Time to buy? Dubai property sales on an upswing, despite Covid-19 woes
Demand for mid-to-high housing market grows amid the pandemic
Dubai has been registering an uptick in property sales transactions in the last six months.
Secondary, ready villas, and townhouses are in high demand as per Dubai Land Department. But it is not just the ‘glut’ in the market that is driving this upswing.
The prices, too, are reporting an upward trend for the last six months. The rising interest in the mid-to-high housing market reflects a paradigm shift in mindset brought about by the pandemic, say experts.
“Yes, people are buying and are leaning towards townhouses and villas. They want to own a private space that allows less interaction with other people,” says Babar Ali, Sales Director, Homesmith Estate Brokers.
Shiv Gupta, co-founder, mymoneysouq.com, echoes similar sentiments. “The novel coronavirus disease (Covid-19) pandemic forced digitisation on us. It imposed a change where our homes are no longer just a sanctuary for relaxation but double up as office space, too. So, people are looking for bigger spaces, even if they are a little far off from work or city centres. They don’t mind longer commutes to work, which in most cases have been reduced to once or twice a week or less, for a space that is more comfortable.”
And while families and individuals look for bigger adobes, the interest invariably has been more in communities. “Gated communities have been of much interest in Dubai in the last six-eight months. This applies to both for rentals and sale. More and more families are appreciating the lifestyle that they can afford in a community with parks, walkways, organised commercial spaces like malls, etc., in community living as opposed to living in a standalone building,” says Farooq Syed, chief executive officer (CEO), Springfield Properties.
Springfield Properties have seen a trend of people moving from Barsha, Dubai Sports City and Jumeirah Village Circle (JVC) to communities such as Town Square, Mudon, Dubai Hills. “Prime real estate is selling at a premium right now, and in this sector, villas and townhouses have done phenomenally well,” adds Syed.
Besides the exclusivity, there are certain aspects of the economics of homeownership that also work in the favour of villas and townhouses.
Service charges, for instance, which are paid by owners on an annual basis are much more reasonable in villas and townhouses. “Villa owners, in most communities, usually a fifth of what owners of an apartment would pay. Service charge for a three- bedroom house villa in Springs is around Dh6,500. Comparatively, a three-bedroom in Marina attracts a service charge of Dh20,000-Dh25,000,” says Ali.
Prices have bottomed out
Prices have bottomed out, at least in the mid-to-high and luxurious sectors. Lower down payments, a dip in interest rates, improved loan to value ratio, and Dubai’s image of a safe haven for investments are largely the reasons for the uptick in demand and prices in this segment.
“Uber luxurious properties have seen a spike in demand, thanks to European buyers. Since the opening of Dubai in July, we’ve seen quite a few high net-worth transactions,” says Syed.
Quality prime real estate is not available in abundance anymore. Constructions over 15 years old have started showing signs of aging. Now, buyers are willing to pay a premium for the new ones. The price for a house in Shoreline apartments on Palm Jumeriah, for instance, starts at Dh1,100 to 1,200 per square feet. Comparatively, prices average at Dh4,000 per square feet at the Royal Atlantis, which is also at Palm Jumeriah. “People are willing to pay top dollar for good quality development in the same area,” says Syed.
Similar variations are also seen in the JBR neighbourhood, where old apartments are selling at Dh1,000 per square feet, and apartments at One JBR, a new construction, are being sold at a minimum Dh4,000 square feet.
Should you buy?
For now, it is only the high-end properties that have seen an uptick in prices and demand. It is expected to have a pull effect on other low-to-mid segments too this year. Rents and sale prices will eventually rise across the board by the end of this year, say experts.
Now while we are at it, there is always this debate among expatriates on whether to rent or buy a house. One way to reason is to know how long you plan to stay in the country. “If you can pay the same rent amount for 10 to 15 years then the house is yours. You have to do the math,” says Gupta.
But is it a good time to buy? Well, that really depends on your financial health rather than the prices dictated by the realty sector right now. “Invest what you can spare. The whole economic environment is a bit volatile even now. We expect it to be better in six months, but this is not a time to be aggressive. If you have a buffer, an emergency fund that will protect you from any untoward experience, then buy,” advises Gupta.
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