Dubai – Mubasher: Off-plan property deals carried out in the emirate of Dubai jumped by 60% in 2017 from figures reported the year before, according to the new Observer: Dubai Q4 2017 report, released by international property research Chestertons MENA.
The data indicates a “steep increase” in both value and volume of off-plan deals in the emirate in the second half of 2017.
Dubailand, Business Bay, and Al Furjan recorded the highest demand, compared to the Lagoons, Downtown Dubai, and Business Bay, which achieved the highest values, according to the report.
“In terms of residential property transactions, off-plan dominated the market throughout 2017. Going forward we expect the off-plan market to decrease as the addition of new supply would suggest it will be ready units that will see an increase in demand,” stated Chestertons MENA head of consulting, valuations and advisory Ivana Gazivoda Vucinic.
In terms of the value of transactions, The Lagoons recorded nearly AED 800 million and was closely followed by Downtown Dubai and Business Bay with AED 780 million and AED 759 million, respectively.
Meanwhile, Dubai’s rental market saw the prices of apartments and villas decline by 3% in 2017, mainly due to the introduction of new units from delayed 2015 and 2016 projects.
Other reasons for the decline included “attractive lettings incentives such as rent-free periods and multiple cheques, [which] encouraged tenants to seek better deals. While this was good news for tenants, it has increased downward pressure on rents in most communities for landlords,” according to Chestertons’ report.
Vucinic forecast that rents would continue to soften in 2018 as “tenants pressure landlords to offer more preferential leasing terms.”
Moreover, new units entering the upper and mid-prime residential segments, alongside the flat economic sentiment, are likely to “exert downward pressure on Dubai’s rents,” she added.
Meanwhile, residential prices and rents are expected to see further correction in Dubai this year, Vucinic noted, indicating that “buyers can expect more incentives from developers for off-plan projects due to the increased competition and greater affordability of the ready units.”
“Short-term demand is expected to be buoyed as Expo2020 draws closer,” she concluded.
