Dubai Off-Plan Property Sales Jump in Q1 2017

There are various opportunities in the Dubai residential real estate market, for investors who are looking to find stable, mid-to-long-term returns. New reports confirm that sales of off-plan properties in Dubai jumped in the first quarter of 2017, providing potential new opportunities for these investors.

Supply problem  

Dubai is one of the Middle East’s brightest economies, acting a as a regional centre for industries such as oil, tourism, and technology, among many others. The city, therefore, is an extremely attractive place for skilled, well-educated professionals, as it provides ample job opportunities and they all need somewhere to live, so Dubai’s residential real estate market holds serious potential.

Over the past decade or so, we have seen a major construction boom in Dubai, with developers creating ever-more ambitious residential housing facilities. However, this caused an oversupply problem, which dented average Dubai residential property prices in 2016, as demand just couldn’t keep up. However, it looks as though the Dubai residential sector is poised to bounce back this year.

Ready for recovery

A new report from Chestersons, a real estate agency, argued that Dubai’s residential property market is “ready for recovery,” despite the over-supply problem, in 2017. The firm estimated, according to Arabian Business, that 15,000 more units will be delivered in Dubai this year – down from 16,000 last year, and over-supply is denting demand, resulting in a minor residential rental fall of 1% in Q1 2017.

The Chestersons report, however, also delivered some very positive news. The firm found  that thanks to incentives and improved payment plans, more investors were drawn into the Dubai off-plan residential property sector in Q1 2017, resulting in sales rising by a staggering 45% when compared to the quarter before. Chestersons also found that overall, Dubai residential transactional activity jumped by 25% during the first quarter of the year, with ready-properties seeing an increase of 4%.

Positive movement

Commenting Ivana Gazivoda Vucinic, Chestersons MENA’s Head of Advisory and Research said: “In the first quarter we witnessed positive movement on the residential transaction side for both transaction values and volumes… This is partly due to the increase in incentives and payment plans created by developers to make it more financially amenable for investors to purchase property.

“The increased number of transactions was followed by increased transactional value, which stood at AED12.28 billion (US$3.3bn) for both ready and off-plan units, which is a 31% increase compared to the previous quarter and an indication that price points are now more in line with buyer expectation.” Ivanna also noted that because the Dubai residential property market has become efficient and more regulated, its realisation rate has risen from 30% a few years ago, to 45% – 50% in the present day.

Major opportunities

Speaking out on the findings of this report Samir Salya, the Chairman of Reign Holdings, a company which specialises in property development in the United Arab Emirates (UAE) and the UK, said: “The Dubai residential real estate sector experienced challenges in 2016, due to an over-supply of units, but it is clear that investors still see the potential of this market, and this could eventually lead to a recovery this year. We are already seeing off-plan transactions climb, suggesting that investors want to capitalise on the opportunities presented by a market where prices are low, to build properties and find new tenants, allowing them to accrue stable streams of revenue as sector activity picks back up.”

Samir Salya

Samir Salya is the Chairman of Reign Holdings and is involved in real estate and construction within the UAE and UK. Samir holds over 20 years of experience in executive management, business expansion, performance improvement, sales and marketing.