Dubai: Property buyers in Dubai are once again showing their preference for homes they can look at and move into. Rather than just thumb through the brochures.
For a fourth month in a row, sales of ready units have held up relatively well compared to the demand for off-plan units.
There is a relative shift that is going on towards the ready space, with green shoots of recovery appearing in Sports City, the Downtown, Arabian Ranches and Jumeirah Islands.”
– Sameer Lakhani| Managing Director of Global Capital Partners
During this period, buyers bought 4,107 ready homes in Dubai, which is down 12 per cent from the same period last year. But when it comes to off-plan buying, the decline is quite substantial — a 30 per cent drop to 6,086 units in the year to April 30 against 8,736 units sold same time last year, according to data released by Reidin-GCP.
“There is a relative shift that is going on towards the ready space, with green shoots of recovery appearing in Sports City, the Downtown, Arabian Ranches and Jumeirah Islands,” said Sameer Lakhani, Managing Director of Global Capital Partners. “We are seeing is a rotation of funds towards the ready space in a slow yet steady manner. This is quite unlike in the equity markets where the feedback is instantaneous.
“In the case of real estate, the trends transpire over longer time frames, and Dubai is in the middle of that shift. It is unlikely that off-plan market transactions will catch up by the end of the year.” The decline in off-plan volumes is also being felt deep and hard on the value side. Fro developers reliant on off-plan sales to get funds coming in, this can be particularly painful.
The Reidin-GCP data estimates that in value terms, off-plan recorded Dh7.96 billion worth of transactions between January to end April, down from Dh13.2 billion last year. That works out to a 40 per cent hit. Only Emaar recorded a consistently high level of sales (Dh3.9 billion) between January to end March. And if those numbers are removed, the off-plan picture would have be even more painful.
In the ready space, the drop was a more manageable 20 per cent — from Dh7.95 billion in the first four months of 2017 to Dh6.38 billion this year.
The ready numbers are also getting a boost from a gradual return of buying activity in Dubai’s high-end villa communities. There is a belief among buyers getting in now that the price drops may have hit a bottom and that it makes sense for them to get in now.
“What we are seeing is that the villa communities are starting to witness steady demand,” said Lakhani. “Even at the Downtown, the high-end properties are experiencing a rise in demand.”
Developers are paying attention, with Dubai Properties having just released a new set of town houses as part of the Villanova cluster in Dubailand. The Majid Al Futtaim Group is also going full upscale with its first community in Dubai, the “Tilal Al Ghaf” and also located within Dubailand. The first releases will be in the Dh6 million to Dh16 million range.
After a year and more when affordable options were the talk of the town, the market is gradually veering towards finding a semblance of balance between luxury and the more budget oriented. Developers would welcome such a transition.
Sports City maintains the wining habit
In the race for buyers among Dubai’s freehold communities, Sports City was one of only two — the other being the Downtown — to show a year-on-year positive in terms of volumes. Sports City recorded 425 deals in the first four months against 298 units sold same period last year. The Downtown managed a 17 per cent year-on-year gain, with 263 units sold against 224 last year, as per Reidin-GCP data.
Since the third quarter of 2017, ready transactions in Dubai have risen by 24 per cent, while off-plan deals are down by 32 per cent. But across the whole of 2017, off-plan accounted for 60-70 per cent of all sales. “In the first quarter of 2018, we have witnessed a reversal where ready sales account for nearly half of overall activity,” according to a recent report from Reidin-GCP. “This was widely expected as off-plan incentives reached their theoretical maximum and the price gap between ready and off-plan prices reached unsustainably high levels.”
Between 2015-17, transactions above Dh1 million accounted for 55 per cent of activity. In the first quarter of 2018, “we have seen a shift towards properties below Dh1 million, which now account for 55 per cent”.