KHALEEJ TIMES, Sunday, Apr 4, 2021 | Shaaban 21, 1442
Property buyers outnumbering sellers in Dubai
Emirates:
Dubai's property market is running low on inventory as buyers currently
outnumber sellers in popular areas of the emirate.
A study by global real estate consultancy Colliers said that due to the
consistently high numbers of buyers, the market has seen a transition into a
seller’s market.
“The majority of participants in our survey agreed that currently the quantity
of buyers registered outweighs the supply in popular areas within Dubai, as
agents informed Colliers they are currently running low on inventory. It is
thought that one of the reasons for this is the ‘need to sell’, with owners that
had to liquidate their assets having already done so and the remaining owners
impartial to sell, but depending on the right price,” Colliers said in its
first-quarter report.
Since the establishment of the Dubai Supreme Committee for Real Estate Planning
in September 2019, new project launches have slowed down substantially. Though
supply of new units from previously-launched projects is still coming onstream,
low property prices and interest rates are attracting buyers in good numbers.
According to Asteco, 34,000 apartments and villas were handed over in 2020.
“What we are increasingly seeing is people prepared to pay more because there is
a lack of stock, and properties which are vacant on transfer rather than let are
obtaining the largest premiums. This has led to bidding wars, gazumping and
constant increasing owner demands. Ninety per cent of participants agreed that
the current level of pricing and price increases have far outweighed expectation
and some believe this sharp increase and demand is verging into uneasy
territory,” said the survey.
It said unreasonable owners’ expectations and a still strong demand from buyers
can cause a stalemate. This has also led to many investors looking at entering
the market and overpaying.
“A staggering 80 per cent of participants also acknowledged that currently, many
properties are being sold off market with the risk of advertising a property too
high due to the increasing competition between agents trying to obtain
inventory,” said the report.
Who buys, and why?
Colliers’ survey results revealed that 57 per cent saw an increase in investor
activity and a further 70 per cent had noticed increased foreign investment into
the market, with the three most popular nationalities being from Chinese,
European and Indian investors.
“Many believe a key driver to the increase in market activity is the way in
which the UAE has handled the global pandemic, this has given people a strong
sense of security and remains a key influencer to the decision making process of
wanting to buy. It is still agreed that the majority of buyers are financed in
some way, with some higher end purchasers also taking a small proportion of
finance,” it said.
In addition, the market is seeing an increasing number of tenants looking to
invest in property for themselves as the rent / mortgage payment gap is still
favourable to ownership.
Atif Rahman, director and partner of Danube Properties, as he had stated
earlier, said there will never be a perfect equilibrium between demand and
supply.
“There could be a temporary balance but largely, either the supply or demand
would be on the higher side. This is what leads to inflation or deflation in the
real estate value. I want to reiterate that the risk of oversupply looms in
every market across the globe, however, there will never be oversupply of good
properties,” Rahman said.
“In the current situation, we do see a reasonable spike in the demand which will
be good enough to consume the current supply of the real estate in the Dubai
real estate market.”
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