As prices skyrocket and vacant properties are a rare commodity, ph Real Estate’s Nick Grassick argues the case for buying now to enjoy later
Oxymoron: A figure of speech that juxtaposes concepts with opposing meanings within a word or phrase that creates an ostensible self-contradiction. Or – why buyers who wish to purchase a home to live in should actually purchase a home with a tenant.
Vacant on transfer is a phrase that estate agents recognize as the mantra of those who wish to buy a home to occupy. In today’s market, this phrase also induces consternation in the majority of people I work with.
Dubai real estate is enjoying a resurgence in property values, thanks to the age-old economic dynamic of supply and demand. When there’s greater demand than supply, prices increase as buyers vie for the limited number of homes available. So, accepting there is a shortage of homes for sale limits options further still to be looking for a home that is, or will soon be, vacant.
Dubai’s property market has matured from an investor-driven, off-plan flipping, 10% month-on-month value rise environment – which I witnessed 13 years ago – to the homeowner, mortgage-backed family abode marketplace we call home.
There is always an opportunity, and (in an expat-driven economy) a need, for investors (landlords) but over the last six years, the number of mortgage-backed buyers (homeowners) has increased exponentially.
A large percentage of homes we sell are to families wanting to buy their own homes. Naturally, they want to live there as soon as they purchase; hence, vacant on transfer. Herein lies the problem.
Every buyer, whether investor or homeowner, undergoes a similar house search process.
It starts with a maximum budget and minimum size; square foot or bedrooms. It progresses to a search of communities. Once a community is settled upon, there are options regarding property layout and design. Once this decision is made, most people are confident they have reviewed enough options to make an educated decision.
Now the fun part, negotiating the best possible price…. Or, at least, that used to be the case. In such a property short market, the bartering days of yore are gone.
The pressures of finding the perfect property, in the perfect community, and within budget are compounded when trying to secure a home that’s also vacant. It stands to reason, with all the research you have undertaken to find the perfect home, another family has surely made the same decision it’s the perfect home? Only they beat you to it, and it’s now their home which they rent. The process to evict a tenant is well documented, with a twelve months’ notarized notice required if you choose to move into the property unless of course you can incentivize the tenant to vacate early.
Let’s not forget, this is currently their family home. You might ask – should you buy a property which you cannot immediately live in, perhaps not for a year?
As an estate agent for nearly thirty years, it’s reasonable to suggest I have become slightly emotionally detached from the fraught experience which can be purchasing the single most emotive and expensive object we are ever likely to own.
However, it is a realtor’s responsibility to present all options, recommendations, and facts for you to consider. If there isn’t the perfect home available for you to move into when you buy it, you may decide to wait. But how long might that wait be?
We are now marketing Dubai homes at nearly double the purchase prices seen a year ago – when the market was paralyzed with pandemic-induced fear.
We are working with clients who are (some might say understandably) so insistent on only buying a home they can move into, that they have watched the market increase by hundreds of thousands of dirhams over a few months.
So why not decide what your perfect home, in the perfect community looks like, and then keep an open mind regarding when you can move in? If you are buying a home to live in, you are likely renting yourselves. You can continue to rent and enjoy the home you’ve enjoyed until now. Mortgage payments on your new home will be offset by rent received from your inherited tenant. In some instances, this can be a lump sum enjoyed, or deducted from the purchase price, upon transfer. This may seem convoluted, but then you’ll be on a rising property ladder. A ladder that hasn’t moved this fast for a decade – and that run lasted three years. It may not be ideal, but then oxymorons are designed to be self-contradictory. This oxymoron may also save you a considerable amount of money.