Take one standard villa in The Meadows. Add marble floors, bathrooms, new fixtures and fittings. Re-sell as a Hattan-standard Meadows villa. Capital gain will be considerable.
Look around a compound in The Meadows – Emaar Properties development next to Emirates Hills for Dubai based executives and entrepreneurs – and you will note endless evidence of building works-in-progress. It appears that some folks are re-building their homes.
What is happening? Was the standard of construction that bad? Actually, it turns out this is not the reason. The vast majority of buyers are very happy with what they got for their money. No, rather this is another example of entrepreneurial flair in Dubai.
Canny buyers have noticed that properties in the Hattan estates nearby sell for at a substantial premium to The Meadows and yet the interior space is very much the same size with a similar lay-out. The Hattan villas also often have a swimming pool in their nicely landscaped gardens.
Thus somebody one day asked the question: how much does it cost to turn a Meadows villa into a Hattan?
Several UAE nationals seem to have been the first to spot this opportunity. Neighbors were initially aghast at what looked like amazing extravagance as the interior of a new Meadows' villa was stripped out and replaced. They only twigged when the owners sold the property on straight away and a new couple moved in.
So what are the likely profits on 'Hattanizing' a Meadows' villa? As ever those that got their first probably made the biggest profits. Contractors have put their prices up, and the re-sale market may not be as strong as it was a few months ago.
However, we are talking quite large numbers. Buy a five-bed Meadows villa for $650,000 and the same villa as a Meadows-Hattan-style will re-sell for $1.2-1.3 million. A good conversion will set you back $150,000, so this is a cool way to make half-a-million dollars.
Of course, this is bound to catch on. But the basic market anomaly is there to be exploited. It is a fact that The Meadows villas were sold with a very standard finish. Upgrading that finish makes sense given the excellent location of The Meadows villas – and the lack of land to build anymore.
Perhaps within a few years micro-developers will have upgraded the entire Meadows' estate of 2,000 villas into Hattan-style residences. With so much Dubai real estate being built to luxury standards, this is one of the few opportunities currently available for the smaller real estate entrepreneur to add value to a property here.