Dubai: Property investors in Dubai were doing a lot of buying and selling in July. Or to be more precise, lots more.
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Both in ready homes and off-plan sales, July’s numbers turned in the best performances since 2017. Developers definitely have a lot to cheer about on the off-plan side, with the Dubai Land Department registering 2,274 deals last month — the best since December 2017.
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This means that the combined off-plan transactions in the first seven months are up 13 per cent over last year, as per Reidin-GCP data.
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Completed homes are doing just as well — July’s tally of 1,698 units represents the best monthly figures since March 2017. In the year to end-July, overall ready property sales are up 4 per cent. So, what’s driving the sales surge this year?
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Investors chase deals and bargains
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With property values still way below their mid-2014 highs, buyers seem to be picking up all the deals being offered. And the deals are coming in all sizes and payment tenures.
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Does the buyer prefer making monthly payments that are not too much of a burden? These pay-as-you-go schemes can be had for as low as Dh2,000-Dh3,000 a month and stretching over eight years. Damac and MAG are among those to have tested investor sentiments with such plans.
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Now, if a buyer does not want to start immediate instalments beyond the down payment, developers have all those post-handover schemes of multi-year durations. These schemes are principally responsible for the upturn in off-plan sales this year, while some developers hope the monthly payment schemes will also start finding greater investor traction going forward.
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But post-handover schemes still rule
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But for the moment, it’s post-handover plans that are all the rage … and not just on off-plan. “Clearly, interest has picked up in the ready and off-plan space spurred by easy instalment schemes,” said Sameer Lakhani, Managing Director at Global Capital Partners. “Emaar is now offering 5-year post-handover, while Dubai Properties has 6-year post-handover.
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“Palm Jumeirah continues to be the standout buyer choice in the ready space, while in off-plan, the emerging communities such as Dubai Creek Harbour, Meydan and Dubai Hills continue to show strong performances. New offerings are definitely attracting investor interest.”
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Will sales upturn hold up?
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For now, market sources believe that the steady improvement in month-on-month sales is the biggest takeaway for them. That off-plan and ready sales were able to do a combined 3,972 units in July — typically a slack month — says much about sentiments.
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Now, even if August turns in a more subdued set of returns, the market believes it has more than compensated for that with the July showing.
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Clearly, the biggest sentiment out there is to pick up the best bargain.
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Just recently, a buyer acquired an Emirates Hills villa for Dh19 million and change at an “auction”, a price considerably lower than what it would have fetched in a market where property values are not under immense pressure.
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And the bargains are not only happening in the top-end of the property market, where buyers are signing up for all-cash transactions.
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“Today, investors have a great opportunity to generate significant returns in the under-priced real estate space,” said Kalpesh Kinariwala, head of the Pantheon Development, which has ongoing residential projects in Dubai. “They can earn returns of 7-8 per cent annually.
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“Prices have bottomed out and buyers are looking for yield guarantees.” (Pantheon has a three-year rental guarantee scheme of 8 per cent, in a four-year payment plan.)
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Prices turn favourable even for secondary listings A year ago, there was a near 40 per cent price gap between homes listed in the secondary market and their off-plan peers. But much has changed in these 12 months.
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“That gap is now starting to narrow and this what’s being reflected in the higher ready sales this year,” said Lakhani. “The reasons for such a wide gap are many, not least being the easy instalment schemes for off-plan. But such schemes are now being offered on ready as well.”
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