Dubai: Buyers scouting for property in Dubai are having the best of both worlds — they can buy new off-plan launches at prices well below what they would have commanded just two years ago. Or if they want to get into a ready property immediately, they could snap up deals on apartments that are still on average 13 per cent lower from their mid-2014 peaks.
If completed villas were what they want, they can have them for 11 per cent off on their 2014 highs, according to the latest data from the consultancy Reidin-GCP. For luxury property buyers, the current cost of acquisition would be even lower than these averages.
Dubai’s property market continues to tilt heavily in favour of buyers and what they want and at prices dictated by them. This remains the case even with the 1.3 per cent increase in apartment values citywide in recent weeks from their lowest point and 1.6 per cent on villas. Locations such as Jumeirah Lake Towers (JLT) have been quietly effecting a turnaround to the decline in apartment values it went through since 2014.
“Analysis of communities reveals that most have rebounded from their lows except for some of the high-end apartment areas such as Dubai Marina, Palm Jumeirah and Downtown,” states the Reidin-GCP report.
But transaction volumes are still far from catching up — data suggests that deals in Dubai’s freehold space are down 60 per cent from what they were during 2014. It means that market activity is driven by end users while most investors could still be biding their time before committing.
But there are still green shoots within muted deal flows — “From the start of the year activity is up 15 per cent in the January to October period, while from its lows it has rebounded by 25 per cent between July and October,” Reidin-GCP reports. “We opine that part of the reason why transactional activity has reduced has been due to the rising incidence of mortgages.”
But are investors better off sifting through the off-plan launches than chasing ready properties? Dubai South launches in recent weeks proved instant hits, selling out all units released on those days. And within hours.
Outside of the Dubai Southside story, “Off-plan properties trade at a discount — or premium — depending on the area and the stage of construction they are at,” said Sameer Lakhani, Managing Director of Global Capital Partners. “Currently, for most projects under construction, off-plan trades at similar levels to the secondary market, indicating that both the project and the market is firm.”
Dubai South launches carry an average of Dh700 per square foot, while Dubai Creek Harbour — where The Tower (the tallest structure in the making) will take centerstage — units carry Dh1,200 a square foot. Locations such as the Akoya development from Damac should see some increased secondary market now that the first handovers are nearing.
“There has been a steady rise in transaction values — both in the secondary market as well as in the off-plan space,” said Lakhani. “This indicates that demand remains stable to rising.
“Yet another proxy that is used to gauge demand is mortgage activity, and we are seeing mortgage transactions rising across communities.”
Rentals in Dubai’s freehold are gaining, but selectively
Locations such as JLT, the Palm apartments and Al Furjan villas are going through a round of rental gains, though still way below from their highs. Outside of these locations, Dubai’s freehold space has seen home rents dip by 7.5 per cent on apartments and 11 per cent on villas, according to Reidin-GCP. (These are from the peak rentals these properties commanded.)
“These ‘green shoot’ could signal a bottoming out of rents as supply and demand dynamics balance themselves, predominately driven by delay of handovers,” it reports.