Dear Design Architect,
Some interesting comments posted and from what I gather it would appear you are on the sidelines wondering if you should buy or not...correct? Your concern is
that perhaps in a couple of years (more or less) the property bubble will burst.
First let me say it is not people "smarter" that can answer the question, but it is perhaps ones that are better informed.
To understand a property market you need know the fundamental elements that fuel it. Lets look at the recent past first...
The Middle-East, Dubai included has benefited from record oil prices fueling (pardon the pun ) the economy.
Statistics from the Colliers report indicating a 78% in the year to the first quarter 2008.
The demand for properties is higher than supply which means completed properties can command a premium. This also fuels the secondary market.
Dubai has established itself as a financial hub and global city, this in itself attracts further investment.
The Dirham is still linked to the dollar.
Prices compared to the global market are still low.
So yes, eventually there will be a "correction" as all property markets go through a cycle. The question is when?...my money would be on a few years down the road, but even this should not be cause for alarm.
If you are planning on staying in Dubai for a few more years...then buy. Remember it is the price you buy for and then ultimately what you sell for that will determine if your investment was a good one. The buying price is a key factor.
Take a simple example.
You rent at Dhs 100,00 per annum ( fixed for 5 years )
Thats
500,000 you have
LOST. ( Yes its that simple )
Instead you decide to buy. ( You have a 100,000 saved ) or less, as a deposit
You find a property for 1,000,000 ( lucky you )
You have arranged a mortgage for 25 years ( Your monthly repayments would be around 6,400 for principle and profit for the remaing 900,000. So if your company is paying the rent they are effectively buying your home for you, even better.
Assuming a very modest 10% increase over five years then the same property would be worth Dhs1,610,000. However at current rates you will achieve this a under two years.
If five years you decide to sell and leave Dubai. You sell for Dhs 1,600,000 you deduct the balance of your mortgage Dhs 500,000 leaving you Dhs 1,100,000.
The above is only rounded off and does not consider inflationary costs.
but the point is renting is money down the drain....unless you are the landlord.
Quote:
Originally Posted by Design Architect
Dear All,
I can't help you with my comments on what to do, but I'm thinking that people smarter than me would fill this post.
Let's be smart - and take advantage of all situations that's going to happen
Bursting or no bursting...
Cheers
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