After a rise in buyer and mortgage enquiries in June, July and August, Allsopp & Allsopp decided to get to the bottom of this surge by asking their most recent clients what has motivated them to get on the move.
Surprisingly, the data collected showed 43% of buyers were investors. In recent years, the majority of Allsopp & Allsopp buyers have been end-users buying in the secondary market. The drop in prices has given investors a nudge and we are seeing more enter the market as many judge that the market may be on the turn.
43% of recent buyers are entering the market for the first time after renting. The decline in pricing is making it possible to own property in the city and pay into a mortgage rather than paying rent.
Lewis Allsopp, CEO of Allsopp & Allsopp says “For those who are renting and have the minimum 33% of the property value to put down on the property, now is the time to plant roots.
It is becoming apparent that expatriates in Dubai are here for the long run. Dubai is no longer a ‘grab and go’ environment. Many foreigners are setting up a new life for themselves in the city and are building their families and looking towards a future in Dubai.”
The real estate company report that 14% of buyers are selling their homes and buying somewhere new.
Allsopp explains “This is a sure sign of a maturing and evolving market. People are building and already living their lives in Dubai. It is encouraging to see our clients taking advantage of the price reductions by moving on, selling their property and investing in a new home”
60% of end-user buyers are selling or giving up the lease on their property to buy villas in different areas.
Areas where Allsopp & Allsopp have seen the most registrations so far this year are Dubai Marina where the price of a 1-bed can be as low as AED 1,080,340 with the average rental amount at AED79,664.29. In the Springs a 2-bedroom villa can be bought for AED 1,441,363 with the average rental price of AED 100,892.31 and Downtown where a 1-bed apartment can be bought for AED 1,059,166 with the average rental price of AED 87,418.18. These areas have been popular with both end-users and investors. All areas are offering an attractive rental yield for investors.
Furthermore, 29% of end-user buyers are upgrading to properties with more bedrooms due to growing families or in the hope of a growing family in the future.
Allsopp says “Prices are attractive for those who are desiring more space. It is the opinion of many that we are at the bottom of the pricing curve, now would be a perfect time to buy and take advantage of the capital appreciation on a bigger villa in a more desirable area.”
Interestingly, 11% of end-user buyers have downgraded to less bedrooms, most of which were previously renting a larger property but took the sacrifice of space to be able to step onto the property ladder. The drop in property prices across Dubai has opened up opportunities for people who had previously not considered buying as a possibility for at least a few years.
Allsopp says “Being able to invest in property and begin to pay off a mortgage earlier has boosted the Dubai property market and first-time buyers are registering more now than ever before. A smaller property is a small sacrifice for a lifelong investment.”
Allsopp & Allsopp also looked into how people were paying for these properties. 73% of buyers paid with a mortgage and 23% of buyers paid with cash.
Allsopp explains “This goes to show that although buyers have been buying for investment purposes, it is not only cash investment buyers that are in the market. Many expats who are already living and earning in the city are grabbing the chance to buy a property to rent out whilst prices are low. In some cases, this could be a second mortgage, but not always. Some expats are still renting their family home but are investing in 1-bedroom apartments due to affordability and rental yield. They can see the benefit of buying but often don’t have the affordability to purchase a property to cater for their families.”
4% of recent buyers have been enticed by some attractive developer incentives. Developers have been making it more affordable for the residents of Dubai to purchase a brand-new property. Jumeirah Golf Estates, for example, is offering a payment plan allowing buyers to move in after a 10% upfront deposit. Buyers will then pay 15% over 18 months, and the mortgage thereafter with the thrown in positive of not having to pay Dubai Land Department fees.