Hire Villa Renovation Company in Dubai
When the British investment banker Sharaz Hussain moved to Dubai in 2010 with his wife and family, they decided it made financial sense to buy and renovate a property rather than rent.
They bought a six-bedroom, five-bathroom villa in the Meadows in Emaar’s Emirates Living community and spent six months refurbishing it.
By the time they finished, they had installed a glass staircase, a new bespoke kitchen, an open living space and completely landscaped the garden.
“A lot of people just decide to rent, but rents are high and, with a commitment to three years, knowing the amount we would spend on rent, we thought we might as well buy and create a home we would like to live in,” says Mr Hussain, 44, a father of three whose wife Amber, 40, is a schoolteacher.
But with house prices in Dubai the fastest-falling in the world this year, according to Knight Frank, is renovation the new name of the property game?
Mohammed Khan, a residential sales and leasing consultant at Better Homes, estimates that renovations can add 10 to 15 per cent to the original sale price.
“The most common upgrades are fittings and fixtures, a change of flooring, a new bathroom or the addition of a swimming pool,” he says. “I had a three-bedroom apartment for sale where the owner spent Dh50,000 replacing all the floor tiles with wood flooring and improving the finish. The new buyer chose my unit because of the renovations, paying an extra Dh100,000. Renovation doesn’t guarantee a successful sale at an increased price; however, in this case it worked.”
While Mr Hussain won’t be drawn on how much they bought their villa for, or the renovation cost, he says they were “prudent”.
“We kept to a relatively tight budget of 2 per cent of the property cost. You can do a lot without spending a lot.”
So has it increased the value of the property?
“The work added about 15 per cent to the value,” says Mr Hussain. “We had it valued after, and the agent was desperate to sell it, but we did it for ourselves as a home.”
With the market also rising in the period leading up to this year, Mr Hussain estimates their villa is now worth 30 per cent more than when they bought.
“It’s made the property more desirable. If you’ve seen 15 to 20 properties, they all very much look the same inside. Love it or hate it, ours is different. We noticed that where we live in the Meadows, a significant number of houses have now been renovated – or upgraded, as the agents say.”
Prices in Dubai’s residential property market have dropped by about 10 per cent year-on-year because of fears of a glut of new supply coming on to the market.
According to JLL, about 23,000 new homes are due to be handed over this year, but the company has said completion of some could be postponed to next year or 2017, depending on market conditions.
Paul Philmore, managing director of the upmarket villa renovation company Primex, which refurbished the Hussain family home, says with the current market conditions, owners of more established properties – those that are eight, 10 or 12 years old – are almost forced to consider refurbishing.
A Dubai resident for seven years, he has completed 40 to 45 villa renovations in that time as well as hundreds of partial renovations. He is working on a Dh22 million villa in the Lakes bought two months ago and being remodelled for a further Dh3m.
“Many homeowners have been living here for a while and their villas are getting a bit tired,” he says. “They want to enjoy their home and protect their investment in terms of keeping it in good condition, but they have an exit strategy and hope to add value by differentiating theirs from the other, original villas and add after-market appeal – and hopefully, value – when they sell.”
But renovations do not come cheap. According to Mr Philmore, for an average detached villa in the Lakes or Meadows worth Dh4m to Dh5m, a full refurbishment generally costs Dh350,000 to Dh400,000 – about 10 per cent of the value.
“In the more upmarket Dh20m villas, you could spend 20 per cent of the value on renovation,” he adds.
Julian Straube, the managing partner of Algebra Contracting, set up his second business to support his estate agency, Algebra Real Estate, and specialises in Dubai Marina apartments.
“Contracting came about because I was struggling to find reliable contractors myself,” he says. “My first project was my own first apartment – a standard two-bedroom in the Marina in a good quality building. I opened it up, made it more modern and redid the kitchen. I lived in it for five years, then rented it out furnished. The villa renovation cost me Dh40,000 and furniture Dh60,000. I got Dh25,000 more in rent annually – Dh155,000 when the market was at Dh130,000.”
Mr Straube says the two things all his clients ask for are a new bathroom and kitchen, mainly because developers often “cheap out” on the size and fittings of these key rooms. The contractor says he will even remove a precious bedroom from an apartment – and yet increase its value.
“Developers cram as many apartments as possible into a floor. You can’t fit in a king-size bed and there’s not enough wardrobe space. I spent Dh100,000 on a three-bedroom apartment and sold it as a two-bedroom for a million more … keeping in mind that the market was on an upturn.”
Mr Straube claims renovation can add double its cost to the value, citing one two-bedroom Marina apartment.
“We spent 25 per cent of the property value for renovation, but the rent increase was about 70 per cent – really substantial. The rule of thumb is that to renovate, you will get your money back in three years in rental increase,” he adds.
But before readying your hammer and chisel, Ben Crompton, the managing partner of Crompton Partners, an estate agency set up in Abu Dhabi in 2012, sounds a note of caution.
“Generally renovations don’t add value – people have a very clear idea of the price per square foot and you have to seriously differentiate from the apartment or villa beside it to be able to charge more,” he warns, adding that with most investment areas, particularly in Abu Dhabi, apartments no more than seven years old are not dilapidated enough to need upgrading.
Another hurdle is gaining permission to carry out upgrades.
“Developers in many cases do not permit large renovations,” says Mr Khan. “One exception was with the two-bedroom villas renovation Dubai [Nakheel’s] Jumeirah Village Triangle and Circle, originally 7,000 square feet with a maid’s room and a massive garden. The developer later permitted the addition of extra rooms, encouraging many owners to not only add multiple rooms but also extend the living and dining spaces.
“What resulted was that a two-bedroom villa, originally sold for Dh2.8m and rented at Dh165,000, became a four to five-bedroom villa that sold for Dh3.8 million and rented at Dh230,000 to Dh250,000. The renovation cost was approximately Dh700,000 to 800,000, so the value was raised by 30 per cent.”
And Mr John says owners should remember the renovation they choose may not be to everyone’s taste. “Aesthetic sense is so subjective,” he adds.
Miss Sarah suggests sticking to neutral colours and styles.
“In apartments we see cosmetic changes such as the addition of wallpaper – that doesn’t add value. In villas there’s more room for modifications – to add a pool, knock down a wall to open a kitchen or landscape a garden,” he says. “In Abu Dhabi, Saadiyat Island has the most potential with big gardens and a rambling layout.”
Mr Ali advice for a successful return is to ensure any work does 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.
“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.”