|14 January, 2018

Dubai's real estate basks in off-plan demand for luxury homes

A penthouse on the Palm that sold for Dh102 million was the priciest deal in Dubai's property market in 2017

Luxurious residential villas in Dubai, with tower blocks in the background. Image used for illustrative purpose.

Luxurious residential villas in Dubai, with tower blocks in the background. Image used for illustrative purpose.

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A penthouse on the Palm that sold for Dh102 million was the priciest deal in Dubai's property market in 2017.

Off-plan sales dominated not just the affordable segment of the Dubai residential market in 2017, but also prime properties.

The total off-plan market for prime residential communities in Dubai was worth Dh16 billion, according to Luxhbitat. Downtown Dubai sold the most in terms of off-plan (Dh5.8 billion), followed by Dubai Creek Harbour (Dh2.9 billion) and Mohammed bin Rashid City (Dh2.7 billion).

A penthouse on the Palm that sold for Dh102 million was the priciest deal in Dubai's property market in 2017, while two villas at Emirates Hills went for Dh95 million and Dh90 million respectively.

Brigitte Tenbergen, associate director, Luxhabitat, said: "There has been a strong demand for off-plan - especially in the higher segment and mostly situated on the beachfront. Most of these developments will be handed over in 2018 or mid 2019. The existing developments are getting tired and clients are looking for modern, contemporary design."

The secondary market was, however, also able to hold its own. The costliest deal on a ready apartment was Dh36 million for a unit at the Volante, followed by Dh30 million for a unit at the Five Palm Jumeirah. An apartment at the La Reve tower went for Dh29.7 million, while the highest transaction involving a Burj Khalifa unit in 2017 was Dh24.8 million.

The total volume of transactions in 2017 for the secondary prime residential market was Dh13.1 billion, a 10 per cent increase over 2016.

Eighty two per cent of the total number of transactions in 2017 were for apartments. The top three performing areas were the Dubai Marina transacting Dh3.34 billion, followed by the Palm Jumeirah (Dh2.32 billion) and Downtown Dubai (Dh1.54 billion). These three areas account for 42 per cent of the secondary prime residential market, says Luxhabitat.

In terms of the villa market, the total volume was Dh4.4 billion. Fifty per cent of the transactions came from Emirates Living areas. The most expensive villa transacted was a villa in Emirates Hills for Dh95 million. The Emirates Hills area alone transacted Dh816 million.

Sally Ann Ghai, associate director at Luxhabitat, said the sentiment seems positive for an improvement in sales volume in 2018, with high buyer interest. "Sellers, having had a tough year up against the high level of off-plan sales, have accepted reality and adjusted prices accordingly to signpost their serious intention to sell. However, buyers should not take this signal of reasonableness as an invitation to charge in with even further low ball offers on already softened prices. Sellers have responded to market data that the end-user market in Dubai has undertaken a permanent correction. Buyers should not interpret the reasonable pricing now appearing as a crash market portend, but rather a considered response to concrete sales data by reasonable sellers. Buyers should be thankful that the market has responded to their accusations of price stubbornness, and appreciate they can now acquire a home at a relative bargain in 2018."

The average price per square feet also marginally increased. In 2017, the price/sq ft for prime residences was Dh1,482 per sqft. The prices are now comparable to the same levels as Q4 2015.

Luxhabitat rentals director Ryan Kasper said: "Rents for prime properties have followed similar trends of the general market. Most luxury apartment and villa prices have remained relatively stable, although we have witnessed a longer marketing period between tenants and more flexibility in payment terms among landlords."
 

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