Best month since 2017: What explains the surge in off-plan, ready Dubai home deals ☘ Hoey Team ☘ eXp Realty

Dated: 08/06/2019

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July’s off-plan and ready deals surge as buyers keep hunting bargains

Dubai: Property investors in Dubai were doing a lot of buying and selling in July. Or to be more precise, lots more.

Both in ready homes and off-plan sales, July’s numbers turned in the best performances since 2017. Developers definitely have a lot to cheer about on the off-plan side, with the Dubai Land Department registering 2,274 deals last month — the best since December 2017.

This means that the combined off-plan transactions in the first seven months are up 13 per cent over last year, as per Reidin-GCP data.

Completed homes are doing just as well — July’s tally of 1,698 units represents the best monthly figures since March 2017. In the year to end-July, overall ready property sales are up 4 per cent. So, what’s driving the sales surge this year?

Investors chase deals and bargains

With property values still way below their mid-2014 highs, buyers seem to be picking up all the deals being offered. And the deals are coming in all sizes and payment tenures.

Does the buyer prefer making monthly payments that are not too much of a burden? These pay-as-you-go schemes can be had for as low as Dh2,000-Dh3,000 a month and stretching over eight years. Damac and MAG are among those to have tested investor sentiments with such plans.

Now, if a buyer does not want to start immediate instalments beyond the down payment, developers have all those post-handover schemes of multi-year durations. These schemes are principally responsible for the upturn in off-plan sales this year, while some developers hope the monthly payment schemes will also start finding greater investor traction going forward.

But post-handover schemes still rule

But for the moment, it’s post-handover plans that are all the rage … and not just on off-plan. “Clearly, interest has picked up in the ready and off-plan space spurred by easy instalment schemes,” said Sameer Lakhani, Managing Director at Global Capital Partners. “Emaar is now offering 5-year post-handover, while Dubai Properties has 6-year post-handover.

“Palm Jumeirah continues to be the standout buyer choice in the ready space, while in off-plan, the emerging communities such as Dubai Creek Harbour, Meydan and Dubai Hills continue to show strong performances. New offerings are definitely attracting investor interest.”

Will sales upturn hold up?

For now, market sources believe that the steady improvement in month-on-month sales is the biggest takeaway for them. That off-plan and ready sales were able to do a combined 3,972 units in July — typically a slack month — says much about sentiments.

Now, even if August turns in a more subdued set of returns, the market believes it has more than compensated for that with the July showing.

Off-plan residences in Dubai Marina

Clearly, the biggest sentiment out there is to pick up the best bargain.

Just recently, a buyer acquired an Emirates Hills villa for Dh19 million and change at an “auction”, a price considerably lower than what it would have fetched in a market where property values are not under immense pressure.

Aerial view of Emirates Hills - Image Credit: Megan Hirons Mahon, Gulf News

And the bargains are not only happening in the top-end of the property market, where buyers are signing up for all-cash transactions.

“Today, investors have a great opportunity to generate significant returns in the under-priced real estate space,” said Kalpesh Kinariwala, head of the Pantheon Development, which has ongoing residential projects in Dubai. “They can earn returns of 7-8 per cent annually.

“Prices have bottomed out and buyers are looking for yield guarantees.” (Pantheon has a three-year rental guarantee scheme of 8 per cent, in a four-year payment plan.)

Hartland Estates Forest Villas is a new project announced by Sobha Group in Sobha Hartland. Villa prices were up by an average of 3 per cent in some areas in the second quarter, while other locations saw a 2 per cent quarterly drop - Image Credit: Sobha

Prices turn favourable even for secondary listings A year ago, there was a near 40 per cent price gap between homes listed in the secondary market and their off-plan peers. But much has changed in these 12 months.

“That gap is now starting to narrow and this what’s being reflected in the higher ready sales this year,” said Lakhani. “The reasons for such a wide gap are many, not least being the easy instalment schemes for off-plan. But such schemes are now being offered on ready as well.”

Article content from Gulf News Property Section

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