Lower real estate prices have levelled the playing field
Developers offering units across the whole spectrum in their projects
The soft market conditions in Dubai aren't deterring developers from launching blue-ribbon projects.
The 17th edition of Cityscape Global 2018, which concluded on Thursday, has seen some big launches - the Madinat Jumeirah Living by Dubai Holding, Marsa Meydan by the Meydan Group and 'Riviera of the Emirates' project by Abu Dhabi-based Imkan Properties. However, developers are weaving in an element of affordability in these luxury projects by adding more apartments to the mix.
"Developers are offering units across the whole spectrum in their projects. It's not just about the three-bed penthouses any more. A luxury developer like the Select Group has a majority of studios and one-bedroom apartments in their Dubai Marina project," says Matt Gregory, head of sales for property at dubizzle.
According to market sources, a one-bedroom apartment at Madinat Jumeirah Living is priced at Dh1.68 million, a two-bedroom at Dh2.05 million and a three-bedroom at Dh2.78 million.
While Dubai property was once considered to be the bastion of the uber-rich, softening property prices have levelled the playing field and made real estate more affordable for end-users as well.
"Dubai wouldn't be Dubai if there were no launches of some luxury projects. Prices and rents will continue to fall, more so for the luxury sector. But there is not that much further to decline, we're getting near the bottom. Prices will continue to fall simply because of the products being launched. The only way developers can clear all that inventory is by cutting costs," observes Craig Plumb, head of research for the Mena at JLL.
End-users who plan to stay in the country longer and are currently paying monthly rents between Dh120,000 to Dh150,000 are thinking of using that money as a downpayment to purchase property in the UAE. The recently proposed residency reforms are also encouraging expatriates to shift from their transient mindset.
For instance, dubizzle says that three-bedroom villas on Palm Jumeirah, which was once considered out of bounds for a majority of the population living in Dubai, is now one among the most searched properties for sale in the emirate.
"In the super-premium segment, there is a smaller number of people who invest in uber-luxury property. A lot of the investment is coming from overseas. The Chinese market is quite hot now. Emaar hiring Chinese brokers is a testament to demand from that market," Ann Boothello, director of marketing at dubizzle, points out.
"It's very much a buyer's market; people can negotiate and get deals," adds Gregory. Although there has been talk for the past few years that Dubai's luxury property market is close to bottoming out, there are certain sub-markets where there is room for prices to fall further.
"In certain markets, this is certainly close to the bottom, however, there is still some room for prices to decrease. In locations such as the Palm Jumeirah villa market, we are seeing that the market is very much there [or there about] and as a result, we are seeing the market begin to pick up in terms of transactions," says Taimur Khan, research manager at Knight Frank.
"We are at the bottom of the cycle. As the supply/demand matrix stabilises, we will see a return to steady measured growth," observes Jason Hayes, founder and CEO of Luxury Property.
Dubai Marina, Jumeirah Lakes Towers and JVC/JVT have a lot of attraction for end-users as well as off-plan buyers. The market in Downtown has slowed a bit.
"Investors are looking at B and C locations for investments as the returns are higher than in prime locations. End-users are still seeking properties in prime locations such as Downtown and the Palm for secondary and Dubai Hills for off-plan," adds Daniel Garofoli, luxury sales specialist at Luxhabitat.
"In terms of off-plan sales, beachfront apartments on the Palm Jumeirah have continued to be popular, primarily in developments such as the Alef, One Palm and Royal Atlantis. The villas at XXII Carat have also proven to be popular with buyers. Secondary villas sales have been strong in areas such as Al Barari, Arabian Ranches II and District One," says Hayes.
If the unit is correctly priced, then it sees good levels of demand, whereas overpriced units will tend to have much longer marketing periods. "More so in areas where we are expecting an influx of supply such as Downtown Dubai, we are seeing greater discounts being achieved compared to the marketing price," elaborates Khan.
Some properties are sitting on the market for a longer period as sellers keep a bottom line in mind that they don't want to move from.
"Sellers are willing to come down in prices little more now and take a hit, which is a great sign as they see that their market moves sidewards, but not down. So, in order to shift a property quick, it's required to come closer to a serious buyer's offer," adds Garofoli.
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