Only a handful of developers launched new projects last month, including Emaar Properties, Damac Properties and L-I-V Real Estate Development.
"What is important to remember about 2017 was that there was a huge amount of launches for one, but also that a lot had attractive payment plans, post-payment plans, fee waivers and attractive offers. It's completely natural that developers will take a pause, as it's not possible to keep offering those type of deals indefinitely. I think for 2018, we will see less launches, but a strong appetite will remain for the launches that there are," says Lewis Allsopp, CEO, Allsopp & Allsopp.
"Following an amazing year for off-plan properties with the total volume of sales twice as much as ready properties, a dip in sales in January is natural to happen," reckons Adrian Popica, general manager, House Hunters Real Estate Brokers.
In January 2018, 1,645 off-plan deals were registered in Dubai compared to 2,281 units 12 months ago, says GCP-Reidin data. In terms of value, off-plan sales worth of Dh2.04 billion were transacted in January 2018 in contrast to sales worth Dh3.375 billion 12 months ago.
Communities that performed particularly well in terms of off-plan sales were Meydan (up 3,043 per cent), Dubai World Central (119 per cent), Jumeirah Village Circle (115 per cent), Town Square (29 per cent) and Dubai Creek Harbour.
Developers may also be in a hurry to release any previously unsold stock in the aftermath of value-added tax (VAT) before launching new projects.
"VAT will have a minimal impact as it only applies to brand new properties that haven't been sold and have been ready for more than three years. The purchase of an off-plan property is exempted from VAT at the moment," informs Popica.
"VAT in property transactions is a comparatively low amount. I don't believe it will have a major impact. It's never nice having an extra expense, of course, but it is manageable," Allsopp points out.
Market observers expect the focus to shift to ready properties in the next couple of years as most projects launched in the last three years are going to be handed over before 2020.
Even in the ready market, the volume of sales transactions in Dubai dipped 24 per cent in January 2018 while the value of such deals decreased 26 per cent compared to January 2017. The final January tally for ready properties was 867 units against the 1,138 deals a year ago.
Ready properties worth Dh1.307 billion were transacted last month compared to Dh1.769 billion 12 months ago.
Apartments in Dubai Marina and Sports City performed well in the ready market while villas in Arabian Ranches, the Springs and Meadows and Jumeirah Islands saw robust demand.
"I predict that 2018 will see a strong secondary market performance, especially with the handover of more affordable housing. I would expect this to continue in the run-up to 2020 with a lot of handovers expected between now and then," adds Allsopp.
Says Hussain Alladin, head of research and IR, Global Capital Partners: "In a larger sense, though it's too early to say, there might be somewhat of a rotation of money flows towards the ready space this year as investors see value in pricing."
There is, however, uncertainty in the market on how sustainable the mid-term absorption of new residential supply by end-users will be.
Says David Godchaux, CEO of Core Savills: "I foresee a regaining of interest in the secondary market over the next 18 months as many new units are handed over, especially if it turns out premiums are negative on the back of insufficient end-user demand, weakening rents and decreasing yields. We see a few investors waiting to seize opportunities when they arise, more specifically in the upper mid market and prime segments, that are increasingly becoming an attractive product in core and established locations at low price points."
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