UAE property market is changing: here’s what you need to know
New research from Allsopp & Allsopp, Dubai-based residential real-estate firm, has revealed landlords are now much more confident accepting four or more rent cheques a year rather than one.
As of May 2017, some 33 per cent of tenants who found their properties through Allsopp & Allsopp are covering their rental leases in four cheques.
While almost a third (32 per cent) are still paying in one cheque, the statistic reveals greater market flexibility and a paradigm shift in property owner’s approach to payment.
In May 2016, Allsopp & Allsopp’s figures revealed nearly half of tenants – 42 per cent – were paying their rental fees in just one cheque.
Lewis Allsopp, CEO of Allsopp & Allsopp, says: “It is good to see a shift in owner’s mentality. A sign of a mature property market is to offer more flexible payment terms. We have established nearly a decade of strong sales and rental agreements in the UAE, so sellers, renters and property owners know they can truly trust Allsopp & Allsopp. This is part of the reason why many property owners are confidently accepting a spread in annual payments.”
Meanwhile, an enormous 72 per cent of sales agreed in April-May 2017 were for vacant properties and 55 per cent of buyers are using finance (mortgages).
Allsopp says: “Savvy sellers ensure their properties are vacant and ready for eager buyers to take ownership immediately. It’s to a seller’s advantage to have their property vacant for transfer.”
British-owned Allsopp & Allsopp also reports that nearly a third of those signing leases under the company in May 2017 were British, with Allsopp commenting that: “We are delighted to do business with our clients from all over the world. But for many people, dealing with their fellow nationals when it comes to something as important as finding the right place to live is important, and creates a strong bond of trust.”
Ready properties a hit among buyers
According to data from Reidin-GCP, 5,397 ready properties were sold in the first five months, a marked improvement on the volumes in 2016 (4,521 units during the same period).
In comparison, the number of off-plan residences sold in Dubai between January to the end of May was 7,152 against 4,521 for the same period in 2016. Dubai Marina is at the top for ready properties with 748 apartments sold, while International City (542 units getting sold), Jumeirah Lake Towers (380 units) and Sports City (378 units) are the next three popular destinations for buyers, the Reidin-GCP data finds.
Sameer Lakhani, Managing Director at Global Capital Partners says: “Transactional increases in Dubai have become broad-based helped by both investor and end-user interest. Last year, this sort of interest was initiated with only select mid-income communities and that too from only end-user demand. This year, the only property category yet to witness sustained interest is the villa communities where prices and transactions remain sluggish.”
And the first instances of price gains are starting to show through in recent transactions for ready properties. Transactions recorded at communities such as the Springs and Meadows and Jumeirah Lake Towers show a three to five per cent increase as compared to 2016.
Will the UK election affect GCC property investors?
Data published by Rightmove, one of the UK’s biggest property portals, on April 24 revealed that average UK property prices have now reached a new record high of £313,000.
Adam Price – Managing Director Global Sales at Select Property Group said in a blog: “Brexit has already impacted on financial market performance over the last year, and the election may also do the same over the next few weeks. But UK property is largely resistant to economic and political events.”
However, Gary Dugan, Chief Investment Officer – Wealth Management at Emirates NBD believes that uncertainty from the election result will have a divergent impact on the UK’s commercial and residential real estate markets.
He said: “The key driver for the UK commercial property market since the Brexit vote last year has been the weakness of GBP. This has made commercial property in the UK highly attractive to overseas buyers who are more concerned about preserving their capital over the long-term than short- term pricing volatility and are principally driven by ‘push’ factors from their home markets (be it political, economic or real estate specific).”
The flood of overseas capital has supported the market to date, although listed real estate securities have traded sideways since the start of the year which indicates that, despite this, UK commercial property values will most likely remain flat for the remainder of 2017.