Off-plan sales have increased in Dubai, with property prices in some areas falling to 2013 lows, attracting new buyers who would otherwise have been priced out.
A mortgage cap brought in by the Central Bank, meaning that expats are obliged to pay at least a 25% deposit and 7% transaction costs, could be the reason for the recent market changes in Dubai, some experts believe.
Lukman Haile, chief commercial officer at Propertyfinder Group, said: “Many commentators have argued that this cap has achieved specifically what it was intended to achieve – a cooling in prices, and diversion away from the secondary market toward the primary market.”
He added that because of the increased number of project launches, there’s been “aggressive low deposit and post handover payment schemes” which add an incentive to buyers in the falling market and lead to more off-plan transactions.
According to Propertyfinder Group’s Trends report, the price drops in Dubai have been gradual over the past six months. Haile believes they are now at the bottom of the cycle, and expects them to rise again in the lead-up to Expo 2020.
Renters becoming buyers
“There will also be an increase in product offerings in affordable emerging communities in the sub-one million AED, sub one thousand AED per square foot segment, which were historically under-serviced during Dubai’s earlier construction booms,” Haile added.
With rent declining in Dubai over the last year, villas are becoming significantly more affordable, with an average median rental price of AED89 per square foot (around £18). In International City and Dubailand, rents are as little as AED60 per square foot.
Haile said: “Few global cities offer the opportunity to buy a well-built four bedroom free-standing villa in prime location on a decent size block for under $1.2m. Try doing that in London, Sydney, New York, Paris or Geneva. Good luck. But you can in Dubai.
“Long-term residents are taking advantage, snapping up good deals, planting roots, and swapping their rent cheques for a mortgage.”
