We see a positive mid-term future for Dubai’s property market, which is great for the long-term economy. We are seeing a lot of confidence. This is how a mature property market should be and it is extremely good for Dubai to be going this way.
At present, we believe Dubai’s property market is very much being driven by end-user buyers. Our transactions are showing that people are looking at both upsizing and downsizing, depending on their stage of life. Those renting are looking at moving into their own place and paying their own mortgage, instead of someone else’s. Market trend analysis from Allsopp & Allsopp shows people tend to rent for two to four years here, and then decide to buy. There’s a curve of getting more settled, deciding they love the city and are progressing in their career enough to have saved some funds towards a down payment on their own property.
We have seen that people who initially come to find their rental property, come back again after a few years to make a purchase. Around three-quarters of buyers take a mortgage — a statistic that is reflected in mature, stable markets around the world. We shouldn’t see extreme highs and lows in the market as we have done previously, as we’re not dealing with investors who are overleveraging. First-time buyers will need a deposit of either 25 or 35 percent (depending on the purchase price, over Dh5 million is 35 percent) so we are seeing a lot of equity going into the market.
Maintenance is key
What is interesting is that it’s upgraded or vacant-on-transfer properties that are by far most popular, and, therefore, it’s this sector of the market that is getting the highest prices. Properties that aren’t maintained as well, or those that have long-term tenants, are a lot harder to sell, and even with our large team of experts, we often see such properties spending a lot longer on the market. Often the owner will have to consider a price reduction or the acceptance of a lower offer to secure a sale.
We are seeing 2017 emerge as a year where more affordable housing became prominent. While there is a demand for multi-million-dollar Palm Jumeirah villas, family homes on golf estates and Marina penthouses, the market trend is towards more affordable housing — city-wide, most market activity is in the Dh1 million-Dh4 million bracket.
This sort of budget will secure you a great property in most developments, including both apartments and villas depending on the lifestyle you want to lead. There are now a number of exciting, new and affordable developments across the city, which is great news for first-time and investors, including the launch of golf-course facing villas in Dubai South.
Pressure on rents
With a lot of market activity at present, there is seemingly a lot of confidence out there. Most commentators believe Dubai is at the bottom of the price cycle. There has been a marginal downward drop in prices in the last quarter, more so in the rental sector than in sales. While we don’t forecast any runaway increases, going into 2018, certainly in the first half of the year, we could see slight increases.
While new developments are increasing the supply of properties to the Dubai market, there are other factors as to why we have seen a downward trend over the last couple of years, including the oil price and the value of the British pound and euro. There are also global factors that cause people to liquidise assets — like a buy-to-let property here in Dubai, and these are things out of the local market’s control.
The property market has always been a cyclical one. Dubai has done a sterling job in recent years to try to ensure there are not the same extent of highs and lows. The market is expected to perform well in the coming years, leading up to Expo 2020, which could see a large influx of property investment.
With more and more up-and-coming communities in and around the city, we firmly believe a lot of people who are currently renting here will switch to buying in the next one to three years. Both established and new communities hold great appeal, and we look forward to this period of growth in Dubai’s ever-growing property sector.