Property investment has always been a lucrative opportunity over the years. And it continues to be so even amid the Covid-19 pandemic restrictions. However, more homeowners are resorting to distressed property sales. What does it mean for the real estate industry in Dubai? And how can you make the most out of it?
Dubai’s property market has always enjoyed a positive outlook, especially when Expo 2020 was already knocking at the door. However, with the current Covid-19 pandemic situation taking a toll on world economies, the real estate sector in Dubai has not been spared. Nevertheless, wiser investment options are still glimmering for those who are willing to look ahead. Moreover, real estate experts are asserting a more optimistic outlook for the industry. Meanwhile, specialists are looking at a new trend that has been emerging now – distressed property sales.
Distressed property sales
With homeowners hit by the coronavirus economic doom and gloom, Dubai is seeing an increase in distressed property sales. They are listing residential properties at a discounted price than the usual market value. Such sales often happen when the property was purchased on a mortgage and the homeowner is not facing insufficient cash flow to pay off the debt. In some cases, the property might have been seized by the bank that provided the cash for its purchase. Homeowners could also be willingly selling their properties to liquidate their assets. In either case, distressed property sales are both an investment option and a liability. While homeowners are selling their properties at a lower price, wise investors are looking for the best deals.
Why should you consider property investment now?
Market slowdown owning to the Covid-19 pandemic has taught investors one thing. The real estate sector is a viable investment option that can withstand any market conditions. While the stock markets were crashing and oil prices plummeting, the property market in Dubai withstood all odds. Additionally, with distressed property sales increasing in Dubai, buyers are going to see some of the best deals now. Moreover, experts are forecasting a real estate boom after the coronavirus impact subdues. Hence, this is the right time to consider property investment.
Finding the best property investment opportunity
Distressed property sales do not mean the property has a lower value in the market or that it is not worth keeping. It just means that the current owner is short of cashflow to maintain it. But someone’s distress is another one’s opportunity. Here’s how you should make the most out of the changing times and invest for higher returns in the long run.
As already mentioned, selling properties out of desperate needs does not mean that the property has less value in the market. On the contrary, such sales create wide scope and opportunity for the buyers with great deals to look out for. However, investors also need to keep in mind that, in certain cases, market conditions could also cause distressed sales. This could affect the actual value of the property for a longer period. Look for properties that are valued below their actual price because of its owner’s inability to maintain the asset. Try to avoid those being sold at a lower price because of market conditions. We recommend you consult a reputable and trusted real estate agent to evaluate the property on sale. This will help you ensure that you get higher returns in the future.
Mortgage vs. cash
Most distressed property sellers go for cash transactions as the urgency factor kicks in for such deals. Hence, investors with ready cash in hand are more likely to find a good deal in such cases. Buyers looking for property investment options in Dubai can also opt for a mortgage. However, it might take a couple of weeks for the mortgage to get approved, which poses a challenge if the deal is too good to wait. In either case, it is wiser to consult a real estate specialist who will be able to evaluate your financial requirements and goals. The agent will have in-depth knowledge about the property market in Dubai to suggest the best deal for you.
Just like in any other deals, ensure that all legal formalities are attended to properly before finalising the deal. It is necessary to determine the legal owners of the property. For instance, in the case of off-plan properties, the unit might still not be registered in the seller’s name, but in the developer’s name. Similarly, it is also essential to understand the nature and status of mortgage deals associated with the property, if any. Buyers need to check with the banks concerned to ensure that the selling price is sufficient for the owner to clear mortgage debts. A specialised real estate expert will be able to help you through the process.
Property investment continues to be a viable venture that wise investors would go for in hard times like these. With Dubai Expo 2020 delayed until 2021, the real estate sector is getting ready for an uplift in the post-Covid-19 era. This is because the postponement has given investors more time to look for the best deals. A mature market like Dubai also offers some of the best prices now more than ever before. This comes as an increasing number of distressed property sales. Moreover, the UAE government has also announced several incentives for boosting property investments.
The time is right and ripe for property investment in Dubai. Reputed and trustworthy real estate agents can help you navigate through the market. They can locate the best deals in line with your financial goals and requirements.
Our property consultants, licensed by the Real Estate Regulatory Authority in Dubai, will be able to help you. For expert advice and guidance, please contact us today.
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