Dubai: Are wealthy investors waiting to see what Palm Jebel Ali offplan sales will come up with next?
As investor attention pivot’s towards Dubai property market’s next signature luxury destination - and a massive one too - sales at some of the other high-end communities have seen some slowdown in recent weeks, according to a new report from Reidin-GCP.
There have been two rounds of sales at the Palm Jebel Ali so far, even as anticipation builds for more releases to come. Of the homes released to date at the island, the price range is Dh18 million to Dh40 million.
“Given how demand is playing out for PJA, it will be no surprise if new launches start to see price premiums,” said an estate agent. “There is definite interest for the second Palm among high networth investors who want to get in before prices start rising sharply. They don’t want to be late coming in.” (Currently, in the secondary market, Palm Jebel Ali properties continue to show a slight premium on the launch prices.)
The most awaited would be the start of apartment sales on the Palm Jebel Ali. “Once the first set of apartment buildings at PJA come to market, we are talking about a new level of buying interest,” the agent added. (As of now, talk is that the apartment launches could happen before year-end, but there has been no confirmation from the developer.)
Some of the demand diversion to the new Palm could explain why sales of high-end homes at some of the other locations (except for the Palm Jumeirah) have dipped somewhat. Plus, since October 7, there is also the geopolitical factor, according to developer sources.
As of now, average sales value in year-to-date transactions at the Palm Jumeirah is close to the Dh4 million mark, that’s up 11 per cent from a year ago.
Other upscale residential locations
“How geopolitical tensions affect demand (and in turn, sales) may be a factor to consider going forward,” says the Reidin-GCP report. “We are seeing falling sale volumes - and values - among luxury communities.
“Dubai Creek Harbour and Dubai Hills Estate, which have been the two main drivers of sales among the newer communities, are starting to see quarterly downturns in transactions.
“This is likely due to rising interest rates and as luxury sales normalize, we can expect the mid-market to pick up.”
- Reidin-GCP report
Mid-market holds its own
Yet, the same sentiments are not visible in Dubai’s mid-market offplan market. A couple of recent launches by private developers did solid sales intake, according to the market.
The Reidin-GCP report also confirms the mid-market’s steady cycle of demand. But ‘the uptick in the mid market seen in transaction volumes does not show up in sales value’, the report notes. That’s ‘due to the transactions themselves being smaller-ticket items’.
“We can still see small quarterly upticks, and Dubai’s mid-market communities have not seen the same sharp drop off as their luxury peers.”
More sales sweeteners - even warranties
Private developers are also getting hyper-aggressive with their offers. Of course, the 1 per cent monthly payment scheme is becoming more widely available from developers. Others have responded with guaranteed returns.
Recently, there have been a couple of developers pushing 5-year ‘warranty’ on their properties. The ‘warranty’ provision is integral to any product or service, but as a sales hook in property, this is relatively new territory in Dubai.
But all that matters is whether this ultimately helps deliver a sale. Developers in Dubai have in these near 20 years of freehold seen their share of market cycles shifting - and the one thing they have tried to learn is stay ahead of the game.