Dubai Off-Plan Sales Up 118% at Dh4B

The total number of off-plan transactions in Dubai during the third quarter of 2017 has increased by 86 per cent from the previous quarter, while the value of off-plan transactions was up 118 per cent at Dh4.04 billion.

"With reference to off-plan transactions, Dubai's real estate market has witnessed seasonal peaks and troughs in the last year. After a promising start to 2017, sales plummeted during a disappointing Q2. However, they have picked up positive momentum in Q3," said Ivana Gazivoda Vucinic, head of advisory and research at Chestertons Mena.

The area with most transactions was Dubai South with 1,151, closely followed by Downtown Dubai with 821 and Business Bay with 686. The total value of off-plan sales in the period was Dh4.04 billion with Downtown commanding 50 per cent of the overall value. The increased interest in off-plan units had a negative impact on completed units where an 11 per cent decrease in transaction volumes and a 19 per cent in values were witnessed.

"In Q4, we expect to see further corrections of sales prices and rents. A slight pickup of completed unit transactions is expected. This will, however, have a negative impact on off-plan sales transactions which we expect to decline and then stabilise," said Vucinic.

Overall, apartment sales prices have continued to decline during the third quarter of 2017 witnessing a drop of two per cent. This could potentially trigger further declines in completed unit values, as investors shift more towards off-plan property opportunities offering convenient payment options such as five-year post-handover or one per cent payment per month.

Prices varied significantly from community to community within the apartment market with Dubai Silicon Oasis declining nine per cent to Dh829 per sqft whereas The Greens witnessed growth of 13 per cent to Dh1,352 per sqft, by far the best performing area in Q3. Dubai Marina was the only other location to witness an increase of two per cent, average sales prices in the area are now Dh1,470 per sqft.

Apartment rents fell further in the third quarter after additional stock entered the market leading to a three per cent decline. Discovery Gardens, Dubai Marina and Jumeirah Village Circle, on average, witnessed declines of five per cent.

"We have seen a two per cent decline for studios and a three per cent decline for one-, two- and three-bedroom apartment units. Studios have been relatively resilient this year and performed better throughout the year when compared to larger apartments, the same is true of the villa market. Two and three-bedroom villas are performing better than larger configurations," added Vucinic.

Villa sales prices have been more resilient due to the higher level of corrections during the previous quarters. The Meadows and Springs were the worst affected areas, both recording a seven per cent decline.

In villa rentals, three-bedroom units witnessed a modest four per cent increase during the third quarter, while other sized units declined by two per cent (two bedrooms), three per cent (four bedrooms) and one per cent (five bedrooms).

"To stimulate demand, we are increasingly seeing landlords now offering more favourable rental plans, these include up to 12 cheques and even rent-free periods as an incentive to lease properties," said Vucinic.

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