Dubai: Even as offplan sales keep growing, there are some signs showing up of some cooling off in the wider Dubai property market. And most notably when it comes to deals featuring ready homes or secondary market transactions.
During April to June, there was a 2.9 per cent drop in quarter-on-quarter secondary/ready market residential sales - and the second consecutive quarter of decline this is happening.
“While the market continues to grow month-on-month, it is beginning to slow down, a trend likely to continue over the next year,” said Lynnette Sacchetto, founder of RealTrust.
“This shift will be further influenced by multiple underlying factors, such as new supply entering the market and sellers adjusting their asking prices as they realize their properties are not worth the inflated values of previous years.
“These inflated prices were driven by low supply in some areas and segments and high demand, which has now dissipated.”
Listing for longer
Data suggest that properties advertise for sale are listing for longer. Against an average of 30 days last year, these listings now average over 90 days, according to RealTrust, thus ‘indicating a more stagnant sales listing market as of Q2-2024’
Of the newly launched projects this year, 34% feature post-handover payment plans, ranging from 12 months to 120 months.
This is also where price softening is starting to show. Since September 2023, the ‘median residential listing price value started to decline month-on-month by an average of 5 per cent’, the report notes.
“This was the first sign that the market was transitioning from a seller’s market to a buyer’s, a reality we are now seeing,” said Lynnette.
“Individual sellers in these off-plan projects are struggling to sell at opening prices, which is the prices they originally bought for, or below, to avoid the next developer payment they cannot afford. (They’re) opting to take a loss instead of the premiums they were promised when they originally purchased at the peak of the market in 2022 and 2023.
“This has been a common scenario over the last few months and likely to increase as a significant amount of off-plan supply begins to transition in the pipeline.”
Emerging market dynamics
As these trends play out, ‘expect changes in prices’ in both the sales and rental markets. “Areas such as Jumeirah Village Circle, where demand is very high and supply is very low, have seen prices more than double over the years,” says the report. “However, there is potential for balance as approximately 30,000 new residential units, representing 80 per cent of JVC’s current housing stock, are expected to enter the market in the coming years.”
Business Bay is another ‘high demand area with low supply and skyrocketing prices’, will see around 20,000 new residential units in the near term. There is also Dubai South, which will have 14,000 new residential units over the next few years.
