Understanding Property Investment: Key Considerations

When it comes to purchasing properties, people have different motivations. Broadly speaking, these motivations can be categorized into two main types: "buying for investment" and "buying to live."

In this discussion, I want to shed light on some significant issues faced by those who buy property for investment purposes. Over time, I have observed many individuals making hasty decisions when it comes to investing in property. The majority rely on luck and hope that their investment choices turn out to be correct. However, it is crucial to ask yourself an important question: Why am I buying this property? If the answer is simply because everyone else is doing it and property prices are rising, it's time to reconsider.

Human nature often leads us to follow the crowd, with numbers increasing as more people join in. In financial theories, this phenomenon is known as herding. Unfortunately, the Dubai property market also fell victim to this trend. Many individuals were purchasing properties without considering the underlying factors affecting property prices. This was one of the primary reasons for the Dubai property crash and the subsequent global financial crisis.

Let's focus on property investment. The first question you should ask yourself is: In which area should I buy my property? Take the time to identify a solid reason for choosing a particular area. Create a list of different areas you are considering and jot down the reasons why you should invest in properties within those areas. Conduct thorough research, and you will soon realize that multiple factors influence property prices in specific locations.

To illustrate this point, let's examine an example from before the Dubai property crash in October 2008. Four months prior to the crash, there was a significant surge in rentals. This was due to a new government rule implemented in Dubai, known as "One Villa One Family." Prior to this rule, multiple families were sharing villas. The policy change created a surge in demand for properties. Additionally, the government decided to demolish old Stawa buildings, leaving many people without homes and causing rental prices to skyrocket. As a result, property prices also started to increase.

At Black Arrow Real Estate, we conduct extensive research on various areas in Dubai. If you require more detailed information about any specific area in Dubai, feel free to contact us at blackarrowrealestate@yahoo.com. We would be happy to assist you further.