After a manic burst in off-plan launches over the last two months, Dubai’s developers are likely to ease off in the final quarter of 2017. If that happens, it could give the property market some sort of a breather in adjusting supply to whatever demand is out there.
It would ease concerns, to an extent, that developers are pushing far too much of stock into the market at the same time, and with a majority of these having payment plans stretched to years after the handover. Also, with too many projects competing for investor attention, there is no knowing for sure how many units have been taken up and — more important — how many are finding it difficult to find buyers.
If off-plan launches recede, that could be a good thing for the market. “The majority of new launches for this year (in Dubai) have already been announced at Cityscape Global in September,” said Manika Dhama, Senior Consultant at the property firm Cavendish Maxwell. “Some (of the) expected launches over the next six months are a project by Danube in Arjan or Al Furjan and phased launches within communities such as Dubai Hills Estate, MBR City and Dubai South, among others.” Sales activity spiked during the three days of Cityscape, with Azizi announcing that it managed to notch up over Dh1 billion, the majority of which came for its Meydan development. Other Dubai developers cashed in as well, as did Aldar from Abu Dhabi, and Sharjah-based Arada also had brisk turnover of their recent launches.
“Even with the spate of launches at Cityscape 2017, which allowed sales at the event (for the first time in nearly a decade), the impact is likely to reflect in Dubai Land Department transfers only upon their registration, within the fourth quarter of 2017 or the first quarter of 2018,” said Dhama.
“There were 1,752 off-plan apartment transactions and 232 off-plan villa transactions in September.”
Dubai South projects had a lot to do with September’s upbeat tally, with buyers crowding in for The Pulse Townhouses and Urbana. And elsewhere in the city, the premium Vida Residences Dubai Mall and Park Heights in Dubai Hills Estate were launched before August.
“Absorption rates vary by location and developer track record,” said Dhama. “Projects launched by established developers in communities with existing or under development infrastructure are likely to be absorbed faster than those in emerging locations, especially if these are from developers who do not yet have a track record in the market.”
If today’s buyers still prefer the first-generation freehold clusters in Dubai, the time to do it is now. Investor activity for Dubai Marina, Business Bay and Downtown has been high — yet these locations still record “marginal” price declines.
“Our latest “Property Monitor” report on price performance in the third quarter of 2017 shows quarter-on-quarter declines of 0.6, 0.9 and 0.2 per cent in Marina, Downtown and Business Bay,” said Dhama. “All three have upcoming supply and this will continue to exert pressure on prices — and more so on rents.”
Jumeirah Lakes Towers — another of the first-generation clusters — is also recording higher levels of transaction. And the canny investor would also be hoping to take advantage from the announcement that a vast stretch next to JLT would be utilised for the 10 million square feet “Uptown Dubai” and its seven towers.
“Development activity has certainly increased in JLT, with single towers such as Dubai Gate 2, Wind Tower 1 and 2, Saba 4 and the recently announced Uptown Dubai district,” said Dhama. “In terms of transactions, units in JLT accounted for 594 secondary market transfers and 65 off-plan during the first nine months of the year.
“The location constitutes 3 per cent of total transactions in Dubai during this time. (But) with increasing activity in other established locations such as Marina and Downtown, as well as emerging communities, there is more competition for JLT when it comes to investor interest.”