Last week’s announcement of a new — and quite substantial — retail project for the Palm need not translate into an immediate spike in property values there, according to market observers. Homes on the Palm recorded some of the sharpest gains in values in 2012 among the leading master-developments in Dubai, but not seen a major upswing in the initial weeks of this year.
“Prices will continue on an upward curve for 2013, (but) I don’t believe we will see the growth witnessed in 2012,” said Mario Volpi, head of residential sales and leasing at Cluttons’ Dubai office. “The Palm to date has lacked in retail facilities and this (the mall announcement) will undoubtedly go towards satisfying that demand.
“That said, owners and tenants will worry about the future traffic flows that will result from the new scheme. The Palm has built up a reputation for being a less hectic residential area of Dubai, which is a major draw.”
Construction of the Dh2.5 billion Nakheel Mall will start this year, with completion expected in 2016. It will covers more than 424,000 square metres, include five retail levels and three basement parking levels. Nearly 100,000 square metres will be dedicated retail space for 200 stores, and there will be a 180-metre high viewing deck to overlook the Palm Jumeirah and Dubai skyline. But all of that is still three years down the line.
In the present, garden homes on the Palm command between Dh10 million to Dh15 million, as against the average Dh6.5 million they dropped to during the downturn. The signature homes, in comparison, can fetch Dh15 million to Dh25 million depending on the spread, as against the Dh11 million during the downturn.
“During the downturn, apartment prices on the Palm went as low as Dh800-Dh1,500 a square foot and the market has since seen them recover to Dh1,200-Dh2,200 a square foot, much of which happened during 2012,” said Mahendra Singh, managing director at SPF Realty. “There is still a lot of room for prices to be anywhere near what they were during the peak — already in January and the first week of February there was a flat-lining of value appreciation compared to the Q4-2012.”
For comparison purposes, signature homes could command Dh20 million to Dh40 million, while the garden homes inflated up to Dh15 million to Dh20 million.
While Nakheel did have a couple of new residential releases last year, most of the recent buying has come through the secondary market. On whether existing property owners would now wait for the Nakheel Mall to deliver a price lift before they place them for sale, the Cluttons spokesperson said: “The natural transient movements within the Dubai demographics mean people are buying and disposing of property all the time. We don’t feel that (Palm) landlords are particularly (going to) hold back.”