The hosts dominate with a total of 194 medals including 65 golds with Saudi in second place and Kuwait in third
"Off-plan transactions have had an extraordinary year, fuelled largely by generous back-ended and post-handover payment plans provided by developers. December proved to be a continuation of that yearly trend; it will be interesting to gauge how the appetite changes [if at all] during the first half of 2018, especially as emphasis starts to shift towards deliveries of some of these projects," says Hussain Alladin, head of IR and research at Global Capital Partners.
There may be many reasons for this spike. According to David Godchaux, CEO of Core Savills: "Few off-plan transactions take time to be reflected in the Oqood system, particularly from smaller developers. December also had a lot of holiday bargains and additional aggressive payment plans lasting for the month which may have caused this uptick. Lastly, December along with March are usually one of the busiest months of the year as businesses/individuals both take decisions before financial year closures. Also, anticipations of mark-ups due to higher service charges on residential products may have triggered closures."
The spike in December transactions could also be due to people being concerned about impending VAT and how this may impact them.
Dubai South or Dubai World Central registered the biggest uptick in off-plan transactions last year - up a whopping 738 per cent from 2016.
"This demand stems from one of the lowest entry points available in the market," reckons Godchaux.
The proximity of Dubai South to the Expo site and the price points it offers attracted both end-users and investors alike.
"There is demand for a few reasons, namely excellent payment plans from developers and the hope of good capital appreciation due to the transport infrastructure and Expo 2020," observes Mario Volpi, chief sales officer, Kensington Exclusive Properties.
Other projects that saw robust off-plan sales were Dubai Hills Estate, Dubai Creek Harbour, Jumeirah Village Circle and Downtown Dubai.
Ready market performance
The secondary market, on the other hand, clearly suffered in the aftermath of off-plan's dominance - transactions in 2017 were up a measly two per cent, according to GCP data.
Among the communities that performed well, Discovery Gardens outperformed the rest, with secondary market transactions up 32 per cent in 2017 while Motor City saw a 42 per cent decline in deal volume. Sales were also weak in International City and International Media Production Zone.
"Discovery Gardens seems to have attracted incremental investor interest especially after the announcement of the extension of the Metro, as well as to cater to the growing construction projects that are taking place in Dubai South. To that extent, there has been some rotation of funds away from International City towards Discovery Gardens," explains Alladin.
"Despite the reduction in rent and sale prices, the return on investment for Discovery Gardens is one of the highest in Dubai. International City is perceived to be of low quality and therefore not in great demand," informs Volpi.
"Discovery Gardens saw a few bulk deals in 2017 creating this spike. Nevertheless, sales price performance has been relatively weak, witnessing a six per cent drop year on year. The average sales price drop was more significant [eight to 10 per cent] as we are noticing a flight to quality on the secondary market on the back of softening prices in core locations too, combined with secondary locations seeing increasing competition coming from numerous off-plan launches at low price points. Still we see many owners holding back selling as selling now is much below premiums and the yields are still good/high," adds Godchaux.
Office market
December also registered the highest volume of commercial transactions in 2017 with 210 deals. With VAT kicking in on January 1, 2018, there was a flurry of activity in the last month of 2017.
"The spike in office demand has partly been due to the imposition of VAT for commercial buildings in 2018. In a broader sense, the office demand curve at the lower end of the spectrum continues to illustrate demand from SMEs," expains GCP's Alladin.
"The office transactions are primarily concentrated in the strata office districts of Jumeirah Lakes Towers and Business Bay. We believe implementation of VAT on commercial properties played a part in this interim spike," concludes Godchaux.
- deepthi@khaleejtimes.com
The hosts dominate with a total of 194 medals including 65 golds with Saudi in second place and Kuwait in third
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