In the first five months of 2017, 7,152 off-plan units were sold in Dubai.
End-users are attracted to properly priced off-plan projects nearing completion
Demand for off-plan property nearing completion is holding its own against that for ready homes in Dubai. With developers getting aggressive with pricing to sell their off-plan inventory, it is having a detrimental effect on sales in the secondary market, particularly in prime apartment districts.
In the first five months, 7,152 off-plan units were sold in Dubai (against the 4,521 units in the corresponding period last year), while ready properties at the older communities in Dubai were involved in 5,397 transactions, according to a recent Reidin-GCP report.
However, investors are still relatively wary of new off-plan projects, with preference given to a few reputed developers with a proven track record.
End-users are increasingly attracted to properly priced off-plan projects nearing completion, even if they are at a price premium over projects with a longer completion schedule. Such projects give end-users a better visibility on the completion timeframe and they are able to limit their financial exposure to long delivery delays by entering late.
Meanwhile, investors ready to take more risk exposure are driving the off-plan market, drawn by attractive payment plans across most market segments, from affordable housing in the outer areas to flagship and prime projects.
A geographical analysis reveals the ready market is dominated by developments in the Shaikh Zayed corridor, whereas the off-plan space has been skewed towards the rapidly developing Mohammad Bin Zayed (MBZ) area.
Established developments in central locations have maintained their interest from investors and end-users alike in the secondary market due to their existing brand value, for example Emirates Living and Dubai Marina (Emaar towers).
There have also been some off-plan launches of low to mid-market product in areas such as Dubailand and Jumeirah Village. However, products in these areas are primarily positioned at similar or higher entry points, keeping the secondary market relatively active.
There is an equilibrium emerging between off-plan ad ready properties in Dubai. There is a higher supply of off-plan today than say three years ago. On the other hand, with the market bottoming out, secondary units are being held onto by sellers because of the lower price the market is seeing. The two factors are creating a balance of demand between off-plan and secondary.
For instance, the secondary sales market in Downtown Dubai has remained slow as owners are withholding their existing units and are not keen to sell at lower premiums. On the other hand, with many projects including The Address Residences Sky View and Boulevard Point under construction, Downtown Dubai is expecting an almost 25 per cent top-up of its existing stock in the next two years – most of which is currently in the market as off-plan offerings.
Credits: Khaleej Times