Investing in International City

[stumbled]

If i may ask what are the current lending rates in Dubai on these projects and which ones are the best???

[wayneis]

Have to get back to you on that one

Barclay's was variable no fixed rate available 7.25 % then I was told 7.95%
Not impressed with the service, no written notice verbal request and then the person could not answer simple questions promised to get back but did not.

Banks here in Dubai do not have a good reputation for service to the customer.
I have dealt with Citi Bank, Mashreq Bank and HSBC all have their faults.

Providing outstanding Service unfortunately is a trait I have yet to encounter.

[martinm]

what happens if you dont borrow to buy, but buy the property out right ?

[DianeLouise]

[QUOTE=stumbled]I am humbled by your comments Diane, with all due respect i am entitled to an opinion?


Hi Stumbled,

Of course you are entitled to your opinions, and I look forward to reading them, surely that's the whole idea of a forum.
It seems the only thing we disagree on is whether or not IC is a good investment. I know there are better developments out there, this will always be the case, but IC can very easily be made to work for you, which is why I still think it is great.
I also remember the days of 15-18% yeilds, but have not seen this for many years. Do you know of anywhere, where this is still achieveable?

[stumbled]

Originally Posted by martinm

what happens if you dont borrow to buy, but buy the property out right ?

Martin there is nothing wrong it's absolutely fine AND a very good question. But, when you become a landlord with multiple properties your cash can be spread as deposits and use the facility to buy more and borrow more,be the best at what you do. Property is an expensive business and not many have the cash to buy 10-20 properties outright.
When you spread your money the yield also increases and the interest on the borrowed money can be offset against your rental return, make sure its only the interest you offset. IR is targeting alot of landlords who have offset the capital return too(landlords are greedy people, give them an inch and they want a yard), so it also makes more sense to have an interest only repayment mortgage. IR can back track 6 years.

Let me show you how spreding costs makes miracles on rentals.

ASSUMING...cost of property 1000 dhs with 10% yield and borrowing we will take at 7.5% on the higher side.

(A) buys the property out right for 1000 dhs and makes 10% on it =100 dhs and pays more tax as he cannot offset the interest on rental income.Becomes very disadvantaged if he is in the 40% tax bracket.

(B) Borrows 50 % of the money and so he can buy 2 properties and still yield 10 % like (A)'s.

1000@10%=100-37.5(interest@7.5%on 500 which was borrowed)=62.5dhs profit on first and second properties=125dhs combined profit from both the properties ,plus he can offset the interest on his rentals..hmmmmm. SO (B) EARNS=12.5% on his return. Now, if you spread the cost further to 3 properties and invest 33.33%of your investment in each property and buy 3 properties ,your profits jump to an incredible 15% on retal income alone, not to mention the capital appreciation would pay off the loans on the 3 properties.SO MORE PROFITS BY SPREADING THE COSTs, FANTASTIC EH!!
Now, my friend i hope you see the power of spreading the costs. Ill send you a bill for this.Like they say you live and learn. May be we should make this into a thread as spreading costs OR DO YOUR HOMEWORK

[stumbled]

[QUOTE=DianeLouise]

Originally Posted by stumbled

I am humbled by your comments Diane, with all due respect i am entitled to an opinion?


Hi Stumbled,

Of course you are entitled to your opinions, and I look forward to reading them, surely that's the whole idea of a forum.
It seems the only thing we disagree on is whether or not IC is a good investment. I know there are better developments out there, this will always be the case, but IC can very easily be made to work for you, which is why I still think it is great.
I also remember the days of 15-18% yeilds, but have not seen this for many years. Do you know of anywhere, where this is still achieveable?

Yes Diane, it can be achieved in Dubai if you spread your costs as my previous workings show and work most tax efficiently too.
My view isn't based on IC alone it is on the whole property scenario as i research the world for greener pastuers, i even said if you get 8%-10% on your cash returns in NZ wouldn't it be best?? I was just comparing the income from IC which seems like the best investments for landlords at the moment and hence if you notice i tried to test the waters by trying to buy 2 properties.
But, Nakheel playing the game of baking the cake and eating it has spoilt it for the majority,still compared to something finished and there to buy-to-let and live, it still of best VALUE FOR MONEY compared to marina,springs..etcetc. Lets not forget this(NAKHEEL) is a government owned company trying to squeeze the investor to the max,making rental profits by retaining 15% stock,capital gain profits it will make,service charges..etcetc...i am sorry but I don't like GREED,and this is only happening in IC project,none of the other developments had this sting where the developer stunted its growth. If the public knows Nakheel has 15% stock and they are advertising 32k for studios and 42k for 1 beds, whats left for people like you and me??with a few sectors still handing over. Lets not forget 10.5/sqft(initially set at around dhs7) charges,management,voids,commuting to and fro,mortgage rates if its borrowed money...etc etc. Their charges are even the higest if you want a residence visa based on your investments....THIEF!!

The days of 15-18% will not be seen by this generation, i know thats damn pessimistic, but you got that idea from my first post.
May be we will tell our kids eh...once upon a time there was a time of plenty...then China and India...and the story continues...

[stumbled]

Originally Posted by wayneis

Have to get back to you on that one

Barclay's was variable no fixed rate available 7.25 % then I was told 7.95%
Not impressed with the service, no written notice verbal request and then the person could not answer simple questions promised to get back but did not.

Banks here in Dubai do not have a good reputation for service to the customer.
I have dealt with Citi Bank, Mashreq Bank and HSBC all have their faults.

Providing outstanding Service unfortunately is a trait I have yet to encounter.

Thank you very much for the information. It certainly helps plan if one were to raise a capital.

The only way I see profitable now would be releasing equity on your home in the UK @5.12% fixed for 2 years . But, that would be the most inefficient way.

You see most banks out there are no longer working for customers they are working for the share holders ,its all about profits and share prices and bonuses. Sadly, Dubai which has the best service industry in the world, has one of the worst banking services. This could be because people don't have that many rights out there like financial ombudsman ,trading standard etc etc, people allow themselves to be trampled and the UAE government lets them have that free hand. In the UK ,we have terrible service in many depts. but banks certainly have to fight for your custom, not to mention they still work for the share holders.

[eyeC]

just to add smthing
1)prices in IC or any other property here in dubai can only go up if rent goes up so how much more can rent prices go up
2)many developments going to be finished in two years time(large ones too)
so how much will your property be worth if you cant rent it or with lower rent
3)ten times net income is max you should pay for a property unless your calculations are future based(future=unknown)
4)thoughts on world economy .....too much cash floating around the world, governments are printing money like anything so what ever you buy will eventually go up

[martinm]

thats for the info.

[stumbled]

Dollar and Dirham hitting an all time low against major currencies, where is this decline going to stop?

£1= 7.47 dirhams(today).....£1=10 dhs??is it possible or how soon??

This could be a boon for the dubai property market with its currecy going down more funds coming in from abroad, but...which is a big but, borrowing costs are going through the roof, so the huge affordibility factor comes in.

With prices not going anywhere, rents on the hold, currency going down, inflation at record levels and borrowings going to sky rocket even more, where will this market go??

SO IS DUBAI PROPERTY STILL LOOKING ROSEY AS IT WAS 3 YEARS AGO OR 3 MONTH AGO??