Dubai housing market in recovery mode

Numerous off-plan projects launched in Q-1-16 started a new cycle of the property market activity in the emirate, but the prices are no longer falling.

It seems that Dubai real estate developers have finally overcome the inertia of the previous period that started last year after many processes in the Dubai housing market had stuck. Exactly 2513 new off-plan projects were launched in the first quarter of the year, and this is not the limit, experts believe.

Last year, scared by unexpectedly fast pace of industry’s development, many developers have suspended their projects, and as a result 2015 in Dubai ended with only 20,ooo new units added to the residential stock. But this year, nothing restrains the enthusiasm of developers any longer, and the transactions may well pass the last year's mark.

At the forefront of new developments there are the largest players in the field of real estate in Dubai, such as Dubai Properties (with its Serena Villas project, sold in a matter of days), Emaar and private construction companies Nshama and Azizi, enticing buyers with affordable housing.

Not all Q-1 statistics have been processed yet, but it is clear that newly launched projects number and handover terms are going to be impressive, though not all of the most significant launches, such as The Tower project by Emaar, will contain freehold component.

However, the best news, according to experts, is that this recent launching boom has not affected the prices in the secondary market. In this sense, the worst (the worst for real estate sellers) is already behind us, and no more big discounts can be expected this year in the secondary market, as it was last year.

“While it is too early to state how they (the off-plan sales) are faring, what we are able to ascertain is there has been somewhat of a pickup in the response to these launches,” said Sameer Lakhani, managing director of Global Capital Partners, which issued the data. “The increased response has been a function of post-handover payment plans, a select reduction in launch prices, as well as improvement in the overall economic sentiment.”

Taught by experience, developers are offering favorable payment plans for their off-plan properties, with most of the payments scheduled to be paid after delivery, and some even offer the opportunity of the final installments due to be paid in two or three years post-completion. Of course, the measures taken could not but have an effect, so that some Dubai locations saw an unprecedented transactions growth recorded in the first months of the year. Sports City, Jumeirah Village Circle, and Emirates Living recorded a 30% growth in real estate deals in Q-1- 2016 compared to the same period last year. Thus, stabilization and even an upturn of the development curve is clearly evident.

“The real estate market in Dubai has indeed become a lot more stable in Q1-16 as compared to 2014 and 2015. Overall, transactions have increased as more buyers have realized that the market, in terms of pricing, has bottomed out,” other experts confirm.

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