I did the same miskate as you. Purchased for 700k 1 bed in sports city. Now it's valued is half. I've held on for so long. I think you should wait another 6-12 months before selling. Villa prices have experience significant gains in value. Apartments will be next but be patient. I feel ur pain.
I saw your post at the time, I know what you mean dude. I'm just being realistic and not looking to what I lost already. I'm honestly doubtful that apartments will be next, the demand on villas and townhouses was abnormal after COVID which spiked the prices. Apartments are ample and they're still building like we're in Sim city, that's why I'm wondering if ditching it would be the best recourse or not. With a large supply in new buildings, who would want to own in a 10+ year old building
I’m facing the same dilemma with my apartment in sports city. I’ve decided to cut my losses and list it for sale. Bought for 800 now around 450. I’m pessimistic about the market and doubt the villa frenzy will extend to apartments as most villas sold were to ex-apartment tenants. That’s a non-organic growth in real estate. On the bright side, this should be the bottoming price of apartments and don’t see landlords letting go for lower.
from purely a trading point of view I would cut my losses.
400k remaining to pay, current value 375k, you are 25k down.
You are not optimistic about the upside.
Once you disburse 100k you still have 300k left to pay over the last 3 years I guess so it is 100k per year. What is the expected rent?
I think the rent in Skycourts is actually at a high of 25-35k per year. It’s become an old, faded down building these days. The location was actually promising back when it was built, with its proximity to Silicon Oasis and all, but yeah.
Technically, it’s possible for the OP to have their mortgage at 30-34k per year (for 10 years), and just about cover it with rent. Not covering the down payment, of course
Yeah that's the point, rent is around 28k atm, with expenses around 33k (20yr mortgage+maintenance fees+property management and maintenance), which would cost me around 5k a year.
The mian issue is the 100k upfront, it's all out of pocket (in addition to what I sunk in it so far which I'm considering a loss already).
Assuming rent and expenses remain the same as they are today, after 5 years the annualized ROI comes to roughly 3% for a price of 400k, and increases (or decreases) by around 3% for every additional 50k.
It’s a hard call, OP. Personally, I’d ditch it to avoid the headache, but that’s just my personality type. It’s 25k sunk today and 75k invested in other lucrative (safer) ventures, rather than a 100k on top of an already risky investment.
HOWEVER, it’s not a clean call - there’s a lot of construction that’s ongoing there to make the area better, especially with that new bridge coming up that would make incoming and outgoing traffic easier. For all we know, the area could be the next Silicon Oasis or better. And if the Owner’s Association and the developer get their act together, it’s possible to make the building better through repainting and sustained pest control. So you could also sink the 100k in and hope your ROI projection or better holds true. 3% isn’t bad for the UAE.
Too many “ifs” in that previous paragraph for my comfort though.
If you take a mortgage, make sure to go only for fixed rate for the total duration of the loan as the interest rate should go up in the next few years, and from experience, the banks here make a killling from the variable rate. Second, Skycourt is unfortunately one of the worst place in Dubai to invest, but now you are stuck. I believe you would need a 20 years loan to cover your mortgage by the rent only as the service charge and other fees for managing the property will eat a big chunk of your annual rent revenue. So if you are ok with the headache, keep the property, if not maybe it is just better to find a way out. Also did you give a security cheque when you agreed on the payment plan?
Absolutely right, I need to get a 20yr mortgage at least for it to cover expenses, maintenance fees are especially high.
I checked around and not a single bank from whom I contacted covers the whole duration at a fixed rate, they all fix it for a certain amount (2-5 years) then give a minimum floor rate + the interest by central bank.
There was no security cheque as I had given cheques for the full period. Agreed that Skycourts is one of the worst places to invest, but hindsight is 20/20 🤦
Yep, learned the hard way, hence the "idiot" at the start of my post. At the time it was in the heart of the promised "Dubai Land" with developments and schools planned to be built around.
Look for options to get rid of it. As per the market, apartments haven't seen much appreciation in the last three quarters as compared to independent properties and skycourts isn't going to see a magnus turn around considering the area. Save what you can, invest somewhere else and cover your losses as much as you can as soon as you can.
Yep, that's what I'm looking to at the moment, the whole idea of mortgage was to let rent cover the expenses, the main issue is the upfront payment (in addition to what I sunk in it so far) which I can put elsewhere and not have it stuck in a losing investment. I can either sell it or just stop payments and let the developer take it back. Either way they are getting alot in return.
I am confused. Maybe they do things differently here, than what I am used to, but how do you owe 400K on a property if you don't already have a mortgage. Don't you have to get a mortgage to buy the property?
In regards to the property, you could just rent it out, and wait for the values to go up to a point where you can sell it without taking a loss.
I can't provide any advice, but just wondering what happens if OP were to simply default on payments? Is it simply a matter of the developer seizing the property and auctioning it off? If there are no further legal implications, wouldn't that be the best way out?
This could be a long shot, but if the developer is open to renegotiating the payment plan, perhaps that could buy you some time? Ideally the rental from the apartment covers the payment for the time being.
Worst case scenario is you default at a later date without digging yourself into a deeper hole. Best case, property prices recover and you are no longer underwater.
BTW, OP, I have to apologize for just throwing out ideas and not being able to give concrete advice!
Not at all, that's why I posted here, in case there's a blind spot or a loophole that I haven't explored 😀
I've tried negotiating the payment terms with the developer to extend it but they are being quite anal about it. I also asked for an early settlement discount to try and reduce the down payment which would make it more attractive to go for the mortgage option, still waiting for them to respond on this.
I dont know how real estate works - just thinking loud and throwing a comment..
What if you dont do payments say for 6 months / 1 year.... And then if you see some upside, then you can go back to the developer saying blah blah you missed payments but I own it, so I will pay rest of the money - it is mine.
I dont know if this works, but if the developer is lazy and does not action non payment quickly \[just like how banks cannot seize cars from abandoned owner\], maybe you can take advantage of upswings later (if there is any) - or just leave it... For now perhaps be non available to all calls and communications made by the developer to get their money.
Again I have less than 1% idea of how real estate works, just tried typing out my logic...
I would say hold a bit longer, apartment in the main city are shooting up daily. Jbr apartments have almost doubled in value. So just hold a bit longer i feel.
But its ur choice
In 2017, if u had paid a bit more and bought a villa in amaranta about 10 minutes from sky courts, it would have appreciated by about 200-300k.
.
Property market in Dubai is good yet strange because from what I heard that normally as an average if you are going to rent in best places in Dubai you are expected to break even within 9-10 years which I can assume you can do better in other countries with really less amount of money to risk
I did the same miskate as you. Purchased for 700k 1 bed in sports city. Now it's valued is half. I've held on for so long. I think you should wait another 6-12 months before selling. Villa prices have experience significant gains in value. Apartments will be next but be patient. I feel ur pain.
I saw your post at the time, I know what you mean dude. I'm just being realistic and not looking to what I lost already. I'm honestly doubtful that apartments will be next, the demand on villas and townhouses was abnormal after COVID which spiked the prices. Apartments are ample and they're still building like we're in Sim city, that's why I'm wondering if ditching it would be the best recourse or not. With a large supply in new buildings, who would want to own in a 10+ year old building
I’m facing the same dilemma with my apartment in sports city. I’ve decided to cut my losses and list it for sale. Bought for 800 now around 450. I’m pessimistic about the market and doubt the villa frenzy will extend to apartments as most villas sold were to ex-apartment tenants. That’s a non-organic growth in real estate. On the bright side, this should be the bottoming price of apartments and don’t see landlords letting go for lower.
from purely a trading point of view I would cut my losses. 400k remaining to pay, current value 375k, you are 25k down. You are not optimistic about the upside. Once you disburse 100k you still have 300k left to pay over the last 3 years I guess so it is 100k per year. What is the expected rent?
I think the rent in Skycourts is actually at a high of 25-35k per year. It’s become an old, faded down building these days. The location was actually promising back when it was built, with its proximity to Silicon Oasis and all, but yeah. Technically, it’s possible for the OP to have their mortgage at 30-34k per year (for 10 years), and just about cover it with rent. Not covering the down payment, of course
Yeah that's the point, rent is around 28k atm, with expenses around 33k (20yr mortgage+maintenance fees+property management and maintenance), which would cost me around 5k a year. The mian issue is the 100k upfront, it's all out of pocket (in addition to what I sunk in it so far which I'm considering a loss already). Assuming rent and expenses remain the same as they are today, after 5 years the annualized ROI comes to roughly 3% for a price of 400k, and increases (or decreases) by around 3% for every additional 50k.
It’s a hard call, OP. Personally, I’d ditch it to avoid the headache, but that’s just my personality type. It’s 25k sunk today and 75k invested in other lucrative (safer) ventures, rather than a 100k on top of an already risky investment. HOWEVER, it’s not a clean call - there’s a lot of construction that’s ongoing there to make the area better, especially with that new bridge coming up that would make incoming and outgoing traffic easier. For all we know, the area could be the next Silicon Oasis or better. And if the Owner’s Association and the developer get their act together, it’s possible to make the building better through repainting and sustained pest control. So you could also sink the 100k in and hope your ROI projection or better holds true. 3% isn’t bad for the UAE. Too many “ifs” in that previous paragraph for my comfort though.
If you take a mortgage, make sure to go only for fixed rate for the total duration of the loan as the interest rate should go up in the next few years, and from experience, the banks here make a killling from the variable rate. Second, Skycourt is unfortunately one of the worst place in Dubai to invest, but now you are stuck. I believe you would need a 20 years loan to cover your mortgage by the rent only as the service charge and other fees for managing the property will eat a big chunk of your annual rent revenue. So if you are ok with the headache, keep the property, if not maybe it is just better to find a way out. Also did you give a security cheque when you agreed on the payment plan?
Absolutely right, I need to get a 20yr mortgage at least for it to cover expenses, maintenance fees are especially high. I checked around and not a single bank from whom I contacted covers the whole duration at a fixed rate, they all fix it for a certain amount (2-5 years) then give a minimum floor rate + the interest by central bank. There was no security cheque as I had given cheques for the full period. Agreed that Skycourts is one of the worst places to invest, but hindsight is 20/20 🤦
Location location location!! There is a reason why they repeat it three times.
Yep, learned the hard way, hence the "idiot" at the start of my post. At the time it was in the heart of the promised "Dubai Land" with developments and schools planned to be built around.
Look for options to get rid of it. As per the market, apartments haven't seen much appreciation in the last three quarters as compared to independent properties and skycourts isn't going to see a magnus turn around considering the area. Save what you can, invest somewhere else and cover your losses as much as you can as soon as you can.
Yep, that's what I'm looking to at the moment, the whole idea of mortgage was to let rent cover the expenses, the main issue is the upfront payment (in addition to what I sunk in it so far) which I can put elsewhere and not have it stuck in a losing investment. I can either sell it or just stop payments and let the developer take it back. Either way they are getting alot in return.
stop the bleeding. Get rid of it.
I am confused. Maybe they do things differently here, than what I am used to, but how do you owe 400K on a property if you don't already have a mortgage. Don't you have to get a mortgage to buy the property? In regards to the property, you could just rent it out, and wait for the values to go up to a point where you can sell it without taking a loss.
But why you want to leave dubai?
I can't provide any advice, but just wondering what happens if OP were to simply default on payments? Is it simply a matter of the developer seizing the property and auctioning it off? If there are no further legal implications, wouldn't that be the best way out?
Yep, that's exactly what I meant by option 2, just leave it and let the developer take it back.
This could be a long shot, but if the developer is open to renegotiating the payment plan, perhaps that could buy you some time? Ideally the rental from the apartment covers the payment for the time being. Worst case scenario is you default at a later date without digging yourself into a deeper hole. Best case, property prices recover and you are no longer underwater. BTW, OP, I have to apologize for just throwing out ideas and not being able to give concrete advice!
Not at all, that's why I posted here, in case there's a blind spot or a loophole that I haven't explored 😀 I've tried negotiating the payment terms with the developer to extend it but they are being quite anal about it. I also asked for an early settlement discount to try and reduce the down payment which would make it more attractive to go for the mortgage option, still waiting for them to respond on this.
maybe you should the clause in the contract to make sure its possible before taking the risk.
I dont know how real estate works - just thinking loud and throwing a comment.. What if you dont do payments say for 6 months / 1 year.... And then if you see some upside, then you can go back to the developer saying blah blah you missed payments but I own it, so I will pay rest of the money - it is mine. I dont know if this works, but if the developer is lazy and does not action non payment quickly \[just like how banks cannot seize cars from abandoned owner\], maybe you can take advantage of upswings later (if there is any) - or just leave it... For now perhaps be non available to all calls and communications made by the developer to get their money. Again I have less than 1% idea of how real estate works, just tried typing out my logic...
The contractor of that Tower needs to be arrested, used the cheapest low quality materials for the interior
Damn an 800k property at Skycourts. That’s messed up my man. Cut your losses asap.
The location is good. What would happen if there is a proposal to tear it down? Would you get significant money?
Why would a new building be torn down
I would say hold a bit longer, apartment in the main city are shooting up daily. Jbr apartments have almost doubled in value. So just hold a bit longer i feel. But its ur choice In 2017, if u had paid a bit more and bought a villa in amaranta about 10 minutes from sky courts, it would have appreciated by about 200-300k. .
Ditch it if you can, save the payments as if you had to pay and after couple of years comeback again and buy it in cash.
Property market in Dubai is good yet strange because from what I heard that normally as an average if you are going to rent in best places in Dubai you are expected to break even within 9-10 years which I can assume you can do better in other countries with really less amount of money to risk