Dubai: Get ready for the big summer sale – in Dubai’s property market.
Developers are rushing to launch or release offplan homes priced in the crucial Dh800,000-Dh1.5 million range to keep attracting end-users, who had been driving the market’s fortunes for the whole of 2021. New launches, even at upscale towers in the Safa Park area, start at Dh1.3 million, while newly-completed apartments at a golf community in Dubai South are priced around Dh900,000. On the ready apartments, the offer is 70 per cent of the payments can be made over three years. In Dubailand, Damac has ready villas at its Akoya community from Dh1.1 million.
With mortgage rates inching higher from last month, developers are not waiting around for end-users to turn up. The need is to convince them that if they plan to buy, they should be doing it now. Any delay will only add to the costs, especially if they are considering mortgages.
Mortgage rates could be hitting 7 per cent on average by year-end – against 3 per cent last year - if the US Federal reserve sticks to the multiple rate hikes they have been talking about. For anyone thinking of mortgages to buy, that would mean quite a substantial payout compared to the last three to four years.
This is why developers are staying with one message when it comes to end-users – ‘Buy Now!’
Drop in mortgage buyers
According to latest data from DXBinteract.com, mortgage-backed property sales in Dubai were down 27 per cent in the first three months of this year. Cash buyers and investors were leading the activity during this period, with more than 20,000 transactions done (up by 80 per cent over Q1-2021). That netted Dh56 billion, which is 125 per cent more than in the same period last year.
Still need end-users
While the numbers are holding up after an exceptionally strong 2021, developers in Dubai realise they still need end-users, and more in the mid-income space. This is why the heavy focus on properties in the Dh1 million to Dh2 million range. “For 2021’s momentum to continue, Dubai property needs more end-users buying homes,” said the CEO at a leading brokerage firm. “2021 had the wealthy and upper-mid-income residents buying a home to move into or rent out.
“The next wave of buying must come from the mid-income.”
Market talk is that Dubai’s luxury homes will easily keep finding new buyers, most of them first-time investors from overseas. (According to Google Trends, this year has seen the ‘highest interest point ever worldwide for Dubai villas’.)
Not just mortgage costs, potential buyers will also need to factor in the steady increase in property prices. In the first quarter, the average selling price of an offplan apartment was Dh1.2 million, which is 16.9 per cent higher than last year, according to the DXBinteract.com portal. For a ready apartment, the increase was 30.9 per cent and the average transaction value at Dh1.1 million.
In terms of location, Business Bay was the hottest spot, leading on both offplan and ready apartment sales.
Properties valued at between Dh1 million to Dh2 million made up 35 per cent of the overall sales volume (with 7,000 transactions) in Dubai, while those under Dh1 million represented 32 per cent (6,500 deals).
“The numbers show what developers should be focussing on – the Dh1 million to Dh2 million properties,” said the broker. “This is where more end-user buyers will be found.”
These coming weeks, developers in Dubai will be doing just that.