KHALEEJ TIMES, Tuesday, Jan 7, 2020 | Jamadi Al Awwal 12, 1441
Investors return strongly as Dubai property transactions hit 11-year high
Emirates:
Investors and buyers cashed in on lower property prices in Dubai as the number
of transactions jumped 20 per cent to hit 11-year high of 41,988 in 2019 as
compared to 34,961 transactions in the previous year.
Data released by Property Finder revealed that the sale of off-plan properties
took the lion's share, accounting for 23,643 transactions or 56.3 per cent of
the total due to attractive prices and incentives such as waiver of service
fees, post-handover payment plans, discounts on registration charges and
commission, guaranteed rental returns etc. offered by the developers.
Secondary market transactions in Dubai reached 18,345 last year. While the
number of completed units reached over 45,000 last year.
Analysts believe that measures taken by the government such as formation of a
Higher Real Estate Committee to rebalance supply and demand in September are
infusing confidence in the market, prompting investors to return to the market
following five years of decline in property market. They foresee this trend will
continue in 2020 as well.
"Going into 2020 and leading up to the Expo, we should continue to see
transaction levels increase and prices start to stabilise in certain areas. We
have already started to see certain market dynamics shift as a direct effect
from Expo and these trends will most likely continue throughout the year," says
Lynnette Abad, director of data and research at Property Finder.
"With new homes becoming completed thick and fast, developers are forced to come
up with rent-to-own schemes and other initiatives to make sure that they are not
left with unsold, ready units. This makes it a perfect buyer's market, with
attractive prices, good deals and plenty of options to choose from," Property
Finder said.
Prathyusha Gurrapu, head of research and advisory at Core, said with the recent
announcement of the real estate committee, the market is witnessing strategic
efforts to moderate supply side deterrents.
"We have seen a number of new launches come down considerably over 2019 as most
developers look to focus on existing inventories. That said, as we enter 2020,
Dubai is reaching a cyclical peak in supply deliveries with the highest number
of handovers in both the residential and commercial markets expected over the
next year as developers aim to handover projects before Expo 2020," she said.
"Due to the softened market conditions and buyer friendly terms, we have seen
record transaction volumes, both in the off-plan and secondary markets. We
expect buyer-friendly terms and heavily incentivised post-handover payment plans
to continue over 2020, helping with the absorption of existing inventory,"
Gurrapu added.
Aditi Hariharan, associate partner for strategic consulting and research at
Cavendish Maxwell, said the price and rental decline of the past few years have
brought properties within the reach of many, and with the current increase in
off-plan sales transactions, investors should actively look for good deals in
upcoming units, especially from developers with a proven track record.
"One of the key trends in 2019 were developers offering flexible deferred
payment plans, eliminating the burden of bank financing for investors, leading
to lower risk and an increase in investment appetite. In 2020, FDI is expected
to rise, with developers continuing to offer appealing deferred payment plans
and introducing direct and indirect marketing strategies to present all their
available units to potential investors at Expo 2020," Hariharan said.