Dubai South, Downtown Dubai and Business Bay are the most transacted areas
The total number of off-plan transactions in the third quarter of 2017 has increased by 86 per cent from the previous quarter, while the value of off-plan transactions was up by 118 per cent to Dh4.04 billion.
“With reference to off-plan transactions, Dubai’s real estate market has witnessed seasonal peaks and troughs in the last year. After a promising start to 2017, sales plummeted during a disappointing Q2. However, they have picked up positive momentum in Q3,” said Ivana Gazivoda Vucinic, head of advisory and research, Chestertons Mena.
The most transacted area in Dubai was Dubai South with 1,151 transactions, closely followed by Downtown Dubai with 821 transactions and Business Bay with 686. The total value of off-plan sales in Q3 was Dh4.04 billion with Downtown commanding 50 per cent of the overall value.
The increased interest in off-plan units had a negative impact on completed units where an 11 per cent decrease in transaction volumes and a 19 per cent in values was witnessed.
“In Q4, we expect to see further corrections of sales prices and rents. A slight pickup of completed unit transactions is expected. This will, however, have a negative impact on off-plan sales transactions which we expect to decline and then stabilise,” said Vucinic.
Overall, apartment sales prices have continued to decline during the third quarter of 2017 witnessing a drop of two per cent. This could potentially trigger further declines in completed unit values, as investors shift more towards off-plan property opportunities offering convenient payment options such as five-year post-handover or one per cent payment per month.
Prices varied significantly from community to community within the apartment market with Dubai Silicon Oasis declining nine per cent whereas The Greens witnessed growth of 13 per cent, by far the best performing area in Q3. Dubai Marina was the only other location to witness an increase of two per cent.
Apartment rents fell further in the third quarter after additional stock entered the market leading to a three per cent decline. Discovery Gardens, Dubai Marina and Jumeirah Village Circle, on average, witnessed declines of five per cent.
“We have seen a two per cent decline for studios and a three per cent decline for one, two, three-bedroom apartment units. Studios have been relatively resilient this year and performed better throughout the year when compared to larger apartments, the same is true of the villa market. Two and three-bedroom villas are performing better than larger configurations,” added Vucinic.
Villa sales prices have been more resilient due to the higher level of corrections during the previous quarters. The Meadows and Springs were the worst affected areas, both recording a seven per cent decline.
In the villa rental market, three-bedroom units witnessed a modest four per cent increase during Q3, while other sized units declined by two per cent (two bedrooms), three per cent (four bedrooms), and one per cent (five bedrooms).
“To stimulate demand, we are increasingly seeing landlords now offering more favourable rental plans, these include up to 12 cheques and even rent-free periods as an incentive to lease properties,” added Vucinic.