Investors and buyers cashed in on lower property prices in Dubai as the number of transactions jumped 20 percent to hit an 11-year high of 41,988 in 2019 as compared to 34,961 transactions in the previous year.
Data released by Property Finder revealed that the sale of off-plan properties took the lion’s share, accounting for 23,643 transactions or 56.3 percent of the total due to attractive prices and incentives such as waiver of service fees, post-handover payment plans, discounts on registration charges and commission, guaranteed rental returns, etc. offered by the developers.
Secondary market transactions in Dubai reached 18,345 last year. While the number of completed units reached over 45,000 last year.
Analysts believe that measures taken by the government such as the formation of a Higher Real Estate Committee to rebalance supply and demand in September are infusing confidence in the market, prompting investors to return to the market following five years of decline in the property market. They foresee this trend will continue in 2020 as well.
“Going into 2020 and leading up to the Expo, we should continue to see transaction levels increase and prices start to stabilize in certain areas. We have already started to see certain market dynamics shift as a direct effect from Expo and these trends will most likely continue throughout the year,” says Lynnette Abad, director of data and research at Property Finder.
“With new homes becoming completed thick and fast, developers are forced to come up with rent-to-own schemes and other initiatives to make sure that they are not left with unsold, ready units. This makes it a perfect buyer’s market, with attractive prices, good deals and plenty of options to choose from,” Property Finder said.
Prathyusha Gurrapu, head of research and advisory at Core, said with the recent announcement of the real estate committee, the market is witnessing strategic efforts to moderate supply-side deterrents.
“We have seen a number of new launches come down considerably over 2019 as most developers look to focus on existing inventories. That said, as we enter 2020, Dubai is reaching a cyclical peak in supply deliveries with the highest number of handovers in both the residential and commercial markets expected over the next year as developers aim to handover projects before Expo 2020,” she said.
“Due to the softened market conditions and buyer friendly terms, we have seen record transaction volumes, both in the off-plan and secondary markets. We expect buyer-friendly terms and heavily incentivized post-handover payment plans to continue over 2020, helping with the absorption of existing inventory,” Gurrapu added.
Aditi Hariharan, associate partner for strategic consulting and research at Cavendish Maxwell, said the price and rental decline of the past few years have brought properties within the reach of many, and with the current increase in off-plan sales transactions, investors should actively look for good deals in upcoming units, especially from developers with a proven track record.
“One of the key trends in 2019 were developers offering flexible deferred payment plans, eliminating the burden of bank financing for investors, leading to lower risk and an increase in investment appetite. In 2020, FDI is expected to rise, with developers continuing to offer appealing deferred payment plans and introducing direct and indirect marketing strategies to present all their available units to potential investors at Expo 2020,” Hariharan said.