Dubai: The discount shopping in Dubai’s property market has picked up in earnest with the IMPZ and Jumeirah Village clusters being the beneficiaries.
Transaction levels in these locations were up 4 per cent and 5 per cent, respectively, during the first quarter from a year ago.
International City had the highest number of transactions recorded in the first quarter, which brought on a 1 per cent increase in values there, “further underscoring the demand for affordable housing”.
But overall transaction levels are still down 17 per cent year-on-year, which again reinforces the hands of prospective buyers in the negotiation process. And they were not shy of using their influence.
“Cash buyers have had a strong negotiating position and were able to secure attractive bulk deals this quarter,” the Asteco report notes. “They are monitoring their investment opportunity as prices appear to be bottoming out. We have noted an increased interest from investors who are on the lookout for investment opportunities that can be obtained more readily.”
In value terms, the areas with the most transactions were Dubai Marina, Palm Jumeriah and Downtown Dubai. But apartment sales values in these locations were down — by 6 per cent on the Palm Jumeirah and 4 per cent at both the Marina and Downtown in the first quarter of 2016.
But villa prices are still in a bit of a slide, down 6 per cent year-on-year and by 2 per cent when seen from a quarter-on-quarter perspective.
The softness in the villa space could be attributed to the “continuous stream of new projects available for sale,” Asteco notes, with some of the new launches coming from Dubai Properties (Serena and Arabella).
These managed to find investors relatively easily through prices that range from Dh820-Dh980 per square foot. Plus, they had a good payment plan to back up the pricing.
Going forward, the payment plans — and how far developers are willing to go on incentives — will be decisive in attracting interest in off-plan.
The Danube Group continues its series of staggered mid-tier project launches in Tier-B locations and offering instalments plans at 1 per cent, while, recently, the Shaikhani Group ventured out with a project where post-handover payments could be stretched to 10 years. It could be that seven and 10 years could well become the norm unless there is a sudden and drastic turnaround in investor demand.
In the chase for bargains, villas at the higher end of the market “continued to be the most affected”. “As a result, sales prices were down predominantly in the most expensive communities such as Jumeirah Golf Estates, The Villa and the larger sized villas at Arabian Ranches, with rates 14 per cent, 11 per cent and 13 per cent lower, respectively, compared with the same period last year,” said the Asteco report.
Conversely, those communities where prices had dropped significantly over the year saw increases in rates as the opportunity for deals attracted buyers. The Springs was a prime example.
“This market has moved favourably towards the buyer as prices drop and cash investors and end-users find themselves in a strong negotiating position,” said John Stevens, managing director at Asteco, the real estate consultancy. “Buyers are definitely considering their investment options as the market appears to be bottoming out and sellers seem prepared to take a more realistic view on pricing.”
Affordability is the dominant theme
* On the rental side, entry-levels apartments were most likely to see continued rental stability, if not gains. In the mid and high-end of the market, the rents saw declines of 2 and 3 per cent during the first quarter. “This minimal decrease was due to a combination of landlords trying to retain tenants rather than insisting on higher renewal rates, a decrease in the number of newcomers to the city, and in some sectors, housing allowance cuts and redundancies,” the Asteco report states.
* Chase for affordability is taking buyers to Ajman. Among the Northern Emirates, Ajman did quite well with sales of 4,000 units and generating Dh11 billion in turn during 2015.
