Is the Dubai property market really looking up?
Recently released data from the Dubai Land Department (DLD) about the growing number of real estate ad permits seems to indicate that the emirate’s property market is indeed looking up.
Several reports through the year have indicated that the Dubai realty market sentiment is weakening. For example, realty firm Core Savills’ Annual Residential Sentiment Survey, released early-September, reveals that only 34 per cent of respondents believe Dubai real estate shows signs of recovery, compared to a stronger 50 per cent a year earlier.
Meanwhile, in early September, AMEinfo had reported that the residential market in the emirate is weakening, leaving tenants in a stronger position.
However, the recently released DLD data reveals that there has been a ‘significant growth’ in the number of ad permits issued, meaning that property advertisers are going full steam ahead to put up advertisements for real estate projects, a sure sign that the market is not doing that badly.
Online is the key
Of the total 8,500 real estate advertising permits issued by the DLD between the end of August 2017 and the same month last year, a whopping three-quarters (6,393 or 75.21 per cent) were issued for e-advertising permits, showing that the internet is by far the largest medium of choice for advertisers.
“The significant increase in the number of permits we have issued from year to year reflects the sustained growth of the real estate sector and the momentum it is building in the run up to Expo 2020,” said Ali Abdullah Al Ali, Senior Director of the Real Estate Licensing Department at the Real Estate Regulatory Agency (RERA) – the regulatory arm of the DLD.
RERA issues real estate permits in 16 different categories across different types of media. Following e-advertising permits with the biggest share came classified ads, with 517 permits, then billboards, with 302 permits, and newspaper ads, with 289.
This data further seems to indicate that real estate advertisers are becoming more price-sensitive when it comes to targeting masses and are showing less confidence in advertising via TV, newspaper ads or even billboards.
Meanwhile, in July this year, Jones Lang Lasalle (JLL), a real estate service and investment company, had said in its Dubai Real Estate Market Overview – Q2 2017: “There are signs of increased activity in the residential sector, with market sentiment to take a positive turn this year.”
Supporting this, DLD data showed that 5,400 residential properties were sold in first five months of 2017, an increase from 4,500 units in 2016, all of which seems to indicate that the market may indeed be picking up.
Q2 saw total residential stock rising to 480,000 units, said JLL in its overview, adding that the office market saw delivery of approximately 33,000 sqm in Q2 2017. However, it noted, the Dubai rental market remains subdued in Q2, with little change in prices or rentals.
In an attempt to explain the apparent conflict between how people feel and how the market is actually doing, Core Savills elaborates in its survey report that there is a clear discrepancy between market reality and perceived sentiment.
Over the past five to six years, it notes, there has been a nearly 50 per cent lag between the number of announced and delivered units.
It further reveals that the total number of delivered units ever year stands at nearly 15,000 to 18,000, which only increases the stock of available units by a meagre three or four per cent, something that is “not a cause of extensive concern as perceived by the market.”