Property sales
Villas getting too pricey? Then, go for the townhouse option - in Dubai, a lot of the new wave of property buyers are doing that. And developers have been quick to cash in, offering sub-Dh2 million choices. Image Credit: Seyyed de Llata/Senior Designer

Dubai: Developers and sellers of villas in Dubai take note – jacking up prices by 10 per cent and more raises the risk of these units remaining unsold for longer. Even when demand for villas continues to run red-hot.

But after villa prices shot up by 40 per cent in just 18 months, potential buyers are wary of further hikes in asking values. “Buyers are becoming less willing to accept double-digit increases from the most recent sales,” says a first-quarter update from Better Homes. “Increasingly, we are seeing villas that are overpriced remaining on the market.”

Villa sales totalled 2,564 units in the first three months, which is a 56 per cent increase over last year. Apartments numbered 11,835, and that’s a 77 per cent gain year-on-year. The biggest winner, though, was townhouses with 3,496 units sold and a 125 per cent improvement from first quarter 2021.

Clearly, affordability compared with their villa peers has been what’s drumming up demand for townhouses. Developers have played it smart by offering multiple pricing options, including at or around the crucial Dh1.5 million to Dh2 million mark. (The trend is being repeated in Abu Dhabi, which has seen increased offplan launch activity from multiple developers, and in Sharjah, where Arada continues to push through with more affordable options.)

Overnight increase
Multiple estate agents have raised complaints about sellers asking for more – after a deal had been signed. “I had bought a confirmed interest for a Dh15 million villa – only to be told that the owner is thinking of testing the waters for Dh20 million,” said one broker.

“A lot of sellers are getting starry eyes hearing about the record sales some of the villas had been fetching in Dubai. What they don’t seem to understand – at least for now – is that a villas on Palm fronds are quite different to anything else.”

More townhouses on the way

Of the first quarter launches, there were quite a few projects that were offering townhouses as part of the mix. Dubailand remains a favoured spot and so is MBR City, Dubai’s two fast-emerging end-user and investor hotspots.

“Developers have been quick to recognise this trend and have launched a number of successful townhouse communities in Q1-2022, resulting in a 207 per cent increase in offplan sales,” says Better Homes.

No let up in demand for Dubai property
Going by the first quarter performance, the rest of 2022 is 'shaping up to be a great one' for Dubai’s property sector, according to Better Homes. "In its first quarter, the residential property market only kept moving forward with a marked uptick in sales transactions and values.

"Dubai Land Department figures showed the real estate market’s continued growth with an 81 per cent increase in transactions quarter-on-quarter. Prices have also continued to increase, albeit at a slightly slower rate than 2020, pushing the value of property sold in Q1 to a record $11.7 billion, a 125 per cent increase compared to the same period in 2021."

Sweet spot on prices

“There is no doubt that a large portion of buyers are looking for this type of budget – of between Dh1 million to Dh2 million,” said Wassim Abdallah, Betterhomes’ OffPlan Sales Manager. “However, the price points developers are launching differs based on two aspects - high demand and low demand areas.

In high demand areas, the main developers - Emaar, Damac, etc. - are opening in the best locations and competing with each other at an average starting price of Dh1.7m to Dh2m plus. Here, you will only find one-bedroom available.

- Wassim Abdallah of Betterhomes

“In low demand areas, this price range will be continuously available for one- and two-bedrooms, as sub-developers are maintaining the same price points - as well as (unit) sizes - to try and create more demand.”