Key locations see considerable decline in drop of sale prices
Dubai residential transaction volumes and total value of transactions were up by 30 per cent in Q4 2016 compared to the third quarter, according to property agency Chestertons.
Dubai Marina, International City, Dubai Sports City, Emirates Living communities and Jumeirah Lakes Towers (JLT) were the top five locations in both transaction values and volumes during the fourth quarter, with Dubai Marina at the top spot with 416 transactions worth Dh724 million and Dh2.9 billion through 2016.
This uptick in both volumes and values suggests that potential property buyers should no longer stay undecided for too long.
“This is a possible indication that the gap between what a seller expects to achieve and the amount that a buyer is actually willing to pay is closing still further,” said Robin Teh, Chestertons’ country manager – UAE and valuations and advisory director, Mena.
According to Ranjeet Chavan, CEO of SPF Realty: “As the market matures, the gap is becoming lesser and lesser. The reason for this is that both sellers and buyers have become more realistic. An educated buyer understands fair value and similarly sellers understand market conditions and, therefore, have expectations in line with that.”
With several reports on price softening in Dubai, sellers’ price expectations are falling while buyers are seeing stories that the bottom of the market is close.
“Both these scenarios are helping to close the expectation gap between buyers and sellers. Buyers will always look for that ‘killer’ deal but will [within reason] generally match the lower expectation of a seller,” said Mario Volpi, chief sales officer, Kensington Exclusive Properties.
A drop in average sales prices in areas such as Dubai Marina, Emirates Living and JLT indicates that these locations are more attractive to potential homeowners who may have previously been tenants.
According to Chestertons, buying property in Dubai is becoming a preferred option for many tenants.
Residential cash sale transactions were approximately Dh18 billion in 2016, although this was a drop of 25 per cent from 2015, said a Chestertons report released on Monday. There was an increase in mortgaged purchases, which points towards more owner/occupiers buying property in Dubai.
“If you look at the data four years ago, only 20 per cent were mortgage buyers, while today that number stands at 50 per cent. The segment overall has grown by 100 per cent. To elaborate, more and more tenants who have even a three to five-year view on Dubai are moving towards converting their rent into some form of equity. The view is saving on a dead investment of rent and converting it into mortgage payments, which even in a scenario that the property value does not appreciate is still a better bet in terms of overall saving,” suggested SPF’s Chavan.
In the same vein, Volpi added: “The mortgage market has seen a large uptake and recently the Dubai Land Department reported that more sales were conducted via mortgage finance than in cash. This points to more purchases being done by end-users rather than investors, which is very healthy and points to a maturing market.”
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