DUBAI: Property buyers in Dubai were chasing affordable options in 2017, with Jumeirah Village Circle (JVC) and Dubai South recording the highest number of off-plan transactions among the city’s freehold communities. JVC, which already hosts a sizeable resident base, figured in 2,161 deals and followed by the fast-developing Dubai South enclave, which did 2,095.
Figuring in third place as the most sought after off-plan location was the pricier Downtown, where 2,039 apartments were bought direct from developers last year, according to data from GCP-Reidin, the property services firm. (At the Downtown, another 607 ready units were also bought during the period.)
For ready properties, mostly sold in the secondary market, Dubai Marina retains its prime position, with 1,860 units, and followed by International City, which figured in 1,227 deals through the year. But the latter saw a 21 per cent drop in volumes compared to 2016.
In dirham terms, overall citywide off-plan sales during 2017 weighed in at the Dh28.63 billion mark, while ready transactions added another Dh19.51 billion.
In 2017, the gap between off-plan sales and those for ready in the secondary market widened considerably. Based on GCP-Reidin data, there were only 11,536 ready units sold as against 21,884 in off-plan. Clearly, all those developer-backed incentives — with post-handover payments being particularly decisive — continue to tilt sales in the off-plan direction. (Post-handover plans accounted for nearly two-thirds of all off-plan launches in Dubai last year).
Expect more of the same this year. Off-plan releases are likely to see a return to form after a relatively slight run in the fourth quarter of 2017, during which only 3,818 units were released. As against that, the third quarter of the year saw 18,267 units released and second quarter accounted for 12,513 units.
“Sure, the fourth quarter of 2017 was when there was some brakes applied on the number of launches,” said Sameer Lakhani, Managing Director at Global Capital Partners. “Remember that entire communities were launched in the fourth quarter, such as the ‘Azizi Victoria’ (at MBR City). Yet the number of unit launches does not reflect that, primarily because developers have a staggered sales policy.”
VAT element
There is also the value-added tax (VAT) sentiment to check on. Some developers, such as Danube Properties, have stated they will wait on the next launches until a clear picture emerges on whether potential buyers are likely to hold back or not. (As such, all residential sales are exempt from VAT, but consumers typically turn over-cautious whenever a tax element is rolled out.)
“It will be interesting to see if sentiment — and launches — are affected in the first and second quarter of 2018,” Lakhani said. “Direct developer financing is fuelling off-plan sales. In the ready market for the most part, developers are still absent and where present, catering to investors rather than end users.”
If new off-plan launches have a subdued first-half, it will give developers with ongoing sales some leeway in trying to find buyers. And without having to wonder what sort of incentives the new releases will have. Even if indirectly, VAT will have given Dubai’s property market some sort of a breather.
Offices suddenly turn hot property in Dubai
* Investors spent the last three months of 2017 snapping up strata-titled offices and this way try to pre-empt having to pay VAT on such transactions. December was the best month for office sales during 2017, with 210 deals being recorded, and ahead of November’s tally of 126. In all, 1,417 office units were sold in Dubai last year
* Business Bay offices were the most sought after with 105 units sold in December
* In 2017, the first quarter was the most busy sales-wise, when a combined 9,145 units (ready and off-plan) being sold in Dubai. Even though deal flow during November was weak, the fourth quarter of 2017 still managed to see 8,544 units sold
* In value terms, the first quarter of 2017 recorded the highest figure, at Dh13.68 billion, according to GCP-Reidin data. In second place was the Dh12.73 billion in the third quarter.
— M.N.
