Off-plan property shows promise in Q1
Increase in the number of transactions in the past two months shows investor confidence
Despite global market challenges brought about by the ongoing Covid-19 pandemic, Dubai real estate market has had a good first quarter with a substantial increase in the number of transactions.
According to Dubai Land Department records, the number of transferred properties has increased by 15 per cent, while the total value of the transacted properties has increased by 17 per cent as compared to the first quarter of 2020, prior to the Covid-19 lockdown.
Elias Hannoush, Managing Director of Morgan’s International Realty, says the significant spike in property demand is driven primarily by the residents of UAE since many countries are still facing lockdown and travel restrictions.
“The lower LTV (Loan-toValue) ratio and favorable interest rates offered by the banks created an ideal opportunity for tenants to secure a home loan and own a property, pushing mortgage transactions to a new high record of 6,068 transactions, an increase of 58 per cent compared to the previous quarter and 69 per cent as opposed to the same quarter last year,’ he adds.
Off-plan market shows promise
Off-plan property transactions accounted for only 28 per cent of total market transactions during the first quarter, but in the last few days of the quarter there have been multiple new developments being launched in in the market, says Hannoush.
According to Lynnette Abad Sacchetto, Director of Research and Data “The increase in the number of transactions for off-plan has been more than 30 per cent for the past two months which is showing a huge growth in investor sentiment and positive market outlook. We have seen developers launch new phases within their existing projects, especially in the villa/townhouse segment, which have sold out within hours. People, end users and investors alike, are once again heavily investing in the future of Dubai.”
She adds that in March, average transaction value for offplan properties has increased month-on-month by 24.6 percent and for secondary properties it increased by 21.5 percent. The total value of off-plan properties when comparing March 2021 to February 2021 has increased by 70 per cent and secondary properties have increased by 41 per cent.
“When we look at the volume of transactions in February, the off-plan market transacted 1,713 properties worth a total of Dh2.91 billion and the secondary market transacted 2,930 properties worth a total of Dh8.02 billion. But the number of off-plan transactions in March increased by 37 per cent and the secondary/ready property transactions increased by 16 per cent.
Luxury market a winner
The Dubai luxury property market has also performed well. Around 150 properties were sold and transferred above the Dh10 million mark, an 18 per cent increase in the number of luxury properties sold as opposed to the same quarter last year and 50 per cent of these transactions took place in Palm Jumeirah, placing it as top luxury property accusation choice for high and ultra-highnetworth individuals in Dubai.
The prices for most of Dubai’s villa and townhouse communities have also shown an increase in the average transactional price per square feet, as well as that of apartment communities in prime locations. “We expected apartment communities in nonprime locations to still experience supply pressure, and the market performed just as expected,” says Hanoush.
The demand in the first quarter is driven primarily by UAE residents Elias Hannoush Morgan International Realty
Buyer confidence
Haider Tuaima, Head of Real Estate Research at ValuStrat, says, “As far as residential supply is concerned, 2020 saw the completion of total 36,015 housing units of which 27,435 were apartments and 8,580 were villas/townhouses. For 2021, estimated upcoming supply currently stands at 46,316 apartments and 10,563 villas/ townhouses. Approximately 7,294 units finished construction during the first quarter, equivalent to more than 12 per cent of total expected supply this year.”
Tuaima agrees that there has been an improved buyer confidence appears evident in many parts of the Dubai residential market. “Anecdotal agent evidence confirms strong demand and speaks of faster sales campaigns and competitive bidding occurring between some purchasers, especially in villa communities and now also in some of the more soughtafter apartment locations too,” he explains.
Top performing areas
According to data published by Property Finder, in the villas/townhouses sector, 11.5 per cent of all sales in March 2021 took place in Mohammed bin Rashid City, followed by Tilal Al Ghaf (10.1 per cent), Dubai Hills Estate (9.9 per cent), Nad Al Sheba (8.2 per cent) and Rukan (5.8 percent). Looking at apartments, 10.7 per cent of all sales transactions took place in Business Bay followed by Dubai Marina (9.3 per cent), Jumeirah Village Circle (8 percent), Jumeirah Lakes Towers (7.6 per cent) and Palm Jumeirah (7.2 per cent).
The top areas of interest in terms of searches for villas/townhouses in March were Dubai Hills Estate, Arabian Ranches, Palm Jumeirah, Mohamed bin Rashid City and Damac Hills. As for apartments for the same period, the top areas of interest were Dubai Marina, Downtown Dubai, Palm Jumeirah, Business Bay and Jumeirah Village Circle.