Dubai’s property market sees demand surge for furnished ready – and offplan - homes

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Dubai: Want to cash in some more from Dubai’s continuing property boom? Then, have a look at the increasing number of offers on ready or near-ready apartments for sale at some of Dubai’s happening residential locations.

And here’s another incentive – these apartments are being offered fully furnished. The idea being that the developer or seller is reducing the time for the buyer to take delivery of the unit and then kitting it out. In effect, by buying an apartment fully furnished, the buyer can start renting it out with immediate effect. (Or move in for their own use, if that’s the purpose.)

Sure, these ready or ready to move in units with all the trappings come at a premium, but right now, investors want to limit any time taken to get returns on their spending. “We have seen units that are to be handed over in 3 months being bought – the best part is that the buyer already has a tenant for it,” said an estate agent. “The market is seeing a clear rise in offers for ready/soon to be ready apartments – not just from developers but from existing owners who want to cash in.”

Sources add these buyers are looking for shorter-stay tenants, whether that’s under a year or for a year or two max. In some cases, the future rental payments are made by the tenant’s employer.

Property market sources say there are two sub-trends playing out:

Essentially, one set of demand is laying the ground for another.

“In areas such as Downtown Dubai & Business Bay, high quality furnished one-bedroom units can typically rent for Dh100,000 to Dh150,000, while two-bedroom units can command Dh170,000 to Dh240,000 annually,” said Aakarshan Kahthuria, Managing Director at RiseUp consultancy.  

“In these areas, the rental premium is driven by expats – typically white-collar professionals - putting immediate occupancy as their first criteria and focusing more towards hassle-free living.”

At Palm Jumeirah, furnished one-bed units can command Dh140,000 to Dh180,000, while two-beds are Dh250,000 to Dh320,000 per annum, particularly ‘when matched to a super-prime address’.

Now, those sort of numbers – and future yields – are just the sort that investors want to sign up for.

This explains the sheer number of branded serviced residences projects that were launched in Dubai - and Abu Dhabi too – in the last 2 years. The current trend is for non-branded projects to offer the option of furnishing the units as part of the sale and purchase agreement.

“Traditionally, offplan properties dominated the market due to flexible payment plans and potential for higher returns,” said Vasilii Fetisov, managing partner of Housebook Real Estate. “However, the demand for ready properties has been on the rise, leading developers to respond accordingly.”

Which means that offers of easier payment plans and lower down payment are now available on ready or soon to be ready units too. That, in itself, has been a game-changer allowing even individual property owners to match offers from developers when it comes to finding a new buyer.

“Furnished apartments are particularly appealing to those looking to relocate swiftly or investors aiming for prompt rental income,” said Fetisov. “This convenience often results in a premium on such units.

“For instance, in areas like Emaar Beachfront, property owners have observed resale premiums of up to 120% compared to the original purchase price from 2-3 years ago. Similarly, properties in DIFC Living have seen approximately a 15% increase in resale value vs. the original price.”

A new cohort of property buyers in Dubai are hoping to match those returns in due course. For now, they are looking at a ready or soon to be ready home with furnishing.

A real estate market, especially one that’s been growing for more than 3 years now, is always on the lookout for new growth engines to continue the momentum. If there is sufficient build up in demand for ready homes, then it’s just what the Dubai property market needs. Because the new buyers can readily tap into new pockets of demand for renting out in instances where they don’t plan to be end-users.

Dubai’s real estate market is recording a ‘notable shift’ towards ready-to-move-in, furnished apartments. That being the case, such properties command ‘significant premiums’ stemming from their immediate usability. Developers in Dubai, never ones to miss an opportunity, are backing this with targeted offerings and flexible payment plans to meet the demand.