The value of off-plan property sales in Dubai has reached an eight-year high after months of sluggish growth, bolstered by strong demand as pre-construction projects reignited buyer interest.
Total sales reached 4.95 billion dirhams ($1.3 billion) in August, the highest value seen in a month for off-plan residential units since December 2013, according to Property Finder. August also registered 2,599 sales transactions, the highest in a calendar month since November 2019.
“During the pandemic year, the off-plan market significantly declined. The average was about 30 percent of properties sold were in the off-plan segment. Today, we have bounced back to 2019 ratios where secondary and off-plan segments are almost 50/50,” said Lynnette Sacchetto, director of research and data for Property Finder.
It’s not only the number and value of transactions that have increased. More buyers are also signing on the dotted line to acquire properties of higher value. In August, buyers spent an average of 1.9 million dirhams per transaction, up by 53 percent from 1.2 million dirhams in the same period last year.
In the apartment category, the average median price for off-plan apartment sales transactions stood at 1.1 million dirhams in August, about 48 percent higher compared to 745,500 dirhams a year earlier. For villas and townhouses, the median price per transaction rose to 1.8 million dirhams from 1.6 million dirhams over the same period.
According to Sachhetto, the demand for off-plan properties will continue to increase this year, especially since investors are expected to come to Dubai during the Expo 2020 event.
“With the expo less than two weeks away, I believe the off-plan market will continue to thrive,” she said.
As of this month, Dubai saw 34,000 new properties completed. The bulk of the additional supply, 26,000 units, were from apartment projects, while villa and townhouse developments only turned over 6,000 units.
“Now the question is, will there be enough stock available to sell in the off-plan market to fulfil investor demand, especially with foreign investors coming in over the next six months for Expo 2020?” Sacchetto noted.
According to a separate report by Asteco, Dubai’s residential supply included 22,500 apartments and 2,000 villas as of June 2021. It noted that there has been an increase in the number of new project launches in Dubai, including off-plan, under construction and completed developments.
“Although new supply slowed as a result of recurring COVID1-19 linked restrictions and delays, it still presents a significant volume,” Asteco said.
Dubai’s major developers, including Emaar, Majid Al Futtaim, Union Properties and Azizi Developments have also unveiled villa, town house and apartment projects that are either being developed or have just been launched.
(Writing by Cleofe Maceda; editing by Seban Scaria)
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© ZAWYA 2021