Monday, April 10, 2017

Off-plan sales in Dubai increase by 45pc in Q1

Dubai’s position as a safe haven for investors is continuing to grow with a 45 per cent increase in the number of transactions for off-plan properties in the first quarter of this year, according to the latest report from Chestertons, a leading international property consultancy firm.

Over the first three months of the year, there was also a 4 per cent average rise in the number of transactions for ready properties, it said.

Ivana Gazivoda Vucinic, head of advisory and research, Chestertons Mena, said: “In the first quarter we witnessed positive movement on the residential transaction side for both transaction values and volumes. This is partly due to the increase in incentives and payment plans created by developers to make it more financially amenable for investors to purchase property. 

“The increased number of transactions was followed by increased transactional value, which stood at Dh12.28 billion for both ready and off-plan units, which is a 31 per cent increase compared to the previous quarter and an indication that price points are now more in line with buyer expectation.”

During 2016 there were 16,000 units added to the market, with a further 15,000 expected to be delivered in 2017. However, Vucinic is confident there will not be any oversupply issues - the realisation rate is increasing, from 30 per cent a few years back to almost 45-50 per cent now, a sign of a more regulated and efficient market, Vucinic said.

“Early signs are showing that the residential market is on its way to recovery. Increased transactional activity and slightly higher or stabilised prices are showing that investors have increased confidence in the Dubai market.

“With a growing population and ever-present foreign investors’ appetite, we expect the forecasted units due for delivery this year to be easily absorbed by additional demand,” she said.

The latest research report revealed apartment sales prices increased by 3 per cent on average during the first quarter, with properties in the emirate’s more affordable areas experiencing substantial price rises. Dubailand recorded an average increase of almost 20 per cent, from Dh760 per sq ft (psf) in Q4 2016 to Dh904.2 psf; while Dubai Sports City climbed 15 per cent on average from Dh918 psf to Dh1,053 psf.

In contrast, apartments in The Greens and JVT saw prices drop by an average of almost 5 per cent, from Dh1,329 psf to Dh1,268 psf, and Dh860 psf to Dh928.42 psf respectively.

Robin Teh, UAE country manager/director valuations and advisory UAE, Chestertons Mena, said: “We’re seeing several of the newer communities in Dubai become more established and with this an increase in interest from investors. They offer a range of amenities and good connectivity which has undoubtedly piqued the interest of potential home owners. They are also in a price bracket much less than centrally located developments and therefore appealing to those with more limited budgets or looking to downsize.”

There was an average overall drop of 1 per cent in terms of villa sales prices. Palm Jumeirah led the way in Q1 with a 7 per cent average increase, from Dh2,152 psf to Dh2,301 psf compared to the previous quarter. This compared to an average 10 per cent decline in sales prices for villas in The Meadows/The Springs, with villas falling from Dh1,187 psf to Dh1,073 psf.

Overall, residential rents dropped marginally in Q1. While average apartment rents dropped by 1 per cent across the emirate, properties in DIFC bucked the trend with an overall 4 per cent average increase compared to Q4 2016. In Dubailand, rents fell by an average of almost 4 per cent, with similar drops experienced in JLT and Remraam, the report said.

Villa rentals also fell, on average, by 1 per cent, with villas in Victory Heights (8 per cent on average) and The Springs (average 6 per cent) experiencing the greatest drops. The Lakes saw rents increase by an average of almost 6 per cent, it said.

In terms of office sales, prices increased by an average of 2 per cent during Q1, with JLT and Barsha Heights witnessing the greatest increases, at 5 per cent and 4 per cent respectively. Despite the growth of sales values, rents were still under pressure and dropped by 3 per cent on average. JLT maintained the same rental levels from the previous quarter, while Business Bay and DIFC dropped by 4 per cent on average and the rents fell in Barsha Heights by an average of 3 per cent.

Office sales, meanwhile, declined by 17 per cent on average in terms of volume, and 15 per cent in value in Q1 2017, which is a sign the office market is still going through the correction stage as a result of recent economic movements in the market.

Teh added: “Weakened oil prices have caused businesses to either consolidate their operations or to downsize, which has left a notable supply of available office space on the market. We expect the positive market sentiment to reflect in the office market in the forthcoming months, which will stabilise rents and, in turn, trigger occupancy increases.” – TradeArabia News Service 

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