Dubai red-hot again? 24% spike in off-plan sales; property sales zoom past 2018 numbers


Property bargains: Homes priced under Dh1m get lion’s share of sales

Dubai: Property buyers in Dubai sure are picking up the bargains.

Off-plan sales in the year to end September have already crossed the tally for the whole of 2018 — that’s 16,056 units against 12,979.

Sales volumes are running at a 24 per cent gain year-on-year as investors and end users swoop in on the best deals out there.

They are not necessarily going in for the most accessible properties out there in terms of price.

Interestingly, sales of residential units priced at Dh1 million or lower represents only 41 per cent (6,584 units) of total off-plan deals this year.

That compares with the 51 per cent (9,041 units) of units that buyers acquired all through last year, according to data provided by Reidin-GCP based on registrations done at Dubai Land Department.

Buyer confidence

Clearly, there are buyers out there who feel reasonably confident to put their money on pricier off-plan homes even when the wider market is still in the doldrums.

Developers too are doing what they can, dropping the average size of apartment units along with the launch prices.

“The sub-Dh1 million mark continues to be the most popular as evidenced by the data, indicating there is investor as well as end-user demand for properties in this range,” said Sameer Lakhani, Managing Director at Global Capital Partners.

“In terms of Dh5 million and more, there has been no noticeable difference in either the ready or off-plan space.” (Based on available data, these deals made up 5.1 per cent of ready sales and 1.3 per cent in off-plan so far this year. Purchasers of these units get to have five-year resident visa tenures.)

Price action

Interestingly enough, these days, it pays to have a newly completed project in your freehold neighbourhood. Because when it happens, average prices for that particular area — or even the cluster itself — tend to spike. It’s happening at Jumeirah Village Circle … and even on the Palm.

The reason? Post-handover plans.

Because most of the new builds are backed by post-handover payments, once those properties get registered, this tends to rub off on average prices for that area. Because typically, properties sold on post-handover terms tend to have a higher selling price.

“We see it in JVC where the phenomenon of post-handover payment plans have proliferated in recent years,” said Lakhani. “In particular sectors at JVC, prices have moved higher by an average of 4 per cent.” (This despite a further 13,757 units being construction at JVC to add to the 16,645 already built there.)

“At Palm Jumeirah, the index is reporting a 5.6 per cent jump in prices — even as Shoreline apartment prices have fallen. This shows the impact new builds backed by such plans have when they enter the ready space. The Azure Residences being the most relevant — and recent example — in the Palm community.”

Lakhani’s got a point — listings show a two-bedroom of 2,000 plus square feet at the Azure with a tag of Dh3.6 million. And a one-bedroom (1,100 square foot plus) for Dh2.1 million. Now, these prices are higher than the overall Palm average by at least 25 per cent.

Steady ready

Demand for ready/newly completed remains steady on a year-on-year basis. Reidin-GCP data show 10,751 units being sold year-to-September against 10,004 for the whole of last year. Market sources, including developers, reckon the next two or three quarters should see improved numbers for ready units.

“Investors still believe there are decent yields in the Dubai rental market for the right location,” said one source. “It’s not the case at all times that new supply will suffer from weak demand in an unsteady market. Some of the best deals can still happen in such circumstances.”

The ‘France’ advance

At International City, average prices were down by 6.5 per cent between the first and second quarters, to Dh514 a square foot. But at the France cluster, there seems to be an anomaly. Prices there are now averaging Dh517 as against the Dh324 a square foot in the first quarter.

What explains this mystery surge despite there being no significant capacity additions there? Market sources say this is brought on by prices levels re-adjusting to the median. “The earlier drops were brought on by a few distress sales at the cluster, and since that’s done, there has been a natural recovery,” the source added.

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