With prices and rental yields falling in the area, the reader wants to know whether to accept a lower offer for his two studio apartments
Homefront: Should International City investor sell his two units at a loss or wait it out?
I bought two studios in International City in 2014: one for Dh392,000 and another for Dh372,000 in June 2014. In anticipation of a price increase this year, I held on to these investments but unfortunately the prices seem to be continuously dropping. In lieu of the current situation, and with so much of supply coming in, do you still recommend holding on to these investments or should they be sold right away. Even the rental yield has dropped from 9 per cent to 7 per cent for this area. I have an offer for both the units for Dh350,000 each. What action should I take? AK, Dubai
It is true that for the rest of this year and perhaps even into 2018, residential sale prices on the secondary market will experience further softening. This is mainly due to the many options available in the off plan primary market, along with exceptionally generous payment plans and post payment plans.
The answer as to whether to hold on or sell your units, given you have buyers for both, lies not in my recommendation but in your situation. If you require any immediate injection of money then go ahead and sell, if however you bought the apartments as long-term investments, I would hold onto them, at least until Expo 2020.
Property values, much like stocks and shares, go up and down therefore timing of when to transact or hold is the key.
The future looks rosy given the government spending plans on the infrastructure and the positioning of Dubai as a tourist destination of choice. This coupled with the Expo will highlight Dubai as a safe and investor-friendly city which again, if you hold onto your properties for a longer period, will mean you will not have to sell at a loss in the future and will have still enjoyed your return on investment. Even if this has reduced from 9 to 7 per cent, it still represents excellent returns compared to other cities.
Read more from Mario Volpi:
Can a non-resident of the UAE or a non-working resident purchase property in Dubai? So, say a resident of another country wishes to purchase a property in Dubai as an investment, what would be the requirements? GB, Dubai
It is indeed possible for you to buy a property in Dubai without being a resident. If you choose to buy with cash it is very straightforward; you can also avail yourself with finance too but banks will only lend a maximum of 50 per cent of the purchase price so bear this in mind.
The easiest way to proceed would be to engage the services of a Rera-registered (Real Estate Regulatory Agency) estate agency, sign the statutory Form B with the agency (this is effectively the agreement between you and the agency to find you your property) and give them all the requirements needed such as location, size and type of property you are looking for then let them do their work.
You do not have to be present, properties can be bought without you being here but in this case you will have to appoint a power of attorney to act on your behalf. Alternatively you will need to visit for viewings, to sign the no objection certificate and of course the final transfer. Once you have selected your property and agreed a price with the seller, the agency will organise a form F (sales contract) that you must sign before paying a 10 per cent of the sale price as a deposit. The seller will have to pay off all outstanding service charges and apply for the NOC from the developer. Once the NOC is ready, the transfer can take place. The whole process, if bought by cash, can take less than a week but perhaps allow a two-week period in case of delays. The process takes a while longer if the purchase is being done with a mortgage.
Mario Volpi is the chief sales officer for Kensington Exclusive Properties and has worked in the property industry for over 30 years in London and Dubai. The opinions expressed do not constitute legal advice and are provided for information only. Please send any questions to firstname.lastname@example.org