Dubai’s off-plan property sales manage to halt slide

Dubai’s off-plan property sales manage to halt slide

Gulf News, 1 January, 2019

Dubai: Here’s the good news — more than half of property sales in Dubai during 2018 were from within the off-plan space. This despite worst-case scenarios painting a picture that off-plan sales were doomed and could go as low as 40-50 per cent off from their 2017 levels.

Based on the first data streaming through, things haven’t been that bad. Overall off-plan sales in Dubai managed to record 17,473 units, down 26 per cent from 2017’s 24,103, according to numbers from Reidin-GCP. A reasonably strong fourth quarter showing — when a combined 4,502 units got sold — did much to prop up full-year off-plan numbers.

Demand for ready property was down a statistically insignificant 1 per cent — falling from 12,783 units to 12,793 last year. (Even in value terms, off-plan made up more than half of the property market, with deals valued at Dh22.46 billion.)

So, what did developers do to ensure off-plan still stayed relevant? One word — incentives. And lot’s of them, including waiving off land department registration charges, freezing property service charges for five years (or even more), and taking payback periods to well past the handover.

These days, developers are even playing a dual role to make the property buying process as smooth as possible.

“Developers keep playing the role of financiers — even in upmarket locations, the focus remains on post-handover payment plans that removes the need for the buyer to deal with banks,” said Sameer Lakhani, managing director at Global Capital Partners, the consultancy. “Demand is still there for new launches… with the incentives, of course.

“Given this demand, new launches as well as more deliveries will remain strong in 2019.”

Will developers play ball with new launches going forward? Some — who can afford it — are focusing on reaching construction milestones before planning their sales programmes.

Market buzz points to consistently high demand for certain projects, such as the recently launched upscale Madinat Jumeirah Living cluster near Burj Khalifa tower from Dubai Holding. Dubai Hills is another seeing some heightened buyer activity as it marks project milestones.

Of the existing projects, Damac Hills (formerly Akoya), Barsha Heights and Al Furjan all have had steady investor activity, while Sports City and Silicon Oasis continue to be a consistent performers sales-wise. So is Nakheel’s Nad Al Sheba villa community.

Interestingly, some 20,000 new homes were completed this year, a marked improvement on the sub-15,000 unit average of recent years. For 2019, the projections are for a similar or even higher tally, as many of the 2014-16 off-plan launch projects get completed.

These numbers will ensure that Dubai’s rental market will continue to face supply pressures. Every new addition to the neighbourhood is one more reason why landlords may find it impossible to even think of raising their demands. (Tenants for their part will not be complaining about more supply.) It could be 2021 and thereafter that new supply could start seeing some decline.

“The rate of development at some communities will be lower than in the past,” said Lakhani. “But this is a function of developers having to make adjustments to newer forms of financing.”

Trends in Dubai’s 2018 property buying

Dubai Marina and International City were the only two clusters to see more than 1,000 transactions for ready property. The former ended with 1,619 units and International City had 1,057, according to Reidin-GCP.

In off-plan sales, Business Bay (2,491 units), the Downtown area (1,111 units), Jumeirah Village Circle (1,504 units) and International City (1,092 units) were the most prominent buyer choices. Creek Harbour, where the first tenants will move in this quarter, saw 909 units sold.

In value terms, ready property sales made up Dh22.52 billion, while off-plan contributed Dh22.46 billion.