Dubai Property: How to Spot a Winning Investment

SPEAKER_1 (0:00)

It's the Morning Drive, Monday morning, property technology next here on Mira Business FM. Devised property market continues to attract investors, but how do you know if a property is really worth your money? From using market data to choosing the right investment and managing properties remotely, we're going to explore how technology is changing the way people invest in real estate. Aleh Baranouski is the founder of Habi, which is essentially a property management company with a PropTech platform. And the idea is to help investors identify opportunities and also for landlords to be able to manage their properties. Aleh joins me in the studio. It's good to meet you.

Aleh Baranouski (0:42)

Yeah, it's a pleasure meeting you as well. Thank you.

SPEAKER_1 (0:43)

Good to have you with us. Look, there's a lot to ask you because this is an evergreen topic, real estate in Dubai, of course.

It attracts investors from around the world. But let's start with a really broad question. What makes property a genuinely good investment right now today?

Aleh Baranouski (1:06)

If we're talking specifically about Dubai, obviously...

SPEAKER_1 (1:09)

Let's talk about Dubai, the UAE, yeah.

Aleh Baranouski (1:11)

Dubai has got very attractive general conditions. So first of all, it's a freehold market, as everyone knows.

Then the favorable tax environment is very attractive, of course. And the relatively high return on investment. Also, the Dubai market is very dynamic, which makes it possible for database speculative investments, where you can get really high return on investment. If you have enough readily available capital, expertise and data, you can spot this investment on the market and generate extra profits that you can't really do on other markets.

SPEAKER_1 (2:02)

Okay.

Aleh Baranouski (2:03)

And it's all tax-free.

SPEAKER_1 (2:05)

Yeah, I mean, that is a very attractive proposition, obviously. So beyond location and price, those are the two things that obviously most of us think about. What are the key numbers in that case when you drill down into the data? What should you be looking for before you buy it as an investor?

Aleh Baranouski (2:22)

Yeah, aside from price, first of all, price can't be studied separately from the property itself. So the price, you must compare the price with transactions of other comparable units on the market. For example, if you're at 2,000 square feet office space or your two-bedroom in, say, downtown, offered price is X, two million, and you see that similar units on the market that are comparable to yours are transacting a bit lower, then you get your actual market value, I'd say.

The other things that you have to look into are income, obviously, the potential income and the probability of that income in case the tenant moves out.

That's a very important one as well as cost of ownership. A lot of new investors make that mistake. They don't look at cost of ownership, maybe very high service charges. Some buildings may surprise you with that, especially branded ones. And yeah, there's lots of things, but these are probably the main ones.

SPEAKER_1 (3:43)

It's doing the research, isn't it?

Aleh Baranouski (3:44)

Research is the key.

SPEAKER_1 (3:45)

Yeah, that's kind of the starting point. So how can market data help investors avoid making those kinds of mistakes and make better decisions?

Aleh Baranouski (3:55)

Of course. So for example, I can give a case that we had. We have it every now and then.

We had it literally a couple of days ago.

A property that is offered to us with 10% return on investment, which sounds fantastic. But then if you check the data, you can see that the rents in that building and four comparable units achieve on average probably 30% less of what it was rented at. So the risk is if that tenant leaves, you will never be able to rent it out at the same price again. So your income will be much lower. And that can only be told after you look at the data.

SPEAKER_1 (4:45)

Gotcha. Now I'm with you. All right, then. So this is the thing that always confuses me about Dubai. Maybe you can put me straight this morning, Aleh, is there are so many properties on the market.

There's a lot to choose from. Oh, yeah. I'm kind of befuddled by which one to choose. How do you identify the real opportunities that may be being overlooked?

Aleh Baranouski (5:09)

Yeah. Right. So first of all, you have to understand what you're looking for.

SPEAKER_1 (5:16)

Right.

Aleh Baranouski (5:18)

In investment terms, you got to have your investment thesis. You have to know that you have to understand where the opportunity lies.

SPEAKER_1 (5:26)