‘Ready’ homes tilt the balance in Dubai’s property market this year
Small down payments and take-possessionnow schemes impact on rents and offplan prices
Dubai’s real estate market is getting set for the “ready” wave — and it will have a telling impact on the city’s residential rents and even on how developers price their off-plan launches.
Between 15,000 and 20,000 new homes will be delivered in Dubai this year, and in locations such as Al Furjan, Jumeirah Village Circle and Sports City, the new additions are being backed up by some eye-catching incentives.
At Al Furjan, for instance, Nakheel is offering a flat 5 per cent down payment which allows the owner to move in immediately. So no waiting around to take possession. And the rest of the payments can be made over five years for the townhouses and seven on the villas. (Nakheel has to date handed over 1,130 units out of 1,234 in total at Al Furjan.) In Jumeirah Village Circle, private developers are lining up 5-10 per cent down payment schemes and the rest to be paid in five years. Ditto at the Sports City.
Now what does this mean for the wider property market dynamics? Ready property purchases tend to be dominated by end-users, who are then likely to move into their own homes rather than rent them out.
This is exactly what is happening at these emerging residential areas of the city, and, to an extent, even in Business Bay. And that adds to the pressures on the rest of the rental marketplace.
Rents in Sports City and JVC are down by 10-15 per cent on average since early 2017. A three-bedroom unit at both locations are in the range of Dh90,000-Dh100,000 a year. Each new property that gets added to these places keeps rental demands in check.
“Rents are falling across the board and that is due to a number of reasons, one of them being the fact there are now generous incentives given on ready properties,” said Sameer Lakhani, managing director at Global Capital Partners.
“That has the impact of certain communities falling more than others in rents. But these are the communities that endusers find to be substitutes.
That could also prompt more residents to make the switch to buying for their own use rather than remain as tenants. End-users — that’s what this market needs to see a lot more of, as Dubai’s developers and the authorities know only too well.
According to Cluttons, the consultancy, this sentiment seems to be percolating down. Properties valued at Dh1.5 million and with mortgages on them are becoming a regular feature in transactions, alongside the multi-million dirham luxury homes Dubai is known for.
“At this price point (of Dh1.5 million), one- and two-bedroom apartments in an established area are dominating most of the activity in the market,” said Richard Paul, Head of Professional Services for Cluttons M. E., in a recent statement. “This is also the case for prospective owner-occupiers who wish to cease paying rent.