Homefront: ‘I have achieved break-even on my property. Do I sell now or hold on to it?’

I bought a studio apartment in Abu Dhabi for Dh950,000 in 2014. It was a full cash payment. The property is now worth a maximum of Dh600,000. In the meantime, I have earned net rent (excluding service fees) of at least Dh400,000 on the unit. The apartment has been leased until November 2021.

If I were to sell the unit now, it would amount to a break-even on the purchase price, considering the property's current reduced value and the amount earned in rent. What should I do: sell the unit or hold it? PP, Abu Dhabi

There are many factors to consider when replying to your request and, of course, only you know those answers. I would, however, like to comment on what we do know. Property prices have unfortunately been steadily reducing since the peak of the spring and summer period of 2014 and the valuation of your property is now in line with the percentage drop seen during these past six years.

The real question is how will property prices perform in the future? Your vision of this will determine whether selling now or holding on for possible future gains is the right decision for you.

Obviously, any buyer of an investment property will look to cash out at some point, and property is a great vehicle for this when times are good.

If you can hold on to the investment, it is obvious that prices will rise again sometime in the future. However, when that time will be is not guaranteed. I believe that next year will see some positive price movements, particularly considering that the breakthrough in Covid-19 vaccines will help to calm people globally and the world economy in general.

Next year has an added incentive for the UAE. This will manifest in the form of the country’s golden jubilee. The UAE will be 50 years old in 2021. The year also coincides with Dubai Expo 2020, which will take place from October 1, 2021, and last for six months.

Although we may have to endure one more year of general uncertainty, by the end of 2021, the property market should have started to improve in terms of capital appreciation. Therefore, I would advise you to hold on to your investment if possible until then.

Mario Volpi is the sales and leasing manager at Engel & Volkers. He has worked in the property sector for more than 35 years in London and Dubai. The opinions expressed do not constitute legal advice and are provided for information only. Please send any questions to mario.volpi@engelvoelkers.com