With the global pandemic affecting one and all, many people are wondering whether it is the right time to invest in Dubai’s real estate
market. Although the economy is suffering due to COVID-19 but those who have their investments ready, they can take the plunge and buy a property they have been eyeing for a long time. The best part for property buyers now is the reduced rates. With some smart negotiation, you may be able to get a 15% or 20% discount on the asking value of the property.
Such offers are not only limited to off-plan projects; the secondary market also has lucrative opportunities for investors. They can now add more properties to their portfolio by investing in more projects that are available at affordable rates on flexible payment terms. Furthermore, sellers/developers are also offering certain incentives to interested buyers or investors.
Industry experts believe that developers may offer more flexibility with regards to price and terms for investors in current times. Particularly those who are in a dire need to liquidate their assets, they may be willing to negotiate the price a little more as well.
It is to be noted that it is not only this requirement of sellers that have led to an increase in the number of property-related transactions in Dubai. The facility of completing transactions remotely provided by Dubai Land Department (DLD) has also contributed in this regard. It has enabled buyers and sellers to complete a transaction while following the new social distancing norms to mitigate the risk of the novel coronavirus.
A Shift in Demand in Dubai Property
Before the world was hit by this pandemic, smaller units remained top on the preference list for buyers due to the possibility of yielding high returns on them. However, in current times, there has been a shift in interest of buyers noted. They are now inclined towards comparatively bigger properties having adequate breathing spaces. In simple words, the demand for villas has increased. The reason cited for this shift in demand is the fact that people are asked to stay indoors. With little to no outdoor space in apartments, people living in them found it hard to pass this self-isolation time. Many real estate firms have reported receiving increased queries for bigger residences having outdoor spaces particularly villas.
This increased demand for villas has led many people looking out for villa communities in Dubai. You can also find some best value villas in the following top communities.
Pre-COVID Situation of Villas in Dubai
As per real estate experts, sales and buyers’ activity recorded a notable surge before COVID-19. The price of villas was lower as compared to what they were 5 years ago. This had led to increased interest of investors and buyers towards these properties. More people are now exploring opportunities for villas for sale in Dubai.
Change in Loan-to-Value (LTV)
In order to facilitate the buyers, LTV has also been increased to 80% from 75%. This implies that the buyer will have to pay only 20% amount while the rest will be borne by the mortgagee. An increased LTV alleviates the burden on the buyer’s pocket. It enables them to invest in a relatively large property that provides them with ample space to live and breathe even if the circumstances force them to stay indoors for an enhanced period.
Wait & See Approach
Despite lucrative offers from sellers and guaranteed high returns, some investors are adopting a ‘wait & see’ approach. The reason for adopting this approach is the difficulty they will face in managing funds in case of employment termination, declining business, salary cuts, etc. A sense of hesitance has been observed among buyers as they want to be prepared in advance for such circumstances.
Opportunities for Cash-Rich Investors
Real estate experts recommend cash-rich investors to opt for ready properties developed by top developers
. These developments must be located in central areas to hold better prospects for them as they have increased chances of maintaining occupancy levels.
Chances of Distress Deals
The experts do not rule out the chances of distress deals. They believe the secondary market is going to witness such deals. However, they are also of the view that property values in the country have been witnessing a decline since 2014. So, the wholesale price isn’t expected to drop in the near future.
Some developers are offering a guaranteed minimum of 8% returns on their properties. This is an offer made to lure in investors and sign the deal with them. However, this guarantee comes with certain conditions as well. Property experts believe that each developer honours this guarantee in their own way.
Attractive Opportunities in Off-Plan Market
Experts believe that the off-plan market also has some attractive opportunities for investors. These offers come with favourable incentives for buyers to facilitate them as they are already facing constraints related to cash flow. They are of the view that it is not only the price of the property that has the potential to be negotiated. There are various other variables that can come into the play. These include an extension of the payment plan, waiving of DLD fee, getting relief for service fee, etc.
For investors, a piece of advice from experts is to invest in selective units having extraordinary features. For example, instead of investing their money in a regular apartment with conveniently available amenities, they should opt for a property that features facilities that aren’t available easily such as full golf course view, full sea view, unobstructed views of a prominent landmark, etc. The reason why it is recommended to invest in such properties is that they are accessible to selected few only i.e. wealthy people. Therefore, their demand doesn’t get greatly impacted by what’s happening in the normal market conditions.