Luxury realty sees dip in popularity

Property prices may be skyrocketing but buyers appear to be taking a stand against the rapid growth in the luxury sector with value gains going down. High-end homes in Dubai saw a more toned-down growth pattern with value gains of 6.3%, according to a new report from consultancy Knight Frank. Compared to the first three months, where gains were up 11.7%, there is undoubtedly hesitance on the part of buyers to spend asking rates on luxury property.
According to market sources, new supply — and in substantial numbers too — such as Nakheel’s recent announcement of a new community of 1,000 villas will reduce the scope for sharp mark-ups in prime properties. Another launch, the Royal Estates project involving an alliance between three private developers, will create 2,000 homes at Dubai Investments and includes townhouses priced upwards of AED1.6 million.
“While there will always be investors interested only in trophy purchases in Dubai, the rest of the market is being driven by long-term buyers and end-users,” said the head of a brokerage firm.“Where they had few choices earlier — and those already had steep premiums attached to them — they now have the flexibility to choose from a wide selection of new projects and multiple property formats.”
“With new supply at the prime level looking limited over the next 18 months we expect prices to strengthen in the remainder of 2014,” said Kate Everett-Allen, international residential research analyst at Knight Frank consultancy.

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