10 Problems People Face when Investing in Dubai Real Estate
Thinking about buying a property in Dubai or already in the process? These are the problems you’ll face. Be Prepared!
Should I invest in Dubai Real Estate?
Recognize that Dubai is here to stay, the real estate market is maturing and even if you feel you missed the boat, do not continue missing the boat.
A lot of people didn’t invest back in 2003, nor in 2011 when historically prices were lower than subsequent years. They didn’t even invest in 2008/2009 during the severe crash. Each time the excuses are several, prices are too high, prices may fall, the timing isn’t right…and on and on.
If you are planning on staying in Dubai for any number of years, then you know that Dubai is continuing to grow, it moves two steps back to regain composure and then leaps five steps forward.
In my opinion; if you haven’t invested already, and you’ve missed it before, don’t miss it again.
- Finding the right Agent:
Talk to Agents, interview them (at least three), to ideally identify an Agent who is honest and competent. Both, not just one, but both honest and competent.
I can’t emphasize this enough. Imagine if your Agent is very honest, yet highly incompetent.
Lastly, but not least, after assessing and interviewing do trust your gut feeling and instinct. If an Agent doesn’t feel right or seems incompetent and lazy, fire him and re-hire.
- Not knowing your end objective
It is a problem if you enter the world of real estate investment with confused objectives.
If you are going solely to rent out the property, then it’s a pure investment where as if you plan on living in the property some years later, it confuses your buying decision today.
I once had an investor who wanted to marry, have children and then in a 5 year period live in the same property, hence he kept looking for a suitably large house, with bigger rooms, etc.
Once we clarified that this is going to be an investment property, we were quickly able to assess the property on the right criteria, avoid confusion and take advantage of the right deals.
- Last Minute Expenses
One of the biggest mistakes buyer and agents make is they don’t go thru all the expenses and who is responsible for which fee at the beginning of the transaction.
I do this with my clients in the first Strategy Consultation, I list and explain ALL (I don’t assume that they’ll know) expenses. Most Agents assume that a client would already be aware of these, however it can lead to problems later, as the Dubai market is peculiar and unique.
- Good Quality vs. Bad Quality
The Dubai market and quality of construction is evolving. The early buildings and villas from 2003 or 2004 were built in haste (perhaps) or oversight of quality was lacking so to speak.
Much has improved since then, however the problem of assessing quality still exists. One way to overcome this is by visiting the property and then having an experienced license inspection company look in places you and your Agent would definitely miss with the naked eye, like the AC ducts, electrical wiring and so on.
- Getting Fooled
Ever felt like you paid extra or over asking price? It still happens in the Dubai Real Estate market. Unscrupulous Agents do exist.
However the market is fairly transparent, data and information is at your fingertips, hence avoiding a bad deal is somewhat in your hands as well.
For total protection, use a trustworthy and experienced Agent who understands the games that are played and can position to protect you.
- Paper work
After a property deal is verbally agreed, it must be signed by both the buyer and the seller and supported with an agreement, other relevant documents.
This paper work is still prepared and performed by Agents. Some have MBAs from top universities and some have barely passed grade 10. So you imagine the quality of paperwork that sometimes comes about. Either use an Agent that has in house legal help or can guide you to a good law firm.
Also note that as was the case many years ago, an Agreement between the buyer and seller does not amount to Property Registration which is the process of registering the property in the government register at the Dubai Land Department. Be aware.
- No money planning (Short on Cash)
This happens and when it does it can hurt.
I carried out a transaction 5 years ago, where the couple bought a home to live in (they are very happy with the purchase). Lo and behold on the day of transfer the wife took me to the side and explained that if they paid the entire broker’s fee, they wouldn’t have any money left for groceries that month.
Obviously I let them pay the following month, but avoid such problems, because nobody needs financial stress (that can be easily avoided) with some extra planning.
- Non-Expert Advice
In real estate there is a plethora of advice given by experts, colleagues, professionals, friends, market watchers, real estate agents, newspaper columnists, neighbors you meet in the elevator and so on.
Some are coming from experience and their advice is sound.
And some repeat what they have read or heard from others, which is not so sound. The market has too much noise — buy, buy now, sell, don’t buy, wait 6 more months, the sky is falling, etc. — which does not allow for fair and reasoned judgement.
Solve this problem; don’t lend your ear to non-experts.
Is it the Right Time?
If you approach investing with the ‘’is the time right”? Mindset, it becomes a bigger problem as time goes by.
There is no right time; times keep changing. There is no right price; price goes up and price comes down.
Instead, Value is what you should be looking for. What remains – is value. When you buy value; it lasts.
I’ll be releasing shortly a mini-series with short videos on how to identify the best townhouse investment in Dubai. Stay tuned and subscribe.
Speak soon,
Fahd Dawood
CEO | FD Global Properties
+971 55 421 8943
Author: “The Intelligent Real Estate Investor”
YouTube: Fahd Dawood