Dubai off-plan properties 20% cheaper than secondary market - Emirates24|7

Dubai off-plan properties 20% cheaper than secondary market

The prices for the villas were not disclosed. (Supplied)

A slew of off-plan project launches in Dubai over the last 12 months has driven prices of secondary market properties down by 15 per cent, according to a new report.

“Initially, off-plan (project) launches were at systematically higher prices than what was prevailing in the secondary market. This trend has reversed in the last 12 months where off-plan launches have been at levels that have averaged 20 per cent below the secondary market rates.
 
“This has caused prices to soften in the secondary market by approximately 15 per cent on a city-wise basis,” Unitas Consultancy and Reidin.com said in a report titled, ‘Killing them softly: The impact and incidence of off plan’.
 
Dubailand has topped the list of maximum number of off-plan project launches followed by Dubai Silicon Oasis, Jumeirah Village Circle and Downtown Dubai.
 
The report states that rise in off-plan project launches, since 2012, sucked out liquidity from the secondary market, as investors and speculators rushed to the primary market to capitalise upon payment plans, resulting in a 26 per cent year-on-year decline in secondary market activity.
 
Arabian Ranches
 
Citing the example of Arabian Ranches, the companies said new launches within the Ranches extension showed an obvious decline of activity in the secondary market coinciding with exogenous factors such as strengthening of the US dollar as well as the decline in oil prices.
 
A price analysis showed prices were trending downwards as new launches within the same vicinity offered similar products at lower prices.
 
“Although there was locational differences, investors responded to the new lower priced launches by ‘switching’ from the ready to off-plan market, causing prices to start declining in third quarter of 2014,” the report said.
 
Downtown Dubai
 

Another example cited was of Downtown Dubai, with the report mentioning transactional activity had declined in the area due to a wide number of (off-plan) launches as prices in new launches were lower than the secondary market.
 
Emirates 24|7 reported earlier this month that Dubai had seen launch of 14 projects in the first five months of 2015, comprising 4,800 units. In 2014, 78 new projects were unveiled.
 
Read: Dubai property market: 14 projects, 4,800 units launched
 
In April 2015, the Dubai Land Department said total real estate transactions had crossed Dh64 billion in the first quarter 2015 compared to Dh61 billion in the same period last year.
 
Indians topped the list of expatriate property investors, buying properties worth Dh3.04 billion followed by British nationals and Pakistanis who invested Dh1.89 billion and Dh1.392 billion, respectively, the department said.
 
Earlier this year, Moody’s Investors Service, a global ratings agency, said it expects prices to fall 10 to 15 per cent this year, but the slowdown wasn’t a worry for long-term investors.
 
“We believe that the slowdown in Dubai's real estate market is positive in the long run, as it gives the market time to absorb the existing supply pipeline, while also alleviating our concerns about the housing market potentially overheating,” it had stated.

 

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