Dubai real estate market is one at its first development stages: most of the buildings here were built no more than 10-15 years ago, and the demand is dictated by a new housing sector. Therefore, the question of refurbishing secondary properties was not that of the urgent in recent years. However, things are changing, and now buyers in Dubai are willing to renovate their villas and even apartments to boost their capital costs and increase their attractiveness in the market.
Better Homes agency estimates that renovations can add 10 to 15 per cent to the original sale price of the house. Among the most common renovations, which ultimately increase the cost of the property, there are flooring replacement, furniture replacement (for leased premises), complete bathrooms renovation or adding a swimming pool, if it is a villa. Moreover, according to experts, landlords owning properties 10 to 12 years old are almost forced to consider refurbishing. In some cases this is the only way to maintain their property’s profitability at the same level.
Renovating property in Dubai, however, can be quite expensive. For example, full refurbishment of a villa in the Lakes or Meadows worth USD 1 - 1.5 million can cost USD 95,000 – 100,000, which is approximately 10 per cent of its value. And in the premium real estate sector, where the average unit price is about USD 5 million, renovation can cost up to 20 per cent of the property value. But at the same time the value of the property can be increased by 30-50% due to renovation. And rental yields can increase by even 70-100% of the previous rental cost at the expense of refurbishing.
On the other hand, Julian Straube, the managing partner of Algebra Contracting, admitted that any work should not “exceed the overall prestige of the project” – so don’t dress your apartment up beyond the finish of the development it sits in. “In the Marina, the buildings, facilities, pool, gym – from the outside they are far superior in quality than the actual apartments. In these cases, it’s worth it,” expert advices.
“Get a good deal in the first place, and ensure you have no pressure to sell afterwards. Take the time to find a client who appreciates your renovation,” he said.