The Ajman Property Market - Part I- By: David Garner
Things are certainly starting to heat up in the Ajman property market as the emirate of Ajman enjoys a certain overspill as workers are priced out of the Dubai market.
With the neighboring emirate of Dubai becoming increasingly expensive and unaffordable for many of the thousands of migrant ex-pat workers from all over the world who move to Dubai for a tax free career in oil, finance, business or within the service/tourism industry. Ajman is now the location of choice for many investors and property developers, as cost per square foot offers good quality accommodation within 25 minutes drive of Dubai International Airport, and prices up to 60% lower than in Dubai itself.
Over the course of three articles, with this being number one, we will analyze the Ajman property market to arm you with up to date market information on on property investment strategies, Ajman property prices, infrastructure developments in Ajman, Off plan properties in Ajman and all of the information you will need concerning the newly reformed property law in Ajman.
This series is aimed at providing the overseas property investor with enough knowledge to be confident enough to make a decision as to whether the Ajman property market is the place to deposit your hard earned capital for growth.
Over the last 24 months, cost per square foot for Ajman properties has seen increments in price of between 3% and 5% per calendar month according to industry house pricing indexes. In the year to date 2008, those who chose to invest early in off plan property in Ajman have been rewarded with capital growth of 40% so far this year.
Most of the market activity comes from the sale of off plan property in Ajman, both to residents, prospective residents buying their first home in the UAE, and pure property investors, with the latter tending to buy entire floors or buildings off plan and then sell them on before completion. As such the secondary property market in Ajman is yet to unfold properly.
The government in Ajman is also investing AED 400 billion towards the cost of new infrastructure, with AED 3 billion designated into renewing roads and highways. This is good news for those looking to buy Ajman properties as infrastructure can keep up with the development of residences.
New property law in Ajman will ensure that we don't experience any of the issues that have been so well publicized in Dubai. New Ajman property developers will have meet the governments guidelines to have enough venture capital and be familiar with the UAE property market to be approved. This means we will only see good quality property delivered on time from reputable property developers. Without this level of state regulation smaller property developers can undermine bigger companies, something that has tended to happen in recent years which has caused instability in the property market of Ajman, and price per square foot were eratic.
Currently, property prices in Ajman range from AED 400 per square foot to AED 650 per square foot. One of the bigger property developers in the Ajman property market; Developer Chapal, has plans to increase their prices after Ramadan to around Dh700 to Dh750 per square foot.
What to buy?
By far the most popular unit choice for those who buy Ajman property is the humble studio apartment, which statistically are the fastest moving of Ajman properties, followed closely by one bedroom apartments. As we know, the property market in Ajman is driven by home buyers who are priced out of the Dubai property market, and many small families do tend to live in these smaller properties, due in part to the cost of financing larger accommodation.
For a full cash purchase and no leverage in the form of financing, a studio apartment in Ajman is returning around 50% to 60% annual return on investment. As the Dubai property market seems to be coming to a peak or plateaux, savvy property investors are now looking around to save on cost and source better value for money, and in the process of doing so, they have discovered the prospect of Ajman property.
If you are interested in buying property in Ajman, please stay tuned out for the next article in this three part series where we will investigate Ajman property law and the recent changes to the law that will benefit property investors in terms of the security of their Ajman property investment.
We can be certain about one thing, this small emirate town of some 100,000 residents, is expanding rapidly with big plans for further expansion. Current demand for residential property in Ajman, as well as commercial infrastructure is high and I have no doubt that there is money to be made in Ajman property right now.
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