Developers are getting in sales by opening up freehold options beyond ‘new Dubai’
Dubai: For buyers scouting property in Dubai, it’s turning into a question of which direction they should take. Should they head for Dubai South, the massive 145 square kilometre brand new “city” taking shape in Jebel Ali?
Or should they try their chance on the “coast”, on the stretch of Jumeirah where Dubai’s next-generation freehold destinations are being built. And in some instances, such as the Bluewaters, getting delivered and with residents moving in.
There are plentiful options for those buyers who do not want to head either south or to the coast.
Dubai’s south-east, which is where emerging attractions such as Dubai Hills and Meydan are located, had the bulk (nearly 48
This spreading of the freehold geography will play to Dubai’s strengths over the longer term, market sources say. “If you buy in central London, you know that area will remain the most important part of that city for decades…if not forever,” said Firas Al Msaddi, CEO of fam Properties. “In Dubai, the city is being built and formed as we speak.
“Dubai’s biggest developers seem to be drawing a line between the prevailing downbeat market conditions and what the demand they expect to generate for their new projects.”
“You buy into today’s trendiest project and a year later another project emerges. In this scenario, life-time investment opportunities can be found. But to discover them you need to study the real estate cycles and trends of the past decade. Dubai’s dynamics are very different to those of other markets, especially in the medium term.”
It’s no coincidence that some of the most prestigious locations on and off the Jumeirah stretch are being opened up. If last year was about projects announced – such as Damac’s Aykon City – along the then newly-extended Dubai Water Canal, 2019 could be about heading closer to the coastline with a selection of prestige projects.
Dubai Holding recently unveiled the “Downtown Jumeirah”, a self-contained destination built around a 550-metre high super-tower called “Burj Jumeira”. The Dubai Government owned developer is also working on “Madinat Jumeirah Living”, adjacent to the Burl Al Arab. (Prices for the initial units released at Madinat Jumeirah Living are between Dh1.33 million to Dh6.1 million.) “It’s too early to speculate on how many new freehold properties will be there in Jumeirah,” said Al Msaddi. “But we’re seeing the classic concept to develop a major landmark that brings enormous value to the surrounding projects.
“We’re likely to see many well thought out projects emerging in the area. The launches will, of course, be highly influenced by how well the sales go for the first few launches.”
About Downtown Jumeirah, “There is no information on the start date of sales as of now… but I do think it might be around the corner.”
Dubai’s biggest developers seem to be drawing a line between the prevailing downbeat market conditions and what the demand they expect to generate for their new projects. Get the basics right on the location and pricing, and then land the deal. It is a strategy that is bearing results – market sources say that the apartment buildings launched to date at Madinat Jumeirah Living have been sold out.
So, there are two distinct trends happening in Dubai’s property market now – on the one side, there are the concerns over more and more supply becoming ready for handover and thus dragging down prices further.
According to the newly released Savills report on Dubai’s property market, “Supply and demand mismatch led to increasing pressure on asset pricing across the emirate. Capital and rental values declined across most sub-markets.
“Across established locations, capital values for apartments fell by 9.5 per cent year-on-year on Palm Jumeirah and by 5–7 per cent across Dubai Marina and JLT. Capital values for apartments in Downtown were down by 16 per cent while values in Burj Khalifa are 12 per cent lower than the 2017 average.”
But this is also the market where a handful of developers are still willing to come up with launches and finding buyers for those.
Demand for the earlier launched Bluewaters and City Walk on Al Wasl Road too has been consistent – “We exited from 24 per cent of the Bluewaters portfolio we purchased during 2018, achieving an average of 35 per cent net profit on invested equity,” said Al Msaddi. “Long-term payment plans, particularly on ready projects, is a life time opportunity in Dubai when done well.
“While City Walk prices have certainly appreciated from the time we purchased in 2014, we did witness a slight decline during early 2018. But today we’re seeing a steady price trend.”
Dubai’s tallest tower is in correction mode
Burj Khalifa apartment values went through a 12 per cent correction in 2018 from a year before, according to Savills, while those at Dubai Marina and Jumeirah Lake endured dips of 5-7 per cent. Currently, a 546 square feet studio at the Burj is available for Dh1.8 million, while a one-bedroom of 1,096 square feet is asking for Dh2.15 million.
According to the latest report from GCP-Reidin, property investors in Dubai will need to reconsider some of their long-held beliefs. “An axiom that exists within the Dubai property market is that investing in villas with a golf course view will outperform those units that do not,” the report finds.
“The price performance of villas with a golf course view versus no-view reveals the former has underperformed in the cycle 2010-18, even though in in the interim period, the premia had doubled. This could be due to a number of factors, but the overall narrative has been one where the luxury end of the market has under performed, outweighing locational variables.
“In the run-up to the Expo 2020, it is likely the proliferation of new communities will imply that locational advantages will continue to dilute, especially in the upper end of the market. This will likely be reflected in developer pricing as the market gears up for the next stage of development.”
All rights reserved to the initial publisher for gulfnews.com