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Property owners find selling in Dubai a tough task

Property owners find selling in Dubai a tough task

City’s developers are ruling the sales charts with their incentives and prices for off-plan

Dubai: Property owners hoping to make a quick profit by selling should raise their expectations. Chances are that some developer is offering off-plan investment options right in their neighbourhood … and often at a lower price.

The message is clear — there is always an extra incentive or discount available for off-plan buyers than those seeking ready properties. And developers are making full use of the situation. It is the same as much in Dubai Marina as it is for property investors in Discovery Gardens.

For instance, at the Dubai Marina recently launched Vida Residences has “much lower entry prices compared to the area average, which made investors flock for early-bird incentives,” Godchaux added.

The off-plan surge is there in full throttle at Dubailand and Jumeirah Village, while their ready property sales remained relatively flat in recent quarters.

Many a recent investor in Discovery Gardens thinking of exiting now is finding the process comes at a cost. The community in fact saw prices going through a “double dip”, as newer developments (from Azizi) were being delivered in proximity at extremely competitive prices, the report says.

Ironically, “these new projects benefit from the social infrastructure available within Discovery Gardens, therefore causing a migration of buyers of this district, (and) adding downward pressure on prices”.

Even two of Dubai’s oldest freehold communities are seeing the impact of new supply next door. “After leading the recovery trend for the villa districts, The Springs and The Meadows marked a slowdown due to the trickle-down effect of (the new community) Mira’s delivery in Reem,” the report adds. “Mira is considerably newer and relatively cheaper, enticing a section of potential buyers away from The Springs and Arabian Ranches’ smaller units.”

What could add to market fluctuations going forward is if a sizeable number of the off-plan launches of the last 24 months are put up for sale in the secondary market. Many of these homes are scheduled for handover by 2019-20. Any spike in properties being put up for sale could have a deep impact on prices … and for developers, on their margins as well.

For the moment, “Off-plan prices haven’t necessarily gone below the launch price although further incentives and payment plans are being provided to entice demand,” said Godchaux. “Yes, buyers have much more options to choose from, both from ready and off-plan properties. But competition is seen only on a few prominent properties.”

Meanwhile, villa demand is passing through some sort of a revival. Apart from the big-ticket purchases in Emirates Hills — with price tags of Dh100 million and Dh90 million among them — there was the demand gains at the Palm.

This is the first time both locations are seeing such gains in two years, says the report. “This upward movement in markets that fundamentally lack liquidity was mainly due to a few large transactions having a significant statistical effect on the district average,” said Godchaux. “Although we hold a positive long-term outlook for prime districts, this spike in few big-ticket purchases is not particularly investor driven.

“End users have tried to lock-in good deals in the ultra-prime markets of Emirates Hills and Palm Jumeirah.”

Changes come slowly in Dubai’s rental market

Residential rents in Dubai were slower to cool off once the property market hit a rough patch from mid-2104. But even after they started to come under pressure, the rate of decline was nowhere near what the sales market was witnessing in 2015-16.

Now, with the sales market in gradual rebound, the rental market could be in for a bit of change as well. In the last 12 months, rents in Dubai’s key freehold locations softened only in single-digit terms, with The Views recording the most decline, by 6% per cent, according to Core Savills.

“Rentals have continued to soften across the board with only one exception marked in Dubailand, possibly due to low entry level rents,” the report notes. “Tenants are increasingly conscious of current market conditions and many have successfully renegotiated contracts while others have shifted homes, either upgrading to a better unit at a similar or lower rent or downsizing, depending on how their housing allowances/income is a ected by the ongoing economic conditions.

“We stand by on our previous forecast of further rental drops throughout the summer months. But expect rents to start stabilising in core locations by next year while predicting potential room for softening in the secondary locations.”

“As existing owners try to attract the same pool of investors for their ready-properties, they have to contend with highly competitive payment plans offered by master-developers, as in Downtown Dubai,” said David Godchaux, CEO of the consultancy Core Savills. “With a wider variety of products to offer, they can exercise a higher level of price control on the sub-market and retain their edge over individual landlords.”

Source – Gulf News