CEO, Lewis Allsopp discusses the trends recognised in the primary real estate market in Dubai.
Anyone and everyone. We are now seeing an influx of Europeans entering the developer sales market (primary market), since Covid-19. Many people are considering Dubai as a safe place to be. Not just because of the leader's response to the virus itself but also because of the way the economy has been looked after.
I have spoken to many clients who are based overseas now considering moving their lives to Dubai for this reason and are interested in developer sales so they get a fresh new place to live and are further motivated by an attractive payment plan.
Dubai residents who were previously renting have also shown huge interest in primary market sales - a lot of first-time buyers are now expressing their interest because of the attractive payment plans on offer, competitive pricing when it comes to villas and the opportunity to own a brand new property. When compared to other property markets around the world, buyers get a lot more for their money in Dubai especially when a property is purchased before completion. This, of course, has increased the demand in these types of properties, hence we’re seeing more villas and townhouse developments coming on the market.
There are indeed some amazing opportunities in the primary market. Dubai property developers are changing their strategies for the betterment of the buyer. What we have noticed in recent months is a huge increase in demand for off-plan properties, especially villas and townhouses, unfortunately supply has become limited in the secondary market and prices have increased due to the demand.
If an end-user is willing to wait for their desired property, they will get a great home at a more affordable price. Some developers have ready properties to move into and with those you may find a payment plan ranging from three to ten years after moving in. Such incentives are encouraging more buyers who are unable to get bank financing, or who maybe need more time to gather their deposit, but still want to get onto the property ladder. Moreover, what we have found over the recent years is the finishings and fixtures are improving as property developers are competing amongst each other to be more sought after.
An advantage of buying a property from a developer is that the buyer doesn't pay commission to a real estate agent as this is paid by the developer saving them 2% of the property value. Most of the time there is a Dubai Land Department (DLD) fee waiver. The DLD fee is 4% of the property value. Some developers will pay this in full meaning the buyer doesn’t have to or the developer will pay 50% which means the buyer will only pay a 2% DLD fee.
As a result of the way the UAE has handled the Covid-19 pandemic, many people around the globe are attracted to the city. They see the economy is still running and is managed efficiently and this has created demand.
The interest in secondary market properties is high - Allsopp & Allsopp’s buyer enquiries to new property listing ratio is 8:1 - but there is also an increased demand for developer stock. The pandemic has really encouraged people to look into their situations and make big decisions. We are seeing that developer stock is now very limited and in some cases, completely sold out.
We are now seeing more residents expressing an interest in developer properties whereas previous to Covid-19, residents were much more interested in purchasing properties in the secondary market. The secondary market in certain areas is experiencing an undersupply so buyers are looking at their wider options and finding that developer properties and the payment plans will work out better for them.
Developer sales are more attractive in certain areas when it is 30-40% constructed and also when a show property is available so buyers can get a feel for the property. Buyers like to see what they are buying and although it is not yet complete, they can see the location and have a better understanding of the plot sizes etc. However, the well known developers such as Emaar, Dubai Holdings, MAF - buyers will invest at launch because they are aware of the quality and finish from these developers and already have trust in them and their brand so if it means they could get a better deal at launch, they will go for it rather than waiting until midway through construction when chances are, it will be sold out.
Developers that are new or less well-known in the region are attracting clients by offering a much higher quality finish. Smaller developers have less of an overhead for marketing and advertising so have the budget to enhance the products they use throughout their build. This is not to say that bigger developers cut on quality, but smaller developers can splash out on more luxuries as they are working on a much smaller scale. Match the luxury finish with a DLD fee waiver and an attractive payment plan and the development is a success.
A huge pull for developer sales, especially off-plan sales is the location of a project. For end-users, they often want to be close to the action, to work or to schools and if a new development ticks all of those boxes, it can be a great success. Dubai Hills as an example, generated a huge amount of interest from end-users from the launch because of the location and the ease of connecting to everywhere in Dubai.
For investors, again, location is a strong pull. Take Madinat Living as an example, this community offers views of the famous Burj Al Arab and is in the heart of the city - an investors dream. Developments like this will attract visitors and residents alike so will be a wise choice for an investor looking for capital gains and long-term ROI’s.
There was less demand for luxury properties, so larger, higher priced villas were moving slower than apartments or even townhouse communities further from the city. Now we’re seeing more end-users looking for high-end luxury villas with generous budgets.