In Dubai, owners of super-luxury homes delay sales as prices keep increasing 10-15%
Potential sellers realise they are better off waiting to get the best deal possible
Dubai: With Dubai’s property values riding higher, those with ready luxury homes are delaying plans to sell – because they can ask for more in the months ahead. And get that asking price, with homes at the Palm, Dubai Hills, Jumeira Bay and District 1 no seeing 10-15 per cent annual price gains. Sales of Dh100 million plus homes too are on their way to new highs.
“Yes, some sellers are holding on since they can see the upward trend,” said Dounia Fadi, Chief Operating Officer of Berkshire Hathaway HomeServices Gulf Properties, which specialises in properties right up there on the value chain. “Owners have increased their prices, which made the properties out of reach for some buyers. So, many of them ended up renting instead, while picking and choosing from some of the recent high-end projects that being launched by renowned developers.”
Bring on the luxury
This is why developers are making a return with premium projects, with the likes of Damac and Dar Al Arkan doing so in association with some renowned luxury labels. Nakheel too launched a cluster of high-end villas in Jebel Ali and more luxury launches on the way, including a bespoke tower on the Palm from Alpgao Properties (with penthouses for Dh200 million).
“We are experiencing low inventory in ready high-end properties, due mainly to the fact that Dubai experienced a high influx of high networth individuals who are choosing the city to be their home,” said Dounia. “The way the pandemic was managed is a testament that UAE is where you would want to be if ever something similar happens again.”
Settled in cash or Bitcoins
At the top end of Dubai’s property market, nearly all the deals are settled outright in cash (or crypto currencies), according to market sources. Most of these buyers do not bother with mortgages or paying off in installments.
That’s “because a high percentage of the current buyers we are seeing are new comers and they don’t necessarily qualify for a mortgage,” said Dounia. “You only qualify as a new resident if you have worked six months as an employee or have operated a business as self-employed for two years.
“However, as a non-resident you are eligible to 50 per cent. But the property has to be completed. The primary reason they are buying a property here is to relocate to Dubai, or they would usually raise money from either selling their properties or businesses back home. Or simply relocating their wealth.”
"The reason I don’t personally see the broker’s commission increasing these days despite the growth we are experiencing is because of the highly competitive environment we are in.
"There was a commission increase few years back when the demand was much less, as it is the buyer’s responsibility to pay broker’s commission. When we were experiencing less demand, brokers who had buyers were able to get commission from the sellers too. Sellers were happy to reward and incentivize those who were able to get their property sold in such tough times.
"That trend has carried on and now all brokers are able to charge both buyers and sellers as long as both parties are aware."
Keep the pace of buying going
The first three months of 2022 have shown demand for homes in Dubai is showing no signs of flagging. If anything, after the start of the Russia-Ukraine conflict, the level of interest in home buying by wealthy overseas investors actually took another spike.
Real estate industry professionals in Dubai are sure of what the immediate future will hold. More than two-thirds in a poll by Berkshire Hathaway HomeServices Gulf Properties expect growth to continue. In fact, 77 per cent of those polled say Dubai’s market will even grow further this year. (Keep in mind, 2021 numbers were among the best returns for the property market in more than a decade.)
“The momentum witnessed in 2021 is an encouraging sign of things to come in 2022,” said Dounia.