Dubai: In Dubai, offplan launches are back in fashion. With Damac’s latest launch bearing the Italian fashion brand ‘Cavalli’ name, can it be any other way?
This was the developer’s first standalone launch in some time and to be built at a hefty price tag of $545 million in Dubai Marina. The same day, Deyaar confirmed the main contractor for its ambitious Dh750 million, 70-storey tower - Regalia - in Business Bay, and which on completion in 2024 will be one of Dubai’s tallest structures. (The actual height has not been revealed.)
Last week, Union Properties released a three-building cluster at Motor City, where four-bedroom units start at an eminently affordable Dh1.75 million. These launches could just be the prompt of more that Dubai’s developers are planning to launch offplan, as they find buyers have become more receptive to buying and waiting for the handover.
The Regalia, located in Business Bay, is aiming for a 2024 completion.
Which brings back a question that has been asked each time Dubai’s property market has had a boom in the last 10 years – is it better to buy a ready property or go for offplan?
As always, the answer lies in where the buyer is looking – and what sort of price he is willing to pay. If thinking of an apartment between Dh500,000-Dh3.67 million, then the buyer will still get ready units costing less than an offplan.
But if the buyer’s interest is for villas in the Dh10 million plus range, then trying offplan will be the less expensive choice. Because right now, ready-to-move-in or existing Dh10 million plus villas are having no delays in getting a buyer – and ones willing to fork over instant cash.
- The average transaction price for an offplan property year-on-year has increased by 53% from Dh1.24 million in August 2020 to Dh1.90 million, according to Property Finder.
- The median price for an offplan apartment sale in August last year was Dh745,500 and this has increased by 48% to Dh1.10 million.
- There is a 12% increase in the median price for offplan villa/townhouses sale values as they increased from Dh1,62 million to Dh1,81 million during these 12 months.
Generous on commissions
According to Sameer Lakhani, Managing Director at the property consultancy Global Capital Partners, the comeback in offplan sales happened because developers do not want to be left behind in the ongoing market revival. In the first few months of the current upturn, which started in the fourth quarter of last year, all the action was centred on ready homes and offplan was left far behind.
Things started to turn from the second quarter of this year for offplan and by July and August, their sales were hitting the charts with as much force. If the demand for ready homes is fuelled by end-users and longer term investors, the resurgence in offplan selling is bringing back some investors with an eye on the fast buck.
Plus, developers are raising the commissions on offer for brokers. “The commission structure developers are offering to intermediaries range as high as 10 per cent, which is as much as the first instalment on the property in some cases,” said Lakhani. “Other incentives such as the waiver of Dubai Land Department fees and post-handover payment plans further stimulate demand.
“This does create an incentive to speculate in the hopes of ‘flipping’. Investors should only be buying in the offplan space if they can service the payments in addition to the locational advantages that the offering can provide.
“Other than that, the ready space continues to provide value relative to the offplan market.”
All about confidence
Lynette Sacchetto, Director of Research and Data at Property Finder, is not unduly surprised by offplans’s takeoff in such a short span. “We have bounced back to 2019 ratios where secondary and offplan [sales] segments are almost 50:50,” she said. "This is a clear indication that investors are coming back into the market due to their confidence in the future of Dubai.
"Now, the question is, will there be enough stock available to sell in the off-plan market to fulfill investor demand, especially with foreign investors coming in over the next six months for Expo?"
For offplan apartment sales transactions, Emaar's Dubai Harbour (260 units) had the most sales last month, followed by Mohammed bin Rashid City (239), Business Bay (219), Jumeirah Village Circle(171) and Jumeirah Lakes Towers(137).
