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When it comes to buying property, speculative investors often make the highest returns by entering a market in its infancy. Taking a chance on an undeveloped market and getting in there quick while it is still a work in progress are tactics that have paid off for many buyers.
Perhaps Dubai offers one of the best examples of this with people that bought in Arabian Ranches five years ago having already seen their investments double and even treble, and early buyers at Jumeirah Beach Residence and The Palm Jumeirah, achieving similarly high returns.
One of the keys to such success stories is having the ability to see the bigger picture, to view the market in terms of what it will become rather than what it is at that point in time. Sure, there is a risk involved, after all there are no guarantees, but more often than not, those that take a chance with property make a profit.
While there are some that suggest the good times and the days of making such high returns in the Dubai market are gone, I tend to disagree. By nature, as the market becomes more developed, the rate of growth will become more gradual, but I still feel there is a long way to go.
Dubai is still very much a work in progress with so much going on and so many exciting projects still under development that will only enhance the emirate's appeal. The smart investors are those that are constantly looking at the potential of areas within a market and evaluating where the largest growth margins can be achieved.
Dubailand is a great example of this, where instead of seeing a mass of desert; investors see what will become the largest tourism destination on the planet! Dubailand is the most ambitious leisure, tourism and entertainment destination ever and will eventually provide three billion square feet of theme parks, hospitality, retail, sports and entertainment venues. Although the first phase isn't expected to launch until 2010, property within Dubailand is already selling well.
Dubai Metro
The Dubai Metro is another example of a project investors hope to capitalise on by getting in early and buying property in locations close to the stations. The metro will be a massive and positive change for those living and working in Dubai; an alternative option to the constant traffic jams.
It is likely that the Dubai metro will have a positive impact on both residential and commercial property prices in areas it serves. People will be willing to pay more for the convenience of living near a station in the same way that retailers will choose to pay higher rents for shops situated near to stations with a high volume.
Ras Al Khaimah (RAK) is another popular option with investors snapping up units in the hope of capitalising on the area's anticipated growth. A major pull is the availability of freehold beachfront properties, something that has until now been limited in other emirates. Price-wise, RAK offers good value for money when compared to some of its neighbours and is emerging as an attractive option for both residential and commercial buyers.
So, while we don't have a crystal ball to see what the future holds, when buying property, it is worth taking a step back and considering the long-term potential of the investment in order to fully understand its value.
The writer is managing director of Better Homes.
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