Off-plan sales in Dubai’s residential market have risen despite a fall in overall property transactions in 2014, according to the latest update from real estate firm Cluttons.
Freehold transactions in Dubai fell by almost one-third in total during the third quarter of 2014 as the emirate’s off-plan residential sales market continued to attract regional and international investors.
“Many households that are determined to purchase, now view off-plan properties as good value,” said Steve Morgan, CEO of Cluttons, Middle East.
“For instance, at Villa Lantana, just off the Umm Suqeim Road, there has been a high level of appetite from Emirati (43 per cent) and Indian (24 per cent) investors in particular, with the former group primarily comprised of buy-to-let investors.”
Faisal Durrani, Cluttons’ international research and business development manager, also pointed out that measures adopted by some developers have failed to dampen off-plan sales.
“Emaar for example, has reportedly restricted re-sales until handover of its first tower at Dubai Creek Harbour, which is expected to come to market in 2018,” he said.
“Units sold for between Dhs1,400 psf and Dhs1,850 psf, with 30 per cent down-payments and Emaar has reported 100 per cent sales. Certainly, Emaar’s positive reputation has aided the rapid sales, but the sell-out scheme also highlights the maturing attitude of investors who are taking a long-term investment perspective.”
The report also noted that the investment appetite continued to remain strong, with investors keen to free up capital to move on to their next purchase.
“Positively, we are seeing nearly four out of every five transactions being refinanced once buyers have met developer restrictions, if any, on the transfer of title deeds,” said Durrani.
“While the market continues to adjust to the changes in the financing landscape, we expect the gradual softening in values to persist over the next three to six months while the market adjusts to the evolving conditions.”
The Cluttons report also said that Dubai’s real estate is entering a period of sustainability after a period of rapid price growth.
The rate of house price growth in the emirate slipped by 0.3 per cent, marking the first decline since Q1 2011. Average values were still however 10 per cent up from Q3 2013 and currently stand at Dhs1,493 psf.
The results are largely in line with a CBRE report, which showed that prices grew just marginally quarter-on-quarter.
“The government’s introduction of the federal mortgage cap and increase in property registration fees, has reined in the extraordinary growth seen in the market over the past 24 months, and has been exceptionally effective, culminating in the IMF recently backing down from concerns about the market overheating,” said Morgan.
Dubai’s property market, which has seen a flurry of new project launches this year, has evoked concern among officials about an impending correction.