Lewis Allsopp, CEO explains the increase in pricing and the undersupply across certain Dubai communities.
The Dubai property market has been under a lot of scrutiny lately and people have been watching closely with many predictions that prices would drop significantly, however, the industry has seen the complete opposite in a number of communities across the city.
Lockdown had many residents of Dubai contemplating their living arrangements and valuing outdoor space and larger properties much more than they once had, accelerating any plans to buy that they may have had for the near future. The number of buyers registering their interest in villas was 62% higher than those registering their interest in apartments as an increasingly obvious trend emerges - many more people are looking at townhouses and villas across the city which give them more space and an outdoor area to enjoy whilst giving them a more diverse home.
From Allsopp & Allsopp data, an increase in the average sale price of certain villa communities in Dubai is apparent. With demand being at an all time high in these communities, we can see the prices start to rise and then, in turn, encourage sellers to market their property.
Supply is a key factor in the pricing in the market and we can see a great example of how price is affected in villa communities including Arabian Ranches, Dubai Hills and The Springs. From May to August the number of properties brought to the market only decreased by 2%, however the number of clients looking to buy a villa increased by 63% and therefore the average sold price increased by 8%.
Popular apartment communities including Dubai Marina, Palm Jumeirah and Downtown tell a similar story. Apartments coming available for sale decreased by 17% from May to August, but the average sold price increased by 5% and the average number of buyers actively looking at apartments increased by 95%, this is 36% less active buyers than those looking to buy a villa.
I believe this drop in average sale price and listings coming to the market is a result of end-user buyers holding out for a property that they truly desire. They are looking for a property that is in great condition with the number of bedrooms that they require and are unwilling to compromise purely because of price.
On the other hand, the drop in average sale price of apartments is encouraging investors into the market and they are willing to compromise on the number of bedrooms and the condition of the apartments for a good price.
Overall, we can see from the data collected that certain villa communities are starting to suffer an undersupply of properties as the number of buyers increases, therefore driving the average sold price of the properties upward. People often talk about oversupply but this is more apparent in the outskirts of the city and does not pertain to the key communities across Dubai. The further out you look, the more availability and the lower the price.
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