The airline also suspended flights to Iran amid reports of an Israeli strike
According to Core Savills, of all the transactions concluded in 2017 year to date, including off-plan and ready property transactions, 41 per cent are below the Dh1,000 per sqft category.
"In 2017, the ready market was skewed towards a preference for prices below Dh1,000psf [roughly 60 per cent of the transactions conducted were in areas below Dh1,000psf]. This has been a recent phenomena that has been observed as end-user as well as investor preferences for affordable properties have come to the fore. Developers have gauged the latent demand that has been apparent in this price segment and have accordingly started to cater to this market but this has become more prolific in 2016-17," says Hussain Alladin, head of research, GCP Group.
"Furthermore, the market is increasingly driven by several factors, including lump sum unit price, the efficiency of the layout and number of bedrooms. This has made units below the price tag of Dh1.1 million very attractive for investors and end-users alike, counting for 53 per cent of the residential units transacted till date within the spectrum," observes David Godchaux, CEO at Core Savills.
Off-plan premium
However, in several communities where prices are below Dh1,000psf, off-plan is trading at a premium to ready properties.
"Historically, off-plan properties trade at a premium specifically because they offer a payment plan and, therefore, are the investment of choice, not only for short-term players, but also for end-users and investors in the absence of readily available mortgages. The premia has reduced as the mortgage market in Dubai has become more accessible. Buyer preference for off-plan or ready is a function of liquidity and the discount that ready properties are available at. What we observe is that on an overall basis, the demand for off-plan is higher in most cases," informs Alladin.
Buying off-plan could be more expensive than ready properties primarily because of larger unit sizes (in case of villas, larger plot sizes), better finishes and developer reputation. "This trend has been spotted particularly with Belgravia by Ellington in Jumeirah Village Circle, due to the successful delivery of its first phase; its future phases are being traded higher than the area average," Godchaux adds.
However, in some communities such as Downtown Dubai and Dubai Marina, off-plan products are priced very competitively and, in fact, undercut ready properties.
As of August 2017 (YTD), the total value of off-plan transactions in Dubai is nearly Dh17.72 billion (13,402 transactions), while total ready transactions (sales and mortgages) value is Dh20.09 billion (11,543), as per Core Savills statistics.
Communities such as Dubailand, JVC, Downtown Dubai, Business Bay and Dubai South are seeing big volumes of off-plan property transactions.
"City-wide, off-plan transactions on a year-on-year basis [Jan-Aug] have increased by 33 per cent. Unsurprisingly, in monitored communities we can witness the largest increase in the Dubai South district [497 per cent]. As the Expo movement gathers momentum, we can expect transactional activity to continue to increase, followed by price hikes," informs GCP's Alladin.
Attractive entry point
Also, 76 per cent of overall transactions concluded in Dubai South have been below the Dh1 million mark, according to a recent GCP-Reidin report. These launch prices are an attractive entry point for investors who would like to capitalise on future gains.
Another interesting trend to note is the marked increase in mortgage activity in the sub-Dh,1000psf price segment. This denotes the increasing numbers of end-users active in the Dubai property market.
"Sixty-eight per cent of transactions conducted in the sub-Dh1,000psf category were mortgaged. This implies there is a considerable hike in activity by end-users in this segment of the market, which stands to reason as Dubai matures into an end-user dominated base," concludes Alladin.
- deepthi@khaleejtimes.com
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