During the first quarter of each year, the Dubai real estate market is a hive of activity.
Buyers are looking to make a fresh start by closing on the property they want, and tenants start to evaluate their plans for the months ahead. It is during this post-holiday period that we begin to see a spike in property prices as well.
The sellers who were away or who didn’t anticipate much activity over the holiday season use this as an opportunity to capitalize on increased demand by raising the asking price. This is a cycle that we see take place following every major seasonal event, whether it’s Christmas or Ramadan, and it’s something that’s especially common right after the summer.
Busting real estate myths
One of the main reasons for this price jump is the continued perception that the market slows down over holiday periods. While that may have been true once upon a time, it has not been the case for years now. There is a segment of buyers and tenants who are not as active during any seasonal cycle – they might be travelling over summer, for example – but there are still healthy levels of real estate activity taking place across the city.
Another pervasive myth we find ourselves dealing with is that prices drop over holidays and periods like Ramadan. Are there sellers who might choose to lower prices because they think there won’t be high levels of enquiries? Absolutely.
Is it a trend across the market? Absolutely not.
The one area where buyers might look at discounts is in the offplan sector. Over Ramadan, for example, many prominent developers lower the buying threshold, or offer attractive payment plans. It’s a great opportunity for investors to find a more flexibly buying option for themselves.
While the secondary market doesn’t offer any so-called ‘holiday discounts’, buyers do benefit from there being less competition over the same property. There is a bit more room to negotiate, but don’t go in expecting a flat rate price drop.
Price bumps mark end of season
What all of this ultimately leads to is a price hike once the season is over. The buyers who did take a break from the market are now back in, and there is always an influx of new buyers, which means that there is a significant jump in demand.
When looking at the prime and super-prime segments, we already have a shortage of supply which combines with the increase in demand to create a dynamic that any savvy seller just can’t ignore. This is the case every January and September, and I’m certain we can expect that to happen again next month.
Any serious buyer who has the means won’t be deterred by a higher price to get what they want, which may push the average transaction prices in a particular community higher. A bit more realistically, these price bumps benefit the individual sellers but don’t set off a new pricing trend.
That is determined by broader market conditions.
Best advice? Buy now
What is the upshot of these pricing cycles? It’s the same advice that any member of my team would give their clients – don’t wait to close on that perfect property. We are now in that period where you will find a bit less competition and can acquire the home you want a bit more easily.
If you hold off until next month, you will find yourself on the wrong end of the cycle.
