Residential property transactions in Dubai are rising, but the price trajectory remains unclear as developers selling off-plan units drive down prices in the affordable housing sector and create a stock of low-quality residential units in the emirate , brokers said on Tuesday.
The number of deals for built units since the beginning of this year has increased by 7 per cent year-on-year, while off plan sales jumped 62 per cent, according to Core Savills.
"As we enter the final quarter of 2017, a year in which most market players expected the Dubai residential market [prices] to bottom out, there remains a clear lack of direction," said the broker. "Despite higher year-on-year transaction volumes, uncertainty and concerns of oversupply have produced divergent sale price trends and further market fragmentation between performing and non-performing communities."
The market fragmentation is being exacerbated by developers who are behind a big chunk of off-plan new stock in the mid-market segment and are attracting investors, particularly, to the below Dh1 million price point, the broker said.
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Read more:
UAE residential rental property market to slip further this year, Cluttons says
Investor sentiment for Dubai's residential property weakens, a new survey shows
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Average unit value in the off-plan affordable housing segment fell by 11 per cent compared to last year as new inventory and easy payment options continue to push prices lower, Core Savills said.
“This further illustrates developers’ current strategy of bringing lower entry products to the market while competing on prices,” said the broker. “Instead of adjusting supply to demand, a few developers are taking the risk of adjusting prices, in some cases by offsetting quality or shrinking their margins."
The off-plan sales are concentrated in the affordable market segment, which includes a two bedroom unit below Dh1 million, and some properties in the mid-market segment, which ranges between Dh1-2.5 million for 2-3 bedroom apartments. According to Core Savills statistics, the mid-market segment represented 52 per cent of deliveries in the third quarter, followed by affordable segment with 28 per cent.
“If sales and tenant demand for such (off-plan) products has been overestimated, this may not be sustainable in the long term,” said the broker.
“This trend also affects the secondary sales market, artificially reducing prices, as individual landlords try to keep pace with off-plan prices that are bringing area averages down and dampening recovery.
Overall, apartment property prices in Dubai were down 4 per cent year-on-year in the third quarter and flat quarter-on-quarter, with off-plan sales driving down rates, according to an Asteco report.
“These developments now demand a larger share of the sales volumes compared to completed units, with rates continuing to decline as a result,” said John Stevens, managing director of Asteco. “Compounding the issue, despite increased government spending on infrastructure, hospitality and retail in the run-up to the Expo 2020, is that market sentiment remains low. This is largely due to weak employment growth and the bearish outlook in terms of oil prices and global economic outlook.”
Both brokers expect deliveries to continue in the ramp-up to the Expo, but Core Savills cautioned that the quality of off-plan products will not meet the demands of the end-users.
“Although we anticipate the number of proposed units and actual hand-overs to vary notably, we expect developers to continue building in the run up to 2020 creating a significant surplus in the lower end of the market that does not adequately address the needs of target end-users,” said Core Savills. “Despite stronger regulations being in place, we continue to view increasing off-plan activity with caution, particularly given its detrimental effect on ready sales that fuels further systemic market risk.”
Company%20profile
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Ain Dubai in numbers
126: The length in metres of the legs supporting the structure
1 football pitch: The length of each permanent spoke is longer than a professional soccer pitch
16 A380 Airbuses: The equivalent weight of the wheel rim.
9,000 tonnes: The amount of steel used to construct the project.
5 tonnes: The weight of each permanent spoke that is holding the wheel rim in place
192: The amount of cable wires used to create the wheel. They measure a distance of 2,4000km in total, the equivalent of the distance between Dubai and Cairo.
COMPANY PROFILE
Name: HyperSpace
Started: 2020
Founders: Alexander Heller, Rama Allen and Desi Gonzalez
Based: Dubai, UAE
Sector: Entertainment
Number of staff: 210
Investment raised: $75 million from investors including Galaxy Interactive, Riyadh Season, Sega Ventures and Apis Venture Partners
THE APPRENTICE
Director: Ali Abbasi
Starring: Sebastian Stan, Maria Bakalova, Jeremy Strong
Rating: 3/5
Jigra
Starring: Alia Bhatt, Vedang Raina, Manoj Pahwa, Harsh Singh
Diriyah%20project%20at%20a%20glance
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Singham Again
Director: Rohit Shetty
Stars: Ajay Devgn, Kareena Kapoor Khan, Ranveer Singh, Akshay Kumar, Tiger Shroff, Deepika Padukone
Rating: 3/5
Meg%202%3A%20The%20Trench
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if you go
The flights
Flydubai flies to Podgorica or nearby Tivat via Sarajevo from Dh2,155 return including taxes. Turkish Airlines flies from Abu Dhabi and Dubai to Podgorica via Istanbul; alternatively, fly with Flydubai from Dubai to Belgrade and take a short flight with Montenegro Air to Podgorica. Etihad flies from Abu Dhabi to Podgorica via Belgrade. Flights cost from about Dh3,000 return including taxes. There are buses from Podgorica to Plav.
The tour
While you can apply for a permit for the route yourself, it’s best to travel with an agency that will arrange it for you. These include Zbulo in Albania (www.zbulo.org) or Zalaz in Montenegro (www.zalaz.me).
Company%20profile
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Premier Futsal 2017 Finals
Al Wasl Football Club; six teams, five-a-side
Delhi Dragons: Ronaldinho
Bengaluru Royals: Paul Scholes
Mumbai Warriors: Ryan Giggs
Chennai Ginghams: Hernan Crespo
Telugu Tigers: Deco
Kerala Cobras: Michel Salgado
The Transfiguration
Director: Michael O’Shea
Starring: Eric Ruffin, Chloe Levine
Three stars
Thank You for Banking with Us
Director: Laila Abbas
Starring: Yasmine Al Massri, Clara Khoury, Kamel El Basha, Ashraf Barhoum
Rating: 4/5
COMPANY PROFILE
● Company: Bidzi
● Started: 2024
● Founders: Akshay Dosaj and Asif Rashid
● Based: Dubai, UAE
● Industry: M&A
● Funding size: Bootstrapped
● No of employees: Nine
Cricket World Cup League 2
UAE squad
Rahul Chopra (captain), Aayan Afzal Khan, Ali Naseer, Aryansh Sharma, Basil Hameed, Dhruv Parashar, Junaid Siddique, Muhammad Farooq, Muhammad Jawadullah, Muhammad Waseem, Omid Rahman, Rahul Bhatia, Tanish Suri, Vishnu Sukumaran, Vriitya Aravind
Fixtures
Friday, November 1 – Oman v UAE
Sunday, November 3 – UAE v Netherlands
Thursday, November 7 – UAE v Oman
Saturday, November 9 – Netherlands v UAE
COMPANY PROFILE
Name: Qyubic
Started: October 2023
Founder: Namrata Raina
Based: Dubai
Sector: E-commerce
Current number of staff: 10
Investment stage: Pre-seed
Initial investment: Undisclosed
Company%20Profile
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Company%20Profile
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Profile
Company: Libra Project
Based: Masdar City, ADGM, London and Delaware
Launch year: 2017
Size: A team of 12 with six employed full-time
Sector: Renewable energy
Funding: $500,000 in Series A funding from family and friends in 2018. A Series B round looking to raise $1.5m is now live.
COMPANY%20PROFILE
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Blonde
%3Cp%3E%3Cstrong%3EDirector%3A%20%3C%2Fstrong%3EAndrew%20Dominik%3Cbr%3E%3Cstrong%3EStars%3A%20%3C%2Fstrong%3EAna%20de%20Armas%2C%20Adrien%20Brody%2C%20Bobby%20Cannavale%3Cbr%3E%3Cstrong%3ERating%3A%20%3C%2Fstrong%3E3%2F5%3Cbr%3E%3C%2Fp%3E%0A
'Munich: The Edge of War'
Director: Christian Schwochow
Starring: George MacKay, Jannis Niewohner, Jeremy Irons
Rating: 3/5
The specs
Engine: 2.7-litre 4-cylinder Turbomax
Power: 310hp
Torque: 583Nm
Transmission: 8-speed automatic
Price: From Dh192,500
On sale: Now
Tree of Hell
Starring: Raed Zeno, Hadi Awada, Dr Mohammad Abdalla
Director: Raed Zeno
Rating: 4/5
The Disaster Artist
Director: James Franco
Starring: James Franco, Dave Franco, Seth Rogan
Four stars
UPI facts
More than 2.2 million Indian tourists arrived in UAE in 2023
More than 3.5 million Indians reside in UAE
Indian tourists can make purchases in UAE using rupee accounts in India through QR-code-based UPI real-time payment systems
Indian residents in UAE can use their non-resident NRO and NRE accounts held in Indian banks linked to a UAE mobile number for UPI transactions