Dubai: Dubai’s property market has come up with a fourth successive month of improved sales, both on off-plan and ready units. And with enough prospective buyers out there, developers in Dubai — government-owned and private — are feeling emboldened to test the markets with more launches.
These are the numbers they will be looking at — at the end of April, 6,360 new homes were sold off-plan, which is a 6 per cent gain on the same period last year, while ready property made up another 4,436 units, on par with what happened last year. The data, provided by Reidin-GCP, shows that among the freehold locations, Dubai Hills Estate (with 875 off-plan registrations) and the Downtown (with 692 units) were the most popular picks in these four months.
More areas will be coming onto the freehold pipeline — on Thursday, Emaar opened up a brand new location in Dubai, at Mina Rashid in Bur Dubai-Deira, where in alliance with a DP World subsidiary, it will create a future-facing seafront destination. Including a mall by the sea, of course.
So far this year, developers have managed to pull in first-time buyers into the market, whether for their own use or as investors. The Dubai Government-owned wasl Properties confirms that Emiratis — many being from the millennial set — picked up 50 per cent of the available units in a recent release of units at The Nook in Jebel Ali.
But market sources say that the rise in demand for off-plan has not come at the expense of ready property sales. By any yardstick, 4,436 new homes in four months is quite a solid set of numbers.
What is driving this two-pronged upturn? Market sources say that stretched payment plans are starting to show up more frequently in secondary market deals, with individual sellers willing to match payment schemes that go up to — and over — five years. In the current marketplace, the only thing that can seal a sale is a payment plan.
But Sameer Lakhani, Managing Director at Global Capital Partners, cautions against secondary market sellers overdoing it. Plus, “It is unlikely they will capture a significant percentage of the market, especially given that the bulk of the sales is still coming in the primary space from developers,” he said.
“We believe the current stability in secondary market activity has more to do with the wide gap that has opened up between primary and secondary market sales prices. This will remain dominant in the run up to the Expo 2020.”
In the off-plan market, government affiliated developers such as Emaar and Nakheel, Meraas and Dubai Holding remain the dominant force, accounting for well over 75 per cent of unit sales. Is that leaving less space for privately owned developers to state their cases with buyers?
Vijay Doshi, Managing Director at Vincitore Real Estate Development. believes there is ample space for all. He has just launched his third project, the “Benessere” in Arjan at a location near the Miracle Garden. The project will cost Dh350 million and aims for completion in the fourth quarter of 2021.
“Six plots were bundled to develop this — we have a fairly sizeable number of apartments — 380 — stretched across the land and we did away with the basement parking,” said Doshi. “Both contributed to lowering our construction costs and we intend to build at a cost of Dh350 million.”
The developer said working his contacts helped generate a fair deal of demand during the pre-release phase. Average selling price is Dh1,050-Dh1,280 a square foot, placing the price tag on a studio at Dh450,000.
It also kept a check on margin expectations. “Our margins on the Benessere would be 25-30 per cent, whereas for the first, the Palacio, we had 35-40 per cent,” said Doshi. “With market changes, developers have to turn realistic on their chances.
“But there is still a decent margin to be made — land costs have come down and so have construction costs, if the project is handled well.” A lot of private developers can go by the same theme and compete with the big names. Plus, seek a little bit of help from stretching those payment plans.
A sense of ‘wellness’ comes to Dubai projects
Rain and mist rooms? Another one dedicated to a bit of aroma therapy? A lagoon pool on the rooftop?
Developers in Dubai sure are taking to the wellness concept. “I would like to think that we are launching the first wellness community in Dubai with the Benessere,” said Vijay Doshi at Vincitore Real Estate Development. “There’s a market for that sort of thing.”
MAG Property Development was the first to come up with wellness elements as a USP in selling property. It even set up a dedicated division, MAG of Life, to oversee such projects, including the one it is building at Dubai Healthcare City.
Another developer, LC Well, is expected to announce a project at Dubai Silicon Oasis shortly. Again, it is being built around wellness features.
Now, if this trend spreads, developers will be paying as much attention to bricks as they would do to Zen gardens.
A freehold launch in Abu Dhabi
A developer other than Aldar Properties and Imkan has launched a project in Abu Dhabi, with Masaood Developments opening sales for a waterfront apartment complex on Al Reem Island. Targeted at the mid-market buyer, the developer is offering units on instalments over 15 years and with an initial deposit of Dh50,000.
“Traditionally, it has taken years for people to save for the necessary large down payments demanded by other developers or for bank mortgages,” said Ziad Abou Nasr, Director of Masaood Developments, in a statement. “We have chosen to create a way of enabling a whole new market, allow individuals to stop renting and realise the dream of owning their own home.”