In Dubai, developers are chasing end users with Dh1m-Dh2m homes – and with some hefty deals too
Dubai: get ready for the big summer sale – in the Dubai property market.
Developers are rushing to launch or release off-plan homes priced between Dh800,000 and Dh1.5 million to continue to attract end-users, who have been driving the market’s fortunes throughout 2021. new launches, even in high-end towers at the Safa Park area, start at Dh1.3m, while recently completed apartments in a golf community in Dubai South cost around Dh900,000. On ready apartments, the offer is 70 percent of payments can be made over three years. In Dubailand, Damac has villas ready in its Akoya community starting at 1.1 million dirhams.
With mortgage rates up from last month, developers aren’t waiting for end users to show up. The need is to convince them that if they are thinking of buying, they should do it now. Any delay will only increase costs, especially if they are considering mortgages.
Mortgage rates could reach 7% on average by the end of the year – up from 3% last year – if the US Federal Reserve sticks to the multiple rate hikes it has been talking about. For anyone thinking of buying mortgages, that would mean a pretty large payment compared to the last three or four years.
That’s why developers stick to one message when it comes to end users: “Buy now!” »
Fall in mortgage buyers
According to the latest data from DXBinteract.com, sales of mortgage-backed properties in Dubai fell by 27% in the first three months of this year. Spot buyers and investors dominated activity during this period, with over 20,000 trades made (up 80% from Q1-2021). This brought in 56 billion dirhams, or 125% more than the same period last year.
Still need end users
As the numbers hold up after an exceptionally strong 2021, developers in Dubai are realizing they still need end users, and more so in the middle-income space. This is why the emphasis is on properties in the range of 1 to 2 million Dh. “For the momentum of 2021 to continue, Dubai real estate needs more end users to buy homes,” said the CEO of a major brokerage firm. “In 2021, wealthy and upper-middle-income residents bought a home to move into or rent out.
“The next wave of purchases must come from middle incomes.”
The market narrative is that Dubai’s luxury homes will easily continue to find new buyers, most of them first-time foreign investors. (According to Google Trends, this year saw the “highest point of interest ever recorded in the world for Dubai villas.”)
In addition to mortgage costs, potential buyers will also need to consider the ever-increasing real estate prices. In the first quarter, the average selling price of an off-plan apartment was 1.2 million dirhams, 16.9% more than last year, according to the DXBinteract.com portal. For a ready apartment, the increase was 30.9% and the average transaction value was 1.1 million dirhams.
In terms of location, Business Bay was the hottest spot, leading off-plan and ready-to-use apartment sales.
Properties worth between 1 million and 2 million dirhams accounted for 35% of total sales volume (with 7,000 transactions) in Dubai, while those under 1 million dirhams accounted for 32% (6,500 transactions) .
“The figures show what developers should focus on – properties from 1 to 2 million dirhams,” the broker said. “That’s where more end-user buyers will be.”
In the coming weeks, developers in Dubai will do just that.