More Homes Give Residents More Room to Negotiate

Property developers are racing to complete and hand over residential projects despite a sustained price correction in Dubai, completing a record 20,978 homes in the first half of 2019, according to a new report.

The Property Finder Trends report for January–June 2019 shows completions comprised 14,999 apartments, 1,084 serviced apartments and 4,895 villas and townhouses. Dubai's total residential stock is expected to reach 637,000 units by the end of next year, a 10% increase. Experts say the price correction and extra supply will position Dubai as an affordable market and give residents and investors the chance to negotiate better deals in one of the world's most popular cities.

Shaher Mousli, chairman of Arthur Mackenzy Properties Group, said the projected supply will create a surplus that could lead to an approximately 20% softening in prices. "The fact that would motivate sales is payment plans and relaxed terms as opposed to the price itself," he said.

Record Completions Ahead

The report said a further 38,426 homes in 152 projects across Dubai, at least 85% complete by the end of July, are expected this year: 29,397 apartments, 3,387 villas or townhouses and 5,642 serviced apartments. Even so, based on past materialisation rates, not all will be finished this year.

Alan James Gammon, general manager of Samana Developers, said the market is dominated by news of deliveries, as most developers race to finish before Expo 2020 Dubai. "The current summer lull, we believe that by offering a well-priced quality product it creates a massive opportunity for end-users who were unable to join the property market due too previously high prices, as well as investors who might opt for large block-buying for higher returns due to the attractive return options," he said.

He said attractive prices and payment plans indicate continued growth, encouraging middle-income families with stable jobs to buy for the first time. "We are a firm believers in the long-term sustainability of the UAE's real estate market. That's why we entered the market when many people started doubting it," he added.

Lynnette Abad, director of data and research at Property Finder, said more supply will give residents more leeway to negotiate rents. "With a record number of units expected for the second half of the year, we can expect prices to decline further as the market continues to absorb these units," she said, adding that new supply not outstripped by demand will keep making the city more affordable for residents and investors.

The report said 33,982 homes under construction last year were at least 65% complete and scheduled for 2019. "Less than a few thousand of those units ended up completed by the end of 2018, and most were pushed to 2019. With nearly 20,000 already completed in the first half of 2019, and another 38,426 with a status of at least 85 per cent complete, the market is set for some record numbers in completions," it said.

Danube: Dubai Can Absorb the Supply

Atif Rahman, director and partner at Danube Properties, said Dubai's economy can absorb the controlled supply as the emirate continues to attract buyers. "Besides, the current price and rent status make properties a very lucrative for investment and we expect massive investment in real estate in the next few months and years," he said.

He said Berkshire Hathaway's entry into Dubai is further evidence of how seriously global real estate experts view the market. "In addition to that, a large number of end-users with stable jobs – who were priced out previously – are now finding the current prices lucrative and entering the market for the first time. Once this trend catches up, the trend will push up the demand high."

Notable Handovers

Handovers so far this year include the DT1 tower in Downtown Dubai (130 apartments); 44 villas in wasl's Al Sarfa compound in Al Sufouh; 512 villas in Sidra and 1,312 villas in Maple I and Maple II at Dubai Hills Estate; 48 villas in Sobha Hartland Estate in Mohammed bin Rashid City; and 426 apartments in Emaar's Vida Hills.

In Nshama's Town Square, where six projects had been expected by the end of 2018, 579 units in Safi Apartments and 680 in Zahra Breeze have been completed this year, with others to follow by year-end.

Also expected in 2019 are the first phase of Arabella villas, Seventh Heaven in Al Barari, Acacia apartments in Park Heights at Dubai Hills Estate, 458 townhouses in Serena and Jenna apartments in Town Square, Phases 1 and 2 of Azizi Victoria (2,550 apartments), Wind Tower 1 and 2 in Jumeirah Lakes Towers (620 apartments), and three towers with 1,427 apartments in Al Habtoor City, according to the report.