Question: What are your thoughts on buying a property at Dh1 million ($272,260) now with the hope that I can flip it for between Dh1.2 million and Dh1.5 million?
A builder launches a bunch of properties in the same location, they will have a lot more units available. Why should I buy now?
If the argument is that in a couple of years, the same builder would have bumped up the price to Dh1.5 million to Dh1.7 million where I try to flip it for Dh1.3 million to Dh1.5 million by the time it is handed over, in that case, there is always a cut-off beyond which the prices will not be bumped up, meaning, the same property after five or seven years cannot be sold for Dh5 million to Dh6 million.
What is your take on this? JT, Dubai
Answer: Buying a property for purely investment purposes and expecting its value to go up quickly is risky because when the market does go up, it typically doesn’t do so at great speed.
Property price inflation during a buoyant real estate market takes many, many months, in fact years to appreciate, and then there are several factors to consider. Your point of more inventory is a fair one, but that’s why any investor should look for distinctiveness in the unit they are buying.
Try where possible to buy something that has some uniqueness about it. This way, it will stand out when you come to sell. There have been clear winners among anyone who bought in the past three to four years, especially those who bought at the end of the pandemic.
But buying just to sell quickly or flipping, as some call it, can be risky especially if the investor is not able to hold on to the unit long enough, or in the case of an off-plan property, is not able to keep up with the payment plan milestones. This is how investors get into trouble when entering into the real estate investing game.
My advice to anyone wishing to invest in property, especially if it is to then sell at a later date, is to buy well and by this, I mean to do your due diligence on many factors.
Look into the location of the unit, the facilities within the building or community and surrounding areas. The transport infrastructure, is it near a metro or tram station or good access to road links. What amenities are around? Is it close to landmarks or tourist attractions? Does it have a view? Are high quality materials used? What is the reputation and history of the developer?
These and more need to be considered and if all these points are answered positively, then go ahead and buy what you can afford.
The Dubai real estate market is presently on an upwards trajectory, but again, caution is needed because what goes up can also come down. The question is when is that likely and that’s anyone’s guess.
Q: I'm facing an issue with my current landlord (a real estate agency) in Abu Dhabi. My current tenancy started on March 10 last year and is ending on March 9 this year. On January 8, the agency sent me an email asking whether I want to renew the contract, to which I replied on January 11 saying I want to renew the contract. On January 14, the agency sent me an email saying the landlord wants to increase the rent by 5 per cent and sent me a renewal offer letter of intent (letter validity: 14 days). On January 22, I replied accepting and signing the renewal letter, but the next day the agency sent me an email saying it does not want to renew the contract and asked me to vacate the property by March 9.
I have tried contacting the agency since then, with no reply.
I know the law requires two months of advance notice for either rent increase or not renewing the contract, so I believe I don't risk eviction, but still my wife and I are stressed about this situation.
Are they entitled not to renew the contract with less than two months advance notice? How can I ensure my tenant rights are protected? GG, Abu Dhabi
A: A landlord can change his mind about things, but when it comes to not renewing the contract, the law is clear, two months’ notice is required to evict a tenant in Abu Dhabi. So, despite his change of heart, you ought to be protected, but I presume only if you file a case at the rent dispute centre.
At this point, it’s all about negotiations. The law is on your side, but owners can sometimes be difficult, so trying to get an agreement before having to go further is preferable.
My advice, therefore, would be to try to arrange a face-to-face meeting with the landlord to ensure your rights are protected. Failing all of this, your only other recourse would be to file a case at the rental dispute centre. You can contact the judicial department at info@adjd.gov.ae.
The opinions expressed do not constitute legal advice and are provided for information only. Please send any questions to mario@novviproperties.com
