Dubai
Dubai’s off-plan sales didn’t have its way through all of 2017 — in the last three months of the year, ready property sales volumes actually gained 17 per cent while those of off-plan dipped, by 8 per cent. Not just that, transaction values on ready properties were up by 15 per cent from the third quarter, while offplan’s dipped 16 per cent, according to Chestertons’ data.
The transaction values were helped by the number of pricey Dubai Marina and Emirates Hills properties being acquired in the final three months of the year, It could well be that the fourth quarter of 2017 numbers for off-plan and ready are a one-off, because through the rest of the year, it was very much off-plan that was dominant. Off-plan “surged by 60 per cent in 2017 compared to 2016,” the consultancy reports. “This overarching theme for the year could potentially trigger a further decline in the value of the ready unit, as investors have shown to be more inclined to invest in off-plan properties with favourable payment options.”
Matters could also be helped on the demand side if, as the Chestertons report says, 45 per cent of new supply over the next five years is priced below Dh1,000 per square feet.
But, according to Ivana Vucinic, Head of Consulting and Valuations and Advisory Operations at Chestertons MENA, 2018 needn’t be another year of off-plan dominance. “Going forward we expect the off-plan market to decrease as the addition of new supply would suggest it will be ready units that will see an increase in demand,” she said.
On the rental side, apartment rates were down 3 per cent in the fourth quarter. “The introduction of new stock, by way of delayed 2015 and 2016 projects, and the addition of attractive lettings incentives such as rent-free periods and multiple cheques, encouraged tenants to seek better deals,” the report adds.
If this state continues, it will increase the pressure on rents in Dubai, or at least in some of the locations. Interestingly, despite increased demand, rents for studios and one-bedroom units fell across all communities by 2 per cent compared to the third quarter of 2017. Rents in Dubai Sports City recorded the steepest decline at 7 per cent whereas there was no change at JVC.
“The softening of rents is expected to continue during 2018 as tenants’ pressure landlords to offer more preferential leasing terms,” said Vucinic. “Additionally, other factors such as new stock entering the upper and mid-prime residential segments, coupled with the flat economic sentiment, will also exert downward pressure.”
