Luxury realty getting its mojo back
Limited new supply and improved demand are ensuring better price stability
Dubai’s high-end freehold communities are seeing some sort of price stability, probably for the first time since mid-2014. The main reason for that is these locations are seeing fewer offplan launches, which would add to the pressure on ready properties there.
And some of the locations are starting to see prices climb up from the trough. Values at the Palm Jumeirah have recorded a price growth 1.2 per cent in the 12 months through March, while at The Lakes, the gains have been 2.6 per cent, according to the latest Knight Frank update on the local property market.
High-end transactions
The Palm is seeing a steady trickle of high-end transactions, including one for a reported Dh76 million plus paid for a penthouse at a recently completed project, the Palme Couture. Another Palmbased development, The Alef Residences, has also been an investor magnet, market sources say.
All this is starting to show up on how prices are faring in key upscale locations. “Prime markets in Dubai are seeing somewhat of a stabilisation,” the report says, adding that across the board, these locations have seen a drop by an average of 2.6 per cent in the year to the end of the first quarter of 2018, but down from the 5.5 per cent decline seen in the previous 12 months.
And where new supply continues to be added, as at the Downtown, the pressure on prices continues. But even here, there are some positive signs emerging. The latest year-on-year decline is pegged at 5.2 per cent, down from the 9.8 per cent drop over the 12 months through March 2017.
Capping new supply is not the only way that luxury developers are responding to a soft market. “In Emirates Hills, prices have fallen by 12.2 per cent in the year to the first quarter of 2018. Lower levels of demand and more realistic vendor expectations have driven prices lower,” the Knight Frank report notes. “We remain optimistic as to the performance of the prime market relative to the mainstream over the course of 2018.
“Aside from Downtown, the level of supply due to be delivered in prime communities remains manageable. This combined with more realistic vendor pricing will drive demand for prime [properties].
“The single largest factor which is likely to continue to put pressure on prices is supply. In 2018 Knight Frank expects up to 33,000 units as scheduled for delivery. If this level of supply comes to fruition, it may drive prices lower and could impact confidence.
“However, the severity will vary, community by community.”