Sales prices of villas and town houses in established Dubai communities are declining, but those in the suburbs of the emirate remain almost unchanged in price, thanks to an influx of affordable properties.

While villa prices in Dubai are 12.1 per cent cheaper than they were in 2017, those in Dubai’s suburban areas, such as Living Legends, Mirdiff, Green Community, DIP and some parts of Mohammed bin Rashid City, have recorded zero or a very marginal drop in sales prices, according to Property Finder’s recent Trends report.

New, affordable off-plan offerings in Dubai South, Dubailand and Town Square have been were popular with buyers, triggering a migration to those places from established areas in Dubai.

“Ample supply explains the reason for zero or marginal drop in sales prices for villas in suburban Dubai,” Aron Lomax, Managing Partner at Dubai-based real estate company, Treo Homes, told Zawya. “Also, three years ago, it was not possible to buy a three-bedroom townhouse anywhere in Dubai for less than AED 2 million. Now, with many master developers releasing properties in suburban Dubai, the average price point is about AED 1.4–1.5 million.”

Lynnette Abad, Director of Data & Research, Property Finder, said, “As new affordable villa communities are getting completed and being handed over, we have seen a migration to these communities from popular areas such as Dubai Marina and Emirates Hills. Families are choosing to live a little further out in the suburban areas of Dubai in order to gain access to a larger property with outside space.”

According to Property Finder, established villa communities in Dubai saw a decline in prices compared to the first half of last year: Damac Hills (−8.2 percent), Emirates Hills (−6.6 percent), Green Community Motor City (−5.4 percent), Dubai Silicon Oasis (−5.2 percent), Al Furjan and The Villa (−5.1 percent). “Damac Hills saw one of the most declining sales prices because of a lot of empty available ready stock,” Abad said.

As inventories across new property markets rise, developers are doling out ever more generous payment plans and going big with post-handover payments and offering rent-to-own (RTO) schemes, which are gaining traction in some market segments. “We have also seen a large influx of renters converting to home buyers, especially in these new villa communities,” Abad noted.

The RTO agreement for a property consists of clauses for rental and future sale at a predetermined price and within a time frame. The buyer has the option to either buy or exit the agreement. Last year, the Dubai Land Department launched a new title deed specifically for RTO in freehold areas.

Lomax, from Treo Homes, makes it clear that RTO schemes work well only in certain segments, as developers are using it to quickly get rid of properties: “Rent-to-own need not necessarily work across all market segments. Developers use this to get rid of properties that are overpriced and not selling as much as they would like. The uptake for RTO schemes is specifically seen on slightly large properties from AED 2.5 million onwards.”

“Although still in early stages in reach and volume, RTO schemes are being advertised in Dubailand and Motorcity for up to 15- to 20-year periods, and that too with very low upfront down payment,” Abad said.

(Reporting by Seban Scaria; editing by Daniel Luiz)


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