Dubai: A sizeable gap is starting to open up between property prices in Dubai sold offplan and those homes bought in the secondary market, creating more opportunities for buyers. On average, recent offplan launches in Dubai carry price tags that are anywhere between 14-30 per cent higher than comparable ready units – and that’s quite a difference and which could further widen.
For instance, at Dubai Hills, the average price per square foot on a home sold direct from developer is Dh1,600 compares to Dh1,400 psf for a unit bought from an investor. Dubai Hills is currently one of the most popular locations with investors and end-users alike, and with more releases coming such as the Address-branded residences from Emaar.
In Downtown Dubai, the price tag from the developer is averaging Dh2,600 a square foot against Dh2,000 from the secondary market. Much the same is happening at the Palm Jumeirah and Dubai Marina, according to data from DXBInteract.com. “The higher prices on offplan units from developers isn’t just about them asking more,” said Firas Al Msaddi, CEO of fam Properties.
There is inflation cost on building materials, and these days, more developers are adding more luxury, more features with their launches
“On a per square foot basis, this is why the difference between ready and offplan is happening.”
And that’s an opportunity for buyers – especially end-users. Because with mortgage rates having risen significantly since the start of the year, buyers will have to look elsewhere to reduce their overall financial commitment. So, if they can get a mortgage on a ready home – and which is going 10-30 per cent lower than an offplan option – then end-user buyers are getting behind ready.
In offplan sales, average psf per transaction is currently at Dh1,472 compared to Dh1,262 in July 2020 and Dh935 back in July 2015.
"We wished for an apartment close to the heart of the city with a good view. This apartment has a large balcony with a view of the Burj, the entire Business Bay, the Canal, and the coastline. Other than that, it comes with an independent maid’s room and all possible amenities and facilities of a city house. We also got it at a very good deal as the market was slightly lower post the pandemic and already seen a more than 30 per cent appreciation.”
Dubai prices stabilise
Interestingly, it’s only on offplan property that prices are still seen as rising within Dubai residential freehold. The price stability/decline is happening on ready villas and apartments and, to an extent, on offplan villas too. “For end-users and investors, this is the best piece of news because the property market requires some cooling off too to keep the demand going in this cycle,” said an estate agent. (On Thursday, Dubai Land Department confirmed that July sales were the highest in a decade.)
Who’s buying offplan
As August closes, it’s already been a busy month for offplan launches or new releases, with Azizi releasing its most premium set of buildings – 24 of them - within the Riviera community in MBR City. And more developers in Dubai are adding green spaces and even private pools to their apartment buildings.
“The trend right now is for buyers/investors seeking more luxury features in their offplan buys,” said a developer. “It could be because the Dubai property market is seeing more European buyers – not just the Russia-Ukraine conflict, it seems even Europe’s searing heat wave is diverting more buyers to the UAE.
“It makes sense for developers to capture all sorts of buying interest.”
At Dubai Creek Harbour, “Allsopp & Allsopp has seen a 60 per cent increase in transactions in the first six months of 2022 compared to the whole of 2021,” said Lewis Allsopp, CEO at the firm, which is a listing partner of the property portal houza.com.
As for Emaar Beachfront, “Handovers have already started with residents taking up occupancy in some of the finished towers like Beach Vista,” said Robert Villalobos, Brand Director at Betterhomes Group, also a houza.com listing partner. “ There are still many that are under construction with anticipated handovers between now and 2027.
“That said, it is still attracting very strong demand from buyers.”
The interest in Dubai Creek Harbour has not wavered and we don't see it wavering any time soon either.
We are seeing launches sold out on the same day and sales on the secondary market achieving high premiums close to unit deliveries as many buyers see the potential of a fully ready project.
- Robert Villalobos of Betterhomes Group