Samir Salya on Dubai’s 9-Year High for Off-Plan Property Sales

Despite recent dips in the Dubai property market, off-plan property is experiencing a sales boom. Showing the highest number of sales since 2008, figures from commercial real estate agency JLL reveal that a total of 25,600 off-plan properties were bought in Dubai throughout 2017.

Off-plan property soars

JLL’s report suggests that confidence is returning in Dubai, as both investors and developers lead sales in off-plan property. The majority of sales in the residential sector for 2017 were seen in the off-plan sector. This comes as developers offer attractive prices and payment plans. With the market seeing a 9-year high, off-plan property could continue to grow in the region.

Despite this, JLL’s report also notes that the number of new launches is significantly below their peak levels in 2006/07, as well as the value and volume of sales falling below levels recorded during 2013/14.

Conditions to remain subdued

The strength of this sector is not being seen by all sections of the property market. With new policies being introduced in Dubai, 2018 could see further troubles. The slowdown in economic growth, decreasing from a historic average of 4.1% to 1.7% in 2017. With this, the citizens of Dubai find themselves in a worse financial position for buying property. In particular, the introduction of VAT could see less activity in the market, as consumers react to the uncertainty surrounding this change. JLL is showing predictions that this could see a reduction in performance and market activity.

Speaking in the JLL report, Head of Research for JLL MENA, Craig Plumb, states: “The UAE real estate industry is entering into a transitional phase, with VAT now in effect and key stakeholders seeking to decipher its immediate and longer-term impact. Although VAT does not apply to residential rents and sales of new residential property, other real estate sectors could be negatively impacted by increased costs and cash flow challenges.”

 Continued falling for Dubai

Despite the success of the off-plan market, sales are not set to grow for the property sector as a whole. According to the report by JLL, prices are forecast to continue falling throughout 2018, as the market works to absorb the additional supply of recent years. Occupancy levels are set to remain on the same track as 2017, with supply growth outpacing potential demand. As the market continues to adapt to this, sales are projected to continue on a downward trajectory.

The bright spot of Expo 2020 is looking to bring more investment into the area. With businesses and individuals looking to set up in the region following the event, there is hope that this will reduce the oversupply. While this could lead to future growth and strength for the real estate market, its current forecast suggests further falls before recovery.

About Samir Salya

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