Lower off-plan prices to stoke property demand in Dubai
Property developers in Dubai are marketing cut-price off-plan properties to tempt buyers back into the market.
Villas at Damac’s latest off-plan development are being marketed at Dh200,000 less than they were a month ago.
At a marketing launch at the end of October, Dubai developer Damac announced that it would be selling off-plan three-bedroom villas at its Akoya Fresh project in its Akoya Oxygen golf course development at starting prices of Dh1.2 million.
Less than a month later, the developer is marketing off-plan three-bedroom villas at the same development for Dh999,999 through real estate brokers in Dubai.
Damac said that there had been no reduction and that the price difference was due to a difference in the types of villas being marketed.
“The difference in price is due to the different villa types they are selling at any point in time,” a Damac spokeswoman said.
“Each project has several different villa types and each type has a different price.”
Kamran Alithe, the managing partner of Splendour Homes, one of the brokers marketing the properties said that the villas priced at less than Dh1m were located in the middle of rows, while those at the ends were priced at Dh1.2m.
“It is a marketing strategy the developer is using,” Mr Ali said.
“There is no depreciation in the market. We are sensing positive vibes in the market.”
In June, hundreds of people queued to buy flats and villas at Nshama’s Town Square development.
At the time the developer marketed one-bedroom apartments from Dh503,988. However, one-bedroom flats in the development are being marketed at Dh378,888.
“A number of developers are looking at adjusting pricing levels to increase the sale rates for off-plan projects.
“Rather than simply reducing the price on a like-for-like basis, these adjustments are being made through other means, such as the extension of payment terms and adjustments to the sale areas of units,” said Craig Plumb, the head of research at JLL’s Dubai office.
According to the Dubai Land Department, 14,600 units were sold off-plan in the first 10 months of last year, with an average price of Dh1.6m. Over the same period this year, 13,000 units were sold off-plan at an average sale price of Dh1.46m.
Property data company Reidin and research company Unitas Consultancy estimate that the average off-plan prices per square foot in Dubai have fallen to about Dh800 per sq ft from Dh870 per sq ft a year ago.
Unitas says that the fall in average price is a result of developers marketing more smaller apartments in suburban locations rather than house prices for individual off-plan properties falling in the secondary market.
“I think it is fair to say that the 10 per cent differential from last year to this year in terms of off-plan property prices comes from developers responding to customer demand and offering a different sort of product to the market,” said Muhammad Sameer Lakhani, the managing director of Unitas Consultancy.
“This year we have seen launches of communities like Dubai South, which are in a very different area and are marketed for a very different selling price than properties on the Sheikh Zayed Road corridor.”
Last week, Cluttons reported that average residential values in Dubai in the third quarter of this year stood 7.4 per cent lower than they were a year earlier.
In January, Damac’s managing director, Ziad El Chaar, told The Sunday Times newspaper that he would go on TV naked and resign if the Dubai property market crashed this year.
Follow The National’s Business section on Twitter