similar units elsewhere. In this project one bedroom apartments start from Dh449,000 and two-beds from Dh670,000. When it comes to capital appreciation, investors should look at what is going on in the immediate area. International City is scheduled to be linked to the Dubai Metro line and plans are afoot for a City Walk-style retail zone developed by Meraas close to Dragon Towers.
When considering a secondary market purchase for the end user, I recommend Al Furjan. This location is developing with the Metro opening up early next year linking up to the Al Maktoum International Airport and the Dubai Expo 2020 site. The immediate area is also served by excellent road developments linking Al Yalayis Street with Mohammed bin Zayed and Sheikh Zayed Road. Dubai Marina is only a 10-minute drive away. Al Furjan has apartments but also a great selection of large family villas and townhouses. Three bedroom townhouses start from approximately Dh1.7m and four-bed standalone villas are available for under Dh3m.
Mario Volpi is the sales and leasing manager at Engel & Volkers. He has worked in the property sector for 35 years in London and Dubai
The opinions expressed do not constitute legal advice and are provided for information only. Please send any questions to mario.volpi@engelvoelkers.com