Dubai Forums Dubai Expat Forums Accommodation in Dubai

Hi,

I am moving to Dubai later this year and have a few questions:


1. Three years ago I bought a 2 Bed apartment on the Palm Jumeirah. What sort of rental do you think I will get for my 2 bed (sea view) apartment ? (when / if its ready!)

2. What do you think of the current state of the property market. I have read, with great interest, the many posts on this subject over the last 6 months. Most of which tend to have said that the market is very volatile and is likely to suffer a significant deflation soon. However, each month that passes I have seen the prices continuing to rise. As an example, I really like the "Jumeirah Islands" properties and have seen the 4 bed homes there go up by around 15-20% in the last 3 months alone! The fear is obvious. You don't buy soon and when you do decide, prices have risen so far that you can no longer afford that dream home. The opposing fear is buying at the top of the market and all the dangers that go with it.

I am thinking of buying another property in dubai, to live in, and renting the Palm property out.

3. Has life in Dubai changed a lot in the last six months? I notice views and opinions of Dubai, both on this site and many others, getting more and more negative.

Any views and opinions greatly appreciated

Im not in Dubai yet but I do work in property development and have several investment properties already so I do have a clue or two ..... any time is a good time to buy property just that the strategy needs to be different.

I suggest read a few books about investing .... a good one that comes to mind is 7 money secrets of the wealthy by John Burley. He explains different strategies for rising, falling and stagnant markets. You also need to decide if you are investing for cashflow (to provide a passive income so that you can stop working) or capital gains as the two strategies can be very different.

Do your research, learn your market like the back of your hand and then take action.

ajb gave some good general advice, i will try to give you some more specific advice to Dubai. However i know there are much more capable people on this forum to give you better.

The market is at an interesting stage rigth now, soon many properties will be nearing completion and thats when the real test to the market will happen. Are all those speculators who bought wont have the money to pay up the rest of the price which is due upon completion and scramble to sell the property causing a huge supply rush ? or will those properties get quickly rented out and keep the demand wanting more ? These are some of the questions every property investor is asking him/herself right now.

If you are not looking for risk, i would say sell your palm property now and wait and see what happens over the next 6 to 9 months and then decide what you want to do. If you are ready to take the risk hold on to your palm property but hold off on buying a new one till the completion dates of the properties comes (which is 2007 for many projects in dubai right now) ..

That being said, Jumeirah lakes is one of the projects that people have been always praising and could be one of those projects that even if a devaluation happens it wont be affected that much.

so yeah its not simple, that was just my two fils i am sure others might disagree and/or have better advice. Anyway keep us updated with what you decide and wish you best of luck either way !!!

I realizxed i only answered #2 .. so i will take a stab at #1 and #3

1) A two bedroom in the Greens is 120,000 dhs right now. Now keep in mind the Greens has no sea view and is on the other side of sheikh zayed road. And is not on a man made presitigious hyped up project around the world. If things go the way they are i can say you will _easily_ rent it out for 150,000 dhs a year. But thats just an educated guess

3) Growth pains. Thats how i would sum it. People do princess alot .. but the city is growing so fast and the people are feeling the pain. But i personally think Dubai is beyond the point where it would "fail" .. but the things that attract people to Dubai are still there and i dont see them going anytime soon. The prices increase is getting annoying and who knows it might be a an intended thing to filter out the middle class and make dubai a playground for the rich and all those who service them and lose that hard working middle class to sharjah

Maad, I have a hard time viewing Sharjah a middle class haven....

My personal opinion is NO DO NOT buy anything at the moment.

Currently the sales market is starting to separate from the rental market.

The rental market is still stong because supply is outstripping demand.

The sales market has reached its peak and is now starting to take a dip. It is not true that prices are rising, in fact it's the opposite, prices have already started to come down.

Emaar are selling at 4% deposit with 96% mortgages fixed @ 6.5%, Damac are giving away studios with some properties. The indicators are there, when developers need to offer incentive for people to buy, it show the market demand has dwindled.

The short term rental market is good, but i have serious concerns that it will remain at its current level, and i believe as more properties come online, the competition created by more availability will drive down rental costs.

If you are not moving to DXB in the short term i would give serious consideration to dumping off any palm properties now. I dumped mine off because i have serious concerns over the management charges needed to maintain the palm infrastucture.

The rental and demand on the palm will initially be high, but you must remember the managesment charges when set, will eat heavilly into your income.

Thanks for your opinions

Very interesting.

One of my concerns is the JBR development and the effect this will have on the market when it is complete. I know this has been discussed many times on this site, so I won't go into it again!

ArnieGang - With reference to the service charges on the Palm, I have heard many rumours that they will be very high, for many reasons, including that the beaches will need constant rebuilding. You have obviosuly done your research and think this will be the case.

If we assume prices are going to drop, what area/s does anyone think will be more resilient to price drops?

arniegang wrote:
If you are not moving to DXB in the short term i would give serious consideration to dumping off any palm properties now. I dumped mine off because i have serious concerns over the management charges needed to maintain the palm infrastucture.

The rental and demand on the palm will initially be high, but you must remember the managesment charges when set, will eat heavilly into your income.

Hi Arniegange. I was just rereading your reply. If you think the initial demand for the properties will be high, once they are built, why did you not wait until then and then sell? (not criticising, just intrigued)

Thanks

Questions are being asked if the market can fuel not the property purchases, but the expected rent the owners of these properties will be asking for.

150,000 AED is asking a lot imho and when supply starts to pull ahead of demand rent will begin to decline. What then for the future of the market?

YabbaYabba wrote:
If we assume prices are going to drop, what area/s does anyone think will be more resilient to price drops?

I feel the developments that have focused on quality will maintain there prices. Green Community is one that comes to mind.

Also the top end (more expensive) properties are usually alot more volatile in price (both increases and decreases) than smaller cheaper properties.

What are the population demographics over there? As in what is the most popular style of home and how is the family living in it made up. In NZ I do not stray from 3 bedroom family homes very often as they are the most sort after style of accommodation in NZ. Would be interesting to know what the equivalent is in Dubai?

YabbaYabba wrote:

arniegang wrote:
If you are not moving to DXB in the short term i would give serious consideration to dumping off any palm properties now. I dumped mine off because i have serious concerns over the management charges needed to maintain the palm infrastucture.

The rental and demand on the palm will initially be high, but you must remember the managesment charges when set, will eat heavilly into your income.

Hi Arniegange. I was just rereading your reply. If you think the initial demand for the properties will be high, once they are built, why did you not wait until then and then sell? (not criticising, just intrigued)

Thanks

I sold my "options" and doubled my money so i was very happy. The reason i didnt want to complete was that Nakheel were digging their heels in regarding the estimated management charges.

Like Emaar part of the final payment and completion process is that to take possession of the property the management fee's will have to to be paid annually in advance.

Having carefully watched and investigated the problems they have had with errosion of the "fonds" "trunk and breakwater, i believe Nakheel are waiting till the very last minute to announce the maangement charges.

They are, as we all are aware the errosion will be a major issue, and it look like they wil have to retain at least one dredger and one "rainbow" boat, possibly 2, to maintain the shoreline. This cost will be horrendous.

YabbaYabba wrote:Thanks for your opinions

Very interesting.

One of my concerns is the JBR development and the effect this will have on the market when it is complete. I know this has been discussed many times on this site, so I won't go into it again!

ArnieGang - With reference to the service charges on the Palm, I have heard many rumours that they will be very high, for many reasons, including that the beaches will need constant rebuilding. You have obviosuly done your research and think this will be the case.

If we assume prices are going to drop, what area/s does anyone think will be more resilient to price drops?

Obviously you know my views on the effect JBR will have on the market.

You ask about resilience to price drops, my personal opinion will be the mid to lower end of the villa market with 3 or 4 beds. The Springs and Meadows and possibly Arabian Ranches i believe will ride through any slump in the market, or at the very least have the best chance in terms of a % drop in sale prices.