Dubai to witness growing interest in off-plan properties: Chesterton
Chesterton, the international property agency established in 1805, stated that property market across Dubai continues to outperform markets in the region as off-plan market comes back into focus. Leading property developers have been at the forefront of new launches in prime locations such as Downtown Dubai, Arabian Ranches, Dubai Marina and DWC.
A number of factors can be attributed to the resurgence of the market including lower off-plan prices, economic stability and better liquidity in the market.
Robin Teh, Country Manager, Director Valuations and Advisory at Chesterton MENA, said, “An estimated 3,000 units were reportedly launched in the first quarter of 2014 and popular off-plan projects include Mulberry Park Heights by Emaar, Atria by Deyaar, Palm Tower Residences on Palm Jumeirah, and Celestia serviced apartments at Dubai World Central by Damac. In a rapidly rising housing market, buying off-plan actually enables investors and home buyers to buy a property at a lower price as opposed to the post construction phase.”
“A huge stock of ready properties has also impacted investment in the off-plan market as end-users now have a choice of a ready property market which was non-existent in the 2006 period. The liquidity is now distributed in these two segments. However, recent launches have absorbed excess liquidity from the ready properties market as off-plan prices continue to be competitive at 15%-20% lower than the prevailing market prices. This has slowed transactions in the ready property market as cash buyers have diverted funds towards off-plan market,” added Robin.
Cash purchases has dominated the off-plan market as banks remain over cautious in financing the off-plan market and mortgage remains unattractive due to 50% down payment option limited to properties nearing completion. Restriction on resale and increase in transaction fees have controlled excessive speculation in the off-plan market where most of the launches are now selling at premiums of 3%-10%. Most of the off-plan action has been focused in Dubai with exception of a villa project in Fujairah.
“Projects valued at more than US$12bn have resumed construction work in the UAE over the past year and a half as per recent reports. The volume of projects awarded made 2013 the second best year for project awards since 2008, a sign of UAE’s strengthening economy. It is estimated that projects worth more than US$5bn having been awarded during the first quarter of the year and anticipates around US$23bn worth of projects to be awarded during 2014. This clearly reflects the positive sentiment in the investment scenario of the economy which is expected to continue in medium term,” added Robin.
“Capital appreciation is the key motivation behind off-plan property investments as buyers are also considering properties that offer a unique positioning in comparison with other units. Therefore the marketing message behind the project is becoming critical. Pricing is however still a key decision factor for buyers who now have plenty to choose from. Identifying buyers mood sellers are offering projects at competitive prices, appropriate pricing is key in making a project sellable in current market scenario since market transparency has improved and buyers have a sense of prevailing market rates and expected future scenario,” concluded Robin.
Chesterton MENA recently received the ‘Highly commended property consultancy in Dubai’ award during the recently held 2013th edition of Arabian Property Awards. The Arabian Property Awards is part of the ‘International Property Awards’, the world’s most prestigious competition dedicated to finding the best real estate professionals across the globe. Chesterton with its Middle Eastern headquarters in Dubai offers a full range of property services, including residential and commercial sales and leasing. In addition, the company provides professional property valuation services together with the valuation of plant and machinery. Chesterton MENA also has a very active international sales division, based in Dubai, specializing in the sale of prime, Central London residential apartments and houses to investors from across the entire MENA region.
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