Dubai: This could be a good time to pick up a bargain on Dubai’s luxury realty. Upscale apartments at Dubai Marina and on the Palm are on average lower by 3 per cent and 2.5 per cent through the first nine months of the year compared with what they were commanding same time last year, according to the latest Dubai residential property update from Cluttons, which adds that there will be further house price declines of 3-5 per cent over the next 12 months across Dubai.

Buyers seem to be interested in the value proposition this means. “Compared to other major world cities such as London, Dubai still offers what is perceived to be good value for money, which is aiding the performance of this segment of the market,” the report notes.

“In London’s prime core, the average price of an apartment stands at Dh4.9 million, which equates to between Dh4,500 and Dh7,400 per square foot (psf). The average value of residential property in Dubai stood at Dh1,441 psf at the end of the third quarter of 2015, with the Burj Khalifa (Dh3,700 psf) being among the city’s most expensive schemes.’

And these days, a Dh11.4 million would fetch a 5,500 square foot four-bedroom Garden Home on the Palm, while it would only come up with a “two- or three- bedroom flat in Chelsea, which would be roughly a third of the size”.

High networth Iranian buyers could come into the equation at some stage. “Our recent experience at Cityscape Global suggests that both residential markets in Dubai and London are likely to emerge as key beneficiaries of the lifting of sanctions, with Iranian HNWI already eyeing up both markets as they begin seeking out perceived safe havens,” the report says. “Iran’s high networth community ... have been effectively locked out of global investment opportunities for nearly a decade.”

If an investor prefers luxury on off-plan in an emerging location in Dubai, developers are willing to do quite a bit. New launches are being advertised via SMS offering “discounts” straight from the developer, and quite generous ones too. For a project launched more than six months, the discounts currently average 10 per cent and above.

Stringent lending criteria

“We’ve seen the popularity of off-plan property sales persist, partly fuelled by the fact that off-plan residential property prices are often 20-30 per cent lower than completed secondary stock, which in essence might allow buyers to bypass some of the stringent lending criteria and also possibly avoid the need for a mortgage altogether,” said Steven Morgan, CEO of Cluttons M. E.

Across the city’s freehold areas, apartment values were down 0.8 per cent and villas by 0.5 per cent during the third quarter, and a fifth consecutive quarterly decline, Cluttons’ numbers suggest.

On an annualised basis, the decline is 6.2 per cent after the first three quarters. The locations with the steepest dips have been Victory Heights (down 8 per cent), The Springs (7 per cent) and the frond villas on the Palm (6 per cent). ‘In fact, for some Garden Homes on the Palm Jumeirah, we have recorded annual downward price adjustments of up to 15 per cent as vendors lower prices in order to entice demand,’ the report adds.

Interestingly, more apartments have been sold this year than in 2014, and contrary to perceptions that transactional activity has caved in completely. Cluttons data estimates apartment-specific deals to be 6.6 per cent higher in the first nine months.

‘This can in part be attributed to their relative affordability in absolute terms and also the appeal of apartments to the buy-to-let investment community,’ the report says. ‘Strengthening yields due to the stability in rents against a backdrop of weakening capital values have aided this.’