The leading real estate company, Allsopp & Allsopp’s Quarter 3 (Q3) report shows a rise in mortgage buyers, cash buyers, secondary market sales and multiple cheque rental payments.
Allsopp & Allsopp report an 18% increase in cash buyers in Q3 2019 compared to Q3 2018 showing that buyer sentiment is building.
Lewis Allsopp, CEO of Allsopp & Allsopp says “More often than not, cash buyers are buying for investment purposes. This summer we conducted a survey of buyers at random over the summer months to see what enticed them to purchase property. 43% of people asked, were for investment purposes.”
“Many investors are predicting the market prices are nearing the bottom of the curve and they are taking this opportunity to get the most out of their rental yield in the future. I have had investors I have personally worked with as a broker in the past, call me to enquire on properties which are giving an 8-10% rental yield. This interest is highly encouraging and shows the confidence there is in the Dubai property market”
The award-winning brokerage reports a 27% increase in mortgage buyers in Q3 of 2019 compared to Q3 of 2018 with buyer registration rising by 21% within the same time frame despite the high up-front fees of purchasing a property in the city.
Allsopp explains “Buyers are taking advantage of the market prices and are deciding to take the leap onto the property ladder. From our survey of buyers at random over the summer, 43% were purchasing property for the first time in Dubai. Buyer confidence has been growing consistently and we have seen a rise in buyer registration quarter on quarter. Families are settling here in the UAE and are looking at Dubai with more longevity.”
The average sales price of properties sold by Allsopp & Allsopp in Q3 of 2019 compared to Q3 of 2018 has decreased by only 1%.
Allsopp says “A decrease of only 1% is to be expected. We continue to hear talk of prices dropping further, however, as real estate brokers, our team are on the front-line. The news that is broadcast is usually from data collected from the previous quarter and is not a reflection of the market as it is on the day.”
The company reports a rise in secondary market sales of 36%, however, has seen a decrease in off-plan sales by 67%
Allsopp explains “The rise in secondary market sales is highly encouraging. As a company, we have had the same marketing spend and the same number of sales agents in Q3 of 2019 as Q3 of 2018 which shows that buyer sentiment is building. The secondary market is where we focus on most and is at the heart of our business - it could be said that this is the reason for the decline in off-plan sales. It could also be said that the formation of the Higher Committee for Real Estate which has been set up to achieve a balance between supply and demand could be a factor in the decline. Developers are focusing on the stock they already have, and we should see a slowdown in launches in the foreseeable future.
Allsopp & Allsopp have recorded a decrease in the average rental price of 10% in Q3 of 2019 compared to Q3 of 2018 and tenant registration remains the same.
Allsopp says “The average rental price decrease could be down to more tenants taking the opportunity to move to differing areas or upgrading to larger properties. As tenants move, the property they have been renting for the last few years comes to the market at the correct market price. So, this isn’t to say that prices have decreased further in a year, but properties that were rented are now becoming available at the correct market price. Allsopp & Allsopp are operating in the new and upcoming areas of Dubai where rental prices are lower such as Town Square. This could also be a factor in the decline in average rental price.
A continuing trend of the real estate company reports is the increase in tenants paying their rent in three or more cheques and a decrease in tenants paying with only one cheque. In Q3 2019, tenants paying with multiple rental cheques increased by 24% and one cheque payments reduced by 7%.
Allsopp says, “It is time for landlords to become more lenient on accepting multiple rental cheque payments. Dubai’s property market is maturing year on year and is becoming more like other mature cities in the world where it is normal for landlords to accept monthly rental payments. It is becoming more and more apparent that tenants are sometimes having to take out bank loans in order to pay for their tenancy upfront which is highly unsustainable.”