The Dubai residential market witnessed solid growth in off-plan sales transactions during the last quarter of 2017. According to a report by real estate consultancy CBRE, off-plan sales accounted for more than 65 per cent of total sales transactions for 2017, an increase of approximately 56 per cent in the number of transactions and 44 per cent in terms of total value, as compared to 2016.
“The sales market has witnessed an improvement in transaction numbers during 2017, with off-plan properties remaining favourable among investors, underlining the speculative nature of the local market,” said Mat Green, head of research and consulting UAE, CBRE Middle East.
“Business Bay, Jumeirah Village Circle and Downtown Dubai continued to dominate the market, as all three districts recorded more than 2,000 off-plan transactions for the year,” commented Green.
“While off-plan residential transaction volumes registered strong momentum during 2017, competition is likely to mount in 2018, with a huge number of new units set for delivery and with further project launches expected. Around 30,000 new units are anticipated to complete this year and we expect to see increasing pressure for the off-plan sector and the wider market, particularly with the recent introduction of VAT,” he added.
In light of the continued slowdown in the residential market, caution among prospective developers and owners is expected to heighten, and developers are likely to be more guarded in their development and sale decisions.
While residential sales prices entered into a period of decline during 2015, the rate of decline for Q4 2017 has actually been negligible, at just 0.5 per cent from the last quarter.
According to the report, over 90,000 new homes (apartments and villas) could enter the market during the period from 2018 to 2020, depending on construction delays.
“The market continues to see a shift in focus as developers seek to readdress the supply and demand gap in the affordable housing sector. Government approval of the low-income housing policy in 2017 will create tangible opportunities in this space and help to rebalance supply towards the demographics of the Emirate. Historically high rents had driven a large number of Dubai’s workforce to seek homes in other emirates and to then commute to Dubai. This group presents a notable opportunity for Dubai’s developers to attract back these residents,” commented Green.