Off-plan property sales in Dubai recorded their best year since the downturn in 2008, according to a number of industry experts.

"Off-plan transactions have had an extraordinary year, fueled largely by generous back-ended and post-handover payment plans provided by developers. December proved to be a continuation of that yearly trend; it will be interesting to gauge how the appetite changes [if at all] during the first half of 2018, especially as emphasis starts to shift towards deliveries of some of these projects," Hussain Alladin, head of research at private equity firm Global Capital Partners was quoted as saying in a report by Khaleej Times.

A report released this week by property consultancy firm said a total of 25,600 off-plan properties were sold in Dubai last year, making 2017 the highest year on record for off-plan sales since 2008. (Read the full report here).

Global Capital Partners said the volume of off-plan transactions was up 60 percent last year and accounted for 70 percent of all property transactions in the emirate during the year.

Dubai South, which is located near the Dubai World Central area, showed the biggest spike in off-plan transactions last year, with the number of deals up 738 percent on 2016.

"This demand stems from one of the lowest entry points available in the market," David Godchaux, CEO of real estate firm Core Savills, told Khaleej Times.

However, while off-plan sales enjoyed a resurgence in 2017, especially in December as buyers rushed to sign deals ahead of the introduction of value-added tax and the impact it may have on prices, some experts warned higher interest rates and falling property prices could dent demand in 2018.

“These ... deals are artificially driving supply up … encouraging overbuilding which drives up market risks,” Jesse Downs, managing director of real estate consultancy firm Phidar Advisory, was quoted as saying in a report by Arab News.

“We see the residential market softening further this year — about 3 percent per quarter. It’s an inevitable, delayed correction — it needs to happen,” she said, adding that she predicts Dubai residential property prices could fall by between 10 percent and 15 percent in 2018.

Further reading:

(Writing by Shane McGinley; Editing by Mily Chakrabarty)
(shane.mcginley@thomsonreuters.com)

Our Standards: The Thomson Reuters Trust Principles



Disclaimer: This article is provided for informational purposes only. The content does not provide tax, legal or investment advice or opinion regarding the suitability, value or profitability of any particular security, portfolio or investment strategy. Read our full disclaimer policy here.

© ZAWYA 2017