Dubai’s offplan sales get a late boost in May

Dubai: A seven-day selling spree from May 24 ensured that Dubai’s offplan property market had its best monthly sales in the year-to-date. Overall offplan sales during May totalled 1,830 units against the previous best of 1,752 units notched up during January, according to data from GCP-Reidin.

In value terms, the May offplan deals were worth a combined Dh2.28 billion. In April, offplan sales in Dubai were at 1,461 units and Dh2.05 billion in value, based on GCP-Reidin numbers. It was widely assumed that sales would then tail off during Ramadan and all through summer.

This year, by the looks of it, things are going to be different.

Much of the credit for the stellar May showing would go to Seven Tides, the developer who released 661 units at its “Seven City” high-rise project in JLT (Jumeirah Lake Towers). And these were bought up in a span of seven days, though the developer says it took even less time than that. In all, the developer took bookings that would eventually channel Dh300 million plus into its accounts. Seven Tides is now gearing up for a second round, though the dates have not been officially announced.

In a statement, Abdullah Bin Sulayem, CEO of Seven Tides, had said: the first round sellout suggests “that if you offer investors a compelling proposition, based on RoI (return on investment), location and quality, they will invest irrespective of overall market sentiment and that is essentially, our three-pronged marketing strategy.” (A studio was going for Dh354,000 and one-beds for Dh683,000.)

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Bin Sulayem’s emphasis on the selling price as a factor is telling. Market sources say that Seven City’s units were going for under Dh950 a square foot, while competing projects of a similar profile and in that area were in the Dh1,000 a square foot range.

“There will always be a buyer category attracted to offplan in Dubai whenever the prices and incentives are attractive enough,” said Sameer Lakhani, Managing Director at Global Capital Partners. “Some launched have attracted a flurry of demand and this is getting reflected in the overall sales data.

“But there will always be a lag between sales and registrations. With the Seven City, there could be a considerable tailwind effect over the next few months in the city-wide offplan data.”

Would the response to Seven City - costing Dh1.3 billion and with 2,635 apartments - now act as catalyst for other developers to test the market now and not wait until September? Or will developers use the present to focus on their ongoing projects and wait for some more time?

Meanwhile, for ready properties, most of which are available in the secondary market, overall demand remains steady. May saw 1,028 of these being sold as against April’s 986 and March’s 1,121, based on GCP-Reidin numbers.

“There remains a steady reallocation of funds to Dubai’s secondary market,” said Lakhani. “This is something developers with offplan projects and launches need to keep an eye out for. It’s difficult to ascertain how much of unsold inventory is building up (from the offplan launches made to date) as not every developer is releasing info on the number of units they have sold.

“There has been a shortage of mid-income, quality housing and that’s the reason why prices in areas like Jumeirah Village Circle and Sports City firming up. Affordable housing is not merely about price points - if that was the case, International City and Discovery Gardens would have the highest demand.”