Making Smart Renovation Decisions

How to maximize return of investment on your property.

After the ?rst quarter peak in 2014 and the introduction of government regulations, such as the increased property registration fees and mortgage cap, the housing market cooled off during 2015. The impact of these regulations, along with the completion of many new projects, means that property prices have dipped. 

It’s believed by property experts based in Dubai that prices have probably reached their lowest level and are good a representation of residential value. That, coupled with the news that Dubai’s rental yields are averaging just over 7% and sometimes as much as 10%, which is signi?cantly higher than London, Hong Kong and Singapore, means that 2016 is a perfect time to invest in new property.

Bearing that in mind, as an existing home owner, what can you do that will make your property stand out, to encourage buyers or renters and for you to achieve maximum potential on your property.

AS A LANDLORD, WHAT I CAN DO TO MAKE MY PROPERTY MORE ENTICING FOR TENANTS?

For tenants, they usually know which community and which type of unit there are interested in renting prior to even looking at your property. The rental market has become signi?cantly more competitive and the goal is to make your property stand out from the one next door.

Firstly, I encourage all my clients to repaint walls and ceilings to a fresh, bright white. As white re?ects all colour waves, your rooms instantly become lighter, brighter and ultimately, perceived as being bigger. White is also a good neutral base if you do want to paint a feature wall or hang wall paper. Prospective tenants typically like blank canvases so that they can add their own touch.

Ensure all lights are working. Again, like the wall colour, if lights are broken and the space feels dark and dingy it will discourage potential tenants. Swop bulbs or ?ttings from the harsh blue ?uorescent ?xtures to softer warm white ?ttings will create a more relaxed atmosphere. Fittings and bulbs are inexpensive, but it makes the tenants feel like they’re in a home rather than in an of?ce. Look at using mirrors to create the illusion of space, re?ects light so the rooms feel brighter and they maximise on any views.

Make sure it’s clean and well maintained. It sounds simple, but people usually want to move in with minimal fuss. If that means the deep clean has been done prior to their viewing, then it’s much easier for them. Keep AC units serviced 3-4 times a year. It’s unlikely something which tenants will reach into their own pockets to cover, so by ensuring you keep it regularly maintained you can avoid larger once-off costs if items break. Same goes for water tanks.

WHAT ABOUT IF I’M LIVING ON MY PROPERTY? WHAT’S THE BEST RETURN ON INVESTMENT MODIFICATIONS I CAN DO?

As a home owner living in your property your priorities are different to those as a landlord. While you want to add value, you also want to personalise your property and transform it into a place you want to live and works with your lifestyle. If you are prepared to do renovation works, then the best return of investment will be updating bathrooms and kitchens. These areas are often badly laid out with wasted space.

There’s a huge scale when updating these rooms, from as simple as installing new taps and shower heads to stripping out the rooms and starting from scratch.

If re-doing bathrooms and kitchens, wherever possible I’d suggest keeping appliances and plumbing in the same location. Once you start moving sinks, toilets, baths etc. time, cost and potential problems escalate very quickly. Developers here typically use white ceramic wear and you’ll ?nd it’s easier to stick with what was initially installed as all plumbing pipes are correct sizes etc. As long as they are in good condition, many ? t out companies will lay new wall and ?oor tiles over the existing. This saves signi?cant time, cost and mess while giving a complete face lift.

People view kitchen make overs as costly exercises, but this doesn’t need to be the case. Many of the high-end kitchen brands do a contract option and even the IKEA kitchens are well made and very well priced. A kitchen that’s 15m2 can cost as little as AED20,000 for new cabinets and tiles. Be mindful that it’s usually the interior ?ttings of the kitchen units that quickly bump up the price. Basic cupboards and drawers are signi?cantly less expensive than corner pull outs and built in drawer units. Ask a kitchen specialist to help with the layout to ensure that all spaces are used to maximum potential.

For both bathrooms and kitchen think timeless design over seasonal trends. For the counters, splashbacks and cabinet stick to classic colours such as white and simple timber veneers. What may be deemed fashionable for a short period of time can quickly date and actually age the property, you just need to think of avocado bathroom suite as an example of this.

For villa and townhouse owners, in addition to changing what currently exists, owners can also look for extension potential in properties. Again, there’s a range of extensions from small and simple to much bigger. The majority of villas have balconies on the ?rst ?oor that creates an overhang on the ground ?oor.

A very simple change to the property is to push the window line out, so what was undercover, external space is now internal. You may ?nd that it doesn’t require extra AC provisions or any extra power points, so an extension like this can add the necessary small additional space without being too expensive or increasing your monthly bills.

WHAT RENOVATIONS WOULD BENEFIT ME, BUT NOT NECESSARILY GIVE A GOOD RETURN ON INVESTMENT?

Some developers allow more substantial extensions, perhaps enclosing ?rst ?oor balconies to allow extra bedrooms, or building a whole new wing to your villa. This would be the most expensive renovation and would only be bene?cial if it will improve your way of life. In addition to the costs for the extension, many developers will charge you a square foot rate for the extra area. Although typically around AED400 per sq ft, in one area this is as much as AED2,000/sq ft. This means a 1,000 sq ft extension will cost you AED2,000,000 before even the ?rst brick is laid. Add to that a refundable deposit and ? at fee of typically AED2,000, major extensions should only be carried out after signi?cant research. An extension like this will also increase monthly outgoings, such as DEWA bills, and the annual service charge levied by most developers.

From a purely ?nancial point of view, the return of investment on a major extension will likely be low. However, with the aforementioned mortgage cap and increased property registration fees, then for some home owners this is a good way to increase the size of your property without the need to move.

WHAT ABOUT LANDSCAPING?

As an owner, either as a tenant or if you live in your property, be mindful of the expense of maintenance and upkeep in addition to the initial investment. Speak to a landscape specialist who’ll be able to advise on suitable planting.

Water consumption isn’t always at the forefront of your mind when choosing plants, but the choice in planting can make a huge difference to the monthly bill; date palms need 200- 300 litres of water a day compared to 80-100 litres for a coconut palm. For the same reason, AstroTurf has become a popular alternative to grass for larger gardens. Many higher end AstroTurf brands come with at least a 5-year warranty, so it’s worth investing in quality and you can guarantee green grass for the foreseeable future.

Stay away from Damas trees at all costs. While they’re cheap, fast growing and provide year round green leaves, they’re banned in many communities. Their roots grow so quickly and can penetrate deep into the ground potentially causing major damage to house foundations, boundary walls and underground pipes.

IN CONCLUSION

It is important to note, that while some renovations will likely increase the value of your property more than others, all well done renovations will differentiate your property from the others in the development where ?oor plans are often identical. Whilst you may not see signi?cant increase in face price value, in an expat heavy market such as Dubai where people regularly need to move quickly, your renovation will set your property apart from others on the market at that time, and will likely mean you can secure a sale quicker that your competitors.

By Katherine Stealy Tranter