Dubai: The next Dubai property market upturn should happen next year, but could be limited to a two or two-and-a-half year run, according to a leading developer. But the moment the upswing is cited, it would set off a “herd mentality among investors who would end up picking all available apartments”.
“The current negative cycle — which is now two years old — is about to end and Dubai can reap the full benefits,” said P.N.C. Menon, Chairman of Sobha Group, which currently has multiple multibillion dirham projects in Dubai and Umm Al Quwain.
“Unlike the real estate cycles up to 2009, which averaged seven years, the next upturn and downturn together would last about five years. The cycles are getting tighter.
“Whatever be the nature of the new cycle, there’s no hope for any other city within this region or elsewhere to recreate what Dubai has in the next 10 years. Unlike others, Dubai always keeps adding to what has already been built — many others head in a southern direction once they reach a certain level. With Dubai, it’s the north side.”
Market watchers have over recent weeks been talking of an upturn for Dubai realty, with the consensus that it should happen in 2017. If it were not for Brexit, the turnaround could even have come about earlier, some say.
Developers like Sobha are keeping their new launch plans ready at hand ahead of the upturn. It has plans to launch a set of semi-detached villas, row-houses and apartments at its underdevelopment $4 billion (Dh14.7 billion) Hartland cluster in MBR (Mohammad Bin Rashid) City in the “next six months”. The villas would start from Dh6 million to Dh6.5 million, while the apartments would be in the Dh1 million plus range.
But a brand new project will have to wait until market trends turn uniformly positive. However, it does have a joint venture in the works in an as yet unidentified location for a “budget project”, where prices would average Dh1,000 square foot for unit sizes of 700-800 square feet.
Menon said there was no “drastic” cutting off prices on unsold inventory at its existing projects, which also includes District 1 (also at MBR City). But there were some adjustments made, he added.
On whether it still makes commercial sense to develop the huge costs associated with creating a “crystal lagoon” as part of District 1, Menon said: “The lagoon design has already been incorporated into the master plan. District 1 is as prestigious a project as it can get in Dubai — we are talking about a project that is part of a 405-hectare location in the “real” heart of the city.
“As such we need to create uniqueness for the destination. The waterbody will take up 36 hectares on its own and there is going to be no change to that.
“We have sold a lot of the inventory in phases 1 and 2 of District 1 … there’s work to be done in clearing the phase three. But we are confident — the upturn is not too far away.”
Factbox: Investors pick up luxury properties on a bargain
Those wealthy investors who are still picking up realty assets in Dubai are getting a good bargain out of it.
“More confident buyers have already spotted the bargains and made their purchases,” said Sally Ann Ghai, Sales Specialist at Luxhabitat, the brokerage firm. “Recently, people seem to be more convicted that the next few months will be their optimum time to buy, and second quarter market reports appear to support this sentiment.
“Not all sellers are prepared to enter the market while prices are low, and as transactions increase, the supply of well-priced property in the area will surely reduce. Over the last two years we have seen a high amount of “window shopping”, with buyers delaying to pull the trigger on a purchase, due to uncertainty over the potential for even cheaper buys if they hang on long enough.
“However, that would strongly suggest that there is an awful lot of pent-up demand which is now, gradually, converting into market activity.”
In the last quarter, Dubai Marina was the investors’ favourite pick for luxury apartment buys. “Apartment prices per square foot for properties in quality towers with the best layouts and views is stable,” according to Daniel Garofoli at Luxhabitat.
The second highest ranking area in terms of number of transactions is Downtown Dubai, with “prices trading below 2013 levels at Dh2,142 per square foot. At Palm Jumeirah, sales remain “robust with an increase in price per square feet of 13 per cent from Dh1,905 a square foot in the first quarter of 2016 to Dh2,160 in the second quarter.”