Monday, February 15, 2016

Tips on commercial property investment in Dubai

2015 was a year of highs and lows for almost every market, from real estate to oil. However, the UAE’s real estate market seemed to have maintained a stable trajectory, showing steady growth and offering greater choice for tenants as the emirate continues to be a global and strategic hub. While prices may have dipped, we should remember that the softening is coming in after three years of sharp price growth and should not be compared to the decline that we witnessed during the 2008-2009 crises. Moreover, it is likely that the softening of prices and price growth of commercial property in Dubai will continue into 2016 given global economic conditions, such as, the Chinese economy, the appreciating dollar and Euro Zone concerns.
Here are few property tips that savvy investors of commercial real estate might want to consider.

  1. Seek profitable tenants: As an investor, your aim would be to focus on assets that offer robust income producing potential. This means closely looking at the buildings tenants. If you are to attract high paying tenants, then reducing rents will no longer be enough. Look into asset management, manage your commercial property better than the next warehouse or office down the road and you will attract more profitable tenants.
  2. Explore other markets: Look for opportunities in global markets that have been reported to reach their peak in terms of pricing and saturation. Find the right property to invest in such primary markets and you’ll be on your way to taking advantage of high rental growth that they may offer.
  3. Understand the risk and return: When it comes to property investment in Dubai or anywhere else in the world, investing in residential property is relatively lower risk and as a consequence, offers lower returns than commercial property. Commercial property comes with higher risk as it could take months and possibly more than a year to find a new tenant for a office space, while securing a new tenant for an apartment or a villa might only take weeks.
  4. Consider maintenance costs: While upgrading a residential property in terms of a paint job or replacing floor coverings in the kitchen may not cost much, refurbishing a commercial property can be an expensive affair.
  5. Read the lease carefully: While a residential lease is short, leases for commercial property often run into 50 pages in length and generally require a solicitor to draw them up. So, read the lease carefully and if you are unsure of anything, get a legal professional to clarify it for you.

With the market maturing, 2016 is a great year for property investment in Dubai. Click here for the latest commercial property in Dubai.

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