Samir Salya on the Slowing Momentum of Dubai’s Property Sales

Although the market in Dubai is showing a turnaround as of late, January property sales fell. According to figures reported by The Gulf News, off-plan sales dropped by 28% in volume and 40% in value terms, based on a year-on-year evaluation. Despite some sales drop-offs forecast in January 2018, following an exceptionally strong 2017 for off-plan sales, the numbers appear much lower than expected.

Only 3 launches scheduled in January

With only 3 developers launching in January, the unease surrounding the off-plan property market is visible. Dubai developers Emaar, Damac and a private entity L-I-V, which opened sales for its first freehold tower, were the only 3 companies launching new off-plan sales.

Emaar managed to pull in sales confirmations of around Dh1 billion within days of the launch. This off-plan development was for towers based at a new location, the Beachfront. This is showing some potential for any companies that choose to launch, however, may be as a result of low competition.

Low figures

Based on available estimates, a study by real estate consultancy GCP-Redin notes poor performance in the property sector. Only 800 units were released in the first 30 days of 2018. January saw 1,645 off-plan deals registered. Compared year-on-year, this recorded a notable fall. In January 2017, 2,281 off-plan sales were registered. Overall, off-plan sales of over 2,000 units each were recorded in 5 months and of 1,800 or more in 3 months at various points throughout 2017. 2018 looks unlikely to match these high periods.

The future of the market

With these dramatic falls, many are looking to the future of off-plan sales. As property ownership and investment looks unstable, experts are looking towards the rental market for hope.

Managing Director for Global Capital Partners, Sameer Lakhani, acknowledges the potential for rental in a statement to The Gulf News. In response to questions regarding the problems for developers with unsold stock, Lakhani states: “It is very difficult to estimate unsold stock — some have expressed concern about these levels rising. However, the data available is opaque for this.

“Or less demand for off-plan now could mean investors are channeling money back into ready properties. Remember that there is always a rotation between off-plan and ready units in terms of money flows. We may be seeing the beginning of a rotation back towards the ready space, though it is too early to tell.”

With factors including the recent introduction of VAT still impacting the market, it is unclear how this will play out for the market. This uncertainty is leading to investors being detracted from the region, thus leaving stock unsold. With oversupply plaguing the Dubai property market, this fall could lead to further problems for the sector’s 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.